AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 11, 1999
REGISTRATION NO. 333-76533
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
______________
PLANET RESOURCES, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 1041 76-0600966
(State or other jurisdiction of. (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) . Classification Code Number) Identification Number)
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A. W. DUGAN, PRESIDENT AND CEO
PLANET RESOURCES, INC.
1415 LOUISIANA, SUITE 3100 . . . . . . . . . 1415 LOUISIANA, SUITE 3100
HOUSTON, TEXAS 77002 . . . . . . . . . . . . HOUSTON, TEXAS 77002
(713) 658-1142 (713) 658-1142
(Address, including zip code, and telephone) (Name, address, including zip code, and
number including area code of registrant's . telephone number including area code
principal executive offices) . . . . . . . . of agent for service)
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Copies to:
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ROBERT L. SONFIELD, JR. . JONATHAN C. GILCHRIST, ESQ.
SONFIELD & SONFIELD . . . INTERNET LAW LIBRARY, INC.
770 S. POST OAK LANE. . . 4301 WINDFERN, SUITE 2001
HOUSTON, TEXAS 77056. . . HOUSTON, TEXAS 77041
(713) 877-8333 (281) 578-8800
FACSIMILE: (713) 877-1547 FACSIMILE: (281) 578-8898
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_______________
Approximate date of commencement of proposed sale to the public:
As soon as practicable on or after the registration statement becomes effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering.
If any securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [x]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
CALCULATION OF REGISTRATION FEE
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NUMBER OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES SHARES OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED BEING REGISTERED PER SHARE OFFERING PRICE FEE
common stock. . . . . 1,605,818 $ .0069(2) $ 11,000 $ 3.33
common stock options. 405,000 - - -
common stock(1) . . . 405,000 $ .15 $ 60,750 $ 18.47
- ---------------------
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(1) Issuable upon exercise of common stock options.
(2) Estimated solely for purposes for calculating the registration fee
pursuant to Rule 457 based upon the book value of the common stock as of June
30, 1999.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
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3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
INITIAL PUBLIC OFFERING
PROSPECTUS
SUBJECT TO COMPLETION, DATED AUGUST 11, 1999
PLANET RESOURCES, INC.
1,605,818 SHARES OF COMMON STOCK
405,000 OPTIONS EACH TO PURCHASE ONE SHARE OF COMMON STOCK
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Planet Resources, Inc.
1415 Louisiana, Suite 3100 . . . . . . . . . . . . . . . . We will own all of the assets of Internet Law Library,
Houston, Texas 77002 . . . . . . . . . . . . . . . . . . . Inc. which are subsurface mineral rights in the City of
Mullan, Idaho and related assets.
As a Internet Law stockholder or optionholder you will
pay no consideration for the shares of our common stock. . No public market currently exists for our shares.
and our options to be received by you in the distribution.
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Proposed Trading Symbol:
Over-The-Counter Bulletin board ("OTCBB") -- PLRS
_____________________________________
The Shares Involve a High Degree of Risk.See "Risk Factors"
Beginning on Page 8.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
August ___, 1999
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5
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6
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5
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PLANET RESOURCES, INC. PROSPECTUS
TABLE OF CONTENTS
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PROSPECTUS SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Planet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The offering. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Tax considerations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Planet stock option plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
RISK FACTORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
No trading market for your common stock and option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Planet has an obligation to indemnify Internet Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Planet has no operating business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Absence of dividends on common stock are unlikely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
There are anti-takeover provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Additional authorized shares available for issuance may adversely affect the market for your shares . . . . . . . . 8
We depend on A.W. Dugan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
We have not implemented any year 2000 procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Cautionary statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
CAPITALIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
THE DISTRIBUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Terms of the distribution agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Manner of effecting the distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Listing of Planet common stock; restrictions on resale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Treatment of indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Indemnification and insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Rights of Internet Law shareholders before and after the distribution . . . . . . . . . . . . . . . . . . . . . . . 12
FEDERAL INCOME TAX CONSEQUENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Taxation of stock as a dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Taxpayer relief act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Backup withholding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
State tax consequences. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
MANAGEMENT'S PLAN OF OPERATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Plan of operation for the next twelve months. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Cautionary statement regarding forward looking statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Property owned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Property leased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Business offices and administrative support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Internet Law Library, Inc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Legal proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Officers and directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
EXECUTIVE AND DIRECTOR COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
THE PLANET STOCK INCENTIVE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
General provisions of the stock incentive plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Stock options and stock appreciation rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Restricted stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Tax information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Planet common stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Office space and administrative support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
DESCRIPTION OF PLANET CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Authorized capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Planet preferred stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Planet common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Planet common stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Defenses against hostile takeovers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Authorized shares of capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Stockholder meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Classified board of directors and removal of directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Restriction of maximum number of directors and filing vacancies on the board of directors . . . . . . . . . . . . . 21
Stockholder vote required to approve business combinations with related persons . . . . . . . . . . . . . . . . . . 21
Advance notice requirements for nomination of directors and proposal of new business at annual stockholder meetings 21
Supermajority voting requirement for amendment of certain provisions of the certificate of incorporation. . . . . . 21
SHARES ELIGIBLE FOR FUTURE SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
WHERE YOU CAN FIND MORE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY PLANET,
INTERNET LAW OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION
TO ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION IN
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION
OF THE SECURITIES MADE UNDER THIS PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF PLANET OR
INTERNET LAW SINCE THE DATE OF THIS PROSPECTUS.
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PROSPECTUS SUMMARY PROSPECTUS SUMMARY
This prospectus is being furnished to stockholders of Internet Law.
OVERVIEW Overview
Prior to the distribution, Internet Law's mineral properties and related
assets will be transferred to Planet, a wholly-owned subsidiary of Internet Law
in exchange for the Planet common stock and Planet options. Immediately
following the transfer, all of the Planet common stock and Planet options will
be distributed to the stockholders and optionholders of Internet Law at the rate
of one share of Planet common stock per share of Internet Law common stock and
one Planet common stock purchase option per common stock purchase option
outstanding as of the distribution record date. Internet Law will continue its
corporate existence under the laws of the State of Delaware. As a result of the
distribution, Planet will be an independent, publicly-traded company owning the
mineral properties and owned by the stockholders of Internet Law as of the
distribution record date.
PLANET Planet
Planet is currently a wholly-owned subsidiary of Internet Law incorporated
under the laws of the State of Delaware. The mailing address of Internet Law's
principal executive offices is 4301 Windfern, Suite 2001, Houston, Texas 77041,
and the telephone number at such address is (281) 578-8800. Following the
distribution, Planet's principal executive offices and phone number will be the
same as Internet Law's former address and number. The mailing address of
Planet's principal executive offices is 1415 Louisiana, Suite 3100, Houston,
Texas 77002, and the telephone number at such address is (713) 658-1142.
Internet Law's transfer agent, Atlas Stock Transfer Corporation, will act as the
distribution Agent for the distribution and will deliver certificates for Planet
common stock as soon as practicable to holders of record of Internet Law common
stock. All shares of Planet common stock will be fully paid and nonassessable
and the holders thereof will not be entitled to preemptive rights. Immediately
following the completion of the distribution, Planet will be an independent,
publicly-traded company. See "The distribution -- Manner of Effecting the
distribution; Listing of Planet common stock."
THE OFFERING The offering
This prospectus covers 1,605,818 shares of common stock, par value $.001
per share of Planet and 405,000 options to purchase shares of Planet common
stock. This prospectus is being furnished to the stockholders and option
holders of Internet Law Library, Inc., a Delaware corporation (formerly Planet
Resources, Inc.), the sole stockholder of Planet, in connection with the
proposed distribution to Internet Law's stockholders of all the outstanding
shares of Planet common stock, according to the terms of an agreement and plan
of distribution, dated as of March 25, 1999, by and between Internet Law and
Planet.
One share of Planet common stock and one Planet option will be distributed for
each share of common stock of Internet Law, par value $.001 per share, and each
option to purchase one share of Internet Law common stock for a price of $0.15
per share issued and outstanding on the 24th date of March 1999. Any person
will receive Planet common stock in the distribution who
owned shares or options of Internet Law on the 24th day of March, 1999
and still owned the shares or options on April 14, 1999, or
purchased shares of Internet Law in the open market prior to the close
of business on April 14, 1999.
Internet Law's transfer agent, Atlas Stock Transfer Corporation, will act
as the distribution Agent for the distribution and will deliver certificates for
Planet common stock as soon as practicable to holders of record of Internet Law
common stock. All shares of Planet common stock will be fully paid and
nonassessable and the holders thereof will not be entitled to preemptive rights.
Immediately following the completion of the distribution, Planet will be an
independent, publicly-traded company. See "The distribution -- Manner of
Effecting the distribution; Listing of Planet common stock."
TAX CONSIDERATIONS Tax considerations
Internet Law will receive the opinion of Sonfield & Sonfield to the effect
that, among other things, the distribution will qualify as a reorganization
under Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the
"Code"), and that neither Internet Law, Planet nor their stockholders will
recognize any gain or loss
upon the receipt by Planet of the mineral properties and related
assets from Internet Law in exchange for the Planet common stock and Planet
options, or
upon receipt by Internet Law stockholders of the Planet common stock
and Planet options in the distribution. See "Certain Federal Income Tax
Consequences."
PLANET STOCK OPTION PLANS Planet stock option plans
Planet has also adopted the Planet stock incentive plan so Planet will be
able to make stock incentive awards in the future. Planet has reserved
2,500,000 shares of Planet common stock under the stock incentive plan.
EXPENSES Expenses
Each of Internet Law, on the one hand, and Internet Law and Planet, on the
other hand, will incur expenses in connection with the acquisition and
distribution. The fees and expenses of Internet Law and Planet are currently
estimated to be approximately $30,000 with respect to the distribution and
approximately $20,000 with respect to the acquisition.
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RISK FACTORS RISK FACTORS
An investment in the securities offered hereby is speculative in nature and
involves a high degree of risk. In addition to the other information contained
in this prospectus, the following factors should be considered carefully in
evaluating Planet before making any investment decisions with respect to the
Planet common stock to be received in the distribution. This prospectus
contains, in addition to historical information, forward-looking statements that
involve risks and uncertainties. Planet's actual results may differ materially
from the results discussed in the forward-looking statements. Factors that
might cause or contribute to such difference include, but are not limited to,
those discussed below, as well as those discussed elsewhere in this prospectus.
NO TRADING MARKET FOR YOUR COMMON STOCK AND OPTIONNo trading market for your
common stock and option
There is no existing trading market for the Planet common stock or Planet
options to be received by you in the distribution and there can be no assurance
as to the establishment of an active trading market. We intend to qualify the
Planet common stock for quotation on the Over-The-Counter Bulletin board
("OTCBB") under the trading symbol "PLRS." Our management expects that
1,605,818 shares of Planet common stock will be outstanding after the
distribution. Our common stock may experience price volatility following the
distribution until trading values become established. As a result, it could be
difficult to make purchases or sales of our common stock in the market at any
particular time. There can be no assurance as to either the price at which our
common stock will trade following the consummation of the distribution.
PLANET HAS AN OBLIGATION TO INDEMNIFY INTERNET LAW Planet has an obligation to
indemnify Internet Law
The distribution agreement and the Indemnification Agreement, indemnify Internet
Law with respect to any losses, damages, claims and liabilities which may arise
from the ownership of the mineral properties before the distribution. See "The
distribution -- Indemnification and Insurance" and "-- Terms of the
Indemnification Agreement."
PLANET HAS NO OPERATING BUSINESS Planet has no operating business
Before the distribution date , Internet Law will transfer the mineral properties
to us that will constitute all of our businesses, assets and liabilities. While
we intend to pursue strategies to commence operations as a going business, we
cannot assure you that we will be successful in implementing such strategies or
that, if implemented, such strategies will result in profitable business.
ABSENCE OF DIVIDENDS ON COMMON STOCK ARE UNLIKELYAbsence of dividends on common
stock are unlikely
We have no present intention of paying cash dividends on our common stock
in the foreseeable future, as we intend to follow a policy of retaining our
earnings, if any, for use in our business. Internet Law has never paid cash
dividends on its common stock. See "Description of Planet Capital Stock" and
"Dividend Policy."
THERE ARE ANTI-TAKEOVER PROVISIONS There are anti-takeover provisions
After completion of the distribution, our officers, directors and principal
stockholders will beneficially own approximately 40% of our common stock and
will have the right to acquire up to an additional 22% of our common stock
pursuant to the Planet options. See "Principal Stockholders of Planet."
Accordingly, such persons may be able to approve major corporate transactions
including those involving amendments to our certificate of incorporation or the
sale of substantially all our assets and may be able to elect all our directors
and to control our affairs. This voting control may have the effect of delaying
or preventing a change in control of Planet and may adversely affect your rights
as a holder of the shares of our common stock.
ADDITIONAL AUTHORIZED SHARES AVAILABLE FOR ISSUANCE MAY ADVERSELY AFFECT THE
MARKET FOR YOUR SHARES Additional authorized shares available for issuance may
adversely affect the market for your shares
Upon completion of the distribution, there will be a total of 1,605,818
shares of Planet common stock outstanding. 405,000 shares of common stock have
been reserved for issuance upon exercise of the Planet options. After the
exercise of all the Planet options we will have 2,010,818 shares of common stock
outstanding and 22,989,182 shares of authorized but unissued common stock
available for issuance without further stockholder approval. As a result, any
issuance of additional shares of common stock may cause you to suffer
significant dilution which may adversely affect the market and the value of your
shares.
You should be aware that the possibility of sales may, in the future, have
a depressive effect on the price of the Planet common stock in any market which
exists or may develop and, therefore, the ability of any investor to market his
shares may be dependent directly upon the number of shares that are offered and
sold. Other stockholders may sell their shares during a favorable movement in
the market price of our securities which may have a depressive effect on its
price per share. See "Description of Planet Capital Stock."
WE DEPEND ON A.W. DUGAN We depend on A.W. Dugan
Planet's operations are dependent on the efforts, ability and experience of A.W.
Dugan. The loss of his services could have a material adverse impact on
Planet's future results of operations.
WE HAVE NOT IMPLEMENTED ANY YEAR 2000 PROCEDURES We have not implemented any
year 2000 procedures
We have not implemented any Year 2000 date conversion program to ensure
that our computer systems and applications will function properly beyond 1999.
CAUTIONARY STATEMENTS Cautionary statements
This prospectus contains statements relating to future results of Planet and
Internet Law (including certain projections and business trends) that are
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995, the Securities Act and the Securities Exchange Act of 1934,
expressly state that the safe harbor for forward-looking statements does not
apply to statements made in connection with an initial public offering. Actual
results may differ materially from those projected as a result of certain risks
and uncertainties, including, but not limited to, changes in political and
economic conditions, regulatory conditions, government healthcare spending,
integration of acquisitions and competitive pricing pressures, all as detailed
from time to time in the filings of Planet and Internet Law made with the
Commission.
When used in this prospectus with respect to Planet and Internet Law the
words "estimate," "project," "intend," "expect" and similar expressions are
intended to identify forward-looking statements. Such statements are subject to
risks and uncertainties that could cause actual results to differ materially
from those contemplated in such forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. Such risks and uncertainties include those
risks, uncertainties and risk factors identified in this prospectus under the
headings "Risk Factors," "The distribution," "Certain Federal Income Tax
Consequences," and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
USE OF PROCEEDS USE OF PROCEEDS
Pursuant to the distribution, Internet Law will transfer the mineral
properties to Planet and receive from Planet shares of Planet common stock and
Planet options. Such shares of Planet common stock and Planet options will be
distributed in a manner expected to receive tax-free treatment to Internet Law
stockholders and optionholders as of the distribution record date, and no
consideration will be paid by such stockholders in the distribution. Therefore,
there will be no proceeds from the issuance of the Planet common stock.
CAPITALIZATION CAPITALIZATION
Following the acquisition, New Planet Resources, Inc. changed its name to
Planet Resources, Inc. and will be treated as the continuation of Internet Law
for financial reporting purposes. The following table sets forth the
capitalization of Planet (i) as of June 30, 1999, (ii) as adjusted to reflect
the distribution of mineral rights and related assets and 1,605,818 shares of
common stock and 405,000 Planet options to the stockholders of Internet Law.
This table should be read in conjunction with the balance sheet and the note
thereto included in this prospectus.
<TABLE>
<CAPTION>
June 30, 1999
--------------
Actual As Adjusted
<S> <C> <C>
Shareholders' equity
Preferred Stock, $.001 par value, 1,000,000 shares authorized,
none issued or outstanding
before and after distribution. . . . . . . . . . . . $ -0- $ -0-
Common Stock, $.001 par value, 25,000,000 shares authorized,
1,000 and 1,605,818 shares issued and outstanding
before and after distribution. . . . . . . . . . . . 1 1,605
Additional paid-in capital. . . . . . . . . . . . . . . . . . . 900 44,670
Retained earnings (deficit) . . . . . . . . . . . . . . . . . . -0- (3,760)
-------------- -------------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . 1,000 42,515
-------------- -------------
Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000 $ 42,515
============== =============
</TABLE>
THE DISTRIBUTION THE DISTRIBUTION
The following information summarizes the proposed distribution. This
description of the distribution agreement is intended to be complete. However,
the entire agreement is filed as an exhibit to the registration statement of
which this prospectus is a part and is available from Planet or the SEC web site
at http://www.sec.gov. You are urged to read such agreement in its entirety.
TERMS OF THE DISTRIBUTION AGREEMENT Terms of the distribution agreement
The distribution agreement provides that the distribution will be effected
by distributing to each holder of Internet Law common stock as of the close of
business on the distribution date certificates representing one share of Planet
common stock for each share of Internet Law common stock held by such holder as
of such time. See "-- Manner of Effecting the distribution."
Immediately following the completion of the distribution, Planet will be an
independent, publicly-owned company and it is contemplated that the shares of
Planet common stock will be quoted on the Electronic Bulletin board under the
trading symbol "PLRS." See "-- Listing of Planet common stock; Restrictions on
Resale."
MANNER OF EFFECTING THE DISTRIBUTION Manner of effecting the distribution
On the distribution date, Internet Law's transfer agent, Atlas Stock
Transfer Corporation, will deliver certificates for Planet common stock and
options as soon as practicable to holders of record of Internet Law common stock
and options to any person who:
owned shares or options of Internet Law on the 24th day of March, 1999
and still owned the shares or options on April 14, 1999, or
purchased shares of Internet Law in the open market prior to the close
of business on April 14, 1999 will receive Planet common stock in the
distributionAll shares of Planet common stock will be fully paid and
nonassessable and the holders thereof will not be entitled to preemptive rights.
See "Description of Planet Capital Stock." Following the completion of the
distribution, Planet will continue to operate as an independent, publicly-traded
company.
YOU WILL NOT BE REQUIRED TO PAY ANY CASH OR OTHER CONSIDERATION FOR THE
SHARES OF COMMON STOCK RECEIVED IN THE DISTRIBUTION NOR WILL YOU NEED TO
SURRENDER YOUR INTERNET LAW COMMON STOCK CERTIFICATES IN ORDER TO RECEIVE SHARES
OF PLANET COMMON STOCK IN THE DISTRIBUTION. THE DISTRIBUTION AGENT WILL SEND
YOU YOUR PLANET STOCK CERTIFICATES FOLLOWING THE CONSUMMATION OF THE
DISTRIBUTION.
LISTING OF PLANET COMMON STOCK; RESTRICTIONS ON RESALE Listing of Planet common
stock; restrictions on resale
Planet intends to apply to a member of the National Association of Securities
Dealers, Inc. to make a market in the Planet common stock and provide a
quotation on the NASD inter-dealer Electronic Bulletin board under the trading
symbol "PLRS." The Planet common stock received pursuant to the distribution
will be freely transferable under the Securities Act, except for shares of
Planet common stock received by any person who may be deemed to be an
"affiliate" of Planet within the meaning of Rule 144 promulgated under the
Securities Act. Persons who may be deemed to be affiliates of Planet after the
distribution generally include individuals or entities that control, are
controlled by, or are under common control with Planet, and may include the
directors and executive officers of Planet. Persons who are affiliates of
Planet will be permitted to sell their Planet common stock only pursuant to an
effective registration statement under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act. The
registration statement of which this prospectus is a part will not cover resales
of Planet common stock by affiliates of Planet. See "Shares Eligible for Future
Sale."
TREATMENT OF INDEBTEDNESS Treatment of indebtedness2
The distribution agreement provides that neither Internet Law nor Planet
will assume or be responsible for any debts or obligations of the other.
EXPENSES Expenses
In accordance with the terms of the distribution agreement Planet shall
bear all expenses incurred in connection with the distribution, including,
without limitation, the preparation, execution and the performance of the
distribution agreement and the transactions contemplated thereby, and all fees
and expenses of investment bankers, finders, brokers, agents, representatives,
counsel and accountants. Expenses incurred in printing, mailing and filing
(including without limitation, SEC filing fees, fees related to any state
securities or "blue sky" laws and stock exchange listing application fees as to
this Planet prospectus and related registration statement shall be paid by
Planet. Planet estimates that the these expenses will approximate $30,000.
INDEMNIFICATION AND INSURANCE Indemnification and insurance
The distribution agreement provides that from and after the distribution
date, Internet Law will indemnify, defend and hold harmless Planet and its
subsidiaries, as well as the directors and officers of Planet and the various
Planet subsidiaries from and against all losses arising out of or relating to
(i) any breach, whether before or after the distribution date, by Internet Law
of any provision of the distribution agreement, (ii) any claims arising out of
this prospectus or the registration statement, and (iii) liabilities related to
the operation of Internet Law.
The distribution agreement also provides that from and after the
distribution date, Planet will indemnify, defend and hold harmless Internet Law
and its subsidiaries, as well as the directors and officers of Internet Law and
the various Internet Law subsidiaries (collectively, the "Internet Law
Indemnitees") from and against all losses arising out of or relating to (i) any
breach, whether before or after the distribution date, by Planet of any
provision of the distribution agreement, (ii) any claims arising out of this
prospectus or the registration statement pertaining thereto, and (iii)
liabilities related to the operation of Planet.
RIGHTS OF INTERNET LAW SHAREHOLDERS BEFORE AND AFTER THE DISTRIBUTION Rights of
Internet Law shareholders before and after the distribution
Before the acquisition and the distribution, the shareholders of Internet
Law, under its former name Planet Resources, Inc., owned all of the equity
interest in the mineral properties described in this prospectus. After the
acquisition and the distribution the same shareholders will own the same ratable
equity interest in the mineral properties as well as a very small percentage
interest in the continuing operations of Internet Law.
FEDERAL INCOME TAX CONSEQUENCES FEDERAL INCOME TAX CONSEQUENCES
GENERALGeneral
The following summary description of the material federal income tax
consequences of the distribution is based upon the opinion of Sonfield &
Sonfield, federal tax counsel for Planet ("Tax Counsel").
Tax opinions are not binding on the IRS or any court. Moreover, the tax
opinions are based upon, among other things, certain representations as to
factual matters made by Internet Law, which representations if incorrect or
incomplete in certain material respects, would jeopardize the conclusions
reached in the opinions.
THE FOLLOWING DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE CODE,
TREASURY REGULATIONS THEREUNDER AND CURRENT ADMINISTRATIVE RULINGS AND COURT
DECISIONS. ALL ARE SUBJECT TO CHANGE WHICH MAY OR MAY NOT BE RETROACTIVE, AND
ANY SUCH CHANGES COULD AFFECT THE TAX CONSEQUENCES DESCRIBED HEREIN. SEE
"POSSIBLE FUTURE LEGISLATION" BELOW.
YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO YOU OF THE DISTRIBUTION, INCLUDING, THE APPLICABILITY AND EFFECT
OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND THE POSSIBLE EFFECTS OF CHANGES OF
APPLICABLE TAX LAWS.
TAXATION OF STOCK AS A DIVIDEND Taxation of stock as a dividend
Dividends paid on common stock are subject to tax as ordinary income to the
extent of Planet's current or accumulated earnings and profits as computed for
federal income tax purposes. To the extent that the amount of the dividend paid
on the common stock exceeds Planet's current and accumulated earnings and
profits for federal income tax purposes, such dividend will be treated first as
a nontaxable return of capital which will be applied against and reduce the
adjusted tax basis of the common stock of the holder. Any amount in excess of
the holder's adjusted tax basis would then be taxed as capital gain, and will be
long-term capital gain if the holder's holding period for the common stock
exceeds one year.
TAXPAYER RELIEF ACT Taxpayer relief act
The Taxpayer Relief Act of 1997 ("TRA 1997") was signed into law on August
5, 1997. TRA 1997 contains certain restrictions involving a distribution or
"spin off" to stockholders of portions of a business enterprise, accompanied by
a merger or acquisition of a specific unit of the business enterprise involving
a third party acquiror. The distribution is not affected by the restrictions
imposed by TRA 1997.
BACKUP WITHHOLDING Backup withholding
United States information reporting requirements and backup withholding at
the rate of 31% may apply with respect to dividends paid on, and proceeds from
the taxable sale, exchange or other disposition of Internet Law common stock,
unless the stockholder (i) is a corporation or comes within certain other exempt
categories, and, when required, demonstrates these facts, or (ii) provides a
correct taxpayer identification number, certifies as to no loss of exemption
from backup withholding and otherwise complies with applicable requirements of
the backup withholding rules.
STATE TAX CONSEQUENCESState tax consequences
Because each state's income tax laws vary, it is impossible to predict the
income tax consequences to the stockholders in all of the state taxing
jurisdictions in which they are already subject to tax. You are urged to
consult their own tax advisors with respect to state income and corporate
franchise tax consequences.
DIVIDEND POLICY DIVIDEND POLICYL1
Internet Law currently does not pay dividends on any of its issued and
outstanding securities. Planet does not expect to pay any dividends for the
foreseeable future. Rather, Planet expects that it will reinvest any earnings
into funding future acquisitions and growth. Any future payments of dividends
and the amount thereof will be dependent upon Planet's results of operations,
financial condition, cash requirements, future prospects and other factors
deemed relevant by the board of directors of Planet from time to time.
MANAGEMENT'S PLAN OF OPERATIONMANAGEMENT'S PLAN OF OPERATIONL1
GENERALGeneral
Planet was incorporated under the laws of the State of Delaware on March 26,
1999. Since incorporation, our only business activity has been organizational
matters and entering into the distribution agreement with our parent company,
Internet Law.
PLAN OF OPERATION FOR THE NEXT TWELVE MONTHSPlan of operation for the next
twelve months
We own the subsurface mineral rights on approximately 190 acres located in the
city of Mullan, Idaho and lease an additional 200 acres from the city of Mullan.
During the next twelve months we will attempt to identify and contract with a
mining company that will agree to search for minerals that may underlie our
property. During the time our search is in progress, the small amounts of cash
required to maintain our operations will be provided by our chief executive
officer and principal stockholder, A.W. Dugan, or one or more of the companies
controlled by him. As a result, there will be no need to raise funds during the
next twelve months.
We have no employees, our office space and administrative support is provided by
Mr. Dugan and we do not plan any significant expenditures for new projects of
any sort within the next twelve months. However, it is possible that we will
merge or in some manner combine with an operating company. In such event, our
preference is an operating company that is in the business of extracting and
marketing natural resources. However, we will consider other industries.
YEAR 2000 Year 2000
Until recently, many computer programs were written using two digits rather
than four digits to define the applicable year in the twentieth century. Such
software may recognize the date using "00" as the year 1900 rather than the year
2000. We have not implemented any Year 2000 date conversion program to ensure
that our computer systems and applications will function properly beyond 1999.
We do not believe any Year 2000 action is necessary.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS Cautionary statement
regarding forward looking statements
Certain statements contained in this section and other sections of this
registration statement regarding matters that are not historical facts are
forward-looking statements. Because such forward-looking statements include
risks and uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements. All statements which
address operating performance, events or developments that management expects or
anticipates to incur in the future, including statements relating to sales and
earnings growth or statements expressing general optimism about future operating
results, are forward-looking statements. The forward-looking statements are
based on management's current views and assumptions regarding future events and
operating performance. Many factors could cause actual results to differ
materially from estimates contained in our forward-looking statements. The
differences may be caused by a variety of factors, including but not limited to
adverse economic conditions, competitive pressures, inadequate capital,
unexpected costs, lower revenues, net income and forecasts, the possibility of
fluctuation and volatility of our operating results and financial condition,
inability to carry out marketing and sales plans and loss of key executives,
among other things.
BUSINESS BUSINESS
GENERAL General
Planet was incorporated under the laws of the State of Delaware on March
26, 1999 as a wholly owned subsidiary of Internet Law Library, Inc. (formerly
Planet Resources, Inc.). Planet was organized for the purpose of acquiring all
of the mineral properties of Internet Law and continuing ownership of those
properties as a stand alone company.
Since incorporation, our only business has been organizational activities
and entering into the various agreements with Internet Law for transfer of the
mineral properties and the distribution.
PROPERTIESProperties
The mineral properties and related assets to be acquired from Internet Law
have been owned by the predecessor company for many years and, for the last
several years, represented the only material assets of the predecessor company.
The mineral properties owned by the predecessor company and to be owned by
Planet are described as follows:
Property owned. Property owned After the distribution, Planet will
be the owner of subsurface mineral rights on approximately 190 acres located in
the City of Mullan, Idaho. Title was acquired by issuance to real property
owners of one share of capital stock for each 25 square feet of surface owned.
In acquiring the mineral rights, Internet Law issued 361,739 shares of capital
stock as adjusted for subsequent stock splits and the Internet Law merger.
Conveyance of title included, free of any additional stock issue, all subsurface
rights lying beneath adjacent streets and alleys where ownership rested with the
grantor. The acquisition of such mineral rights was completed in November of
1985.
Property leased. Property leasedPlanet will acquire the lease entered
into May 1, 1981, with the city of Mullan (which supersedes a previous agreement
dated December 31, 1971) whereby Internet Law has the right to mine subsurface
minerals on approximately 200 acres owned by the city north of Osburn Fault for
a period of 25 years (subject to a renewal option for an additional 25 years).
In the event Planet enters in to a lease agreement for the exploration and
development of city property south of the Osburn Fault, the city shall receive
15% of the royalties received. No royalties have been paid on city property
south of the fault.
BUSINESS OFFICES AND ADMINISTRATIVE SUPPORTBusiness offices and administrative
support
One or more corporations controlled by A.W. Dugan provides office space and
the necessary administrative and clerical support for the corporate affairs of
Planet without any cost to Planet.
EMPLOYEES Employees
We have no employees.
INTERNET LAW LIBRARY, INC.Internet Law Library, Inc.
Under the terms of the Reorganization Agreement as approved by the
stockholders of Internet Law and Internet Law and the satisfaction or waiver of
the other conditions to the acquisition, Planet acquired all of the outstanding
capital stock of National Law Library, Inc., with National Law continuing as a
wholly owned subsidiary of Internet Law. Because National Law stockholders
owned a majority of the outstanding shares of Internet Law after the
acquisition, the acquisition transaction is accounted for as a reverse
acquisition of Internet Law by National Law.
Internet Law is proposing to make the distribution in connection with the
acquisition that took place, according to an agreement and plan of
reorganization dated as of March 25, 1999. In connection with the acquisition,
Planet changed its name to "Internet Law Library, Inc."
LEGAL PROCEEDINGS Legal proceedings
We are not parties in any lawsuit, pending or threatened, that we believe
should have a material effect on our financial position.
"PENNY STOCK" REGULATIONS IMPOSE RESTRICTIONS ON MARKETABILITY OF OUR SECURITIES
Pennystock regulations impose restrictions on marketability of our securities
The Commission has adopted regulations which generally define "penny stock"
to be any equity security that has a market price (as defined) less than $5.00
per share or an exercise price of less than $5.00 per share, subject to certain
exceptions. In the event of authorization of the Planet common stock for
quotation on the OTC Bulletin board, such securities will initially be covered
by the definition of "penny stock." If such securities or the common stock are
removed from listing on the OTC Bulletin board at any time following the
Effective Date, Planet's securities may become subject to rules that impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally, those persons with assets in excess of $1,000,000 or annual income
exceeding $200,000, or $300,000 together with their spouse). For transactions
covered by these rules, the broker-dealer must make a special suitability
determination for the purchase of such securities and have received the
purchaser's written consent to the transaction prior to the purchase. In
addition, for any transaction involving a penny stock, unless exempt, the rules
require the delivery, prior to the transaction, of a risk disclosure document
mandated by the Commission relating to the penny stock market. The broker-dealer
also must disclose the commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and, if the
broker-dealer is the sole market-maker, the broker-dealer must disclose this
fact and the broker-dealer's presumed control over the market. Finally, monthly
statements must be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny stocks.
Consequently, the "penny stock" rules may restrict the ability of broker-dealers
to sell our securities and may affect the ability of purchasers in this Offering
to sell our securities in the secondary market.
In the event that we were not able to qualify our securities for listing on
the OTC Bulletin board, we will attempt to have our securities traded in the
"pink sheets." In such event, holders of our securities may encounter
substantially greater difficulty in disposing of their securities and/or in
obtaining accurate quotations as to the prices of our securities.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS DIRECTORS,
EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS
The table below sets forth, as to each executive officer and director of
Planet, such person's name, positions with Planet and age. Each executive
officer and director of Planet holds office until a successor is elected, or
until the earliest of death, resignation or removal. Each executive officer is
elected or appointed by the Planet board of directors. All of the directors and
executive officers listed below will continue with Planet in the same capacity
as such individuals have served Internet Law.
OFFICERS AND DIRECTORSOfficers and directors
After the distribution, the officers and directors of Planet before the
acquisition will be the officers and directors of Planet. This will result in
the following persons holding the positions indicated below in Planet until
Planet's next annual meeting or until their respective successors are elected
and qualified:
Name Age Mailing Address
---- --- ----------------
A.W. Dugan 71 1415 Louisiana, Suite 3100
Houston, Texas 77002-7360
Jacque N. York 44 1415 Louisiana, Suite 3100
Houston, Texas 77002-7360
Michael K. Branstetter 45 416 River Street
Wallace, Idaho 63873-0709
The city of Mullan, Idaho is entitled to have a representative on the board
of directors under the terms of the lease between Planet and the city. As of
the date of this prospectus, the city has not requested such representation.
A.W. Dugan, president, chief financial officer and director, organized
Planet as the promoter and joined the board in 1999. Mr. Dugan's principal
occupation and five year business history is oil and gas operator. For the past
five years, Mr. Dugan has been the chief executive officer of Nortex
Corporation, a privately held company in the business of oil and gas exploration
and production.
Jacque N. York, secretary and director, joined the board in 1999. Ms.
York's principal occupation and five year business history is corporate officer.
For the past five years, Ms. York has been the corporate secretary of Nortex
Corporation, a privately held company in the business of oil and gas exploration
and production.
Michael K. Branstetter, director joined the board in 1999. Mr.
Branstetter's principal occupation and five year business history is attorney at
law. Mr. Branstetter is an officer and director of the following public
companies: Pilot Silver Lead, Inc., Idaho General Mines, Inc., and Lucky Friday
Extension Mining Company.
Planet will be a wholly-owned subsidiary of Internet Law until the
completion of the distribution. Because all of the shares of Planet common
stock held and to be held by Internet Law will be distributed to shareholders of
Internet Law in connection with the distribution, the number of shares of Planet
common stock shown below to be owned beneficially by certain beneficial owners
holding more than five percent of the issued and outstanding Internet Law common
stock, as well as by each director and by all directors and officers as a group
is based upon the number of shares to be received by such persons in the
distribution.
The following table sets forth, as of the date of this prospectus , certain
information with respect to the beneficial ownership of Planet's common stock
after the distribution by (i) each person known by us to own beneficially five
percent (5%) or more of the outstanding common stock,(ii) each director, (iii)
the executive officers, and (iv) all directors and officers as a group.
Number of Shares Percentage of Shares
-----------------------------
Name and Address of of common stock
Beneficial Owners (1) Beneficially Owned
- ----------------------- -------------------
A.W. Dugan 1,040,000(2) 51.72%
1415 Louisiana, Suite 3100
Houston, Texas 77002
Michael K. Branstetter 7,500(3) .37%
416 River Street
Wallace, Idaho 83873-0709
ALL EXECUTIVE OFFICERS AND DIRECTORS 1,047,500 52.09%
AS A GROUP (2 PERSONS)
(1) Unless otherwise indicated below, the persons in the table above have
sole voting and investment power with respect to all shares shown as
beneficially owned by them, subject to community property laws where applicable,
except 240,000 shown as beneficially owned by A.W. Dugan to which he disclaims
any beneficial interest. A person is deemed to be the beneficial owner of
securities that can be acquired by such person within 60 days from the date of
this prospectus upon the exercise of options. Each person's percentage of
ownership is determined by assuming that any options held by such person have
been exercised.
(2) Includes options to purchase an additional 400,000 shares owned
beneficially by A.W. Dugan.
(3) Includes options to purchase 5,000 shares owned by Michael Branstetter.
EXECUTIVE AND DIRECTOR COMPENSATION EXECUTIVE AND DIRECTOR COMPENSATION
The officers and directors will not receive any compensation from Planet
during the current fiscal year.
THE PLANET STOCK INCENTIVE PLAN THE PLANET STOCK INCENTIVE PLAN
Planet has adopted a stock incentive plan to provide deferred stock
incentives to key employees and directors of Planet and its subsidiaries who
contribute significantly to the long-term performance and growth of Planet.
GENERAL PROVISIONS OF THE STOCK INCENTIVE PLAN General provisions of the stock
incentive plan
The stock incentive plan will be administered by the board of directors or
a committee of the board of directors duly authorized and given authority by the
board of directors to administer the stock incentive plan. The board will have
exclusive authority to administer the stock incentive plan including without
limitation, to select the employees to be granted awards under the stock
incentive plan, to determine the type, size and terms of the awards to be made,
to determine the time when awards will be granted, and to prescribe the form of
instruments evidencing awards made under the stock incentive plan. The board
will be authorized to establish, amend and rescind any rules and regulations
relating to the stock incentive plan as may be necessary for efficient
administration of the stock incentive plan. Any board action will require a
majority vote of the members of the board.
Three types of awards are available under the stock incentive plan: (i)
nonqualified stock options or incentive stock, (ii) stock appreciation rights
and (iii) restricted stock. An aggregate of two million five hundred thousand
shares of Planet common stock may be issued pursuant to the stock incentive
plan, subject to adjustment to prevent dilution due to merger, consolidation,
stock split or other recapitalization of Planet.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS Stock options and stock appreciation
rights
Stock options are rights to purchase shares of Planet common stock. Stock
appreciation rights are rights to receive, without payment to Planet, cash
and/or shares of Planet common stock in lieu of the purchase of shares of Planet
common stock under the stock option to which the stock appreciation right is
attached. The board may grant stock options in its discretion under the stock
incentive plan. The option price shall be determined by the board at the time
the option is granted and shall not be less than the par value of such shares.
The board may, in its discretion, attach a stock appreciation right to an
option awarded under the stock incentive plan. A stock appreciation right in
exercisable only to the extent that the option to which it is attached is
exercisable. A stock appreciation right entitles the optionee to receive a
payment equal to the appreciated value of each Planet share under option in lieu
of exercising the option to which the right is attached. The appreciated value
is the amount by which the fair market value of a share of Planet common stock
exceeds the option exercise price for that Planet share. A holder of a stock
appreciation right may receive cash, Planet common stock or a combination of
both upon surrendering to Planet the unexercised option to which the stock
appreciation right is attached. Planet must elect its method of payment within
fifteen business days after the receipt of written notice of an intention to
exercise the stock appreciation right.
A person to whom a stock option or stock appreciation right is awarded will
have no rights as a stockholder with respect to any shares of Planet common
stock issuable pursuant to the stock option or stock appreciation rights until
actual issuance of a stock certificate for the Planet shares.
RESTRICTED STOCK Restricted stock
The board may in its discretion award Planet common stock that is subject
to certain restrictions on transferability. This restricted stock issued
pursuant to the stock incentive plan may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by the laws of descent
and distribution, for a period of time as determined by the board, from the date
on which the award is granted. Planet will have the option to repurchase the
shares of restricted Planet common stock at such price as the board shall have
fixed, in its sole discretion, when the award was made, which option will be
exercisable at such times and upon the occurrence of such events as the board
shall establish when the restricted stock award is granted. Planet may also
exercise its option to repurchase the restricted Planet common stock if prior to
the expiration of the restricted period, the participant has not paid to Planet
amounts required to be withhold pursuant to federal, state or local income tax
laws. Certificates for restricted stock will bear an appropriate legend
referring to the restrictions. A holder of restricted stock may exercise all
rights of ownership incident to such stock including the right to vote and
receive dividends, subject to any limitations the board may impose.
TAX INFORMATION Tax information
A recipient of an incentive stock option or a non-qualified stock option
will not recognize income at the time of the grant of the option. On the
exercise of a non-qualified stock option, the amount by which the fair market
value of the Planet common stock on the date of exercise exceeds the option
price will generally be taxable to the holder as ordinary income, and will be
deductible for tax purposes by Planet. The disposition of Planet shares
acquired upon exercise of a non-qualified option will ordinarily result in
capital gain or loss. In the case of officers who are subject to the
restrictions of Section 16(b) of the Securities Exchange Act of 1934, as
amended, the date for measuring the amount of ordinary income to be recognized
upon the exercise of a non-qualified stock option will generally be six months
after exercise rather than the date of exercise.
If an incentive option is exercised through the use of Planet common stock
previously owned by the holder, such exercise generally will not be considered a
taxable disposition of the previously owned Planet shares and thus no gain or
loss will be recognized with respect to such Planet shares upon exercise.
However, if the previously owned Planet shares were acquired by the exercise of
an incentive stock option or other tax qualified stock option and the holding
period requirements for those Planet shares were not satisfied at the time the
previously owned Planet shares were used to exercise the incentive option, such
use would constitute a disqualifying disposition of such previously owned Planet
shares resulting in the recognition of ordinary income (but, under proposed
Treasury regulations, not any additional gain in capital gain) in the amount
described above.
The amount of any cash or the fair market value of any Planet common stock
received upon the exercise of stock appreciation rights under the stock
incentive plan will be subject to ordinary income tax in the year of receipt and
Planet will be entitled to a deduction for such amount. However, if the holder
receives Planet common stock upon the exercise of stock appreciation rights and
is then subject to the restrictions of Section 16(b) of the Exchange Act; unless
the holder elects otherwise, the amount of ordinary income and deduction will be
measured at the time such restrictions lapse.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
PLANET COMMON STOCK OPTIONS Planet common stock options
On July 28, 1994 Internet Law granted five (5) year options to purchase 645,000
shares of common stock at a price of $0.15 per share. During fiscal 1996,
240,000 of the options were exercised by Houston Resources Corporation, a
corporate entity owned by a trust for the benefit of the family of A.W. Dugan.
As of the distribution record date 405,000 options are outstanding.
OFFICE SPACE AND ADMINISTRATIVE SUPPORT Office space and administrative support
One or more corporations controlled by A.W. Dugan provides office space and
the necessary administrative and clerical support for the corporate affairs of
Planet without any cost to Planet.
DESCRIPTION OF PLANET CAPITAL STOCK DESCRIPTION OF PLANET CAPITAL STOCK
AUTHORIZED CAPITAL STOCK Authorized capital stock
The certificate of incorporation grants Planet the authority to issue
26,000,000 shares of capital stock, of which 25,000,000 are common stock, par
value $.001 per share, and 1,000,000 are preferred stock, par value $.001 per
share. At June 30, 1999, Planet had outstanding 1,000 shares of Planet common
stock, all of which are currently held by Internet Law.
PLANET PREFERRED STOCK Planet preferred stock
Under Planet's certificate of incorporation, Planet's board of directors may
from time to time establish and issue one or more series of preferred stock and
fix the designations, powers, preferences and rights of the shares of such
series and the qualification, limitations or restrictions thereon, including,
but not limited to, the fixing of the dividend rights, dividend rate or rates,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), the redemption price or prices, and the liquidation
preferences, in each case, if any, of any wholly unissued series of Planet
preferred stock.
PLANET COMMON STOCK Planet common stock
Holders of Planet common stock are entitled to receive such dividends as
are declared by the board of directors, subject to the preference of any
outstanding Planet preferred stock, and are entitled to cast one vote per share
on all matters voted upon by stockholders. However, Planet has no present
intention of paying any dividends. There is no cumulative voting for the
election of directors and Planet common stock does not have any preemptive
rights. Upon liquidation of Planet, holders of Planet common stock are entitled
to share equally and ratably in any assets available for distribution to them,
after payment or provision for liabilities and amounts owing with respect to any
outstanding Planet preferred stock. Payment and declaration of dividends on
Planet common stock and purchases of shares thereof by Planet will be subject to
restrictions if Planet fails to pay dividends on any series of Planet preferred
stock ranking prior to Planet common stock as to the payment of dividends.
The registrar and transfer agent for Planet common stock is Atlas Stock Transfer
Corporation.
PLANET COMMON STOCK OPTIONS Planet common stock options
As of the distribution record date we have authorized the issuance of 405,000
options each to purchase one share of common stock at a price of $.15 per share
at any time up to December 31, 2004.
DEFENSES AGAINST HOSTILE TAKEOVERSDefenses against hostile takeovers
Introduction. IntroductionWhile the following discussion summarizes the
reasons for, and the operation and effects of, certain provisions of Planet's
certificate of incorporation which management has identified as potentially
having an anti-takeover effect, it is not intended to be a complete description
of all potential anti-takeover effects. Copies of the certificate of
incorporation and by-laws are included as an exhibit to the registration
statement of which this prospectus is a part.
In general, the anti-takeover provisions in Delaware law and Planet's
certificate of incorporation are designed to minimize Planet's susceptibility to
sudden acquisitions of control which have not been negotiated with and approved
by Planet's board of directors. As a result, these provisions may tend to make
it more difficult to remove the incumbent members of the board of directors.
The provisions would not prohibit an acquisition of control of Planet or a
tender offer for all of Planet's capital stock. However, to the extent these
provisions successfully discourage the acquisition of control of Planet or
tender offers for all or part of Planet's capital stock without approval of the
board of directors, they may have the effect of preventing an acquisition or
tender offer which might be viewed by stockholders to be in their best
interests.
Tender offers or other non-open market acquisitions of stock are usually
made at prices above the prevailing market price of a company's stock. In
addition, acquisitions of stock by persons attempting to acquire control through
market purchases may cause the market price of the stock to reach levels which
are higher than would otherwise be the case. Anti-takeover provisions may
discourage such purchases, particularly those of less than all of Planet's
stock, and may thereby deprive stockholders of an opportunity to sell their
stock at a temporarily higher price.
Authorized shares of capital stock. Authorized shares of capital stock
Planet's certificate of incorporation authorizes the issuance of up to 1,000,000
shares of serial preferred stock. Shares of Planet's serial preferred stock
with voting rights could be issued and would then represent an additional class
of stock required to approve any proposed acquisition. This preferred stock,
together with authorized but unissued shares of common stock, could represent
additional capital stock required to be purchased by an acquiror. The
certificate of incorporation authorizes the issuance of up to 25,000,000 common
shares. Issuance of such additional shares may dilute the voting interest of
Planet's stockholders. If the board of directors of Planet determined to issue
an additional class of voting preferred stock to a person opposed to a proposed
acquisition, such person might be able to prevent the acquisition
single-handedly.
Stockholder meetings. Stockholder meetingsDelaware law provides that the
annual stockholder meeting may be called by a corporation's board of directors
or by such person or persons as may be authorized by a corporation's certificate
of incorporation or by-laws. Planet's certificate of incorporation provides
that annual stockholder meetings may be called only by Planet's board of
directors or a duly designated committee of the board. Although Planet believes
that this provision will discourage stockholder attempts to disrupt the business
of Planet between annual meetings, its effect may be to deter hostile takeovers
by making it more difficult for a person or entity to obtain immediate control
of Planet between one annual meeting as a forum to address certain other matters
and discourage takeovers which are desired by the stockholders. Planet's
certificate of incorporation also provides that stockholder action may be taken
only at a special or annual stockholder meeting and not by written consent.
Classified board of directors and removal of directors. Classified board of
directors and removal of directors Planet's certificate of incorporation
provides that Planet's board of directors is to be divided into three classes
which shall be as nearly equal in number as possible. The directors in each
class serve for terms of three years, with the terms of one class expiring each
year. Each class currently consists of approximately one-third of the number of
directors. Each director will serve until his successor is elected and
qualified.
A classified board of directors could make it more difficult for
stockholders, including those holding a majority of Planet's outstanding stock,
to force an immediate change in the composition of a majority of the board of
directors. Since the terms of only one-third of the incumbent directors expire
each year, it requires at least two annual elections for the stockholders to
change a majority, whereas a majority of a non-classified board may be changed
in one year. In the absence of the provisions of Planet's certificate of
incorporation classifying the board, all of the directors would be elected each
year. The provision for a staggered board of directors affects every election
of directors and is not triggered by the occurrence of a particular event such
as a hostile takeover. Thus a staggered board of directors makes it more
difficult for stockholders to change the majority of directors even when the
reason for the change would be unrelated to a takeover.
Restriction of maximum number of directors and filling vacancies on the
board of directors. Restriction of maximum number of directors and filing
vacancies on the board of directorsDelaware law requires that the board of
directors of a corporation consist of one or more members and that the number of
directors shall be set by the corporation's by-laws, unless it is set by the
corporation's certificate of incorporation. Planet's certificate of
incorporation provides that the number of directors (exclusive of directors, if
any, to be elected by the holders of preferred stock) shall not be less than one
or more than 15, as shall be provided from time to time in accordance with
Planet by-laws. The overall effect of such provisions may be to prevent a
person or entity from quickly acquiring control of Planet through an increase in
the number of Planet's directors and election of nominees to fill the newly
created vacancies and thus allow existing management to continue in office.
Stockholder vote required to approve business combinations with related
persons. Stockholder vote required to approve business combinations with
related personsPlanet's certificate of incorporation generally requires the
approval of the holders of 75% of Planet's outstanding voting stock (and any
class or series entitled to vote separately), and a majority of the outstanding
stock not beneficially owned by a related person (as defined) (up to a maximum
requirement of 85% of the outstanding voting stock), to approve business
combinations (as defined) involving the related person, except in cases where
the business combination has been approved in advance by two-thirds of those
members of Planet's board of directors who were directors prior to the time when
the related person became a related person. The supermajority stockholder vote
requirements under the Delaware Certificate and Delaware law may have the effect
of foreclosing mergers and other business combinations which the holders of a
majority of Planet's stock deem desirable and place the power to prevent such a
transaction in the hands of a minority of Planet's stockholders
Advance notice requirements for nomination of directors and proposal of new
business at annual stockholder meetings. Advance notice requirements for
nomination of directors and proposal of new business at annual stockholder
meetingsPlanet's certificate of incorporation generally provides that any
stockholder desiring to make a nomination for the election of directors or a
proposal for new business at a stockholder meeting must submit written notice
not less than 30 or more than 60 days in advance of the meeting. Making the
period for nomination of directors and introducing new business a period not
less than 10 days prior to notice of a stockholder meeting may tend to
discourage persons from bringing up matters disclosed in the proxy materials
furnished by Planet and could inhibit the ability of stockholders to bring up
new business in response to recent developments.
Supermajority voting requirement for amendment of certain provisions of the
certificate of incorporation. Supermajority voting requirement for amendment of
certain provisions of the certificate of incorporationPlanet's certificate of
incorporation provides that specified provisions contained in the certificate of
incorporation may not be repealed or amended except upon the affirmative vote of
the holders of not less than seventy-five percent of the outstanding stock
entitled to vote. This requirement exceeds the majority vote that would
otherwise be required by Delaware law for the repeal or amendment of the
certificate of incorporation. Specific provisions subject to the supermajority
vote requirement are
Article XIII, governing the calling of stockholder meetings and the
requirement that stockholder action be taken only at annual or special meetings,
Article IX, requiring written notice to Planet of nominations for the
election of directors and new business proposals,
Article X, governing the number and terms of Planet's directors,
Article XI, governing the removal of directors,
Article XII, governing approval of business combinations involving
related persons,
Article XIII, relating to the consideration of various factors in the
evaluation of business combinations,
Article XIV, providing for indemnification of directors, officers,
employees and agents,
Article XV, limiting directors' liability, and
Articles XVI and XVII, governing the required stockholder vote for
amending the by-laws and certificate of incorporation, respectively. Article
XVII is intended to prevent the holders of less than 75% of Planet's outstanding
voting stock from circumventing any of the foregoing provisions by amending the
certificate of incorporation to delete or modify one of such provisions. This
provision would enable the holders of more than 25% of Planet's voting stock to
prevent amendments to the certificate of incorporation or by-laws even if they
were favored by the holders of a majority of the voting stock.
SHARES ELIGIBLE FOR FUTURE SALE SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the distribution, Planet will have an estimated
1,605,818 shares of common stock outstanding held beneficially by approximately
1,449 persons, all of which will be freely tradable without restriction or
further registration under the Securities Act, except to the extent such shares
are held by "affiliates" of Planet, which will be subject to the limitations of
Rule 144 promulgated under the Securities Act. In general, under Rule 144 as
currently in effect, beginning 90 days after the date of this prospectus,
persons who may be deemed affiliates of Planet, as that term is defined in the
Securities Act would be entitled to sell within any three-month period a number
of shares that does not exceed the greater of 1,605,818 shares immediately after
the distribution, one percent of the then outstanding shares of Planet common
stock or the average weekly trading volume during the four calendar weeks
preceding a sale by such person. Sales under Rule 144 are also subject to
certain provisions relating to the manner and notice of sale and availability of
current public information about Planet. Following the distribution, 405,000
shares of Planet common stock will be issuable upon the exercise of options held
by directors of Planet.
LEGAL MATTERS LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be
passed upon for Planet by Sonfield & Sonfield, Houston, Texas.
EXPERTS EXPERTS
The financial statements of Planet Resources, Inc. as of June 30, 1999,
appearing in this prospectus have been audited by Harper & Pearson Company,
independent auditors, as set forth in their report thereon appearing elsewhere
herein, and is included in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing. The audit of the financial
statements does not include any of the information contained in the accompanying
registration statement and prospectus.
WHERE YOU CAN FIND MORE INFORMATIONWHERE YOU CAN FIND MORE INFORMATION
Planet intends to furnish to its shareholders annual reports, which will
include financial statements audited by independent accountants, and such other
periodic reports as it may determine to furnish or as may be required by law,
including sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as
amended.
Planet has filed a registration statement with the Securities Exchange
Commission under the Securities Act with respect to the shares registered
hereby. This Prospectus omits certain information contained in the registration
statement as permitted by the rules and regulations of the Commission. For
further information about respect to Planet Resources, Inc. and Planet common
stock, investors should read the registration statement, including the exhibits
included with it. Statements in this Prospectus about the contents of any
contract or any other document are not necessarily complete; investors should
read such contract or other document filed with the Commission as an exhibit to
the registration statement. The registration statement, including all of the
attached exhibits and schedules, may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, NW, Washington, D.C. 20549. Copies of such materials can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
NW, Washington, D.C. 20549, at prescribed rates. Planet will file registration
statements (including this one) and other documents and reports electronically
through the Electronic Data Gathering, Analysis and Retrieval System ("EDGAR")
which is publicly available through the Commission's Internet World Wide
website, http://www.sec.gov.
<PAGE>
F - 9
<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS
<S> <C>
Report of Harper & Pearson Company, Independent Auditors . . . . . . F-2
Balance Sheet at June 30, 1999 . . . . . . . . . . . . . . . . . . . F-3
Statement of Operations for the Period Ended June 30, 1999 . . . . . F-4
Statement of Stockholder's Equity for the Period Ended June 30, 1999 F-5
Statement of Cash Flows for the Period Ended June 30, 1999 . . . . . F-6
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . F-7-9
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholder
Planet Resources, Inc.
Houston, Texas
We have audited the accompanying balance sheet of Planet Resources, Inc.
(formerly New Planet Resources, Inc.) as of June 30, 1999, and the related
statements of operations, changes in stockholder's equity and cash flows for the
period March 25, 1999 through June 30, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our 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 financial position of Planet Resources, Inc. at June
30, 1999, and the results of its operations and its cash flows for the period
March 25, 1999 through June 30, 1999 in conformity with generally accepted
accounting principles.
/s/HARPER & PEARSON COMPANY
Houston, Texas
August 3, 1999
<PAGE>
PLANET RESOURCES, INC.
BALANCE SHEET
JUNE 30, 1999
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
CURRENT ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . $ 32,515
----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . $ 32,515
==========
LIABILITIES AND STOCKHOLDER'S EQUITY
- ----------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY
Preferred stock - par value $.001; 1,000,000 shares
authorized, none issued or outstanding . . . . . . $ -0-
Common stock - par value $.001; 25,000,000 shares
authorized, 1,000 shares issued and outstanding. . 1
Additional paid-in capital . . . . . . . . . . . . . 36,274
Retained earnings (deficit). . . . . . . . . . . . . (3,760)
----------
Total stockholder's equity . . . . . . . . . . . . . 32,515
----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY . . . . . $ 32,515
==========
See accompanying note.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PLANET RESOURCES, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD MARCH 25, 1999 THROUGH JUNE 30, 1999
<S> <C>
REVENUE . . . . . . . . . . . . . . $ -0-
---------------
EXPENSES
Professional fees . . . . . . . . . 3,581
Other . . . . . . . . . . . . . . . 179
---------------
Total expenses. . . . . . . . . . . 3,760
---------------
NET LOSS. . . . . . . . . . . . . . $ (3,760)
===============
BASIC LOSS PER SHARE OUTSTANDING. . $ (3.76)
===============
WEIGHTED AVERAGE SHARES OUTSTANDING 1,000
===============
</TABLE>
See accompanying note.
<PAGE>
<TABLE>
<CAPTION>
PLANET RESOURCES, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
FOR THE PERIOD MARCH 25, 1999 THROUGH JUNE 30, 1999
Number Additional Retained
of Shares Common Paid-In Earnings
Issued Stock Capital (Deficit) Total
--------- ------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
BALANCES, MARCH 25, 1999 -0- $ -0- $ -0- $ -0- $ -0-
SHARES ISSUED FOR CASH . 1,000 1 36,274 -0- 36,275
NET LOSS . . . . . . . . -0- -0- -0- (3,760) (3,760)
--------- ------------- ---------- ---------- -----------
BALANCES, JUNE 30, 1999. 1,000 $ 1 $ 36,274 $ (3,760) $ 32,515
========= ============= ========== ========== ===========
</TABLE>
See accompanying note.
<PAGE>
<TABLE>
<CAPTION>
PLANET RESOURCES, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD MARCH 25, 1999 THROUGH JUNE 30, 1999
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss. . . . . . . . . . . . . . . . . . $ (3,760)
----------
Cash used by operating activities . . . . . (3,760)
----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock. 36,275
----------
Cash provided by financing activities 36,275
----------
NET INCREASE IN CASH. . . . . . . . . . . . 32,515
CASH AT BEGINNING OF PERIOD . . . . . . . . -0-
----------
CASH AT END OF PERIOD . . . . . . . . . . . $ 32,515
==========
</TABLE>
See accompanying note.
<PAGE>
NOTE TO FINANCIAL STATEMENTS
JUNE 30, 1999
1. ORGANIZATION AND BUSINESS
Planet Resources, Inc. ("Planet") (formerly New Planet Resources, Inc.) was
incorporated in the State of Delaware on March 26, 1999, as a wholly owned
subsidiary of Internet Law Library, Inc. ("Internet Law") (formerly Planet
Resources, Inc.) ("Old Planet"). Planet was formed in connection with the
execution of an Agreement and Plan of Distribution (the 'Distribution
Agreement') by and between Internet Law and Planet dated March 25, 1999. Under
the Distribution Agreement, Internet Law will transfer all of its mineral
properties to Planet and shares and options of Planet will be distributed to the
Internet Law stockholders in a tax-free spin-off accounted for as a pooling of
interest. Effective March 30, 1999, Old Planet acquired National Law Library
("National Law") through a tax free exchange of shares of common stock of
National Law for Internet Law common shares ("Acquisition"), all as contemplated
by an Agreement and Plan of Reorganization dated March 25, 1999 ("Acquisition
Agreement").
Effective July 8, 1999, Old Planet changed its corporate name to Internet Law
Library, Inc. and effective July 15, 1999, New Planet Resources, Inc. changed
its corporate name to Planet Resources, Inc.
Planet intends to become a public company upon the effectiveness of a
registration statement, and will continue the business of Old Planet. The
Distribution Agreement provides that the Distribution is subject to customary
regulatory approvals and the receipt of an opinion of counsel concerning the
tax-free nature of the transaction. For accounting and financial reporting
purposes, such transactions will be treated as the spin-off of the mineral
properties and a reorganization/recapitalization of Internet Law into Planet
since Planet will continue the Internet Law (Old Planet) business. No gain will
be recognized as a result of the spin-off for the difference between the market
value of the Internet Law shares received and the carrying value of the mineral
properties. In addition, since the former National Law stockholders will own a
majority of the outstanding shares of Planet after the Acquisition, the
Acquisition transaction will be accounted for as a reverse acquisition by
National Law.
Planet has no commercial operations although management is evaluating various
future operating strategies, including the merger of Planet with operating
entities. Planet has incurred minimal expenses for professional and other costs
which have been reflected on the accompanying Statement Of Operations. The lease
with HECLA Mining Company relating to Planet's mineral rights has been
terminated.
2. PROFORMA EFFECTS OF DISTRIBUTION AGREEMENT
The following table reflects the current financial position of Planet as
reflected on the accompanying balance sheet and the proforma effects on Planet's
financial position following the execution of the Distribution Agreement. Upon
completion of the Distribution, there will be a total of 1,605,818 shares of
Planet Stock outstanding and 405,000 options each to purchase one share of
Planet Common Stock for a price of $.15 per share. Shares of the Company's
Common Stock have been reserved for issuance upon exercise of Planet Options.
The Company has adopted a Stock Incentive Plan and has reserved 2,500,000 shares
of the Company's Common Stock under the Plan.
<PAGE>
<TABLE>
<CAPTION>
Actual Proforma
---------- ----------
ASSETS
- ----------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,515 $ 32,515
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . 32,515 32,515
---------- ----------
PROPERTY
Mineral rights . . . . . . . . . . . . . . . . . . . . . . . . . -0- 10,000
Depreciable property . . . . . . . . . . . . . . . . . . . . . . -0- 15,963
---------- ----------
-0- 25,963
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . -0- 15,963
---------- ----------
Net property . . . . . . . . . . . . . . . . . . . . . . . . . . -0- 10,000
---------- ----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . $ 32,515 $ 42,515
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
- ----------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY
Preferred stock - par value $.001; 1,000,000 shares
authorized, none issued or outstanding . . . . . . . . . . . . $ -0- $ -0-
Common stock - par value $.001; 25,000,000 shares
authorized, 1,000 and 1,605,147 shares issued and outstanding. 1 1,605
Additional paid-in capital . . . . . . . . . . . . . . . . . . . 36,274 44,670
Retained earnings (deficit). . . . . . . . . . . . . . . . . . . (3,760) (3,760)
---------- ----------
Total stockholder's equity . . . . . . . . . . . . . . . . . . . 32,515 42,515
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY . . . . . . . . . . . . . . . . . . $ 32,515 $ 42,515
========== ==========
</TABLE>
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES FOR PROFORMA EFFECTS OF
DISTRIBUTION AGREEMENT
(a) 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 of 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.
(b) Equipment and Leasehold Improvements - The costs of equipment and
---------------------------------------
leasehold improvements are capitalized and charged to earnings utilizing the
straight-line method of depreciation, with useful lives ranging from three to
ten years. The costs of routine maintenance are charged to earnings as incurred.
When assets are sold or retired, any resulting gain or loss is reflected in
operations.
(c) Realization of the Carrying Cost of Mining Property and Exploration
------------------------------------------------------------------------
Costs - Following termination of the Hecla lease agreement in January 1992, the
-
Board of Directors wrote down the mineral rights and capitalized exploration
costs to their best estimate of their net realizable value of $10,000. The
ultimate realization of Planet's carrying costs in these assets is dependent
upon the discovery and the ability of Planet to finance successful exploration
and development of commercial ore deposits, if any, in the mining properties in
sufficient quantity for Planet to recover its recorded value.
(d) Basic Loss Per Share - Basis loss per share of common stock is based on
---------------------
the weighted average number of shares outstanding during the period.
4. PROPERTY - MINERAL RIGHTS AND LEASES
(a) Planet is the owner of subsurface mineral rights on approximately 190
acres located in the City of Mullan, Idaho. Title was acquired by issuance to
real property owners of one share of capital stock for each 25 square feet of
surface owned. The acquisition of such mineral rights was completed in November
1985.
(b) Leases
------
Planet entered into an agreement dated May 1, 1981, with the City of Mullan
(which supersedes a previous agreement dated December 3, 1971), whereby Planet,
as lessee, has the right to mine subsurface minerals on approximately 200 acres
owned by the City north of the Osburn Fault for a period of 25 years. The City,
as lessor, will receive 20% of all royalty payments or other consideration
received by Planet from Hecla. In the event Planet enters into a lease agreement
for the exploration and development of "City Property" south of the Osburn
Fault, the City shall receive 15% of the royalties received. No royalties have
been received or paid on "City Property' south of the fault.
<PAGE>
II - 6
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law applies to Planet and
the relevant portion of the Delaware General Corporation Law provides as
follows:
145. Indemnification of Officers, Directors, Employees and Agents;
Insurance. (a) 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
(other than 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 such action, suit or proceeding if he acted
in good faith and in a manner 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, shall 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, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) 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 or
suit by or in the right of the corporation 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 attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) 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 (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of 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,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) 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 (2) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses (including
attorneys' fees) incurred by other employees and agents may be so paid upon such
terms and conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
Planet's certificate of incorporation limits the liability of directors (in
their capacity as directors, but not in their capacity as officers) to Planet or
its stockholders to the fullest extent permitted by the Delaware General
Corporation Law, as amended. Specifically, no director of Planet will be
personally liable to Planet or its stockholders for monetary damages for breach
of the director's fiduciary duty as a director, except as provided in Section
102 of the Delaware General Corporation Law for liability: (i) for any breach of
the director's duty of loyalty to Planet or its stockholders; (ii) for acts or
omissions not in good faith and which involve intentional misconduct or knowing
violation of law; (iii) under Section 174 of the Delaware General Corporation
Law, which relates to unlawful payments of dividends or unlawful stock
repurchases or redemptions; or (iv) for any transaction from which the director
derived an improper personal benefit. The inclusion of this provision in
Planet's certificate of incorporation may have the effect of reducing the
likelihood of derivative litigation against directors, and may discourage or
deter stockholders or management from bringing a lawsuit against directors for
breach of their duty of care, even though such action, if successful, might
otherwise have benefited Planet and its stockholders.
Under Planet's certificate of incorporation and in accordance with Section
145 of the Delaware General Corporation Law, Planet will 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 (other than a "derivative" action by or in the
right of Planet) by reason of the fact that such person was or is a director or
officer of Planet, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of Planet, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such acts were unlawful. A
similar standard of care is applicable in the case of derivative actions, except
that indemnification only extends to expenses (including attorneys' fees)
actually and reasonably incurred in connection with the defense or settlement of
such an action and then, where the person is adjudged to be liable to Planet,
only if and to the extent that the Court of Chancery of the State of Delaware or
the court in which such action was brought determines that such person is fairly
and reasonably entitled to such indemnity and then only for such expenses as the
court deems proper. Planet will indemnify, pursuant to the standard enumerated
in Section 145 of the Delaware General Corporation Law, any past or present
officer or director who was or is a party, or is threatened to be made a party,
to any threatened, pending or completed derivative action by or in the right of
Planet.
The certificate of incorporation of Planet provides that Planet may pay for
the expenses incurred by an indemnified director or officer in defending the
proceedings specified above in advance of their final disposition, provided
that, if the Delaware General Corporation Law so requires, such indemnified
person agrees to reimburse Planet if it is ultimately determined that such
person is not entitled to indemnification. Planet's certificate of
incorporation also allows Planet, in its sole discretion, to indemnify any
person who is or was one of its employees and agents to the same degree as the
foregoing indemnification of directors and officers. To the extent that a
director, officer, employee or agent of Planet has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145 of the Delaware General Corporation Law,
or in defense of any claim, issue or matter therein, such person shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith. In addition Planet may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of Planet or another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against and incurred by such person in such capacity, or arising out of
the person's status as such whether or not Planet would have the power or
obligation to indemnify such person against such liability under the provisions
of the Delaware General Corporation Law. Planet maintains insurance for the
benefit of Planet's officers and directors insuring such persons against certain
liabilities, including civil liabilities under the securities laws.
Additionally, Planet has entered into indemnification agreements with each of
the Directors of Planet, which, among other things, provides that Planet will
indemnify such Directors to the fullest extent permitted by Planet's certificate
of incorporation and the Delaware General Corporation Law and will advance
expenses of defending claims against such Directors.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<CAPTION>
The estimated expenses payable by Planet in connection with the issuance
and distribution of the securities being registered are as follows:
<S> <C>
SEC Registration and Filing Fee $38,000
Legal Fees and Expenses*. . . . 25,000
Accounting Fees and Expenses*.. 5,000
Financial Printing*.. . . . . . 2,000
Transfer Agent Fees*. . . . . . 1,500
Blue Sky Fees and Expenses*.. . 3,000
Miscellaneous*. . . . . . . . . 3,461
-------
TOTAL . . . . . . . . . . . . $77,961
=======
* Estimated
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On March 26, 1999, Planet issued 1,000 shares of common stock to Internet
Law Library, Inc., a Delaware corporation for the cash sum of $1,000 in reliance
on the exemption from registration in Section 4(2) of the Securities Act.
On March 30, 1999, Internet Law issued 7,000,000 shares of common stock to
the shareholders of National Law Library, inc. (in exchange for 100% of the
capital stock of National Law Library, Inc.) in a reverse acquisition in
reliance on the exemption from registration in Section 4(2) of the securities
Act.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
Exhibit No. Description of Document
- ----------- -------------------------
<C> <S>
1.1 Agreement and Plan of Distribution*
3.1 Certification of Incorporation**
3.1.1 Amendment of Certificate of Incorporation changing name from New Planet to Planet.*
3.2 By-Laws**
4.1 Common Stock Option Agreement*
4.2 Form of Common Stock Option Certificate (included as an exhibit to Exhibit 4.1)*
4.3 Form of Common Stock Certificate**
5.1 Opinion of Sonfield & Sonfield*
8.1 Opinion of Sonfield & Sonfield with respect to tax matters (included as part of Exhibit 5.1).*
10.1 Planet Incentive Stock Option Plan**
10.2 Indemnification Agreement between Planet and A.W. Dugan**
10.3 Indemnification Agreement between Planet and Jacque N. York**
10.4 Indemnification Agreement between Planet and Michael K. Branstetter**
10.5 Indemnification Agreement between Planet and Danyel Owens**
10.6 Indemnification Agreement between Planet and Internet Law Library, Inc. under its former name*
10.7 Lease Agreement with City of Mullan, Idaho (included as an exhibit to Exhibit 10.8)*
10.8 Form of Assignment of Mineral Lease*
10.9 Form of Mineral Deed*
23.1 Consent of Harper & Pearson Company*
23.2 Consent of Sonfield & Sonfield (contained in such firm's opinion filed as Exhibit 5.1)*
27.1 Financial Data Schedule*
</TABLE>
________________________
* Filed herewith
** Previously filed
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to participating
broker-dealers, at the closing, certificates in such denominations and
registered in such names as required by the participating broker-dealers, to
permit prompt delivery to each purchaser.
The undersigned Registrant also undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission (the "Commission") such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or preceding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant also undertakes that it will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as a part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant under Rule 424(b)(1), or (4) or 497(h) under
the Securities Act as part of this registration statement as of the time the
Commission declared it effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this amendment number 1 to the registration statement on Form SB-2 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the city
of Houston, State of Texas, on the ____ day of August, 1999.
PLANET RESOURCES, INC.
By:
A.W. Dugan, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed on the dates indicated by the
following persons in the capacities indicated.
A.W. Dugan, Chief Executive Officer, Jacque N. York, Secretary
and Director
Chief Financial Officer, Chief Accounting
Officer and Director
<PAGE>
II - 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description of Document
- ----------- -------------------------
<C> <S>
1.1 Agreement and Plan of Distribution*
3.1 Certification of Incorporation**
3.1.1 Amendment of Certificate of Incorporation changing name from New Planet to Planet.*
3.2 By-Laws**
4.1 Common Stock Option Agreement*
4.2 Form of Common Stock Option Certificate (included as an exhibit to Exhibit 4.1)*
4.3 Form of Common Stock Certificate**
5.1 Opinion of Sonfield & Sonfield*
8.1 Opinion of Sonfield & Sonfield with respect to tax matters (included as part of Exhibit 5.1).*
10.1 Planet Incentive Stock Option Plan**
10.2 Indemnification Agreement between Planet and A.W. Dugan**
10.3 Indemnification Agreement between Planet and Jacque N. York**
10.4 Indemnification Agreement between Planet and Michael K. Branstetter**
10.5 Indemnification Agreement between Planet and Danyel Owens**
10.6 Indemnification Agreement between Planet and Internet Law Library, Inc. under its former name*
10.7 Lease Agreement with City of Mullan, Idaho (included as an exhibit to Exhibit 10.8)*
10.8 Form of Assignment of Mineral Lease*
10.9 Form of Mineral Deed*
23.1 Consent of Harper & Pearson Company*
23.2 Consent of Sonfield & Sonfield (contained in such firm's opinion filed as Exhibit 5.1)*
27.1 Financial Data Schedule*
</TABLE>
________________________
* Filed herewith
** Previously filed
<PAGE>
Exhibit 1.1 - Page 14
EXHIBIT 1.1
AGREEMENT AND PLAN OF DISTRIBUTION
THIS AGREEMENT AND PLAN OF DISTRIBUTION (the "Distribution Agreement")
dated as of March 25, 1999 by and among Planet Resources, Inc., a Delaware
corporation ("Planet"), New Planet Resources, Inc., a Delaware corporation ("New
Planet") and National Law Library, Inc., a Texas corporation ("National").
W I T N E S S E T H:
-------------------
WHEREAS, Planet and National previously entered into an Agreement and Plan
of Reorganization, dated as of March 25, 1999 (the "Reorganization Agreement"),
providing for the acquisition (the "Acquisition") of all of the outstanding
shares of capital stock of National by Planet;
WHEREAS, immediately after the Closing (as defined in the Reorganization
Agreement) of the Acquisition, Planet intends to transfer all of its mineral
properties (as hereinafter defined) to New Planet in exchange for the issuance
of shares of New Planet Common Stock;
WHEREAS, Planet's board of directors expects to complete the Distribution
(as hereinafter defined) immediately after the Closing of the Acquisition; and
WHEREAS, the purpose of the Distribution is to make possible the
Acquisition by divesting Planet of the mineral properties with which National is
unwilling to combine, and this Distribution Agreement sets forth the various
agreements between Planet and New Planet relating to the divestiture of the
mineral properties by Planet.
NOW THEREFORE in consideration of the mutual promises and benefits to be
derived from this Agreement, New Planet and Planet hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 GENERAL. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
Action shall mean any action, suit, claim, arbitration, inquiry, proceeding
or investigation by or before any court, any governmental or other regulatory or
administrative agency, body or commission or any arbitration tribunal.
Agreement: This Agreement and Plan of Distribution as amended or
supplemented from time to time.
Affiliate: Affiliate of any Person shall mean any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agent: Any Person authorized to act and who acts on behalf of any other
Person with respect to the transactions contemplated by the Documents.
CERCLA shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Section 9601, et seq., as the same may be
amended from time to time.
Commission: The Securities and Exchange Commission.
Distribution Date: The date selected by New Planet to issue the Distribution
Shares, which shall occur not later than the first business day after the
Effective Date, as the date on which the Distribution shall be effected.
Distribution Record Date: shall mean such date as may hereafter be
determined by Planet's Board of Directors as the record date for determining the
stockholders of Planet entitled to receive the Distribution Shares.
Distribution Shares: Common voting shares of New Planet, par value $.001,
issued to Planet pursuant to the provisions of Section 2.3(a).
Documents: This Agreement, the Registration Statement, together with any
exhibits, schedules or other attachments thereto.
Environmental Laws and Orders shall mean collectively, all Laws and Orders
relating to industrial hygiene, occupational safety conditions or environmental
conditions on, under or about property, including, without limitation, RCRA,
CERCLA and all other Laws and Orders relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals or industrial,
hazardous or toxic materials or wastes into the environment (including ambient
air, surface water, ground water, land surface or sub-surface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, chemicals
or industrial hazardous or toxic materials or wastes.
Exchange Act: The Securities Exchange Act of 1934, as amended from time to
time.
Effective Date: The date on which the distribution of the Distribution
Shares contemplated by this Agreement is authorized to commence pursuant to the
Securities Act.
Effective Time: The time on the Effective Date when the distribution of
the Distribution Shares contemplated by this Agreement is authorized to commence
pursuant to the Securities Act.
Indemnifiable Losses shall mean any and all losses, Liabilities, claims,
damages, penalties, fines, demands, awards and judgments, including reasonable
costs and expenses (including, without limitation, attorneys' fees and any and
all out-of-pocket expenses) whatsoever reasonably incurred in investigating,
preparing for or defending against any Actions or potential Actions involving an
Indemnifiable Loss, incurred by an Indemnitee.
Mineral Properties shall mean the following:
(a) Subsurface mineral rights on approximately 190 acres located
in the City of Mullan, Idaho. Title was acquired by issuance to real property
owners of one share of capital stock for each 25 square feet of surface owned.
In acquiring such mineral rights, the Company issued 361,739 shares of capital
stock as adjusted for subsequent stock splits and Planet merger. Conveyance of
title included, free of any additional stock issue, all subsurface rights lying
beneath adjacent streets and alleys where ownership rested with the grantor.
The acquisition of such mineral rights was completed in November of 1985.
(b) Lease agreement dated May 1, 1981, with the City of
Mullan (which supersedes a previous agreement dated December 31, 1971) whereby
Planet, as Lessee, has the right to mine subsurface minerals on approximately
200 acres owned by the City north of Osburn Fault for a period of 25 years
(subject to a renewal option for an additional 25 years), The City, as lessor,
received 20% of all royalty payments or other consideration received by Allied
from Hecla. In the event Allied enters in to a lease agreement for the
exploration and development of "City Property" south of the Osburn Fault, the
City shall receive 15% of the royalties received. No royalties have been paid
on "City Property" south of the fault.
NASD: The National Association of Securities Dealers, Inc.
Person: shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an association, a company, an unincorporated
organization, a government or any department, political subdivision or agency
thereof.
Planet Indemnitees shall mean Planet, National, the directors and officers
of Planet, National and each of the heirs, executors, successors and assigns of
any of the foregoing.
Prospectus: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the distribution of any portion of the Distribution Shares covered by such
Registration Statement and by all other amendments and supplements to the
Prospectus, including post-effective amendments and all documents incorporated
by reference in such prospectus. If the prospectus filed pursuant to Rule
424(b) or Rule 424(c) of the Securities Act shall differ from the Prospectus,
the term "Prospectus" shall also include the prospectus filed pursuant to such
Rule.
RCRA shall mean the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901, et seq., as the same may be amended from time to time.
Registration Expenses: See Section 5.2 hereof.
Registration Statement: Any registration statement of New Planet which
covers any of the Distribution Shares pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all documents incorporated by reference in such Registration Statement.
Restricted Securities: The Distribution Shares upon original issuance
thereof, as provided in Section 2.3 hereof.
Rules and Regulations: The rules and regulations of the Commission.
Securities: New Planet's common stock, $.001 par value, to be issued by
New Planet.
Securities Act: The Securities Act of 1933, as amended from time to time.
Shelf Registration: See Section 3(a) hereof.
Term: The duration of this Agreement specified in Section 2.1.
Transfer Agent: shall mean Continental Stock Transfer and Trust Company,
and its successors and assigns.
SECTION 1.2 REFERENCES; INTERPRETATION. References to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to one of the Schedules or Exhibits
attached to this Agreement and Plan of Distribution, and references to a
"Section" are, unless otherwise specified, to one of the Sections of this
Agreement and Plan of Distribution.
ARTICLE II
DISTRIBUTION, OTHER TRANSACTIONS AND COVENANTS
SECTION 2.1 TRANSFER OF ASSETS AND DISTRIBUTION OF SECURITIES.
(a) On or prior to the Distribution Date, New Planet shall issue to
Planet, in exchange for the contribution to New Planet of the Mineral
Properties, such number of shares of New Planet Common Stock and options to
purchase Common Stock as shall be required to effect the Distribution. In
connection therewith, Planet shall deliver to New Planet for cancellation any
share certificates currently held by Planet representing shares of New Planet
Common Stock.
(b) Planet shall deliver to the Transfer Agent on or prior to the
Distribution Date the certificates representing the shares of New Planet Common
Stock and options to purchase New Planet Common Stock issued to Planet by New
Planet pursuant to Section 2.1(a), and shall instruct the Transfer Agent to
distribute, on or as soon as practicable following the Distribution Date, such
New Planet Common Stock and New Planet options to holders of record of shares of
Planet Common Stock and options of Planet Common Stock on the Distribution
Record Date as further contemplated by the Information Statement and herein.
New Planet shall provide all certificates that the Transfer Agent shall require
in order to effect the Distribution.
(c) On or prior to the date of filing of the New Planet Registration
Document with the Commission, all necessary actions shall have been taken to
provide for the adoption of the form of Certificate of Incorporation and By-laws
filed or to be filed by New Planet with the Commission.
(d) On or prior to the Distribution Date, Planet, as the sole stockholder of
New Planet, (i) shall have taken all necessary action by written consent to
elect to the Board of Directors of New Planet, the individuals to be identified
in the Information Statement as directors of New Planet, effective upon the
Distribution, and (ii) shall have caused the directors of New Planet to elect as
officers of New Planet the individuals to be identified in the Information
Statement as the officers of New Planet, effective upon the Distribution.
SECTION 2.2 ASSUMPTIONS OF LIABILITIES New Planet shall assume, pay,
perform and discharge any and all liabilities, costs or expenses related to the
Mineral Properties, Environmental Laws and Orders, CERCLA, or RCRA.
SECTION 2.3 POST-DISTRIBUTION TRANSACTIONS
(a) On or prior to the Distribution Date, Planet will take the necessary
corporate action to change its name to National Law Library, Inc., or such other
name as may be selected by the Board of Directors and a majority of the
shareholders of Planet. Immediately after the change of corporate name by
Planet, New Planet shall take the necessary corporate action to change its name
to Planet Resources, Inc.
(b) Planet and New Planet shall use their respective reasonable best efforts
to qualify the New Planet Common Stock and options to purchase New Planet Common
Stock issued pursuant to the Distribution for quotation on the Electronic
Bulletin Board operated by the National Association of Securities Dealers, Inc.
ARTICLE III
INDEMNIFICATION
SECTION 3.1 INDEMNIFICATION BY NEW PLANET Subsequent to the Distribution
Date, except as otherwise specifically set forth in any provision of this
Distribution Agreement, New Planet shall indemnify, defend and hold harmless the
New Planet Indemnitees from and against any and all Indemnifiable Losses of the
New Planet Indemnitees arising out of, by reason of or otherwise in connection
with (a) the Mineral Properties, (b) the breach, whether before or after the
Distribution Date, by Planet of any provision of this Distribution Agreement or
(c) any Planet Liabilities.
SECTION 3.2 PROCEDURES FOR INDEMNIFICATION.
(a) If a claim or demand is made against an Indemnitee by any person who is
not a party to this Distribution Agreement (a "Third Party Claim") as to which
such Indemnitee is entitled to indemnification pursuant to this Distribution
Agreement, such Indemnitee shall notify the Indemnifying Party in writing, and
in reasonable detail, of the Third Party Claim promptly (and in any event within
20 business days) after receipt by such Indemnitee of written notice of the
Third Party Claim; provided, however, that failure to give such notification
within such 20 business day period shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure (except that the Indemnifying Party shall
not be liable for any expenses incurred during the period in which the
Indemnitee failed to give such notice). Thereafter, the Indemnitee shall deliver
to the Indemnifying Party, promptly (and in any event within 20 business days)
after the Indemnitee's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnitee relating to the Third Party
Claim.
(b) If a Third Party Claim is made against an Indemnitee, the Indemnifying Party
shall be entitled to participate in the defense thereof and, if it so chooses
and acknowledges in writing its obligation to indemnify the Indemnitee therefor,
to assume the defense thereof with counsel selected by the Indemnifying Party;
provided that such counsel is not reasonably objected to by the Indemnitee.
Should the Indemnifying Party so elect to assume the defense of a Third Party
Claim, the Indemnifying Party shall not be liable to the Indemnitee for legal or
other expenses subsequently incurred by the Indemnitee in connection with the
defense thereof. If the Indemnifying Party assumes such defense, the Indemnitee
shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party, it being understood that the Indemnifying Party shall
control such defense. The Indemnifying Party shall be liable for the fees and
expenses of counsel employed by the Indemnitee (i) for any period during which
the Indemnifying Party has failed to assume the defense thereof (other than
during the 20 business day period prior to the time the Indemnitee shall have
given notice of the Third Party Claim as provided above) or (ii) in the event
the Indemnitee reasonably determines, based on the advice of its counsel that
there shall exist a conflict of interest between the Indemnitee and the
Indemnifying Party or that there are defenses available to the Indemnitee that
are not available to the Indemnifying Party, the effect of which shall be to
make it impractical for the Indemnitee and the Indemnifying Party to be jointly
represented by the same counsel, in which case the Indemnifying Party shall be
liable for the fees and expenses of one counsel for all Indemnitees in any
single or series of related Actions. If the Indemnifying Party so elects to
assume the defense of any Third Party Claim, the Indemnitee shall cooperate with
the Indemnifying Party in the defense or prosecution thereof.
(c) If the Indemnifying Party acknowledges in writing liability for
indemnification of a Third Party Claim, then in no event will the Indemnitee
admit any liability with respect to, or settle, compromise or discharge, any
Third Party Claim without the Indemnifying Party's prior written consent;
provided, however, that the Indemnitee shall have the right to settle,
compromise or discharge such Third Party Claim without the consent of the
Indemnifying Party if the Indemnitee releases the Indemnifying Party from its
indemnification obligation hereunder with respect to such Third Party Claim and
such settlement, compromise or discharge would not otherwise adversely affect
the Indemnifying Party. If the Indemnifying Party acknowledges in writing
liability for indemnification of a Third Party Claim, the Indemnitee will agree
to any settlement, compromise or discharge of a Third Party Claim that the
Indemnifying Party may recommend that by its terms (i) obligates the
Indemnifying Party to pay the full amount of the liability in connection with
such Third Party Claim, (ii) releases the Indemnitee completely in connection
with such Third Party Claim and (iii) would not otherwise adversely affect the
Indemnitee; provided, however, that the Indemnitee may refuse to agree to any
such settlement, compromise or discharge and may assume the defense of such
Third Party Claim if the Indemnitee agrees (A) that the Indemnifying Party's
indemnification obligation with respect to such Third Party Claim shall not
exceed the amount that would have been required to be paid by or on behalf of
the Indemnifying Party in connection with such settlement, compromise or
discharge and (B) to assume all costs and expenses thereafter incurred in
connection with the defense of such Third Party Claim (other than those
contemplated by subclause (A) herein above).
(d) Notwithstanding the foregoing, the Indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be liable for the fees
and expenses of counsel incurred by the Indemnitee in defending such Third Party
Claim) if the Third Party Claim seeks an order, injunction or other equitable
relief or relief other than money damages against the Indemnitee which the
Indemnitee reasonably determines, based on the advice of its counsel, cannot be
separated from any related claim for money damages. If such equitable or other
relief portion of the Third Party Claim can be so separated from the claim for
money damages, the Indemnifying Party shall be entitled to assume the defense of
the portion relating to money damages.
SECTION 3.3 INDEMNIFICATION PAYMENTS. Indemnification required by this
Article III shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or loss,
liability, claim, damage or expense is incurred.
SECTION 3.4 INDEMNITIES. . The obligations of New Planet under this
Article III shall survive the sale or other transfer by either of them of any
assets or businesses or the assignment by either of them of any Liabilities,
with respect to any Indemnifiable Loss of any Indemnitee related to such assets,
businesses or Liabilities and shall be binding on the successors and assigns of
all, or substantially all, of their respective assets and business.
ARTICLE IV
THE DISTRIBUTION
SECTION 4.1 ISSUANCE, SALE AND DELIVERY OF THE SHARES.
(a) Planet shall deliver to the Transfer Agent on or prior to the
Distribution Date the share certificates representing the Distribution Shares
and shall instruct the Transfer Agent to distribute, on or as soon as
practicable following the Distribution Date, such Distribution Shares to holders
of record of shares of Planet on the Distribution Record Date as further
contemplated by the Prospectus and this Agreement. New Planet shall provide all
share certificates that the Transfer Agent shall require in order to effect the
Distribution.
(b) The Parties hereto represent that at the Distribution Date, the
representations and warranties herein contained and the statements contained in
all certificates theretofor or simultaneously delivered by any party to another
pursuant to the Agreement, shall in all respects be true and correct.
(c) New Planet will give irrevocable instructions to its Transfer Agent to
deliver to Planet (at New Planet's expense) for a period of three years from the
first Distribution Date of the Distribution Shares, daily advice sheets showing
any transfers of Distribution Shares and from time to time during the aforesaid
period a complete Stockholders' list will be furnished by New Planet when
requested by Planet.
SECTION 4.2 CONDITIONS TO THE DISTRIBUTION Planet's obligation to effect
the distribution hereunder, shall be subject to the accuracy as of the date
hereof and as of such Distribution Date, of the representations and warranties
on the part of New Planet herein contained, to the performance by New Planet of
all its agreements herein contained, to the fulfillment of or compliance by New
Planet with all covenants and conditions hereof, and to the following
additional conditions:
(a) On or prior to each Distribution Date, no order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission or be pending; any request for additional information on the part of
the Commission (to be included in the Registration Statement or the Prospectus
or otherwise) shall have been complied with to the satisfaction of the
Commission; and neither the Registration Statement nor any amendment thereto
shall have been filed to which counsel to Planet shall have reasonably objected,
in writing.
(b) On or prior to the first Distribution Date, the Distribution Shares
shall have (i) been authorized for quotation on the NASD Automated Quotation
System (NASDAQ) or the Electronic Bulletin Board and at least one NASD member
firm has agreed to make a market in the Distribution Shares, or (ii) the
Distribution Shares have been approved for listing on a regional, national or
international exchange.
(c) Planet shall not have disclosed in writing to New Planet that the
Registration Statement or Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of counsel to
Planet, is material, or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein, or is necessary to
make the statements therein not misleading.
(d) Between the date hereof and each Distribution Date, New Planet shall
not have sustained any loss on account of fire, explosion, flood, accident,
calamity or other cause, of such character as materially adversely affects its
business or property, whether or not such loss is covered by insurance.
(e) Between the date hereof and each Distribution Date there shall be no
material litigation instituted or to the knowledge of New Planet threatened
against New Planet and there shall be no proceeding instituted or to the
knowledge of New Planet threatened against New Planet before or by any federal
or state commission, regulatory body or administrative agency or other
governmental body, domestic or foreign, wherein an unfavorable ruling, decision
or finding would materially adversely affect the business, franchises, licenses,
permits, operations or financial condition or income of New Planet.
(f) Except as contemplated herein or as set forth in the Registration
Statement and Prospectus, during the period subsequent to the Effective Date and
prior to each Distribution Date, (i) New Planet (A) shall have conducted its
business in the usual and ordinary manner as the same was being conducted on the
date of the filing of the initial Registration Statement and (B) except in the
ordinary course of its business, New Planet shall not have incurred any
liabilities or obligations (direct or contingent), or disposed of any of its
assets, or entered into any material transaction or suffered or experienced any
substantially adverse change in its condition, financial or otherwise. On each
Distribution Date, the capital stock and surplus accounts of New Planet shall be
substantially as great as at its last financial report without considering the
proceeds from the distribution of the Distribution Shares.
(g) The authorization of the Distribution Shares, the Registration
Statement, the Prospectus and all corporate proceedings and other legal matters
incident thereto and to this Agreement, shall be reasonably satisfactory in all
material respects to counsel to Planet.
(h) New Planet shall have furnished to Planet the opinion, dated the first
Distribution Date, addressed to Planet, or its counsel that:
(i) New Planet has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of its incorporation
with full corporate power and authority to own and operate its properties and to
carry on its business as set forth in the Registration Statement and Prospectus,
and has an authorized and outstanding capitalization as set forth in the
Registration Statement and Prospectus, and New Planet is duly licensed or
qualified as a foreign corporation in all jurisdictions in which by reason of
maintaining an office in such jurisdiction or by owning or leasing real property
in such jurisdiction it is required to be so licensed or qualified, except where
the failure to do so would not have a material adverse effect on the business,
properties or operations of New Planet.
(ii) The Distribution Shares, and the outstanding Common Stock of New
Planet, conform to the statements concerning them in the Registration Statement
and Prospectus; the outstanding Common Stock of New Planet has been duly and
validly issued and is fully-paid and non-assessable and does not have any
pre-emptive rights applicable thereto; the Distribution Shares have been duly
and validly authorized are duly and validly issued, fully-paid and
non-assessable and have no pre-emptive right applicable thereto.
(iii) No consents, approvals, authorizations or orders of agencies,
officers or other regulatory authorities are necessary for the valid
distribution of the Distribution Shares hereunder, except such as may be
required under the Securities Act or state securities or Blue Sky Laws.
(iv) The Registration Statement has become effective under the Securities
Act and, to the best of the knowledge of such counsel, no order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or contemplated under the
Securities Act, and the Registration Statement and Prospectus, and each
amendment thereof and supplement thereto, comply as to form in all material
respects with the requirements of the Securities Act and the Rules and
Regulations (except that no opinion need be expressed as to financial statements
and financial data contained in the Registration Statement or Prospectus), and
nothing has come to the attention of such counsel which would lead such counsel
to believe that either the Registration Statement or the Prospectus or any such
amendment or supplement contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and such counsel is familiar with
all contracts referred to in the Registration Statement or in the Prospectus and
such contracts are sufficiently summarized or disclosed therein, or filed as
exhibits thereto, as required, and such counsel does not know of any other
contracts required to be summarized or disclosed or filed, and such counsel does
not know of any legal or governmental proceedings pending or threatened to which
New Planet is a party, or in which property of New Planet is the subject, of a
character required to be disclosed in the Registration Statement or the
Prospectus which are not disclosed and properly described therein.
(v) Based upon New Planet's representations, New Planet (a) owns the real
and personal properties shown in the Prospectus as being owned by it by good and
marketable title, free and clear of all liens, encumbrances and equities of
record, except for those expressly referred to in the Prospectus, and except for
those which do not in the reasonable opinion of such counsel materially affect
the use or value of such assets, and except for the lien of current taxes not
due, or (b) holds by valid lease, its properties as shown in the Prospectus, and
to the best of our knowledge is not in violation of any applicable laws,
ordinances and regulations applicable thereto.
(vi) The Agreement has been duly authorized and executed by New Planet and
is a valid and binding agreement of New Planet, except no opinion need be given
regarding contribution and indemnification under Article VI and enforceability
under laws affecting creditors' rights.
(vii) To the best of the knowledge of such counsel, the warranties and
representations referred to in sub-paragraphs (d), (j) and (k) of Section 3.1
hereof are true and correct.
Such opinion shall also cover such other matters incident to the
transactions contemplated by this Agreement as Planet shall reasonably request.
At any Distribution Date, subsequent to the first Distribution Date, New
Planet shall have furnished to Planet the opinion of such counsel, dated such
Distribution Date confirming in all respects, as of such Distribution Date, the
opinion given by such counsel on the first Distribution Date pursuant to this
Section 4.2 (h).
(i) New Planet shall have furnished to Planet a certificate of the
President and the Treasurer of New Planet, dated as of the first Distribution
Date, to the effect that:
(i) The representations and warranties of New Planet in this Agreement are
true and correct at and as of such Distribution Date, and New Planet has
complied with all the agreements and satisfied all the conditions on its part to
be performed or satisfied at or prior to the first Distribution Date;
(ii) The Registration Statement has become effective and no order
suspending the effectiveness of the Registration Statement has been issued, and,
to the best of the knowledge of the respective signers, no proceeding for that
purpose has been initiated or is threatened by the Commission:
(iii) The respective signers have each carefully examined the Registration
Statement and the Prospectus and any amendments and supplements thereto, and to
the best of their knowledge the Registration Statement and the Prospectus and
any amendments and supplements thereto and all statements contained therein are
true and correct, and neither the Registration Statement nor the Prospectus nor
any amendment or supplement thereto includes any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and, since the Effective
Date, there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth.
(iv) Except as set forth in the Registration Statement and Prospectus since
the respective dates as of which or periods for which information is given in
the Registration Statement and Prospectus and prior to the date of such
certificate (A) there has not been any substantially adverse change, financial
or otherwise, in the affairs or condition of New Planet and (B) New Planet has
not incurred any material liabilities, direct or contingent, or entered into any
material transactions, otherwise than in the ordinary course of business.
At any Distribution Date, subsequent to the first Distribution Date, you
shall be furnished a letter from the President and Treasurer of New Planet,
confirming in all respects, as of such Distribution Date, the opinion given by
such President and Treasurer on the first Distribution Date pursuant to this
Section 4.2(i).
(j) New Planet shall have furnished to Planet at the Distribution Date,
such other certificates, additional to those specifically mentioned herein, as
Planet may have reasonably requested as to the accuracy and completeness of any
statement in the Registration Statement or the Prospectus, or in any amendment
or supplement thereto; of the representations and warranties of New Planet
herein; as to the performance by New Planet of its obligations hereunder, or as
to the fulfillment of the conditions concurrent and precedent to its obligations
hereunder, which are required to be performed or fulfilled on or prior to the
Distribution Date.
All the opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
to Planet, whose approval shall not be unreasonably withheld. Planet reserves
the right to waive any of the conditions herein set forth.
ARTICLE V
REGISTRATION OF NEW PLANET SHARES
SECTION 5.1 REGISTRATION PROCEDURES. New Planet will use its best efforts
to effect such registrations to permit the distribution of the Distribution
Shares in accordance with the intended method or methods of distribution
thereof, and pursuant thereto New Planet will as expeditiously as possible:
(a) Prepare and file with the Commission, as soon as practicable, a
Registration Statement or Registration Statements relating to the applicable
registration on any appropriate form under the Securities Act, which form shall
be available for the distribution of the Distribution Shares in accordance with
the intended method or methods of distribution thereof and shall include all
financial statements required by the Commission to be filed therewith, and use
its best efforts to cause such Registration Statement to become effective;
provided, however, that before filing a Registration Statement or Prospectus or
any amendments or supplements thereto, including documents incorporated by
reference after the initial filing of the Registration Statement, New Planet
will furnish to Planet copies of all such documents proposed to be filed, and
New Planet will not file any registration Statement or amendment thereto or any
Prospectus or any supplement thereto (including such documents incorporated by
reference) to which Planet shall reasonably object;
(b) Prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the applicable period, or such
shorter period which will terminate when all Distribution Shares covered by such
Registration Statement have been distributed; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed with the Commission pursuant to Rule 424 under the Securities Act;
(c) Notify Planet promptly, and (if requested by Planet) confirm such
advice in writing, (i) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to the Registration
Statement or any post-effective amendment, when the same has become effective,
(ii) of any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (iii) of
the issuance by the Commission of any stop order suspending the effectiveness to
the Registration Statement for the initiation of any proceedings for that
purpose, (iv) of the receipt by New Planet of any notification with respect to
the suspension of the qualification of the Distribution Shares for distribution
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (v) of the happening of any event which makes any statement made in
the Registration Statement, the Prospectus or any document incorporated therein
by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus or any document incorporated therein by
reference in order to make the statements therein not misleading;
(d) Make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(e) If requested by Planet, promptly incorporate in a Prospectus
supplement or post-effective amendment such information as Planet requests to be
included therein relating to the distribution of the Distribution Shares and
make all required filings of such Prospectus supplement or post-effective
amendment;
(f) Furnish to Planet, without charge, at least one copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference);
(g) Deliver to Planet without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request; New Planet consents to the use of the
Prospectus or any amendment or supplement thereto by Planet in connection with
the distribution of the Distribution Shares covered by the Prospectus or any
amendment or supplement thereto;
(h) Prior to any public offering of Distribution Shares, register or
qualify or cooperate with Planet and its counsel in connection with the
registration or qualification of such Distribution Shares covered by the
Registration Statement; provided, however, that New Planet will not be required
to qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process in any such jurisdiction where it is not then so subject;
(i) Cooperate with Planet to facilitate the timely preparation and
delivery of certificates representing Distribution Shares to be distributed,
which certificates shall not bear any restrictive legends; and enable such
Distribution Shares to be in such denominations and registered in such names as
the managing Planet or Planets may request at least two business days prior to
any distribution of Distribution Shares to the shareholders of Planet;
(j) Use its best efforts to cause the Distribution Shares covered by the
applicable Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable Planet
to consummate the distribution of such Distribution Shares;
(k) Upon the occurrence of any event contemplated by subparagraph (c)(v)
above, prepare a supplement or post-effective amendment to the Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Distribution Shares, the Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading;
(l) Use its best efforts to cause all Distribution Shares covered by the
Registration Statement to be listed on each securities exchange on which similar
securities issued by New Planet are then listed if requested by Planet or, if
not listed, to become listed or qualified for quotation on the NASDAQ Stock
Market or the Electronic Bulletin Board;
(m) Provide a CUSIP number for all Distribution Shares, not later than the
effective date of the applicable Registration Statement;
(n) Make generally available to its security holders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act, no later than
45 days after the end of any 12-month period (or 90 days, if such period is a
fiscal year) commencing at the end of any fiscal quarter in which Distribution
Shares.
New Planet may require Planet to furnish to New Planet such information
regarding the distribution of the Distribution Shares as New Planet may from
time to time reasonably request in writing.
Planet agrees by acquisition of the Distribution Shares that, upon receipt
of any notice from New Planet of the happening of any event of the kind
described in Section 5.1(c)(iii) or 5.1(k) hereof, such holder will forthwith
discontinue disposition of Distribution Shares until such holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
5.1(c)(iii) or 5.1(k) hereof, or until it is advised in writing (the "Advice")
by New Planet that the use of the Prospectus may be resumed, and has received
copies of any additional or supplemental filings which are incorporated by
reference in the Prospectus, and if so directed by New Planet, Planet will
deliver to New Planet (at New Planet's expense) all copies, other than permanent
file copies then in possession or control of Planet at the time of receipt of
such notice.
SECTION 5.2 REGISTRATION EXPENSES All expenses incident to New Planet's
performance of or compliance with this Agreement, including without limitation
all registration and filing fees, fees with respect to filings required to be
made with the NASD fees and expenses of compliance with state securities or blue
sky laws (including reasonable fees and disbursements of counsel in connection
with blue sky registrations of qualifications of the Distribution Shares and
determination of their eligibility for investment under the laws of such
jurisdictions as Planet may reasonably designate), printing expenses, messenger,
telephone and delivery expenses, and fees and disbursements of counsel for New
Planet and of all independent certified public accountants of New Planet
securities acts liability insurance if New Planet so desires and fees and
expenses of other Persons retained by New Planet (all such expenses being herein
called "Registration Expenses") will be borne by New Planet, regardless of
whether the Registration Statement becomes effective, except as otherwise
required by applicable laws. New Planet will, in any event, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting expenses incurred in
connection with the listing of the securities to be registered on any securities
exchange or qualified for quotation by the NASDAQ Stock Market on the Electronic
Bulletin Board and the fees and expenses of any Person, including special
experts, retained by New Planet.
ARTICLE VI
DISPUTE RESOLUTION
SECTION 6.1 AGREEMENT AND PLAN OF DISTRIBUTION DISPUTES. In the event of
a controversy, dispute or claim arising out of, in connection with, or in
relation to the interpretation, performance, nonperformance, validity or breach
of this Agreement or otherwise arising out of, or in any way related to this
Agreement, including, without limitation, any claim based on contract, tort,
statute or constitution (singly, an "Agreement Dispute" and collectively,
"Agreement Disputes"), the party asserting the Agreement Dispute shall give
written notice to the other party of the existence and nature of such Agreement
Dispute. Thereafter, the general counsels (or other designated representatives)
of the respective parties shall negotiate in good faith for a period no less
than 60 days after the date of the notice in an attempt to settle such Agreement
Dispute. If after such 60 calendar day period such representatives are unable to
settle such Agreement Dispute, any party hereto may commence arbitration by
giving written notice to all other party that such Agreement Dispute has been
referred to the American Arbitration Association for arbitration in accordance
with the provisions of this Article.
SECTION 6.2 ARBITRATION IN ACCORDANCE WITH AMERICAN ARBITRATION
ASSOCIATION RULES. All Agreement Disputes shall be settled by arbitration in
Houston, Texas, before a single arbitrator in accordance with the rules of the
American Arbitration Association (the "Rules"). The arbitrator shall be
selected by the mutual agreement of all parties, but if they do not so agree
within twenty (20) days after the date of the notice of arbitration referred to
above, the selection shall be made pursuant to the Rules from the panels of
arbitrators maintained by the American Arbitration Association. The arbitrator
shall be an individual with substantial professional experience with regard to
resolving or settling sophisticated commercial disputes.
SECTION 6.3 FINAL AND BINDING AWARDS Any award rendered by the arbitrator
shall be conclusive and binding upon the parties hereto; provided, however, that
any such award shall be accompanied by a written opinion of the arbitrator
giving the reasons for the award. This provision for arbitration shall be
specifically enforceable by the parties and the decision of the arbitrator in
accordance therewith shall be final and binding, and there shall be no right of
appeal therefrom. The parties agree to comply with any award made in any such
arbitration proceedings that has become final in accordance with the Rules, and
agree to the entry of a judgment in any jurisdiction upon any award rendered in
such proceedings becoming final under the Rules.
SECTION 6.4 COSTS OF ARBITRATION. In the award the arbitrator shall
allocate, in his or her discretion, among the parties to the arbitration all
costs of the arbitration, including, without limitation, the fees and expenses
of the arbitrator and reasonable attorneys' fees, costs and expert witness
expenses of the parties. Absent such an allocation by the arbitrator, each party
shall pay its own expenses of arbitration, and the expenses of the arbitrator
shall be equally shared.
SECTION 6.5 SETTLEMENT BY MUTUAL AGREEMENT. Nothing contained in this
Article shall prevent the parties from settling any Agreement Dispute by mutual
agreement at any time.
SECTION VII
MISCELLANEOUS
SECTION 7.1 NO INCONSISTENT AGREEMENTS. New Planet will not on or after
the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with this Agreement or otherwise conflicts with
the provisions hereof. In the event New Planet has previously entered into any
agreement with respect to its securities granting any registration rights to any
Person, the rights granted to Planet hereunder do not in any way conflict with
and are not inconsistent with the rights granted to the holders of New Planet's
securities under any such agreements.
SECTION 7.2 SURVIVAL OF OBLIGATIONS. The obligations of the parties
under Sections 6 and 7 of this Agreement shall survive the termination for any
reason of this Agreement (whether such termination is by New Planet, by Planet,
upon the expiration of this Agreement or otherwise).
SECTION 7.3 SEVERABILITY. In case any one or more of the provisions or
part of the provision contained in this Agreement shall for any reason be held
to be invalid, illegal or unenforceable in any respect in any jurisdiction, such
invalidity, illegality or unenforceability shall be deemed not to affect any
other jurisdiction or any other provision or part of a provision of this
Agreement, but this Agreement shall be reformed and construed in such
jurisdiction as if such provision or part of a provision held to be invalid or
illegal or unenforceable had never been contained herein and such provision or
part reformed so that it would be valid, legal and enforceable in such
jurisdiction to the maximum extent possible. In furtherance and not in
limitation of the foregoing, New Planet and Planet each intend that the
covenants contained in Sections 4 and 5 shall be deemed to be a series of
separate covenants, one for each county of the State of Texas and one for each
and every other state, territory or jurisdiction of the United States and any
foreign country set forth therein. If, in any judicial proceeding, a court
shall refuse to enforce any of such separate covenants, then such enforceable
covenants shall be deemed eliminated from the provisions hereof for the purpose
of such proceedings to the extent necessary to permit the remaining separate
covenants to be enforced in such proceedings. If, in any judicial proceeding, a
court shall refuse to enforce any one or more of such separate covenants because
the total time thereof is deemed to be excessive or unreasonable, then it is the
intent of the parties hereto that such covenants, which would otherwise be
unenforceable due to such excessive or unreasonable period of time, be enforced
for such lesser period of time as shall be deemed reasonable and not excessive
by such court.
SECTION 7.4 ENTIRE AGREEMENT, AMENDMENT. This Agreement contains the
entire agreement between New Planet and Planet with respect to the subject
matter thereof. Planet acknowledges that it neither holds any right, warrant or
option to acquire securities of New Planet, nor has the right to any such
rights, warrants or options, except pursuant to the is Agreement. This
Agreement may not be amended, waived, changed, modified or discharged except by
an instrument in writing executed by or on behalf of the party against whom any
amendment, waiver, change, modification or discharge is sought.
<TABLE>
<CAPTION>
SECTION 7.5 NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing and shall be deemed to have duly given
if delivered by hand-delivery, registered first-class mail, postage prepaid, telex,
telecopier, or air courier guaranteeing overnight delivery as follows:
<S> <C>
TO NEW PLANET:. . . . . . . . . . . . . . TO PLANET
New Planet Resources, Inc.. . . . . . . . Planet Resources, Inc.
1415 Louisiana, Suite 3100. . . . . . . . One Park Ten Place, Suite 200
Houston, Texas 77002. . . . . . . . . . . Houston, Texas 77084
Attn: A.W. Dugan, President . . . . . . . Attn: Hunter M.A. Carr, President
WITH AN ADDITIONAL COPY BY LIKE MEANS TO: WITH AN ADDITIONAL COPY BY LIKE MEANS TO:
Sonfield & Sonfield . . . . . . . . . . . Planet Resources, Inc.
770 South Post Oak Lane . . . . . . . . . One Park Ten Place, Suite 200
Houston, Texas 77056. . . . . . . . . . . Houston, Texas 77084
Attn: Robert L. Sonfield, Jr., Esq. . . . Attn: Jonathan C. Gilchrist, Esq.
</TABLE>
and/or to such other persons and addresses as any party shall have
specified in writing to the other.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day if timely delivered to an air courier guaranteeing overnight
delivery.
SECTION 7.6 AsSIGNABILITY. This Agreement shall be assignable by either
party on the express consent of the other and shall be binding upon, and shall
inure to the benefit of, the successors and assigns of the parties.
SECTION 7.7 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Delaware.
SECTION 7.8 WAIVER AND FURTHER AGREEMENT. Any waiver of any breach of
any terms or conditions of this Agreement shall not operate as a waiver of any
other breach of such terms or conditions or any other term or condition, nor
shall any failure to enforce any provision hereof operate as a waiver of such
provision or of any other provision hereof. Each of the parties hereto agrees
to execute all such further instruments and documents and to take all such
further action as the other party may reasonably require in order to effectuate
the terms and purposes of this Agreement.
SECTION 7.9 HEADING OF NO EFFECT. The paragraph headings contained in
this Agreement are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
NEW PLANET RESOURCES, INC.
By: /a/A.W. Dugan
--------------
A.W. Dugan, President
PLANET RESOURCES, INC.
By: /s/Hunter M.A. Carr
---------------------
Hunter M.A. Carr, President
<PAGE>
Exhibit 3.1.1 - Page 1
EXHIBIT 3.1.1
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
NEW PLANET RESOURCES, INC.
FIRST: That Article I of the certificate of incorporation be and it hereby
is amended to read as follows:
RESOLVED, that the certificate of incorporation of New Planet
Resources, Inc. be amended by changing the First Article thereof so that, as
amended, said Article shall be and read as follows:
The name of the Corporation is Planet Resources, Inc.
SECOND: That the amendment was duly adopted in accordance with the
provisions of section 242 of the General Corporation Law of the State of
Delaware.
EXECUTED this 15th day of July, 1999.
/s/A.W. Dugan
--------------
A.W. Dugan, President and Majority Shareholder
/s/Jacque N. York
-------------------
Jacque N. York, Secretary
<PAGE>
Exhibit 4.1 - Page 12
Exhibit 4.1 - Page 2
EXHIBIT 4.1
OPTION AGREEMENT
THIS OPTION AGREEMENT, dated as of the ___ day of August, 1999, is entered
into by and between PLANET RESOURCES, INC., a Delaware corporation (the
"Company") and Atlas Stock Transfer Corp. (the "Option Agent").
W I T N E S S E T H:
WHEREAS, the Company has authorized the issuance of 405,000 Options, each to
purchase one share of the Company's common stock, $.001 par value per share
("Shares"), and
WHEREAS, the Company desires to provide for the issuance of certificates
representing the Options ("Options"); and
WHEREAS, the Company desires the Option Agent to act on behalf of the Company,
and the Option Agent is willing to act in connection with the issuance,
registration, transfer and exchange of Options and the exercise of the Options.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Options and the respective rights and obligations hereunder of the
Company, the holders of Options, and the Option Agent, the parties hereto agree
as follows:
SECTION 1
DEFINITIONS
In addition to those terms defined above, as used herein, the following terms
shall have the following meanings, unless the context shall otherwise require:
"CORPORATE OFFICE"
The office of the Option Agent (or its successor) at which its principal
business shall be administered, which office is located at the date hereof at
5899 South State Street, Salt Lake City, Utah 84107.
"EXERCISE DATE"
As to any Option, the date on which the Option Agent shall have received
both (i) the Option Certificate representing such Option, with the exercise form
therefor duly executed by the Registered Holder thereof or his duly authorized
attorney (in writing), and (ii) payment in cash, or by check made payable to the
Company, of an amount in lawful money of the United States of America equal to
the applicable Exercise Price.
"EXERCISE PRICE"
The Exercise Price upon exercise of the Options is $.15 per share.
"EXPIRATION DATE"
The Expiration Date of the Options shall be 5:00 p.m. (Houston time) on (i)
December 31, 2004, or (ii) such later date as the Company may at its option
determine.
If such Expiration Date shall be a holiday in the State of Texas or shall
be a day on which banks are authorized to close in Texas, then Expiration Date
shall mean 5:00 p.m. (Houston time) on the next following day that in the State
of Texas is not a holiday or a day on which banks are authorized to close.
"INITIAL OPTION EXERCISE DATE"
9:00 o'clock a.m. on the day following the first issuance of certificates
representing any of the options.
If such Initial Option Exercise Date shall be a holiday in the State of
Texas or shall be a date on which banks are authorized to close in Texas, then
Initial Option Exercise Date shall mean 9:00 o'clock a.m. (Houston time) on the
next following day that in the State of Texas is not a holiday or a day on which
banks are authorized to close.
"REGISTERED HOLDER"
The person in whose name any certificate representing Options shall be
registered on the books maintained by the Option Agent pursuant to Section 6.
"SHARES"
The shares of the Company's common stock, $.001 par value per share (the
"Common Stock"), issuable upon exercise of the Options.
"STOCK"
The shares of the Company's capital stock of any class, whether now or
thereafter authorized, that has the right to participate in the distribution of
earnings and assets of the Company without limit as to amount or percentage,
which at the date hereof consists of 25,000,000 authorized shares of the
Company's common stock, par value $.001 per share and 1,000,000 shares of
Preferred Stock, par value $.001 per share.
"OPTION AGENT"
Atlas Stock Transfer Corp. shall serve as Option Agent.
SECTION 2
OPTIONS AND ISSUANCE OF OPTIONS
2.1. OPTION
Each Option shall entitle the Registered Holder of the Option representing
such Option to purchase one Share upon the exercise thereof, subject to
modification and adjustment as provided in Section 8.
2.2. EXECUTION OF OPTIONS
Upon execution of this Agreement, Options representing an aggregate of
405,000 Options shall be executed by the Company and delivered to the Option
Agent. At its request, additional Option Certificates shall be executed by the
Company and delivered to the Option Agent. After certificates representing an
aggregate of such number of Options as shall be required in connection with the
distribution of the Options, shall have been duly countersigned by the Option
Agent and upon written order of the Company signed by its President and by its
Secretary, the Options shall be countersigned, issued, and delivered by the
Option Agent.
2.3. DELIVERY OF ADDITIONAL OPTIONS
From time to time, up to the Expiration Date, the Option Agent shall
countersign and deliver stock certificates in required whole number
denominations upon the exercise of Options in accordance with this Agreement.
From time to time, up to the Expiration Date, the Option Agent shall countersign
and deliver Options in required whole number denominations to the persons
entitled thereto in connection with any transfer or exchange permitted under
this Agreement. No Options shall be issued except (i) those initially issued
hereunder, (ii) those issued on or after the Initial Option Exercise Date, upon
the exercise of any Options pursuant to Section 4, to evidence any unexercised
Options held by the exercising Registered Holder, (iii) those issued upon any
transfer or exchange pursuant to Section 6, and (iv) those issued pursuant to
Section 7.
SECTION 3
FORM AND EXECUTION OF OPTION CERTIFICATES
3.1. FORM OF OPTIONS
The Options shall be substantially in the form annexed hereto as Exhibit
"A" (the provisions of which are hereby incorporated herein) and may have such
letters, numbers, or other marks of identification or designation and such
legends, summaries, or endorsements printed, lithographed, or engraved thereon
as the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Options may be listed, or to conform to
usage. The Options shall be dated the date of issuance thereof (whether upon
initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen or
destroyed Options). The Options shall be numbered serially.
3.2. VALIDITY OF SIGNATURES
Options shall be executed on behalf of the Company by its President and by its
Secretary, by manual signatures or by facsimile signatures printed thereon, and
shall have imprinted thereon a facsimile of the Company's seal. Options shall
be manually countersigned by the Option Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who signed
a Option ceases to be such officer of the Company before issuance of such
Option, or before countersignature by the Option Agent and issuance and delivery
thereof, such Option may nevertheless be countersigned by the Option Agent, and
issued and delivered with the same force and effect as though the person who
signed such Option had not ceased to be such officer of the Company.
SECTION 4
EXERCISE
4.1. EXERCISE PROCEDURES
Each Option may be exercised at any time on or after the Initial Option Exercise
Date, but not after the Expiration Date, as appropriate, upon the terms and
subject to the conditions set forth herein and in the applicable Option. A
Option shall be deemed to have been exercised immediately prior to the close of
business on the Exercise Date, and the person entitled to receive the securities
deliverable upon such exercise shall be treated for all purposes as the holder
thereof with respect to such number of Shares as shall equal the aggregate
number of full Shares issuable upon such exercise. As soon as practicable on or
after the Exercise Date, and in conformity with usual practices respecting such
conduct, the Option Agent (on behalf of the Company) shall cause to be issued
and delivered to the person or persons entitled to receive the same a
certificate or certificates for the securities deliverable upon such exercise.
Upon the exercise of any Option, the Option Agent shall promptly notify the
Company in writing of such fact and of the number of securities delivered upon
such exercise, and shall deposit promptly in the Company's bank account upon
receipt therefor the dollar amount equal to the Exercise Price multiplied by the
number of Shares for which notice of exercise has been received.
4.2. NO FRACTIONAL SHARES
Notwithstanding that the number of Shares purchasable upon the exercise of
a Option is adjusted pursuant to Section 8 of this Agreement, the Company shall
nonetheless not be required to issue fractions of Shares upon exercise of the
Options or to distribute Shares certificates that evidence fractional Shares.
In lieu of fractional Shares, there shall be returned to exercising registered
holders of the Options upon such exercise an amount in cash, in United States
dollars, equal to the amount in excess of that required to purchase the largest
number of full Shares.
The holder of a Option by the acceptance thereof expressly waives his right
to receive any fractional Option or any fractional Shares upon exercise of a
Option.
4.3. PARTIAL EXERCISE
In case the registered holder of any Option shall exercise fewer than all of the
Options evidenced thereby, a new Option evidencing Options equivalent to the
Options remaining unexercised shall be issued by the Option Agent to the
registered holder of such Option or to his duly authorized assign, subject to
the provisions of this Agreement.
SECTION 5
RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES
5.1. RESERVATION OF SHARES
The Company covenants that it will at all times reserve and keep available out
of its authorized Shares, solely for the purpose of issuance upon exercise of
Options, such number of Shares as shall then be issuable upon the exercise of
all outstanding Options. The Company covenants that all Shares that shall be
issuable upon exercise of the Options shall be duly and validly issued, fully
paid and nonassessable and free from all taxes, liens, and charges with respect
to the issue thereof, and that upon issuance the Company shall use its best
efforts to cause such shares to be included for trading on any system or to be
listed on each national securities exchange, if any, on which the Company's
other outstanding Shares are then listed.
5.2. GOVERNMENTAL APPROVALS
If the Shares reserved under this Section require qualification or registration
with or approval of any governmental authority, federal or state, before such
securities may be validly issued or delivered pursuant to such exercise, the
Company covenants that it will, in good faith, endeavor to secure such
registration or qualification or approval; provided, however, that the Company
shall not be required to issue Shares to any person, pursuant to exercise of the
Options, who shall be resident in any state in which such exercise would be
unlawful or if such qualification, registration or approval shall require the
Company to file a general consent of service of process or qualify to do
business as a foreign corporation in such state.
5.3. PAYMENT OF TAXES
The Company shall pay all documentary, stamp, or similar taxes and other
governmental charges that may be imposed with respect to the issuance of
Options, or the issuance or delivery of any Shares upon exercise of the Options,
provided, however, that if Shares are to be delivered in a name other than the
name of the Registered Holder of the Option representing any Option being
exercised, then no such delivery shall be made unless the person requesting the
same has paid to the Option Agent the amount of transfer taxes or charges
incident thereto, if any.
5.4. REQUISITION OF SHARES
The Option Agent is hereby irrevocably authorized by the Company to
requisition, from time to time, certificates representing Shares required to be
delivered upon exercise of the Options.
SECTION 6
EXCHANGE AND REGISTRATION OF TRANSFER
6.1. EXCHANGES AND TRANSFERS
Options may be exchanged for other Options representing an equal aggregate
number of Options or may be transferred, in whole or part, under the terms of
this Agreement. Options to be exchanged shall be surrendered to the Option
Agent at its Corporate Office, and the Company shall execute and the Option
Agent shall countersign, issue and deliver in exchange therefor the Option or
Options that the Registered Holder making the exchange shall be entitled to
receive.
6.2. BOOKS AND RECORDS
The Option Agent shall keep at such office books and records in which it shall
register Options and the transfer thereof. Upon due presentment at such office
of any Option for registration of transfer, the Company shall execute and the
Option Agent shall issue and deliver to the transferee(s) a new Option or
Options representing an equal aggregate number of Options.
6.3. PROCEDURES OF TRANSFERS, ETC.
With respect to all Options presented for registration of transfer, or for
exchange or exercise, the subscription form on the reverse thereof shall be duly
endorsed, or be accompanied by a written instrument or instruments of transfer
and subscription, in form satisfactory to the Company and the Option Agent.
Such documentation shall be duly executed by the Registered Holder or his duly
authorized attorney.
The Company may require payment by the holders of Options of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with exchange or registration of transfer of Options.
All Options so surrendered for exchange or transfer shall be promptly canceled
by the Option Agent in accordance with previous instructions pertaining to the
Company's Shares.
6.4. REGISTERED HOLDERS
Prior to due presentment for registration of transfer, the Company and the
Option Agent may deem and treat the Registered Holder of any Option as the
absolute owner thereof and of each Option represented thereby, for all purposes
(notwithstanding any notations of ownership or writing thereon made by anyone
other than the Company or the Option Agent), and shall not be affected by any
notice to the contrary.
SECTION 7
LOSS OR MUTILATION
Upon receipt by the Company and the Option Agent of satisfactory evidence
of the ownership of and the loss, theft, destruction, or mutilation of any
Option, and (i) in the case of loss, theft or destruction, upon receipt by the
Company and the Option Agent of indemnity satisfactory to them, or (ii) in the
case of mutilation, upon surrender and cancellation upon receipt of such Option,
the Company shall execute and the Option Agent shall countersign and deliver in
lieu thereof a new Option representing an equal aggregate number of Options.
Applicants for a substitute Option shall comply with such other reasonable
regulations and pay such other reasonable charges as the Option Agent may
prescribe.
SECTION 8
ADJUSTMENT OF EXERCISE PRICE
AND
NUMBER OF SHARES DELIVERABLE
8.1. ADJUSTMENT EVENTS
The Exercise Price and the number of shares (and, in certain events, the
class or classes of capital stock of the Company) purchased upon the exercise of
each Option are each, respectively, subject to adjustment from time to time as
hereinafter provided prior to the expiration of any Option by its exercise or by
its terms, in case any one or more of the events and referred to described below
shall occur at any time or from time to time; that is to say, if the Company
shall:
(i) issue any shares of its Common Stock as a dividend or subdivide its
outstanding shares of Common Stock into a greater number of shares
then, in either of such cases, the then applicable Exercise Price per share of
the shares of Common Stock purchasable pursuant to each Option in effect at the
time of such action shall be proportionately reduced and the number of shares at
that time purchasable pursuant to each Option shall be proportionately
increased; or,
(ii) combine its outstanding shares of Common Stock into a smaller number of
such shares,
then, in such case, the then applicable Exercise Price per share of the shares
of Common Stock purchasable pursuant to each Option in effect at the time of
such action shall be proportionately increased and the number of shares of
Common Stock at that time purchasable pursuant to each Option shall be
proportionately decreased; or
(iii) issue by reclassification of its shares of Common Stock any shares of
its capital stock,
then, as a condition of such recapitalization, lawful and adequate provision
shall be made whereby the holder of each Option shall have, immediately after
the effective date of any such reclassification, the right to purchase, upon the
basis and on the terms and conditions specified herein, in lieu of the shares of
Common Stock of the Company theretofore purchasable upon the exercise of each
Option, such shares of stock or other securities as may be issued or payable
with respect to, or in exchange for the number of shares of Common Stock of the
Corporation theretofore purchasable upon the exercise of each Option, had such
recapitalization not taken place; and in any such event, the rights of the
Option holder to any adjustment in the number of shares of Common Stock
purchasable upon the exercise of each Option, as hereinbefore provided, shall
continue and be preserved in respect of any stock or other securities which the
Option holder becomes entitled to purchase.
If after an adjustment the holder of a Option upon exercise of it may
receive shares of two or more classes of capital stock of the Company, the Board
of Directors shall in good faith determine the allocation of the adjusted
Exercise Price between or among the classes of capital stock. After such
allocation, that portion of the Exercise Price applicable to each share of each
such class of capital stock shall thereafter be subject to adjustment on terms
comparable to those applicable to Common Stock in this Agreement.
Notwithstanding the allocation of the Exercise Price between or among shares of
capital stock as provided by this Section 8, a Option may only be exercised in
full by payment of the entire Exercise Price currently in effect; or
(iv) merge or consolidate with or into another corporation or sell or convey
to another corporation, all or substantially all of the Company's assets
then, as a condition of such consolidation, merger, sale or conveyance, the
Company, or such successor or purchasing corporation, as the case may be, shall
make lawful and adequate provision whereby the Registered Holder of each Option
then outstanding shall receive, on exercise of such Option, the kind and amount
of securities and property receivable upon such change, consolidation, merger,
sale or conveyance by a holder of the number of securities issuable upon
exercise of such Option immediately prior to such consolidation, merger, sale or
conveyance, and shall forthwith file at the Corporation Office of the Option
Agent a statement signed by its Chairman of the Board or President and by its
Secretary or an Assistant Secretary evidencing such provisions. Such provisions
shall include provision for adjustments that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 8.
(v) take a record of the holders of its Common Stock for the purpose of
entitling them to purchase shares of its Common Stock at a price per share more
than 10% below the current market price per share of its Common Stock (as
defined below) at the date of taking such record,
then, the number of shares of Common Stock purchasable pursuant to this Option
shall be adjusted by multiplying (a) the number of shares of Common Stock which
the holder hereof was entitled to receive immediately prior to such adjustment
(taking into account fractional interests to the nearest 1000th of a share) by
(b) a fraction, the numerator of which is the number of shares of the Common
Stock of the Corporation outstanding (excluding the shares owned by the
Corporation) immediately prior to the taking of such record plus the number of
additional shares offered for purchase, and the denominator of which is the
number of shares of Common Stock of the Corporation outstanding (excluding
shares owned by the Corporation) immediately prior to the taking of such record
plus the number of shares which the aggregate offering price of the total number
of additional shares so offered could purchase at such current market price and
the price per share shall be that number determined by multiplying (a) the price
per share in effect immediately prior to the taking of such record by (b) a
fraction, the numerator of which is the number of shares purchasable hereunder
immediately prior to taking of such record and the denominator of which is the
number of shares purchasable hereunder immediately after the taking of such
record.
(vi) reduce the exercise price of any or all classes of Options, then, as a
condition of such reduction it shall be made uniformly as to all Options of that
class then outstanding.
For the purpose hereof, the current market price per share of Common Stock
of the Corporation at any date shall be deemed to be the average of the daily
closing prices for the thirty (30) consecutive business days commencing
forty-five (45) business days before the day in question. The closing price for
each day shall be the last sale price, or, in case of no sales on such day, the
average of the closing bid and asked prices, in either case as officially quoted
by any National Securities Exchange, or, if the Common Stock of the Corporation
is not listed or admitted to trading on any such Exchange, the average of the
highest bid and asked prices as reported in the sheets of the National
Association of Securities Dealers, Inc. for the over the counter market in New
York City, or if not so reported, the average of the highest bid and asked
prices as furnished by any New York Stock Exchange firm selected from time to
time by the Company for the purpose.
8.2. CONDITIONS PRECEDENT
Before taking any action that would cause an adjustment increasing the then par
value of the Shares issuable upon exercise of the Options above the Exercise
Price, the Company shall have the right to take any corporate action that may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable Shares at such adjusted
Exercise Price.
Upon any adjustment of the Exercise Price required to be made pursuant to this
Section 8, within 30 days thereafter the Company shall (a) cause to be filed
with the Option Agent written notice thereof, which notice shall be accompanied
by a certificate of the Company's independent auditors, stating the adjusted
Exercise Price and the adjusted number of Shares purchasable or the kind and
amount of any securities or property purchasable upon exercise of a Option, as
the case may be, and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation and the facts upon which
such calculation is based, which certificate shall be conclusive evidence of the
correctness of such adjustment, and (b) cause to be mailed to each of the
Registered Holders of the Option Certificates written notice of such adjustment.
Such notice may be given in advance and included as a part of the notice
required to be mailed pursuant hereto.
(i) In case at any time (a) the Company shall declare any dividend upon its
Shares payable otherwise than in cash or in Shares of the Company; or (b) the
Company shall offer for subscription to the holders of its Shares any additional
shares of stock of any class or any other securities convertible into shares of
stock or any rights to subscribe thereto; or (c) there shall be any capital
reorganization or reclassification of the capital stock of the Company, or a
sale of all or substantially all of the assets of the Company, or a
consolidation or merger of the Company with another corporation (other than a
merger in which the Company is the continuing corporation, and which does not
result in any reclassification or change of the then outstanding Shares or other
capital stock issuable upon exercise of the Options (other than a change in par
value or a subdivision or combination of such shares); or (d) there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall cause to be mailed to
- ----
each of the Registered Holders of outstanding Options, at the earliest
practicable time (and in any event not less than 20 days before any record date
or other date set for definitive action), written notice of the date of which
the books of the Company shall close or a record shall be taken for such
dividend, distribution of, or grant of subscription rights, or such
reorganization, reclassification, sale, consolidation, merger, dissolution,
liquidation, or winding up shall take place, as the case may be. Such notice
shall also set forth such facts as shall indicate the effect of such action (to
the extent such effect may be known at the date of such notice) on the kind and
amount of the shares of stock and other securities and property deliverable upon
exercise of the Options. Such notice shall also specify the date as of which
the record holders of the Shares shall participate in said dividend,
distribution, or subscription rights or shall be entitled to exchange their
shares for securities or other property deliverable upon such reorganization,
reclassification, sale, consolidation, merger, dissolution, liquidation or
winding up, as the case may be (on which date, in the event of voluntary or
involuntary dissolution, liquidation or winding up of the Company, the right to
exercise the Options shall terminate).
(ii) Without limiting the obligation of the Company to provide notice to the
Registered Holders of corporate actions hereunder, it is agreed that failure of
the Company to give notice shall not invalidate such corporate action of the
Company.
SECTION 9
REDEMPTION
The Company may not redeem or call the Options.
SECTION 10
CONCERNING THE OPTION AGENT
10.1. CAPACITY
The Option Agent acts hereunder as agent and in a ministerial capacity for
the Company, and its duties shall be determined solely by the provisions hereof.
The Option Agent shall not, by issuing and delivering Options or by any other
act hereunder, be deemed to make any representations as to (i) the validity or
value or authorization of (A) the Option or the Options represented thereby, or
(B) any securities or other property delivered upon exercise of any Option; or
(ii) whether any Shares of capital stock issued upon exercise of any Option is
fully paid and nonassessable.
10.2. LIMITATIONS OF RESPONSIBILITY
The Option Agent shall not, at any time, be under any duty or
responsibility to any holder of Options (i) to make or cause to be made any
adjustment of the Exercise Price provided in this Agreement; (ii) to determine
whether any fact exists that may require any such adjustments; (iii) to
determine the nature or extent of any such adjustment, when made; or (iv) to
determine the method employed in making any such adjustment.
The Option Agent shall not be (i) liable for any recital or statement of
fact contained herein or for any action taken, suffered, or omitted by it in
reliance on any Option or other document or instrument believed by it in good
faith to be genuine, and to have been signed or presented by the proper party or
parties, (ii) responsible for any failure on the part of the Company to comply
with any of its covenants and obligations contained in this Agreement or in any
Option, or (iii) liable for any act or omission in connection with this
Agreement except for its own negligence or willful misconduct.
10.3. ADVICE OF COUNSEL
The Option Agent, may, at any time, consult with counsel satisfactory to it
(who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
10.4. EFFECT OF ORDER OF THE COMPANY
Any notice, statement, instruction, request, direction, order, or demand of
the Company shall be sufficiently evidenced by an instrument signed by any of
the Chairman of the Board, President, Secretary, or Assistant Secretary (unless
other evidence in respect thereof is herein specifically prescribed). The
Option Agent shall not be liable for any action taken, suffered, or omitted by
it in accordance with such notice, statement, instruction, request, direction,
order, or demand.
10.5. COMPENSATION AND FEES
The Company agrees to pay the Option Agent reasonable compensation for its
services hereunder and to reimburse it for its reasonable expenses hereunder, in
such amount as shall be mutually agreed upon by the parties hereto; it further
agrees to indemnify the Option Agent and save it harmless against any and all
losses, expenses and liabilities, including judgments, costs and counsel fees,
for anything done or omitted by the Option Agent in the execution of its duties
and powers hereunder except losses, expenses, and liabilities arising as a
result of the Option Agent's negligence or willful misconduct.
10.6. RESIGNATION
The Option Agent may resign its duties and be discharged from all further
duties and liabilities hereunder (except liabilities arising as a result of the
Option Agent's own negligence or willful misconduct), after giving 30 days'
prior written notice to the Company. At least 15 days' prior to the date such
resignation is to become effective, the Option Agent shall cause a copy of such
notice of resignation to be mailed to the Registered Holder of each Option at
the Company's expense. Upon such resignation the Company shall appoint a new
Option agent in writing. If the Company shall fail to make such appointment
within a period of 30 days after it has been notified in writing of such
resignation by the resigning Option Agent, then the Registered Holder of any
Option may apply to any court of competent jurisdiction for the appointment of a
new Option agent. Any new Option agent, whether appointed by the Company or by
such court, shall be (i) a bank or trust company having a capital and surplus,
as shown by its last published report to its stockholders, of not less than
$10,000,000 or (ii) a stock transfer company. After acceptance of such
appointment by the new Option agent is received by the Company, such new Option
agent shall be vested with the same powers, duties, rights, and responsibilities
as if it had been originally named herein as Option Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be necessary
or expedient to execute and deliver any further assurance, conveyance, act, or
deed, the same shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the resigning Option agent. No later than
the effective date of any such appointment, the Company shall file notice
thereof with the resigning Option agent and shall forthwith cause a copy of such
notice to be mailed to the Registered Holder of each Option.
10.7. TERMINATION
The Company may terminate the Option Agent hereunder and be discharged from
all further duties and liabilities hereunder (except liabilities for the Option
Agent's then-due compensation and expenses), after giving 30 days' prior written
notice to the Option Agent.
10.8. SUCCESSORS
Any corporation into which the Option Agent or any new Option agent may be
converted or merged, or any corporation resulting from any consolidation to
which the Option Agent (or any new Option agent) shall be a party, or any
corporation succeeding to the corporate trust business of the Option Agent shall
be a successor Option agent under this Agreement without any further act,
provided that such corporation is eligible for appointment as successor to the
Option Agent under the provisions of the preceding paragraph 10.6. Any such
successor Option agent shall promptly cause notice of its succession as Option
agent to be mailed to the Company and to the Registered Holder of each Option.
10.9. PERMITTED TRANSACTIONS
The Option Agent, its subsidiaries and affiliates, and any of its or their
officers or directors, may buy and hold or sell Options or other securities of
the Company and otherwise deal with the Company in the same manner and to the
same extent as though the Option Agent were not the Option agent hereunder.
Nothing herein shall preclude the Option Agent from acting in any other capacity
for the Company or for any other legal entity.
SECTION 11
RIGHTS OF THE REGISTERED HOLDER
No registered holder shall, by virtue hereof, be entitled to any rights of a
shareholder in the company, either at law or equity. The rights of the
Registered Holder are limited to those expressed in the Option and are not
enforceable against the Company except to the extent set forth in this Agreement
and in the Option Certificates.
SECTION 12
MODIFICATION OF AGREEMENT
The Option Agent and the Company, by supplemental agreement, may make any
changes in this Agreement (i) that they shall deem appropriate to cure any
ambiguity or to correct any defective or inconsistent provision or manifest
mistake or error herein contained; or (ii) that they may deem necessary or
desirable and that shall not adversely affect the interests of the holders of
Option Certificates (this provision, for instance, shall permit the Exercise
Price to be decreased at the Company's option).
SECTION 13
NOTICES
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been made when delivered or mailed, first
class postage prepaid, or delivered to a telegraph office for transmission: (a)
if to the Registered Holder of a Option Certificate, at the address of such
holder as shown on the registry books maintained by the Option Agent; (b) if to
the Company, at 1415 Louisiana, Suite 3100, Houston, Texas 77002, or at such
other address as may have been furnished to the Option Agent in writing by the
Company; and (c) if to the Option Agent, at 5899 South State Street, Salt Lake
City, Utah 84107.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
PLANET RESOURCES, INC.
Attest:
/s/Jacque N. York By:/s/A.W. Dugan
- ------------------- ---------------
Jacque N. York, Secretary A.W. Dugan, President
<PAGE>
Exhibit 4.1 - Page 15
EXHIBIT A
TO
OPTION AGREEMENT
EXERCISABLE FROM 9:00 A.M., HOUSTON TIME,
ON THE INITIAL OPTION EXERCISE DATE,
UNTIL 5:00 P.M., HOUSTON TIME, DECEMBER 31, 2004
No. _______ ______ Options
OPTION CERTIFICATE
PLANET RESOURCES, INC.
This Option Certificate ("this Option") certifies that
_____________________________________________, or registered assigns, is the
registered holder of ____________ Options (the "Options") to purchase Common
Stock, $.001 par value per share (the "Common Stock"), of Planet Resources,
Inc., a Delaware corporation (the "Company"). Each Option entitles the holder
to purchase from the Company after 9:00 a.m. Houston time, on the initial Option
exercise date and before 5:00 p.m., Houston time on the earlier of (i) the date
which is the last day of the 36 month period commencing on the Initial Option
Exercise Date, or (ii) such later date as the Company may at its option
determine (the "Expiration Date") one fully paid and nonassessable share of
Common Stock of the Company at the initial exercise price for each Option,
subject to adjustment in certain events (the "Exercise Price"), of $.15 per
share. Each Option entitles the Holder to purchase at the Exercise Price upon
surrender of this Option and payment of the Exercise Price at an office or
agency of the Company, but only subject to the conditions set forth herein and
in the Option Agreement (as hereinafter defined). Payment of the Exercise Price
may be made in cash, or by certified or official bank check payable to the order
of the Company, or any combination of such cash or check. As used herein,
"Share" or "Shares" refers to the Common Stock of the Company and, where
appropriate, to the other securities or property issuable upon exercise of an
Option as provided for in the Option Agreement upon the happening of certain
events. The Exercise Price and the number of Shares and classes of capital
stock purchasable upon exercise of the Options are subject to adjustment upon
the occurrence of certain events set forth in the Option Agreement. In the
event that upon any exercise of Options evidenced hereby, the number of Options
exercised shall be less than the total number of Options evidenced hereby, there
shall be issued to the holder hereof or his assignee a new Option Certificate
evidencing the number of Options not exercised. No adjustment shall be made for
any dividends on any Shares issuable upon exercise of this Option.
No Option may be exercised after 5:00 P.M., Houston time, on the Expiration
Date. All Options evidenced hereby shall thereafter be void.
The Options evidenced by this Option Certificate are part of a duly authorized
issue of Options issued pursuant of an Option Agreement dated as of August ___,
1999 (the "Option Agreement"), duly executed by the Company which Option
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder of the Option Certificates).
The Option Agreement provides that upon the occurrence of certain events, the
Exercise Price set forth above and the number of shares and classes of capital
stock of the Company may, subject to certain conditions, be adjusted. No
fractions of Shares will be issued upon any such adjustment, but the persons
entitled to such fractional interests will be paid, as provided in the Option
Agreement, an amount in cash equal to the current market value of such
fractional Shares.
Option Certificates, when surrendered at an office or agency of the Company by
the holder thereof in person or by a legal representative duly authorized in
writing, may be exchanged, in the manner and subject to the limitations provided
in the Option Agreement, but without payment of any service charge, for another
Option Certificate or Option Certificates of like tenor evidencing in the
aggregate a like number of Options.
Upon due presentment for registration of transfer of this Option Certificate at
an office or agency of the Company, a new Option Certificate or Option
Certificates of like tenor and evidencing in the aggregate a like number of
Options shall be issued to the transferee(s) in exchange for this Option
Certificate, subject to the limitations provided herein and in the Option
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Company may deem and treat the registered holder(s) hereof as the absolute
owner(s) of this Option Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all purposes, and the
Company shall not be affected by any notice to the contrary.
All terms used in this Option Certificate which are defined in the Option
Agreement shall have the meanings assigned to them in the Option Agreement.
IN WITNESS WHEREOF, the Company has caused this Option Certificate to be duly
executed under its corporate seal.
Dated:
By:
Countersigned:
ATLAS STOCK TRANSFER CORP.
Option Agent
By:
Attest: PLANET RESOURCES, INC.
By:
Jacque N. York, Secretary A.W. Dugan, President
<PAGE>
[FORM OF ELECTION TO PURCHASE]
(To be executed upon exercise of Option)
The undersigned hereby irrevocably elects to exercise the right, represented by
this Option Certificate, to purchase _______ Shares and herewith tenders in
payment for such Shares cash or a certified or official bank check payable to
the order of Planet Resources, Inc. in the amount of $______, all in accordance
with the terms hereof. The undersigned requests that a certificate for such
Shares be registered in the name of _______________________________ whose
address is _____________________________, and that such certificate be delivered
to ___________________, whose address is ___________________ _______________.
If said number of Shares is less than all of the Shares purchasable hereunder,
the undersigned requests that a new Option Certificate representing the
remaining balance of the Shares be registered in the name of
___________________, whose address is _____________________ ____________ and
that such Certificate be delivered to ______________, whose address is
______________________________.
Dated: Signature:_______________
(Signature must conform
in all respects to name
of holder as specified on
the face of the Option Certificate)
(Insert Social Security or Other
Identifying Number of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires
to transfer the Option Certificate)
FOR VALUE RECEIVED, _______________________________
hereby sells, assigns and transfers unto ___________________________,
(Please print name and address of transferee)
this Option Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Option Certificate on the books of the within-named Company,
with full power of substitution.
Dated: Signature:_______________
(Signature must conform
in all respects to name
of holder as specified on
the face of the Option
Certificate)
(Insert Social Security or Other
Identifying Number or Assignee)
<PAGE>
Exhibit 5.1 - Page 2
EXHIBIT 5.1
<TABLE>
<CAPTION>
SONFIELD & SONFIELD
A PROFESSIONAL CORPORATION
<S> <C> <C>
ATTORNEYS AT LAW
LEON SONFIELD (1865-1934)
GEORGE M. SONFIELD (1899-1967)
ROBERT L. SONFIELD (1893-1972) . . . . 770 SOUTH POST OAK LANE
____________________ . . . . . . . . . HOUSTON, TEXAS 77056
[email protected]
FRANKLIN D. ROOSEVELT, JR. (1914-1988)
TELECOPIER (713) 877-1547. . . . . . NEW YORK
____ . . . . . . . . . . . . . . . . LOS ANGELES
ROBERT L. SONFIELD, JR.. . . . . . . . TELEPHONE (713) 877-8333 WASHINGTON, D.C.
MANAGING DIRECTOR
</TABLE>
August ____, 1999
Board of Directors
Planet Resources, Inc.
1415 Louisiana, Suite 3100
Houston, Texas 77002
Ladies and Gentlemen:
In our capacity as counsel for Planet Resources, Inc. (formerly New Planet
Resources, Inc.) (the "Company"), we have participated in the corporate
proceedings relative to the authorization and issuance of 1,605,818 shares of
Common Stock, par value $.001 per share ("Company Common Stock") 405,000 options
("Company options") to Internet Law Library, Inc. (formerly Planet Resources,
Inc.) ("Internet Law") and the distribution of the Company Common Stock and
Company options to the stockholders of Internet Law (the "distribution"),
pursuant to the terms of a Plan and Agreement of distribution by and between
Internet Law and the Company (the "distribution agreement"). A copy of the
distribution agreement is included as an exhibit to the registration statement
of which the prospectus is a part, all as set out and described in the Company's
registration statement on Form SB-2 (File No. 333-76533) under the Securities
Act of 1933 (the "registration statement"). We have also participated in the
preparation and filing of the registration statement including the federal
income tax information set out therein under the caption "Federal Income Tax
Consequences" and elsewhere in the prospectus constituting a part of the
registration statement.
Based upon the foregoing and upon our examination of originals (or copies
certified to our satisfaction) of such corporate records of the Company and
other documents as we have deemed necessary as a basis for the opinions
hereinafter expressed, and assuming the accuracy and completeness of all
information supplied us by the Company, having regard for the legal
considerations which we deem relevant, we are of the opinion that:
(1) The Company is a corporation duly organized and validly
existing under the laws of the State of Delaware;
(2) The Company has taken all requisite corporate action and all
action required by the laws of the State of Delaware with respect to the
authorization, issuance and sale of the Company common stock, the Company
options and the shares of the Company common stock issuable upon exercise of the
Company options to be issued pursuant to the registration statement;
(3) The 1,605,818 shares of the Company common stock, when issued
and distributed pursuant to the registration statement, will be validly issued,
fully paid and nonassessable shares of common stock of the Company;
(4) The 405,00 Company options, when issued and distributed
pursuant to the registration statement, will be validly issued options to
purchase fully paid and nonassessable shares of common stock of the Company;
(5) The 405,000 shares of the Company common stock, issuable upon
exercise of the Company options when issued and distributed pursuant to the
registration statement, will be validly issued, fully paid and nonassessable
shares of common stock of the Company;
(6) Based upon the current provisions of federal income tax laws
and regulations, and on current authoritative interpretations thereof, we are of
the opinion that the discussion in the prospectus under the caption "Federal
Income Tax Consequences" of the federal income tax laws relevant to the
prospective investors, although necessarily general, considers each material
federal income tax issue of significance to Internet Law stockholders and the
result which, more likely than not, would obtain under the laws and regulations
in effect as of the date hereof.
We hereby consent to the use of this opinion as an exhibit to the
registration statement and to the references to our firm in the prospectus.
Yours very truly,
/s/Sonfield & Sonfield
- ------------------------
SONFIELD & SONFIELD
<PAGE>
Exhibit 10.6 - Page 6
EXHIBIT 10.6
INDEMNIFICATION AGREEMENT
Agreement, effective as of March 30, 1999 between New Planet Resources,
Inc., a Delaware corporation ("Indemnifying Party")
WHEREAS, Planet and National previously entered into an Agreement and Plan
of Reorganization, dated as of March 25, 1999 (the "Reorganization Agreement"),
providing for the acquisition (the "Acquisition") of all of the outstanding
shares of capital stock of National by Planet;
WHEREAS, immediately after the Closing (as defined in the Reorganization
Agreement) of the Acquisition Planet intends to transfer all of its mineral
properties (as hereinafter defined) to New Planet in exchange for the issuance
of shares of New Planet Common Stock;
WHEREAS, Planet's board of directors expects to complete the Distribution
(as hereinafter defined) immediately after the Closing of the Acquisition; and
WHEREAS, the purpose of the Distribution is to make possible the
Acquisition by divesting Planet of the mineral properties with which National is
unwilling to combine, and this Distribution Agreement sets forth the various
agreements between Planet and New Planet relating to the divestiture of the
mineral properties by Planet.
NOW THEREFORE in consideration of the mutual promises and benefits to be
derived from this Agreement, New Planet and Planet hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 GENERAL. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
Agreement: This Indemnification Agreement as amended or supplemented
from time to time.
Affiliate: Affiliate of any Person shall mean any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agent: Any Person authorized to act and who acts on behalf of any other
Person with respect to the transactions contemplated by the Documents.
CERCLA shall mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Section 9601, et seq., as the same may be
amended from time to time.
Documents: This Agreement, the Registration Statement, together with any
exhibits, schedules or other attachments thereto.
Environmental Laws and Orders shall mean collectively, all Laws and Orders
relating to industrial hygiene, occupational safety conditions or environmental
conditions on, under or about property, including, without limitation, RCRA,
CERCLA and all other Laws and Orders relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals or industrial,
hazardous or toxic materials or wastes into the environment (including ambient
air, surface water, ground water, land surface or sub-surface strata) or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, chemicals
or industrial hazardous or toxic materials or wastes.
Indemnifiable Losses shall mean any and all losses, Liabilities, claims,
damages, penalties, fines, demands, awards and judgments, including reasonable
costs and expenses (including, without limitation, attorneys' fees and any and
all out-of-pocket expenses) whatsoever reasonably incurred in investigating,
preparing for or defending against any Actions or potential Actions involving an
Indemnifiable Loss, incurred by an Indemnitee.
Mineral Properties shall mean the following:
(a) Subsurface mineral rights on approximately 190 acres located
in the City of Mullan, Idaho. Title was acquired by issuance to real property
owners of one share of capital stock for each 25 square feet of surface owned.
In acquiring such mineral rights, the Company issued 361,739 shares of capital
stock as adjusted for subsequent stock splits and Planet merger. Conveyance of
title included, free of any additional stock issue, all subsurface rights lying
beneath adjacent streets and alleys where ownership rested with the grantor.
The acquisition of such mineral rights was completed in November of 1985.
(b) Lease agreement dated May 1, 1981, with the City of
Mullan (which supersedes a previous agreement dated December 31, 1971) whereby
Planet, as Lessee, has the right to mine subsurface minerals on approximately
200 acres owned by the City north of Osburn Fault for a period of 25 years
(subject to a renewal option for an additional 25 years), The City, as lessor,
received 20% of all royalty payments or other consideration received by Allied
from Hecla. In the event Allied enters in to a lease agreement for the
exploration and development of "City Property" south of the Osburn Fault, the
City shall receive 15% of the royalties received. No royalties have been paid
on "City Property" south of the fault.
Person: shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an association, a company, an unincorporated
organization, a government or any department, political subdivision or agency
thereof.
Planet Indemnitees shall mean Planet, National, the directors and officers
of Planet, National and each of the heirs, executors, successors and assigns of
any of the foregoing.
RCRA shall mean the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901, et seq., as the same may be amended from time to time.
ARTICLE II
INDEMNIFICATION
SECTION 2.1 INDEMNIFICATION BY NEW PLANET Subsequent to the Distribution
Date, except as otherwise specifically set forth in any provision of this
Distribution Agreement, New Planet shall indemnify, defend and hold harmless the
New Planet Indemnitees from and against any and all Indemnifiable Losses of the
New Planet Indemnitees arising out of, by reason of or otherwise in connection
with (a) the Mineral Properties, (b) the breach, whether before or after the
Distribution Date, by Planet of any provision of this Distribution Agreement or
(c) any Planet Liabilities.
SECTION 2.2 PROCEDURES FOR INDEMNIFICATION.
(a) If a claim or demand is made against an Indemnitee by any person who is
not a party to this Distribution Agreement (a "Third Party Claim") as to which
such Indemnitee is entitled to indemnification pursuant to this Distribution
Agreement, such Indemnitee shall notify the Indemnifying Party in writing, and
in reasonable detail, of the Third Party Claim promptly (and in any event within
20 business days) after receipt by such Indemnitee of written notice of the
Third Party Claim; provided, however, that failure to give such notification
within such 20 business day period shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure (except that the Indemnifying Party shall
not be liable for any expenses incurred during the period in which the
Indemnitee failed to give such notice). Thereafter, the Indemnitee shall deliver
to the Indemnifying Party, promptly (and in any event within 20 business days)
after the Indemnitee's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnitee relating to the Third Party
Claim.
(b) If a Third Party Claim is made against an Indemnitee, the Indemnifying Party
shall be entitled to participate in the defense thereof and, if it so chooses
and acknowledges in writing its obligation to indemnify the Indemnitee therefor,
to assume the defense thereof with counsel selected by the Indemnifying Party;
provided that such counsel is not reasonably objected to by the Indemnitee.
Should the Indemnifying Party so elect to assume the defense of a Third Party
Claim, the Indemnifying Party shall not be liable to the Indemnitee for legal or
other expenses subsequently incurred by the Indemnitee in connection with the
defense thereof. If the Indemnifying Party assumes such defense, the Indemnitee
shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party, it being understood that the Indemnifying Party shall
control such defense. The Indemnifying Party shall be liable for the fees and
expenses of counsel employed by the Indemnitee (i) for any period during which
the Indemnifying Party has failed to assume the defense thereof (other than
during the 20 business day period prior to the time the Indemnitee shall have
given notice of the Third Party Claim as provided above) or (ii) in the event
the Indemnitee reasonably determines, based on the advice of its counsel that
there shall exist a conflict of interest between the Indemnitee and the
Indemnifying Party or that there are defenses available to the Indemnitee that
are not available to the Indemnifying Party, the effect of which shall be to
make it impractical for the Indemnitee and the Indemnifying Party to be jointly
represented by the same counsel, in which case the Indemnifying Party shall be
liable for the fees and expenses of one counsel for all Indemnitees in any
single or series of related Actions. If the Indemnifying Party so elects to
assume the defense of any Third Party Claim, the Indemnitee shall cooperate with
the Indemnifying Party in the defense or prosecution thereof.
(c) If the Indemnifying Party acknowledges in writing liability for
indemnification of a Third Party Claim, then in no event will the Indemnitee
admit any liability with respect to, or settle, compromise or discharge, any
Third Party Claim without the Indemnifying Party's prior written consent;
provided, however, that the Indemnitee shall have the right to settle,
compromise or discharge such Third Party Claim without the consent of the
Indemnifying Party if the Indemnitee releases the Indemnifying Party from its
indemnification obligation hereunder with respect to such Third Party Claim and
such settlement, compromise or discharge would not otherwise adversely affect
the Indemnifying Party. If the Indemnifying Party acknowledges in writing
liability for indemnification of a Third Party Claim, the Indemnitee will agree
to any settlement, compromise or discharge of a Third Party Claim that the
Indemnifying Party may recommend that by its terms (i) obligates the
Indemnifying Party to pay the full amount of the liability in connection with
such Third Party Claim, (ii) releases the Indemnitee completely in connection
with such Third Party Claim and (iii) would not otherwise adversely affect the
Indemnitee; provided, however, that the Indemnitee may refuse to agree to any
such settlement, compromise or discharge and may assume the defense of such
Third Party Claim if the Indemnitee agrees (A) that the Indemnifying Party's
indemnification obligation with respect to such Third Party Claim shall not
exceed the amount that would have been required to be paid by or on behalf of
the Indemnifying Party in connection with such settlement, compromise or
discharge and (B) to assume all costs and expenses thereafter incurred in
connection with the defense of such Third Party Claim (other than those
contemplated by subclause (A) herein above).
(d) Notwithstanding the foregoing, the Indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be liable for the fees
and expenses of counsel incurred by the Indemnitee in defending such Third Party
Claim) if the Third Party Claim seeks an order, injunction or other equitable
relief or relief other than money damages against the Indemnitee which the
Indemnitee reasonably determines, based on the advice of its counsel, cannot be
separated from any related claim for money damages. If such equitable or other
relief portion of the Third Party Claim can be so separated from the claim for
money damages, the Indemnifying Party shall be entitled to assume the defense of
the portion relating to money damages.
SECTION 2.3 INDEMNIFICATION PAYMENTS. Indemnification required by this
Article III shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or loss,
liability, claim, damage or expense is incurred.
SECTION 2.4 INDEMNITIES. . The obligations of New Planet under this
Article III shall survive the sale or other transfer by either of them of any
assets or businesses or the assignment by either of them of any Liabilities,
with respect to any Indemnifiable Loss of any Indemnitee related to such assets,
businesses or Liabilities and shall be binding on the successors and assigns of
all, or substantially all, of their respective assets and business.
ARTICLE III
DISPUTE RESOLUTION
SECTION 3.1 INDEMNIFICATION AGREEMENT DISPUTES. In the event of a
controversy, dispute or claim arising out of, in connection with, or in relation
to the interpretation, performance, nonperformance, validity or breach of this
Agreement or otherwise arising out of, or in any way related to this Agreement,
including, without limitation, any claim based on contract, tort, statute or
constitution (singly, an "Agreement Dispute" and collectively, "Agreement
Disputes"), the party asserting the Agreement Dispute shall give written notice
to the other party of the existence and nature of such Agreement Dispute.
Thereafter, the general counsels (or other designated representatives) of the
respective parties shall negotiate in good faith for a period no less than 60
days after the date of the notice in an attempt to settle such Agreement
Dispute. If after such 60 calendar day period such representatives are unable to
settle such Agreement Dispute, any party hereto may commence arbitration by
giving written notice to all other party that such Agreement Dispute has been
referred to the American Arbitration Association for arbitration in accordance
with the provisions of this Article.
SECTION 3.2 ARBITRATION IN ACCORDANCE WITH AMERICAN ARBITRATION
ASSOCIATION RULES. All Agreement Disputes shall be settled by arbitration in
Houston, Texas, before a single arbitrator in accordance with the rules of the
American Arbitration Association (the "Rules"). The arbitrator shall be
selected by the mutual agreement of all parties, but if they do not so agree
within twenty (20) days after the date of the notice of arbitration referred to
above, the selection shall be made pursuant to the Rules from the panels of
arbitrators maintained by the American Arbitration Association. The arbitrator
shall be an individual with substantial professional experience with regard to
resolving or settling sophisticated commercial disputes.
SECTION 3.3 FINAL AND BINDING AWARDS. Any award rendered by the
arbitrator shall be conclusive and binding upon the parties hereto; provided,
however, that any such award shall be accompanied by a written opinion of the
arbitrator giving the reasons for the award. This provision for arbitration
shall be specifically enforceable by the parties and the decision of the
arbitrator in accordance therewith shall be final and binding, and there shall
be no right of appeal therefrom. The parties agree to comply with any award made
in any such arbitration proceedings that has become final in accordance with the
Rules, and agree to the entry of a judgment in any jurisdiction upon any award
rendered in such proceedings becoming final under the Rules.
SECTION 3.4 COSTS OF ARBITRATION. In the award the arbitrator shall
allocate, in his or her discretion, among the parties to the arbitration all
costs of the arbitration, including, without limitation, the fees and expenses
of the arbitrator and reasonable attorneys' fees, costs and expert witness
expenses of the parties. Absent such an allocation by the arbitrator, each party
shall pay its own expenses of arbitration, and the expenses of the arbitrator
shall be equally shared.
SECTION 3.5 SETTLEMENT BY MUTUAL AGREEMENT. Nothing contained in this
Article shall prevent the parties from settling any Agreement Dispute by mutual
agreement at any time.
SECTION IV
MISCELLANEOUS
SECTION 4.1 NO INCONSISTENT AGREEMENTS. New Planet will not on or after
the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with this Agreement or otherwise conflicts with
the provisions hereof. In the event New Planet has previously entered into any
agreement with respect to its securities granting any registration rights to any
Person, the rights granted to Planet hereunder do not in any way conflict with
and are not inconsistent with the rights granted to the holders of New Planet's
securities under any such agreements.
SECTION 4.2 SURVIVAL OF OBLIGATIONS. The obligations of the parties
under Sections 3 and 4 of this Agreement shall survive the termination for any
reason of this Agreement (whether such termination is by New Planet, by Planet,
upon the expiration of this Agreement or otherwise).
SECTION 4.3 SEVERABILITY. In case any one or more of the provisions or
part of the provision contained in this Agreement shall for any reason be held
to be invalid, illegal or unenforceable in any respect in any jurisdiction, such
invalidity, illegality or unenforceability shall be deemed not to affect any
other jurisdiction or any other provision or part of a provision of this
Agreement, but this Agreement shall be reformed and construed in such
jurisdiction as if such provision or part of a provision held to be invalid or
illegal or unenforceable had never been contained herein and such provision or
part reformed so that it would be valid, legal and enforceable in such
jurisdiction to the maximum extent possible. In furtherance and not in
limitation of the foregoing, New Planet and Planet each intend that the
covenants contained in Sections 4 and 5 shall be deemed to be a series of
separate covenants, one for each county of the State of Texas and one for each
and every other state, territory or jurisdiction of the United States and any
foreign country set forth therein. If, in any judicial proceeding, a court
shall refuse to enforce any of such separate covenants, then such enforceable
covenants shall be deemed eliminated from the provisions hereof for the purpose
of such proceedings to the extent necessary to permit the remaining separate
covenants to be enforced in such proceedings. If, in any judicial proceeding, a
court shall refuse to enforce any one or more of such separate covenants because
the total time thereof is deemed to be excessive or unreasonable, then it is the
intent of the parties hereto that such covenants, which would otherwise be
unenforceable due to such excessive or unreasonable period of time, be enforced
for such lesser period of time as shall be deemed reasonable and not excessive
by such court.
SECTION 4.4 ENTIRE AGREEMENT, AMENDMENT. This Agreement contains the
entire agreement between New Planet and Planet with respect to the subject
matter thereof. Planet acknowledges that it neither holds any right, warrant or
option to acquire securities of New Planet, nor has the right to any such
rights, warrants or options, except pursuant to the is Agreement. This
Agreement may not be amended, waived, changed, modified or discharged except by
an instrument in writing executed by or on behalf of the party against whom any
amendment, waiver, change, modification or discharge is sought.
<TABLE>
<CAPTION>
SECTION 4.5 NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing and shall be deemed to have duly given
if delivered by hand-delivery, registered first-class mail, postage prepaid, telex,
telecopier, or air courier guaranteeing overnight delivery as follows:
<S> <C>
TO NEW PLANET:. . . . . . . . . . . . . . TO PLANET
New Planet Resources, Inc.. . . . . . . . Planet Resources, Inc.
1415 Louisiana, Suite 3100. . . . . . . . One Park Ten Place, Suite 200
Houston, Texas 77002. . . . . . . . . . . Houston, Texas 77084
Attn: A.W. Dugan, President . . . . . . . Attn: Hunter M.A. Carr, President
WITH AN ADDITIONAL COPY BY LIKE MEANS TO: WITH AN ADDITIONAL COPY BY LIKE MEANS TO:
Sonfield & Sonfield . . . . . . . . . . . Planet Resources, Inc.
770 South Post Oak Lane . . . . . . . . . One Park Ten Place, Suite 200
Houston, Texas 77056. . . . . . . . . . . Houston, Texas 77084
Attn: Robert L. Sonfield, Jr., Esq. . . . Attn: Jonathan C. Gilchrist, Esq.
</TABLE>
and/or to such other persons and addresses as any party shall have
specified in writing to the other.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day if timely delivered to an air courier guaranteeing overnight
delivery.
SECTION 4.6 AsSIGNABILITY. This Agreement shall be assignable by either
party on the express consent of the other and shall be binding upon, and shall
inure to the benefit of, the successors and assigns of the parties.
SECTION 4.7 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Delaware.
SECTION 4.8 WAIVER AND FURTHER AGREEMENT. Any waiver of any breach of
any terms or conditions of this Agreement shall not operate as a waiver of any
other breach of such terms or conditions or any other term or condition, nor
shall any failure to enforce any provision hereof operate as a waiver of such
provision or of any other provision hereof. Each of the parties hereto agrees
to execute all such further instruments and documents and to take all such
further action as the other party may reasonably require in order to effectuate
the terms and purposes of this Agreement.
SECTION 4.9 HEADING OF NO EFFECT. The paragraph headings contained in
this Agreement are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
NEW PLANET RESOURCES, INC.
By: /a/A.W. Dugan
--------------
A.W. Dugan, President
PLANET RESOURCES, INC.
By: /s/Hunter M.A. Carr
---------------------
Hunter M.A. Carr, President
<PAGE>
Exhibit 10.8 - Page 5
EXHIBT 10.8
LEASE AGREEMENT WITH CITY OF MULLAN, IDAHO
ASSIGNMENT OF MINING LEASE
--------------------------
For value received, Planet Resources, Inc., a Delaware Corporation,
formally known as Allied Silver Lead Company, Assignor, hereby sells, assigns
and transfers to New Planet Resources Inc., a Delaware Corporation, Assignee,
all of Assignor's right, title and interest in and to that certain lease by and
between the City of Mullan, County of Shoshone, State of Idaho and Allied Silver
Lead Company, dated May 7, 198 1, a copy of which is attached hereto as Exhibit
"1".
By reason of this Assignment, Assignor assigns to the Assignee all of its
rights, privileges and duties arising or existing under said Lease. Assignee
hereby agrees to fully and faithfully perform all of Assignor's duties and
obligations under said Lease.
Dated this ___ day of ________________, 1999.
Planet Resources, Inc.
By: /s/Hunter M.A. Carr
---------------------
Hunter M.A. Carr, President
The above Assignment is hereby accepted by Assignee.
New Planet Resources, Inc.
By: /s/A.W. Dugan
--------------
A.W. Dugan
<PAGE>
STATE OF TEXAS )
)ss.
COUNTY OF HARRIS )
On this ___ day of __________, 1999, before me, the undersigned, a Notary
Public in and for the state aforesaid, personally appeared Hunter M.A. Carr
known or identified to me to be the President of Planet Resources, Inc., a
Delaware corporation and the officer that executed the foregoing instrument on
behalf of said corporation, and acknowledged to me that such corporation
executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notary the
day and year in this certificate first above written.
Notary Public in and for the State of Texas
Residing at:
My Commission expires:
STATE OF TEXAS )
)ss.
COUNTY OF HARRIS )
On this ___ day of __________, 1999, before me, the undersigned, a Notary
Public in and for the state aforesaid, personally appeared _________________ or
identified to me to be the Secretary of Planet Resources, Inc., a Delaware
corporation and the officer that executed the foregoing instrument on behalf of
said corporation, and acknowledged to me that such corporation executed the
same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notary the
day and year in this certificate first above written.
Notary Public in and for the State of Texas
Residing at:
My Commission expires:
<PAGE>
MINING LEASE
------------
THIS LEASE AGREEMENT, entered into this 7th day of May, 1981, by and
between the CITY OF MULLAN, a municipal corporation organized under the laws of
the State of Idaho, party of the first part and hereinafter referred to as the
"LESSOR", and ALLIED SILVER LEAD COMPANY, an Idaho Corporation, having its
principal place of business within the City of Mullan, County of Shoshone, State
of Idaho, party of the second part, hereinafter referred to as the "LESSEE".
W I T N E S S E T H:
-------------------
WHEREAS, the Lessor and the Lessee on the 28th day of December, 1970,
entered into that certain letter of intent wherein the Lessor desired to lease
to the Lessee the mineral rights owned by the Lessor and situated within the
exterior boundaries of the City of Mullan, Shoshone County, State-of Idaho, and
which letter of intent was later revised to a written mining lease, dated
December 3,-1971; and
WHEREAS, the parties now desire to enter into a new lease;
NOW THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. The Lessor does hereby let, lease and demise to the Lessee, for the
term of Twenty-Five (25) years pursuant to Idaho Code Section 50-234, the
exclusive right and privilege in the Lessee to mine for and extract any and all
minerals which may underlie the surface of the real- property within the
exterior geographical boundaries of the City of Mullan, County of Shoshone,
State of Idaho, which may be owned by said Lessor and consisting of
approximately 200 total acres and shown as outlined on Exhibit 'A" attached
hereto and by reference incorporated herein and shall be referred to as the
"Property* or "Properties".
2. It is understood that the Lessee and/or its assignees intend to
explore and develop the mineral rights owned by the Lessor and the Lessee
jointly. In this regard, it is specifically understood by and between the
parties hereto that the Lessee has entered into a letter of intent with Sunshine
Mining Company, a Delaware corporation, licensed to transact business within the
State of Idaho, for the exploration and development of the mining properties
lying north of the Osburn fault as defined by attached Exhibit "B", owned by the
Lessor and the Lessee and to receive from the exploration and development
therefrom certain royalties to be paid by the Sunshine Mining Company for
minerals extracted from the properties of the Lessor and the Lessee. In this
regard, it is understood and agreed by the parties hereto that in consideration
of the lease granted hereunder by the Lessor to the Lessee, that the Lessor
shall be entitled to receive twenty per cent (20%) of any and all royalty
payments, advance or otherwise, or other consideration which may be paid by the
Sunshine Mining Company or any other assignee of all or part of this Lease to
the Lessee. If and when the Lessor herein enters into any agreement for the
exploration and development of its properties south of the Osburn fault, the
Lessor shall be entitled to fifteen per cent (15%) of the returns from this
property.
3. It is understood and agreed between the Lessor and the Lessee, that
the Lessor, if it elects, shall be entitled to have one representative upon the
Board of Directors of the Lessee during the term of this lease agreement or any
extension or renewal thereof, so that the Lessor may be properly informed upon
the progress of the work to be performed by the Lessee and/or its assignee under
this agreement.
4. It is understood and agreed by the Lessee that in accordance with
Idaho Code Section 50-234 that the-surface of said property shall to the extent
provided by said statute in no wise be interfered with or disturbed, by the
Lessee in the mining and extraction of any and all minerals which may be found
within the property herein leased by the Lessor.
5. It is expressly understood and agreed that the Lessee may either
choose to explore and/or develop the mineral rights of the Lessor subject to
this agreement or to engage others to perform such exploration and/or
development. The Lessor hereby agrees that the Lessee shall have the right to
assign this agreement and all rights pertaining thereto.
6. It is expressly understood and agreed by and between the Lessor and
the Lessee that all work which may be performed under the terms of this lease
agreement by the Lessee and/or its assignee, shall be performed in such a manner
and at such depths below the surface as will not cause or result in any caving
or settlement of the surface or any damage to any buildings or other structures
on the surface and situated within the exterior boundaries of the City of
Mullan, County of Shoshone, State of Idaho.
7. To the extent permitted by the Laws of the State of Idaho, the Lessee
shall have the option to renew said lease upon the same terms and conditions for
an additional term of twenty-five (25) years from the date of expiration of this
lease agreement by giving written notice of said renewal on or before 180 days
from the expiration date of this lease agreement.
8. This lease of' subsurface minerals is intended to and does convey
according to the terms and conditions hereof to the Lessee and/or its assignee
during the term of this agreement and any renewal or extension thereof, all
veins, fissures, stringers or other mineral bearing structures' and all ores
therein containing precious or base metals, including but not limited to silver,
lead, zinc, gold and copper, together with the right to enter into the above
described property by such underground tunnels, drifts, crosscuts, laterals,
raises, winzes or other necessary or appropriate openings as in the judgment of
the Lessee and/or its assignees shall be necessary or convenient in its
exploration and/or development of the property of the Lessor.
IN WITNESS WHEREOF, The Lessor has caused these presents to be signed by
its duly authorized Mayor and attested to by its City Clerk, and the Lessee has
caused these presents to be signed by its duly authorized President and attested
thereto by its duly authorized Secretary, the day and year first above written.
ATTEST: CITY OF MULLAN
City Clerk Mayor
ATTEST: ALLIED SILVER LEAD COMPANY
Secretary President
<PAGE>
STATE OF IDAHO )
)ss.
COUNTY OF SHOSHONE )
On this ___ day of May, 1981, before me, the undersigned, a Notary Public
in and for the State of Idaho, personally appeared Wayne Koski and Barbara
Crnkovich, personally known to me to be Mayor and City Clerk, respectively, a
municipal corporation whose name is subscribed to the foregoing instrument and
acknowledged to me that said corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notary the
day and year in this certificate first above written.
Notary Public in and for the State of Texas
Residing at:
My Commission expires:
STATE OF IDAHO )
)ss.
COUNTY OF SHOSHONE )
On this ___ day of May, 1981, before me, the undersigned, a Notary Public
in and for the State of Idaho, personally appeared Elmer Almquist and Don
McClary, President and Secretary, respectively, of Allied Silver Lead Company, a
corporation whose name is subscribed to the foregoing instrument and
acknowledged to me that said corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notary the
day and year in this certificate first above written.
Notary Public in and for the State of Texas
Residing at:
My Commission expires:
<PAGE>
Exhibit 10.9 - Page 2
EXHIBIT 10.9
MINING DEED
-----------
THIS INDENTURE, made the ___ day of ____________. 1999, between Planet
Resources, Inc., a Delaware Corporation, party of the first part, and New Planet
Resources, Inc., a Delaware Corporation, of 14.15 Louisiana Street, Suite 3 100,
Houston, Texas, 77002-7360, party of the second part.
W I T N E S S E T H:
-------------------
That the said party of the first part, for and in consideration of the sum
of ONE DOLLAR ($ 1.00), lawful money of the United States of America, to it in
hand paid by the said party of the second part, the receipt whereof is hereby
acknowledged, has granted, bargained, sold, remised, released and forever
quitclaimed and by these presents does grant, bargain, sell, remise, release and
forever quitclaim unto said party of the second part, its heirs and assigns the
following:
The subsurface mineral rights set forth in Exhibit "A" attached hereto
as Exhibit A-1 through A-8.
Together with all the dips, spurs and angles, and also all the metals,
ores, gold and silver-bearing quartz rock and earth therein belonging thereto,
and all the rights, privileges and franchises thereto incident, appendant and
appurtenant, or therewith usually had and enjoyed; and also all and singular the
tenements, hereditaments and appurtenances thereto belonging or in anywise
appertaining, and the rents, issues and profits thereof, and also all the
estate, right, title, interest, property, possession, claim and demand
whatsoever, as well in law as in equity, of the said party of the first part,
of, in and to said premises, and every part and parcel thereof, with
appurtenances.
To have and to hold all and singular, the said premises, together with the
appurtenances and privileges thereto incident, unto the said party of the second
part, its heirs and assigns forever.
IN WITNESS WHEREOF,, the said party of the first part has hereunto
subscribed their names the day and year first above written.
Planet Resources, Inc.
By: /s/Hunter M.A. Carr
---------------------
Hunter M.A. Carr, President
Attest:
/s/
---
_________________, Secretary
<PAGE>
STATE OF TEXAS )
)ss.
COUNTY OF HARRIS )
On this ___ day of __________, 1999, before me, the undersigned, a Notary
Public in and for the state aforesaid, personally appeared Hunter M.A. Carr and
________________ known or identified to me to be the President and Secretary
respectively, of Planet Resources, Inc., a Delaware corporation and the officers
that executed the foregoing instrument on behalf of said corporation, and
acknowledged to me that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notary the
day and year in this certificate first above written.
Notary Public in and for the State of Texas
Residing at:
My Commission expires:
<PAGE>
Exhibit 23.1 - Page 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the use in this Registration Statement on Form SB-2 No.
33-76533 of our report dated August 3, 1999, relating to the financial
statements of Planet Resources, Inc., and to the reference to our Firm under the
caption "Experts" in the Prospectus.
/s/HARPER & PEARSON COMPANY
Houston, Texas
August 11, 1999
<PAGE>
Exhibit 27 - Page 1
EXHIBIT 27
FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted from the
financial statements as of and for the nine months ended June 30, 1999, and is
qualified in its entirety by reference to such financial statements. (In
thousands, except EPS.)
ITEM NUMBER . ITEM DESCRIPTION AMOUNT
- ------------- ------------------------------------------------------- --------
5-02(1) . . . Cash and cash items. $ 32,515
5-02(2) . . . Marketable securities 0
5-02(3)(a)(1) Notes and interest receivable-trade 0
5-02(4) . . . Allowances for doubtful accounts 0
5-02(6) . . . Inventory 0
5-02(9) . . . Total current assets 32,515
5-02(13). . . Property, plant and equipment 0
5-02(14). . . Accumulated depreciation 0
5-02(18). . . Total assets 32,515
5-02(21). . . Total current liabilities 0
5-02(22). . . Bonds, mortgages and similar debt 0
5-02(28). . . Preferred stock-mandatory redemption 0
5-02(29). . . Preferred stock-no mandatory redemption 0
5-02(30). . . Common stock 1
5-02(31). . . Other stockholder's equity 32,514
5-02(32). . . Total liabilities and stockholder's equity 32,515
5-03(b)1(a) . Net sales tangible products 0
5-03(b)1. . . Total revenues 0
5-03(b)2(a) . Cost of tangible goods sold 0
5-03(b)2. . . Total costs and expenses applicable to sales and revenues 0
5-03(b)3. . . Other costs expenses 3,760
5-03(b)5. . . Provision for doubtful accounts and notes 0
5-03(b)(8). . Interest and amortization of debt discount 0
5-03(b)(10) . Income before taxes and other items 0
5-03(b)(11) . Income tax expense 0
5-03(b)(14) . Income/loss continuing operations 0
5-03(b)(15) . Discontinued operations 0
5-03(b)(17) . Extraordinary items 0
5-03(b)(18) . Cumulative effect-changes in accounting principles 0
5-03(b)(19) . Net income or loss <3,760>
5-03(b)(20) . Earnings per share-primary <3.76>
5-03(b)(20) . Earnings per share-fully diluted 0
