AMENDED
SCHEDULE 14 C
INFORMATION STATEMENT PURSUANT TO SECTION 14 (C)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[X] Preliminary information statement
[ ] Definitive information statement
Confidential, for use of the Commission only (as permitted by Rule
14c-5(d)(2))
PLANET RESOURCES, INC.
(NAME OF COMPANY AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies: Not
Applicable.
(2) Aggregate number of securities to which transaction applies: Not
Applicable.
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined): Not Applicable.
(4) Proposed maximum aggregate value of transaction: Not Applicable.
(5) Total fee paid: Not Applicable.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: Not Applicable.
(2) Form, Schedule or Registration Statement No. : Not Applicable.
(3) Filing Party: Not Applicable.
(4) Date Filed: Not Applicable.
<PAGE>
[GRAPHIC OMITTED]
PLANET RESOURCES, INC.
ONE PARK TEN PLACE, SUITE 200
HOUSTON, TEXAS 77084
June 3, 1999
Dear Stockholder:
This Information Statement is being provided to inform you that the
holders of a majority of the outstanding common stock of Planet Resources,
Inc. (the "Company"), has delivered to the Company written consent to the
following actions:
1. Amending the Certificate of Incorporation of the Company to
change the name of the corporation to "Internet Law Library, Inc."
2. Amending the Certificate of Incorporation of the Company to
increase its authorized shares of common stock from 10,000,000 shares, par
value $0.001, to 30,000,000 shares, par value $0.001.
3. Amending the By Laws of the Company to increase the maximum
age a director and officer is permitted to serve from 70 to 80.
4. Approving the Company's 1999 Stock Option Plan;
5. Approving the Company 1999 Director Option Plan;
6. Approving the Company Employee Stock Purchase Plan; and
The actions taken by the holders of a majority of the outstanding common
stock will become effective twenty (20) days from the date hereof.
This Information Statement is being provided to you for information
purposes only. Your vote is not required to approve the Actions. This
Information Statement does not relate to an annual meeting or special meeting
in lieu of an annual meeting. You are not being asked to send a proxy and you
are requested not to send one.
Very truly yours,
/s/Jonathan C. Gilchrist
Jonathan C. Gilchrist
Secretary
<PAGE>
INFORMATION STATEMENT
OF
PLANET RESOURCES, INC.
NOTICE TO STOCKHOLDERS PURSUANT TO
SECTION 14(C) OF THE SECURITIES EXCHANGE ACT OF 1934
This Information Statement is being furnished to the holders of common
stock, par value $.001 per share (the "Company Common Stock"), of Planet
Resources, Inc., a Delaware corporation (the "Company") to inform you that the
Board of Directors of the Company and the holders of a majority of the
outstanding Company Common Stock have authorized, by written consent dated
March 31, 1999: (i) an amendment to the Certificate of Incorporation of the
Company to change the name of the corporation to "Internet Law Library, Inc.,"
(ii) an amendment to the Certificate of Incorporation of the Company to
increase its authorized shares of common stock from 10,000,000 shares, par
value $0.001, to 30,000,000 shares, par value $0.001, (iii) an amendment to
the By Laws of the Company to increase the maximum age a director and officer
is permitted to serve from 70 to 80, (iv) approval of the Company's 1999 Stock
Option Plan, (v) approval of the Company 1999 Director Option Plan, and
(iv) approval of the Company Employee Stock Purchase Plan.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO CHANGE NAME OF COMPANY
Pursuant to the Consent, the name of the Company will be changed from
"Planet Resources, Inc." to "Internet Law Library, Inc." The name change will
become effective upon the proper filing of Certificate of Amendment to the
Certificate of Incorporation
The decision to change the name of the Company was based on the desire of
management that the name of the Company reflect the Company's present business
purpose.
AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK THE COMPANY IS AUTHORIZED TO ISSUE
Pursuant to the Consent, the Certificate of Incorporation of the Company
will be amended to increase the number of shares of Common Stock the Company
is authorized to issue from 10 million shares, par value $.001 per share to 30
million shares, par value $.001 per share.
1999 STOCK OPTION PLAN
On March 30, 1999, the Board of Directors of the Company adopted the 1999
Stock Option Plan for the Company (the "Plan"). Under the Plan, the Option
Committee of the Board of Directors (a committee which consists of a minimum
of two members of the Board of Directors, none of whom may be an employee of
the Company) in its discretion may grant stock options to purchase common
stock of the Company (either incentive or non-qualified stock options) and
stock appreciation rights ("SARs") to officers and employees, including
directors who are employees, of the Company. Subject to certain limitations
set forth in the Plan, the Option Committee has discretion to determine the
terms and conditions upon which the options may be exercised. The Company has
reserved 300,000 shares of common stock for the grant of options under the
Plan, subject to anti-dilution provisions.
SUMMARY OF PLAN PROVISIONS
The following is a summary of the terms of the Plan. This summary is
qualified in its entirety by reference to the full text of the Plan.
Employees of the Company or any subsidiary of the Company who are
executive, administrative, professional or technical personnel with
responsibilities affecting the management, direction, development and
financial success of the Company or its subsidiaries are eligible to
participate in the Plan. As of the date of this Information Statement there
are no employees eligible to participate in the Plan.
Subject to certain limitations in the Plan, the Option Committee under
the Plan has the discretion from time to time to grant incentive stock
options, non-qualified options, stock appreciation rights ("SARs"), either
individually or in combination.
Stock options under the Plan give the optionee the right to purchase a
number of shares of the Company's common stock at future dates within ten
years of the date of grant. The exercise price may be the fair market value
of the stock on the date of grant or such other price as the committee may
determine, but with respect to incentive stock options, not less than 100% of
such fair market value or, if granted to an individual who owns stock
possessing more than 10% of the combined voting power of all classes of stock
of the Company, 110% of fair market value. The purchase price to be paid upon
exercise of the option may be paid in the committee's discretion: (i) in cash
or by certified check; (ii) by delivery of shares of the Company's common
stock or by authorizing the Company to retain shares of the Company's common
stock which would be issuable on exercise of the option or by certifying
shares of common stock for later delivery with a fair market value at the time
of exercise equal to the total option price; (iii) by delivery of a note; (iv)
by extension of credit by a broker-dealer; or (v) in the discretion of the
committee, by a combination of the methods described above. The fair market
value of shares of common stock on a particular date is defined as (i) the
closing price of the common stock as quoted on an established stock exchange
or a national market system as quoted on that date, (ii) a mean between the
highest and lowest bid and asked price per share of the common stock on the
National Association of Securities Dealers Automatic Quotation System
("NASDAQ") or as regularly quoted by a recognized securities dealer for the
last trading day before such date or (iii) in the absence of a reliable
market, by a formula fixed by the Board of Directors.
The Option Committee may grant SARs in conjunction with all or part of
any stock option granted under the Plan and the exercise of such an SAR shall
require the cancellation of a corresponding portion of the stock option (and
the exercise of a stock option shall result in a corresponding cancellation of
the SAR). In the case of a stock option other than an incentive stock option,
such SARs may be granted either at or after the time of grant of such stock
option. In the case of an incentive stock option, such SARs may be granted
only at the time of grant of such stock option. An SAR may also be granted on
a stand alone basis.
The term of an SAR shall be established by the Option Committee. If
granted in conjunction with a stock option, the SAR shall have a term which is
the same as the period for the stock option and shall be exercisable only at
such time or times and to the extent the related stock options would be
exercisable. An SAR which is granted on a stand alone basis shall be for such
period and shall be exercisable at such times and to the extent determined by
the Option Committee.
Upon the exercise of an SAR, an employee shall be entitled to receive an
amount in cash, shares of common stock or both as determined by the Option
Committee equal in value to the excess of the fair market value per share of
the common stock over the exercise price per share of common stock subject to
the option multiplied by the number of shares of common stock in respect of
which the SAR is exercised. In the case of an SAR granted on a stand-alone
basis, the Option Committee shall specify the value to be used.
The Option Committee has the right to amend any provision of an option or
SAR at any time after issuance; provided, however, no amendment may be made to
increase the exercise price, extend the date on which such option or SAR or
any installment thereof shall become exercisable or shorten the term of the
option or SAR without the consent of the holder.
The Plan permits an optionee to exercise any outstanding option or SAR
during the three months after termination of employment, unless the optionee's
employment is terminated for cause (as determined by the committee) or is
terminated without the consent of the Company. A holder's legal
representatives have twelve months after the holder's death to exercise an
outstanding option or SAR. In either instance, such option or SAR may be
exercised only to the extent that the option or SAR was exercisable on the
date of termination and only prior to the time the option or SAR expires. If
the holder terminates employment due to retirement, the exercise period of an
outstanding option or SAR which is exercisable on the retirement date shall
continue for a period of sixty months after such termination or the remainder
of the option period, whichever is less. The Company may in its discretion
cause an option to be forfeited if, at any time more than three months after
termination of employment due to retirement, the holder engages in detrimental
activity, as defined in the Plan.
The Board is authorized to amend or terminate the Plan. Stockholder
approval will be required for a Plan amendment only if and to the extent such
approval is required (i) to maintain compliance of the Plan with Rule 16b-3
under the Securities and Exchange Act of 1934; or (ii) by Section 422 of the
United States Internal Revenue Code, as amended (the "Code"). If not sooner
terminated, the Plan will terminate on, and no options or SARs will be granted
after, June 30, 2004.
FEDERAL INCOME TAX CONSEQUENCES
The following summary is limited to United States federal income tax
laws, as in effect on the date of this Information Statement, applicable to
persons who are both citizens and residents of the United States. This
summary does not purport to cover any foreign, state or local taxes.
Some of the options issued under the Plan are intended to constitute
"incentive stock options" within the meaning of Section 422 of the Code, while
other options granted under the Plan are non-qualified stock options. The
Code provides for tax treatment of stock options qualifying as incentive stock
options that may be more favorable to employees than the tax treatment
accorded non-qualified stock options. Generally, upon the exercise of an
incentive stock option, the optionee will recognize no income for U.S.
federal income tax purposes. The difference between the exercise price of the
incentive stock option and the fair market value of the stock at the time of
purchase is an item of tax preference which may require payment of an
alternative minimum tax. On the sale of shares acquired by exercise of an
incentive stock option (assuming that the sale does not occur within two years
of the date of grant of the option or within one year from the date of
exercise) any gain will be taxed to the optionee as long-term capital gain.
In contrast, upon the exercise of a non-qualified option, the optionee
recognizes taxable income (subject to withholding) in an amount equal to the
difference between the then fair market value of the shares on the date of
exercise and the exercise price. Upon any sale of such shares by the
optionee, any difference between the sale price and the fair market value of
the shares on the date of exercise of the non-qualified option will be treated
generally as capital gain or loss. Under rules applicable to U.S.
corporations, no deduction is available to the employer corporation upon the
grant or exercise of an incentive stock option (although a deduction may be
available if the employee sells the shares so purchased before the applicable
holding period expires), whereas, upon exercise of an non-qualified stock
option, the employer corporation is entitled to a deduction in an amount equal
to the income recognized by the employee.
Except with respect to death, an optionee has three months after
termination of employment in which to exercise an incentive stock option and
retain favorable tax treatment at exercise. An option exercised more than
three months after an optionee's termination of employment due to retirement
cannot qualify for the tax treatment accorded incentive stock options. Such
option would be treated as a non-qualified stock option instead. An optionee
who retires from employment and exercises an incentive stock option during the
three months following his or her termination should qualify to receive
incentive stock option tax treatment for that option.
SARs are taxed as compensation to the employee upon the exercise of the
SARs. The employee will recognize ordinary taxable income in the amount
received upon the exercise of an SAR. Generally, the employer corporation
will realize a deduction for compensation paid upon the exercise of an SAR.
1999 DIRECTOR OPTION PLAN
The 1999 Director Option Plan (the "Director Plan") was approved by the
Board of Directors on March 30, 1999 subject to stockholder approval. The
Director Plan provides for automatic grants of stock options to non-employee
directors. As of the date of this Information Statement, there are five
directors of which three are non-employee directors and eligible to
participate in the Director Plan. The Company has reserved 200,000 shares of
common stock for the grant of options under the Director Plan, subject to
anti-dilution adjustments.
SUMMARY OF PLAN PROVISIONS
The following is a summary of the terms of the Director Plan. This
summary is qualified in its entirety by reference to the full text of the
Director Plan.
The Director Plan provides for the automatic grant to non-employee
directors of stock options to purchase shares of common stock of the Company.
The automatic grants of stock options consist of an initial grant upon the
election of a director after March 30, 1999 or, for those non-employee
directors serving on August 14, 1996, the adoption of the Plan (the "Initial
Grant") and a subsequent grant ("Subsequent Grants") at the time of the annual
meeting of stockholders each year.
Stock options under the Director Plan give the optionee the right to
purchase a number of shares of the Company's common stock at future dates
within ten years of the date of the grant. Each Initial Grant shall become
exercisable in installments cumulatively as follows: on the date which is the
six month anniversary of the date of grant, for the greater of 1/8th of the
shares of common stock subject to the Initial Grant or 1/48th of the shares of
common stock subject to the Initial Grant multiplied by the number of full
months that the Director has served as a director of the Company on the date
of such six month anniversary. Each Subsequent Grant shall become fully
exercisable on the first anniversary of the date of grant.
The exercise price of each option granted under the Director Plan is 100%
of the fair market value of the stock on the date of grant. The purchase
price to be paid upon exercise of the stock option grants may be paid by (i)
cash, (ii) check, (iii) other shares of common stock of the Company which (x)
in the case of shares of common stock acquired upon the exercise of a stock
option granted under the Director Plan have been owned for more than six
months on the date of surrender, and (y) have a fair market value on the date
of surrender equal to the aggregate exercise price of the shares of common
stock as to which the option is to be exercised, (iv) the sale or loan
proceeds from the sale or pledge of all or part of the shares of common stock
to be received upon exercise of the option, or (v) any combination of these
methods. The fair market value of shares of common stock on a particular date
is defined as (i) the closing price of the common stock as quoted on an
established stock exchange or a national market system as quoted on such date,
(ii) a mean between the highest and lowest bid and asked price per share of
the common stock on the National Association of Securities Dealers Automatic
Quotation System ("NASDAQ") or as regularly quoted by a recognized securities
dealer for the last trading day before such date, or (iii) in the absence of a
reliable market by a formula fixed by the Board of Directors.
The Director Plan permits an optionee to exercise any outstanding option
during the three months after termination as a director, other than
termination as a result of death or total and permanent disability To the
extent an optionee terminates as a director as a result of death or total and
permanent disability, the optionee or the optionee's representative has twelve
months from the date of death or termination to exercise the options granted
under the Director Plan. An outstanding option may only be exercised to the
extent it was exercisable on the date of termination.
The Board of Directors may amend or terminate the Director Plan subject,
to the extent required by Rule 16b-3 under the Securities Exchange Act of
1934, to stockholder approval. No amendment may impair the rights of an
option holder of an existing option without his or her consent. If not sooner
terminated, the Plan will terminate on and no options may be granted after May
21, 2007.
FEDERAL INCOME TAX CONSEQUENCES
The following summary is limited to United States federal income tax
laws, as in effect on the date of this Information Statement, applicable to
persons who are both citizens and residents of the United States. This
summary does not purport to cover any foreign, state or local taxes.
The options granted under the plan will be non-qualified stock options.
Upon the exercise of a non-qualified option the optionee recognized taxable
income (subject to withholding) in an amount equal to the difference between
the then fair market value of the shares on the date of exercise and the
exercise price. Upon any sale of such shares by the optionee, any difference
between the sale price and the fair market value of the shares on the date of
exercise of the non-qualified option will be treated generally as capital gain
or loss. Under the rules applicable to U.S. corporations, no deduction is
available to the corporation until the exercise of a non-qualified stock
option at which time the corporation is entitled to a deduction in the amount
of the income recognized by the optionee.
EMPLOYEE STOCK PURCHASE PLAN
Subject to the approval of the stockholders, the Board of Directors
approved an Employee Stock Purchase Plan on March 30, 1999 and approved the
form of the Employee Stock Purchase Plan on February 19, 1997 (the "Stock
Purchase Plan"). The Stock Purchase Plan affords eligible employees of the
Company the option to purchase shares of the common stock of the Company at a
discount. The Board of Directors has reserved 100,000 shares of common stock
for purchase under the terms of the Stock Purchase Plan, subject to
anti-dilution adjustments. The Stock Purchase Plan is intended to qualify as
an "employee stock purchase plan" under Section 423 of the Internal Revenue
Code.
SUMMARY OF PLAN PROVISIONS
The following is a summary of the terms of the Stock Purchase Plan. This
summary is qualified in its entirety by reference to the full text of the
Stock Purchase Plan.
The Stock Purchase Plan will be open to all eligible employees of the
Company. Eligible employees are all part-time and full-time employees of the
Company who are regularly scheduled to work more than 20 hours per week and
have completed six consecutive months of employment with the Company at an
Offering Commencement Date. No employee will be eligible if, after the grant
of the option under the Stock Purchase Plan, (i) in the aggregate, the
employee owns or has options to purchase more than 5% of the outstanding
shares of common stock of the Company or (ii) the employee's right to purchase
stock under all employee stock purchase plans of the Company would accrue at a
rate which would exceed $25,000 per calendar year.
The Board of Directors will establish a date to begin each offering under
the Stock Purchase Plan. Offering Commencement Dates can be set by the Board
of Directors no more often then once every six months. Each offering will
last six months.
During each offering, each eligible employee will be able to elect to
apply up to 5% of his base earnings or salary during the six month period of
the offering to purchase shares of common stock at a purchase price equal to
the lower of (i) 85% of the fair market value of the stock at the Offering
Commencement Date, or (ii) 85% of the fair market value of the stock at the
sixth month anniversary of the Offering Commencement Date which will be the
Offering Termination Date. For purposes of the Stock Purchase Plan, the fair
market value of shares of common stock on a particular date is defined as the
closing sales price per share of the common stock on NASDAQ as reported for
that date, or if there shall have been no reported prices for that date, the
closing price on the last preceding date on which a sale or sales were
effected on the NASDAQ. If the common stock is not admitted to trading on
NASDAQ on the Offering Commencement Date or Offering Termination Date, fair
market value is determined by the Board of Directors of the Company. The
amount of the employee contributions are applied to the purchase price of the
stock on the Offering Termination Date.
The Board of Directors will have the right to terminate or amend the
Stock Purchase Plan, provided, however, the stockholders must approve any
amendment (i) to increase the maximum number of shares of common stock which
may be issued under the Stock Purchase Plan or (ii) to change the employees
who are eligible to purchase common stock under the terms of the Stock
Purchase Plan. No amendment or termination of the Stock Purchase Plan will
terminate or affect any outstanding options to purchase stock. The Stock
Purchase Plan has no fixed termination date.
FEDERAL INCOME TAX CONSEQUENCES
The following summary is limited to United States federal income tax
laws, as in effect on the date of this Information Statement, applicable to
persons who are both citizens and residents of the United States. This
summary does not purport to cover any foreign, state or local taxes.
Enrollment or Purchase of Shares under the Stock Purchase Plan. No
--------------------------------------------------------------------
federal income tax consequences arise at the time of a participating
employee's enrollment in the Stock Purchase Plan or upon the purchase of
common stock under the Stock Purchase Plan. However, as discussed below, if a
participating employee disposes of common stock acquired under the Stock
Purchase Plan, the employee will have the federal income tax consequences
described below in the year of disposition. Amounts withheld by payroll
deduction are subject to federal income tax as though such amounts had been
paid in cash.
Dispositions Prior to End of Holding Period. If a participating employee
-------------------------------------------
disposes of common stock purchased under the Stock Purchase Plan within two
years after the enrollment date or within one year after the transfer of the
common stock to the employee (the "Holding Period"), the employee will have
included in his or her compensation taxable as ordinary income in the year of
disposition an amount equal to the difference between (A) the fair market
value of the common stock on the date of purchase of the shares and (B) the
price paid by the employee for the shares, regardless of the price received in
connection with the disposition of the shares. The amount of such ordinary
income is added to the purchase price and becomes part of the cost basis for
that common stock for federal income tax purposes. If the disposition of the
common stock involves a sale or exchange, the employee generally will also
realize a short-term capital gain or loss equal to the difference between the
employee's cost basis (calculated pursuant to the preceding sentence) and the
proceeds from the sale or exchange.
Dispositions after the End of the Holding Period. If a participating
----------------------------------------------------
employee disposes of common stock purchased under the Stock Purchase Plan
after the end of the Holding Period or if the employee dies at any time while
owning such common stock, the employee (or his or her estate) will have
included in their compensation taxable as ordinary income in the year of
disposition (or death) an amount equal to the lesser of (1) the excess of the
fair market value of the common stock on the enrollment date over the purchase
price paid by the employee for the shares, or (2) the excess of the fair
market value of the common stock on the date of disposition (or death) over
the purchase price paid by the employee for the shares. The amount of any
such ordinary income is added to the cost basis of that common stock for
federal income tax purposes. The cost basis is therefore the sum of the
purchase price of the common stock and the ordinary income recognized from the
formula above. If the disposition of the common stock involves a sale or
exchange, the employee will also realize a long-term capital gain or loss
equal to the difference between his or her cost basis (calculated pursuant to
the preceding sentence) and the proceeds from the sale or exchange.
Tax Consequences to the Company. The Company is not entitled to a tax
----------------------------------
deduction upon the grant, exercise, purchase or subsequent transfer of shares
of common stock acquired on the purchase date, provided the participating
employee holds the shares received for the Holding Period. If the employee
transfers the common stock before the end of that period, the Company will
have a deduction at the time the employee recognizes ordinary income in an
amount equal to the amount of ordinary income such person is required to
recognize as the result of such transfer during that period; provided,
however, that the Company may not be entitled to the deduction to the extent
that the employee's compensation (including the ordinary income that the
employee is required to recognize as a result of such transfer) exceeds $1
million.
A COPY OF THE COMPANY'S FORM 10-KSB MAY BE OBTAINED BY WRITTEN REQUEST
FROM JONATHAN C. GILCHRIST, ESQ., ONE PARK TEN PLACE, SUITE 200, HOUSTON,
TEXAS 77084.
AMENDMENT TO BY LAWS
Pursuant to the Consent the By Laws of the Company will be amended to
increase the maximum age of officers and directors from 70 years to 80 years.
The decision to amend the By Laws was based on the desire of management to
include the persons of significant business experience and not eliminate their
eligibility because of age.
Annex A - Page 2
Annex A - Page 1
ANNEX A
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 APRIL 19, 1999
PLANET RESOURCES, INC.
1,605,818 SHARES OF COMMON STOCK
We will own all of the assets of Planet Resources, Inc. which are
subsurface mineral rights in the City of Mullan, Idaho.
New Planet Resources, Inc.
1415 Louisiana, Suite 3100 This is our initial public offering, and no
public market currently exists for our shares.
Houston, Texas 77002
Any person who (i) owned shares of Planet on the 24th day of March, 1999
and still owned the shares on April 14, 1999, or (ii) purchased shares of
Planet in the open market prior to the close of business on April 14, 1999
will receive New Planet Common Stock in the Distribution.
As a Planet stockholder or optionholder you will pay no consideration for the
shares of our Common Stock and our options to be received by you in the
Distribution. There is currently no public trading market for our shares of
Common Stock.
Proposed Trading Symbol:
Over-The-Counter Bulletin Board ("OTCBB") -- PLRS
_____________________________________
The Shares Involve a High Degree of Risk. See "Risk Factors" Beginning on
Page 10.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
April ___, 1999.
2
Annex A - Page 2
NEW PLANET, INC. PROSPECTUS
TABLE OF CONTENTS
AVAILABLE INFORMATION 4
CAUTIONARY STATEMENTS 5
PROSPECTUS SUMMARY 6
Overview 6
New Planet 6
The Offering 7
Certain Tax Considerations 7
New Planet Stock Option Plans 7
Expenses 7
Risk Factors 8
RISK FACTORS 9
Absence of Prior Trading Market 9
Indemnification Obligations 9
Lack of Business to be Conducted by New Planet 9
Absence of Dividends on Common Stock 9
Voting Control; Potential Anti-Takeover Effect 9
Requirements of Current Prospectus and State Blue Sky Registration in
Connection with the Exercise of the New Planet Options Which May Not Be
Exercisable and May Therefore Be Valueless 10
Exercise of New Planet Options May Have Dilutive Effect on Market 11
Additional Authorized Shares Available for Issuance May Adversely Affect the
Market 11
Shares Eligible for Future Sale May Adversely Affect the Market 11
Dependence on Key Personnel 11
Year 2000 Risk 12
USE OF PROCEEDS 12
CAPITALIZATION 12
THE DISTRIBUTION 12
Terms of the Distribution Agreement 13
Manner of Effecting the Distribution 13
Listing of New Planet Common Stock; Restrictions on Resale 13
Treatment of Indebtedness 13
Expenses 14
Indemnification and Insurance 14
Terms of the Indemnification Agreement 14
CERTAIN FEDERAL INCOME TAX CONSEQUENCES 14
General 14
Taxation of Stock as a Dividend 15
Taxpayer Relief Act 16
Backup Withholding 16
Certain State Tax Consequences 16
DIVIDEND POLICY 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 17
Year 2000 17
Cautionary Statement Regarding Forward Looking Statements 18
BUSINESS 18
General 18
Properties 18
Employees 18
Legal Proceedings 18
MANAGEMENT 19
EXECUTIVE AND DIRECTOR COMPENSATION 19
THE NEW PLANET STOCK INCENTIVE PLAN 19
General Provisions of the Stock Incentive Plan 20
Stock Options and Stock Appreciation Rights 20
Restricted Stock 21
Tax Information 21
PRINCIPAL STOCKHOLDERS OF NEW PLANET 22
DESCRIPTION OF NEW PLANET CAPITAL STOCK 23
Authorized Capital Stock 23
New Planet Preferred Stock 23
New Planet Common Stock 23
New Planet Common Stock Options 23
SHARES ELIGIBLE FOR FUTURE SALE 26
LEGAL MATTERS 27
EXPERTS 27
INDEX TO FINANCIAL STATEMENTS F - 28
<PAGE>
AVAILABLE INFORMATION AVAILABLE INFORMATION
New Planet has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the shares of New Planet Common Stock described in this
Prospectus. This Prospectus, which is a part of the Registration Statement,
does not contain all of the information set forth in the Registration
Statement or the exhibits and schedules thereto, certain portions having been
omitted pursuant to the rules and regulations of the Commission. Statements
made in this Prospectus as to the contents of any contract or other document
are not necessarily complete with respect to each such contract or other
document filed with the Commission as an exhibit to the Registration
Statement. Reference is made to such exhibits for a more complete description
of the matter involved, and each such statement shall be deemed qualified in
its entirety by such reference.
The Registration Statement and the exhibits and schedules thereto filed with
the Commission may be inspected and copied (at prescribed rates) at the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. Such reports and other information can
be reviewed through the Commission's Electronic Data Gathering Analysis and
Retrieval System, which is publicly available through the Commission's Web
site (http://www.sec.gov).
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits thereto. Statements contained in this
Prospectus as to the contents of any contract or other document referred to
are not necessarily complete, and in each instance reference is made to the
copy of such contract or other document filed as an exhibit to the
Registration Statement for a more complete description of the matter involved,
each such statement being qualified in its entirety by such reference. The
Company will provide without charge to each person who receives this
Prospectus, upon written or oral request of such person, a copy of any of the
information that is incorporated by reference herein (excluding exhibits to
the information that is incorporated by reference unless the exhibits are
themselves specifically incorporated by reference) by contacting New Planet at
1415 Louisiana, Suite 3100, Houston, Texas 77002, Attention: Chief Financial
Officer, telephone (713) 658-1142.
Annex A - Page 5
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 NEW
PLANET, PLANET 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 NEW PLANET OR PLANET SINCE THE DATE OF THIS PROSPECTUS.
<PAGE>
CAUTIONARY STATEMENTS CAUTIONARY STATEMENTS
This Prospectus contains statements relating to future results of New
Planet and Planet (including certain projections and business trends) that are
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995 (the "Litigation Reform Act"). Section 27A(b)(2)(D) of the
Securities Act and Section 21E(b)(2)(D) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as promulgated by the Litigation Reform
Act, 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 New Planet and
Planet made with the Commission.
When used in this Prospectus with respect to New Planet and Planet 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." New Planet and Planet do not undertake
any obligation to publicly release any revisions to these forward-looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
Annex A - Page 27
PROSPECTUS SUMMARY PROSPECTUS SUMMARY
This Prospectus is being furnished to stockholders of Planet together
with the Information Statement. The following summary is qualified in its
entirety by the more detailed information and financial statements, including
the notes thereto, appearing elsewhere in this Prospectus. Planet
stockholders are urged to read this Prospectus in its entirety. Except where
otherwise indicated, the description of New Planet and its businesses
contained herein assumes the completion of the Distribution and the
Acquisition.
OVERVIEW Overview
Prior to the Distribution, Planet's Mineral Properties will be
transferred or contributed to New Planet, a wholly-owned subsidiary of Planet,
and all of the New Planet Common Stock and New Planet Options will be
distributed to the stockholders and optionholders of Planet at the rate of one
share of New Planet Common Stock per share of Planet Common Stock and one New
Planet Common Stock Purchase Option per Common Stock Purchase Option
outstanding as of the Distribution Record Date. Planet's only remaining
business then will be owned by New Planet. National will continue its
corporate existence under the laws of the State of Texas as a wholly owned
subsidiary and the only material asset of Planet. As a result of the
Distribution, New Planet will be an independent, publicly-traded company
owning the Mineral Properties and owned by the stockholders of Planet as of
the Distribution Record Date. Immediately following the Acquisition, the name
of New Planet will be changed to "Planet Resources, Inc" and the Name of
Planet will be changed to "National Law Library, Inc."
NEW PLANET New Planet
New Planet is currently a wholly-owned subsidiary of Planet incorporated
under the laws of the State of Delaware. By virtue of the restructuring of
Planet as part of the Distribution, all of the Mineral Properties of Planet,
will be contributed to New Planet prior to the Distribution. New Planet
Common Stock and New Planet Options will be distributed to the stockholders
and optionholders of Planet. 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. Following the
Distribution, New Planet's principal executive offices and phone number will
be the same as Planet's present address and number, indicated above. New
Planet will make application to quote the New Planet Common Stock on the OTCBB
under the symbol "PLRS."
New Planet is treated for accounting purposes in the Distributions as the
continuing reporting entity with respect to the historical Planet business in
light of, among other factors, (i) all of Planet's business operations being
continued by New Planet after the Distributions, (ii) the stockholders of
Planet before, and New Planet after, the Distributions being identical, (iii)
the respective Boards of Directors of Planet before, and New Planet after, the
Distributions being identical in composition, number and tenure, and (iv) the
management of Planet before, and New Planet after, the Distribution being
identical.
Distribution. The Distribution will be effected after the Acquisition. On
the Distribution Date, Planet will distribute one New Planet share for each
Planet share outstanding. Any person who (i) owned shares of Planet on the
24th day of March, 1999 and still owned the shares on April 14, 1999, or (ii)
purchased shares of Planet in the open market prior to the close of business
on April 14, 1999 will receive New Planet Common Stock in the Distribution.
The Distribution will not take place unless all of the conditions to effecting
the Acquisition (other than the completion of the Distribution) have been
fulfilled. Planet's transfer agent, Atlas Stock Transfer Corporation, will
act as the Distribution Agent for the Distribution and will deliver
certificates for New Planet Common Stock as soon as practicable to holders of
record of Planet Common Stock. All shares of New 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,
New Planet will be an independent, publicly-traded company, and it is
contemplated that the shares of New Planet Common Stock will be quoted on the
OTCBB under the symbol "PLRS." See "The Distribution -- Manner of Effecting
the Distribution; Listing of New Planet Common Stock."
Acquisition. Under the terms of the Reorganization Agreement as approved
by the stockholders of Planet and National and the satisfaction or waiver of
the other conditions to the Acquisition, Planet will acquire all of the
outstanding capital stock of National, with National continuing as a wholly
owned subsidiary of Planet. Because National 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 of Planet by
National.
THE OFFERING The Offering
This Prospectus covers up to 1,605,818 shares of common stock, par value
$.001 per share ("New Planet Common Stock"), of New Planet, Inc and 405,000
options to ("New Planet Options") purchase shares of New Planet Common Stock.,
a Delaware corporation ("New Planet"). This Prospectus is being furnished to
the stockholders and option holders of Planet Resources, Inc., a Delaware
corporation ("Planet"), the sole stockholder of New Planet, in connection with
the proposed distribution (the "Distribution") to Planet's stockholders of all
the outstanding shares of New Planet Common Stock, pursuant to the terms of an
Agreement and Plan of Distribution, dated as of March 30, 1999, by and between
Planet and New Planet (the "Distribution Agreement"). A copy of the
Distribution Agreement is attached as Annex B to the Information Statement
(the "Information Statement") of Planet relating to the Distribution and
Acquisition (as defined below) which accompanies this Prospectus. Planet is
proposing to make the Distribution in connection with and as part of a
proposed reorganization that also involves the acquisition by Planet of
National Law Library, Inc., a Texas corporation ("National") (the
"Acquisition"), the Acquisition took place, pursuant to an Agreement and Plan
of Reorganization by and between National and Planet dated as of March 25,
1999 (the "Reorganization Agreement"). In connection with the Acquisition,
New Planet will change its name to "Planet Resources, Inc." The completion of
the Acquisition (and, in the case of Planet, the Distribution) has been
approved by the stockholders of both Planet and National.
One share of New Planet Common Stock and New Planet Options will be
distributed for each share of common stock of Planet, par value $.001 per
share (the "Planet Common Stock"), and each option to purchase one share of
Planet Common Stock ("Planet Options") for a price of $0.15 per share issued
and outstanding on the 24th date of March 1999, the date established by the
Board of Directors of Planet for determining the total number of shares
distributed to stockholders of record entitled to receive New Planet Common
Stock in the Distribution (the "Distribution Record Date"). Any person who
(i) owned shares of Planet on the 24th day of March, 1999 and still owned the
shares on April 14, 1999, or (ii) purchased shares of Planet in the open
market prior to the close of business on April 14, 1999 will receive New
Planet Common Stock in the Distribution.
CERTAIN TAX CONSIDERATIONS Certain Tax Considerations
Planet 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 Planet, New Planet nor their stockholders will
recognize any gain or loss (i) upon the receipt by New Planet of the Mineral
Properties from Planet in exchange for the New Planet Common Stock and New
Planet Options, or (ii) upon receipt by Planet stockholders of the New Planet
Common Stock and New Planet Options in the Distribution. See "Certain Federal
Income Tax Consequences."
NEW PLANET STOCK OPTION PLANS New Planet Stock Option Plans
The New Planet Board of Directors has also adopted the New Planet Stock
Incentive Plan Option Plan (the "Stock Incentive Plan"), pursuant to which New
Planet will be able to make stock incentive awards in the future. The Stock
Incentive Plan was adopted by the Board of Directors and was approved by
Planet as the sole stockholder of New Planet prior to the Distribution. See
"The New Planet Stock Incentive Plan." New Planet has reserved 500,000 shares
of New Planet Common Stock under the Stock Incentive Plan.
EXPENSES Expenses
Each of National, on the one hand, and Planet and New Planet, on the
other hand, will incur expenses in connection with the Acquisition and
Distribution. The fees and expenses of Planet and New Planet are currently
estimated to be approximately $30,000 with respect to the Distribution and
approximately $20,000 with respect to the Acquisition.
RISK FACTORS Risk Factors
New Planet stockholders should carefully consider certain risks in
evaluating the New Planet Common Stock to be received in the Distribution.
See "Risk Factors."
<PAGE>
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 New Planet before making any investment decisions with
respect to the New 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. The
Company'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.
ABSENCE OF PRIOR TRADING MARKET Absence of Prior Trading Market
There is no existing trading market for the New Planet Common Stock 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 New
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 New 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.
INDEMNIFICATION OBLIGATIONS Indemnification Obligations
The Distribution Agreement and the Indemnification Agreement, indemnify
National 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."
LACK OF BUSINESS TO BE CONDUCTED BY NEW PLANET Lack of Business to be
Conducted by New Planet
Before the Distribution Date , Planet 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 Absence of Dividends on Common Stock
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. Planet has never paid cash
dividends on its Common Stock. See "Description of New Planet Capital Stock"
and "Dividend Policy".
VOTING CONTROL; POTENTIAL ANTI-TAKEOVER EFFECT Voting Control; Potential
Anti-Takeover Effect
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 the Common
Stock pursuant to the New Planet Options. See "Principal Stockholders of New
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 New Planet
and may adversely affect the rights of the holders of the shares of our Common
Stock.
REQUIREMENTS OF CURRENT PROSPECTUS AND STATE BLUE SKY REGISTRATION IN
CONNECTION WITH THE EXERCISE OF THE NEW PLANET OPTIONS WHICH MAY NOT BE
EXERCISABLE AND MAY THEREFORE BE VALUELESS Requirements of Current Prospectus
and State Blue Sky Registration in Connection with the Exercise of the New
Planet Options Which May Not Be Exercisable and May Therefore Be Valueless
We will be able to issue the New Planet Common Stock and shares of our
Common Stock upon the exercise of the New Planet Options only if (i) there is
a current prospectus under an effective registration statement filed with the
Commission and (ii) such Common Stock is, to the extent required, then
qualified for sale or exempt therefrom under applicable state securities laws
of the jurisdictions in which the various holders of New Planet Options
reside. There can be no assurance, however, that we will be successful in
maintaining a current registration statement. After a registration statement
becomes effective, it may require updating by the filing of a post-effective
amendment. A post-effective amendment is required under the Securities Act:
M anytime after nine months subsequent to the effective date thereof
when any information contained in the prospectus is over 16 months old;
M when facts or events have occurred which represent a fundamental
change in the information contained in the registration statement; or
M when any material change occurs in the information relating to the
plan or distribution of the securities registered by such registration
statement.
The Prospectus forming a part of this Registration Statement will remain
current within the meaning of the Securities Act for not more than nine months
following the date of this Prospectus, or until ________, 1999, assuming a
post-effective amendment is not filed by us. We will be prevented from issuing
Common Stock upon exercise of the New Planet Options in those states where
exemptions are unavailable and we have failed to qualify the Common Stock
issuable upon exercise of the New Planet Options. We may decide not to seek,
or may not be able to obtain qualification of the issuance of such Common
Stock in all of the states in which the ultimate purchasers of the New Planet
Options reside. In such a case, the New Planet Options of those purchasers
will expire and have no value if such warrants cannot be exercised or sold.
Accordingly, the market for the New Planet Options may be limited because of
the Company's obligation to fulfill both of the foregoing requirements. See
"Description of New Planet Capital Stock".
"PENNY STOCK" REGULATIONS MAY IMPOSE CERTAIN RESTRICTIONS ON MARKETABILITY OF
SECURITIES PennyStock Regulations May Impose Certain Restrictions On
Marketability of 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 New 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, the Company'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 its 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.
EXERCISE OF NEW PLANET OPTIONS MAY HAVE DILUTIVE EFFECT ON MARKET Exercise of
New Planet Options May Have Dilutive Effect on Market
The New Planet Options will provide, during their term, an opportunity
for the holder to exercise the Options and profit from a rise in the market
price of the Common Stock, of which there is no assurance, with resulting
dilution in the ownership interest in us held by the then present
stockholders. Holders of the New Planet Options most likely would exercise
the New Planet Options and purchase the underlying Common Stock at a time when
we may be able to obtain capital on terms more favorable than those provided
by such Warrants, in which event the terms on which we may be able to obtain
additional capital would be affected adversely. See "Underwriting".
ADDITIONAL AUTHORIZED SHARES AVAILABLE FOR ISSUANCE MAY ADVERSELY AFFECT THE
MARKET Additional Authorized Shares Available for Issuance May Adversely
Affect the Market
Upon completion of the Distribution, there will be a total of 1,605,818
shares of New Planet Common Stock outstanding. 405,000 shares of Common Stock
have been reserved for issuance upon exercise of the New Planet Options.
After the exercise of all the New 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 our
current stockholders to suffer significant dilution which may adversely affect
the market. See "Description of New Planet Capital Stock" and "Underwriting".
SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT THE MARKET Shares
Eligible for Future Sale May Adversely Affect the Market
The sale, or availability for sale, of a substantial number of shares of
Common Stock in the public market subsequent to the offering pursuant to Rule
144 under the Securities Act or otherwise could materially or adversely affect
the market price of the securities and could impair our ability to raise
additional capital from the sale of our equity securities or debt financing.
After completion of the Distribution none of our shares of outstanding Common
Stock will be "restricted securities." However, we may issue restricted
securities, which in the future, may be sold upon compliance with Rule 144.
The Rule adopted under the Securities Act. Rule 144, as amended, provides, in
essence, that a person holding "restricted securities" for a period of one
year may sell every three months a number of shares equal to the greater of
(a) one percent of our issued and outstanding shares, or (b) the average
weekly volume of sales during the four calendar weeks preceding the sale. The
amount of "restricted securities" which a person who is not affiliated with us
may sell is not so limited, since non-affiliates may sell without volume
limitation their shares held for two years. Nonaffiliated persons who hold for
the two year period described above may sell unlimited shares once their
holding period is met. Ordinarily, any shares issuable to employees upon
exercise of options granted under our New Planet Stock Incentive Plan or
otherwise, pursuant to Rule 701 under the Securities Act, could be sold
publicly commencing 90 days after we become a reporting company under the
Securities Exchange Act of 1934.
Prospective investors should be aware that the possibility of sales may,
in the future, have a depressive effect on the price of the New 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. Our affiliates 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 New Planet
Capital Stock".
DEPENDENCE ON KEY PERSONNEL Dependence on Key Personnel
New Planet's operations are dependent on the efforts, ability and experience
of its executive officers. The loss of some or all of these executive
officers and skilled employees could have a material adverse impact on New
Planet's future results of operations.
YEAR 2000 RISK Year 2000 Risk
We have not implemented any Year 2000 date conversion program to ensure
that our computer systems and applications will function properly beyond 1999.
We believe that we have no need to take any action for this purpose. There
can, however, be no assurance that this will be the case. We do not expect to
incur significant expenditures to address this issue. The ability of third
parties with whom we transact business to adequately address their respective
Year 2000 issues is outside of our control. There can be no assurance that
our failure or the failure of such third parties to adequately address our
respective Year 2000 issues will not have a material adverse effect on our
business.
USE OF PROCEEDS USE OF PROCEEDS
Pursuant to the Distribution, Planet will transfer the Mineral Properties
to New Planet and receive from New Planet shares of New Planet Common Stock
and New Planet Options. Such shares of New Planet Common Stock and New Planet
Options will be distributed in a manner expected to receive tax-free treatment
to Planet 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 New Planet
Common Stock.
CAPITALIZATION CAPITALIZATION
Following the Distribution and the Acquisition, New Planet will change
its name to Planet Resources, Inc. and will be treated as the continuation of
Planet for financial reporting purposes. The following table sets forth the
capitalization of the Company (i) as of March 26, 1999, (ii) as adjusted to
reflect the distribution of 1,605,818 shares of common stock and 405,000 New
Planet Options to the stockholders of Planet. This table should be read in
conjunction with the Balance Sheet and the Note thereto included elsewhere in
this Prospectus.
March 26, 1999
----------------
Actual As Adjusted
------ -----------
Shareholders' equity
Preferred Stock, $.001 par value, 5,000,000 shares authorized,
none issued or outstanding $ -0- $ -0-
before and after distribution
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 9,395
------------------ ----------
Total shareholders' equity 1,000 11,000
----------------- ------------
Total capitalization $ 1,000 $ 11,000
============== =========
THE DISTRIBUTION THE DISTRIBUTION
The following information describes certain aspects of the proposed
Distribution. The description of the Distribution Agreement contained herein
does not purport to be complete and is qualified in their entirety by
reference to the form of such agreement which is filed as an exhibit to the
registration statement of which this Prospectus is a part and is incorporated
herein by reference. All Planet Stockholders 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 Planet Common Stock as of the close
of business on the Distribution Date certificates representing one share of
New Planet Common Stock for each share of Planet Common Stock held by such
holder as of such time. See "-- Manner of Effecting the Distribution."
Immediately following the completion of the Distribution, New Planet will
be an independent, publicly-owned company and it is contemplated that the
shares of New Planet Common Stock will be quoted on the Electronic Bulletin
Board under the trading symbol "PLRS." See "-- Listing of New Planet Common
Stock; Restrictions on Resale."
MANNER OF EFFECTING THE DISTRIBUTION Manner of Effecting the Distribution
On the Distribution Date, Planet's transfer agent, Atlas Stock Transfer
Corporation, will deliver certificates for New Planet Common Stock as soon as
practicable to holders of record of Planet Common Stock. Any person who (i)
owned shares of Planet on the 24th day of March, 1999 and still owned the
shares on April 14, 1999, or (ii) purchased shares of Planet in the open
market prior to the close of business on April 14, 1999 will receive New
Planet Common Stock in the DistributionAll shares of New Planet Common Stock
will be fully paid and nonassessable and the holders thereof will not be
entitled to preemptive rights. See "Description of New Planet Capital Stock."
Following the completion of the Distribution, New 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 PLANET COMMON STOCK CERTIFICATES IN ORDER TO RECEIVE SHARES OF
NEW PLANET COMMON STOCK IN THE DISTRIBUTION. THE DISTRIBUTION AGENT WILL SEND
YOU YOUR NEW PLANET STOCK CERTIFICATES FOLLOWING THE CONSUMMATION OF THE
DISTRIBUTION.
LISTING OF NEW PLANET COMMON STOCK; RESTRICTIONS ON RESALE Listing of New
Planet Common Stock; Restrictions on Resale
New Planet intends to apply to a member of the National Association of
Securities Dealers, Inc. to make a market in the New Planet Common Stock and
provide a quotation on the NASD inter-dealer Electronic Bulletin Board under
the trading symbol "PLRS." The New Planet Common Stock received pursuant to
the Distribution will be freely transferable under the Securities Act, except
for shares of New Planet Common Stock received by any person who may be deemed
to be an "affiliate" of New Planet within the meaning of Rule 144 promulgated
under the Securities Act. Persons who may be deemed to be affiliates of New
Planet after the Distribution generally include individuals or entities that
control, are controlled by, or are under common control with New Planet, and
may include the directors and executive officers of New Planet. Persons who
are affiliates of New Planet will be permitted to sell their New 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 New Planet Common Stock by affiliates of New
Planet. See "Shares Eligible for Future Sale."
TREATMENT OF INDEBTEDNESS Treatment of Indebtedness
The Distribution Agreement provides that neither Planet nor New 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 New 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 New Planet Prospectus and related Registration
Statement shall be paid by New Planet. New Planet estimates that the
transaction expenses will approximate $40,000.
INDEMNIFICATION AND INSURANCE Indemnification and Insurance
The Distribution Agreement provides that from and after the Distribution
Date, Planet will indemnify, defend and hold harmless New Planet and its
subsidiaries, as well as the directors and officers of New Planet and the
various New Planet subsidiaries (collectively, the "New Planet 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.
The Distribution Agreement also provides that from and after the
Distribution Date, New Planet will indemnify, defend and hold harmless Planet
and its subsidiaries, as well as the directors and officers of Planet and the
various Planet subsidiaries (collectively, the "Planet Indemnitees") from and
against all losses arising out of or relating to (i) any breach, whether
before or after the Distribution Date, by New 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 New Planet.
TERMS OF THE INDEMNIFICATION AGREEMENT Terms of the Indemnification Agreement
Prior to the Distribution, we will enter into a Indemnification Agreement
(the "Indemnification Agreement") with Planet. This agreement sets forth each
party's rights and obligations with respect to the allocation and payment of
tax liabilities and entitlements to refunds, if any, for any federal, state or
local taxes for periods before and after the Effective Time of the
Acquisition. The Indemnification Agreement also addresses related matters
such as the allocation of responsibility in connection with the preparation
and filing of any tax returns, the conduct of proceedings related to taxes,
cooperation of the parties with respect to certain tax matters and the
indemnification of the parties against certain liabilities allocated under the
Tax Allocation and Indemnification Agreement.
In general, under the Indemnification Agreement, New Planet will be
responsible for (i) all tax liabilities of Planet not allocable to the
Pharmacy Subsidiaries (ii) any tax liability of New Planet for periods
beginning after the date of the Acquisition, and (iii) except as otherwise
described in this section, any tax liability of Planet resulting from the
failure of the restructuring and the Distribution to qualify as transactions
described in Sections 351 and 355 of the Code, and/or as a "reorganization"
under Section 368(a)(1)(D) of the Code, or the Acquisition to qualify as a
"reorganization" under Section 368(a)(1)(A) of the Code. New Planet will also
be entitled to any refunds that relate to those liabilities.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES CERTAIN 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 the Company ("Tax Counsel"). This summary
is for general informational purposes only and is not intended as a complete
description of all of the tax consequences of the Distribution and does not
discuss tax consequences under the laws of state or local governments or of
any other jurisdiction. The Company has not requested a ruling from the
Internal Revenue Service (the "Service") with respect to these matters.
Accordingly, no assurance can be given as to the Service's interpretation with
respect to these matters. Moreover, the tax treatment of a stockholder may
vary depending upon his, her or its particular situation. In this regard,
certain stockholders (including (i) insurance companies, tax-exempt
organizations, financial institutions or broker-dealers, and persons who are
not citizens or residents of the United States or who are foreign
corporations, foreign partnerships or foreign trusts or estates as defined for
United States federal income tax purposes, and (ii) stockholders that hold
shares as part of a position in a "straddle" or as part of a "hedging" or
"conversion" transaction for United States federal income tax purposes and
stockholders with a "functional currency" other than the United States dollar)
may be subject to special rules not discussed below. In addition, this
summary applies only to shares which are held as capital assets. The
following discussion may not be applicable to a stockholder who acquired his
or her shares pursuant to the exercise of stock options or otherwise as
compensation. There can be no assurance that there will not be differences of
opinion as to the interpretation of applicable law.
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 Planet, which representations if incorrect or
incomplete in certain material respects, would jeopardize the conclusions
reached in the opinions.
This information is directed to stockholders who acquire shares in the initial
distribution thereof, who are citizens or residents of the United States,
including domestic corporations and partnerships, and who hold the shares as
"capital assets" within the meaning of Section 1221 of the Code. Taxpayers
and preparers of tax returns (including those filed by any partnership or
other company) should be aware that under applicable Treasury regulations a
provider of advice on specific issues of law is not considered an income tax
return preparer unless the advice is (i) given with respect to events that
have occurred at the time the advice is rendered and is not given with respect
to the consequences of contemplated actions, and (ii) is directly relevant to
the determination of an entry on a tax return. Accordingly, taxpayers should
consult their own tax advisors and tax return preparers regarding the
preparation of any item on a tax return, even where the anticipated tax
treatment has been discussed herein.
THE FOLLOWING DISCUSSION IS BASED ON CURRENTLY EXISTING PROVISIONS OF THE
CODE, TREASURY REGULATIONS THEREUNDER AND CURRENT ADMINISTRATIVE RULINGS AND
COURT DECISIONS. ALL OF THE FOREGOING 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.
EACH STOCKHOLDER IS URGED TO CONSULT HIS, HER OR ITS OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO HIM, HER OR IT OF THE TRANSACTION DESCRIBED
HEREIN, 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 the company'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 the company'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. For purposes of the
remainder of this discussion of federal income tax consequences, the term
"dividend" refers to a distribution out of current or accumulated earnings and
profits and taxed as ordinary income as described above, unless the context
indicates otherwise.
The 70% (and in some cases, 80%) dividends received deduction may be
available with respect to dividends paid by the company to holders which are
corporations. However, a corporate holder that disposes of shares within 45
days of their date of acquisition cannot claim the dividends received
deduction for dividends on such shares. (These time periods are extended for
periods during which the taxpayer's risk of loss with respect to such shares
is diminished, for example, by an offsetting position.) In addition, under
section 246A of the Code, if a corporation incurs indebtedness for the purpose
of making or carrying a portfolio stock investment (which would include the
common stock), the 70% (or in some cases, 80%) deduction for dividends
received will generally be disallowed with respect to the dividends on that
portion of such stock which was acquired or carried by means of such
indebtedness
Section 1059 of the Code imposes a special basis reduction rule that
requires a corporate shareholder to reduce its basis (but not below zero) for
stock owned by it to the extent of the nontaxed portion of any extraordinary
dividend if as of the earliest of the date on which the corporation declares,
announces or agrees to the amount or payment of such dividend the corporate
shareholder has not held such stock for more than two years. Generally, the
nontaxed portion of an extraordinary dividend is the amount excluded from
income under section 243 of the Code (relating to the deduction for dividends
received by corporations). An extraordinary dividend is generally defined as
a dividend equaling or exceeding a prescribed threshold percentage (5% for
Bonds and 10% for common stock) of the corporate shareholder's adjusted basis
in such stock. Under certain circumstances the corporate shareholder may
elect to use fair market value rather than adjusted basis in computing the
threshold percentage for determining whether an extraordinary dividend has
been received. In addition, a corporate shareholder shall recognize, in the
year such stock is sold or otherwise disposed of, as gain from the sale or
exchange of stock, an amount equal to the aggregate nontaxed portions of any
extraordinary dividends with respect to such stock which did not reduce the
basis of such stock by reason of the limitation on reducing basis below zero
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 Planet 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. A stockholder who does not
supply Planet with his, her or its correct taxpayer identification number may
be subject to penalties imposed by the IRS. Any amount withheld under these
rules will be refunded or credited against the stockholder's federal income
tax liability. Stockholders should consult their tax advisers as to their
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption. If information reporting requirements apply to a
stockholder, the amount of dividends paid with respect to such shares will be
reported annually to the IRS and to such stockholder.
These back-up withholding tax and information reporting rules currently
are under review by the United States Treasury Department and proposed
Treasury Regulations issued on April 15, 1996 would modify certain of such
rules generally with respect to payments made after December 31, 1997.
Accordingly, the application of such rules may be changed.
CERTAIN STATE TAX CONSEQUENCESCertain State Tax Consequences
Because each state's income tax laws vary, it is impossible to predict
the income tax consequences to the holders of Bonds in all of the state taxing
jurisdictions in which they are already subject to tax. Bondholders are urged
to consult their own tax advisors with respect to state income and corporate
franchise tax consequences arising out of the purchase, ownership and
disposition of Bonds.
DIVIDEND POLICY DIVIDEND POLICYL1
Planet currently does not pay dividends on any of its issued and
outstanding securities. New Planet does not expect to pay any dividends for
the foreseeable future. Rather, New 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 New Planet's results
of operations, financial condition, cash requirements, future prospects and
other factors deemed relevant by the Board of Directors of New Planet from
time to time.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONSMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONSL1
The following discussion of financial condition and results of operations
for Planet includes both the Mineral Properties and the Institutional Pharmacy
Business. After the Distribution and the Acquisition, the financial condition
and results of operations of New Planet will not include those of the
Institutional Pharmacy Business. The following discussion is based upon and
should be read in conjunction with the Selected Historical Consolidated
Financial Data, the Unaudited Pro Forma Condensed Consolidated Financial
Statements and the historical consolidated financial statements of Planet and
the notes thereto, included elsewhere herein.
(a) Results of Operations for the Year Ended June 30, 1998
---------------------------------------------------------------
Planet had no operations for the year ended June 30, 1998 and had a net
loss of $13,377 for the year. There was no revenue whereas, the expenses of
$13,377 were for professional fees and general and administrative expenses.
(b) Results of Operations for the Year Ended June 30, 1997
---------------------------------------------------------------
Planet had no operations for the year ended June 30, 1997 and had a net
loss of $32,631 for the year. The only income was from interest; whereas, the
expenses of $32,633 were for professional fees and general and administrative
expenses.
(c) Results of Operations for the Year Ended June 30, 1996
---------------------------------------------------------------
Planet had no operations for the year ended June 30, 1996 and had a
net loss of $21,367 for the year. The only income was from interest; whereas,
the expenses of $25,143 were for professional fees and general and
administrative expenses.
(d) Comparison of Operations - June 30, 1998 versus June 30, 1997
-------------------------------------------------------------
Planet had no operations for the year ended June 30, 1998. The principal
difference between expenses for the two years was a decrease in professional
fees, stock transfer, filing fees, permits and printing costs and legal fees
of $18,628.
(e) Comparison of Operations - June 30, 1997 versus June 30, 1996
-----------------------------------------------------------------
Planet had no operations for year ended June 30, 1997. The principal
difference between expenses for the two years was an increase in professional
fees and stock transfer, filing fees, permits and printing costs of $11,488.
(f) Comparison of Operations - June 30, 1996 versus June 30, 1995
-----------------------------------------------------------------
Planet had no operations for year ended June 30, 1996. The principal
difference between expenses for the two years was an increase in legal fees of
$7,168.
(g) Liquidity and Capital Resources
----------------------------------
Planet's working capital decreased from $121,733 at June 30, 1997 to
$108,356 at June 30, 1998. The decrease was due primarily to the expenses for
the year ended June 30, 1998. The Company does not have any present
commitments for capital expenditures. Management believes that the present
working capital balance will provide adequate funds to pay ongoing
administrative costs for several years.
YEAR 2000 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 believe that we have no need to take any action for this purpose. There
can, however, be no assurance that this will be the case. We do not expect to
incur significant expenditures to address this issue. The ability of third
parties with whom we transact business to adequately address their respective
Year 2000 issues is outside of our control. There can be no assurance that
our failure or the failure of such third parties to adequately address our
respective Year 2000 issues will not have a material adverse effect on our
business.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS Cautionary Statement
Regarding Forward Looking Statements
Certain statements contained in this Section and elsewhere in this
Registration Statement regarding matters that are not historical facts are
forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995). 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 management's
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 the Company's
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
The Registrant was incorporated under the laws of the State of Delaware
on March 26, 1999.
Since incorporation, our only business has been organizational activities
and entering into the various agreements with Planet for transfer of the
Mineral Properties and the Distribution.
PROPERTIESProperties
The Company 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. In acquiring such mineral rights, the Company
issued 361,739 shares of capital stock as adjusted for subsequent stock splits
and the 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.
Planet entered into an agreement dated May 1, 1981, with the City of
Mullan (which supersedes a previous agreement dated December 31, 1971) whereby
the Company, 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.
EMPLOYEES Employees
We have no employees.
LEGAL PROCEEDINGS Legal Proceedings
We are not parties in any lawsuit, pending or threatened, which
management believes should have a material effect on our financial position.
MANAGEMENT MANAGEMENT
The table below sets forth, as to each executive officer and director of
New Planet, such person's name, positions with New Planet and age. Each
executive officer and director of New 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 New Planet Board of
Directors. All of the directors and executive officers listed below will
continue with New Planet in the same capacity as such individuals have served
Planet.
OFFICERS AND DIRECTORS
Upon the Effective Date the present officers and directors of the Company
will continue to be the officers and directors of New Planet. This will
result in the following persons holding the positions indicated below in New
Planet until New Planet's next annual meeting or until their respective
successors are elected and qualified:
Name Age Mailing Address
---- --- ----------------
A.W. Dugan 70 1415 Louisiana, Suite 3100
Houston, Texas 77002-7360
Jacque N. York 43 1415 Louisiana, Suite 3100
Houston, Texas 77002-7360
Michael K. Branstetter 44 416 River Street
Wallace, Idaho 63873-0709
A.W. DUGAN, President and Director, joined the Board in 1999. Mr.
Dugan's principal occupation and five year business history is oil and gas
operator.
JACQUE N. YORK, Secretary and Director, joined the Board in 1999. Ms.
York's principal occupation and five year business history is corporate
officer.
MICHAEL K. BRANSTETTER, Director joined the Board in 1999. Mr.
Branstetter's principal occupation and five year business history is attorney
at law.
EXECUTIVE AND DIRECTOR COMPENSATION EXECUTIVE AND DIRECTOR COMPENSATION
The officers and directors will not receive any compensation from New
Planet during the current fiscal year.
THE NEW PLANET STOCK INCENTIVE PLAN THE NEW PLANET STOCK INCENTIVE PLAN
The board of directors of New Planet and Majority Holders have approved
by written consent the New Planet Corp. Stock Incentive Plan (the "Stock
Incentive Plan"). The purpose of the Stock Incentive Plan is to provide
deferred stock incentives to certain key employees and directors of New Planet
and its subsidiaries who contribute significantly to the long-term performance
and growth of New 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 of
Directors or such designated Committee as administrator of the Stock Incentive
Plan shall be hereinafter referred to as the "Board"). 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 ten thousand shares of New 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 New Planet.
The Stock Incentive Plan will not affect the right or power of New Planet
or its stockholders to make or authorize any major corporate transaction such
as a merger, dissolution or sale of assets. If New Planet is dissolved
liquidated or merged out of existence, each participant will be entitled to a
benefit as though he became fully vested in all previous awards to him
immediately prior to or concurrently with such dissolution, liquidation or
merger. The Board may provide that an option or stock appreciation right will
be fully exercisable, or that a share of restricted stock will be free of such
restriction upon a change in control of New Planet.
The Stock Incentive Plan may be amended at any time and from time to time
by the Board of Directors but no amendment which increases the aggregate
number of shares of New Planet Common Stock that may be issued pursuant to the
Stock Incentive Plan will be effective unless it is approved by the
stockholders of New Planet. The Stock Incentive Plan will terminate upon the
earlier of the adoption of a resolution by the Board of Directors terminating
the Stock Incentive Plan, or ten years from the date of the Stock Incentive
Plan's approval by the Majority Holders.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS Stock Options and Stock
Appreciation Rights
Stock options are rights to purchase shares of New Planet Common Stock.
Stock appreciation rights are rights to receive, without payment to New
Planet, cash and/or shares of New Planet Common Stock in lieu of the purchase
of shares of New 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 will determine the number of New Planet shares to be subject to
any option awarded. The option will not be transferable by the recipient
except by the laws of descent and distribution. The option period and date of
exercise will be determined by the Board and may not exceed ten years. The
option of any person who dies may be exercised by his executors,
administrators, heirs or distributors if done so within one year after the
date of that person's death with respect to any New Planet shares as to which
the decedent could have exercised the option at the time of this death. Upon
exercise of an option, the participant may pay for the New Planet shares so
acquired in cash, with New Planet Common Stock (the value of which will be the
fair market value at the date of exercise), in a combination of both cash and
New Planet Common Stock, or, in the discretion of the Board, by promissory
note. For purposes of determining the amount, if any, of the purchase price
satisfied by payment with New Planet Common Stock, fan market value in the
mean between the highest and lowest sales price per share of the New Planet
Common Stock on a given day on the principal exchange upon which the stock
trades or some other quotation source designated by the Board.
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 light entitles the optionee to receive a
payment equal to the appreciated value of each New 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
New Planet Common Stock exceeds the option exercise price for that New Planet
share. A holder of a stock appreciation right may receive cash, New Planet
Common Stock or a combination of both upon surrendering to New Planet the
unexercised option to which the stock appreciation right is attached. New
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 fight.
Any person granted an incentive stock option under the Stock Incentive
Plan who makes a disposition, within the meaning of 425(c) of the Internal
Revenue Code of 1986, as amended ("Code"), and the regulations promulgated
thereunder, of any shares of New Planet Common Stock issued to him pursuant to
his exercise of an option within two years from the date of the granting of
such option or within one year after the date any shares are transferred to
him pursuant to the exercise of the incentive stock option must within ten
days of the disposition notify New Planet and immediately deliver to New
Planet any amount of federal income tax withholding required by law.
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 New Planet
Common Stock issuable pursuant to the stock option or stock appreciation
rights until actual issuance of a stock certificate for the New Planet shares.
RESTRICTED STOCK Restricted Stock
The Board may in its discretion award New 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. New Planet will have the
option to repurchase the shares of restricted New 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. New Planet may also exercise its option to repurchase
the restricted New Planet Common Stock if prior to the expiration of the
restricted period, the participant has not paid to New 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 New 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 New Planet. The disposition of New
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 "Exchange Act"), 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.
On the exercise of an option that qualifies as an "incentive stock
option" within the meaning of the Code, the holder will not recognize any
income and New Planet will not be entitled to a deduction for tax purposes.
However, the difference between the exercise price and the fair market value
of the New Planet Common Stock received on the date of the exercise will be
treated as an "item of tax preference" to the holder that may be subject to
the alternative minimum tax. The disposition of New Planet shares acquired
upon exercise of an incentive stock option will ordinarily result in capital
gain or loss, however if the holder disposes of New Planet shares acquired
upon the exercise of an incentive stock option within two years after the date
of grant or one year after the date of exercise (a "disqualifying
disposition"), the holder will recognize ordinary income, and New Planet will
be entitled to a deduction for tax purposes in the amount of the excess of the
fair market value of the shares of New Planet Common Stock on the date the
option was exercised over the option price (or, in certain circumstances, the
gain on sale, if less). Otherwise, New Planet will not be entitled to any
deduction for tax purposes upon disposition of such New Planet shares. Any
excess of the amount realized by the holder on the disqualifying disposition
over the fair market of the New Planet shares on the date of exercise of the
option will be capital gain.
If an incentive option is exercised through the use of New Planet Common
Stock previously owned by the holder, such exercise generally will not be
considered a taxable disposition of the previously owned New Planet shares and
thus no gain or loss will be recognized with respect to such New Planet shares
upon exercise. However, if the previously owned New 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 New Planet shares
were not satisfied at the time the previously owned New Planet shares were
used to exercise the incentive option, such use would constitute a
disqualifying disposition of such previously owned New 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 New Planet Common
Stock received upon the exercise of stock appreciation fights under the Stock
Incentive Plan will be subject to ordinary income tax in the year of receipt
and New Planet will be entitled to a deduction for such amount. However, if
the holder receives New 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.
Generally, a grant of restricted stock under the Stock Incentive Plan
will not result in taxable income to the employee or deduction to New Planet
in the year of the grant. The value of the New Planet shares will be taxable
to the employee and compensation income in the years in which the restrictions
on the New Planet shares lapse. Such value will be the fair market value of
the New Planet shares on the dates the restrictions terminate, less any amount
the recipient may have paid for the New Planet shares at the time of the
issuance. An employee, however, may elect to treat the fair market value of
the New Planet shares on the date of such grant (less restricted stock,
provided the employee makes the election within thirty days after the date of
the grant. If such an election is made and the employee later forfeits the
New Planet S hares to New Planet, the employee will not be allowed to deduct
at a later date the amount he had earlier included as compensation income. In
any case, New Planet will receive a deduction corresponding in amount and time
to the amount of compensation included in the employee's income in the year in
which that amount is so included.
PRINCIPAL STOCKHOLDERS OF NEW PLANET PRINCIPAL STOCKHOLDERS OF NEW PLANET
New Planet will be a wholly-owned subsidiary of Planet until the
consummation of the Distribution. Because all of the shares of New Planet
Common Stock held and to be held by Planet will be distributed to shareholders
of Planet in connection with the Distribution, the number of shares of New
Planet Common Stock shown below to be owned beneficially by certain beneficial
owners holding more than five percent of the issued and outstanding Planet
Common Stock, as well as by each director and by all directors and officers as
a group is based upon the number of shares held by such persons at the time of
the Distribution.
The following table sets forth, as of the date of this Prospectus ,
certain information with respect to the beneficial ownership of the Company's
Common Stock after the Distribution by (i) each person known by the Company to
own beneficially five percent (5%) or more of the outstanding Common
Stock,(ii) each director of the Company, (iii) the executive officers of the
Company, 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 640,000(2) 39.86%
1415 Louisiana, Suite 3100
Houston, Texas 77002
All Executive Officers and Directors 640,000 39.86%
as a Group (1 person)
(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. 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) Does not include options to purchase an additional 360,000 shares
owned beneficially by A.W. Dugan.
DESCRIPTION OF NEW PLANET CAPITAL STOCK DESCRIPTION OF NEW PLANET CAPITAL
STOCK
AUTHORIZED CAPITAL STOCK Authorized Capital Stock
The Certificate of Incorporation grants New 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 ("New Planet Preferred Stock"). At March 26, 1999, New Planet had
outstanding 1,000 shares of New Planet Common Stock, all of which are
currently held by Planet.
NEW PLANET PREFERRED STOCK New Planet Preferred Stock
Under New Planet's Certificate of Incorporation, New 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 New Planet Preferred Stock.
NEW PLANET COMMON STOCK New Planet Common Stock
Holders of New Planet Common Stock are entitled to receive such dividends
as are declared by the Board of Directors, subject to the preference of any
outstanding New Planet Preferred Stock, and are entitled to cast one vote per
share on all matters voted upon by stockholders. There is no cumulative
voting for the election of directors and New Planet Common Stock does not have
any preemptive rights. Upon liquidation of New Planet, holders of New 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 New Planet Preferred Stock.
Payment and declaration of dividends on New Planet Common Stock and purchases
of shares thereof by New Planet will be subject to restrictions if New Planet
fails to pay dividends on any series of New Planet Preferred Stock ranking
prior to New Planet Common Stock as to the payment of dividends. It is
anticipated that New Planet will be subject to certain restrictions under its
banking arrangements related to the payment of cash dividends on its common
stock.
The Registrar and Transfer Agent for New Planet Common Stock is Atlas Stock
Transfer Corporation.
NEW PLANET COMMON STOCK OPTIONS New Planet Common Stock Options
On July 28, 1994 Plane 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 a corporate entity controlled by A.W.
Dugan. Therefore as of the date of this Prospectus 405,000 options remain
outstanding.
DEFENSES AGAINST HOSTILE TAKEOVERS
Introduction. While the following discussion summarizes the reasons for,
and the operation and effects of, certain provisions of New 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, and it is qualified in its
entirety by reference to New Planet's Certificate of Incorporation and By
Laws. 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 New Planet's
Certificate of Incorporation are designed to minimize New Planet's
susceptibility to sudden acquisitions of control which have not been
negotiated with and approved by New 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 New Planet or a tender offer for all of New Planet's
capital stock. The provisions are designed to discourage any tender offer or
other attempt to gain control of New Planet in a transaction that is not
approved by the New Planet Board of Directors, by making it more difficult for
a person or group to obtain control of New Planet in a short time and then
impose its will on the remaining stockholders. However, to the extent these
provisions successfully discourage the acquisition of control of New Planet or
tender offers for all or part of New 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 New Planet's stock, and may thereby deprive stockholders of an opportunity
to sell their stock at a temporarily higher price. These provisions may
therefore decrease the likelihood that a tender offer will be made, and, if
made, will be successful. As a result, the provisions may adversely affect
those stockholders who would desire to participate in a tender offer. These
provisions may also serve to insulate incumbent management from change and to
discourage not only sudden or hostile takeover attempts, but any attempts to
acquire control which are not approved by the Board of Directors, whether or
not stockholders deem such transactions to be in their best interests.
Authorized Shares of Capital Stock. New Planet's Certificate of
Incorporation authorizes the issuance of up to 1,000,000 shares of serial
preferred stock. Shares of New 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 (the Certificate of
Incorporation authorizes the issuance of up to 25,000,000 shares), could
represent additional capital stock required to be purchased by an acquiror.
Issuance of such additional shares may dilute the voting interest of New
Planet's stockholders. If the Board of Directors of New 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. Delaware 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. New Planet's Certificate of Incorporation provides
that annual stockholder meetings may be called only by New Planet's Board of
Directors or a duly designated committee of the Board. Although New Planet
believes that this provision will discourage stockholder attempts to disrupt
the business of New 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 New Planet between one annual meeting as a forum to
address certain other matters and discourage takeovers which are desired by
the stockholders. New 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. New Planet's
Certificate of Incorporation provides that New 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 New 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 New
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.
New Planet's Certificate of Incorporation provides that a director may be
removed only for cause and by the affirmative vote of the holders of 75% of
the outstanding shares of capital stock entitled to vote at an election of
directors. This provision may, under certain circumstances, impede the
removal of a director and thus preclude the acquisition of control of New
Planet through the removal of existing directors and the election of nominees
to fill in the newly created vacancies. The supermajority vote requirement
would make it difficult for the stockholders of New Planet to remove
directors, even if the stockholders believe such removal would be beneficial.
Restriction of Maximum Number of Directors and Filling Vacancies on the
Board of Directors. Delaware 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. New 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 New Planet By Laws. The power to determine the number of directors
within these numerical limitations and the power to fill vacancies, whether
occurring by reason of an increase in the number of directors or by
resignation, is vested in New Planet's Board of Directors. The overall effect
of such provisions may be to prevent a person or entity from quickly acquiring
control of New Planet through an increase in the number of New 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. New Planet's Certificate of Incorporation generally requires the
approval of the holders of 75% of New 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 New Planet's Board of Directors who were
directors prior to the time when the related person became a related person.
Under Delaware law, absent these provisions, business combinations generally,
including mergers, consolidations and sales of substantially all of the assets
of New Planet must, subject to certain exceptions, be approved by the vote of
the holders of a majority of New Planet's outstanding voting stock. One
exception under Delaware law to the majority approval requirement applies to
business combinations (as defined) involving stockholders owning 15% of the
outstanding voting stock of a corporation for less than three years. In order
to obtain stockholder approval of a business combination with such a related
person, the holders of two-thirds of the outstanding voting stock, excluding
the stock owned by the 15% stockholder, must approve the transaction.
Alternatively, the 15% stockholder must satisfy other requirements under
Delaware law relating to (i) the percentage of stock acquired by such person
in the transaction which resulted in such person's ownership becoming subject
to the law, or (ii) approval of the board of directors of such person's
acquisition of the stock of the Delaware corporation. Delaware law does not
contain price criteria. 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 New
Planet's stock deem desirable and place the power to prevent such a
transaction in the hands of a minority of New Planet's stockholders
Under Delaware law, there is no cumulative voting by stockholders for the
election of New Planet's directors. The absence of cumulative voting rights
effectively means that the holders of a majority of the stock voted at a
stockholder meeting may, if they so choose, elect all directors of New Planet,
thus precluding a small group of stockholders from controlling the election of
one or more representatives to New Planet's Board of Directors.
Advance Notice Requirements for Nomination of Directors and Proposal of
New Business at Annual Stockholder Meetings. New Planet'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. This advance notice requirement may give
management time to solicit its own proxies in an attempt to defeat any
dissident slate of nominations, should management determine that doing so is
in the best interests of stockholders generally. Similarly, adequate advance
notice of stockholder proposals will give management time to study such
proposals and to determine whether to recommend to the stockholders that such
proposals be adopted. In certain instances, such provisions could make it
more difficult to oppose management's nominees or proposals, even if the
stockholders believe such nominees or proposals are in their interests.
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 New 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. New Planet'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 (i) Article XIII, governing the calling of
stockholder meetings and the requirement that stockholder action be taken only
at annual or special meetings, (ii) Article IX, requiring written notice to
New Planet of nominations for the election of directors and new business
proposals, (iii) Article X, governing the number and terms of New Planet's
directors, (iv) Article XI, governing the removal of directors, (v) Article
XII, governing approval of business combinations involving related persons,
(vi) Article XIII, relating to the consideration of various factors in the
evaluation of business combinations, (vii) Article XIV, providing for
indemnification of directors, officers, employees and agents, (ix) Article XV,
limiting directors' liability, and (x) 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 New 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 New 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, New Planet will have an estimated
1,605,818 shares of New Planet Common Stock outstanding, 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
New 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 New 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 one percent of the then outstanding shares of New
Planet Common Stock (1,605,818 shares immediately after the Distribution) 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 New Planet. Following the Distribution,
405,000 shares of New Planet Common Stock will be issuable upon the exercise
of options held by a director of New Planet and former director of Planet.
LEGAL MATTERS LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be
passed upon for New Planet by Sonfield & Sonfield, Houston, Texas.
EXPERTS EXPERTS
The balance sheet of New Planet, Inc. as of March 26, 1999, appearing in
this Prospectus and Registration Statement, has 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.
Annex A - Page 28
INDEX TO FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS
Report of Harper & Pearson Company, Independent Auditors F-2
Balance Sheet as of March 26, 1999 F-3
Note to Balance Sheet F-4
Annex A - Page 29
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholder
New Planet Resources, Inc.
Houston, Texas
We have audited the accompanying balance sheet of New Planet Resources, Inc.
(a wholly owned subsidiary of Planet Resources, Inc.) as of March 26, 1999.
This balance sheet is the responsibility of the Company's management. Our
responsibility is to express an opinion on this balance sheet 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 balance sheet is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet. 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 balance sheet referred to above presents fairly, in all
material respects, the financial position of New Planet Resources, Inc. at
March 26, 1999, in conformity with generally accepted accounting principles.
/s/Harper & Pearson Company
Houston, Texas
March 30, 1999
Annex A - Page 30
NEW PLANET RESOURCES, INC.
A WHOLLY OWNED SUBSIDIARY OF PLANET RESOURCES, INC.
BALANCE SHEET
MARCH 26, 1999
<TABLE>
<CAPTION>
ASSETS
------
Cash $1,000
------
<S> <C>
Total assets . . . . . . . . . . . . . $1,000
======
STOCKHOLDER'S EQUITY
- --------------------------------------
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 . . . . . . 999
------
Total stockholders' equity . . . . . . $1,000
======
See accompanying note.
</TABLE>
Annex A - Page 31
NOTE TO BALANCE SHEET
MARCH 26, 1999
New Planet Resources, Inc. ("New Planet") was incorporated in the state
of Delaware on March 26, 1999, as a wholly-owned subsidiary of Planet
Resources, Inc. ("Planet"). New Planet was formed in connection with the
execution of an Agreement and Plan of Distribution (the "Distribution
Agreement") by and between Planet and New Planet dated March 25, 1999. Under
the Distribution Agreement, Planet will transfer all of its mineral properties
to New Planet, and shares and options of New Planet will be distributed to the
Planet stockholders in a tax-free spin-off accounted for as a pooling of
interest. Planet with assets, then consisting solely of cash in bank, will
acquire National Law Library ("National") through a tax-free exchange of
shares of common stock of National for Planet common shares (the
"Acquisition"), all as contemplated by an Agreement and Plan of Reorganization
dated March 25, 1999 (the "Acquisition Agreement").
New Planet intends to become a public company upon the effectiveness of a
registration statement, will then change its name to Planet Resources, Inc.
and will be treated as the continuation of Planet. Closing under the
Acquisition Agreement is subject to certain conditions, including but not
limited to completion of all requirements under the Distribution Agreement,
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
Planet into New Planet since New Planet will continue the majority of the
Planet businesses. No gain will be recognized as a result of the spin-off for
the difference between the market value of the National shares received and
the carrying value of the net assets of the mineral properties. In addition,
since National 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 of Planet by National.
New Planet has had no operations from its inception through March 26,
1999. Therefore, management has omitted the Statement of Operations and the
Statement of Cash Flows from these financial statements.
Annex B - Page 14
ANNEX B
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 ARTICLE I
DEFINITIONS DEFINITIONS
SECTION 1.1 GENERAL. 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 Actionshall 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: AgreementThis Agreement and Plan of Distribution as
amended or supplemented from time to time.
Affiliate: AffiliateAffiliate 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: AgentAny Person authorized to act and who acts on behalf of any
other Person with respect to the transactions contemplated by the Documents.
CERCLA CERCLAshall 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: CommissionThe Securities and Exchange Commission.
Distribution Date: 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: 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: Distribution SharesCommon voting shares of New
Planet, par value $.001, issued to Planet pursuant to the provisions of
Section 2.3(a).
Documents: DocumentsThis Agreement, the Registration Statement, together
with any exhibits, schedules or other attachments thereto.
Environmental Laws and Orders Environmental Laws and Ordersshall 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: Exchange ActThe Securities Exchange Act of 1934, as
amended from time to time.
Effective Date: Effective DateThe date on which the distribution of the
Distribution Shares contemplated by this Agreement is authorized to commence
pursuant to the Securities Act.
Effective Time: Effective TimeThe 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 Indemnifiable Lossesshall 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 PropertiesMineral 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: NASDThe National Association of Securities Dealers, Inc.
Person: Personshall 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 IndemniteesPlanet 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: ProspectusThe 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 RCRAshall 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: Registration ExpensesSee Section 5.2 hereof.
Registration Statement: Registration StatementAny 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: Restricted SecuritiesThe Distribution Shares upon
original issuance thereof, as provided in Section 2.3 hereof.
Rules and Regulations: CommissionThe rules and regulations of the
Commission.
Securities: SecuritiesNew Planet's common stock, $.001 par value, to be
issued by New Planet.
Securities Act: Securities ActThe Securities Act of 1933, as amended
from time to time.
Shelf Registration: Shelf RegistrationSee Section 3(a) hereof.
Term: TermThe duration of this Agreement specified in Section 2.1.
Transfer Agent: Transfer Agentshall mean Continental Stock Transfer and
Trust Company, and its successors and assigns.
SECTION 1.2 REFERENCES; INTERPRETATION. 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 ARTICLE II
DISTRIBUTION, OTHER TRANSACTIONS AND COVENANTSDISTRIBUTION, OTHER TRANSACTIONS
AND COVENANTS
SECTION 2.1 TRANSFER OF ASSETS AND DISTRIBUTION OF SECURITIES. 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
Bylaws 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 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 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 ARTICLE III
INDEMNIFICATION INDEMNIFICATION
SECTION 3.1 INDEMNIFICATION BY NEW PLANET.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. 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. 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. 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 ARTICLE IV
THE DISTRIBUTION THE DISTRIBUTION
SECTION 4.1 ISSUANCE, SALE AND DELIVERY OF THE SHARES. 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 Section 4.2 Conditions to
the tc 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 ARTICLE V
REGISTRATION OF NEW PLANET SHARES REGISTRATION OF NEW PLANET SHARES
SECTION 5.1 REGISTRATION PROCEDURES. 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.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 ARTICLE VI
DISPUTE RESOLUTION DISPUTE RESOLUTION
SECTION 6.1 AGREEMENT AND PLAN OF DISTRIBUTION DISPUTES. Section 6.1
Consulting and Distribution 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 6.2 ARBITRATION IN ACCORDANCE WITH AMERICAN ARBITRATION
ASSOCIATION RULES. 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.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. 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. 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 SECTION VII
MISCELLANEOUS MISCELLANEOUS
SECTION 7.1 NO INCONSISTENT AGREEMENTS. 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. 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. 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. 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.
SECTION 7.5 NOTICES. 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:
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.
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. 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. 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. 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. Section 7.9 Headings 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
