SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER THE 1934 ACT
Genesis Capital Corporation of Nevada
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(Name of Small Business Issuer in Its Charter)
Nevada 91-1947658
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
11701 South Freeway, Burleson, Texas 76028
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(Address of Principal Executive Offices) (Zip Code)
(817) 293-9334
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(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Exchange Act: None
Securities to be registered under Section 12(g) of the Exchange Act:
Title of Each Class to be so registered: Common Stock ($0.001 Par Value)
Preferred Stock ($0.001 Par Value)
Name of Each Exchange on Which Each Class is to be Registered: N/A
This form is being filed with the Securities and Exchange Commission in order to
become a reporting company under the Exchange Act of 1934 and to maintain the
Company's quotation on the OTC Bulletin Board(R) in compliance with National
Association of Securities Dealers, Inc. (NASD(R)) Rules 6530 and 6540, which
limit quotations on the OTC Bulletin Board(R) (OTCBB) to the securities of
companies that report their current financial information to the SEC, banking,
or insurance regulators.
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TABLE OF CONTENTS
Page No.
PART I
Item 1. Description of Business ........................................1
Item 2. Management's Discussion and Analysis or Plan of Operation ......7
Item 3. Description of Property ........................................9
Item 4. Security Ownership of Certain Beneficial
Owners and Management ........................................9
Item 5. Directors, Executive Officers, Promoters and Control Persons ...10
Item 6. Executive Compensation .........................................11
Item 7. Certain Relationships and Related Transactions .................12
Item 8. Description of Securities ......................................12
PART II
Item 1. Market for Common Equity and Related Stockholder Matters .......14
Item 2. Legal Proceedings ..............................................15
Item 3. Changes in and Disagreements with Accountants ..................15
Item 4. Recent Sales of Unregistered Securities ........................15
Item 5. Indemnification of Directors and Officers ......................19
PART F/S
Consolidated Financial Statements - September 30, 1999 and 1998........F-1 - F-9
PART III
Item 1. Index to Exhibits ..............................................31
Item 2. Description of Exhibits ........................................33
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
History
The Company was formed as a Colorado corporation on September 19, 1983, under
the name Bugs, Inc., for the purpose of using microbial and other agents,
including metallurgy, to enhance oil and natural gas production and to
facilitate the recovery of certain metals. Its initial capitalization was
100,000,000 shares of $.001 par value common stock. In July 1989, the Company
approved Articles of Amendment changing its name to Genesis Services, Inc. In
September 1990, the Company approved additional Articles of Amendment changing
its name to Genesis Capital Corporation (sometimes referred to as the "Colorado
Corporation"). In July 1993, the Company decreased its authorized capital from
100,000,000 shares of $.001 par value common stock to 10,000,000 shares of $.01
par value common stock. At that same time, the Company created a class of
10,000,000 shares of no par value preferred stock.
Since 1994 the activities of the Company have been quite limited, because it
sold its wholly owned subsidiary, U.S. Staffing, Inc., during the 1994-95 fiscal
year. In January of 1996--after its sale--U.S. Staffing, Inc. filed for
bankruptcy and restrained the Colorado Corporation from collecting its note
receivable and claimed to own stock in the Colorado Corporation through its U.S.
Benefit Trust. The Company itself has never declared bankruptcy. In December
1997, the Colorado Corporation's shareholders voted unanimously to settle this
claim by issuing 4,500,000 shares of its common stock, restricted under Rule 144
of the Securities Act of 1933, to be held in trust for U.S. Benefit Trust (U.S.
Benefit Trust still owns these shares, though they have been reduced to 113
shares due to a 1:20 reverse stock split in 1997 and a 1:2000 reverse stock
split in 1999). Also at this time, the Company merged with Lincoln Health Fund,
Inc. (which owned land in Tarrant County, Texas which it planned to use in
building a retirement center), increased its authorized capital to 50,000,000
shares of common stock, and authorized a post-merger reverse split of its common
stock on a 1:20 basis. In December 1997 the current management, Reginald Davis
and Jerry Conditt, joined the Company. For the past three years, the Company has
had no operations. The Company is a shell corporation seeking a business to
acquire.
On December 22, 1998, Genesis Capital Corporation of Nevada (sometimes referred
to as the "Nevada Corporation") was incorporated in Nevada for the purpose of
merging with the Colorado Corporation so as to effect a redomicile to Nevada and
a reverse split of the Company's common stock. The Nevada Corporation was
authorized to issue 50,000,000 shares of $.001 par value common stock and
10,000,000 shares of $.001 par value preferred stock. As part of the Company's
plan to seek an acquisition candidate, on January 11, 1999, the Company paid a
total of 600,000 shares of preferred stock to 5 persons, Ronald Welborn, Henry
Simon, David Newren, Richard Surber, and A-Z Professional Consultants, Inc., for
consulting services related to the redomicile and reverse split of the Company's
stock.
On March 9, 1999, both the Colorado Corporation and the Nevada Corporation
signed Articles of Merger by which the Colorado Corporation's shareholders
received one share of new (Nevada) common stock for every 2,000 shares of old
(Colorado) common stock they owned. The shareholders of both corporations had
previously approved this proposal on due notice, and all outstanding shares of
the Colorado Corporation's common stock were purchased by the new Nevada
Corporation, effectively merging the Colorado Corporation into the Nevada
Corporation, reverse-splitting the Company's stock, and making the Nevada
Corporation the surviving entity. Holders of preferred stock in the old Colorado
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Corporation received preferred stock in the new Nevada Corporation on a 1:1
basis. In March 1999, the Company entered into Consulting Agreements with Hudson
Consulting Group, Inc. and Global Universal, Inc. to obtain additional
assistance in finding and completing an acquisition.
Later in March 1999, the Company began discussions about acquiring Motor Sports
on Dirt, Inc. ("Motor Sports"), which claimed to own NASCAR race tracks in the
South. The parties reached a preliminary agreement on the terms of acquisition,
in anticipation of which, on March 25, the Company authorized an offering for
10,000,000 shares of common stock under Rule 504 of Regulation D. The shares
were offered at Ten Cents ($.10) per share to raise up to but not more than
$1,000,000, and a Form D to that effect was filed with the SEC on March 26,
1999. Proceeds were to be used to pay expenses related to the acquisition of
Motor Sports and to pay off the Company's debts. By April 6, 1999, the Company
had sold 4,100,000 shares to five investors. 215,000 shares were sold for a
$100,000 check delivered before April 6, 1999 (this check was to buy 1,000,000
shares; it was later dishonored, but not before the purchaser absconded with
215,000 shares -- the Company canceled the remaining 785,000 shares and is
considering legal action, though it currently cannot afford to do so). 3,885,000
shares were paid toward debts owed to consultants, Arce International, Inc.,
Hudson Consulting Group, Inc., Chartwell Investments, Inc., and Global
Universal, Inc., incurred for services rendered before April 6, 1999 by
introducing Motor Sports to the Company and handling various accounting,
corporate cleanup, and compliance issues.
On April 6, 1999, the Company signed an Acquisition Agreement with Motor Sports
which would have effected the Company's acquisition of Motor Sports. According
to the Acquisition Agreement, a total of 11,790,000 shares of the Company's
common stock were to be issued to Motor Sports shareholders. However, Motor
Sports and/or its financial backers did not perform certain conditions of the
Acquisition Agreement, which led to extensive negotiations between the parties.
These negotiations yielded an Addendum #1 to the Acquisition Agreement dated May
10, a Debt Settlement Agreement dated June 11 (relating to matters raised in the
Acquisition Agreement), and a Settlement Agreement dated July 19, 1999 (which
the parties intended to resolve all outstanding issues). As a result of these
negotiations and agreements, the contemplated merger with Motor Sports was
finally canceled on or about September 28, 1999. As a result of the canceled
merger, all 11,790,000 shares of common stock, as well as all but 502,360 shares
of the stock issued under Rule 504, were canceled on September 28, 1999.
Also on September 28, 1999, the Company issued 250,000 shares of its common
stock, restricted under Rule 144, to Donald Walker as a settlement of all claims
under the Settlement Agreement dated July 19, 1999; 550,000 shares of common
stock, restricted under Rule 144 to Global Universal for new services relating
to new acquisition opportunities; and 532,640 shares of common stock, restricted
under Rule 144, to Hudson Consulting Group, Inc. for new assistance in preparing
the documents necessary to become a reporting company under the Securities
Exchange Act of 1934 as well as assistance relating to new acquisition
opportunities.
General
During the past three years, the Company has attempted to identify and acquire a
favorable business opportunity. The Company has reviewed and evaluated a number
of business ventures for possible acquisition. The Company has not entered into
any agreement, nor does it have any commitment or understanding to enter into or
become engaged in a transaction, as of the date of this filing. The Company
continues to investigate, review, and evaluate business opportunities as they
become available and will seek to acquire or become engaged in business
opportunities when specific opportunities warrant.
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To date, opportunities have been made available to the Company through its
officers and directors and through professional advisors including securities
broker-dealers and through members of the financial community. It is anticipated
that business opportunities will continue to be available primarily from these
sources.
To a large extent, a decision to participate in a specific business opportunity
may be made upon management's analysis regarding the quality of the other firm's
management and personnel, the asset base of such firm or enterprise, the
anticipated acceptability of new products or marketing concepts, the merit of
the firm's business plan, and numerous other factors which are difficult, if not
impossible, to analyze through the application of any objective criteria.
For the past three years, the Company has had no active business operations, and
has been seeking to acquire an interest in a business with long-term growth
potential. The Company currently has no commitment or arrangement to participate
in a business and cannot now predict what type of business it may enter into or
acquire. It is emphasized that the business objectives discussed herein are
extremely general and are not intended to be restrictive on the discretion of
the Company's management.
There are no plans or arrangements proposed or under consideration for the
issuance or sale of additional securities by the Company prior to the
identification of an acquisition candidate. Consequently, management anticipates
that it may be able to participate in only one potential business venture, due
primarily to the Company's limited capital. This lack of diversification should
be considered a substantial risk, because it will not permit the Company to
offset potential losses from one venture against gains from another.
Selection of a Business
The Company anticipates that businesses for possible acquisition will be
referred by various sources, including its officers and directors, professional
advisors, securities broker-dealers, venture capitalists, members of the
financial community, and others who may present unsolicited proposals. The
Company will not engage in any general solicitation or advertising for a
business opportunity, and will rely on personal contacts of its officers and
directors and their affiliates, as well as indirect associations between them
and other business and professional people. By relying on "word of mouth," the
Company may be limited in the number of potential acquisitions it can identify.
While it is not presently anticipated that the Company will engage unaffiliated
professional firms specializing in business acquisitions or reorganizations,
such firms may be retained if management deems it in the best interest of the
Company.
Compensation to a finder or business acquisition firm may take various forms,
including one-time cash payments, payments based on a percentage of revenues or
product sales volume, payments involving issuance of securities (including those
of the Company), or any combination of these or other compensation arrangements.
Consequently, the Company is currently unable to predict the cost of utilizing
such services.
The Company will not restrict its search to any particular business, industry,
or geographical location, and management reserves the right to evaluate and
enter into any type of business in any location. The Company may participate in
a newly organized business venture or a more established company entering a new
phase of growth or in need of additional capital to overcome existing financial
problems. Participation in a new business venture entails greater risks since in
many
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instances management of such a venture will not have proved its ability; the
eventual market of such venture's product or services will likely not be
established; and the profitability of the venture will be unproved and cannot be
predicted accurately. If the Company participates in a more established firm
with existing financial problems, it may be subjected to risk because the
financial resources of the Company may not be adequate to eliminate or reverse
the circumstances leading to such financial problems.
In seeking a business venture, the decision of management will not be controlled
by an attempt to take advantage of any anticipated or perceived appeal of a
specific industry, management group, product, or industry, but will be based on
the business objective of seeking long-term capital appreciation in the real
value of the Company.
The analysis of new businesses will be undertaken by or under the supervision of
the officers and directors. In analyzing prospective businesses, management will
consider, to the extent applicable, the available technical, financial, and
managerial resources; working capital and other prospects for the future; the
nature of present and expected competition; the quality and experience of
management services which may be available and the depth of that management; the
potential for further research, development, or exploration; the potential for
growth and expansion; the potential for profit; the perceived public recognition
or acceptance of products, services, or trade or service marks; name
identification; and other relevant factors. It is anticipated that the results
of operations of a specific firm may not necessarily be indicative of the
potential for the future because of the requirement to substantially shift
marketing approaches, expand significantly, change product emphasis, change or
substantially augment management, and other factors.
The Company will analyze all available factors and make a determination based on
a composite of available facts, without reliance on any single factor. The
period within which the Company may participate in a business cannot be
predicted and will depend on circumstances beyond the Company's control,
including the availability of businesses, the time required for the Company to
complete its investigation and analysis of prospective businesses, the time
required to prepare appropriate documents and agreements providing for the
Company's participation, and other circumstances.
Acquisition of a Business
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, or other reorganization with
another corporation or entity; joint venture; license; purchase and sale of
assets; or purchase and sale of stock, the exact nature of which cannot now be
predicted. Notwithstanding the above, the Company does not intend to participate
in a business through the purchase of minority stock positions. On the
consummation of a transaction, it is likely that the present management and
shareholders of the Company will not be in control of the Company. In addition,
a majority or all of the Company's directors may, as part of the terms of the
acquisition transaction, resign and be replaced by new directors without a vote
of the Company's shareholders.
In connection with the Company's acquisition of a business, the present
shareholders of the Company, including officers and directors, may, as a
negotiated element of the acquisition, sell a portion or all of the Company's
Common Stock held by them at a significant premium over their original
investment in the Company. As a result of such sales, affiliates of the entity
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participating in the business reorganization with the Company would acquire a
higher percentage of equity ownership in the Company. Management does not intend
to actively negotiate for or otherwise require the purchase of all or any
portion of its stock as a condition to or in connection with any proposed merger
or acquisition. Although the Company's present shareholders did not acquire
their shares of Common Stock with a view towards any subsequent sale in
connection with a business reorganization, it is not unusual for affiliates of
the entity participating in the reorganization to negotiate to purchase shares
held by the present shareholders in order to reduce the amount of shares held by
persons no longer affiliated with the Company and thereby reduce the potential
adverse impact on the public market in the Company's common stock that could
result from substantial sales of such shares after the business reorganization.
Public investors will not receive any portion of the premium that may be paid
in the foregoing circumstances. Furthermore, the Company's shareholders may not
be afforded an opportunity to approve or consent to any particular stock buy-out
transaction.
In the event sales of shares by present shareholders of the Company, including
officers and directors, is a negotiated element of a future acquisition, a
conflict of interest may arise because directors will be negotiating for the
acquisition on behalf of the Company and for sale of their shares for their own
respective accounts. Where a business opportunity is well suited for acquisition
by the Company, but affiliates of the business opportunity impose a condition
that management sell their shares at a price which is unacceptable to them,
management may not sacrifice their financial interest for the Company to
complete the transaction. Where the business opportunity is not well suited, but
the price offered management for their shares is high, Management will be
tempted to effect the acquisition to realize a substantial gain on their shares
in the Company. Management has not adopted any policy for resolving the
foregoing potential conflicts, should they arise, and does not intend to obtain
an independent appraisal to determine whether any price that may be offered for
their shares is fair. Stockholders must rely, instead, on the obligation of
management to fulfill its fiduciary duty under state law to act in the best
interests of the Company and its stockholders.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of the transaction, the Company may agree to register such securities either at
the time the transaction is consummated, under certain conditions, or at
specified times thereafter. Although the terms of such registration rights and
the number of securities, if any, which may be registered cannot be predicted,
it may be expected that registration of securities by the Company in these
circumstances would entail substantial expense to the Company.
The issuance of substantial additional securities and their potential sale into
any trading market which may develop in the Company's securities may have a
depressive effect on such market.
While the actual terms of a transaction to which the Company may be a party
cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to structure the acquisition as a so-called
"tax-free" event under sections 351 or 368(a) of the Internal Revenue Code of
1986 (the "Code"). In order to obtain tax-free treatment under section 351 of
the Code, it would be necessary for the owners of the acquired business to own
80% or more of the voting stock of the surviving entity. In such event, the
shareholders of the Company would retain less than 20% of the issued and
outstanding shares of the surviving entity. Section 368(a)(1) of the Code
provides for tax- free treatment of certain business reorganizations between
corporate entities where one corporation is merged with or acquires the
securities or assets of another corporation. Generally, the Company will be the
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acquiring corporation in such a business reorganization, and the tax-free status
of the transaction will not depend on the issuance of any specific amount of the
Company's voting securities. It is not uncommon, however, that as a negotiated
element of a transaction completed in reliance on section 368, the acquiring
corporation will issue securities in such an amount that the shareholders of the
acquired corporation will hold 50% or more of the voting stock of the surviving
entity. Consequently, there is a substantial possibility that the shareholders
of the Company immediately prior to the transaction would retain less than 50%
of the issued and outstanding shares of the surviving entity. Therefore,
regardless of the form of the business acquisition, it may be anticipated that
stockholders immediately prior to the transaction will experience a significant
reduction in their percentage of ownership in the Company.
Notwithstanding the fact that the Company is technically the acquiring entity in
the foregoing circumstances, generally accepted accounting principles will
ordinarily require that such transaction be accounted for as if the Company had
been acquired by the other entity owning the business and, therefore, will not
permit a write-up in the carrying value of the assets of the other company.
The manner in which the Company participates in a business will depend on the
nature of the business, the respective needs and desires of the Company and
other parties, the management of the business, and the relative negotiating
strength of the Company and such other management.
The Company will participate in a business only after the negotiation and
execution of appropriate written agreements. Although the terms of such
agreements cannot be predicted, generally such agreements will require specific
representations and warranties by all of the parties thereto, will specify
certain events of default, will detail the terms of closing and the conditions
which must be satisfied by each of the parties prior to such closing, will
outline the manner of bearing costs if the transaction is not closed, will set
forth remedies on default, and will include miscellaneous other terms.
Operation of Business After Acquisition
The Company's operation following its acquisition of a business will be
dependent on the nature of the business and the interest acquired. The Company
is unable to predict whether the Company will be in control of the business or
whether present management will be in control of the Company following the
acquisition. It may be expected that the business will present various risks,
which cannot be predicted at the present time.
Governmental Regulation
It is impossible to predict the government regulation, if any, to which the
Company may be subject until it has acquired an interest in a business. The use
of assets and/or conduct of businesses which the Company may acquire could
subject it to environmental, public health and safety, land use, trade, or other
governmental regulations and state or local taxation. In selecting a business in
which to acquire an interest, management will endeavor to ascertain, to the
extent of the limited resources of the Company, the effects of such government
regulation on the prospective business of the Company. In certain circumstances,
however, such as the acquisition of an interest in a new or start-up business
activity, it may not be possible to predict with any degree of accuracy the
impact of government regulation. The inability to ascertain the effect of
government regulation on a prospective business activity will make the
acquisition of an interest in such business a higher risk.
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Competition
The Company will be involved in intense competition with other business
entities, many of which will have a competitive edge over the Company by virtue
of their stronger financial resources and prior experience in business. There is
no assurance that the Company will be successful in obtaining suitable
investments.
Employees
The Company is a development stage company and currently has no employees.
Executive officers will devote only such time to the affairs of the Company as
they deem appropriate, which is estimated to be approximately 20 hours per month
per person. Management of the Company expects to use consultants, attorneys, and
accountants as necessary, and does not anticipate a need to engage any full-time
employees so long as it is seeking and evaluating businesses. The need for
employees and their availability will be addressed in connection with a decision
whether or not to acquire or participate in a specific business industry.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operations
The Company's plan of operations for the coming year, as discussed above, is to
identify and acquire a favorable business opportunity. The Company does not plan
to limit its options to any particular industry, but will evaluate each
opportunity on its merits. The Company anticipates that its owners, affiliates,
and consultants will provide it with sufficient capital to continue operations
until the end of the first quarter of 2000, but there can be no assurance that
this expectation will be fully realized.
Results of Operations
Fiscal Years ending September 30, 1999 and 1998
The Company had no revenue from continuing operations for the periods ended
September 30, 1999 and 1998.
Property taxes (on its land) for the period ended September 30, 1999 were
$15,236, compared to $16,922 for the period ended September 30, 1998. General
and administrative expenses for the period ended September 30, 1999 were
$15,558, compared to $0.00 for the year ended September 30, 1998. General and
administrative expenses for fiscal year 1999 consisted of expenses to keep the
Company in good corporate standing, fees to Transfer Agents, and minimal
expenses for office and bank account administration.
The Company had a net loss of $26,175 for the period ended September 30, 1999,
and a net loss of $16,922 for the year ended September 30, 1998. The Company's
net losses for fiscal 1999 and 1998 were attributable to property taxees and
general and administrative expenses.
The Company does not expect to generate any meaningful revenue or incur
operating expenses unless and until it acquires an interest in an operating
company.
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Liquidity and Capital Resources
At September 30, 1999 the Company had one major asset, an investment in real
estate located in Tarrant County, Texas, valued at $600,000. The Company is
currently authorized to issue 50,000,000 shares of common stock, of which
2,067,911 shares were issued and outstanding as of September 30, 1999. The
Company has recently issued 532,640 shares of common stock, restricted pursuant
to Rule 144, to Hudson Consulting Group, Inc. in order to pay the costs of
becoming a reporting company under the Securities Exchange Act of 1934.
Management is hopeful that becoming a reporting company will increase the number
of prospective business ventures that may be available to the Company.
Management believes that the Company has sufficient resources to meet the
anticipated needs of the Company's operations through at least the first
calendar quarter of 2000. However, there can be no assurances to that effect, as
the Company has no revenues and the Company's need for capital may change
dramatically if it acquires an interest in a business opportunity during that
period.
The Company's current operating plan is to (i) handle the administrative and
reporting requirements of a public company; and (ii) search for potential
businesses, products, technologies and companies for acquisition. At present,
the Company has no understandings, commitments or agreements with respect to the
acquisition of any business, product, technology or company and there can be no
assurance that the Company will identify any such business, product, technology
or company suitable for acquisition in the future. Further, there can be no
assurance that the Company would be successful in consummating any acquisition
on favorable terms or that it will be able to profitably manage the business,
product, technology or company it acquires. If the Company is unable to
participate in a business venture by the end of the first calendar quarter of
2000, it may require additional capital to continue its search for a business
venture and avoid dissolution. There is no assurance additional capital will be
available to the Company on acceptable terms.
Impact of Year 2000
General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non- IT Systems. The Year 2000
Issue is the result of computer programs being written using two digits rather
than four to define the applicable year. Any of the Company's computer programs,
hardware, or embedded chips that have date-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of operations including,
among other things, a temporary inability to process transactions, send
invoices, or engage in normal business activities.
The Company's Efforts to Remedy the Year 2000 Issue. The Company currently owns
no computer equipment and is not dependent on computers for its internal
operations.
Nature and Level of Importance of Third Parties and their Exposure to the Year
2000. Other than payroll and banking relationships, the Company has no other
significant direct interfaces with third party vendors. The Company currently
has no operations, and thus is not reliant on any key vendors who may or may not
be Year 2000 compliant. Until the Company acquires a business, it is impossible
to evaluate what the specific Year 2000 issues are which will need to be
addressed. The Company plans to query its potential acquisition targets about
their level of Year 2000 compliance. To date, the Company is not aware of any
external agent with a Year 2000 issue that would materially impact the Company's
results of operations, liquidity, or capital resources. The Company has no means
of ensuring that external agents will be Year 2000 ready. The inability of
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external agents to complete their Year 2000 resolution process in a timely
fashion could materially impact the Company. The effect of noncompliance by
external agents is not determinable at this time. The Company currently has no
contingency plans in place to deal with the Year 2000 issue. The Company plans
to evaluate the status of the Year 2000 issue by the end of November 1999 and
determine whether a contingency plan is necessary.
ITEM 3. DESCRIPTION OF PROPERTY
The Company owns one parcel of real property: approximately 10.9 acres on
Meadowbrook drive, City of Fort Worth, Texas, Abstract 1133, tracts 1C, 1C1, 1K,
1L, and Lot 2B of Bullard subdivision, Fort Worth, Texas. The land was purchased
and owned by Lincoln Health Fund, Inc., a wholly owned subsidiary of the
Company. To the Company's best knowledge, the property is not currently the
subject of any mortgage, lien or encumbrance other than an ad valorem tax lien
of approximately $36,000 for property taxes, which are being paid under a
payment plan of $500 per month.
The Company does not currently have any policy with respect to real estate
investment, as it does not plan to engage in the business of real estate
investment. The Company does not plan to invest in other pieces of real property
except as integral to the operations of a business it acquires.
The single parcel of real property is currently zoned for multi-family use. The
Company holds title to the land in fee simple. It is undeveloped, raw land
situated across the street from a high school. The Company intended in 1997 to
use the land to build a retirement center, which use the Company believed and
continues to believe the land is suitable for. However, the plan to build a
retirement center is no longer in effect, and the land may be used for any
purpose consistent with its zoning for multi-family use. There is, however, no
current plan to develop or renovate the property. The land is not subject to any
appreciable competitive condition other than general market conditions for real
estate sales. In the opinion of management, the property currently has no need
to be covered by insurance, since it is raw land with no improvements.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of September 30, 1999, the number and
percentage of outstanding shares of common stock which, according to the
information supplied to the Company, were beneficially owned by (i) each current
director of the Company, (ii) each current executive officer of the Company,
(iii) all current directors and executive officers of the Company as a group,
and (iv) each person who, to the knowledge of the Company, is the beneficial
owner of more than 5% of the Company's outstanding common stock. Except as
otherwise indicated, the persons named in the table below have sole voting and
dispositive power with respect to all shares beneficially owned, subject to
community property laws (where applicable).
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Title of Class Name and Address of Beneficial Amount and nature of Percent of Class
Ownership Beneficial Ownership
Common Global Universal, Inc.(1) 550,000 26.6%
Stock P.O. Box 6653
Fort Worth, TX 76115
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Common Hudson Consulting Group, Inc. 532,640 25.8%
Stock 268 West 400 South, Ste. 300
Salt Lake City, UT 84101
Common Donald Walker 250,000 12.1%
Stock 1501 Azure Hills
Van Buren, AR 72956
Common Arce International, Inc 200,126 9.7%
Stock Apdo. 30
P.O. Box 60326
Houston, 77205
Common Reginald Davis 60,076 2.9%
Stock (President & Director) (610,076)(2) (29.5%)(2)
11701 South Freeway
Burleson, TX 76028
Common Jerry Conditt 35,051 1.7%
Stock (Vice Pres. & Director)
11701 South Freeway
Burleson, TX 76028
Common All Executive Officers and 95,000 4.6%
Stock Directors as a Group (645,000)(2) (31.2%)(2)
(Davis & Conditt)
</TABLE>
(1) Global Universal, Inc. is controlled by Reginald Davis.
(2) Including the Global Universal stock with Mr. Davis' personal stock.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
The following two persons constitute all of the Company's Executive Officers and
Directors as of 9/30/99:
Name Age Position
Reginald L. Davis 44 President/CEO and Director
Jerry Conditt 64 Vice President/Secretary/Treasurer
and Director
All executive officers are elected by the Board and hold office until the next
Annual Meeting of stockholders and until their successors are elected and
qualify.
Reginald L. Davis was appointed President and Director of the Company on
December 8, 1997. Mr. Davis is an attorney specializing in international
business and corporate law. He is presently a partner in the law firm of
Martinez, Rodriguez y Asociados, S. C., of Mexico City. Mr. Davis has 20 years
of experience in the legal field. Mr. Davis received a Master of Laws degree in
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1984 from Harvard Law School, a Juris Doctor degree in 1983 from the Universidad
Iberoamericana, and a Bachelor of Arts degree, summa cum laude (Government), in
1978 from Georgetown University.
Jerry Conditt was appointed Vice President, Secretary, Treasurer and
Director of the Company on December 8, 1997. Mr. Conditt has over 30 years of
experience in the business field. His experience includes starting, purchasing,
operating and selling various businesses. He is presently engaged in automobile
sales and financing. Mr. Conditt has a Bachelor of Business Administration
degree from North Texas State University.
ITEM 6. EXECUTIVE COMPENSATION
No cash compensation was paid to any of the Company's executive officers during
the fiscal years ended September 30, 1998 or 1999. No cash compensation has been
paid to any of the executive officers since the beginning of 1999, and it is not
expected any such compensation will be paid during the remainder of 1999. The
executive officers did receive the following issuances of stock only, which may
have been in the nature of compensation: Reginald Davis was issued 150,000
shares of common stock, restricted under Rule 144, on February 10, 1998; he was
issued 60,000 shares of common stock, restricted under Rule 144, on April 2,
1999. Jerry Conditt was issued 25,000 shares of common stock, restricted under
Rule 144, on February 10, 1998; he was issued 35,000 shares of common stock,
restricted under Rule 144, on April 2, 1999.
The Company has no agreement or understanding, express or implied, with any
officer, director, or principal stockholder, or their affiliates or associates,
regarding employment with the Company or compensation for services. The Company
has no plan, agreement, or understanding, express or implied, with any officer,
director, or principal stockholder, or their affiliates or associates, regarding
the issuance to such persons of any shares of the Company's authorized and
unissued common stock. There is no understanding between the Company and any of
its present stockholders regarding the sale of a portion or all of the common
stock currently held by them in connection with any future participation by the
Company in a business. There are no other plans, understandings, or arrangements
whereby any of the Company's officers, directors, or principal stockholders, or
any of their affiliates or associates, would receive funds, stock, or other
assets in connection with the Company's participation in a business. No advances
have been made or contemplated by the Company to any of its officers, directors,
or principal stockholders, or any of their affiliates or associates.
There is no policy that prevents management from adopting a plan or agreement in
the future that would provide for cash or stock based compensation for services
rendered to the Company.
On acquisition of a business, it is possible that current management will resign
and be replaced by persons associated with the business acquired, particularly
if the Company participates in a business by effecting a stock exchange, merger,
or consolidation as discussed under the "BUSINESS" heading above. In the event
that any member of current management remains after effecting a business
acquisition, that member's time commitment and compensation will likely be
adjusted based on the nature and location of such business and the services
required, which cannot now be foreseen.
Compensation of Directors
The Company's directors are not compensated for their services as directors of
the Company.
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has made several issuances of stock to its President, Reginald
Davis, or to entities controlled by him. On February 10, 1998, the Company
issued 150,000 shares of common stock, restricted under Rule 144, to Mr. Davis
as compensation for services rendered in managing Genesis. On April 2, 1999, the
Company issued 60,000 shares of common stock, restricted under Rule 144, for
additional services rendered to Genesis. On April 6, 1999, the Company issued
1,305,000 shares of its common stock under Rule 504 to Global Universal, Inc., a
corporation which is more than 50% owned by a trust of which Mr. Davis is the
trustee, in exchange for consulting services rendered pursuant to a written
contract (all of these shares were subsequently canceled on September 28, 1999
when the merger with Motor Sports was canceled). On September 28, 1999, the
Company issued 550,000 shares of its common stock, restricted under Rule 144, to
Global Universal, Inc. for additional services rendered pursuant to a consulting
contract.
The Company has made several issuances of stock to its Vice President, Jerry
Conditt, and a relative of his. On February 10, 1998, the Company issued 25,000
shares of common stock, restricted under Rule 144, to Mr. Conditt for services
rendered in managing Genesis. Also on February 10, 1998, the Company issued
5,000 shares of common stock, restricted under Rule 144, to Mitchell Conditt,
the son of Jerry Conditt, for services rendered on behalf of Lincoln Health
Fund. On April 2, 1998, the Company issued 35,000 shares of common stock,
restricted under Rule 144, to Mr. Conditt for additional services rendered
pursuant to a consulting contract.
ITEM 8. DESCRIPTION OF SECURITIES
The Company is authorized to issue 50,000,000 shares of common stock, par value
$0.001 per share, of which 2,067,911 shares are issued and outstanding as of
September 30, 1999. The Company is also authorized to issue 10,000,000 shares of
preferred stock, par value $0.001 per share, of which 932,755 shares are issued
and outstanding as of September 30, 1999. Holders of both the common and
preferred stock are entitled to one vote per share on each matter submitted to a
vote at any meeting of stockholders. Neither the holders of common stock nor of
preferred stock have cumulative voting rights. The Company's board of directors
has authority, without action by the Company's stockholders, to issue all or any
portion of the authorized but unissued shares of common stock, which would
reduce the percentage ownership in the Company of its stockholders and which may
dilute the book value of the common stock. Likewise, the Company's board of
directors has authority, without action by the holders of preferred stock, to
issue all or any portion of the authorized but unissued shares of preferred
stock so long as such shares are on a parity with or junior to the rights of the
preferred stock, which would reduce the percentage ownership of the preferred
stock holders and which may dilute the book value of the stock.
Holders of either the Company's common or preferred stock have no pre-emptive
rights to acquire additional shares of stock. The common stock is not subject to
redemption and carries no subscription or conversion rights. In the event of
liquidation of the Company, the shares of common stock are entitled to share
equally in corporate assets after satisfaction of all liabilities. The preferred
stock carries no subscription rights, but one share of preferred stock is
convertible into ten shares of common stock at the option of the shareholder,
and the preferred stock is redeemable at the option of the Company or of the
shareholder upon certain conditions.
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<PAGE>
Holders of the common stock are entitled to receive such dividends as the board
of directors may from time to time declare out of funds legally available for
the payment of dividends. Holders of the preferred stock are entitled to receive
a dividend of $0.60 per annum when, as, and if declared by the board of
directors out of funds at the time legally available for such purpose. The
Company has not paid dividends on either its common stock or its preferred
stock, and it does not anticipate that it will pay dividends in the foreseeable
future.
Dividend, Voting and Preemption Rights
The Company has two classes of authorized shares: $.001 par value common stock
and $.001 par value preferred stock. Holders of common stock are entitled to
receive ratably such dividends as may be declared by the Board of Directors out
of funds legally available therefor. Holders of preferred stock are entitled to
receive a dividend of $0.60 per annum when, as, and if declared by the board of
directors out of funds at the time legally available for such purpose. The
Company has not paid dividends on either its common stock or its preferred
stock, and it does not anticipate that it will pay dividends in the foreseeable
future. For more information on the Company's dividend policy, see "Part II.
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters."
Holders of both the Company's common and preferred stock are entitled to one
vote for each share held of record on all matters submitted to a vote of the
security holders. Neither class of stock is entitled to cumulative voting
rights.
In the event of a liquidation, dissolution or winding up of the Company, holders
of preferred stock are entitled to a liquidation preference to receive an amount
equal to the dividends accrued and unpaid thereon, without interest, and a sum
equal to $10 per share before any payment shall be made to holders of common
stock or any other class of stock with liquidation rights junior to the
preferred stock, but only if the liquidation rights of stockholders with senior
liquidation rights are paid in full. Such payment or distribution shall be made
ratably to all holders of preferred stock. The holders of common stock are
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preference of any other securities. Neither the preferred
stock nor the common stock have any preemptive or other subscription rights.
There are no redemption or sinking fund provisions applicable to the common
stock or preferred stock. All outstanding shares of common stock and preferred
stock are duly authorized, fully paid, and nonassessable.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS
The Company's common stock is traded on the OTC Bulletin Board under the symbol
"GNCP."
The table below sets forth the high and low sales prices for the Company's
Common Stock for each quarter of fiscal 1998 and fiscal 1999 (for fiscal years
ended September 30, 1998 and 1999). The quote given for the quarter ended
December 31, 1997 reflects a 1 for 20 reverse split which the Company effected
on or about December 8, 1997. The quote given for the quarter ended June 30,
1999 reflects a 1 for 2000 reverse split which the Company effected on or about
March 9, 1999. The quotations below reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions:
Quarter Ended High Low
------- ----- ---- ---
F.Y. 1998 12/31/97 $1.75(1) $0.03
- ---------
3/31/98 $1.75 $1.69
6/30/98 N/A(2) N/A
9/30/98 $0.88 $0.88
Quarter Ended High Low
------- ----- ---- ---
F.Y. 1999 12/31/98 $1.06 $0.19
- ---------
3/31/99 $0.13 $0.06
6/30/99 $7.00(3) $1.00
9/30/99 $3.50 $.88
Record Holders
As of September 30, 1999 there were 237 shareholders of record holding a total
of 2,067,911 shares of Common Stock. The holders of the Common Stock are
entitled to one vote for each share held of record on all matters submitted to a
vote of stockholders. Holders of the Common Stock have no preemptive rights and
- --------
(1)Prices reflect a 1 for 20 reverse split effective Dec. 8, 1997.
(2)Data for second quarter 1998 not available.
(3)Prices reflect a 1 for 2000 reverse split effective March 9, 1999.
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<PAGE>
no right to convert their Common Stock into any other securities. There are no
redemption or sinking fund provisions applicable to the Common Stock.
Dividends
The Company has not declared any dividends since inception and does not
anticipate paying any dividends in the foreseeable future. The payment of
dividends is within the discretion of the Board of Directors and will depend on
the Company's earnings, capital requirements, financial condition, and other
relevant factors. There are no restrictions that currently limit the Company's
ability to pay dividends on its Common Stock other than those generally imposed
by applicable state law.
ITEM 2. LEGAL PROCEEDINGS
On September 30, 1999, Biorelease Corporation filed a petition in the district
court of Harris County, Texas, 269th judicial district, involving a March 1994
contract with Genesis by which 150,000 shares of Genesis preferred stock were
given to Biorelease in exchange for 1.5 million shares of its common stock.
Biorelease has sought relief in the form of an injunction preventing transfer of
its 1.5 million shares, or rescission of the contract, or damages of $1,300,000.
Amicable settlement negotiations are currently underway, though there can be no
assurance the suit will be settled at this time.
In 1998, the county of Tarrant County, Texas and the city of Fort Worth, Texas
filed a lawsuit in the district court for Tarrant County, Texas seeking relief
in the form that Lincoln Health Fund, Inc. pay approximately $36,000 in
allegedly unpaid ad valorem and property taxes. The suit has been settled
subject to a payment plan.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
In its two most recent fiscal years or any later interim period, the Company has
had no disagreements with its independent accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The following is a list of unregistered securities sold by the Company within
the last three years including the date sold, the title of the securities, the
amount sold, the identity of the person who purchased the securities, the price
or other consideration paid for the securities, and the section of the
Securities Act of 1933 under which the sale was exempt from registration as well
as the factual basis for claiming such exemption.
On November 30, 1996, the Company issued 20,000 shares of preferred stock to
Zeros USA, Inc. in exchange for services rendered, exempt pursuant to section
4(2) of the Securities Act of 1933, based on the facts that the issuance was an
isolated private transaction by the Company which did not involve a public
offering, there was only one offeree, the offeree did not resell the stock but
continues to hold the stock to this day, there was no subsequent or
contemporaneous public offering of the preferred stock, the stock was not broken
down into small denominations, and the negotiations for the sale took place
directly between the offeree and the Company.
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<PAGE>
On January 31, 1997, the Company issued a total of 15,000 shares of its
preferred stock to REP TRUST, in exchange for services rendered, exempt pursuant
to section 4(2) of the Securities Act of 1933, based on the facts that the
issuance was an isolated private transaction by the Company which did not
involve a public offering, there was only one offeree, the offeree did not
resell the stock but continues to hold the stock to this day, there was no
subsequent or contemporaneous public offering of the preferred stock, the stock
was not broken down into small denominations, and the negotiations for the sale
took place directly between the offeree and the Company.
On March 7, 1997, the Company issued a total of 15,000 shares of its preferred
stock to ECO PAL, Inc. in exchange for services rendered, exempt pursuant to
section 4(2) of the Securities Act of 1933, based on the facts that the issuance
was an isolated private transaction by the Company which did not involve a
public offering, there was only one offeree, there was no subsequent or
contemporaneous public offering of the preferred stock, the stock was not broken
down into small denominations, and the negotiations for the sale took place
directly between the offeree and the Company.
On April 14, 1997, the Company issued a total of 20,000 shares of its preferred
stock to Zeros USA, Inc. in exchange for services rendered, exempt pursuant to
section 4(2) of the Securities Act of 1933, based on the facts that the issuance
was an isolated private transaction by the Company which did not involve a
public offering, there was only one offeree, the offeree did not resell the
stock but continues to hold the stock to this day, there was no subsequent or
contemporaneous public offering of the preferred stock, the stock was not broken
down into small denominations, and the negotiations for the sale took place
directly between the offeree and the Company.
On December 8, 1997, the Company issued a total of 85,495,184 shares of common
stock (pre-1:20 reverse split) to Churchill Advancements, Inc., the sole
shareholder of the Lincoln Health Fund, Inc., whereby the Company acquired 100%
ownership of the Lincoln Health Fund, Inc. exempt pursuant to section 4(2) of
the Securities Act of 1933, based on the facts that the issuance was an isolated
private transaction by the Company which did not involve a public offering,
there was only one offeree, there was no subsequent or contemporaneous public
offering of the common stock, the stock was not broken down into small
denominations, and the negotiations for the sale took place directly between the
offeree and the Company.
On February 10, 1998 the Company issued a total of 175,000 shares of its common
stock (150,000 shares to its President, Reginald Davis, as compensation for
services rendered in managing the Company; and 25,000 shares to its Vice
President, Jerry Conditt, for the same consideration), exempt pursuant to
section 4(2) of the Securities Act of 1933, based on the facts that the issuance
was an isolated private transaction by the Company which did not involve a
public offering, there were only two offerees, both offerees had a special
status as officers or directors of the Company, the offerees did not resell the
stock but continue to hold the stock to this day, there was no subsequent or
contemporaneous public offering of the common stock, the stock was not broken
down into small denominations, and the negotiations for the sale took place
directly between the offeree and the Company.
On March 11, 1998, the Company issued a total of 28,500 shares of its common
stock to 4 individuals (200 shares to the Susan Smith IRA; 20,000 shares to
Larry Hillis; and 8,300 shares to Jim and Judy Cornett) according to the terms
of its convertible preferred stock. Each of the foregoing had held shares of the
convertible preferred stock and elected to convert the shares into common stock,
exempt pursuant to section 4(2) of the Securities Act of 1933, based on the
facts that the issuance was an isolated private transaction by the Company which
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<PAGE>
did not involve a public offering, there were only four offerees, the offerees
were part of a special, well-defined class of previous preferred stock holders,
the offerees did not resell the stock but continue to hold the stock to this
day, there was no subsequent or contemporaneous public offering of the common
stock, the stock was not broken down into small denominations, and the
negotiations for the sale took place directly between the offerees and the
Company.
On April 30, 1998, the Company issued a total of 27,000 shares to Country Maid
Farms, Inc. according to the terms of its convertible preferred stock. The
foregoing shareholder had held shares of the convertible preferred stock and
elected to convert the shares into common stock exempt pursuant to section 4(2)
of the Securities Act of 1933, based on the facts that the issuance was an
isolated private transaction by the Company which did not involve a public
offering, there was only one offeree, the offeree was part of a special,
well-defined class of previous preferred stock holders, the offeree did not
resell the stock but continues to hold the stock to this day, there was no
subsequent or contemporaneous public offering of the common stock, the stock was
not broken down into small denominations, and the negotiations for the sale took
place directly between the offeree and the Company.
On May 19, 1998, the Company issued a total of 105,000 shares of its common
stock to Agri Capital Trust according to the terms of its convertible preferred
stock. The foregoing shareholder had held shares of the convertible preferred
stock and elected to convert the shares into common stock exempt pursuant to
section 4(2) of the Securities Act of 1933, based on the facts that the issuance
was an isolated private transaction by the Company which did not involve a
public offering, there was only one offeree, the offeree was part of a special,
well-defined class of previous preferred stock holders, the offeree did not
resell the stock but continues to hold the stock to this day, there was no
subsequent or contemporaneous public offering of the common stock, the stock was
not broken down into small denominations, and the negotiations for the sale took
place directly between the offeree and the Company.
On May 28, 1998, the Company issued a total of 182,500 shares of its common
stock to 3 persons (25,000 shares to Agri Capital Trust; 150,000 shares to
American National Financial Services, and 7,500 shares to Trade Americas, Inc.)
according to the terms of its convertible preferred stock. The foregoing
shareholders had held shares of the convertible preferred stock and elected to
convert the shares into common stock exempt pursuant to section 4(2) of the
Securities Act of 1933, based on the facts that the issuance was an isolated
private transaction by the Company which did not involve a public offering,
there were only three offerees, the offerees were part of a special,
well-defined class of previous preferred stock holders, all 3 of the offerees
did not resell the stock but continue to hold the stock to this day, there was
no subsequent or contemporaneous public offering of the common stock, the stock
was not broken down into small denominations, and the negotiations for the sale
took place directly between the offerees and the Company.
On June 5, 1998, the Company issued a total of 10,000 shares of its common stock
to Zeros USA, Inc. according to the terms of its convertible preferred stock.
The foregoing shareholder had held shares of the convertible preferred stock and
elected to convert the shares into common stock exempt pursuant to section 4(2)
of the Securities Act of 1933, based on the facts that the issuance was an
isolated private transaction by the Company which did not involve a public
offering, there was only one offeree, the offeree was part of a special,
well-defined class of previous preferred stock holders, the offeree did not
resell the stock but continues to hold the stock to this day, there was no
subsequent or contemporaneous public offering of the common stock, the stock was
not broken down into small denominations, and the negotiations for the sale took
place directly between the offeree and the Company.
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<PAGE>
On June 10, 1998 the Company issued a total of 1,500 shares of its common stock
to Roscoe Hill Hatchery, Inc. according to the terms of its convertible
preferred stock. The foregoing shareholder had held shares of the convertible
preferred stock and elected to convert the shares into common stock exempt
pursuant to section 4(2) of the Securities Act of 1933, based on the facts that
the issuance was an isolated private transaction by the Company which did not
involve a public offering, there was only one offeree, the offeree was part of a
special, well-defined class of previous preferred stock holders, there was no
subsequent or contemporaneous public offering of the common stock, the stock was
not broken down into small denominations, and the negotiations for the sale took
place directly between the offeree and the Company.
On February 9, 1999, the Company issued a total of 600,000 shares of its
preferred stock to 5 persons (150,000 shares to Henry Simon, Esq.; 150,000
shares to David Newren; 150,000 shares to Ronald Welborn; 75,000 shares to
Richard Surber; and 75,000 shares to A Z Professional Consultants, Inc.) in
exchange for consulting services rendered, exempt pursuant to section 4(2) of
the Securities Act of 1933, based on the facts that the stock was offered in an
isolated private transaction by the Company and did not involve a public
offering of stock, there were only five offerees, all offerees were part of a
special, well- defined class of sophisticated financial advisors with special
knowledge of the Company, none of the offerees resold their stock but they
continue to hold the stock to this day (although they have all agreed to allow
the Company to buy back their stock pursuant to the Debt Settlement Agreement
attached as Exhibit 6(viii)), there was no subsequent or contemporaneous public
offering of the preferred stock, the stock was not broken down into small
denominations, and the negotiations for the sale took place directly between the
offerees and the Company.
On March 25, 1999, the Company issued a total of 502,360 shares (post 1:2000
reverse stock split) of its common stock at a price of $.10 per share--an
aggregate of $50,236--pursuant to Rule 504 of Regulation D of the Securities Act
of 1933 to 4 persons (215,000 shares to Erie Holdings, Ltd; 150,000 to Chartwell
Investments, Inc.; 100,000 to Arce International, Inc.; and 37,360 to Hudson
Consulting Group, Inc.). The Company relied on the following facts in
determining that Rule 504 Regulation D was available: (a) an opinion letter from
counsel to the effect that the stock was exempt from registration under federal
law and state law because Erie and Arce were offshore entities not subject to
state blue sky laws, Hudson was a Nevada Corporation exempt under Nevada Statute
Section 90.503(11) limiting the offering to 25 purchasers, and Chartwell was a
Texas corporation exempt under Texas Statute Section 581-5(I)(3) limiting the
offering to 15 persons; (b) the Company was not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act; (c) the Company had a
specific business plan at the time to acquire a specific company, Motor Sports
on Dirt, Inc., to operate Nascar-style race tracks; (d) the aggregate offering
price of all shares offered under Rule 504 in the preceding 12 months did not
exceed $1,000,000 and (e) the Company filed a Form D within 15 days of the first
sale of the shares subject to the offering. The Company also offered to allow
investors to inspect the books and records of the Company.
On April 2, 1999, the Company issued a total of 230,000 shares of its common
stock (post 1:2000 reverse split) to five individuals (100,000 shares to David
Newren; 60,000 shares to Reginald Davis; 35,000 shares to Jerry Conditt; 20,000
shares to Fauniel Rowland, Esq.; and 15,000 shares to Jim Rolfe, Esq.) in
exchange for services rendered, exempt pursuant to section 4(2) of the
Securities Act of 1933, based on the facts that the issuance was an isolated
private transaction by the Company which did not involve a public offering,
there were only five offerees, the offerees were part of a special, well-defined
class of attorneys, consultants, and corporate officers who had rendered
services directly to the Company, none of the offerees have resold the stock
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<PAGE>
but all continue to hold the stock to this day, there was no subsequent or
contemporaneous public offering of the common stock, the stock was not broken
down into small denominations, and the negotiations for the sale took place
directly between the offerees and the Company.
On September 28, 1999, the Company issued a total of 1,332,640 shares of its
common stock to 3 persons (550,000 shares to Global Universal, Inc.; 532,640
shares to Hudson Consulting Group, Inc.; and 250,000 shares to Donald Walker) in
exchange for the following consideration: Global and Hudson for services
rendered in assisting with location and negotiation of mergers and acquisitions
for the Company, and Donald Walker in full and final settlement of disputed
claims relating to the failed merger with Motor Sports on Dirt, Inc. All
issuances were exempt pursuant to section 4(2) of the Securities Act of 1933,
based on the facts that the issuance was an isolated private transaction by the
Company which did not involve a public offering, there were only three offerees,
the offerees were part of a special, well-defined class of sophisticated
financial consultants and officers of Motor Sports, the offerees did not resell
the stock but continue to hold the stock to this day, there was no subsequent or
contemporaneous public offering of the common stock, the stock was not broken
down into small denominations, and the negotiations for the sale took place
directly between the offerees and the Company.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws and section 78.751 of the Nevada Revised Statutes provide
for indemnification of the Company's officers and directors in certain
situations where they might otherwise personally incur liability, judgments,
penalties, fines and expenses in connection with a proceeding or lawsuit to
which they might become parties because of their position with the Company.
Section 78.751. Indemnification of officers, directors, employees and agents;
advancements of expenses, states the following:
1. A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by
or in the right of the corporation, by reason of the fact that
he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit
or proceeding if he acted in good faith and in a manner which
he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its
equivalent, does not, of itself, create a presumption that the
person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any
criminal action or proceeding, he had reasonable cause to
believe that his conduct was unlawful.
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2. A corporation may indemnify an person who was or is a party or
is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corpor-
ation to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or
other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably
incurred by him in connection with the defense or settlement
of the action or suit if he acted in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the corporation. Indemnification may not
be made for any claim, issue or matter as to which such a
person has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable to the
corporation or for amounts paid in settlement to the corpor-
ation, unless and only to the extent that the court in which
the action or suit was brought or other court of competent
jurisdiction determines upon application that in view of all
the circumstances of the case, the person is fairly and
reasonable entitled to indemnity for such expenses as the
court deems proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
subsections 1 and 2, or in defense of any claim, issue or
matter therein, he must be indemnified by the corporation
against expenses, including attorneys' fees, actually and
reasonably incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered
by a court or advanced pursuant to subsection 5, must be made
by the corporation only as authorized in the specific case
upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances. The
determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a
quorum consisting of directors who were not parties
to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of
directors who were not parties to the act, suit or
proceeding so orders, by independent legal counsel in
a written opinion; or
(d) If a quorum consisting of directors who were not
parties tot he act, suit or proceeding cannot be
obtained, by independent legal counsel in a written
opinion.
5. The articles of incorporation, the bylaws or an agreement made
by the corporation may provide that the expenses of officers
and directors incurred in defending a civil or criminal
action, suit or proceeding must be paid by the corporation as
they are incurred and in advance of the final disposition of
the action, suit or proceeding, upon receipt of an undertaking
by or on behalf of the director or officer to repay the
amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the
corporation. The provision of this subsection do not affect
any rights to advancement of expenses to which corporate
personnel other than directors or officers may be entitled
under any contract or otherwise by law.
20
<PAGE>
6. The indemnification and advancement of expenses authorized in
or ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses
may be entitled under the articles of incorporation
or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an
action in his official capacity or an action in
another capacity while holding his office, except
that indemnification, unless ordered by a court
pursuant to subsection 5, may not be made to or on
behalf of any director or officer if a final adjudi-
cation establishes that his acts or omissions
involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of
action.
(b) Continues for a person who has ceased to be a
director, officer, employee or agent and inures to
the benefit of the heirs, executors and
administrators of such a person.
To the extent that indemnification may be related to liability arising under the
Securities Act, the Securities and Exchange Commission takes the position that
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
PART F/S
The Company's audited financial statements for the fiscal years ended September
30, 1999 and 1998 are attached hereto as F-1 through F-9.
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
21
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Audited Financial Reports for Year ending December 31, 1998
Letter From Auditor..........................................................F-2
Balance Sheet...... ........................................................F-3
Statements of Operations.....................................................F-4
Statements of Stockholders' Equity...........................................F-5
Statement of Cash Flows......................................................F-6
Notes to Financial Statements................................................F-7
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
F-1
<PAGE>
CLYDE BAILEY P. C.
Certified Public Accountants
10924 Vance Jackson #404
San Antonio, Texas 78230
(210) 699-1287 (ofc.)
(888) 699-1287+(210) 691-2911 (fax)
Member:
American Institute of CPA's
Texas society of CPA's
Report of Independent Certified Public Accountant
To the Board of Directors and Shareholders
Genesis Capital Corporation of Nevada
We have audited the accompanying consolidated balance sheets of Genesis Capital
Corporation of Nevada (Company) as of September 30, 1999 and 1998, and the
related statements of operations, changes in stockholders' equity, and cash
flows for the years ended September 30, 1999, 1998 and 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company as of
September 30, 1999 and 1998, and the consolidated results of their operations
and their cash flows for the years then ended in conformity with generally
accepted accounting principles.
/S/ Clyde Bailey
Certified Public Accountant
October 20, 1999
F-2
<PAGE>
<TABLE>
<CAPTION>
GENESIS CAPITAL CORPORATION OF NEVADA
Balance Sheet
As of September
1999 1998
---------------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash in Bank $ - $ -
----------------- --------------
Total Current Assets - -
Investments
Investment in Real Estate 600,000 600,000
----------------- --------------
Deferred Tax Benefit 4,619 -
----------------- --------------
Total Assets $ 604,619 $ 600,000
================= ==============
LIABILITIES
Current Liabilities
Accrued Property Taxes $ 32,158 $ 16,922
----------------- --------------
Total Current Liabilities 32,158 16,922
STOCKHOLDERS EQUITY
Preferred Stock, .001 par value, 10,000,000 shares 933 333
Authorized with 932,755 and 332,755 shares issued
and outstanding
Common Stock, .001 par value, 50,000,000 shares 2,068 3
authorized with 2,067,911 and 2,766 shares issued
and
outstanding
Additional paid in capital 9,194,829 9,181,936
Retained Earnings (8,625,369) (8,599,194)
------------------ --------------
Total Stockholders' Equity 572,461 583,078
Total Liabilities and Stockholders' Equity $ 604,619 $ 600,000
================== ==============
</TABLE>
See Notes to Financial Statements
F-3
<PAGE>
<TABLE>
<CAPTION>
GENESIS CAPITAL CORPORATION OF NEVADA
STATEMENTS OF OPERATIONS
For the Years Ended September 30
1999 1998 1997
------------------------ --------------------- ------------------
<S> <C> <C> <C>
Revenues:
Revenues $ - $ - $ -
--------------- ------------- -------------
Total Revenues - - -
Property Taxes 15,236 16,922 -
General & Administrative Expenses: 15,558 - -
--------------- ------------- -------------
Total Expenses 30,794 16,922 -
Net Income Before Tax (30,794) (16,922) -
Income Tax Benefit 4,619 - -
--------------- ------------- -------------
Net Income $ (26,175) $ (16,922) $ -
=============== ============= =============
Earnings Per Share - Basic
Net Income (Loss) per Share $ (1.325) $ (6.118) $ -
Earnings Per Share - Diluted
Net Income (Loss) per Share $ (0.008) $ (0.005) $ -
Weighted Average Shares Outstanding 19,762 2,766 -
Weighted Average Shares Outstanding (Diluted) 3,347,290 3,347,290 -
(Retroactively Restated)
</TABLE>
See Notes to Financial Statements
F-4
<PAGE>
<TABLE>
<CAPTION>
GENESIS CAPITAL CORPORATION OF NEVADA
STATEMENT OF STOCKHOLDERS' EQUITY
Additional
Common Stock Preferred Stock Paid-in Accumulated
Shares At Par Shares At Par Capital Deficit Total
-------- ------- -------- -------- ------- --------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance October 1, 1996
(Retroactively Restated) 5,532,016 5,532 332,755 333 9,176,407 (8,582,272) 600,000
Net Income (Loss) - - - - - - -
---------- -------- --------- -------- ------------ ------------- ----------
Balance, September 30, 1997 5,532,016 5,532 332,755 333 9,176,407 (8,582,272) 600,000
Net Income (Loss) - - - - - (16,922) (16,922)
---------- -------- --------- -------- ------------ ------------- ----------
Balance, September 30, 1998 5,532,016 5,532 332,755 333 9,176,407 (8,599,194) 583,078
Stock Reverse 2000/1 (5,529,250) (5,529) - - 5,529 - -
Effective March 9, 1999
Stock Issued 2,065,145 2,065 600,000 600 12,893 - 15,558
Net Income (Loss) - - - - - (26,175) (26,175)
---------- -------- -------- -------- ------------ ------------- ----------
Balance September 30, 1999 2,067,911 $ 2,068 932,755 $ 933 $ 9,194,829 $ (8,625,369) $ 572,461
========== ======== ========== ======== ============ ============= ==========
</TABLE>
See Notes to Financial Statements
F-5
<PAGE>
<TABLE>
<CAPTION>
GENESIS CAPITAL CORPORATION OF NEVADA
STATEMENTS OF CASH FLOWS
For the Years Ended September 30
1999 1998 1997
----------------- ---------------- --------------
<S> <C> <C> <C>
Cash flows - Operating Activities:
Net Income per Income Statement $ (26,175) $ (16,922) -
Adjustments: - - -
Depreciation - - -
Escrow Deposit - - -
Loan Receivable - - -
Accrued Property Tax Benefit 15,236 16,922 -
Deferred Income Tax Benefit (4,619) - -
Accounts Receivable - - -
---------------- ---------------- -------------
Total from Operating Activities (15,558) - -
Cash Flows - Investing Activities
Fixed Assets - - -
---------------- ---------------- -------------
Total for Investing Activities - - -
Cash Flows - Financing Activities
Common Stock/Paid-In-Capital 15,558 - -
Other - - -
---------------- ---------------- -------------
Total from Financing Activities 15,558 - -
Increase in Cash - - -
Cash Balance, Beginning of Year - - -
---------------- ---------------- -------------
Cash Balance, End of Year - - -
================ ================ =============
Supplement Disclosure:
Cash paid during year for:
Interest - - -
Income Taxes - - -
</TABLE>
See Notes to Financial Statements
F-6
<PAGE>
Genesis Capital Corporation of Nevada
Notes to Financial Statements
SUMMARY OF ACCOUNTING POLICIES
NATURE OF BUSINESS
Genesis Capital Corporation (the "Company") was incorporated in the State of
Colorado in 1983. The Company had no revenues or expenses for the years ended
September 30, 1998 and 1997. In the fiscal year ended September 30, 1999 only
minimal activity has been recorded. In March of 1999 the Company filed an
Articles of Merger in the State of Nevada to change the name to Genesis Capital
Corporation of Nevada and to change the par value of the common stock. In
December 1997, the Company merged with Lincoln Health Fund Inc which owned land
in Tarrant County Texas. The company has a total of 50,000,000 authorized common
shares (par value of $.001) with 2,067,911 shares issued and outstanding, and
10,000,000 authorized preferred stock (par value of $,001) with 932,655 shares
issued outstanding as of September 30, 1999.
MARKETABLE SECURITIES
In accordance with Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," (SFAS 115),
the Company classifies its investment portfolio according to the provisions of
SFAS 1 15 as either held to maturity, trading, or available for sale. At
September 30, 1999, the Company did not have any investments in its investment
portfolio classified as available for sale and held to maturity.
INCOME TAXES
The Company accounts for income taxes pursuant to the provisions of the
Financial Accounting Standards Board Statement No. 109, "Accounting for Income
Taxes", which requires an asset and liability approach to calculating deferred
income taxes. The asset and liability approach requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of
temporary differences between the carrying amounts and the tax basis of assets
and liabilities.
ACCOUNTING METHOD
The Company's financial statements are prepared using the accrual method of
accounting. Revenues are recognized when earned and expenses when incurred.
Fixed assets are stated at cost. Depreciation and amortization using the
straight-line method for financial reporting purposes and accelerated methods
for income tax purposes. The Company does not have any fixed assets at this
time.
No depreciation expense for the periods ended September 30, 1999, 1998 or 1997
has been recorded.
EARNINGS PER COMMON SHARE
The Company adopted Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share," which simplifies the computation of earnings per share requiring the
restatement of all prior periods.
Basic earnings per share are computed on the basis of the weighted average
number of common shares outstanding during each year.
Diluted earnings per share are computed on the basis of the weighted average
number of common shares and dilutive securities outstanding. Dilutive securities
having an anti-dilutive effect on diluted earnings per share are excluded from
the calculation.
F-7
<PAGE>
Genesis Capital Corporation of Nevada
Notes to Financial Statements
UNINSURED CASH BALANCES
The Company maintains its cash balances at several financial institutions.
Accounts at the institutions are secured by the Federal Deposit Insurance
Corporation up to $100,000. Periodically, balances may exceed this amount. At
September 30, 1999, there were no uninsured cash balances.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure on
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
YEAR 2000 CONCERNS
The Company has addressed the concerns of potential year 2000 computing
problems, both internally and with external parties and believes that
significant additional costs will not be incurred because of this circumstance.
The Company has performed an evaluation of its computer hardware and software
and has determined that recent enhancements and upgrades have brought its
systems significantly into compliance with the year 2000 phenomenon and that
existing support agreements are adequate to cope with any remaining issues.
Based upon equipment evaluations and analysis by consulting parties, management
does not believe that significant operational equipment modifications are
necessary.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of financial instruments including marketable securities,
notes and loans receivables, accounts payable and notes payable approximate
their fair values at September 30, 1999 and 1998.
LONG-LIVED ASSETS
Statement of Financial Accounting Standards No. 121 "Accounting for Impairment
of Long-Lived Assets to be Disposed of requires, among other things, impairment
loss of assets to be held and gains or losses from assets that are expected to
be disposed of be included as a component of income from continuing operations
before taxes on income.
STOCK BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation" SFAS No. 123 established a fair value method for accounting for
stock-based compensation plans either through recognition or disclosure. The
Company did not adopt the fair value based method but instead discloses the
effects of the calculation required by the statement.
COMPREHENSIVE INCOME
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
No. 130 requires that all items that are required to be recognized under current
accounting standards as
F-8
<PAGE>
Genesis Capital Corporation of Nevada
Notes to Financial Statements
COMPREHENSIVE INCOME (continued)
components of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. The Company
does not have any assets requiring disclosure of comprehensive income.
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION
Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures about
Segments of an Enterprise and Related Information, supersedes SFAS No, 14,
"Financial Reporting for Segments of a Business Enterprise." SFAS 131
establishes standards for the way that public companies report information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS 131 defines
operating segments as components of a company about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance.
NOTES TO FINANCIAL STATEMENTS
1. INVESTMENT IN REAL ESTATE - The Company owns a parcel of real estate in Fort
Worth Texas. An appraisal was prepared in December 1998 for 10.68 acres of
vacant land by an independent appraisal firm. The appraisal reports a value of
$694,931 based on a Fee Simple Estate value.
2. COMMON STOCK - The Company filed a plan of merger in the State of Nevada with
an effective date of March 9, 1999. As part of the agreement, the Board of
Directors approved a 2000 to 1 reverse stock split to be recorded with any
fractional shares rounded up. Also, the par value of the Nevada corporation was
changed to $.001 par value,
3. PREFERRED STOCK - The Company's preferred stock contains a designation of
$.60 cumulative convertible Preferred Stock. A total of 10,000,000 shares are
authorized with 932,755 and 332,755 issued and outstanding as of September 30,
1999 and 1998. The holders of the Convertible Preferred Stock shall be entitled
to receive, when declared by the Board of Directors, dividends of $.60 per share
and no more. Also, the preferred stock is eligible to be converted to common
stock at the rate of 10 shares of common share for each share of preferred
stock.
4. ACCRUED PROPERTY TAXES - There is an amount due for property taxes on the
land in Tarrant County and the City of Fort Worth in an amount of $32,158. The
ad valorem tax lien has been filed against the property and is being paid at the
rate of $500 per month.
5. CONTINGENCIES - There is an additional amount due on the property taxes in
the amount of $15,526 that will due and payable in December 1999. This amount is
not included in the liability of $32,158.
6. SUBSEQUENT EVENTS
No other material subsequent events have occurred that warrants disclosure since
the balance sheet date.
F-9
<PAGE>
PART III
ITEM 1. EXHIBITS
(a) Exhibits. Exhibits required to be attached are listed in the Index to
Exhibits beginning on page 33 of this form 10-SB under "Item 2.
Description of Exhibits."
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
31
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, this 20th day of October 1999.
Genesis Capital Corporation of Nevada
/s/ Reginald Davis
------------------------------------
Name: Reginald Davis
Title: President/CEO and Director
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature Title Date
/s/ Reginald Davis
- -------------------------
Reginald Davis President/CEO and Director 20 October 1999
/s/ Jerry Conditt
- -------------------------
Jerry Conditt Vice President, Secretary,
Treasurer and Director 20 October 1999
32
<PAGE>
ITEM 2. DESCRIPTION OF EXHIBITS.
INDEX TO EXHIBITS
Exhib. Page
No. No. Description
Charter and By-laws
2(i) 35 Articles of Incorporation of Genesis Capital Corporation
of Nevada, a Nevada corporation, filed with the State of
Nevada on December 22, 1998.
2(ii) 38 By-laws of the Company adopted on December 18, 1998.
Material Contracts
6(i) 51 Consulting Agreement between the Company and Reginald
Davis, Esq., dated March 19, 1999.
6(ii) 60 Consulting Agreement between the Company and Jerry
Conditt, dated March 19, 1999.
6(iii) 69 Consulting Agreement between the Company and Global
Universal Inc., dated March 19, 1999 (including secured
promissory note for $133,000).
6(iv) 78 Consulting Agreement between the Company and Hudson
Consulting Group, Inc., dated March 19, 1999 (including
secured promissory note for $67,000).
6(v) 87 Security Agreement between the Company and Global
Universal, Inc., dated March 19, 1999, in which the
Company granted Global a security interest in 830,000
shares of its common stock to secure its promissory note
for $133,000.
6(vi) 90 Security Agreement between the Company and Hudson
Consulting Group, Inc., dated March 19, 1999, in which
the Company granted Hudson a security interest in
670,000 shares of common stock to secure its promissory
note for $67,000.
6(vii) 93 Addendum #1 (dated May 10, 1999) to the Acquisition
Agreement of April 6, 1999 between the Company and Motor
Sports on Dirt, Inc.
6(viii) 97 Debt Settlement Agreement (dated June 11, 1999) between
the Company and Motor Sports on Dirt, Inc., as well as
several other parties, settling the debts the Company
owed to Global and Hudson.
6(ix) 107 Settlement Agreement (dated July 19, 1999) between the
Company and Motor Sports on Dirt, Inc., as well as
several other parties, releasing all claims to stock of
Genesis Capital Corporation and effectively canceling
the Company's acquisition of Motor Sports on Dirt, Inc.
33
<PAGE>
Plans of Acquisition
8(i) 112 Letter agreement between the Company and the Lincoln
Health Fund, Inc, dated November 14, 1997, regarding the
Company's acquisition of Lincoln Health Fund, Inc.
8(ii) 115 Merger Agreement and Plan of Merger between Genesis
Capital Corporation of Nevada and Genesis Capital
Corporation, dated March 9, 1999.
8(iii) 118 Acquisition Agreement between the Company and Motor
Sports on Dirt, Inc., dated April 6, 1999.
27 132 Financial Data Schedule "CE"
34
Exhibit 2(i)
ARTICLES OF INCORPORATION
OF
GENESIS CAPITAL CORPORATION OF NEVADA
ARTICLE I
The name of the corporation is Genesis Capital Corporation of Nevada.
ARTICLE II
The purpose for which this corporation is formed is for transacting any lawful
business, or promoting or conducting any legitimate object or purpose, under and
subject to the laws of the State of Nevada.
ARTICLE III
The stock of the corporation is divided into two classes: (1) Common Stock in
the amount of fifty million (50,000,000) shares having par value of $0.001 each;
and (2) Preferred Stock in the amount of ten million (10,000,000) shares having
a par value of $0.001 each. The Board of Directors shall have the authority, by
resolution or resolutions, (1) to divide the Preferred Stock into more than one
class of stock or more than one series of any class; (2) to establish and fix
the distinguishing designation of each such series and the number of shares
thereof, which number, by like action of the Board of Directors, from time to
time thereafter, may be increased, except when otherwise provided by the Board
of Directors in creating such series, or may be decreased, but not below the
number of shares thereof then outstanding; and (3) within the limitations of
applicable law of the State of Nevada or as otherwise set forth in this Article,
to fix and determine the relative voting powers, designations, preferences,
limitations, restrictions and relative rights of the various classes or stock or
series thereof and the qualifications, limitations or restrictions such rights
of each series so established prior to the issuance thereof. There shall be no
cumulative voting by shareholders.
ARTICLE IV
The resident agent and registered office located within the State of Nevada is:
35
<PAGE>
LaVonne Frost
711 South Carson Street, Suite 1
Carson City, Nevada 89701
I hereby accept the responsibilities as resident agent for Genesis Capital
Corporation this 21st day of December , 1998.
____________/s/_________________________
Resident Agent
ARTICLE V
The Board of Directors shall consist of no fewer than one member and no more
than seven members. The initial Board of Directors will consist only the
following person(s) with their address showing, as follows:
Reginald Davis Jerry Conditt
11701 Freeway PO Box 1493
Burleson, TX 76028 Fort Worth, TX 76101
ARTICLE VI
The name and address of the Incorporator of the corporation is as follows:
BonneJean C. Tippetts
268 West 400 South
Salt Lake City, Utah 84101
IN WITNESS WHEREOF these Articles of Incorporation are hereby executed this
18 day of Dec., 1998
GENESIS CAPITAL CORPORATION
________________/s/_____________________
BonnieJean C. Tippetts
Incorporator
NOTARIZATION OF SIGNATURE OF THE INCORPORATOR
State of Utah )
-------------------
)
County of Salt Lake )
36
<PAGE>
On this 18 day of December , 1998 before me, Evelyne Krebs , a notary public,
personally appeared Bonnie who is personally known to me to be the person whose
name is subscribed to this instrument and who has acknowledged that he executed
the same as the Incorporator of GENESIS CAPITAL CORPORATION.
S _________________/s/_____________________
E Notary Public
A
L
My Commission Expires June 9, 1999
Residing at: 254 W. 400 S. SLC, UT
37
Exhibit 2(ii)
BYLAWS
OF
GENESIS CAPITAL CORPORATION OF NEVADA
ARTICLE 1
Offices
Section 1.01 -- Principal Office.
The principal and registered office for the transaction of the business of the
Corporation is hereby fixed and located at: 11701 South Freeway, Burleson, Texas
76028. The Corporation may have such other offices as the Corporation's Board of
Directors (the "Board") may designate or as the business of the Corporation may
require from time to time.
Section 1.02 -- Other Offices.
Branch or subordinate offices may at any time be established by the Board at any
place or places wherein the Corporation is qualified to do business.
ARTICLE 2
Meetings of Shareholders
Section 2.01 -- Meeting Place.
All annual meetings of shareholders and all other meetings of shareholders shall
be held either at the principal office or at any other place which may be
designated either by the Board, pursuant to authority hereinafter granted, or by
the written consent of all shareholders entitled to vote thereat, given either
before or after the meeting and filed with the secretary of the Corporation.
Section 2.02 -- Annual Meetings.
A. The annual meetings of shareholders shall be held on the anniversary date of
the date of incorporation at the hour of two o'clock p.m., provided, however,
that should the day of the annual meeting fall upon a legal holiday, then any
such annual meeting of shareholders shall be held at the same time and place on
the next business day thereafter which is not a legal holiday.
38
<PAGE>
B. Written notice of each annual meeting signed by the president or vice
president, or the secretary, or an assistant secretary, or by such other person
or persons as the Board may designate, shall be given to each shareholder
entitled to vote thereat, either personally or by mail or other means of written
communication, charges prepaid, addressed to such shareholder at his address
appearing on the books of the Corporation or given by him to the Corporation for
the purpose of notice. If a shareholder gives no address, notice shall be deemed
to have been given to him if sent by mail or other means of written
communication addressed to the place where the principal office of the
Corporation is situated, or if published at least once in some newspaper of
general circulation in the county in which said office is located. All such
notices shall be sent to each shareholder entitled thereto, or published, not
less than ten (10) nor more than sixty (60) days before each annual meeting, and
shall specify the place, the day, and the hour of such meeting, and shall also
state the purpose or purposes for which the meeting is called.
C. Failure to hold the annual meeting shall not constitute dissolution or
forfeiture of the Corporation, and a special meeting of the shareholders may
take the place thereof.
Section 2.03 -- Special Meetings.
Special meetings of the shareholders, for any purpose or purposes whatsoever,
may be called at any time by the President, or by the Board, or by one or more
shareholders holding not less than ten percent (10%) of the voting power of the
Corporation. Except in special cases where other express provision is made by
statute, notice of such special meetings shall be given in the same manner as
for annual meetings of shareholders. Notices of any special meeting shall
specify in addition to the place, day, and hour of such meeting, the purpose or
purposes for which the meeting is called.
Section 2.04 -- Adjourned Meetings and Notice Thereof.
A. Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of a majority of the
shares, the holders of which are either present in person or represented by
proxy thereat, but in the absence of a quorum, no other business may be
transacted at any such meeting.
B. When any shareholders' meeting, either annual or special, is adjourned for
thirty (30) days or more, notice of the adjourned meeting shall be given as in
the case of an original meeting. Otherwise, it shall not be necessary to give
any notice of an adjournment or of the business to be transacted at an adjourned
meeting, other than by announcement at the meeting at which such adjournment is
taken.
39
<PAGE>
Section 2.05 -- Entry of Notice.
Whenever any shareholder entitled to vote has been absent from any meeting of
shareholders, whether annual or special, an entry in the minutes to the effect
that notice has been duly given shall be conclusive and incontrovertible
evidence that due notice of such meeting was given to such shareholder, as
required by law and these Bylaws.
Section 2.06 -- Voting.
At all annual and special meetings of shareholders, each shareholder entitled to
vote thereat shall have one vote for each share of stock so held and represented
at such meetings, either in person or by written proxy, unless the Corporation's
Articles of Incorporation ("Articles") provide otherwise, in which event, the
voting rights, powers, and privileges prescribed in the Articles shall prevail.
Voting for Directors and, upon demand of any shareholder, upon any question at
any meeting, shall be by ballot. If a quorum is present at a meeting of the
shareholders, the vote of a majority of the shares represented at such meeting
shall be sufficient to bind the Corporation, unless otherwise provided in the
Bylaws or the Articles.
Section 2.07 -- Quorum.
The presence in person or by proxy of the holders of a majority of the shares
entitled to vote at any meeting shall constitute a quorum for the transaction of
business. The shareholders present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment, notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.
Section 2.08 -- Consent of Absentees.
The transactions of any meeting of shareholders, either annual or special,
however called and notice given thereof, shall be as valid as though done at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before of after the meeting, each of the
shareholders entitled to vote, not present in person or by proxy, signs a
written Waiver of Notice, or a consent to the holding of such meeting, or an
approval of the Minutes thereof. All such waivers, consents or approvals shall
be filed with the corporate records or made a part of the Minutes of such
meeting.
Section 2.09 -- Proxies.
Every person entitled to vote or execute consents shall have the right to do so
either in person or by an agent or agents authorized by a written proxy executed
by such person or his duly authorized agent and filed with the secretary of the
Corporation; provided however, that no such proxy shall be valid after the
expiration of eleven (11) months from the date of its execution, unless the
shareholder executing it specifies therein the length of time for which such
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proxy is to continue in force, which in no case shall exceed seven (7) years
from the date of its execution.
Section 2.10 -- Shareholder Action Without a Meeting.
Any action required or permitted to be taken at a meeting of the shareholders
may be taken without a meeting if a written consent thereto is signed by
shareholders holding at least a majority of the voting power, except that if a
different proportion of voting power is required for such an action at a
meeting, then that proportion of written consents is required. In no instance
where action is authorized by this written consent need a meeting of
shareholders be called or notice given. The written consent must be filed with
the proceedings of the shareholders.
ARTICLE 3
Board of Directors
Section 3.01 -- Powers.
Subject to the limitations of the Articles, these Bylaws, and the provisions of
Nevada corporate law as to action to be authorized or approved by the
shareholders, and subject to the duties of Directors as prescribed by these
Bylaws, all corporate powers shall be exercised by or under the authority of,
and the business and affairs of the Corporation shall be controlled by, the
Board. Without prejudice to such general powers, but subject to the same
limitations, it is hereby expressly declared that the Directors shall have the
following powers:
A. To select and remove all the other officers, agents, and employees of the
Corporation, prescribe such powers and duties for them as are not inconsistent
with law, with the Articles, or these Bylaws, fix their compensation, and
require from them security for faithful service.
B. To conduct, manage, and control the affairs and business of the Corporation,
and to make such rules and regulations therefore not inconsistent with the law,
the Articles, or these Bylaws, as they may deem best.
C. To change the principal office for the transaction of the business if such
change becomes necessary or useful; to fix and locate from time to time one or
more subsidiary offices of the Corporation, as provided in Section 1.02 of
Article 1 hereof; to designate any reasonable place for the holding of any
shareholders' meeting or meetings; and to adopt, make, and use a corporate seal,
and to prescribe the forms of certificates of stock, and to alter the form of
such seal and of such certificates from time to time, as in their judgment they
may deem best, provided such seal and such certificates shall at all times
comply with the provisions of law.
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D. To authorize the issuance of shares of stock of the Corporation from time to
time, upon such terms as may be lawful, in consideration of money paid, labor
done or services actually rendered, debts or securities canceled, or tangible or
intangible property actually received, or in the case of shares issued as a
dividend, against amounts transferred from surplus to stated capital.
E. To borrow money and incur indebtedness for the purposes of the Corporation,
and to cause to be executed and delivered therefore, in the corporate name,
promissory notes, bonds, debentures, deeds of trust, mortgages, pledges,
hypothecation, or other evidences of debt and securities therefore.
F. To appoint an executive committee and other committees and to delegate to the
executive committee any of the powers and authority of the Board in management
of the business and affairs of the Corporation, except the power to declare
dividends and to adopt, amend, or repeal Bylaws. The Executive Committee shall
be composed of one or more Directors.
Section 3.02 -- Number and Qualification of Directors.
The authorized number of Directors of the Corporation shall not be less than one
(1) nor more than twelve (12).
Section 3.03 -- Election and Term of Office.
The Directors shall be elected at each annual meeting of shareholders, but if
any such annual meeting is not held, or the Directors are not elected thereat,
the Directors may be elected at any special meeting of shareholders. All
Directors shall hold office until their respective successors are elected.
Section 3.04 -- Vacancies.
A. Vacancies in the Board may be filled by a majority of the remaining
Directors, though less than a quorum, or by a sole remaining Director, and each
Director so elected or appointed shall hold office until his successor is
elected at an annual or a special meeting of the shareholders.
B. A vacancy or vacancies in the Board shall be deemed to exist in case of the
death, resignation, or removal of any Director, or if the authorized number of
Directors be increased, or if the shareholders fail at any annual or special
meeting of shareholders at which any Director or Directors are elected to elect
the full authorized number of Directors to be voted for at that meeting.
C. The shareholders may elect a Director or Directors at any time to fill any
vacancy or vacancies not filled by the Directors.
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D. No reduction of the authorized number of Directors shall have the effect of
removing any Director unless also authorized by a vote of the shareholders.
ARTICLE 4
Meetings of the Board of Directors
Section 4.01 -- Place of Meetings.
Regular meetings of the Board shall be held at any reasonable place, with
sufficient notice given, which has been designated from time to time by
resolution of the Board or by written consent of all members of the Board. In
the absence of such designation, regular meetings shall be held at the principal
office of the Corporation. Special meetings of the Board may be held either at a
place so designated, or at the principal office. Failure to hold an annual
meeting of the Board shall not constitute forfeiture or dissolution of the
Corporation.
Section 4.02 -- Organization Meeting.
Immediately following each annual meeting of shareholders, the Board shall hold
a regular meeting for the purpose of organization, election of officers, and the
transaction of other business. Notice of such meeting is hereby dispensed with.
Section 4.03 -- Other Regular Meetings.
Other regular meetings of the Board shall be held, whether monthly or quarterly
or by some other schedule, at a day and time as set by the President; provided
however, that should the day of the meeting fall upon a legal holiday, then such
meeting shall be held at the same time on the next business day thereafter which
is not a legal holiday. Notice of all such regular meetings of the Board is
hereby required.
Section 4.04 -- Special Meetings.
A. Special meetings of the Board may be called at any time for any purpose or
purposes by the President, or, if he is absent or unable or refuses to act, by
any Vice President or by any two Directors.
B. Written notice of the time and place of special meetings shall be delivered
personally to each Director or sent to each Director by mail (including
overnight delivery services such as Federal Express) or telegraph, charges
prepaid, addressed to him at his address as it is shown upon the records of the
Corporation, or if it is not shown upon such records or is not readily
ascertainable, at the place in which the regular meetings of the Directors are
normally held. No such notice is valid unless delivered to the Director to whom
it was addressed at least twenty-four (24) hours prior to the time of the
meeting. However, such mailing, telegraphing, or
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delivery as above provided herein shall constitute prima facie evidence that
such director received proper and timely notice.
Section 4.05 -- Notice of Adjournment.
Notice of the time and place of an adjourned meeting need not be given to absent
Directors, if the time and place be fixed at the meeting adjourned.
Section 4.06 -- Waiver of Notice.
The transactions of any meeting of the Board, however called and noticed or
wherever held, shall be as valid as though a meeting had been duly held after
regular call and notice, if a quorum be present, and if, either before or after
the meeting, each of the Directors not present signs a written waiver of notice
or a consent to holding such meeting or an approval of the Minutes thereof. All
such waivers, consents, or approvals shall be filed with the corporate records
or made a part of the Minutes of the meeting.
Section 4.07 -- Quorum.
If the Corporation has only one Director, then the presence of that one Director
constitutes a quorum. If the Corporation has only two Directors, then the
presence of both such Directors is necessary to constitute a quorum. If the
Corporation has three or more Directors, then a majority of those Directors
shall be necessary to constitute a quorum for the transaction of business,
except to adjourn as hereinafter provided. A Director may be present at a
meeting either in person or by telephone. Every act or decision done or made by
a majority of the Directors present at a meeting duly held at which a quorum is
present, shall be regarded as the act of the Board, unless a greater number be
required by law or by the Articles.
Section 4.08 -- Adjournment.
A quorum of the Directors may adjourn any Directors' Meeting to meet again at a
stated day and hour; provided however, that in the absence of a quorum, a
majority of the Directors present at any Directors' Meeting, either regular or
special, may adjourn such meeting only until the time fixed for the next regular
meeting of the Board.
Section 4.09 -- Fees and Compensation.
Directors shall receive a stated salary for their services as Directors in stock
of the Corporation. In addition, by resolution of the Board, a fixed fee, with
or without expenses of attendance, may be allowed for attendance at each
meeting. Nothing stated herein shall be construed to preclude any Director from
serving the Corporation in any other capacity as an officer, agent, employee, or
otherwise, and receiving compensation therefore.
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Section 4.10 -- Action Without a Meeting.
Any action required or permitted to be taken at a meeting of the Board, or a
committee thereof, may be taken without a meeting if, before or after the
action, a written consent thereto is signed by all the members of the Board or
of the Committee. The written consent must be filed with the proceedings of the
Board or Committee.
ARTICLE 5
Officers
Section 5.01 -- Executive Officers.
The executive officers of the Corporation shall be a President, a Secretary, and
a Treasurer/Chief Financial Officer. The Corporation may also have, at the
direction of the Board, a Chairman of the Board, one or more Vice Presidents,
one or more Assistant Secretaries, one or more Assistant Treasurers, and such
other officers as may be appointed in accordance with the provisions of Section
5.03 of this Article. Officers other than the President and the Chairman of the
Board need not be Directors. Any one person may hold two or more offices, unless
otherwise prohibited by the Articles or by law.
Section 5.02 -- Appointment.
The officers of the Corporation, except such officers as may be appointed in
accordance with the provisions of Sections 5.03 and 5.05 of this Article, shall
be appointed by the Board, and each shall hold his office until he resigns or is
removed or otherwise disqualified to serve, or his successor is appointed and
qualified.
Section 5.03 -- Subordinate Officers.
The Board may appoint such other officers as the business of the Corporation may
require, each of whom shall hold office for such period, have such authority,
and perform such duties as are provided in these Bylaws or as the Board may from
time to time determine.
Section 5.04 -- Removal and Resignation.
A. Any officer may be removed, either with or without cause, by a majority of
the Directors at the time in office, at any regular or special meeting of the
Board.
B. Any officer may resign at any time by giving written notice to the Board or
to the President or Secretary. Any such resignation shall take effect on the
date such notice is received or at any later time specified therein. Unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
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Section 5.05 -- Vacancies.
A vacancy in any office because of death, resignation, removal,
disqualification, or any other cause shall be filled in the manner prescribed in
these Bylaws for regular appointments to such office.
Section 5.06 -- Chairman of The Board.
The Chairman of the Board, if there be such an officer, shall, if present,
preside at all meetings of the Board, and exercise and perform such other powers
and duties as may be from time to time assigned to him by the Board or
prescribed by these Bylaws.
Section 5.07 -- President.
Subject to such supervisory powers, if any, as may be given by the Board to the
Chairman of the Board (if there be such an officer), the President shall be the
Chief Executive Officer of the Corporation and shall, subject to the control of
the Board, have general supervision, direction, and control of the business and
officers of the Corporation. He shall preside at all meetings of the
shareholders and, in the absence of the Chairman of the Board, or if there be
none, at all meetings of the Board. He shall be an ex-officio member of all the
standing committees, including the Executive Committee, if any, and 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 or these Bylaws.
Section 5.08 -- Vice President.
In the absence or disability of the President, the Vice Presidents, in order of
their rank as fixed by the Board, or if not ranked, the Vice President
designated by the Board, shall perform all the duties of the President and when
so acting shall have all the powers of, and be subject to all the restrictions
upon, the President. The Vice Presidents shall have such other powers and
perform such other duties as from time to time may be prescribed for them
respectively by the Board or these Bylaws.
Section 5.09 -- Secretary.
A. The Secretary shall keep, or cause to be kept, at the principal office or
such other place as the Board may direct, a book of (I) Minutes of all meetings
of directors and shareholders, with the time and place of holding, whether
regular or special, and if special, how authorized, the notice thereof given,
the names of those present and absent at Directors' Meetings, the number of
shares present or represented at Shareholders' Meetings, and the proceedings
thereof; and (ii) any waivers, consents, or approvals authorized to be given by
law or these Bylaws.
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B. The Secretary shall keep, or cause to be kept, at the principal office, a
share register, or a duplicate share register, showing (I) the name of each
shareholder and his or her address; (ii) the number and class or classes of
shares held by each, and the number and date of certificates issued for the
same; and (iii) the number and date of cancellation of every certificate
surrendered for cancellation.
C. The Secretary shall give, or cause to be given, notice of all the meetings of
the shareholders and of the Board required by these Bylaws or by law to be
given, and he shall keep the seal of the Corporation, if any, in safe custody,
and shall have such other powers and perform such other duties as may be
prescribed by the Board or these Bylaws.
Section 5.10 -- Treasurer/Chief Financial Officer.
A. The Treasurer/Chief Financial Officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct accounts of the properties and
business transactions of the Corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, surplus, and
shares. Any surplus, including earned surplus, paid-in surplus, and surplus
arising from a reduction of stated capital, shall be classified according to
source and shown in a separate account. The books of account shall at all times
be open to inspection by any Director.
B. The Treasurer/Chief Financial Officer shall deposit all monies and other
valuables in the name and to the credit of the Corporation with such
depositories as may be designated by the Board. He shall disburse the funds of
the Corporation as may be ordered by the Board, shall render to the President
and Directors, whenever they request it, an account of all of his transactions
as Treasurer and of the financial condition of the Corporation, and shall have
such other powers and perform such other duties as may be prescribed by the
Board or these Bylaws.
ARTICLE 6
Miscellaneous
Section 6.01 -- Record Date and Closing Stock Books.
The Board may fix a time in the future, for the payment of any dividend or
distribution, or for the allotment of rights, or when any change or conversion
or exchange of shares shall go into effect, as a record date for the
determination of the shareholders entitled to notice of and to vote at any such
meeting, or entitled to receive any such dividend or distribution, or any such
allotment of rights, or to exercise the rights in respect to any such change,
conversion or exchange of shares, and in such case only shareholders of record
on the date so fixed shall be entitled to notice of and to vote at such
meetings, or to receive such dividend, distribution, or allotment of rights, or
to exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the Corporation after any record date fixed as herein set
forth.
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The Board may close the books of the Corporation against transfers of shares
during the whole, or any part, of any such period.
Section 6.02 -- Inspection of Corporate Records.
The Share Register or Duplicate Share Register, the Books of Account, and
Records of Proceedings of the Shareholders and Directors shall be open to
inspection upon the written demand of any shareholder or the holder of a voting
trust certificate, at any reasonable time, and for a purpose reasonably related
to his interests as a shareholder or as the holder of a voting trust
certificate, and shall be exhibited at any time when required by the demand of
ten percent (10%) of the shares represented at any shareholders' meeting. Such
inspection may be made in person or by an agent or attorney, and shall include
the right to make extracts. Demand of inspection other than at a Shareholders'
Meeting shall be made in writing upon the President, Secretary, or Assistant
Secretary, and shall state the reason for which inspection is requested.
Section 6.03 -- Checks, Drafts, Etc.
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the Corporation,
shall be signed or endorsed by such person or persons and in such manner as,
from time to time, shall be determined by resolution of the Board.
Section 6.04 -- Annual Report.
The Board shall cause to be sent to the shareholders, not later than one hundred
twenty (120) days after the close of the fiscal or calendar year, an annual
report.
Section 6.05 -- Contracts: How Executed.
The Board, except as otherwise provided in these Bylaws, may authorize any
officer, officers, agent, or agents, to enter into any contract, deed, or lease,
or execute any instrument in the name of and on behalf of the Corporation, and
such authority may be general or confined to specific instances; and unless so
authorized by the Board, no officer, agent, or employee shall have any power or
authority to bind the Corporation by any contract or engagement or to pledge its
credit or render it liable for any purpose or for any amount.
Section 6.06 -- Certificates of Stock.
A certificate or certificates for shares of the capital stock of the Corporation
shall be issued to each shareholder when any such shares are fully paid up. All
such certificates shall be signed by the President or a Vice President and the
Secretary or an Assistant Secretary, or be authenticated by facsimiles of the
signature of the President and Secretary or by a facsimile of the signatures of
the President and the written signature of the Secretary or an Assistant
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Secretary. Every certificate authenticated by a facsimile of a signature must be
countersigned by a transfer agent or transfer clerk.
Section 6.07 -- Representations of Shares of Other Corporations.
The President or any Vice President and the Secretary or Assistant Secretary of
this Corporation are authorized to vote, represent, and exercise on behalf of
this Corporation, all rights incident to any and all shares of any other
corporation or corporations standing in the name of this Corporation. The
authority herein granted to said officers to vote or represent on behalf of this
Corporation or corporations may be exercised either by such officers in person
or by any person authorized so to do by proxy or power of attorney duly executed
by said officers.
Section 6.08 -- Inspection of Bylaws.
The Corporation shall keep in its principal office for the transaction of
business the original or a copy of these Bylaws, as amended or otherwise altered
to date, certified by the Secretary, which shall be open to inspection by the
shareholders at all reasonable times during office hours.
Section 6.09 -- Indemnification.
A. The Corporation shall indemnify its officers and directors for any liability
including reasonable costs of defense arising out of any act or omission of any
officer or director on behalf of the Corporation to the full extent allowed by
the laws of the State of Nevada, if the officer or director acted in good faith
and in a manner the officer or director reasonably believed to be in, or not
opposed to, the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe the conduct
was unlawful.
B. Any indemnification under this section (unless ordered by a court) shall be
made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in the
circumstances because the officer or director has met the applicable standard of
conduct. Such determination shall be made by the Board of Directors by a
majority vote of a quorum consisting of Directors who were not parties to such
action, suit, or proceeding, or, regardless of whether or not such a quorum is
obtainable and a quorum of disinterested Directors so directs, by independent
legal counsel in a written opinion, or by the stockholders.
ARTICLE 7
Amendments
Section 7.01 -- Power of Shareholders.
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New Bylaws may be adopted, or these Bylaws may be amended or repealed, by the
affirmative vote of the shareholders collectively having a majority of the
voting power or by the written assent of such shareholders.
Section 7.02 -- Power of Directors.
Subject to the rights of the shareholders as provided in Section 7.01 of this
Article, Bylaws other than a bylaw, or amendment thereof, changing the
authorized number of Directors, may also be adopted, amended, or repealed by the
Board.
Certificate
The undersigned, being the initial Board of Genesis Capital Corporation, a
corporation duly organized and existing under and by virtue of the laws of the
State of Nevada; certify that the above and foregoing Bylaws of said corporation
were duly and regularly adopted as such by the Board of Directors of the
Corporation at a meeting of said Board, which was duly held on the
18 day of December , 1998, that the above and foregoing Bylaws are now in
full force and effect.
DATED this 18 day of Dec. , 1998.
--------- ------------------
_____________________/s/________________________
Reginald Davis, Director
___________________/s/__________________________
Jerry Conditt, Director
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Exhibit 6(i)
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made effective this 19th day
of March, 1999 by and between Reginald L. Davis ("Consultant"), and Genesis
Capital Corporation of Nevada, a Nevada Corporation, ("Client").
PREMISES
WHEREAS, Client wishes to obtain the consulting services of Consultant.
WHEREAS, Consultant is in the business of providing consulting and
other services to firms, who desire to make complex financial and
structural changes to their firms.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which is expressly
acknowledged, Client and Consultant agree as follows:
I. ENGAGEMENT OF CONSULTANT - Client hereby retains Consultant to serve
Client in the following areas:
A. Consulting with Client in the requirements of becoming a
non-reporting public entity;
B. Consulting with and assisting Client in the techniques and
preparation of documents for raiising capital and acquiring
financing, loans and other sources of capital; and
C. Use his best efforts in the location or identification of
various assets for potential acquisition and possible entities
for merger and acquisition possibilities.
All of the foregoing services collectively are referred to herein as
the "Consulting Services."
II. TERM - This Agreement shall have a term of one (1) year commencing on
the date of this Agreement ("Initial Term"). In the event that Client
desires to engage Consultant further this Agreement shall continue on a
month to month basis after the expiration of the Initial Term for the
additional terms provided in an Addendum to this Agreement executed by
both parties, should the parties be so interested at any particular
point.
III. COMPENSATION - In consideration of the Consulting Services contemplated
herein, Consultant shall be issued the following compensation, but only
upon the consummation of a merger or acquisition by the Client:
Client shall transfer to Consultant 60,000 shares of Client's
common stock, which stock is acknowledged to bear a
restrictive legend pursuant to the provisions of Rule 144.
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IV. EXPENSES - Client shall be responsible for all expenses associated with
completing the Consulting Services contemplated herein. The Expenses
include but are not limited to the following:
A. All fees associated with the filing of any forms required by
state or federal agencies to bring about the intent of this
Agreement;
B. All long distance telephone and facsimile costs incurred by
Consultant and all copying, mail and Federal Express or other
express delivery costs incurred by Consultant and all other
expenses reasonably incurred by Consultant in rendering the
Consulting Services contemplated by this Agreement.
C. Any and all fees associated with obtaining or providing
Consultant with audited financial statements of Client.
Consultant will not perform any accounting services related to
Client without obtaining audited financial statements (NOTE:
The cost of this item must be paid for directly by Client, and
does not come out of the Escrow Account reserved for
expenses.)
D. Any and all travel, airfare and hotel expenses which
Consultant may reasonably incur in relation to the performance
of the Consulting Services contemplated herein. While
circumstances may change, the parties do not anticipate any
travel during this engagement.
V. BEST EFFORTS - Consultant agrees that it will at all times faithfully
and to the best of its experience, ability and talents, perform all the
duties that may be required of and from Consultant pursuant to the
terms of this Agreement. Consultant does not guarantee that its efforts
will have any impact on Client's business or that any subsequent
financial improvement will result from Consultant's efforts.
VI. CLIENT'S REPRESENTATIONS - Client represents, warrants and covenants to
Consultant that each of the following are true and complete as of the
date of this Agreement:
A. Entity Existence. Client is a corporation or other legal entity duly
organized, validly existing, and in good standing under the laws of the
state of their formation, with full power and authority and all necessary
governmental authorizations to own, lease and operate property and carry on
their business as it is now being conducted. Client is duly qualified to do
business in and is in good standing in every jurisdiction in which the
nature of its business or the property owned or leased by it makes such
qualifications necessary.
B. Involvement in Proceedings or Investigations by Securities Regulatory
Authorities. Client
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or its officers and 10% or more owners, and any entity which Client or its
affiliates or officers control, has not been previously involved in any
litigation, investigations or proceedings with the United States Securities
and Exchange Commission or any other State or Foreign Securities Regulatory
organization, and is not presently indicted and/or was never convicted of
fraud or any similar crime involving any allegation of dishonesty or theft,
nor found guilty or is currently involved in legal proceedings of such
conduct in a civil context, other than as disclosed and with full and
complete details attached hereto.
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C. Disclosure Documents. Client has or will cause to be delivered, concurrent
with the -------------------- execution of this Agreement, copies of its
entity records as requested to effectuate any transaction contemplated
herein. Documents which Client agrees to provide to Consultant shall
include but not be limited to audited financial statements for the past
three years of Client's operations or as long as Client has been in
operation, whichever is less, which have been audited by a United States
Securities and Exchange Commission peer approved financial auditor, any
entity resolutions and any and all other documents which may in any way
relate to the transactions contemplated in this Agreement.
D. Client's Authority for Agreement. The execution and delivery of this
Agreement and the -------------------------------- consummation of the
transactions contemplated herein have been duly authorized by the Client.
This Agreement has been duly executed and delivered by Client and
constitutes the valid and legally binding obligation of Client enforceable
in accordance with its terms, except to the extent that enforceability may
be subject to or limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditor's rights generally. To
the best of Client's knowledge, after due inquiry, the execution and
delivery of this agreement and the consummation of the transactions
contemplated herein will not conflict with any mortgage, indenture, lease,
contract, commitment, agreement, or other instrument, permit, concession,
grant, franchise, license, judgement, order, decree, statute, law,
ordinance, rule or regulation applicable to Client or any of its properties
or assets.
E. Consents and Authorizations. Any consent, approval, order or authorization
of, or registration, declaration, compliance with or filing with any
governmental or regulatory authority required in connection with the
execution and delivery of this Agreement to permit the consummation by
Client and Consultant of the transactions contemplated herein shall be
accomplished in a timely manner and in accordance with federal and/or state
laws where applicable.
F. Minute Books. The minute books of Client contain full and complete minutes
of all meetings (or written consents in lieu thereof).
G. Nature of Representations. No representation or warranty made by Client in
this Agreement, nor any document or information furnished or to be
furnished by Client to the Consultant in connection with this Agreement,
contains or will contain any untrue statement of material fact, or omits or
will omit to state any material fact necessary to make the statements
contained therein not misleading, or omits to state any material fact
relevant to the transactions contemplated by this Agreement.
H. Independent Legal and Financial Advice. Consultant is not a law firm nor an
accounting firm. Client represent that it has not nor will it rely upon any
legal or financial representation made by Consultant, and that Client has
and will continue to seek the independent advice of legal and financial
counsel regarding all material aspects of the transactions contemplated by
this Agreement, including the review of all documents provided by
Consultant to Client and all opportunities Consultant introduces to Client.
Client acknowledge that any attorneys, accountants and other advisors
employed by
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Consultant represent the interests of Consultant solely, and that no
representation or warranty has been given to Client by Consultant as to any
legal, tax, accounting, financial or other aspect of the transactions
contemplated by this Agreement.
VII. NON-CIRCUMVENTION- Client agrees to not enter into any other agreements
to provide services for which Consultant has provided services, or
enter into any transaction involving a business opportunity or asset
introduced to Client by Consultant, without compensating Consultant
pursuant to this Agreement. Neither will Client terminate this
Agreement solely as a means to avoid paying Consultant compensation
earned or to be earned, or in any other was attempt to circumvent
Consultant.
VIII. TERMINATION OF AGREEMENT BY CONSULTANT - Consultant may terminate this
Agreement if any of the following occurs:
A. Payments due under this Agreement are not timely made.
B. In the judgment of Consultant, Client's actions or conduct
make it unreasonable for Consultant to perform under this
Agreement. Such acts include, and are or may be perceived as
being in the nature of dishonesty, illegal activities,
activities harmful to the reputation of the Consultant, and
activities which may create civil or criminal liability for
the Consultant.
C. Consultant makes a bona fide decision to terminate its business
and liquidate its assets.
D. Client misrepresents its corporate or other entity standing,
power to enter and bind itself to this Agreement,
misrepresentation of its guarantees as indicated below, or any
other concealed or misrepresented material fact which would
decrease the binding effect of this Agreement on Client.
E. If after conduct of a due diligence investigation, Consultant
concludes that an intended offering, or other action
contemplated under this Agreement (the "Transaction"), is not
viable, Consultant may give ten (10) days written notice to
Client stating in particular why the Transaction is not
viable, and if after ten (10) days of receipt of the written
notice, Client insists that Consultant continue performance on
the Transaction, Consultant may then terminate the Agreement,
returning all monies received after deductions as indicated in
Subsection "H" below.
F. An unanticipated material change in federal or state laws
and/or regulations makes continued performance under this
Agreement unreasonable.
G. Breach of any provision of this Agreement, and in particular,
but not limited to, not providing audited financial statements
in a timely manner.
H. Notwithstanding the termination of this Agreement, Consultant
shall be entitled to receipt of the charges for the work
actually performed up to the time of termination at its normal
consulting rates. Consultant shall also be entitled to
reimbursement of any expenses
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incurred, up to the time of termination of this Agreement
along with any expenses incurred as a result of the
termination.
IX. TERMINATION OF AGREEMENT BY CLIENT - Client may terminate this
Agreement under the following conditions:
A. Consultant fails to follow Client's reasonable instructions.
Client must advise Consultant that his actions or inactions
are unacceptable and give Consultant thirty (30) days in which
to comply. If Consultant fails to comply within thirty (30)
days, Consultant may be terminated hereunder by Client's
service of notice of termination to Consultant.
B. If, in the judgment of the Board of Directors of Client,
Consultant's actions or conduct would make it unreasonable to
require Client to retain Consultant. Such acts include and are
in the nature of, dishonesty, illegal activities, activities
harmful to the reputation of the Client and activities which
create civil or criminal liability for the Client.
C. Notwithstanding the termination of this Agreement, Consultant
shall be entitled to receipt of all compensation owed pursuant
to Section "H" of Article VIII above up to the time of
termination of this Agreement, for work actually performed.
Consultant shall also be entitled to reimbursement of any
expenses incurred, up to the time of termination of this
Agreement, along with any expenses incurred as a result of the
termination.
X. UTILIZATION OF ATTORNEYS - Consultant may utilize attorneys to assist
him in preparing the documentation required to effectuate the
transactions contemplated by this Agreement. The attorneys utilized by
Consultant represent only Consultant, and Consultant's interest in
providing consulting services and do not in an way represent the
interests of any party to this Agreement other than Consultant's.
Client are advised, and have represented, that they will seek
independent legal counsel to review all documentation provided to it by
Consultant.
XI. CONSULTANT IS NOT A BROKER-DEALER - Consultant has fully disclosed to
Client that he is not a broker-dealer and does not have or hold a
license to act as such. None of the activities of consultant are
intended to provide the services of a broker-dealer to the Client and
Client has been informed that a broker-dealer will need to be engaged
to perform any such services. Client has full and free discretion in
the selection of a broker-dealer.
XII. NONDISCLOSURE OF CONFIDENTIAL INFORMATION - In consideration for the
Client entering into this Agreement, Consultant agrees that the
following items used in the Client's business are secret, confidential,
unique, and valuable, and disclosure of any of the items to anyone
other than Consultant's officers, agents, or authorized employees may
cause Client irreparable injury.
A. Non-public financial information, accounting information,
plans of operations, possible public offerings public
announcement.
B. Customer lists, call lists, and other confidential customer
data;
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C. Memoranda, notes or records concerning the technical an
creative processes conducted by Client.
D. Sketches, plans, drawings and other confidential research and
development data or;
E. Manufacturing processes, chemical formulae, and the compo-
sition of Client's products.
Consultant shall have no liability to the Client with respect to the
use or disclosure to others not party to this Agreement, of such
information as Consultant can establish to:
A. have been publicly known;
B. have become known, without fault on the part of Consultant,
subsequent to disclosure by Client of such information to
Consultant;
C. have been otherwise known by Consultant prior to communication
by the Client to Consultant of such information, or
D. have been received by Consultant at any time from a source
other than Client lawfully having possession of such
information.
XIII. PLACE OF SERVICES - The Consulting Services contemplated to be
performed by Consultant will be performed through Consultant's offices;
however, it is understood and expected that Consultant may make
contacts with persons and entities in any other place deemed
appropriate by Consultant.
XIV. NONEXCLUSIVE SERVICES - Client acknowledge that Consultant is currently
providing services of the same or similar nature to other parties and
Client agree that Consultant is not prevented or barred from rendering
services of the same nature or a similar nature to any other individual
or entity.
XV. ALL PRIOR AGREEMENTS TERMINATED - This Agreement comprises the entire
agreement and understanding between the parties hereto at the date of
this Agreement as to the subject matter hereof and supersedes and
replaces all proposals, prior negotiations and agreements, whether oral
or written, between the parties hereto in connection with the subject
matter hereof, with the sole exception of an Escrow Agreement to be
executed on the same date. None of the parties hereto shall be bound by
any conditions, definitions, warranties or representations with respect
to the subject matter of this Agreement other than as expressly
provided in this Agreement unless the parties hereto subsequently agree
to vary this Agreement in writing, duly signed by authorized
representatives of the parties hereto.
XVI. CONSULTANT IS NOT AN AGENT OR EMPLOYEE OF CLIENT - Consultant's
obligations under this agreement consist solely of the Consulting
Services described herein. In no event shall Consultant be considered
to act as the employee or agent of Client or otherwise represent or
bind Client. For the purposes of this Agreement, Consultant is an
independent contractor. All final decisions with respect to acts of
Client or their affiliates, whether or not made pursuant to or in
reliance on information or advice furnished by Consultant hereunder,
shall
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be those of Client or such affiliates, and Consultant, its employees or
agents shall under no circumstances be liable for any expense incurred
or loss suffered by Client as a consequence of such action or
decisions.
XVII. CONTINUE OPERATIONS IN SUBSTANTIALLY SAME MANNER - Client will not
transfer, sell or hypothecate, assign or distribute any significant
portion of its assets currently in its possession except upon written
notice to the parties to this Agreement, and Client agrees to continue
operations in substantially the same manner as it is presently
functioning, until this agreement has been consummated.
XVIII. MISCELLANEOUS.
A. Authority. The execution and performance of this Agreement
have been duly authorized by all requisite corporate action.
This Agreement constitutes a valid and binding obligation of
the parties hereto.
B. Amendment. This Agreement may be amended or modified at any
time and in any manner only by an instrument in writing
executed by the parties hereto.
C. Waiver. No term of this Agreement shall be considered waived
and no breach excused by either party unless made in writing.
No consent waiver or excuse by either party, express or
implied shall constitute a subsequent consent, waiver or
excuse.
D. Assignment
1. The rights and obligations of both parties under this
Agreement shall inure to the benefit of and shall be
binding upon its successors and assigns. There shall
be no rights of transfer or assignment of this
Agreement by either party except with the prior
written consent of the other party.
2. Nothing in this Agreement, expressed or implied, is
intended to confer upon any person other than the
parties and their successors, any rights or remedies
under this Agreement.
E. Notices. Any notice or other communication required or
permitted by this Agreement must be in writing and shall be
deemed to be properly given when delivered in person to an
officer of the other party, when deposited in the United
States mails for transmittal by certified or registered mail,
postage prepaid, or when deposited with a public telegraph
company for transmittal or when sent by facsimile
transmission, charges prepaid provided that the communication
is addressed:
1. In the Case of Consultant to:
Reginald L. Davis
Damas 123
San Jose Insurgentes
Mexico, D.F. 03900
Telephone: (525) 643-6347
Facsimile: (525) 643-6347
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2. In the Case of Client to:
Genesis Capital Corporation of Nevada
11701 South Freeway
Burleson, Texas 76028
Telephone: (817) 293-9334
Facsimile: (817) 293-9336
or to such other person or address designated by Client in writing to
receive notice.
F. Headings and Captions. The headings of paragraphs are included
solely for convenience. If a conflict exists between any
heading and the text of this Agreement, the text shall
control.
G. Entire Agreement. This instrument and the exhibits to this
instrument contain the entire Agreement between the parties
with respect to the transaction contemplated by the Agreement.
It may be executed in any number of counterparts but the
aggregate of the counterparts together constitute only one and
the same instrument.
H. Effect of Partial Invalidity. In the event that any one or
more of the provisions contained in this Agreement shall for
any reason be held to be invalid, illegal, or unenforceable in
any respect, such invalidity, illegality or un-enforceability
shall not affect any other provisions of this Agreement, but
this Agreement shall be constructed as if it never contained
any such invalid, illegal or unenforceable provisions.
I. Controlling Law. The validity, interpretation, and performance
of this Agreement shall be governed by the laws of the State
of Texas, without regard to its law on the conflict of laws.
Any dispute arising out of this Agreement shall be brought in
a court of competent jurisdiction in the State of Texas. The
parties exclude any and all statutes, law and treaties which
would allow or require any dispute to be decided in another
forum or by other rules of decision than provided in this
Agreement.
J. Attorney's Fees. If any action at law or in equity, including
an action for declaratory --------------- elict, is brought to
enforce or interpret the provisions of this Agreement, the
prevailing party shall be entitled to recover actual
attorney's fees court costs, and other costs incurred in
proceeding with the action from the other party. The
attorney's fees, court costs or other costs, may be ordered by
the court in its decision of any action described in this
paragraph or may be enforced in a separate action brought for
determining attorneys fees, court costs, or other costs.
Should either party be represented by in-house counsel all
parties agree that party may recover attorney's fees incurred
by that in-house counsel in an amount equal to that attorney's
normal fees for similar matters, or, should that attorney not
normally charge a fee, by the prevailing rate charged by
attorneys with similar background in that legal community.
K. Time is of the Essence. Time is of the essence of this Agree-
ment and of each and every provision hereof
L. Mutual Cooperation The parties hereto shall cooperate with
each other to achieve the purpose of this Agreement, and shall
execute such other and further documents and take
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such other and further actions as may be necessary or
convenient to effect the transactions described herein.
M. Indemnification. Client and Consultant agree to indemnify,
hold harmless and, at the party ---------------- seeking
indemnification's sole option, defend the other from and
against all demands, claims, actions, losses, damages, liabil-
ities, costs and expenses, including without limitation,
interest, penalties, court fees, and attorney's fees and
expenses asserted against or imposed or incurred by either
party by reason of or resulting from a breach of any repre-
sentation, warranty, covenant condition or agreement of the
other party to this Agreement. Neither party shall be respon-
sible to the other party' for any consequential or punitive
damages.
N. No Third Party Beneficiary. Nothing in this Agreement,
expressed or implied, is intended to confer upon any person,
other than the parties hereto and their successors, any rights
or remedies under or by reason of this Agreement, unless this
Agreement specifically states such intent.
O. Facsimile Counterparts. If a party signs this Agreement and
transmits an electronic facsimile of the signature page to the
other party, the party who receives the transmission may rely
upon the electronic facsimile as a signed original of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective the date
first written above.
Reginald L. Davis
/s/
------------------------------------
Genesis Capital Corporation of Nevada
/s/
- -------------------------------------
Reginald L. Davis, President
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Exhibit 6(ii)
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement") is made effective this 19th day
of March, 1999 by and between Jerry Conditt ("Consultant"), and Genesis Capital
Corporation of Nevada, a Nevada Corporation, ("Client").
PREMISES
WHEREAS, Client wishes to obtain the consulting services of Consultant.
WHEREAS, Consultant is in the business of providing consulting and
other services to firms, who desire to make complex financial and
structural changes to their firms.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which is expressly
acknowledged, Client and Consultant agree as follows:
I. ENGAGEMENT OF CONSULTANT - Client hereby retains Consultant to serve
Client in the following areas:
A. Consulting with Client in the requirements of becoming a non-
reporting public entity;
B. Consulting with and assisting Client in the techniques and prep-
aration of documents for raising capital and acquiring financing, loans
and other sources of capital; and
C. Use his best efforts in the location or identification of various
assets for potential acquisition and possible entities for merger and
acquisition possibilities.
All of the foregoing services collectively are referred to herein as
the "Consulting Services."
II. TERM - This Agreement shall have a term of one (1) year commencing on
the date of this Agreement ("Initial Term"). In the event that Client
desires to engage Consultant further this Agreement shall continue on a
month to month basis after the expiration of the Initial Term for the
additional terms provided in an Addendum to this Agreement executed by
both parties, should the parties be so interested at any particular
point.
III. COMPENSATION - In consideration of the Consulting Services contemplated
herein, Consultant shall be issued the following compensation, but only
upon the consummation of a merger or acquisition by the Client:
Client shall transfer to Consultant 35,000 shares of Client's common
stock, which stock is acknowledged to bear a restrictive legend
pursuant to the provisions of Rule 144.
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IV. EXPENSES - Client shall be responsible for all expenses associated with
completing the Consulting Services contemplated herein. The Expenses
include but are not limited to the following:
A. All fees associated with the filing of any forms required by state
or federal agencies to bring about the intent of this Agreement;
B. All long distance telephone and facsimile costs incurred by
Consultant and all copying, mail and Federal Express or other express
delivery costs incurred by Consultant and all other expenses reasonably
incurred by Consultant in rendering the Consulting Services
contemplated by this Agreement.
C. Any and all fees associated with obtaining or providing Consultant
with audited financial statements of Client. Consultant will not
perform any accounting services related to Client without obtaining
audited financial statements (NOTE: The cost of this item must be paid
for directly by Client, and does not come out of the Escrow Account
reserved for expenses.)
D. Any and all travel, airfare and hotel expenses which Consultant may
reasonably incur in relation to the performance of the Consulting
Services contemplated herein. While circumstances may change, the
parties do not anticipate any travel during this engagement.
V. BEST EFFORTS - Consultant agrees that it will at all times faithfully
and to the best of its experience, ability and talents, perform all the
duties that may be required of and from Consultant pursuant to the
terms of this Agreement. Consultant does not guarantee that its efforts
will have any impact on Client's business or that any subsequent
financial improvement will result from Consultant's efforts.
VI. CLIENT'S REPRESENTATIONS - Client represents, warrants and covenants to
Consultant that each of the following are true and complete as of the
date of this Agreement:
A. Entity Existence. Client is a corporation or other legal entity duly
organized, validly existing, and in good standing under the laws of the
state of their formation, with full power and authority and all
necessary governmental authorizations to own, lease and operate
property and carry on their business as it is now being conducted.
Client is duly qualified to do business in and is in good standing in
every jurisdiction in which the nature of its business or the property
owned or leased by it makes such qualifications necessary.
B. Involvement in Proceedings or Investigations by Securities
Regulatory Authorities .Client or its officers and 10% or more owners,
and any entity which Client or its affiliates or officers control, has
not been previously involved in any litigation, investigations or
proceedings with the United States Securities and Exchange Commission
or any other State or Foreign Securities Regulatory organization, and
is not presently indicted and/or was never convicted of fraud or any
similar crime involving any allegation of dishonesty or theft, nor
found guilty or is currently involved in legal proceedings of such
conduct in a civil context, other than as disclosed and with full and
complete details attached hereto.
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C. Disclosure Documents. Client has or will cause to be delivered,
concurrent with the execution of this Agreement, copies of its entity
records as requested to effectuate any transaction contemplated herein.
Documents which Client agrees to provide to Consultant shall include
but not be limited to audited financial statements for the past three
years of Client's operations or as long as Client has been in
operation, whichever is less, which have been audited by a United
States Securities and Exchange Commission peer approved financial
auditor, any entity resolutions and any and all other documents which
may in any way relate to the transactions contemplated in this
Agreement.
D. Client's Authority for Agreement. The execution and delivery of this
Agreement and the consummation of the transactions contemplated herein
have been duly authorized by the Client. This Agreement has been duly
executed and delivered by Client and constitutes the valid and legally
binding obligation of Client enforceable in accordance with its terms,
except to the extent that enforceability may be subject to or limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditor's rights generally. To the best of Client's
knowledge, after due inquiry, the execution and delivery of this
agreement and the consummation of the transactions contemplated herein
will not conflict with any mortgage, indenture, lease, contract,
commitment, agreement, or other instrument, permit, concession, grant,
franchise, license, judgement, order, decree, statute, law, ordinance,
rule or regulation applicable to Client or any of its properties or
assets.
E. Consents and Authorizations. Any consent, approval, order or
authorization of, or registration, declaration, compliance with or
filing with any governmental or regulatory authority required in
connection with the execution and delivery of this Agreement to permit
the consummation by Client and Consultant of the transactions
contemplated herein shall be accomplished in a timely manner and in
accordance with federal and/or state laws where applicable.
F. Minute Books. The minute books of Client contain full and complete
minutes of all meetings (or written consents in lieu thereof).
G. Nature of Representations. No representation or warranty made by
Client in this Agreement, nor any document or information furnished or
to be furnished by Client to the Consultant in connection with this
Agreement, contains or will contain any untrue statement of material
fact, or omits or will omit to state any material fact necessary to
make the statements contained therein not misleading, or omits to state
any material fact relevant to the transactions contemplated by this
Agreement.
H. Independent Legal and Financial Advice. Consultant is not a law firm
nor an accounting firm. Client represent that it has not nor will it
rely upon any legal or financial representation made by Consultant, and
that Client has and will continue to seek the independent advice of
legal and financial counsel regarding all material aspects of the
transactions contemplated by this Agreement, including the review of
all documents provided by Consultant to Client and all opportunities
Consultant introduces to Client. Client acknowledge that any attorneys,
accountants and other advisors employed by Consultant represent the
interests of Consultant solely, and that no representation or warranty
has been given to Client by Consultant as to any legal, tax,
accounting, financial or other aspect of the transactions contemplated
by this Agreement.
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VII. NON-CIRCUMVENTION- Client agrees to not enter into any other agreements
to provide services for which Consultant has provided services, or
enter into any transaction involving a business opportunity or asset
introduced to Client by Consultant, without compensating Consultant
pursuant to this Agreement. Neither will Client terminate this
Agreement solely as a means to avoid paying Consultant compensation
earned or to be earned, or in any other was attempt to circumvent
Consultant.
VIII. TERMINATION OF AGREEMENT BY CONSULTANT - Consultant may terminate this
Agreement if any of the following occurs:
A. Payments due under this Agreement are not timely made.
B. In the judgment of Consultant, Client's actions or conduct make it
unreasonable for Consultant to perform under this Agreement. Such acts
include, and are or may be perceived as being in the nature of
dishonesty, illegal activities, activities harmful to the reputation of
the Consultant, and activities which may create civil or criminal
liability for the Consultant.
C. Consultant makes a bona fide decision to terminate its business and
liquidate its assets.
D. Client misrepresents its corporate or other entity standing, power
to enter and bind itself to this Agreement, misrepresentation of its
guarantees as indicated below, or any other concealed or misrepresented
material fact which would decrease the binding effect of this Agreement
on Client.
E. If after conduct of a due diligence investigation, Consultant
concludes that an intended offering, or other action contemplated under
this Agreement (the "Transaction"), is not viable, Consultant may give
ten (10) days written notice to Client stating in particular why the
Transaction is not viable, and if after ten (10) days of receipt of the
written notice, Client insists that Consultant continue performance on
the Transaction, Consultant may then terminate the Agreement, returning
all monies received after deductions as indicated in Subsection "H"
below.
F. An unanticipated material change in federal or state laws and/or
regulations makes continued performance under this Agreement
unreasonable.
G. Breach of any provision of this Agreement, and in particular, but
not limited to, not providing audited financial statements in a timely
manner.
H. Notwithstanding the termination of this Agreement, Consultant shall
be entitled to receipt of the charges for the work actually performed
up to the time of termination at its normal consulting rates.
Consultant shall also be entitled to reimbursement of any expenses
incurred, up to the time of termination of this Agreement along with
any expenses incurred as a result of the termination.
IX. TERMINATION OF AGREEMENT BY CLIENT - Client may terminate this
Agreement under the following conditions:
A. Consultant fails to follow Client's reasonable instructions. Client
must advise Consultant that his actions or inactions are unacceptable
and give Consultant thirty (30) days in which to comply.
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If Consultant fails to comply within thirty (30) days, Consultant may
be terminated hereunder by Client's service of notice of termination to
Consultant.
B. If, in the judgment of the Board of Directors of Client,
Consultant's actions or conduct would make it unreasonable to require
Client to retain Consultant. Such acts include and are in the nature
of, dishonesty, illegal activities, activities harmful to the
reputation of the Client and activities which create civil or criminal
liability for the Client.
C. Notwithstanding the termination of this Agreement, Consultant shall
be entitled to receipt of all compensation owed pursuant to Section "H"
of Article VIII above up to the time of termination of this Agreement,
for work actually performed. Consultant shall also be entitled to
reimbursement of any expenses incurred, up to the time of termination
of this Agreement, along with any expenses incurred as a result of the
termination.
X. UTILIZATION OF ATTORNEYS - Consultant may utilize attorneys to assist
him in preparing the documentation required to effectuate the
transactions contemplated by this Agreement. The attorneys utilized by
Consultant represent only Consultant, and Consultant's interest in
providing consulting services and do not in an way represent the
interests of any party to this Agreement other than Consultant's.
Client are advised, and have represented, that they will seek
independent legal counsel to review all documentation provided to it by
Consultant.
XI. CONSULTANT IS NOT A BROKER-DEALER - Consultant has fully disclosed to
Client that he is not a broker-dealer and does not have or hold a
license to act as such. None of the activities of consultant are
intended to provide the services of a broker-dealer to the Client and
Client has been informed that a broker-dealer will need to be engaged
to perform any such services. Client has full and free discretion in
the selection of a broker-dealer.
XII. NONDISCLOSURE OF CONFIDENTIAL INFORMATION - In consideration for the
Client entering into this Agreement, Consultant agrees that the
following items used in the Client's business are secret, confidential,
unique, and valuable, and disclosure of any of the items to anyone
other than Consultant's officers, agents, or authorized employees may
cause Client irreparable injury.
A. Non-public financial information, accounting information, plans of
operations, possible public offerings public announcement.
B. Customer lists, call lists, and other confidential customer data;
C. Memoranda, notes or records concerning the technical and creative
processes conducted by Client.
D. Sketches, plans, drawings and other confidential research and
development data or;
E. Manufacturing processes, chemical formulae, and the composition of
Client's products.
Consultant shall have no liability to the Client with respect to the
use or disclosure to others not party to this Agreement, of such
information as Consultant can establish to:
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A. have been publicly known;
B. have become known, without fault on the part of Consultant,
subsequent to disclosure by Client of such information to Consultant;
C. have been otherwise known by Consultant prior to communication by
the Client to Consultant of such information, or
D. have been received by Consultant at any time from a source other
than Client lawfully having possession of such information.
XIII. PLACE OF SERVICES - The Consulting Services contemplated to be
performed by Consultant will be performed through Consultant's offices;
however, it is understood and expected that Consultant may make
contacts with persons and entities in any other place deemed
appropriate by Consultant.
XIV. NONEXCLUSIVE SERVICES - Client acknowledge that Consultant is currently
providing services of the same or similar nature to other parties and
Client agree that Consultant is not prevented or barred from rendering
services of the same nature or a similar nature to any other individual
or entity.
XV. ALL PRIOR AGREEMENTS TERMINATED - This Agreement comprises the entire
agreement and understanding between the parties hereto at the date of
this Agreement as to the subject matter hereof and supersedes and
replaces all proposals, prior negotiations and agreements, whether oral
or written, between the parties hereto in connection with the subject
matter hereof, with the sole exception of an Escrow Agreement to be
executed on the same date. None of the parties hereto shall be bound by
any conditions, definitions, warranties or representations with respect
to the subject matter of this Agreement other than as expressly
provided in this Agreement unless the parties hereto subsequently agree
to vary this Agreement in writing, duly signed by authorized
representatives of the parties hereto.
XVI. CONSULTANT IS NOT AN AGENT OR EMPLOYEE OF CLIENT - Consultant's
obligations under this agreement consist solely of the Consulting
Services described herein. In no event shall Consultant be considered
to act as the employee or agent of Client or otherwise represent or
bind Client. For the purposes of this Agreement, Consultant is an
independent contractor. All final decisions with respect to acts of
Client or their affiliates, whether or not made pursuant to or in
reliance on information or advice furnished by Consultant hereunder,
shall be those of Client or such affiliates, and Consultant, its
employees or agents shall under no circumstances be liable for any
expense incurred or loss suffered by Client as a consequence of such
action or decisions.
XVII. CONTINUE OPERATIONS IN SUBSTANTIALLY SAME MANNER - Client will not
transfer, sell or hypothecate, assign or distribute any significant
portion of its assets currently in its possession except upon written
notice to the parties to this Agreement, and Client agrees to continue
operations in substantially the same manner as it is presently
functioning, until this agreement has been consummated.
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XVIII. MISCELLANEOUS.
A. Authority. The execution and performance of this Agreement have been
duly authorized by all requisite corporate action. This Agreement
constitutes a valid and binding obligation of the parties hereto.
B. Amendment. This Agreement may be amended or modified at any time
and in any manner only by an instrument in writing executed by the
parties hereto.
C. Waiver. No term of this Agreement shall be considered waived and no
breach excused by either party unless made in writing. No consent
waiver or excuse by either party, express or implied shall constitute a
subsequent consent, waiver or excuse.
D. Assignment
1. The rights and obligations of both parties under this Agreement
shall inure to the benefit of and shall be binding upon its successors
and assigns. There shall be no rights of transfer or assignment of this
Agreement by either party except with the prior written consent of the
other party.
2. Nothing in this Agreement, expressed or implied, is intended to
confer upon any person other than the parties and their successors, any
rights or remedies under this Agreement.
E. Notices. Any notice or other communication required or permitted by
this Agreement must be in writing and shall be deemed to be properly
given when delivered in person to an officer of the other party, when
deposited in the United States mails for transmittal by certified or
registered mail, postage prepaid, or when deposited with a public
telegraph company for transmittal or when sent by facsimile
transmission, charges prepaid provided that the communication is
addressed:
In the Case of Consultant to:
Jerry Conditt
4808 East Belknap Street
Fort Worth, Texas 76117
Telephone: (817) 222-2886
In the Case of Client to:
Genesis Capital Corporation of Nevada
11701 South Freeway
Burleson, Texas 76028
Telephone: (817) 293-9334
Facsimile: (817) 293-9336
or to such other person or address designated by Client in writing to
receive notice.
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F. Headings and Captions. The headings of paragraphs are included
solely for convenience. If a conflict exists between any heading and
the text of this Agreement, the text shall control.
G. Entire Agreement. This instrument and the exhibits to this
instrument contain the entire Agreement between the parties with
respect to the transaction contemplated by the Agreement. It may be
executed in any number of counterparts but the aggregate of the
counterparts together constitute only one and the same instrument.
H. Effect of Partial Invalidity. In the event that any one or more of
the provisions contained in this Agreement shall for any reason be held
to be invalid, illegal, or unenforceable in any respect, such
invalidity, illegality or un-enforceability shall not affect any other
provisions of this Agreement, but this Agreement shall be constructed
as if it never contained any such invalid, illegal or unenforceable
provisions.
I. Controlling Law. The validity, interpretation, and performance of
this Agreement shall be governed by the laws of the State of Texas,
without regard to its law on the conflict of laws. Any dispute arising
out of this Agreement shall be brought in a court of competent
jurisdiction in the State of Texas. The parties exclude any and all
statutes, law and treaties which would allow or require any dispute to
be decided in another forum or by other rules of decision than provided
in this Agreement.
J. Attorney's Fees. If any action at law or in equity, including an
action for declaratory relict, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to
recover actual attorney's fees court costs, and other costs incurred in
proceeding with the action from the other party. The attorney's fees,
court costs or other costs, may be ordered by the court in its decision
of any action described in this paragraph or may be enforced in a
separate action brought for determining attorneys fees, court costs, or
other costs. Should either party be represented by in-house counsel all
parties agree that party may recover attorney's fees incurred by that
in-house counsel in an amount equal to that attorney's normal fees for
similar matters, or, should that attorney not normally charge a fee, by
the prevailing rate charged by attorneys with similar background in
that legal community.
K. Time is of the Essence. Time is of the essence of this Agreement and
of each and every provision hereof
L. Mutual Cooperation The parties hereto shall cooperate with each
other to achieve the purpose of this Agreement, and shall execute such
other and further documents and take such other and further actions as
may be necessary or convenient to effect the transactions described
herein.
M. Indemnification. Client and Consultant agree to indemnify, hold
harmless and, at the party seeking indemnification's sole option,
defend the other from and against all demands, claims, actions, losses,
damages, liabilities, costs and expenses, including without limitation,
interest, penalties, court fees, and attorney's fees and expenses
asserted against or imposed or incurred by either party by reason of or
resulting from a breach of any representation, warranty, covenant
condition or agreement of the other party to this Agreement. Neither
party shall be responsible to the other party' for any consequential or
punitive damages.
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N. No Third Party Beneficiary. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person, other than the parties
hereto and their successors, any rights or remedies under or by reason
of this Agreement, unless this Agreement specifically states such
intent.
O. Facsimile Counterparts. If a party signs this Agreement and
transmits an electronic facsimile of the signature page to the other
party, the party who receives the transmission may rely upon the
electronic facsimile as a signed original of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement effective the date
first written above.
Jerry Conditt
/s/
Genesis Capital Corporation of Nevada
/s/
Reginald L. Davis, President
68
Exhibit 6(iii)
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ( "Agreement") is made effective this 19th
day of March 1999, by and between Global Universal, Inc., a Nevada corporation
("Consultant") and Genesis Capital Corporation of Nevada, a Nevada corporation
(the "Company").
WHEREAS, Consultant and Consultant's personnel are in the business of
assisting development stage companies through locating, evaluating, and
effecting mergers and acquisitions;
WHEREAS, Consultant also provides general financial advice to corporate
management and performs general administrative duties for publicly-held
companies; and
WHEREAS, the Company desires to retain Consultant to advise and assist
it, on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and
Consultant agree as follows:
1. Engagement
The Company hereby retains Consultant, effective the date hereof and
continuing until termination, as provided herein, to (1) assist the
Company in locating evaluating, and effecting a merger and/or
acquisition; (2) provide general financial advice to corporate
management; (3) provide general administrative duties and (4) assist in
the acquisition of various assets (collectively termed the "Services").
The Services are to be provided on a "best efforts" basis directly and
through Consultant's employees or others employed or retained and under
the direction of Consultant ("Consultant's Personnel"); provided,
however, that the Services are expressly agreed to exclude all legal
advice, accounting services or other services which require licenses or
certification.
2. Term
This Agreement shall have an initial term of one (1) year (the "Primary
Term"), with an effective date retroactive to the date services were
first performed by Consultant, which was on or about September 1, 1998,
and may be renewed at the Company's option by written notice of
renewal.
3. Time and Effort of Consultant
Consultant shall allocate time and Consultant's personnel as it deems
necessary to provide the Services. The particular amount of time may
vary from day to day or week to week. Consultant has provided a
statement identifying, in general, the tasks it has performed from
September 1, 1998 to March 19, 1999. The Company has reviewed this
statement and believes the time and effort expended by Consultant to be
reasonable for the tasks it has completed. Consultant will continue to
provide billing statements on a monthly basis or within (7) days of the
Company's request. These billing
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statements shall be conclusive evidence that the Services have been
performed. Additionally, in the absence of willful misfeasance, bad
faith, or reckless disregard for the obligations or duties hereunder by
Consultant, neither Consultant nor Consultant's personnel shall be
liable to the Company or any of its shareholders for any act or
omission in the course of or connected with rendering the Services,
including but not limited to losses that may be sustained in any
corporate act in any subsequent Asset Opportunity or Business
Opportunity (as defined herein) undertaken by the Company as a result
of advice provided by Consultant or Consultant's personnel.
4. Compensation
The Company agrees to pay Consultant a fee for the Services it has
provided from September 1, 1998 to March 19, 1999 (the "Initial Fee")
in the following manner: by issuing Four Hundred Seventy-Five Thousand
(475,000) shares of the Company's common stock issued pursuant to Rule
504 of Regulation D of the Securities Act of 1933 (the "'33 Act").
5. Compensation for Other Services
If the Company after the date hereof enters into a merger or
acquisition, or enters into an agreement for the purchase of assets, as
a direct or indirect result of Consultant's efforts, the Company agrees
to pay Consultant a fee in the manner described below.
If Consultant provides any material assistance to the Company in a
merger, acquisition or asset purchase of an entity ("Business
Opportunity"), which assistance includes (but is not limited to)
introducing the Business Opportunity to the Company or helping to
prepare documents used in negotiating such Business Opportunity,
Consultant shall be paid the following amounts ("M&A Fee"): $67,000 in
cash; and a promissory note in the amount of $133,000 (attached as
Exhibit "A"), secured by Eight Hundred Thirty Thousand (830,000) shares
of the Company's common stock issued pursuant to Rule 504 of Regulation
D of the '33 Act. The $67,000 in cash, the $133,000 promissory note,
and the Eight Hundred Thirty Thousand (830,000) shares securing such
promissory note shall be delivered to Consultant on the date the
Company signs a Merger, Acquisition or Asset Purchase Agreement. For
purposes of determining Consultant's M&A Fee, the Company's shares
shall be valued at $.10 per share.
If the Company acquires any asset or obtains any payment or other
benefit, other than a Business Opportunity described above, as a result
of Consultant's Services (an "Asset Opportunity"), the Company agrees
to pay Consultant 10% of the gross value of such Asset Opportunity. The
Company will pay Consultant in cash, shares of the Company or in like
kind for each Asset Opportunity the Company acquires as a result of
Consultant's efforts ("Consultant's Fee"). Such payment shall be made
on the date the Company substantially completes the transaction
involved with such Asset Opportunity.
The Initial Fee, Consultant's Fee, M&A Fee and any other shares issued
pursuant to this Agreement are in addition to any preferred shares paid
to Consultant for services rendered.
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6. Registration of Shares
Consultant agrees to accept the above-described shares as compensation,
based on exemptions from registration provided by Section 4(2) of the
'33 Act, Regulation D of the '33 Act, and applicable state securities
laws. The Company shall have no obligation to register Consultant's
shares.
7. Costs and Expenses
All third-party and out-of-pocket expenses incurred by Consultant in
the performance of the Services shall be paid by the Company, or shall
be reimbursed if paid by Consultant on behalf of the Company, within
ten (10) days of receipt of written notice by Consultant, provided that
the Company must approve in advance all such expenses in excess of $500
per month.
8. Place of Services
The Services provided by Consultant or Consultant's Personnel will be
performed at Consultant's offices except as otherwise mutually agreed
in writing by Consultant and the Company.
9. Independent Contractor
Consultant and Consultant's Personnel will act as independent
contractors in the performance of any duties under this Agreement.
Accordingly, Consultant will be responsible for paying all federal,
state, and local taxes on compensation paid under this Agreement,
including income and social security taxes, unemployment insurance, and
any other taxes due relative to Consultant's Personnel, and any and all
business license fees as may be required. This Agreement neither
expressly nor impliedly creates a relationship of principal and agent,
or employer and employee, between the Company and Consultant's
Personnel. Neither Consultant nor Consultant's Personnel are authorized
to enter into any agreements on behalf of the Company. The Company
expressly retains the right to approve, in its sole discretion, each
Asset Opportunity or Business Opportunity introduced by Consultant, and
to make all final decisions with respect to all transactions on any
Asset Opportunity or Business Opportunity.
10. Rejected Asset Opportunity or Business Opportunity
If, during the term of this Agreement, the Company makes a written
election not to proceed to acquire, participate or invest in any Asset
Opportunity or Business Opportunity identified and/or selected by
Consultant, notwithstanding the time and expense the Company may have
incurred reviewing such transaction, such Asset Opportunity or Business
Opportunity shall re-vest back to and become proprietary to Consultant.
Consultant shall be entitled to acquire or broker the sale or
investment in such rejected Asset Opportunity or Business Opportunity
for its own account, or submit such Asset Opportunity or Business
Opportunity elsewhere. In such event, Consultant shall be entitled to
any and all profits or fees resulting from Consultant's purchase,
referral or placement of any such rejected Asset Opportunity or
Business Opportunity, or from the Company's subsequent purchase or
financing with such Asset Opportunity or Business Opportunity in
circumvention of Consultant's reasonable expectation to be paid.
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11. No Agency Express or Implied
This Agreement creates neither a principal-agent nor an
employer-employee relationship, either express or implied, between the
Company and either Consultant or Consultant's Personnel.
12. Termination
The Company and Consultant may terminate this Agreement before the
Primary Term expires, on thirty (30) days written notice, with mutual
written consent. Absent mutual consent, and without prejudice to any
other remedy to which the terminating party may be entitled, either
party may terminate this Agreement with thirty (30) days written notice
under the following conditions:
(A) By the Company.
(i) If during the Primary Term of this Agreement, Consultant is unable
to provide the Services as set forth herein for thirty (30) consecutive
business days because of illness, accident, or other incapacity of
Consultant's personnel; or,
(ii) If Consultant willfully breaches or grossly neglects the duties
required to be performed hereunder; or,
(B) By Consultant.
(i) If the Company breaches this Agreement or fails to make any payment
or provide any information required hereunder; or
(ii) If the Company ceases business or, other than in a merger arranged
by Consultant, sells a controlling interest to a third party, or agrees
to a consolidation or merger of itself with or into another
corporation, or enters into such a transaction outside of the scope of
this Agreement, or sells substantially all of its assets to another
corporation, entity or individual outside the scope of this Agreement;
or
(iii) If the Company has a receiver appointed for its business or
assets, or otherwise becomes insolvent or unable to timely satisfy its
obligations in the ordinary course of business, including but not
limited to the obligation to pay the Initial Fee, the M&A Fee, or the
Consultant's Fee; or
(iv) If the Company institutes or has instituted against it any
bankruptcy proceeding, files a petition in a court of bankruptcy, is
adjudicated a bankrupt, or makes a general assignment for the benefit
of creditors; or
(v) If any disclosure made by the Company, either herein or subsequent
hereto, is materially false or misleading.
If Consultant terminates this Agreement without relying on one of the
conditions listed in B(i) through (v) above, or if this Agreement is
terminated by mutual written agreement before the Primary Term expires,
or if the Company terminates this Agreement for the reasons set forth
in A(i) and (ii) above,
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the Company shall only pay Consultant for unreimbursed expenses and for
any M&A Fee and/or Consultant's Fee accrued up to and including the
effective date of termination. If this Agreement is terminated by the
Company for any other reason, or by Consultant for the reasons set
forth in B(i) through (v) above, the Company shall pay Consultant for
unreimbursed expenses, for any M&A Fee accrued up to and including the
effective date of termination, and for the balance of the Consultant's
Fee for the remainder of the unexpired term of this Agreement.
13. Indemnification
Subject to the provisions herein, the Company and Consultant agree to
indemnify and defend each other, and hold each other harmless, from and
against all demands, claims, actions, losses, damages, liabilities,
costs and expenses, including without limitation interest, penalties,
attorneys' fees and expenses, asserted against, imposed on, or incurred
by either party by reason of or resulting from any action of, or the
breach of any representation, warranty, covenant, condition, or
agreement of, the other party to this Agreement.
14. Remedies
Consultant and the Company acknowledge that in the event of a breach of
this Agreement by either party, money damages would be inadequate, and
the non-breaching party would have no adequate remedy at law.
Accordingly, in the event of any controversy concerning the rights or
obligations under this Agreement, such rights or obligations shall be
enforceable in a court of equity by a decree of specific performance.
Such remedy, however, shall be cumulative and non-exclusive and shall
be in addition to any other remedy to which the parties may be
entitled.
15. Miscellaneous
(A) Subsequent Events. Consultant and the Company each agree to notify
the other party if, subsequent to the date of this Agreement, either
party incurs obligations which could compromise its efforts and
obligations under this Agreement.
(B) Amendment. This Agreement may be amended or modified at any time
and in any manner only by an instrument in writing executed by the
parties hereto.
(C) Further Actions and Assurances. At any time and from time to time,
each party agrees, at its or their expense, to take actions and to
execute and deliver documents as may be reasonably necessary to
effectuate the purposes of this Agreement.
(D) Waiver. Any failure of any party to this Agreement to comply with
any of its obligations, agreements, or conditions hereunder may be
waived in writing by the party to whom such compliance is owed. The
failure of any party to this Agreement to enforce at any time any of
the provisions of this Agreement shall in no way be construed to be a
waiver of any such provision or a waiver of the right of such party
thereafter to enforce each and every such provision. No waiver of any
breach of or non-compliance with this Agreement shall be held to be a
waiver of any other or subsequent breach or non-compliance.
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(E) Assignment. Neither this Agreement nor any right created by it
shall be assignable by either party without the prior written consent
of the other.
(F) Notices. Any notice or other communication required or permitted by
this Agreement must be in writing and shall be deemed to be properly
given when delivered in person to an officer of the other party, when
deposited in the United States mails for transmittal by certified or
registered mail, postage prepaid, when deposited with a public
telegraph company for transmittal, or when sent by facsimile
transmission, provided that the communication is addressed:
(i) In the case of the Company:
Genesis Capital Corporation of Nevada
11701 South Freeway
Burleson, Texas 76028
Telephone: (817) 293-9334
Facsimile: (817) 293-9336
(ii) In the case of Consultant:
Global Universal, Inc.
P.O. Box 6653
Fort Worth, Texas 76115
Telephone: (817) 293-9334
Facsimile: (817) 293-9336
or to such other person or address designated in writing by the Company
or Consultant to receive notice.
(G) Headings. The headings in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(H) Governing Law. This Agreement was negotiated and is being
contracted for in the United States of America, State of Nevada, and
shall be governed by the laws of the State of Nevada, and the United
States of America, notwithstanding any conflict-of-law provision to the
contrary.
(I) Binding Effect. This Agreement shall be binding on the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors, and assigns.
(J) Entire Agreement. This Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior agreements,
arrangements, or understandings between the parties relating to the
subject matter of this Agreement. No oral understandings, statements,
promises, or inducements contrary to the terms of this Agreement exist.
No representations, warranties, covenants, or conditions, express or
implied, other than as set forth herein, have been made by any party.
(K) Severability. If any part of this Agreement is deemed to be void,
illegal, or unenforceable, the balance of the Agreement shall remain in
full force and effect.
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(L) Counterparts. A facsimile, telecopy, or other reproduction of this
Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument, by one or more parties
hereto, and such executed copy may be delivered by facsimile or similar
instantaneous electronic transmission device pursuant to which the
signature of or on behalf of such party can be seen. In this event,
such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all
parties agree to execute an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.
(M) Time is of the Essence. Time is of the essence of this Agreement
and of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date above written.
"Consultant"
Global Universal, Inc.
a Nevada corporation
By: /s/
Name: Ronald Welborn
Title: President
The "Company"
Genesis Capital Corporation of Nevada
a Nevada corporation
By: /s/
Name: Reginald Davis
Title: President
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Exhibit A
"Promissory Note"
Recourse
$133,000 Dated: March 19, 1999
SECURED PROMISSORY NOTE
FOR VALUE RECEIVED, Genesis Capital Corporation of Nevada ("Maker")
promises to pay to Global Universal, Inc. ("Holder"), or to order, the principal
sum of One Hundred Thirty-Three Thousand dollars ($133,000).
1. Payments. The principal amount shall be paid in full WITHIN THREE (3) DAYS of
the written demand of Holder upon the Maker, but in any event the principal
amount shall be paid in full no later than June 1, 1999.
2. Interest. The obligation shall bear simple interest at the rate of 12% per
annum, commencing on the date this Note is made, and shall be paid in full on
the date(s) of payment identified in Paragraph 1 above, provided, however, that
the obligation shall bear interest at the rate of 24% per annum on the
occurrence of a default as set forth in Section 5 below.
3. Type and Place of Payments. Payments of principal and interest shall be made
in lawful money of the United States of America to the above-named Holder at
P.O. Box 6653, Fort Worth, Texas 76115, or to order.
4. Prepayment. Advance payment or payments may be made on the principal, without
penalty or forfeiture. There shall be no penalty for any prepayment.
5. Default. Upon the occurrence or during the continuance of any one or more of
the events listed below, Holder or the holder of this Note may forthwith or at
any time thereafter during the continuance of any such event, by notice in
writing to the Maker, declare the unpaid balance of the principal of this Note
to be immediately due and payable, and the principal shall become and shall be
immediately due and payable without presentation, demand, protest, notice of
protest, or other notice of dishonor, all of which are hereby expressly waived
by Maker, with full knowledge of the effect of such waiver. The events deemed as
defaults shall include without limitation the following:
(a) Maker's failure to pay the principal and interest of this Note or
any portion thereof when the same shall become due and payable (whether
at maturity as herein expressed, by acceleration, or otherwise) unless
cured within five (5) days after Holder or the holder of this Note
delivers to Maker written notice of default;
(b) Maker's filing a voluntary petition in bankruptcy; or filing a
voluntary petition seeking reorganization; or filing an answer
admitting the jurisdiction of the court and any material allegations of
an involuntary petition filed pursuant to any act of Congress relating
to bankruptcy or to any act purporting to be amendatory thereof; or
making an assignment for the benefit of its creditors; or applying for
or consenting to the appointment of any receiver or trustee for Maker
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or all or any substantial portion of its property; or assigning an
agent to liquidate any substantial part of Maker's assets;
(c) The entry of (i) any court order pursuant to any act of Congress
(or amendment thereof) relating to Maker's bankruptcy or
reorganization; or (ii) any court order approving an involuntary
petition for the bankruptcy or reorganization of the Maker; or (iii)
any court order appointing any receiver or trustee of or for Maker or
for all or any substantial portion of the Maker's property; or (iv) any
writ or warrant of attachment or any similar process issued by any
court against all or any substantial portion of the Maker's property
(unless such court orders, writs, or warrants as identified in
subpoints (i) to (iv) of this paragraph are vacated or stayed or
released or bonded within 60 days after their entry).
6. Attorneys' Fees & Construction. If either party hereto seeks to enforce any
portion of this Note through litigation or arbitration, then the prevailing
party shall be entitled to recover reasonable attorney's fees, costs, and
interest at the maximum legal rate. The parties agree that the interpretation of
any provision in this Agreement shall be governed by the laws of the State of
Texas. The parties further acknowledge that the terms of this Note were
negotiated with the Holder in the State of Texas, that the place of contracting
was in the State of Texas, and that the place for performing this note is in the
State of Texas. Accordingly, the parties irrevocably consent to the jurisdiction
of the United States District Court for the Northern District of Texas and agree
to bring any action solely in that Court. The parties expressly waive the
operation of any court ruling, statute, or other provision that would allow or
require suit to be brought in any other jurisdiction, with full knowledge of the
effect of such waiver.
7. Security. This Note is secured by the Maker's pledge of Eight Hundred Thirty
Thousand (830,000) shares of the common stock of Genesis Capital Corporation of
Nevada, issued pursuant to Rule 504 of Regulation D under the Securities Act of
1933 and issued in the name of the Holder. The shares shall be held by the
Holder pursuant to the Security Agreement between the Maker and the Holder dated
March 19, 1999. Any default, or any failure to make payment in full by the due
date(s) described herein, will result in the immediate and irrevocable delivery
of the above identified stock to the Holder.
By /s/
Name: Reginald L. Davis
Title: President
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Exhibit 6(iv)
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT ( "Agreement") is made effective this 19th
day of March 1999, by and between Hudson Consulting Group, Inc., a Nevada
corporation ("Consultant") and Genesis Capital Corporation of Nevada, a Nevada
corporation (the "Company").
WHEREAS, Consultant and Consultant's personnel are in the business of
assisting development stage companies through locating, evaluating, and
effecting mergers and acquisitions;
WHEREAS, Consultant also provides general financial advice to corporate
management and performs general administrative duties for publicly-held
companies; and
WHEREAS, the Company desires to retain Consultant to advise and assist
it, on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and
Consultant agree as follows:
1. Engagement
The Company hereby retains Consultant, effective the date hereof and
continuing until termination, as provided herein, to (1) assist the
Company in locating evaluating, and effecting a merger and/or
acquisition; (2) provide general financial advice to corporate
management; (3) provide general administrative duties and (4) assist in
the acquisition of various assets (collectively termed the "Services").
The Services are to be provided on a "best efforts" basis directly and
through Consultant's employees or others employed or retained and under
the direction of Consultant ("Consultant's Personnel"); provided,
however, that the Services are expressly agreed to exclude all legal
advice, accounting services or other services which require licenses or
certification.
2. Term
This Agreement shall have an initial term of one (1) year (the "Primary
Term"), with an effective date retroactive to the date services were
first performed by Consultant, which was on or about September 1, 1998,
and may be renewed at the Company's option by written notice of
renewal.
3. Time and Effort of Consultant
Consultant shall allocate time and Consultant's personnel as it deems
necessary to provide the Services. The particular amount of time may
vary from day to day or week to week. Consultant has provided a
statement identifying, in general, the tasks it has performed from
September 1, 1998 to March 19, 1999. The Company has reviewed this
statement and believes the time and effort expended by Consultant to be
reasonable for the tasks it has completed. Consultant will continue to
provide billing statements on a monthly basis or within (7) days of the
Company's request. These billing
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statements shall be conclusive evidence that the Services have been
performed. Additionally, in the absence of willful misfeasance, bad
faith, or reckless disregard for the obligations or duties hereunder by
Consultant, neither Consultant nor Consultant's personnel shall be
liable to the Company or any of its shareholders for any act or
omission in the course of or connected with rendering the Services,
including but not limited to losses that may be sustained in any
corporate act in any subsequent Asset Opportunity or Business
Opportunity (as defined herein) undertaken by the Company as a result
of advice provided by Consultant or Consultant's personnel.
4. Compensation
The Company agrees to pay Consultant a fee for the Services it has
provided from September 1, 1998 to March 19, 1999 (the "Initial Fee")
in the following manner: by issuing Four Hundred Fifty-Five Thousand
(455,000) shares of the Company's common stock issued pursuant to Rule
504 of Regulation D of the Securities Act of 1933 (the "'33 Act").
5. Compensation for Other Services
If the Company after the date hereof enters into a merger or
acquisition, or enters into an agreement for the purchase of assets, as
a direct or indirect result of Consultant's efforts, the Company agrees
to pay Consultant a fee in the manner described below.
If Consultant provides any material assistance to the Company in a
merger, acquisition or asset purchase of an entity ("Business
Opportunity"), which assistance includes (but is not limited to)
introducing the Business Opportunity to the Company or helping to
prepare documents used in negotiating such Business Opportunity,
Consultant shall be paid the following amounts ("M&A Fee"): $33,000 in
cash; and a promissory note in the amount of $67,000 (attached as
Exhibit "A"), secured by Six Hundred Seventy Thousand (670,000) shares
of the Company's common stock issued pursuant to Rule 504 of Regulation
D of the '33 Act. The $33,000 in cash, the $67,000 promissory note, and
the Six Hundred Seventy Thousand (670,000) shares securing such
promissory note shall be delivered to Consultant on the date the
Company signs a Merger, Acquisition or Asset Purchase Agreement. For
purposes of determining Consultant's M&A Fee, the Company's shares
shall be valued at $.10 per share.
If the Company acquires any asset or obtains any payment or other
benefit, other than a Business Opportunity described above, as a result
of Consultant's Services (an "Asset Opportunity"), the Company agrees
to pay Consultant 10% of the gross value of such Asset Opportunity. The
Company will pay Consultant in cash, shares of the Company or in like
kind for each Asset Opportunity the Company acquires as a result of
Consultant's efforts ("Consultant's Fee"). Such payment shall be made
on the date the Company substantially completes the transaction
involved with such Asset Opportunity.
The Initial Fee, Consultant's Fee, M&A Fee and any other shares issued
pursuant to this Agreement are in addition to any preferred shares paid
to Consultant for services rendered.
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6. Registration of Shares
Consultant agrees to accept the above-described shares as compensation,
based on exemptions from registration provided by Section 4(2) of the
'33 Act, Regulation D of the '33 Act, and applicable state securities
laws. The Company shall have no obligation to register Consultant's
shares.
7. Costs and Expenses
All third-party and out-of-pocket expenses incurred by Consultant in
the performance of the Services shall be paid by the Company, or shall
be reimbursed if paid by Consultant on behalf of the Company, within
ten (10) days of receipt of written notice by Consultant, provided that
the Company must approve in advance all such expenses in excess of $500
per month.
8. Place of Services
The Services provided by Consultant or Consultant's Personnel will be
performed at Consultant's offices except as otherwise mutually agreed
in writing by Consultant and the Company.
9. Independent Contractor
Consultant and Consultant's Personnel will act as independent
contractors in the performance of any duties under this Agreement.
Accordingly, Consultant will be responsible for paying all federal,
state, and local taxes on compensation paid under this Agreement,
including income and social security taxes, unemployment insurance, and
any other taxes due relative to Consultant's Personnel, and any and all
business license fees as may be required. This Agreement neither
expressly nor impliedly creates a relationship of principal and agent,
or employer and employee, between the Company and Consultant's
Personnel. Neither Consultant nor Consultant's Personnel are authorized
to enter into any agreements on behalf of the Company. The Company
expressly retains the right to approve, in its sole discretion, each
Asset Opportunity or Business Opportunity introduced by Consultant, and
to make all final decisions with respect to all transactions on any
Asset Opportunity or Business Opportunity.
10. Rejected Asset Opportunity or Business Opportunity
If, during the term of this Agreement, the Company makes a written
election not to proceed to acquire, participate or invest in any Asset
Opportunity or Business Opportunity identified and/or selected by
Consultant, notwithstanding the time and expense the Company may have
incurred reviewing such transaction, such Asset Opportunity or Business
Opportunity shall re-vest back to and become proprietary to Consultant.
Consultant shall be entitled to acquire or broker the sale or
investment in such rejected Asset Opportunity or Business Opportunity
for its own account, or submit such Asset Opportunity or Business
Opportunity elsewhere. In such event, Consultant shall be entitled to
any and all profits or fees resulting from Consultant's purchase,
referral or placement of any such rejected Asset Opportunity or
Business Opportunity, or from the Company's subsequent purchase or
financing with such Asset Opportunity or Business Opportunity in
circumvention of Consultant's reasonable expectation to be paid.
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11. No Agency Express or Implied
This Agreement creates neither a principal-agent nor an
employer-employee relationship, either express or implied, between the
Company and either Consultant or Consultant's Personnel.
12. Termination
The Company and Consultant may terminate this Agreement before the
Primary Term expires, on thirty (30) days written notice, with mutual
written consent. Absent mutual consent, and without prejudice to any
other remedy to which the terminating party may be entitled, either
party may terminate this Agreement with thirty (30) days written notice
under the following conditions:
(A) By the Company.
(i) If during the Primary Term of this Agreement, Consultant is unable
to provide the Services as set forth herein for thirty (30) consecutive
business days because of illness, accident, or other incapacity of
Consultant's personnel; or,
(ii) If Consultant willfully breaches or grossly neglects the duties
required to be performed hereunder; or,
(B) By Consultant.
(i) If the Company breaches this Agreement or fails to make any payment
or provide any information required hereunder; or
(ii) If the Company ceases business or, other than in a merger arranged
by Consultant, sells a controlling interest to a third party, or agrees
to a consolidation or merger of itself with or into another
corporation, or enters into such a transaction outside of the scope of
this Agreement, or sells substantially all of its assets to another
corporation, entity or individual outside the scope of this Agreement;
or
(iii) If the Company has a receiver appointed for its business or
assets, or otherwise becomes insolvent or unable to timely satisfy its
obligations in the ordinary course of business, including but not
limited to the obligation to pay the Initial Fee, the M&A Fee, or the
Consultant's Fee; or
(iv) If the Company institutes or has instituted against it any
bankruptcy proceeding, files a petition in a court of bankruptcy, is
adjudicated a bankrupt, or makes a general assignment for the benefit
of creditors; or
(v) If any disclosure made by the Company, either herein or subsequent
hereto, is materially false or misleading.
If Consultant terminates this Agreement without relying on one of the
conditions listed in B(i) through (v) above, or if this Agreement is
terminated by mutual written agreement before the Primary Term expires,
or if the Company terminates this Agreement for the reasons set forth
in A(i) and (ii) above, the Company shall only pay Consultant for
unreimbursed expenses and for any M&A Fee and/or
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Consultant's Fee accrued up to and including the effective date of
termination. If this Agreement is terminated by the Company for any
other reason, or by Consultant for the reasons set forth in B(i)
through (v) above, the Company shall pay Consultant for unreimbursed
expenses, for any M&A Fee accrued up to and including the effective
date of termination, and for the balance of the Consultant's Fee for
the remainder of the unexpired term of this Agreement.
13. Indemnification
Subject to the provisions herein, the Company and Consultant agree to
indemnify and defend each other, and hold each other harmless, from and
against all demands, claims, actions, losses, damages, liabilities,
costs and expenses, including without limitation interest, penalties,
attorneys' fees and expenses, asserted against, imposed on, or incurred
by either party by reason of or resulting from any action of, or the
breach of any representation, warranty, covenant, condition, or
agreement of, the other party to this Agreement.
14. Remedies
Consultant and the Company acknowledge that in the event of a breach of
this Agreement by either party, money damages would be inadequate, and
the non-breaching party would have no adequate remedy at law.
Accordingly, in the event of any controversy concerning the rights or
obligations under this Agreement, such rights or obligations shall be
enforceable in a court of equity by a decree of specific performance.
Such remedy, however, shall be cumulative and non-exclusive and shall
be in addition to any other remedy to which the parties may be
entitled.
15. Miscellaneous
(A) Subsequent Events. Consultant and the Company each agree to notify
the other party if, subsequent to the date of this Agreement, either
party incurs obligations which could compromise its efforts and
obligations under this Agreement.
(B) Amendment. This Agreement may be amended or modified at any time
and in any manner only by an instrument in writing executed by the
parties hereto.
(C) Further Actions and Assurances. At any time and from time to time,
each party agrees, at its or their expense, to take actions and to
execute and deliver documents as may be reasonably necessary to
effectuate the purposes of this Agreement.
(D) Waiver. Any failure of any party to this Agreement to comply with
any of its obligations, agreements, or conditions hereunder may be
waived in writing by the party to whom such compliance is owed. The
failure of any party to this Agreement to enforce at any time any of
the provisions of this Agreement shall in no way be construed to be a
waiver of any such provision or a waiver of the right of such party
thereafter to enforce each and every such provision. No waiver of any
breach of or non-compliance with this Agreement shall be held to be a
waiver of any other or subsequent breach or non-compliance.
(E) Assignment. Neither this Agreement nor any right created by it
shall be assignable by either party without the prior written consent
of the other.
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(F) Notices. Any notice or other communication required or permitted by
this Agreement must be in writing and shall be deemed to be properly
given when delivered in person to an officer of the other party, when
deposited in the United States mails for transmittal by certified or
registered mail, postage prepaid, when deposited with a public
telegraph company for transmittal, or when sent by facsimile
transmission, provided that the communication is addressed:
(i) In the case of the Company:
Genesis Capital Corporation of Nevada
11701 South Freeway
Burleson, Texas 76028
Telephone: (817) 293-9334
Facsimile: (817) 293-9336
(ii) In the case of Consultant:
Hudson Consulting Group, Inc.
268 West 400 South, Suite 300
Salt Lake City, Utah 84101
Telephone: (801) 575-8073
Facsimile: (801) 575-8092
or to such other person or address designated in writing by the Company
or Consultant to receive notice.
(G) Headings. The headings in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(H) Governing Law. The parties agree that this Agreement was negotiated
in, and the place of performance is in, and the place of contracting is
in, the United States of America, State of Utah. Accordingly, this
Agreement shall be governed by the laws of the State of Utah, and of
the United States of America, notwithstanding any conflict-of-law
provision to the contrary. The parties further agree that any action
brought to interpret or enforce any provision of this Agreement shall
be brought exclusively in a court of competent jurisdiction within Salt
Lake County, State of Utah. The parties mutually agree to waive the
operation of any court ruling, statute, or other provision which would
allow or require an action to be brought in any other jurisdiction or
to be governed by any other law than as agreed to herein. The parties
make this waiver with full understanding of its effect.
(I) Binding Effect. This Agreement shall be binding on the parties
hereto and inure to the benefit of the parties, their respective heirs,
administrators, executors, successors, and assigns.
(J) Entire Agreement. This Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior agreements,
arrangements, or understandings between the parties relating to the
subject matter of this Agreement. No oral understandings, statements,
promises, or inducements contrary to the terms of this Agreement exist.
No representations, warranties, covenants, or conditions, express or
implied, other than as set forth herein, have been made by any party.
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(K) Severability. If any part of this Agreement is deemed to be void,
illegal, or unenforceable, the balance of the Agreement shall remain in
full force and effect.
(L) Counterparts. A facsimile, telecopy, or other reproduction of this
Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument, by one or more parties
hereto, and such executed copy may be delivered by facsimile or similar
instantaneous electronic transmission device pursuant to which the
signature of or on behalf of such party can be seen. In this event,
such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all
parties agree to execute an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.
(M) Time is of the Essence. Time is of the essence of this Agreement
and of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date above written.
"Consultant"
Hudson Consulting Group, Inc.
a Nevada corporation
By: /s/
Name: Richard Surber
Title: President
The "Company"
Genesis Capital Corporation of Nevada
a Nevada corporation
By: /s/
Name: Reginald Davis
Title: President
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Exhibit A
"Promissory Note"
Recourse
$67,000 Dated: March 19, 1999
SECURED PROMISSORY NOTE
FOR VALUE RECEIVED, Genesis Capital Corporation of Nevada ("Maker")
promises to pay to Hudson Consulting Group, Inc. ("Holder"), or to order, the
principal sum of Sixty-Seven Thousand dollars ($67,000).
1. Payments. The principal amount shall be paid in full WITHIN THREE (3) DAYS of
the written demand of Holder upon the Maker, but in any event the principal
amount shall be paid in full no later than June 1, 1999.
2. Interest. The obligation shall bear simple interest at the rate of 12% per
annum, commencing on the date this Note is made, and shall be paid in full on
the date(s) of payment identified in Paragraph 1, above, provided, however, that
the obligation shall bear interest at the rate of 24% per annum on the
occurrence of a default as set forth in Section 5 below.
3. Type and Place of Payments. Payments of principal and interest shall be made
in lawful money of the United States of America to the above-named Holder at 268
West 400 South, Suite 300, Salt Lake City, Utah 84101, or to order.
4. Prepayment. Advance payment or payments may be made on the principal, without
penalty or forfeiture. There shall be no penalty for any prepayment.
5. Default. Upon the occurrence or during the continuance of any one or more of
the events listed below, Holder or the holder of this Note may forthwith or at
any time thereafter during the continuance of any such event, by notice in
writing to the Maker, declare the unpaid balance of the principal of this Note
to be immediately due and payable, and the principal shall become and shall be
immediately due and payable without presentation, demand, protest, notice of
protest, or other notice of dishonor, all of which are hereby expressly waived
by Maker, with full knowledge of the effect of such waiver. The events deemed as
defaults shall include without limitation the following:
(a) Maker's failure to pay the principal and interest of this Note or
any portion thereof when the same shall become due and payable (whether
at maturity as herein expressed, by acceleration, or otherwise) unless
cured within five (5) days after Holder or the holder of this Note
delivers to Maker written notice of default;
(b) Maker's filing a voluntary petition in bankruptcy; or filing a
voluntary petition seeking reorganization; or filing an answer
admitting the jurisdiction of the court and any material allegations of
an involuntary petition filed pursuant to any act of Congress relating
to bankruptcy or to any act purporting to be amendatory thereof; or
making an assignment for the benefit of its creditors; or applying for
or consenting to the appointment of any receiver or trustee for Maker
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or all or any substantial portion of its property; or assigning an
agent to liquidate any substantial part of Maker's assets;
(c) The entry of (i) any court order pursuant to any act of Congress
(or amendment thereof) relating to Maker's bankruptcy or
reorganization; or (ii) any court order approving an involuntary
petition for the bankruptcy or reorganization of the Maker; or (iii)
any court order appointing any receiver or trustee of or for Maker or
for all or any substantial portion of the Maker's property; or (iv) any
writ or warrant of attachment or any similar process issued by any
court against all or any substantial portion of the Maker's property
(unless such court orders, writs, or warrants as identified in
subpoints (i) to (iv) of this paragraph are vacated or stayed or
released or bonded within 60 days after their entry).
6. Attorneys' Fees & Construction. If either party hereto seeks to enforce any
portion of this Note through litigation or arbitration, then the prevailing
party shall be entitled to recover reasonable attorney's fees, costs, and
interest at the maximum legal rate. The parties agree that the interpretation of
any provision in this Agreement shall be governed by the laws of the State of
Utah. The parties further acknowledge that the terms of this Note were
negotiated with the Holder in the State of Utah, that the place of contracting
was in the State of Utah, and that the place for performing this note is in the
State of Utah. Accordingly, the parties irrevocably consent to the jurisdiction
of the United States District Court for the District of Utah and agree to bring
any action solely in that Court. The parties expressly waive the operation of
any court ruling, statute, or other provision that would allow or require suit
to be brought in any other jurisdiction, with full knowledge of the effect of
such waiver.
7. Security. This Note is secured by the pledge of Six Hundred Seventy Thousand
shares of the common stock of Genesis Capital Corporation of Nevada, issued
pursuant to Rule 504 of Regulation D under the Securities Act of 1933 and issued
in the name of the Holder. The shares shall be held by the Holder pursuant to
the Security Agreement between the Maker and the Holder dated March 19, 1999.
Any default, or any failure to make payment in full by the due date(s) described
herein, will result in the immediate and irrevocable delivery of the above
identified stock to the Holder.
By /s/
Name: Reginald L. Davis
Title: President
86
Exhibit 6(v)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is made and effective this 19th
day of March, 1999 by and between Genesis Capital Corporation of Nevada, a
Nevada corporation having its principal offices at 11701 South Freeway,
Burleson, Texas, 76028 ("Genesis") and Global Universal, Inc., a Nevada
corporation having its principal address at P.O. Box 6653, Fort Worth, Texas
76115 ("Global" or "Secured Party").
RECITALS
A. Genesis has entered into a Consulting Agreement with Global, in
which Genesis agreed to pay Global for certain consulting services therein
specified.
B. Genesis has signed a Secured Promissory Note in the amount of
$133,000 (the "Promissory Note") as partial payment of its obligations to Global
under the above-mentioned Consulting Agreement.
C. Genesis has pledged Eight Hundred Thirty Thousand (830,000) shares
of its common stock issued pursuant to Rule 504 of Regulation D promulgated
under the Securities Act of 1933 as collateral for the Secured Promissory Note.
D. Genesis desires to give, and Global desires to receive, a security
interest in the shares of Genesis common stock until such time as the Secured
Party shall be paid in full under the terms of the Secured Promissory Note
described above.
AGREEMENT
NOW, THEREFORE, in exchange for the mutual promises, covenants and
agreements described herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Genesis and Global
agree as follows:
1. Definitions. The parties agree to define the following terms in the
following manner:
a. "Collateral" means the certificate(s) for shares of stock
corresponding in type and amount to those set forth in the Secured
Promissory Note signed by Genesis on March 19, 1999
2. Security Interest. Genesis hereby grants to Global a security interest
in the Collateral until such time as Genesis has satisfied its
obligation to Global under the terms of the Secured Promissory Note.
3. Representations and Warranties of Genesis. Genesis represents and
warrants to Global that, with respect to the Collateral, Genesis
possesses and shall possess at all times while this Security Agreement
is in effect, full and complete and unencumbered title to the
Collateral, subject only to the rights of Global's security interest
described herein.
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4. Covenants of Genesis. Genesis agrees and covenants with Global that:
a. Genesis shall not at any time cause or suffer any part of the
Collateral, or any interest in any of the Collateral, to be subject to
any Security Interest other than that of Global.
b. Genesis shall defend the Collateral against the claims and demands
of all persons other than Global.
c. Genesis shall at all times promptly pay and discharge, at Genesis'
expense, all taxes, assessments and other government charges which
constitute or may become liens on the Collateral.
d. Genesis shall pay all costs, expenses, charges and other
obligations, including without limitation reasonable attorneys' fees,
suffered or incurred by Global to protect, preserve, maintain, and/or
obtain possession of or title to the Collateral; to perfect, protect,
preserve and/or maintain the security interest granted by this Security
Agreement; and to enforce or assert any one or more of Global's rights,
powers, remedies, and/or defenses under this Security Agreement.
5. Events of Default. Genesis shall be in default under this Security
Agreement if Genesis fails to pay the obligation to Global in full as
required by the Promissory Note.
6. Remedies on Event of Default. At any time during or following the
occurrence of one or more of the events of default under section 5 of
this Agreement, Global may, at its option, assert or avail itself of
any one or more of the rights, powers, remedies and defenses conferred
on Global under the laws governing the construction and interpretation
of this Agreement; and upon receipt of the Collateral, Global may, at
its option, avail itself of any one or more of the rights, powers, and
remedies of a secured party which are conferred on the Secured Party
under any other appropriate law.
7. Application of Proceeds. Any and all proceeds resulting from the
disposition of all or any part of the Collateral, following the
occurrence of one or more events of default, shall be applied first to
pay and provide for Genesis' obligation to Global under the Promissory
Note; any balance remaining may be paid to Genesis or its successors
and assigns, subject to their respective interests.
8. Notices. Any notices required by this Agreement or given in connection
with it shall be in writing and shall be given to the appropriate party
by one of the following methods: personal delivery; certified mail,
postage prepaid; overnight delivery service via Federal Express,
Airborne Express, or similarly reliable service; or by facsimile
transmission, provided that the transmission is verified by a
confirmation report.
9. Severability and Headings. The invalidity or unenforceability of any
provision in this Agreement shall not cause any other provision to be
invalid or unenforceable. Headings used in this Agreement are provided
for convenience only and shall not be used to construe meaning or
intent.
10. Final Agreement. This Agreement constitutes the final agreement and
understanding between the parties on the subject matter hereof and
supersedes all prior memoranda, understandings or agreements whether
oral or written, with the sole exception that this Agreement shall be
construed
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in conjunction with the Promissory Note referenced above. This
Agreement may be modified only by a further writing duly executed by
both parties.
11. Construction. The parties agree that the interpretation of any
provision in this Agreement shall be governed by the laws of the State
of Texas. The parties further acknowledge that the terms of this Agree-
ment were negotiated in the State of Texas, that the place of contract-
ing was in the State of Texas, and that the place for performance is in
the State of Texas. Accordingly, the parties irrevocably consent to the
jurisdiction of the United States District Court for the Northern
District of Texas and agree to bring any action solely in that Court.
The parties expressly waive the operation of any court ruling, statute,
or other provision that would allow or require suit to be brought in
any other jurisdiction, with full knowledge of the effect of such
waiver.
12. Assignment and Third-Party Beneficiaries. This Agreement shall be
binding upon and inure to the benefit of the successors and assigns of
the parties.
IN WITNESS WHEREOF, Genesis and Global have executed this Security
Agreement on the date first written above.
Genesis Capital Corporation of Nevada
By: /s/
Name: Reginald L. Davis
Title: President
Global Universal, Inc.
By: /s/
Name: Ronald Welborn
Title: President
89
Exhibit 6(vi)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is made and effective this 19th
day of March, 1999 by and between Genesis Capital Corporation of Nevada, a
Nevada corporation having its principal offices at 11701 South Freeway,
Burleson, Texas, 76028 ("Genesis") and Hudson Consulting Group, Inc., a Nevada
corporation having its principal offices at 268 West 400 South, Suite 300, Salt
Lake City, Utah 84101 ("Hudson" or "Secured Party").
RECITALS
A. Genesis has entered into a Consulting Agreement with Hudson, in
which Genesis agreed to pay Hudson for certain consulting services therein
specified.
B. Genesis has signed a Secured Promissory Note in the amount of
$67,000 (the "Promissory Note") as partial payment of its obligations to Hudson
under the above-mentioned Consulting Agreement.
C. Genesis has pledged Six Hundred Seventy Thousand (670,000) shares of
its common stock issued pursuant to Rule 504 of Regulation D promulgated under
the Securities Act of 1933 as collateral for the Secured Promissory Note.
D. Genesis desires to give, and Hudson desires to receive, a security
interest in the shares of Genesis common stock until such time as the Secured
Party shall be paid in full under the terms of the Secured Promissory Note
described above.
AGREEMENT
NOW, THEREFORE, in exchange for the mutual promises, covenants and
agreements described herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Genesis and Hudson
agree as follows:
1. Definitions. The parties agree to define the following terms in the
following manner:
a. "Collateral" means the certificate(s) for shares of stock
corresponding in type and amount to those set forth in the Secured
Promissory Note signed by Genesis on March 19, 1999
2. Security Interest. Genesis hereby grants to Hudson a security interest
in the Collateral until such time as Genesis has satisfied its
obligation to Hudson under the terms of the Secured Promissory Note.
3. Representations and Warranties of Genesis. Genesis represents and
warrants to Hudson that, with respect to the Collateral, Genesis
possesses and shall possess at all times while this Security Agreement
is in effect, full and complete and unencumbered title to the
Collateral, subject only to the rights of Hudson's security interest
described herein.
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4. Covenants of Genesis. Genesis agrees and covenants with Hudson that:
a. Genesis shall not at any time cause or suffer any part of the
Collateral, or any interest in any of the Collateral, to be subject to
any Security Interest other than that of Hudson.
b. Genesis shall defend the Collateral against the claims and demands
of all persons other than Hudson.
c. Genesis shall at all times promptly pay and discharge, at Genesis'
expense, all taxes, assessments and other government charges which
constitute or may become liens on the Collateral.
d. Genesis shall pay all costs, expenses, charges and other
obligations, including without limitation reasonable attorneys' fees,
suffered or incurred by Hudson to protect, preserve, maintain, and/or
obtain possession of or title to the Collateral; to perfect, protect,
preserve and/or maintain the security interest granted by this Security
Agreement; and to enforce or assert any one or more of Hudson's rights,
powers, remedies, and/or defenses under this Security Agreement.
5. Events of Default. Genesis shall be in default under this Security
Agreement if Genesis fails to pay the obligation to Hudson in full as
required by the Promissory Note.
6. Remedies on Event of Default. At any time during or following the
occurrence of one or more of the events of default under section 5 of
this Agreement, Hudson may, at its option, assert or avail itself of
any one or more of the rights, powers, remedies and defenses conferred
on Hudson under the laws governing the construction and interpretation
of this Agreement; and upon receipt of the Collateral, Hudson may, at
its option, avail itself of any one or more of the rights, powers, and
remedies of a secured party which are conferred on the Secured Party
under any other appropriate law.
7. Application of Proceeds. Any and all proceeds resulting from the
disposition of all or any part of the Collateral, following the
occurrence of one or more events of default, shall be applied first to
pay and provide for Genesis' obligation to Hudson under the Promissory
Note; any balance remaining may be paid to Genesis or its successors
and assigns, subject to their respective interests.
8. Notices. Any notices required by this Agreement or given in connection
with it shall be in writing and shall be given to the appropriate party
by one of the following methods: personal delivery; certified mail,
postage prepaid; overnight delivery service via Federal Express,
Airborne Express, or similarly reliable service; or by facsimile
transmission, provided that the transmission is verified by a
confirmation report.
9. Severability and Headings. The invalidity or unenforceability of any
provision in this Agreement shall not cause any other provision to be
invalid or unenforceable. Headings used in this Agreement are provided
for convenience only and shall not be used to construe meaning or
intent.
10. Final Agreement. This Agreement constitutes the final agreement and
understanding between the parties on the subject matter hereof and
supersedes all prior memoranda, understandings or agreements whether
oral or written, with the sole exception that this Agreement shall be
construed
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in conjunction with the Promissory Note referenced above. This
Agreement may be modified only by a further writing duly executed by
both parties.
11. Construction. The parties agree that the interpretation of any
provision in this Agreement shall be governed by the laws of the State
of Utah. The parties further acknowledge that the terms of this
Agreement were negotiated in the State of Utah, that the place of con-
tracting was in the State of Utah, and that the place for performance
is in the State of Utah. Accordingly, the parties irrevocably consent
to the jurisdiction of the United States District Court for the
District of Utah and agree to bring any action solely in that Court.
The parties expressly waive the operation of any court ruling, statute,
or other provision that would allow or require suit to be brought in
any other jurisdiction, with full knowledge of the effect of such
waiver.
12. Assignment and Third-Party Beneficiaries. This Agreement shall be
binding upon and inure to the benefit of the successors and assigns of
the parties.
IN WITNESS WHEREOF, Genesis and Hudson have executed this Security
Agreement on the date first written above.
Genesis Capital Corporation of Nevada
By: /s/
Name: Reginald L. Davis
Title: President
Hudson Consulting Group, Inc.
By: /s/
Name: Richard Surber
Title: President
92
Exhibit 6(vii)
ADDENDUM #1 TO
ACQUISITION AGREEMENT
THIS ADDENDUM #1 TO ACQUISITION AGREEMENT is made effective this 10th
day of May, 1999, by, between and among Genesis Capital Corporation of Nevada, a
Nevada corporation ("Genesis"); Motor Sports on Dirt, Inc., a Texas Corporation
("Motor"); and the persons listed on Exhibit "A" attached hereto and made a part
hereof, being all of Motor's stockholders as of the date of this Agreement (the
"Sellers").
WHEREAS, the parties to the original Acquisition Agreement dated April
6, 1999 (the "Acquisition Agreement," attached as Exhibit B to this Addendum and
incorporated herein by this reference) mutually desire to amend and modify their
previous agreement according to the terms of this addendum;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree to amend and modify their previous agreement as follows:
A. Paragraph VII(B) of the Acquisition Agreement is hereby amended to add
a new subparagraph 5, which reads as follows:
"5. Genesis' obligation to pay the Purchase Price of Eleven Million Seven
Hundred Ninety Thousand (11,790,000) shares of Genesis' Common Stock
shall not arise, and shall not be paid, until all of the following
conditions precedent occur:
(i) Genesis has received $100,000 in cash from Erie Holdings for the
purchase of One Million (1,000,000) shares of Genesis' common stock
issued under Rule 504 of Regulation D, and Genesis has paid that cash
toward reducing the $300,000 liability which Genesis owes for
consulting and merger/acquisition services (such payment is further
referenced in Paragraph IV(F) of the original Agreement, and Paragraph
IV(F) is hereby modified according to this Paragraph VII(B)(5)(i));
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(ii) Motor pays the remaining $200,000 liability which Genesis owes for
consulting and merger/acquisition services (i.e., that portion of the
liability left after the payment described in VII(B)(5)(i) above);
(iii) Motor pays the $250,000 liability which Genesis owes for the
repurchase of 600,000 shares of Genesis' preferred stock; and
(iv) Motor provides to Genesis an opinion letter from a duly licensed
attorney (whose practice is limited primarily to securities law) that
clearly concludes Erie Holdings, Ltd. is not an "affiliate" of Motor,
Genesis, or any other party to this agreement, as that term is used
under the Securities Act of 1933, as amended, and the Securities
Exchange Act of 1934, as amended, as well as the rules and regulations
promulgated thereunder.
(v) Motor provides to Genesis an opinion letter from a duly licensed
attorney (whose practice is limited primarily to securities law) that
clearly concludes that the 1,000,000 shares of Genesis stock issued to
Erie Holdings, Ltd. are exempt from registration under Rule 504 of
Regulation D, and that Genesis does not have a duty to place a
restrictive legend on such stock."
All remaining provisions of the Acquisition Agreement shall remain in
full force and effect as modified by this Addendum #1.
IN WITNESS WHEREOF, the parties have hereto placed their signatures.
GENESIS CAPITAL CORPORATION
OF NEVADA
By: /s/
Name: Reginald Davis
Title: President
MOTOR SPORTS ON DIRT, INC.
By: /s/
Name: Donald Walker
Title: President
SELLERS:
/s/
First Walker Family Trust, Shareholder,
Sally J. Rogers, Trustee
/s/
Arnon O'Brien
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APPENDIX A
ALL OF MOTOR'S SHAREHOLDERS
# OF SHARES # OF
SHAREHOLDER NAME OF MOTOR SHARES OF
GENESIS
First Walker Family Trust, 500 5,395,000
Sally J. Rogers, Trustee
Arnon O'Brien 500 5,395,000
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APPENDIX B
ORIGINAL ACQUISITION AGREEMENT
[Incorporated by reference to Exhibit 8(iii), below, attached to this
Registration Statement]
96
Exhibit 6 (viii)
DEBT SETTLEMENT AGREEMENT
THIS DEBT SETTLEMENT AGREEMENT ("Agreement"), is hereby made effective
on June 11, 1999, by and between Hudson Consulting Group, Inc., a Nevada
corporation, and Global Universal, Inc., a Nevada corporation (hereinafter
collectively referred to as "Consultants"); and Genesis Capital Corporation of
Nevada, a Nevada corporation; Motor Sports on Dirt, Inc., a Texas corporation;
Calbear Gas, LLC, a Texas limited liability company; and Donald L. Walker, an
individual resident of Arkansas (hereinafter collectively referred to as
"Debtors").
Recitals
WHEREAS, Genesis Capital Corporation of Nevada ("Genesis") incurred
certain debts by entering into Consulting Agreements with the Consultants
(attached as Exhibits A and B), which agreements were accompanied by Security
Agreements (attached as Exhibits C and D) and Secured Promissory Notes (attached
as Exhibits E and F), all of which agreements were executed by Genesis in favor
of the Consultants;
WHEREAS, Genesis incurred an additional debt by entering into a
Preferred Stock Buyback Agreement (attached as Exhibit G) with one of the
Consultants (Global Universal, Inc.);
WHEREAS, Motor Sports on Dirt, Inc. ("Motor Sports") entered into an
Acquisition Agreement with Genesis, which together with Addendum #1 to such
Acquisition Agreement required Motor Sports to pay all of the above-described
debts owed to Consultants;
WHEREAS, the above-described agreements allow for interest, attorneys
fees, and costs of suit--and applicable law may allow for additional
consequential damages--if the agreements were breached;
WHEREAS, the above-described debts were due and payable from Genesis as
of March 25, 1999; such debts were assumed by Motor Sports pursuant to the
Acquisition Agreement dated April 6, 1999; such debts have not been paid to
date; and Motor Sports is now technically in breach of the agreements creating
these debts, but is making attempts to remedy such breach;
WHEREAS, Consultants are willing to forgive all indebtedness, interest,
attorneys fees, and consequential damages arising from or connected with the
above-described agreements in exchange for two cash payments from Debtors, as
follows: one payment in the amount of $345,000 (allocable to all liability
arising from the two Consulting Agreements) and the second payment in the amount
of $255,000 (allocable to all liability arising from the Preferred Stock Buyback
Agreement), on the condition that Consultants receive such payment by wire
transfer or certified cashier's check before 5:00 p.m. MDT on June 15, 1999;
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WHEREAS, in the alternative, Consultants are willing to forgive all
indebtedness, interest, attorneys fees, and consequential damages arising from
or connected with the above-described agreements in exchange for the transfer of
Donald L. Walker's 100% ownership interest (consisting of 1,000 member shares)
in Calbear Gas, LLC (Calbear), whose balance sheet has been warranted to consist
of zero (0) liabilities and the following single asset: the non- dilutable
ownership of Nine Million Ninety Five Thousand (9,095,000) shares of the common
stock of Caye Chapel, Inc. ("Caye");
WHEREAS, Caye has Forty Million Five Hundred Eighty One Thousand Eight
Hundred Thirty Three (40,581,833) shares of its common stock issued and
outstanding as of the date of this Agreement; has agreed that it will neither
dilute Calbear's shareholder interest in Caye nor effect any reverse split of
Caye's Common Stock until June 10, 2002 or until Calbear has fully liquidated
its position, whichever occurs sooner;
WHEREAS, Donald L. Walker is not a volunteer in settling the
above-described debts owed to the Consultants, but is the President of Motor
Sports and is intervening to settle such debts in order to effect the Closing of
the Acquisition Agreement between Motor Sports and Genesis in order to protect
his financial interest in Motor Sports, Genesis, and the merger/acquisition of
those two entities;
WHEREAS, Debtors are also willing to guarantee that the value of the
9,095,000 shares of Caye Common Stock owned by Calbear ("the Caye Stock") and
transferred to the Consultants will be at least $345,000 upon liquidation, and
are further willing to transfer additional shares of Caye Common Stock--or pay
other valuable consideration--sufficient to cover any deficiency if liquidation
of the Caye Stock fails to net at least $345,000 for Consultants.
Agreement
NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements contained in this Agreement, and in reliance on the representations
and warranties set forth in this Agreement, and for other good and valuable
consideration, the sufficiency of which is hereby expressly acknowledged, the
parties agree as follows:
1. Purchase and Sale. Donald L. Walker ("Walker") hereby agrees to sell,
transfer, assign ----------------- and convey to Consultants, and Con-
sultants hereby agree to purchase and acquire from Walker, One Hundred
Percent (100%) of the total ownership (which consists of 1,000
membership shares) of Calbear. As an integral part of the purchase and
sale of Calbear, Walker and Calbear also hereby agree to sell, and Con-
sultants agree to purchase, the sole asset owned by Calbear, namely
Nine Million Ninety Five Thousand (9,095,000) shares of the common
stock of Caye Chapel, Inc. All parties agree that as a result of such
purchase and sale, Consultants will become the sole owners of Calbear,
and the sole owners of the Nine Million Ninety Five Thousand
(9,095,000)shares of Caye Chapel, Inc. described in this Agreement.
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2. Purchase Price and Settlement of Debt. The aggregate purchase price to be
paid by the ------------------------------------- Consultants for the 100%
ownership of Calbear and of the 9,095,000 shares of Caye Chapel, Inc. shall
be the cancellation of SIX HUNDRED THOUSAND dollars ($600,000) in unpaid
debt and unpaid claims for interest, attorney fees, and possible
consequential damages arising from or connected with the unpaid Consulting
Agreements, Security Agreements, Secured Promissory Notes, and Preferred
Stock Buyback Agreement attached as Exhibits A-- G to this Agreement. Each
of the Debtors hereby agree to the terms of this Agreement.
3. Guarantee of Minimum Value of Caye Stock. Calbear and Walker hereby
guarantee that the value of the 9,095,000 shares of Caye Stock described in
this Agreement will be worth at least $345,000 upon liquidation, and
Calbear and Walker hereby agree, covenant and promise to transfer
additional shares of Caye common stock--or pay other valuable
consideration--sufficient to cover any deficiency if liquidation of the
Caye Stock fails to net at least $345,000 upon liquidation.
4. Transfer of Shares in Genesis Capital Corporation of Nevada. Genesis, Motor
Sports, ----------------------------------------------------------- Walker,
Calbear, Hudson and Global all agree that the transfer of Eleven Million
Seven Hundred Ninety Thousand shares of Genesis common stock contemplated
in the Acquisition Agreement and Addendum #1 thereto shall be completed
from Genesis to Motor Sports on the following conditions: the Consultants
succeed in liquidating enough of the Caye Chapel stock to satisfy the
$600,000 in unpaid debts and claims the Consultants have (as described in
this Agreement), and all other relevant conditions in the Acquisition
Agreement and Addendum #1 are met.
5. Representations and Warranties of Walker and Calbear. In order to induce
Consultants to enter into this Agreement and to complete the transaction
contemplated hereby, Walker and Calbear represent and warrant that each of
the following are true and complete statements of material fact as of the
date of this Agreement and the Closing Date:
A. Entity Existence. Calbear Gas, LLC is a limited liability company
duly organized, validly existing, and in good standing under the laws
of the state of its formation, with full authority to own, lease and
operate property and to carry on business as it is now being conducted.
Calbear is duly qualified to do business in--and is in good standing
in-- every jurisdiction where such qualification is necessary to carry
out the terms of this Agreement.
B. Walker's Ownership of Calbear. Walker is the sole owner of Calbear,
such ownership being represented by 1,000 member shares in Calbear, all
of which are shares are owned by Walker, free and clear of all liens,
encumbrances and restrictions of any nature whatsoever, except that
such shares have not been registered under the 1933 Securities Act, as
amended, or any applicable state securities laws.
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C. Calbear's Assets and Liabilities. Calbear has zero (0) liabilities,
and its sole asset is the ownership of Nine Million Ninety Five
Thousand (9,095,000) shares of the common stock of Caye Chapel, Inc.,
which Calbear holds free and clear of all liens, encumbrances and
restrictions of any nature whatsoever, except that such shares have not
been registered under the 1933 Securities Act, as amended, or any
applicable state securities laws. The Caye Stock is all validly issued,
fully paid and non-assessable, with full voting rights, dividend
rights, and the rights to receive the proceeds of liquidation, if any,
as set forth in Caye's Articles of Incorporation and Bylaws.
D. Caye's Capitalization. As of the date of this Agreement, Caye's
entire authorized equity capital consists of Fifty Million (50,000,000)
shares of $.001 par value common stock, of which Forty Million Five
Hundred Eighty One Thousand Eight Hundred Thirty Three (40,581,833)
shares are currently issued and outstanding. There will be no other
voting or equity securities authorized or issued, nor any authorized or
issued securities convertible into voting stock, and no outstanding
subscriptions, warrants, calls, options, rights, commitments or other
agreements calling for the issuance of any additional shares of Caye's
common stock or of any other voting or equity security.
E. No Misleading Statements or Omissions. Neither this Agreement nor
any document attached to this Agreement or presented to the Consultants
in connection herewith contain or will contain any materially
misleading statement, nor do they omit to make any statement of fact
necessary to make the other statements or facts set forth herein not
materially misleading.
F. Walker's and Calbear's Authority for Agreement. Walker and Calbear
have duly authorized the execution and delivery of this Agreement and
the consummation of the transactions contemplated herein. Walker and
Calbear have each duly executed and delivered this Agreement; it
constitutes the valid and legally binding obligation of both Walker and
Calbear, enforceable according to its terms. To the best knowledge of
Walker and Calbear, after due inquiry, the execution and delivery of
this Agreement and the consummation of the transactions contemplated
herein will not conflict with any mortgage, indenture, lease, contract,
commitment, agreement, or other instrument applicable to either Walker
or Calbear or any of its properties or assets.
G. Consents and Authorizations. Any consent, approval, order or
authorization of, or registration, declaration, compliance with or
filing with any governmental or regulatory authority required of the
Debtors in connection with the execution and delivery of this Agreement
to permit the consummation of the transactions contemplated herein
shall be accomplished by the Debtors in a timely manner and in
accordance with federal and/or state law.
H. Assurances of Anti-Dilution and Lifting Restrictions on Stock.
Calbear and Walker have received contractual assurances from Caye
Chapel, Inc. to the effect that (i) Caye
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will neither dilute Calbear's shareholder interest in Caye nor effect
any reverse split of Caye's Common Stock until June 10, 2002 or until
Calbear has fully liquidated its position, whichever occurs sooner;
(ii) Caye will exert its best efforts to make available, as soon as
reasonably possible and in no event more than 10 days from the date of
this Agreement, "current public information" on itself sufficient to
comply with the "current public information" requirement set forth in
Rule 144 promulgated under the Securities Act of 1933; and (iii) Caye
will cooperate to the fullest extent possible with removing the
restrictive legend, as soon as possible, from the 9,095,000 shares of
Caye Stock transferred pursuant to this Agreement.
I. Ownership of Caye Stock Certificate No. 1025. Calbear is the legal
and lawful owner of stock certificate no. 1025 (a true and correct copy
of which is attached as Exhibit H to this Agreement), representing
9,095,000 shares of the common stock of Caye Chapel, Inc., currently
registered in the name of Churchill Resources, Inc., and its ownership
is free and clear of any lien, encumbrance, or restriction on transfer,
except that the shares represented by certificate no. 1025 have not
been registered under the Securities Act of 1933 or any relevant state
securities law. Neither Calbear nor Walker have transferred or will
transfer any of the shares represented by certificate 1025 to any other
person whomsoever.
6. Term. All representations, warranties, covenants and agreements made in
this Agreement and in the exhibits attached hereto shall survive the
execution and delivery of this Agreement and any payments made pursuant
hereto.
7. Conditions Precedent to Closing. The obligations of the Consultants
under this Agreement are subject to the fulfillment--before or at the
Closing--of each of the following conditions, and no obligation on the
part of the Consultants shall arise or be enforceable until all of such
conditions are met:
A. The representations and warranties contained in this Agreement shall
all be true and correct;
B. The Debtors shall have performed or complied with all terms and
conditions of this Agreement which are required to be performed or
complied with before or at the time of Closing;
C. Walker shall provide Consultants with a true and correct copy of a
signed contract between Caye Chapel, Inc. and Calbear including the
following terms: (i) Caye will neither dilute Calbear's shareholder
interest in Caye nor effect any reverse split of Caye's Common Stock
until June 10, 2002 or until Calbear has fully liquidated its position,
whichever occurs sooner; (ii) Caye will exert its best efforts to make
available, as soon as reasonably possible and in no event more than 10
days from the date of this Agreement, "current public information" on
itself sufficient to comply with the "current
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public information" requirement set forth in Rule 144 promulgated under
the Securities Act of 1933; and (iii) Caye will cooperate to the
fullest extent possible with removing the restrictive legend, as soon
as possible, from the 9,095,000 shares of Caye Stock transferred
pursuant to this Agreement.
D. Walker shall provide Consultants with written proof that he is the
sole and exclusive owner of all membership interest in Calbear Gas,
LLC.
E. Walker shall provide Consultants with written proof that Caye
Chapel, Inc. currently has no more than 50,000,000 shares of common
stock authorized, and no more than 40,581,833 shares of its common
stock issued and outstanding.
F. Walker shall provide Consultants with written proof that Calbear is
the rightful owner, with ownership free and clear of any lien,
encumbrance, or restriction on transfer (other than as required by the
Securities Act of 1933, rules and regulations promulgated thereunder,
or comparable state securities laws), with regard to stock certificate
1025 (attached hereto as Exhibit H), which is currently registered in
the name of Churchill Resources, Inc., and that Walker has full power,
authority, and right to transfer such certificate into the name of
Consultants.
8. Conditional Return of the Caye Stock. Consultants hereby agree to
return Walker's 100% interest in Calbear (and all 9,095,000 shares of
the Caye Stock) on the condition that the following event occurs at or
before Closing: Debtors make two cash payments to Consultants, as
follows: one in the amount of $345,000 for payment of all liability
arising from the two Consulting Agreements and the other in the amount
of $255,000 for payment of all liability arising from the Preferred
Stock Buyback Agreement, such payment to be made by wire transfer or
certified cashier's check.
If Debtors do not make the cash payments for $345,000 and $255,000 by
the Closing Date in the manner set forth in this Agreement, then the
sale of Calbear and the Caye Stock shall be consummated as set forth in
This Agreement. The Consultants shall then have the absolute and
irrevocable right, obtained in consideration for releasing the Debtors
from $600,000 in debts and unpaid claims, to complete ownership of
Calbear and the Caye Stock.
9. Closing. The Closing of the transactions contemplated by this Agreement
("Closing") shall take place at or before 5:00 p.m. Mountain Daylight
Time on June 15, 1999. The Closing shall occur at 268 West 400 South,
Suite 300, Salt Lake City, Utah 84101, or at such other place as the
parties hereto shall agree upon in writing. At the Closing, all of the
documents, payments, and items referred to in this Agreement shall be
exchanged. Facsimiles of signatures and documents shall be accepted by
all parties as originals, so long as they are legible.
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10. Non-Circumvention. Debtors agree not to terminate this Agreement or
refuse to perform any of its terms solely as a means to avoid paying
Consultants under this Agreement. Debtors will not act in any other way
to circumvent paying Consultants.
11. Calculation of Profits. The Debtors and Consultants acknowledge that in
the event Consultants, as a result of this Agreement, receive shares of
the Caye Stock, they may be considered an "affiliate" subject to
Section 16(b) of the Securities Exchange Act of 1934 (the "'34 Act").
In this regard, Debtors and Consultants agree that for the purposes of
any "profit" computation under Section 16(b) of the '34 Act, the price
paid for such shares is equal to the amount of the debts and unpaid
claims forgiven.
12. Indemnification. Subject to the provisions herein, Debtors and
Consultants shall indemnify, defend and hold each other harmless from
and against all demands, claims, actions, damages, liabilities, costs
and expenses (including, without limitation, interest, penalties and
attorneys' fees) asserted or imposed against or incurred by any other
party, arising from any action of, or a breach of any representation,
warranty, covenant, or agreement of, any other party to this Agreement.
13. Remedies. Debtors and Consultants acknowledge that in the event of a
breach of this Agreement by any of the debtors, money damages would be
inadequate, and the non- breaching parties would have no adequate
remedy at law. Accordingly, in the event of any controversy concerning
the rights or obligations under this Agreement, such rights or
obligations shall be enforceable in a court of equity by a decree of
specific performance. Such remedy, however, shall be cumulative and
non-exclusive and shall be in addition to any other remedy to which the
parties may be entitled.
14. MISCELLANEOUS.
A. Subsequent Events. Consultants and Debtors agree to notify each
other if, subsequent to the date of this Agreement, any party incurs
obligations which could compromise its efforts and obligations under
this Agreement.
B. Amendment. This Agreement may be amended or modified at any time or
in any manner, but only by an instrument in writing executed by the
parties hereto.
C. Entire Agreement. This Agreement contains the entire agreement
between Consultants and Debtors relating to the settlement of the debts
described herein. This Agreement supersedes any and all prior
agreements, arrangements, or understandings (written or oral) between
the parties with respect to the settlement of such debts. No
understandings, statements, promises, or inducements contrary to the
terms of this Agreement exist with respect to the settlement of the
debts described herein. No representations, warranties, covenants, or
conditions, express or implied, other than as set forth herein, have
been made by any party with respect to the settlement of the debts
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described herein. This Agreement does not supersede the Acquisition
Agreement between Motor Sports and Genesis, dated April 6, 1999 and
amended by Addendum #1 dated May 10, 1999. Those written agreements
shall be construed together with this Agreement to effect the intent of
the parties, but no oral expressions or agreements whatsoever shall be
used to modify or supplement the terms of the written agreements
referred to herein.
D. Waiver. Any failure of any party to this Agreement to comply with
any of its obligations hereunder may be waived in writing by the party
to whom compliance is owed. The failure of any party to enforce at any
time any of the provisions of this Agreement shall in no way be
construed as a waiver of any such provision or a waiver of the right to
enforce such provision. No waiver of any breach of or non-compliance
with this Agreement shall be held to be a waiver of any other or
subsequent breach or non-compliance.
E. Assignment. Neither this Agreement nor any right created by it shall
be assignable by either party without the prior written consent of the
other.
G. Headings and Captions. The section headings in this Agreement are
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
H. Governing Law. All provisions of this Agreement shall be interpreted
under the laws of the State of Utah, without regard to its conflict of
laws rules. Any dispute arising out of this Agreement shall be brought
in a court of competent jurisdiction in Salt Lake County, Utah. The
parties expressly consent to the personal jurisdiction of the above-
identified courts and agree to exclude and waive any statute, law or
treaty which allows or requires any dispute to be decided in any forum,
or by any law, other than as provided in this Agreement.
I. Binding Effect. This Agreement is binding on the parties hereto and
inures to the benefit of the parties, their respective heirs, admin-
istrators, executors, successors, and assigns.
J. Further Actions and Assurances. At any time and from time to time,
each party agrees, at its or their expense, to take actions and to
execute and deliver documents as may be reasonably necessary to
effectuate the purposes of this Agreement.
K. Attorney's Fees. If any action at law or in equity, including an
action for declaratory relief, is brought to enforce or interpret any
provision of this Agreement, the prevailing party shall be entitled to
recover reasonable attorney's fees, court costs, and other costs
incurred in proceeding with the action. Attorney's fees, court costs,
or other costs may be ordered by the court in its decision of the
action or may be enforced in a separate action for such fees and costs.
If any party is represented by in-house counsel, the
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attorney fee attributed to in-house counsel shall equal the attorney
fee normally charged by attorneys in the prevailing party's community
who have similar backgrounds.
L. Severability. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality
or un-enforceability shall not affect any other provisions of this
Agreement. Instead, this Agreement shall be construed as if it never
contained any such invalid, illegal or unenforceable provisions.
M. Mutual Cooperation The parties shall cooperate with each other to
achieve the purpose of this Agreement, and shall execute such other
documents and take such other actions as may be necessary or convenient
to effect the transactions described herein.
N. Counterparts. A facsimile, telecopy, or other reproduction of this
Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute
one and the same instrument. Such executed copy may be delivered by
facsimile or similar electronic transmission device if such delivery
produces legible copies of the relevant signatures. Such execution and
delivery shall be valid, binding and effective for all purposes.
O. No Third Party Beneficiary. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person, other than the parties
hereto and their successors, any right or remedy by reason of this
Agreement, unless this Agreement specifically states such intent.
P. Time is of the Essence. Time is of the essence of this Agreement and
of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first written above.
"Global" or "Consultant
Global Universal, Inc.
__________/s/__________________
Ronald Welborn, President
"Hudson" or "Consultant"
Hudson Consulting Group, Inc.
/s/
Richard Surber, President
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"Calbear" or "Debtor"
Calbear Gas, LLC
____________/s/________________
Donald L. Walker, Member
"Genesis" or "Debtor"
Genesis Capital Corporation of Nevada
_____________/s/_______________
Reginald L. Davis, President
"Motor Sports" or "Debtor"
Motor Sports On Dirt, Inc.
_____________/s/_______________
Donald L. Walker, President
"Walker" or "Debtor"
Donald L. Walker, an individual
_______________/s/_____________
Donald L. Walker, an individual
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Exhibit 6(ix)
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT ("Agreement"), is hereby made effective on
July 19, 1999, by and between Hudson Consulting Group, Inc., a Nevada
corporation, (Hudson) and Global Universal, Inc., a Nevada corporation
("Global"); and A-Z Oil. L.L.C., a Utah Corporation (A-Z), and Genesis Capital
Corporation of Nevada, a Nevada corporation; ("Genesis"), and Motor Sports on
Dirt, Inc., a Texas corporation ("Motor"); and Donald L. Walker, an individual
resident of Arkansas ( "Walker").
Recitals
WHEREAS, Genesis Capital Corporation of Nevada ("Genesis") entered into
Consulting Agreements with Hudson and Global, which agreements were accompanied
by Security Agreements and Secured Promissory Notes, all of which agreements
were executed by Genesis;
WHEREAS, the above-described agreements allow for interest, attorneys
fees, and costs of suit--and applicable law may allow for additional
consequential damages--if the agreements were breached;
WHEREAS, the above-described agreements created debts that were assumed
by Motor Sports pursuant to the Acquisition Agreement dated April 6, 1999; such
debts have not been paid to date; and Motor Sports is now technically in breach
of the agreements creating these debts;
WHEREAS, Walker and Motor are willing to release any and all claims
they may have as to Hudson, Global and Genesis and to release all claims to the
common stock of Genesis presently held in their names in exchange for the right
to retain 250,000 shares of the common stock of Genesis bearing a Rule 144
restriction.
Agreement
NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements contained in this Agreement, and in reliance on the representations
and warranties set forth in this Agreement, and for other good and valuable
consideration, the sufficiency of which is hereby expressly acknowledged, the
parties agree as follows:
1 Transfer and Release. Walker and Motor hereby agree to transfer, assign
and return to Genesis, One Hundred Percent (100%) of the common shares
of Genesis held in their names or their assigns, less no more than
250,000 shares of such shares that bear a 144 restriction which Walker
shall be entitled to retain in exchange for future services to Genesis
and execution of this release. A-Z hereby agrees to release Walker and
Motor from repayment of the Thirty Thousand ($30,000) cash advance or
loan from June of 1999 and any and all claims that may arise therefrom.
2. Walker Transfer. Walker agrees upon receipt of consulting fees from
Caye Chapel, Inc. to transfer One Million (1,000,000) shares of common
stock of Caye Chapel to Genesis, Three Million Two Hundred Thousand
(3,200,000) shares of common stock of Caye Chapel to Global and Three
Hundred Thousand (300,000) shares of common stock of Caye Chapel to
Hudson.
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3. Settlement of Debt. The parties hereto agree that as part of the
consideration for this agreement shall be the cancellation of all
obligations and debts, including ownership of common stock owed to
Motor and/or Walker by Genesis, Global or Hudson, including any
possible consequential damages arising from or connected with those
debts, obligations or ownership of common stock, including all shares
of Caye Chapel, Inc. Each of the Parties hereby agree to the terms of
this Agreement.
4. Entity Existence. Motor Sports on Dirt, Inc. is a Texas corporation
duly organized, validly existing, and in good standing under the laws
of the state of its formation, with full authority to own, lease and
operate property and to carry on business as it is now being conducted.
5. No Misleading Statements or Omissions. Neither this Agreement nor any
document referenced to or attached to this Agreement or presented to
the Parties in connection herewith contain or will contain any
materially misleading statement, nor do they omit to make any statement
of fact necessary to make the other statements or facts set forth
herein not materially misleading.
6. Walker's and Motor's Authority for Agreement. Walker and Motor have
duly authorized the ---------- execution and delivery of this Agreement
and the consummation of the transactions contemplated herein. Walker
and Motor have each duly executed and delivered this Agreement; it
constitutes the valid and legally binding obligation of both Walker and
Motor, enforceable according to its terms. To the best knowledge of
Walker and Motor, after due inquiry, the execution and delivery of this
Agreemen t and the consummation of the transactions contemplated herein
will not conflict with any mortgage, indenture, lease, contract,
commitment, agreement, or other instrument applicable to either Walker
or Motor or any of its properties or assets.
7. Consents and Authorizations. Any consent, approval, order or
authorization of, or registration, declaration, compliance with or
filing with any governmental or regulatory authority required of the
Parties in connection with the execution and delivery of this Agreement
to permit the consummation of the transactions contemplated herein
shall be accomplished by the Parties in a timely manner and in
accordance with federal and/or state law.
8. Term. All representations, warranties, covenants and agreements made in
this Agreement and in the exhibits attached hereto shall survive the
execution and delivery of this Agreement and any payments made pursuant
hereto.
9. Conditions Precedent to Closing. The obligations of the Parties under
this Agreement are subject to the fulfillment--before or at the
Closing--of each of the following conditions, and no obligation on the
part of the Parties shall arise or be enforceable until all of such
conditions are met:
A. The representations and warranties contained in this Agreement shall
all be true and correct;
B. Walker and Motor shall have performed or complied with all terms and
conditions of this Agreement which are required to be performed or
complied with before or at the time of Closing;
C. Walker shall provide Genesis with written proof that he is an
authorized officer of Motor.
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10. Closing. The Closing of the transactions contemplated by this Agreement
("Closing") shall take place at or before 5:00 p.m. Mountain Daylight
Time on July 19, 1999. The Closing shall occur at 268 West 400 South,
Suite 300, Salt Lake City, Utah 84101, or at such other place as the
parties hereto shall agree upon in writing. At the Closing, all of the
documents, payments, and items referred to in this Agreement shall be
exchanged. Facsimiles of signatures and documents shall be accepted by
all parties as originals, so long as they are legible.
11. Non-Circumvention. Walker and Motor agree not to terminate this
Agreement or refuse to perform any of its terms solely as a means to
avoid transferring the shares required under this Agreement. The
parties will not act in any other way to circumvent performance
required by this Agreement.
12. Indemnification. Subject to the provisions herein, the Parties shall
indemnify, defend and hold each other harmless from and against all
demands, claims, actions, damages, liabilities, costs and expenses
(including, without limitation, interest, penalties and attorneys'
fees) asserted or imposed against or incurred by any other party,
arising from any action of, or a breach of any representation,
warranty, covenant, or agreement of, any other party to this Agreement.
13. Remedies. The Parties acknowledge that in the event of a breach of this
Agreement by any of the parties, money damages would be inadequate, and
the non-breaching parties would have no adequate remedy at law.
Accordingly, in the event of any controversy concerning the rights or
obligations under this Agreement, such rights or obligations shall be
enforceable in a court of equity by a decree of specific performance.
Such remedy, however, shall be cumulative and non-exclusive and shall
be in addition to any other remedy to which the parties may be
entitled.
14. MISCELLANEOUS.
A. Subsequent Events. Walker, Motor, Genesis, Hudson and Global agree
to notify each other if, subsequent to the date of this Agreement, any
party incurs obligations which could compromise its efforts and
obligations under this Agreement.
B. Amendment. This Agreement may be amended or modified at any time or
in any manner, but only by an instrument in writing executed by the
parties hereto.
C. Entire Agreement. This Agreement contains the entire agreement
between Walker, Motor, Genesis, Hudson and Global relating to the
settlement of the debts described herein. This Agreement supersedes any
and all prior agreements, arrangements, or understandings (written or
oral) between the parties with respect to the settlement of such debts.
No understandings, statements, promises, or inducements contrary to the
terms of this Agreement exist with respect to the settlement of the
debts described herein. No representations, warranties, covenants, or
conditions, express or implied, other than as set forth herein, have
been made by any party with respect to the settlement of the debts
described herein. No oral expressions or agreements whatsoever shall be
used to modify or supplement the terms of the written agreements
referred to herein.
D. Waiver. Any failure of any party to this Agreement to comply with
any of its obligations hereunder may be waived in writing by the party
to whom compliance is owed. The failure of any party to enforce at any
time any of the provisions of this Agreement shall in no way be
construed as a waiver of any such provision or a waiver of the right to
enforce such provision. No waiver of any breach of
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<PAGE>
or non-compliance with this Agreement shall be held to be a waiver of
any other or subsequent breach or non-compliance.
E. Assignment. Neither this Agreement nor any right created by it shall
be assignable by either party without the prior written consent of the
other.
G. Headings and Captions. The section headings in this Agreement are
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
H. Governing Law. All provisions of this Agreement shall be interpreted
under the laws of the State of Utah, without regard to its conflict of
laws rules. Any dispute arising out of this Agreement shall be brought
in a court of competent jurisdiction in Salt Lake County, Utah. The
parties expressly consent to the personal jurisdiction of the
above-identified courts and agree to exclude and waive any statute, law
or treaty which allows or requires any dispute to be decided in any
forum, or by any law, other than as provided in this Agreement.
I. Binding Effect. This Agreement is binding on the parties hereto and
inures to the benefit of the parties, their respective heirs, admin-
istrators, executors, successors, and assigns.
J. Further Actions and Assurances. At any time and from time to time,
each party agrees, at its or their expense, to take actions and to
execute and deliver documents as may be reasonably necessary to
effectuate the purposes of this Agreement.
K. Attorney's Fees. If any action at law or in equity, including an
action for declaratory relief, is brought to enforce or interpret any
provision of this Agreement, the prevailing party shall be entitled to
recover reasonable attorney's fees, court costs, and other costs
incurred in proceeding with the action. Attorney's fees, court costs,
or other costs may be ordered by the court in its decision of the
action or may be enforced in a separate action for such fees and costs.
If any party is represented by in-house counsel, the attorney fee
attributed to in-house counsel shall equal the attorney fee normally
charged by attorneys in the prevailing party's community who have
similar backgrounds.
L. Severability. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality
or un-enforceability shall not affect any other provisions of this
Agreement. Instead, this Agreement shall be construed as if it never
contained any such invalid, illegal or unenforceable provisions.
M. Mutual Cooperation The parties shall cooperate with each other to
achieve the purpose of this Agreement, and shall execute such other
documents and take such other actions as may be necessary or convenient
to effect the transactions described herein.
N. Counterparts. A facsimile, telecopy, or other reproduction of this
Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute
one and the same instrument. Such executed copy may be delivered by
facsimile or similar electronic transmission device if such delivery
produces legible copies of the relevant signatures. Such execution and
delivery shall be valid, binding and effective for all purposes.
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<PAGE>
O. No Third Party Beneficiary. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person, other than the parties
hereto and their successors, any right or remedy by reason of this
Agreement, unless this Agreement specifically states such intent.
P. Time is of the Essence. Time is of the essence of this Agreement and
of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first written above.
"Global"
Global Universal, Inc.
_____________/s/_______________
Ronald Welborn, President
"Hudson"
Hudson Consulting Group, Inc.
/s/
Richard Surber, President
"A-Z"
A-Z Oil, L.L.C.
/s/
BonnieJean Tippetts, President
"Genesis"
Genesis Capital Corporation of Nevada
_______________/s/_____________
Jerry Conditt, Vice-President
"Motor Sports"
Motor Sports On Dirt, Inc.
_____________/s/_______________
Donald L. Walker, President
"Walker"
Donald L. Walker, an individual
______________/s/______________
Donald L. Walker, an individual
111
Exhibit 8(i)
GENESIS CAPITAL CORPORATION
Genesis Capital: putting ideas, people and resources together for success
P.O. Box 271405, Houston, Texas 77277-1405
Phone: (713) 436-0922 Fax: (713) 436-0351
- --------------------------------------------------------------------------------
November 14, 1997
Mr. Reginald L. Davis, Trustee
c/o Barrow and Williams, Attorneys at Law
99 Albert Street
Belize City, Belize C.A.
Dear Mr. Davis:
Per our recent discussion, this letter will serve as a Letter of Intent
whereby Genesis Capital Corporation, a Colorado corporation that is publicly
held, having its principal offices at Houston, Texas will acquire 100% of the
capital stock of Lincoln Health Fund, Inc.
To exchange under the IRS regulation for Corporate reorganization 100%
of the Lincoln Health Fund, Inc., a Delaware Corporation that owns 10.680 acres
of multi-family use property at 5900 Meadow Brook Drive, Fort Worth, Texas free
and clear of debt, with exception of 1997 advolurem taxes as appraised by the
Tarrant County Real Estate District of $16,095.35, with net earning of $539,818.
The Company has an audited financial statement by KPMG Peat Marwick for 1996
with will reflect assets of $6,000,000. At closing, the Company will have book
value of $650,000 and earnings in excess of $480,000.
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<PAGE>
The Lincoln Health Fund, Inc., will warrant the stock delivered at
closing will be 100% of the issued capital stock, being 1,000 shares, and the
said shares are free and clear of any encumbrances.
Genesis Capital Corporation will issue four shares of its authorized
shares for each one share of common stock outstanding at the time of closing
this transaction.
Upon signing this letter of intent, Genesis Capital Corporation agrees
to notify its shareholders of a special shareholder meeting to approve a reverse
merger, and that it will advise the shareholders of the Board of Directors
approval of the following:
A. A name change to Lincoln Holdings, Inc.
B. A reorganization plan that will be submitted to the IRS, SEC, State
of Colorado and any other regulatory authorities as deemed necessary.
C. A reverse split of all common shares on a basis of one share for
twenty shares issued and outstanding.
D. At closing, the litigation of U.S. Staffing, Inc.(former subsidiary,
now bankrupt) will be
settled and dismissed by the U.S. Bankruptcy Court (Case No. 96-40333OH 5-11).
This settlement will be approved by Lincoln's Board of Directors, and its legal
counsel, Reginald L. Davis, Esquire.
E. Genesis Warrants that it had no business operations in 1995, 1996,
or 1997 fiscal years, and that it will complete and file up to date tax returns.
F. Genesis warrants that there are no further outstanding litigation,
payroll taxes, or claims of any nature.
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Genesis Capital Corporation will provide a final agreement acceptable
to the legal counsel of both companies and will call a special shareholders
meeting on Friday, December 5, 1997 at the Holiday Inn, Alta Mesa at I 35, Forth
Worth, Texas for 10:00 A.M. so that each shareholder can see the property
itself, and its development plan for multi-family units, meet the new management
team, ask questions concerning the merger, and vote on the reorganization plan..
If the above Letter of Intent is agreeable and acceptable to you,
please indicate by executing and dating below and returning via telecopier at
your earliest convenience.
Sincerely,
GENESIS CAPITAL CORPORATION
a Colorado, Corporation, for its Board of Directors
By: ____________/s/__________________________
Dennis L. Hoerr, President
Agreed and Accepted, this 14 day of November, 1997.
By: ____________/s/__________________________
Reginald L. Davis, Trustee
114
Exhibit 8(ii)
MERGER AGREEMENT AND PLAN OF MERGER
THIS MERGER AGREEMENT AND PLAN OF MERGER ("Agreement") is made and
entered into as of the 9th day of March, 1999 by and between Genesis Capital
Corporation of Nevada, a Nevada corporation (hereinafter "The Nevada
Corporation"), and Genesis Capital Corporation, a Colorado corporation
("Genesis"). The Nevada Corporation and Genesis are hereinafter sometimes
referred to collectively as the "Constituent Corporations."
WHEREAS, Genesis is a privately-held company; and,
WHEREAS, The Nevada Corporation is a recently formed privately-held
Nevada corporation; and,
WHEREAS, the Boards of Directors of Genesis and The Nevada Corporation
have determined that it is in the best interest of the Constituent Corporations
that Genesis merge with and into The Nevada Corporation, and that the
shareholders of Genesis exchange their shares of the capital stock of Genesis
for shares of the capital stock of The Nevada Corporation. The transaction
contemplated hereby is hereinafter referred to as the "Merger"; and,
WHEREAS, the Constituent Corporations desire to enter into and adopt
this Merger Agreement for the purpose of setting forth certain terms and
provisions that will govern the Merger and to consummate the Merger as a "change
in domicile merger" in accordance with the provisions of Section 368 (a)(2)(F)
of the Internal Revenue Code of 1986, as amended (the "Code"); and,
WHEREAS, the principal purpose of the Merger is to effectuate a change
in corporate domicile from Colorado to Nevada.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth, in accordance with the business corporation law of the State of Nevada
and the State of Colorado, and for the purpose of setting forth the terms and
conditions of the Merger, the mode of completing the Merger, and the manner of
converting the shares of the capital stock of Genesis into shares of capital
stock of The Nevada Corporation, the parties agree as follows:
1. The Merger
1.1 The Effective Time. The Merger shall be accomplished by filing
appropriate articles of merger with the Secretary of State of the State of
Nevada and the Secretary of State of the State of Colorado in a form acceptable
under the business corporation laws of such States as soon as practicable after
execution of this Merger Agreement. The term "Effective Time" shall mean the
time at which all necessary Certificates of Merger have been issued by the
Secretary of State of the State of Nevada and the Secretary of State of the
State of Colorado. If one or both Secretaries of State need not issue a
Certificate of Merger, the filing with and acceptance by the relevant Secretary
of State shall be deemed the time of issuance of a Certificate of Merger for
purposes of calculating the "Effective Time."
1.2 Manner of Merger. At the Effective Time, Genesis shall be merged
into The Nevada Corporation, which shall be the corporation that survives the
Merger. The corporate existence of The Nevada Corporation with all its purposes,
powers and objects shall continue unaffected and unimpaired by the Merger; and,
as the corporation surviving the Merger, The Nevada Corporation shall be
governed by the laws of the State of Nevada
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<PAGE>
and shall succeed to all rights, assets, liabilities and obligations of Genesis,
as provided in the business corporation laws of the State of Colorado. The
separate existence and corporate organizations of The Nevada Corporation and
Genesis shall cease at the Effective Time, and thereafter The Nevada Corporation
shall continue as The Nevada Corporation under the laws of the State of Nevada
under the new name of Genesis Capital Corporation of Nevada, a Nevada
corporation. All the property, real, personal, and mixed, and all debts
or other obligations due to Genesis, shall be transferred to and shall be
vested in The Nevada Corporation, without further act or deed, as provided in
the business corporation laws of the States of Nevada and Colorado.
1.3 Articles of Incorporation and Bylaws of The Nevada Corporation.
(a) At the Effective Time, the Articles of Incorporation, as amended, and
By-Laws of The Nevada Corporation shall become the surviving Articles
and By-Laws of the Constituent Corporations.
(b) The directors and officers of Genesis as of the Effective Time shall be
the directors and officers of The Nevada Corporation, until their
successors shall have been elected and qualified, or as otherwise
provided by the General Corporation Law of the State of Nevada and in
the Bylaws of The Nevada Corporation. If at the Effective Time a
vacancy exists in the Board of Directors or in any of the offices of
The Nevada Corporation, such vacancy shall thereafter be filled in the
manner provided in the Bylaws of The Nevada Corporation.
1.4 Status and Conversion of Shares. The manner of converting the
shares of capital stock of Genesis outstanding immediately prior to the Merger
into shares of common stock of The Nevada Corporation shall be as follows:
(a) At the Effective Time, each Two Thousand (2,000) shares of the issued
and outstanding $.01 par value common stock of Genesis shall, by virtue
of the Merger and without any action on the part of the holder thereof,
become and be converted into one (1) share of the $.001 par value
common stock of The Nevada Corporation. At the Effective Time, each One
(1) share of the issued and outstanding $.01 par value preferred stock
of Genesis shall, by virtue of the Merger and without any action on the
part of the holder thereof, become and be converted into One (1) share
of the $.001 par value preferred stock of The Nevada Corporation.
(b) Any fractional shares of the capital stock of The Nevada Corporation
resulting from conversion under this Paragraph 1.4 shall be rounded up
to the next whole share of capital stock in the Nevada Corporation.
(c) Any shares of the capital stock of Genesis held in treasury as of the
Effective Time shall, by virtue of the Merger and without any
additional action, become and be converted into shares held in the
treasury of The Nevada Corporation at the same rate of conversion
stated in Paragraph 1.4(a), above.
(d) After the Effective Time, each holder of a certificate or certificates
theretofore representing outstanding shares of the capital stock of
Genesis may surrender such certificate or certificates to such agent or
agents as shall be appointed by The Nevada Corporation (the "Exchange
Agent"), and shall be entitled to receive in exchange therefor a
certificate or certificates representing the number of whole shares of
capital stock of The Nevada Corporation into which the shares of
capital stock of Genesis theretofore represented by the certificates so
surrendered have been converted, at the conversion rate stated in
Paragraph 1.4(a), above.
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<PAGE>
(e) If any certificate evidencing shares of the capital stock of Genesis is
to be issued in a name other than the name in which the certificate
surrendered is registered, the certificate so surrendered shall be
properly endorsed and shall otherwise be in proper form for transfer.
The person requesting the transfer shall pay to the Exchange Agent any
transfer or other fees or taxes required by reason of the issuance of a
certificate in name other than that of the registered holder of the
certificate surrendered.
(f) The Nevada Corporation may, without notice to any person, terminate all
exchange agencies at any time after 120 days following the Effective
Time. After such termination, all exchanges, payments and notices
provided for in this Agreement to be made to or by the Exchange Agent
shall be made to or by The Nevada Corporation or its agent.
(g) On or before February 10, 1999, notice of the proposed merger will be
given to all shareholders of record of Genesis, and such holders of a
majority of the outstanding shares of the $.01 par value common stock
and $.01 par value preferred stock, representing all classes of capital
stock of Genesis entitled to vote on the Merger, shall have opportunity
to vote on and approve or reject the Merger. In such Notice to
Shareholders, all Genesis shareholders shall be made aware of any
dissenter's rights under Colorado law and, in particular, that they
will have waived any dissenter's rights under the Business Corporation
Act of the State of Colorado by voting in favor of such merger.
(h) The sole share of $.001 par value common stock of The Nevada
Corporation owned by Global Advancements, Inc. shall be canceled as of
the Effective Time and shall not thereafter be issued or outstanding.
2. Miscellaneous
2.1 Amendments. This Merger Agreement may be amended with the approval
of the Boards of Directors of the Constituent Corporations at any time before or
after the approval hereof by their respective shareholders, but after any such
approval no amendment shall be made that substantially and adversely changes the
terms hereof as to any party without the approval of the shareholders of such
party.
2.2 Extension; Waiver. At any time before the Effective Time, the Board
of Directors of either of the Constituent Corporations may (a) extend the time
for the performance of any of the obligations or other acts of another party
hereto, or (b) waive compliance by another party with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing duly executed and delivered on behalf of
such party.
IN WITNESS WHEREOF, the Constituent Corporations have executed this
Merger Agreement as of the day and year first above written.
"The Nevada Corporation"
Genesis Capital Corporation of Nevada,
a Nevada corporation
By: /s/
Name: Reginald Davis
Title: President
"Genesis"
Genesis Capital Corporation,
a Colorado corporation
By:_______________/s/_________________
Name: Reginald Davis
Title: President
117
Exhibit 8(iii)
ACQUISITION AGREEMENT
BETWEEN
Genesis Capital Corporation of Nevada
AND
Motor Sports on Dirt, Inc.
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<PAGE>
ACQUISITION AGREEMENT
TABLE OF CONTENTS
Purchase and Sale..............................................................2
Purchase Price.................................................................2
Warranties and Representations of Motor and Sellers............................3
Warranties and Representations of Genesis......................................7
Term..........................................................................11
The Genesis Shares............................................................11
Conditions Precedent to Closing...............................................11
Termination...................................................................12
Exhibits......................................................................13
Miscellaneous Provisions......................................................13
Closing.......................................................................13
Post-Closing: Form 10 or Form 10-SB...........................................13
Governing Law.................................................................14
Counterparts..................................................................14
119
<PAGE>
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT is made effective this 6th day of April,
1999, by, between and among Genesis Capital Corporation of Nevada, a Nevada
corporation ("Genesis"); Motor Sports on Dirt, Inc., a Texas Corporation
("Motor"); and the persons listed on Exhibit "A" attached hereto and made a part
hereof, being all of Motor's stockholders now and as of the closing date of this
Agreement (the "Sellers").
WHEREAS, the Sellers own a total of 1,000 shares of Motor's $5.00 par
value Common Stock, said shares being one hundred percent (100%) of the issued
and outstanding Common Stock of Motor; and
WHEREAS, the Sellers desire to sell, and Genesis desires to purchase,
one hundred percent (100%) of such shares;
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
I. Purchase and Sale. The Sellers hereby agree to sell, transfer, assign
and convey to Genesis, and Genesis hereby agrees to purchase and
acquire from the Sellers, one hundred percent (100%) of Motor's issued
and outstanding Common Stock (the "Motor Common Shares"). All parties
agree that as a result of such purchase and sale, Genesis will be the
surviving corporation, and Motor will be acquired as a wholly-owned
subsidiary of Genesis.
II. Purchase Price. The aggregate purchase price to be paid by Genesis for
the Motor ----------------- Common Shares shall be ELEVEN MILLION SEVEN
HUNDRED NINETY THOUSAND (11,790,000) shares of Genesis' $.001 par value
voting Common Stock, (the "Genesis Common Shares"). The Genesis Common
Shares will be issued to the individual Sellers listed in Exhibit "A"
attached hereto, in the amounts set forth therein. Fractional shares of
the Genesis Common Shares shall not be issued; rather, fractional
shares (if any) shall be rounded down to the next whole share. Each of
the Sellers hereby agree to the terms of this Agreement ( the
"Agreement").
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III. Warranties and Representations of Motor and Sellers. In order to induce
Genesis to enter into the Agreement and to complete the transaction
contemplated hereby, Motor and Sellers warrant and represent to Genesis
that:
A. Organization and Standing. Motor is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Texas, is qualified to do business as a foreign corporation in every
other state or jurisdiction in which it operates to the extent required
by the laws of such states and jurisdictions, and has full power and
authority to carry on its business as now conducted and to own and
operate its assets, properties and business. Attached hereto as Exhibit
"B" are true and correct copies of Motor's Certificate of
Incorporation, amendments thereto, and all current By laws of Motor. No
changes thereto will be made in any of the Exhibit "B" documents before
the Closing.
B. Capitalization. As of the Closing Date, Motor's entire authorized
equity capital consists of 1,000,000 shares of voting Common Stock (of
which 1,000 shares of voting Common Stock will be issued and
outstanding as of the Closing), and 940,000 shares of non-voting
preferred stock issued and outstanding as of the closing. Motor
represents and warrants that as of the Closing Date, there will be no
other voting or equity securities authorized or issued, nor any
authorized or issued securities convertible into voting stock, and no
outstanding subscriptions, warrants, calls, options, rights,
commitments or other agreements by which any of the Sellers are bound,
calling for the issuance of any additional shares of Common Stock of
any other voting or equity security. The Motor Common Shares constitute
one hundred percent (100%) of the equity capital of Motor, which
includes, inter alia, one hundred percent (100%) of Motor's voting
power, right to receive dividends, when, as and if declared and paid,
and the right to receive the proceeds of liquidation attributable to
Common Stock, if any.
C. Ownership of the Motor Shares As of the Date hereof, the Sellers are
the sole owners of the Motor Common Shares, free and clear of all
liens, encumbrances and restrictions of any nature whatsoever, except
by reason of the fact that the Motor Common Shares will not have been
registered under the 1933 Securities Act, as amended (the "'33 Act"),
or any applicable state securities laws.
D. Taxes. Motor has filed all federal, state and local income or other
tax returns and reports that it is required to file with all govern-
mental agencies, wherever situate, and has paid or accrued for payment
all taxes as shown on such returns,
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such that a failure to file, pay or accrue will not have a material
adverse effect on Motor.
E. Pending Actions. There are no material legal actions, lawsuits,
proceedings or investigations, either administrative or judicial,
pending or threatened, against or affecting Motor, or against the
Sellers, that arise out of their operation of Motor, except as
described in Exhibit "C" attached hereto. Motor is not in violation of
any law, material ordinance or regulation of any kind whatever,
including but not limited to laws, rules and regulations governing the
sale of its products, the '33 Act, the Securities Exchange Act of 1934,
as amended (the "'34 Act"), the Rules and Regulations of the U.S.
Securities and Exchange Commission ("SEC"), or the securities laws and
regulations of any state.
F. Governmental Regulation. Motor holds the licenses and registrations
set forth on Exhibit "D" hereto from the jurisdictions set forth
therein, which licenses and registrations are all of the licenses and
registrations necessary to permit Motor to conduct its current
business. All of such licenses and registrations are in full force and
effect, and there are no proceedings, hearings or other actions pending
that may affect the validity or continuation of any of them. No
approval of any other trade or professional association or agency of
government other than as set forth on Exhibit "D" is required for any
of the transactions effected by the Agreement, and the completion of
the transactions contemplated by the Agreement will not, in and of
themselves, affect or jeopardize the validity or continuation of any of
them.
G. Ownership of Assets. Except as set forth in Exhibit "E," Motor has
good, marketable title, without any liens or encumbrances of any nature
whatever, to all of the following, if any: its assets, properties and
rights of every type and description, including, without limitation,
all cash on hand and in banks, certificates of deposit, stocks, bonds,
and other securities, good will, customer lists, its corporate name and
all variants thereof, trademarks and trade names, copyrights and
interests thereunder, licenses and registrations, pending licenses and
permits and applications therefor, inventions, processes, know-how,
trade secrets, real estate and interests therein and improvements
thereto, machinery, equipment, vehicles, notes and accounts receivable,
fixtures, rights under agreements and leases, franchises, all rights
and claims under insurance policies and other contracts of whatever
nature, rights in funds of whatever nature, books and records, and all
other property and rights of every kind and nature owned or
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held by Motor as of this date, and will continue to hold such title on
and after the completion of the transactions contemplated by the
Agreement; nor, except in the ordinary course of its business, has
Motor disposed of any such asset since the date of the most recent
balance sheet described in Section III (O) of the Agreement.
H. No Interest in Suppliers, Customers, Landlords or Competitors.
Neither the Sellers nor any member of their families have any interest
of any nature whatever in any supplier, customer, landlord or
competitor of Motor.
I. No Debt Owed by Motor to Sellers. Except as set forth in Exhibit "F"
Motor does not owe any money, securities, or property to the Sellers or
to any member of the Seller's family, or to any company controlled by
the Sellers or their families, directly or indirectly. To the extent
that Motor may have any undisclosed liability to pay any sum or
property to any such person or entity, or any member of their families,
such liability is hereby forever irrevocably released and discharged.
J. Corporate Records. All of Motor's books and records, including,
without limitation, its books of account, corporate records, minute
book, stock certificate books and other records of Motor are
up-to-date, complete and reflect accurately and fairly the conduct of
its business in all material respects since its date of incorporation.
K. No Misleading Statements or Omissions. Neither the Agreement nor any
financial statement, exhibit, schedule or document attached hereto or
presented to Genesis in connection herewith, contains any materially
misleading statement, or omits any statement of fact necessary to make
the other statements or facts herein set forth not materially
misleading.
L. Validity of the Agreement. All corporate and other proceedings
required to be taken by the Sellers and by Motor in order to enter into
and to carry out the Agreement have been duly and properly taken. The
Agreement has been duly executed by the Sellers and by Motor, and
constitutes the valid and binding obligation of each of them, except to
the extent limited by applicable laws relating to or affecting
generally the enforcement of creditors' rights. The execution and
delivery of the Agreement and the carrying out of its purposes will not
result in the breach of any of the terms or conditions of, or
constitute a default under or violate,
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Motor's Certificate of Incorporation or document of undertaking, nor
will such execution, delivery and carrying out violate any order, writ,
injunction, decree, law, rule or regulation of any court, regulatory
agency or other governmental body; and the business now conducted by
Motor can continue to be so conducted after completion of the
transaction contemplated hereby, with Motor as a wholly-owned
subsidiary of Genesis.
M. Enforceability of the Agreement. When duly executed and delivered,
the Agreement and the Exhibits hereto which are incorporated herein and
made a part hereof are legal, valid, and enforceable by Genesis
according to their terms, except to the extent limited by applicable
laws relating to or affecting generally the enforcement of creditors'
rights, and that at the time of such execution and delivery, Genesis
will have acquired title in and to the Motor Common Shares free and
clear of all claims, liens and encumbrances.
N. Access to Books and Records. Genesis will have full and free access
to Motor's books and records during the course of this transaction
prior to Closing, during regular business hours.
O. Motor's Financial Statements. Motor's Balance Sheet as of March 31,
1999, attached hereto as Exhibit "G," accurately describes Motor's
financial position as of the dates thereof. Within 90 days after the
Closing, Motor will provide Genesis with audited financial statements
for the necessary periods to file a Form 10 or Form 10SB. These
financial statements shall be prepared in accordance with generally
accepted accounting principles in the United States ("GAAP") (or as
permitted by regulation S-X, S-B and/or the rules promulgated under the
'33 Act and the '34 Act and audited by independent certified public
accountants with substantial SEC experience.)
P. Corporate Summary. Motor's Corporate Summary, attached hereto as
Exhibit "H," accurately describes Motor's business, assets, proposed
operations and management as of the date thereof; since the date of the
Corporate Summary, there has been no material change in the Business
Plan.
IV. Warranties and Representations of Genesis. In order to induce the
Sellers and Motor to enter into the Agreement and to complete the
transaction contemplated hereby, Genesis warrants and represents to
Motor and Sellers that:
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A. Organization and Standing. Genesis is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada, is qualified to do business as a foreign corporation in every
other state in which it operates to the extent required by the laws of
such states, and has full power and authority to carry on its business
as now conducted and to own and operate its assets, properties and
business.
B. Capitalization Genesis's entire authorized equity capital consists
of 50,000,000 shares of voting Common Stock, $.001 par value, and
10,000,000 shares of preferred stock, $.001 par value. Upon Closing,
Genesis will have approximately 13,102,677 shares of Common Stock,
$.001 par value, issued and outstanding, which will include all shares
issued to Consultants as fees. Genesis will also have approximately
952,000 shares of preferred stock issued and outstanding as of the
Closing date. Upon issuance, all of the Genesis Common Stock will be
validly issued, fully paid and non-assessable. The relative rights and
preferences of Genesis's equity securities are set forth in the
Articles of Incorporation, as amended, and Genesis's By-Laws (Exhibit
"I" hereto). The ByLaws of Genesis provide that a simple majority of
the shares voting at a stockholders' meeting at which a quorum is
present may elect all of the directors of Genesis. Cumulative voting is
not provided for by the By-Laws or Articles of Incorporation of
Genesis. Accordingly, as of the Closing, the 11,790,000 shares being
issued to and acquired by the Sellers will constitute approximately
ninety percent (90%) of the Common Shares of Genesis then issued and
outstanding, which includes, inter alia, that same percentage of
Genesis's voting power, right to receive dividends (when, as, and if
declared and paid), and the right to receive the proceeds of
liquidation attributable to Common Stock, if any.
C. Ownership of Shares. By Genesis's issuance of the Genesis Common
Shares to the Sellers pursuant to the Agreement, the Sellers will
thereby acquire good, absolute marketable title thereto, free and clear
of all liens, encumbrances and restrictions of any nature whatsoever,
except by reason of the fact that such Genesis shares will not have
been registered under the '33 Act.
D. Significant Agreements. Genesis is not and will not at Closing be
bound by any of the following, unless specifically listed in Exhibit
"J" hereto:
1. Employment, advisory, or consulting contract;
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<PAGE>
2. Plan providing for employee benefits of any nature;
3. Lease with respect to any property or equipment;
4. Contract for any future expenditure in excess of $100;
5. Contract or commitment pursuant to which it has assumed,
guaranteed, endorsed, or otherwise become liable for any obligation of
any other person, firm or organization;
6. Contract, agreement, understanding, commitment or arrangement,
other than in the normal course of business, not fully disclosed or set
forth in the Agreement;
7. Agreement with any person relating to the dividend, purchase or
sale of securities, which has not been settled by the delivery or
payment of such securities when due, and which remains unsettled on the
date of the Agreement.
E. Taxes. Genesis will file all federal, state and local income or
other tax returns and reports that it is required to file with all
governmental agencies, wherever situate, except for its federal tax
return, which was due in September of 1998. Genesis estimates that
there are approximately $36,000 in unpaid ad valorem taxes within the
State of Texas. Genesis hereby discloses that it ha been sued by the
City of Fort Worth and Tarrant County, Texas for the above-mentioned
taxes.
F. Liabilities. At and as of the Closing Date, Genesis will have a
total of approximately $586,000 in liabilities, exclusive of the costs
(including legal and accounting fees and other expenses) relating to
this transaction. This $586,000 amount includes the $36,000 in ad
valorem taxes previously disclosed, $250,000 in debt for the repurchase
of 600,000 shares of Genesis' preferred stock, and $300,000 for
consulting and merger/acquisition services. From Genesis' sale of
1,000,000 shares of common stock to Erie Holdings, Ltd, $100,000 will
be paid out to satisfy outstanding debts of Genesis, which will reduce
Genesis' outstanding debts to approximately 486,000.
G. No Pending Actions. There are no legal actions, lawsuits,
proceedings or investigations, either administrative or judicial,
pending or threatened, against or affecting Genesis, or against any of
Genesis's officers or directors and arising out
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<PAGE>
of their operation of Genesis, except a judgment obligation (arising
from a bankruptcy trustee's lawsuit) for Genesis to deliver 100
post-reverse shares of Common Stock. Genesis has been in compliance
with, and has not received notice of violation of any law, ordinance of
regulation to any kind whatever, including, but not limited to, the '33
Act, the '34 Act, the Rules and Regulations of the SEC or the
Securities Laws and Regulations of any state. Genesis is not now and
never has been required to file reports under the '33 Act or the '34
Act.
H. Corporate Records. All of Genesis's books and records, including
without limitation, its book of account, corporate records, minute
book, stock certificate books and other records are complete and
reflect accurately and fairly the conduct of its business in all
respects since the date Reginald Davis became President of Genesis. All
of said books and records will be delivered to Genesis' new management
at the Closing.
I. No Misleading Statements or Omissions. Neither the Agreement nor any
financial statement, exhibit, schedule or document attached hereto or
presented to Motor's counsel in connection herewith contains any
materially misleading statement, or omits any fact or statement
necessary to make the other statements of fact therein set forth not
materially misleading.
J. Validity of the Agreement. All corporate action and proceedings
required to be taken by Genesis in order to enter into and to carry out
the Agreement have been duly and properly taken. The Agreement has been
duly executed by Genesis, and constitutes a valid and binding
obligation of Genesis. The execution and delivery of the Agreement and
the carrying out of its purposes will not result in the breach of any
of the terms or conditions of, or constitute a default under or
violate, Genesis's Certificate of Incorporation or By-Laws, or any
agreement, lease, mortgage, bond, indenture, license or other document
or undertaking, oral or written, to which Genesis is a party or is
bound or may be affected, nor will such execution, delivery and
carrying out violate any order, writ, injunction, decree, law, rule or
regulation of any court, regulatory agency or other governmental body.
K. Enforceability of the Agreement. When duly executed and delivered,
the Agreement and the Exhibits hereto which are incorporated herein and
made a part hereof are legal, valid, and enforceable by Motor and the
Sellers according to their terms, and that at the time of such
execution and delivery, the Sellers will have
127
<PAGE>
acquired good, marketable title in and to the Genesis Common Shares
acquired pursuant hereto, free and clear of all liens and encumbrances.
L. Access to Books and Records. Motor and Sellers will have full and
free access to Genesis's books and records during the course of this
transaction prior to and at the Closing.
M. Genesis Financial Statements. At or before the Closing, Genesis
will provide Motor with recent financial statements.
N. Genesis Financial Condition. As of the Closing, Genesis will have
$600,000 in assets and $586,000 of liabilities.
O. Stockholder Approval. Immediately upon the signing of the Agreement,
Genesis will submit to its stockholders by meeting or consent the
matters described in section VII(B)(1) herein, if required to do so
under Nevada Corporate Law. Hudson Consulting Group, Inc. agrees that
it will vote all of its Genesis shares in favor of all items submitted
to Genesis stockholders in accordance with the Agreement.
V. Term. All representations, warranties, covenants and agreements made
herein and in the exhibits attached hereto shall survive the execution
and delivery of the Agreement and payment pursuant thereto.
VI. The Genesis Shares. All of the Genesis Common Shares shall be validly
issued, fully-paid and non-assessable shares of Genesis Common Stock,
with full voting rights, dividend rights, and the right to receive the
proceeds of liquidation, if any, as set forth in Genesis' Articles of
Incorporation.
VII. Conditions Precedent to Closing.
A. The obligations of Motor and Sellers under the Agreement are subject
to the fulfillment, before or at the Closing, of each of the following
conditions:
1. That Genesis' representations and warranties contained herein
shall be true and correct at the time of the closing date as if such
representations and warranties were made at such time;
128
<PAGE>
2. That Genesis and its management shall have performed or
complied with all agreements, terms and conditions required by the
Agreement to be performed or complied with by them prior to or at the
time of Closing;
3. That Genesis' stockholders, by proper and sufficient vote,
shall have properly approved all of the matters described in Section
VII(B)(1) herein, if required to do so under Nevada Corporate Law; and
B. The obligations of Genesis under the Agreement are subject to the
fulfillment, before or at or after the Closing, of each of the
following conditions:
1. That Genesis stockholders, by proper and sufficient vote, shall
have approved the Agreement and the transactions contemplated hereby
and shall have approved such other changes as are consistent with the
Agreement, if required to do so under Nevada Corporate Law;
2. That Motor's and Sellers' representations and warranties
contained herein shall be true and correct at the time of Closing as if
such representations and warranties were made at such time; and
3. That Motor and Sellers shall have performed or complied with
all agreements, terms and conditions required by the Agreement to be
performed or complied with by them before or at the time of Closing;
4. That Sellers and Genesis jointly and severally indemnify and
hold harmless Genesis' former officers, directors, agents and
affiliates against any claims or liabilities, including reasonable
attorney's fees and other reasonable defense costs incurred in
defending such claims or liabilities, arising from or relating to any
material misrepresentation or omission in the Agreement.
VIII. Termination. The Agreement may be terminated at any time before or a
Closing by:
A. The mutual written agreement of the parties;
B. Any party if:
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<PAGE>
1. Any provision of the Agreement applicable to a party shall be
materially untrue or fail to be accomplished.
2. Any legal proceeding shall have been instituted or shall be
imminently threatening to delay, restrain or prevent the consummation
of the Agreement.
Upon termination of the Agreement for any reason set forth in this paragraph,
each party shall bear all of its own costs and expenses, and no party shall be
liable to any other.
IX. Exhibits. All Exhibits attached hereto are incorporated herein by this
reference as if they were set forth here in their entirety.
X. Miscellaneous Provisions. This Agreement is the entire agreement
between the -------------------------parties in respect of the subject
matter hereof, and there are no other agreements, written or oral,
concerning such subject matter. The Agreement shall not be modified or
amended except in a writing executed by all of the parties hereto. The
failure to insist upon strict compliance with any of the terms,
covenants or conditions of the Agreement shall not be deemed a waiver
or relinquishment of such right or power at any other time or times.
This Agreement will be binding on, and inure to the benefit of, any and
all successors, assigns, heirs, administrators, representatives, or
trustees of the parties to this Agreement.
XI. Closing. The Closing of the transactions contemplated by the Agreement
("Closing") shall take place at 1:00 p.m. Central Time on April 6,
1999. The Closing shall occur at 268 West 400 South, Suite 300, Salt
Lake City, Utah 84101 or such other place as the parties hereto shall
agree upon. At the Closing, all of the documents, payments, and items
referred to herein shall be exchanged. Facsimiles of signatures and
documents shall be accepted by all parties as originals.
XII. Post-Closing: Form 10 or Form 10-SB. As soon as practical after Closing
and after Genesis meets the initial listing requirements for the NASDAQ
Small Cap market, Genesis will prepare, file, and use its best efforts
to have declared effective, a Form 10 or Form 10-SB Registration
Statement with the U.S.
Securities and Exchange Commission.
XIII. Governing Law. The Agreement shall be governed by and construed in
accordance with the local laws of the State of Nevada.
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<PAGE>
XIV. Counterparts. The Agreement may be executed in duplicate facsimile
counterparts, each of which shall be deemed an original and together
shall constitute one and the same binding Agreement, with one
counterpart being delivered to each party hereto.
XV. No Reverse Stock Splits. All the parties to the Agreement hereby agree,
and represent and warrant to all the other parties in order to induce
them to enter into the Agreement, that no reverse split of either
Motor's or Genesis' common stock will occur, or will be allowed,
assented to, encouraged by, or voted for by any of the parties hereto,
for a period of 30 months after the Closing Date.
IN WITNESS WHEREOF, the parties hereto have placed their signatures as
of the date and year above first written.
GENESIS CAPITAL CORPORATION OF NEVADA
By: /s/
Name: Reginald Davis
Title: President
MOTOR SPORTS ON DIRT, INC.
By: /s/
Name: Donald Walker
Title: President
SELLERS:
/s/
First Walker Family Trust, Shareholder,
Sally J. Rogers, Trustee
/s/
Arnon O'Brien
131
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED AUDITED FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30,
1999 THAT WERE FILED WITH THE COMPANY'S REPORT ON FORM 10-SB AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 600,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 604,619
<CURRENT-LIABILITIES> 32,158
<BONDS> 0
0
933
<COMMON> 2068
<OTHER-SE> 569,460
<TOTAL-LIABILITY-AND-EQUITY> 604,619
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 30,794
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (30,794)
<INCOME-TAX> 4,619
<INCOME-CONTINUING> (26,175)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> (26,175)
<EPS-BASIC> (1.325)
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</TABLE>
