UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 000-26425
NextPath Technologies, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 84-1402416
- ---------------------------------------- ------------------------------------
(State of incorporation or organization) (I.R.S. Employer Identification No.)
1615 N. 24th West Avenue
Tulsa, Oklahoma 74127
- ---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 295-8289
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which registered
- ------------------------------- -----------------------------------------
Common Stock ($0.001 par value) None (OTCBB)
Indicated by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (s) has been subject to such
filing requirements for the last 90 days.
Yes No X
---
Indicated by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting common stock held by
non-affiliates as of May 8, 2000 was $147,219,770.
At May 8, 2000, there were 41,985,775 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
1995.
This 10-K/A contains statements that plan for or anticipate the future.
Forward-looking statements include statements about future business plans and
strategies and most other statements that are not historical in nature. In this
10-K/A, forward-looking statements are generally identified by the words
"anticipate," "plan," "believe," "estimate," and the like. Because
forward-looking statements involve future risks and uncertainties, there are
factors that could cause actual results to differ materially from those
expressed or implied, including, but not limited to, our ability to obtain
infusion of equity capital or financing on terms reasonably satisfactory to us,
competition, changes in consumer trends, and competitors' marketing strategies.
See Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations-Risk Factors. These forward-looking statements are based
on our current expectations or those of the preparer of the statement. Readers
of this 10-K/A are cautioned not to place undue reliance on the forward-looking
statements. The forward-looking statements included in this 10-K/A are made as
of the date of this 10-K/A and we don't undertake any obligation to update them
to reflect subsequent events or circumstances.
The terms "NextPath," the "Company," "we," "our" and "us" refer to
NextPath Technologies, Inc. and its subsidiaries and affiliates unless the
context suggests otherwise.
ITEM 1. BUSINESS
Our Organizational History
We were organized as Petrogenics, Inc. under the laws of the State of
Colorado on March 23, 1984. On May 12, 1997, we completed a change of domicile
merger with FSC Holdings, Inc., a Nevada corporation, thereby changing our
domicile from Colorado to Nevada and changing our name to FSC Holdings, Inc. On
January 27, 1998, Compact Power International, Inc. merged with and into us.
Pursuant to the Articles of Merger, our name was changed to Hyperion
Technologies, Inc. On July 22, 1999, we changed our name to NextPath
Technologies, Inc. and our OTC Bulletin Board trading symbol from "HYPE" to
"NPTK." On November 11, 1999, we were the surviving corporation in a merger with
Epilogue Corporation and became a reporting company under the Securities
Exchange Act of 1934 as a result of the merger.
We are a development stage holding company that identifies, acquires and
manages what we believe to be state-of-the-art technology companies that
together form a community of shared resources. We are organized into four
operating groups as follows: Precision Technologies Group, Internet and
E-Commerce Group, Environmental Technologies Group and Health Products Group.
Our Acquisitions
During most of 1999, we sought, negotiated and closed acquisition
agreements with several target companies. The following is a summary of our
acquisitions:
o On June 12, 1999, we signed an Option Agreement with PriMedium,
LLC. (the "PriMedium Transaction"). We are evaluating whether
or not to enter into a definitive agreement and there can be
no assurances that one will ultimately be consummated. See
"Internet and E-Commerce Group-PriMedium, LLC."
o On August 30, 1999, we purchased 666,666 Units in the capital of
LATelco International, Inc. See "Investments."
o On October 21, 1999, we acquired 1,000 shares of non-voting
Series A Preferred Stock of United Paper, Inc., a Dallas, Texas
based primary independent paper distributer. See "Investments."
o On October 18, 1999, we acquired LaserWireless, Inc.
<PAGE>
o On November 2, 1999, we acquired Willow Systems Limited and its
subsidiaries, NextWave Photonics, LLC and Reflex LLC.
o On November 11, 1999, we acquired the Epilogue Corporation.
o On December 14, 1999, we acquired Sagebrush Technology, Inc.
o As of December 31, 1999, we had paid $1,500,000 to Group Now,
Inc. for Series A Convertible Preferred Stock pursuant to the
terms of a Subscription Agreement dated November 24, 1999. See
"Investments."
o On January 21, 2000, we acquired Essentia Water, Inc.
Other Transactions
In addition to the acquisitions set forth in "Our Acquisitions," we
entered into the following transactions:
o On January 28, 2000, our wholly owned subsidiary, NextPath
Environmental Services, Inc. ("NES"), formed a limited liability
company with Thermogenics, Inc. named NextPath Thermogenics, LLC,
but NES has not made all of its intitial required $1,750,000
capital contribution.
o On January 24, 2000, NES formed a limited liability company with
Tetra Separation Systems, LLC named NextPath Separation
Solutions, LLC, but NES has not yet made its initial required
$5,000,000 capital contribution.
o Our wholly owned subsidiary, NextPath AES, Inc. ("NAES") has
negotiated an Asset Purchase Agreement to acquire all of the
assets of Agri-Covers, Inc., but a definitive agreement has not
been signed pending funding by NAES.
o On April 4, 2000, we executed a definitive agreement to acquire
20% of US Certified Letters, LLC ("USCL"), which has licensed the
right to proprietary technology for transmitting any instruments
by certified mail via the Internet or other medium (the "C-mail
Technology") within the continential United States, Alaska and
Hawaii (the "USCL Transaction"). Closing is set to occur on or
before June 4, 2000.
o On April 4, 2000, our wholly owned subsidiary, Global Certified
Mail, Inc. ("GCM"), signed a License Agreement by which it
licensed the C-mail Technology for use outside of the
continential United States, Alaska and Hawaii in exchange for
which GCM transferred 20% of its stock to the Licensor (the "GCM
Transaction"). Closing is set to occur on or before June 4, 2000.
Our Business
Through our wholly owned subsidiaries, we're currently involved in the
following businesses: o We design, develop, manufacture and market positioning
devices known as gimbals.
o We design and market motion control systems.
o We design and market wireless communication technology.
o We design and market fiber optic switching and other fiber optic
technology.
o We bottle and market alkaline and electrolyte enhanced premium
water products.
<PAGE>
o We develop energy and micro economic systems technology.
o Upon making the required capital contribution to the NextPath
Thermogenics, LLC, we will design, engineer, fabricate, own,
sell, lease and operate systems which convert waste products to
energy.
o Upon making the required capital contribution to the Separation
Solutions, LLC, we will design, engineer, fabricate, own,
operate, market and sell systems which remove waste products from
soil and water.
o Upon closing the USCL Transaction, we will be involved in the
commercialization and marketing of the C-mail Technology within
the continental United States, Alaska and Hawaii.
o Upon closing the GCM Transaction, we will be engaged in the
commercialization and marketing of the C-mail Technology outside
the continental United States, Alaska and Hawaii.
Our Growth Strategy and Plan of Operation
Our goal is to enhance shareholder value by increasing cash flow,
earnings and the value of our common stock. To successfully reach our goal, we
believe we must implement the following growth strategy and plan of operations
for the foreseeable future: o We must continue to identify, pursue and
capitalize acquisitions that provide attractive investment opportunities,
particularly where we can add value through our technical expertise.
o We must effectively integrate our businesses and technologies.
o We must grow our business nationally and internationally by
effectively developing, marketing and expanding our products and
services and our market base.
o We must continue to identify, attract, retain and motivate
qualified personnel.
o We must continue to identify and close sources of working
capital.
In view of our current working capital, we will need to raise or borrow
additional funds during the foreseeable future to meet the expenditures required
for operating our business. We are actively engaged in negotiations with debt
and equity sources and we will continue to pursue all such options on an
aggressive basis.
Our Proprietary Rights
We regard the protection of our patents, trademarks, trade secrets,
websites, and other proprietary rights as important to our success. We rely on a
combination of patent, trademark, service mark and trade secret laws and
contractual restrictions to protect our proprietary rights in technology,
products and services. We have entered, and will continue to enter, into
confidentiality and invention assignment agreements with our employees,
consultants and contractors.
THE PRECISION TECHNOLOGY GROUP
------------------------------
In General
The Precision Technologies Group (the "PTG") consists of three wholly
owned subsidiaries: LaserWireless, Inc. ("LaserWireless"), located in Lancaster,
Pennsylvania; Willow Systems, Inc. ("Willow"), located in Albuquerque, New
Mexico; and Sagebrush Technology, Inc. ("Sagebrush"), located in Albuquerque,
<PAGE>
New Mexico. In turn, Willow owns NextWave Photonics, LLC and Reflex LLC and
holds a stock position in Skycam Systems, Inc. Together, these entities design,
engineer, manufacture, and market precision motion control systems, laser
communications systems, and purpose-designed, precision-controlled imaging
systems. Additionally, Willow, through NextPath Photonics, is engaged in
feasibility and design work on a solid state optical switching system.
Sagebrush Technologies, Inc.
- ----------------------------
Overview
Sagebrush is an engineering and manufacturing company specializing in
providing innovative solutions based primarily on its patented Roto-Lok(R)
rotary drive technology. Its principal executive offices are located at 10300-A
Constitution, NE, Albuquerque, New Mexico 87112. Its telephone number is (505)
299-6623. Its website is www.sagebrushtech.com.
Growth Strategy and Plan of Operations
Sagebrush designs, develops, manufactures and markets positioning
devices. Its objective is to bring the latest technologies and best engineering
talents together to address its clients' needs. Its business philosophy is to
provide products that meet specifications, are safe to use, are kind to the
environment, are fairly priced, and are delivered on time. Sagebrush's growth
strategy will be to increase its production of positioning devices and other
quality products and to expand its customer base through an aggressive
advertising and marketing campaign to publicize its products. Key elements of
its growth strategy include:
Products. Sagebrush provides products, systems and Original Equipment
Manufacture (OEM) activators for applications that require state of the art
precision, smoothness, reliability and cost effective performance in all types
of environment. Its specialties include:
o laser communications gimbal systems
o low earth orbit satellite tracking systems
o stabilized platforms and gimbals
o medical and industrial activators and turntables
Gimbals are positioning devices. The mechanism that supports a telescope
so it can look at all different parts of the sky is a typical gimbal. It is most
often called a telescope mount but it can gimbal or swing in two axes, up and
down and side to side. Most people have seen gyroscopes that are mounted in a
gimbal arrangement so the gyroscope wheel stays oriented in the same direction
even when the base of the gimbal is rotated. Gyroscopic gimbal systems are used
in ships, airplanes, missiles and many other applications to indicate a stable
reference plane, even when the vehicle is pitching, rolling or changing
direction.
Antenna positioners are the devices that point antennas at a target.
Satellite antennas that are portable such as those used by the military, by the
networks or by local television stations require positioners that can lay the
antenna down flat during transit, then quickly raise it up and point it
accurately at a satellite. The large surface area of an antenna acts as a sail
in high winds. To keep the antenna pointed at the satellite, the antenna
positioner must be extremely stiff. The Sagebrush Roto-Lok(R) rotary drive
provides the stiffest drive currently available.
Sagebrush manufactures and sells several innovative products including a
20 lb. capacity Model-20 Pan & Tilt Gimbal.
Product Research and Development. Sagebrush believes that strong product
research and development capabilities are essential to maintain a competitive
edge with its products. Since inception, it has focused its research and
development efforts on developing the finest gimbals and other positioning
devices available. Its research and development efforts will continue.
<PAGE>
Target Market. A major part of Sagebrush's business is supplying rotary
drive systems on an OEM basis for military, industrial, space, commercial,
aerospace, medical and research applications. Its products can be provided to
fit a customer's particular application.
The basic idea of the Roto-Lok(R) drive is the essence of simplicity.
But what this simplicity delivers to Sagebrush's customers is unparalleled
performance and cost benefits that go right to their bottom line. For some
customers the Roto-Lok(R) drive solution allows them to proceed with a project
that otherwise might not be possible to complete - at any cost. For other
customers, Roto-Lok(R) drive technology is providing a major advantage in their
quest for superior quality and cost effectiveness.
Sagebrush Technology. Sagebrush owns all rights to United States Patent
No. 5,105,672 issued on April 21, 1992 and entitled "Rotary Drive Apparatus
Having One Member with Smooth Outer Peripheral Surface." It also owns all title
to the registered trademark "Roto-Lok," Serial No. 73-451065 (Registration No.
1347219) dated July 9, 1985.
The Roto-Lok(R) rotary drive is an elegantly simple, yet powerful,
technology that utilizes the averaging effect of many cables - each sharing the
load - wrapped around a drive capstan and a driven drum. It was originally
invented as an inexpensive way to rotate large observatory telescopes accurately
and smoothly. Traditionally, precision gears have been used to position those
loads. However, even the best gears suffer from high friction, drive
irregularities and backlash, and they are expensive. They also require costly
precision sealed housings to support the gears and their lubricants and to keep
them clean. All Roto-Lok(R) rotary drive machined components are smooth and
round, making the parts easy to produce. The many cables serve to average the
rotation rate so that imperfections, dirt or other slight irregularities on a
single cable or drum do not have a significant effect. This results in superb
drive smoothness with no cogging or drive rate irregularity.
The following are some of the many advantages and benefits of the
Roto-Lok(R) rotary drive:
o The load bearing elements (cables) are statically tensioned to
increase the no-load stiffness of the drive. In a gear drive,
that tensioning will create friction and shorten the useful
zero-backlash life of the gears.
o Many load bearing elements can be paralleled to meet the peak
load requirements without significantly impacting the cost while
simultaneously improving the precision of the drive.
o The use of multiple cables virtually eliminates "cogging" found
in traditional gear drives. Near-perfect smoothness can be
attained with a properly designed drive because of the averaging
effect of the many cables.
o Where weight and power are at a premium, the Roto-Lok(R) drives
excel because they produce superior performance along with a 60%
to 70% savings in both weight and power. Because the drive is
stiff and efficient, smaller motors, wiring and power supplies
can be used.
The three primary performance attributes of the Roto-Lok(R) rotary drive
are its extremely high torsional stiffness, its high torque capacity, and its
total freedom from backlash.
Manufacturing Strategy. Sagebrush's ongoing manufacturing strategy will
be designed to increase capacity, improve quality, and reduce costs. It plans to
gradually increase its production in order to sustain its projected growth. In
any given year, its ability to reach its targeted production level will depend
upon, among other factors, its ability to (i) continue to realize production
efficiencies at its existing production facilities through implementation of
innovative manufacturing techniques and other means, (ii) successfully implement
production capacity increases in its facility, and (iii) sell all of the
products it can produce.
Sagebrush will not manufacture any of the parts it needs to produce its
products and it'll have to rely on outside suppliers to provide them.
Sagebrush's income projections are as follows:
<PAGE>
<TABLE>
<CAPTION>
Sagebrush Income Projections
----------------------------
2000 2001 2002 2003
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $4,739,450 $5,269,750 $8,049,750 $8,199,750
Operating Costs and Expenses 5,894,168 4,681,178 7,043,531 7,051,785
--------- --------- --------- ---------
Income (Loss) From Operations (1,154,718) 578,573 1,006,219 1,147,965
Other income (Expenses) -- -- -- --
Net Income (Loss) (1,154,718) 578,573 1,006,219 1,147,965
</TABLE>
Marketing Strategy. Sagebrush will conduct an aggressive advertising and
marketing campaign to publicize its products. Sagebrush believes that its
potential customers can best be reached through advertising in trade shows,
technical publications and direct marketing and on the Internet.
Sagebrush Facility
Sagebrush's executive offices and manufacturing facility are located in
a light industrial area in Albuquerque. They consist of approximately 10,650
square feet of leased space under a lease which expires in July 2000.
Competition
Sagebrush believes that it is at the forefront in the design,
development and manufacturing of positioning devices and related products. It
emphasizes quality, reliability, cost-effectiveness and timely delivery.
Nonetheless, other companies are engaged in the design, development and
manufacturing of positioning devices and related products which may be
competitive with Sagebrush's products. Many of those entities have substantially
greater financial, technical, manufacturing, marketing, distribution or other
resources than Sagebrush. Sagebrush's profitability will depend upon its ability
to compete in its market area.
Product Liability
The sale of its products may expose Sagebrush to product liability
claims. It believes that its products are, and will be, safe and that it will be
able to obtain product liability insurance at a reasonable cost. However, in the
event of an uninsured or inadequately insured product liability claim, or in the
event of an indemnification claim by a third party, Sagebrush's business and
financial condition could be materially adversely affected.
Regulation
Sagebrush's products and business may be subject to federal, state and
local regulations, including environmental regulations. Sagebrush can't
calculate exactly how much it will cost to comply with government regulation,
but it will try to ensure that its facilities and products comply with all
applicable regulations and standards. In any event, it doesn't think that the
cost of compliance will materially affect its financial condition.
Management
Sagebrush is currently managed by August Sanchez, its Vice President.
Don Carson, the founder of Sagebrush and the inventor of the Roto-Lok(R) drive
system with nearly 40 years experience developing precision mechanical and
opto-mechanical systems for worldwide research, industrial, military, aerospace,
medical and commercial customers, serves as a consultant to Sagebrush under a
Consulting Agreement which expires in December, 2003.
Employees
As of May 8, 2000, Sagebrush employed twenty-seven full-time employees
and two part-time employees. None of Sagebrush's employees is represented by a
union and management believes its employee relations are good.
<PAGE>
Operating Results
The following financial information summarizes the more complete
historical financial information of Sagebrush contained elsewhere in this
10-K/A. The results in the following table do not necessarily indicate results
Sagebrush will achieve in the future.
<TABLE>
<CAPTION>
Sagebrush Operating Results
---------------------------
Year Ended December 31,
-----------------------
1999 1998 1997 1996
------ ------ ------ -----
Income Statement Data:
<S> <C> <C> <C> <C>
Revenues $1,759,350 $1,758,747 $658,191 $1,039,318
Cost of Goods Sold 1,099,071 906,655 417,071 781,760
Selling, General and Administrative 1,277,323 743,845 362,010 300,267
Depreciation 21,840 10,340 2,258 6,342
--------- --------- ------- ---------
Income (Loss) from Operations (638,884) 97,907 (123,148) (49,051)
Other Income (Loss) 50,494 130,900 92,294 (11,642)
--------- --------- ------- ---------
Income (Loss) before Taxes (588,390) 228,807 (30,854) (60,693)
Deferred Tax Expense 14,882 - - -
--------- --------- ------- ---------
Net Income (Loss) (603,272) 228,807 (30,854) (60,693)
Accumulated Deficit,
Beginning of Year (35,597) (264,404) (233,550) (172,857)
--------- --------- --------- ---------
Accumulated Deficit, End of Year $ (638,869) $(35,597) $(264,404) $(233,550)
========= ========= ========== ==========
Balance Sheet Data
Total Assets (1) $ 735,281 $282,734 $62,106 (2)
Total Liabilities 1,248,438 318,191 326,370 (2)
Deferred Income Tax 14,882 - -
Common Stock 140 140 140 (2)
Additional Paid-In Capital 110,690 - - -
Accumulated Deficit (638,869) (35,597) (264,404) (2)
- --------------------------------
</TABLE>
(1) Net of accumulated depreciation and amortization.
(2) Not available.
Willow Systems, Inc.
- --------------------
Overview
Willow is an engineering and manufacturing company specializing in
providing custom real-time motion control and electronics solutions. Its
principal executive offices are located at 15100 Central Avenue SE, Albuquerque,
New Mexico 87193. Its telephone number is (505) 299-2486. Its website is
www.willowsystems.com.
Growth Strategy and Plan of Operations
Willow specializes in translating its customers' motion control
requirements into reliable, custom hardware solutions. Its objective is
to bring the latest technologies and best engineering talents together to
address its clients' needs. Its business philosophy is to provide products that
meet specifications, are safe to use, are kind to the environment, are fairly
priced, and are delivered on time. Willow's growth strategy will be to increase
its production of motion control devices and other quality products and to
expand its customer base through an aggressive advertising and marketing
campaign to publicize its products. Key elements of its growth strategy include:
Willow designs and markets custom motion control, robotics and
electronics solutions with leading edge technologies in the areas of gimbals and
photographic/electro-optical systems. Willow has the capability to translate
real-time motion control requirements into reliable, hardware solutions, and its
technologies have potential application in a wide range of
businesses.
<PAGE>
Willow is also engaged in the business of designing and developing new
and innovative MicroElectro Mechanical Systems ("MEMS") technology and
associated controls and electronics, primarily for optical applications. MEMS
are machines so small that they are imperceptible to the human eye.
Willow is also developing a high-speed fiber optic switch that will
control communications routing over fiber optic networks. This switch will be
compatible with the high capacity wavelength division multiplexed ("WDM") fiber
optic systems that are expected to dominate the fiber optic communications
market over the next decade.
Products. Willow provides gimbals, camera and electro-optical systems.
Its specialties include:
o Gimbals and pedestals
o real-time control systems
o specialized board designs
o analog designs
o camera systems
o real-time micro controller, DSP, and state machine designs
Product Research and Development. Willow believes that strong product
research and development capabilities are essential to maintain a competitive
edge with its products. Since inception, it has focused its research and
development efforts on developing the finest motion control systems available.
Its research and development efforts will continue.
Target Market. A major part of Willow's business is supplying motion
control systems on an OEM basis for military, industrial, space, commercial,
aerospace, and motion picture applications. Its products can be provided to fit
a customer's particular application.
Willow uses focused system engineering approach to all of its projects.
It is able to do this because it possesses a very broad range of expertise in
all aspects of precision motion control and electro-optical systems, and in
supporting engineering disciplines. Willow specializes in precision-engineered
solutions - cutting-edge design, engineering, manufacturing, testing, and
customer support - to provide maximum value for its customer's program dollar.
Willow applies this systems approach using integrated product
development teams. Each development team typically includes not only the
internal engineering and management capabilities required for a project, but its
customers and key suppliers as well. Regular technical interchange ensures that
Willow remains focused on its customers' needs and provides timely visibility
throughout the design process. Involvement of essential suppliers helps ensure
that components and subsystems meet design parameters. This integrated product
development approach helps to provide its customers with a product that is
reliable, manufacturable, high-quality and that will test to the customer's
specifications.
Manufacturing Strategy. Willow's ongoing manufacturing strategy will be
designed to increase capacity, improve quality, and reduce costs. It plans to
gradually increase its production in order to sustain its projected growth. In
any given year, its ability to reach its targeted production level will depend
upon, among other factors, its ability to (i) continue to realize production
efficiencies at its existing production facilities through implementation of
innovative manufacturing techniques and other means, (ii) successfully implement
production capacity increases in its facility, and (iii) sell all of the
products it can produce.
Willow will assemble its products; however Willow will not manufacture
all of the parts it needs to produce its products and it'll have to rely on
outside suppliers to provide most of them.
<PAGE>
Willow's income projections are as follows:
<TABLE>
<CAPTION>
Willow Income Projections
-------------------------
2000 2001 2002 2003
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $1,234,664 $20,164,000 $45,823,250 $91,726,000
Operating Costs
and Expenses 1,109,562 18,066,944 40,920,162 61,636,140
--------- ---------- ---------- ----------
Income (Loss)
From Operations 125,100 2,097,056 4,903,088 10,089,860
Other income (Expenses) -- -- - --
Net Income (Loss) 125,100 2,097,056 4,903.088 10,089,860
</TABLE>
Marketing Strategy. Willow will conduct an aggressive advertising and
marketing campaign to publicize its products. Willow believes that its potential
customers can best be reached through advertising in technical publications,
trade shows and direct marketing and on the Internet.
Willow Facility
Willow's executive offices and manufacturing facility are located in a
light industrial area in Albuquerque. They consist of approximately 5,960 square
feet of leased space under a lease which expires in October 2001.
Competition
Willow believes that it is at the forefront in the design, development
and manufacturing of motion control devices and related products. It emphasizes
quality, reliability, cost-effectiveness and timely delivery. Nonetheless, other
companies are engaged in the design, development and manufacturing of motion
control devices and related products which may be competitive with Willow's
products. Many of those entities have substantially greater financial,
technical, manufacturing, marketing, distribution or other resources than
Willow. Willow's profitability will depend upon its ability to compete in its
market area.
Product Liability
The sale of its products may expose Willow to product liability claims.
It believes that its products are, and will be, safe and that it will be able to
obtain product liability insurance at a reasonable cost. However, in the event
of an uninsured or inadequately insured product liability claim, or in the event
of an indemnification claim by a third party, Willow's business and financial
condition could be materially adversely affected.
Regulation
Willow's products and business may be subject to federal, state and
local regulations, including environmental regulations. Willow can't calculate
exactly how much it will cost to comply with government regulation, but it will
try to ensure that its facilities and products comply with all applicable
regulations and standards. In any event, it doesn't think that the cost of
compliance will materially affect its financial condition.
Management
Willow is currently managed by Doug Elerath, its President, and Sam
Rogers, Jr., its Vice President.
Employees
As of May 8, 2000, Willow employed twenty-two full-time employees and
two part-time employees. None of Willow's employees is represented by a union
and management believes its employee relations are good.
<PAGE>
Operating Results
The following financial information summarizes the more complete
historical financial information of Willow contained elsewhere in this 10-K/A.
The results in the following table do not necessarily indicate results Willow
will achieve in the future.
Willow Operating Results
------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1999 1998 1997 1996
------ ------ ------ -----
Income Statement Data:
<S> <C> <C> <C>
Revenues (Net Sales) $1,231,791 $1,039,117 $551,331 $33,298
Research and Development 536,353 - - -
General and Administrative
Expenses 1,468,267 845,007 445,116 7,199
Depreciation 18,817 17,791 10,393 5,520
--------- --------- ------- ------
Income (Loss) from Operations (791,646) 176,319 95,822 20,579
Other Income (Loss) (652) 40 -- --
--------- --------- ------- ------
Income (Loss) Before Taxes (792,298) 176,359 95,822 20,579
Income Taxes (11,451) 64,607 24,651 4,103
---------- -------- -------- --------
Net Income (Loss) (780,847) 111,752 71,171 16,476
Retained Earnings,
Beginning of Year 199,399 87,647 16,476 --
--------- -------- -------- --------
Accumulated Deficit, End of Year $ (581,448) $199,399 $87,647 $16,476
========= ======== ======= =======
Balance Sheet Data:
Total Assets (1) $ 445,922 $370,580 $146,359 (2)
Total Liabilities 1,027,170 159,530 52,558 (2)
Deferred Income Taxes - 11,451 5,954 (2)
Common Stock 200 200 200 (2)
Retained Earnings (581,448) 199,399 87,647 (2)
- -----------------------------------
</TABLE>
(1) Net of accumulated depreciation and amortization.
(2) Not available.
LaserWireless, Inc.
- -------------------
LaserWireless, which began its operations in 1999, specializes in the
development, sale and support of state-of-the-art wireless optical communication
systems capable of transmitting video, voice, telephone and data through the
atmosphere using eye-safe laser technology. This capability offers a solution
for private communications where a leased line cannot be used, for example, when
land is not owned between two sites or where physical barriers, such as rivers,
highways, parking lots, etc., prevent use of conventional cables. The systems
include full time electronic tracking for maximum availability. Its principal
executive offices are located at 2145 Lincoln Plaza, Lancaster, Pennsylvania.
Its telephone number is (877) 527-3757. Its website is www.laserwireless.com.
Growth Strategy and Plan of Operations
LaserWireless designs, develops, manufactures and markets
state-of-the-art atmospheric laser communications equipment for voice, video,
phones and data. Its objective is to bring the latest technologies and best
engineering talents together to address its clients' needs. Its business
philosophy is to provide products that meet specifications, are safe to use, are
fairly priced, and are delivered on time. LaserWireless' growth strategy will be
to increase its production of laser communications systems and other quality
products and to expand its customer base through an aggressive advertising and
marketing campaign to publicize its products. Key elements of its growth
strategy include:
Products. There is a growing need in today's information society to
augment existing communication systems with reliable, high bandwidth
<PAGE>
communication capability. Laser communication systems provide users with an
alternative to traditional copper or fiber communications pathways.
LaserWireless systems facilitate immediate communication enhancements with full
network interface support.
The LaserWireless LightBridge 155 communication system features
electronic tracking to ensure continuous alignment of both transmitting and
receiving optical links. A typical system consists of two Laser Transceivers and
two Digital Remote Status Monitors. The Laser Transceivers provide a high speed
full-duplex data link between sites, while the Remote Status Monitors allow the
user to verify correct system operation. Two advance features - Full Time
Electronic Tracking and Remote Factory Diagnostics - ensure the highest levels
of reliability and availability. Currently the system will support data rates to
155 million bits per second (Mbps) with a range to 2.5 kilometers (1.5 miles).
Development plans include systems supporting tomorrow's ultra-high data rates.
Other features include remote status monitoring and diagnostics, both supported
by 24-hour technical support.
Product Research and Development. LaserWireless believes that strong
product research and development capabilities are essential to maintain a
competitive edge with its products. Since inception, it has focused its research
and development efforts on developing the finest laser communication devices
available. Its research and development efforts will continue.
Target Market. Current applications for LaserWireless products include
university and office campuses, building-to-building communications, military
mobile communications, emergency communication networks and temporary
communications. Important military applications include mobile, high bandwidth
communications using a battery-powered system that is easily transportable,
non-detectable, and secure. Emergency communication needs arise in disaster
areas where damage has occurred to above ground or underground communication
systems. Other temporary communication needs include conventions, expositions,
trade shows, and mobile command and control.
LaserWireless is preparing for the future of high-speed communications
with system development efforts focused on providing 622 Mbps and 2+ Gbps
communication capabilities.
LaserWireless Technology. LaserWireless' system is the latest technology
in optical communications for distances up to 2.5 kilometers with greater than
95% availability. The system incorporates full real-time electronic tracking to
ensure continuous alignment. The transmitters are easy to install and operate,
requiring only a clear line-of-sight and solid supporting locating for mounting.
Any problems in the field can be diagnosed by the factory using standard phone
lines. The transceivers are field repairable and include full factory support.
There are no license or right-of-way requirements.
The following are some of the features of the LaserWireless system:
o data rates from 1 to 155 Mbps
o 2.5 kilometer range (1.5 miles)
o electronic tracking system
o no licensing required
o D.C. operational
o remote status monitor
o complete diagnostics from factory
o 7 plus years MTBF
o waterproof, modular design
o protocol transparent
<PAGE>
o highly cost effective
o secure transmission
o very high bandwidth capabilities
o compatible with all network interfaces
o eye-safe design
o certified CSA, UL, CDRH and CE
Manufacturing Strategy. LaserWireless' ongoing manufacturing strategy
will be designed to increase capacity, improve quality, and reduce costs. It
plans to gradually increase its production in order to sustain its projected
growth. In any given year, its ability to reach its targeted production level
will depend upon, among other factors, its ability to (i) continue to realize
production efficiencies at its existing production facilities through
implementation of innovative manufacturing techniques and other means, (ii)
successfully implement production capacity increases in its facility, and (iii)
sell all of the products it can produce.
LaserWireless will not manufacture any of the parts it needs to produce
its products and it'll have to rely on outside suppliers to provide the rest.
LaserWireless' income projections are as follows:
<TABLE>
<CAPTION>
LaserWireless Income Projections
--------------------------------
2000 2001 2002 2003
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $2,311,932 $5,064,740 $10,775,318 $20,599,640
Operating Costs
and Expenses 2,018,832 4,001,145 7,679,160 10,923,880
--------- --------- --------- ----------
Income (Loss)
From Operations 293,100 1,063,595 3,096,158 9,675,760
Other income (Expenses) -- -- -- --
Net Income (Loss) 293,100 1,063,595 3,096,158 9,675,760
</TABLE>
Marketing Strategy. LaserWireless will conduct an aggressive advertising
and marketing campaign to publicize its products. LaserWireless believes that
its potential customers can best be reached through advertising in trade shows
and direct marketing and on the Internet.
LaserWireless Facility
LaserWireless' executive offices and manufacturing facility are located
in a light industrial area in Lancaster, Pennsylvania. They consist of
approximately 10,500 square feet of leased space under a lease which expires in
January 2003.
Competition
LaserWireless believes that it is at the forefront in the design,
development and manufacturing of laser communication systems. It emphasizes
quality, reliability, cost-effectiveness and timely delivery. Nonetheless, other
companies are engaged in the design, development and manufacturing laser
communication systems which may be competitive with LaserWireless' products.
Many of those entities have substantially greater financial, technical,
manufacturing, marketing, distribution or other resources than LaserWireless.
LaserWireless' profitability will depend upon its ability to compete in its
market area.
<PAGE>
Product Liability
Although LaserWireless believes its laser systems to be safe at any
distance, the sale of its products may expose LaserWireless to product liability
claims. It believes that its products are, and will be, safe and that it will be
able to obtain product liability insurance at a reasonable cost. However, in the
event of an uninsured or inadequately insured product liability claim, or in the
event of an indemnification claim by a third party, LaserWireless' business and
financial condition could be materially adversely affected.
Regulation
LaserWireless' products and business may be subject to federal, state
and local regulations, including environmental regulations. LaserWireless can't
calculate exactly how much it will cost to comply with government regulation,
but it will try to ensure that its facilities and products comply with all
applicable regulations and standards. In any event, it doesn't think that the
cost of compliance will materially affect its financial condition.
Management
LaserWireless is currently managed by Richard Walter, its President.
Employees
As of May 8, 2000, LaserWireless employed nine full-time employees and
one part-time employee. None of LaserWireless' employees is represented by a
union and management believes its employee relations are good.
Operating Results
LaserWireless began operations in 1999. The following financial
information summarizes the more complete historical financial information of
LaserWireless contained elsewhere in this 10-K/A. The results in the following
table do not necessarily indicate results LaserWireless will achieve in the
future.
LaserWireless Operating Results
-------------------------------
Year Ended December 31, 1999
----------------------------
<TABLE>
Income Statement Data:
<S> <C>
Revenues $ -
Research and Development 150,828
General and Administrative 311,601
Depreciation 2,505
---------
Loss from Operations (464,934)
Other Income -
---------
Loss Before Taxes (464,934)
Income Taxes -
---------
Net Loss (464,934)
Accumulated Deficit, Beginning of Year -
---------
Accumulated Deficit, End of Year (1) (464,934)
=========
Balance Sheet Data:
Total Assets (2) 264,565
Total Liabilities 729,399
Common Stock 100
Accumulated Deficit (464,934)
- -------------------------------
</TABLE>
(1) Before depreciation of any assets.
(2) Net of accumulated depreciation and amortization.
<PAGE>
HEALTH PRODUCTS GROUP
---------------------
Essentia Water, Inc.
Overview
Essentia Water, Inc. ("Essentia") is a Woodinville, Washington based
bottled water marketing company acquired by NextPath on January 21, 2000. Its
principal executive offices are located at 24100 State Route 9 SE, Bldg. A,
Woodinville, Washington. Its phone number is (425) 488-9400. Its website is
www.essentiawater.com.
Growth Strategy and Plan of Operations
Essentia is engaged in the business of developing, manufacturing,
packaging, and marketing bottled alkaline and electrolyte enhanced premium water
products with health and hydration benefits. Essentia water is initially
pre-filtered and purified using reverse osmosis and ozonation to achieve 99.9%
purity. A bio-available electrolyte formulation of bicarbonate, magnesium,
potassium, sodium and calcium is added and the water is then processed using
Essentia's ionic separation technology to increase its alkalinity to assist in
balancing the acidic nature of American diets and to aid in producing a smooth
taste. Key elements of its growth strategy include:
Products. Bottled in 20 oz., 1.0 liter and 1.5 liter recyclable P.E.T.
(Polyethylene Terephtalate) bottles, Essentia water is distributed through
natural/health food and retail grocery channels (natural sets only) throughout
the United States. In addition to manufacturing bottled water products under its
own name, Essentia bottles under private labels such as Wild Water(TM) for Wild
Oats Community Markets, the second largest national chain of health food stores;
BonH2O(TM) for The Bon Marche, a flagship brand of Federated Department Stores;
and PETsMART.
In contrast to so many bottled waters, Essentia avoids the use of
"source" water from springs, glaciers, mountains, etc. because of their
inconsistencies. Instead, Essentia's unique process involves first purifying
water to its essence through reverse osmosis, then adding nutrient minerals that
are more bio-available (absorbable) by the body.
As a result, no other bottled water has the unique biological active
properties of Essentia Water. Certified lab analysis verifies that Essentia
(compared to other bottled waters) provides an abundant source of active
hydrogen that "quenches free radicals;" has less cohesion (better saturating
water) thus promoting faster hydration; is higher in alkalinity (+/- 9.5) thus
assisting the body in maintaining proper pH balance by neutralizing acidic
conditions; and delivers a proprietary formula of pure minerals for vital
cellular electrolyte replenishment.
All these active properties enhance the body's innate ability to heal
itself. These unique processes mean Essentia can bottle Essentia Water anywhere
in the world, consistently and within stringent quality assurance standards set
forth by Essentia while incorporating federal and state guidelines as the
foundation. Thus, Essentia Water is lab certified, user endorsed and 100%
satisfaction guaranteed to ensure consumer trust - an important part of
continued purchases and long term brand loyalty.
Product Research and Development. Essentia believes that strong product
research and development capabilities are essential to maintain a competitive
edge with its products. Essentia is committed to making Essentia an
international brand. Essentia realizes that a successful brand is not built by
accident, but requires the brand to become the focal point of the company's
vision. Essentia has gathered a seasoned team of business executives and
industry professionals all committed to research, development and product
engineering to further the Essentia vision.
Target Markets. Essentia currently co-packs, markets, and sells high
alkaline (pH) and electrolyte enhanced bottled water under the brand name
Essentia Water. Bottled in PET - 20 oz., 1.0 liter and 1.5 liter sizes, Essentia
Water is distributed through natural/health food stores and retail grocery
channels (natural sets only) throughout most of the United States. Essentia has
developed a national distribution infrastructure for catalog and Internet sales,
which provides direct delivery to Essentia's customers, adding to its national
distribution capabilities.
<PAGE>
Essentia Technology. We believe Essentia Water is the only water of its
kind in the market today. Unlike source waters (spring, glacier, mountain,
etc.), Essentia, using its unique process, removes all foreign minerals and
contaminates commonly known as TDS (total dissolved solids) that survive
standard filtration.
Essentia specifications require our water to be purified to three (3)
parts per million (PPM) TDS. Some source waters have been tested and contain
over 100 times more TDS than Essentia Water. The amount and class of TDS found
in source water as compared to Essentia Water will change from bottle to bottle
giving little consistency to the water taste and profile.
Once Essentia Water is purified, our proprietary, pure electrolyte,
formulation is added. This formulation contains vital pure minerals including
calcium, magnesium, potassium, sodium and bicarbonates the human body requires.
Compared to source water, these minerals can be easily assimilated by the body.
Additionally, our proprietary formulation is tasteless, colorless, odorless and
water soluble.
After the electrolytes have been added, the purified water runs through
our proprietary Ionic Separation Technology. This technology separates the
water's alkaline ions (negative charged) from the acidic ions (positive
charged). Essentia bottles only the alkaline water we call "negative charged."
Essentia water has a pH level to +/- 9.5 compared to source water having an
average pH level of 7.0. A diagram of our process can be found at
www.essentiawater.com.
Marketing Strategy. Essentia's marketing strategy is designed to
increase sales by (i) expanding its product lines, (ii) continuing to increase
its distribution network, and (iii) adding a new east coast production facility
(co-packer). In any given year, its ability to reach its targeted sales level
will depend upon, among other factors, (i) its ability to obtain financial
resources, (ii) market acceptability of its new products, and (iii) its ability
to successfully increase its East coast production capacity.
Financial Summary. Since its inception in July 1998, Essentia has seen
product sales grow from 18,000 cases in the second half of 1998 to 75,000 cases
in 1999. Essentia expects sales of 200,000 cases in year 2000.
<TABLE>
<CAPTION>
Results of Operations: 2000 (forecast) 2001 (forecast)
- ---------------------- --------------- ---------------
<S> <C> <C>
Net Revenues $ 3,111,300 $ 5,093,900
Cost of Goods Sold 1,929,400 2,995,900
--------------- ---------------
Gross Profit 1,181,900 2,098,000
Operating Expenses 1,715,700 1,872,000
Depreciation & Amortization 86,700 111,200
--------------- ---------------
Loss from Operations (620,500) 114,800
Other Income (Expense), Net 57,400 44,600
=============== ===============
Net Income $ (563,100) $ 159,400
(Loss) =============== ===============
</TABLE>
These financial forecasts do not reflect an increase in net revenues
from sources other than those derived by Essentia's normal course of business in
the natural and health foods channels, in both branded and private label product
sales.
Essentia Facility
Essentia's executive offices are located in Woodinville, Washington,
which is located outside Seattle. They consist of approximately 800 square feet
of leased space under a lease which is month to month. Essentia is planning a
corporate office move to Phoenix, Arizona within the next 90 days. Essentia's
current business strategy is to continue to "partner" with contract packing
companies to produce its products under Essentia'a product specifications and
quality control standards. Essentia believes that contract packing
("co-packing") provides the most flexibility and the least capital investment.
Essentia anticipates having multiple plants strategically located around the
United States by the end of 2000. Currently Essentia's co-packers are California
Bottling Company located in Roseville, California and Renegade of America
located in Glendale, Arizona.
<PAGE>
Competition
Essentia believes that Essentia Water is the only water of its kind in
the market today. However, many other water bottlers have substantially greater
financial, technical, bottling, marketing or other resources than Essentia.
Essentia's profitability will depend upon its ability to compete in its market
area.
Product Liability
The sale of its products may expose Essentia to product liability
claims. It believes that its products are, and will be, safe and that it will be
able to continue to obtain product liability insurance at a reasonable cost.
However, in the event of an uninsured or inadequately insured product liability
claim, or in the event of an indemnification claim by a third party, Essentia's
business and financial condition could be materially adversely affected.
Regulation
Essentia's products and business may be subject to federal, state and
local regulations, including environmental regulations. Essentia can't calculate
exactly how much it will cost to comply with government regulation, but it will
try to ensure that its facilities and products comply with all applicable
regulations and standards. In any event, it doesn't think that the cost of
compliance will materially affect its financial condition.
Management
Essentia is currently managed by Kenneth Uptain, its Chief Executive
Officer, and by James Tonkin, its President and Chief Operating Officer.
Employees
As of May 8, 2000, Essentia employed five full-time employees and one
part-time employee plus four contract consultants, two of whom are full-time and
two of whom are part-time. None of Essentia'a employees is represented by a
union and management believes its employee relations are good.
The following financial information summarizes the more complete
historical financial information of Essentia contained elsewhere in this 10-K/A.
The results in the following table do not necessarily indicate results Essentia
will achieve in the future.
Essentia Operating Results
--------------------------
<TABLE>
<CAPTION>
Year Ended December 31,
1999 (July-December) 1998
---------- --------------------
Income Statement Data:
<S> <C> <C>
Net Revenues $677,221 $174,401
Cost of Goods Sold 499,755 199,468
------- -------
Gross Profit (Loss) 177,466 (25,067)
Operating Expenses 821,903 475,565
-------- -------
Operating Loss (644,437) (500,632)
Interest Expense 43,713 2,948
-------- -------
Net Loss $(688,150) $(503,580)
======= ========
Balance Sheet Data:
Current Assets $263,964 $118,350
Property and Equipment-At Cost, Net 280,010 312,763
------- -------
Current Liabilities 676,857 375,846
Paid In Capital 1,058,847 558,847
Accumulated Deficit (1,191,730) (503,580)
</TABLE>
<PAGE>
ENVIRONMENTAL TECHNOLOGIES GROUP
--------------------------------
Overview
The Environmental Technologies Group ("ETG") was created in October,
1999, is headquartered in Tulsa, Oklahoma, and is concerned with the
acquisition, development, and application of specific, environmentally-benign
technologies.
NextPath AES, Inc.
In General. NextPath AES, Inc. ("NAES"), a wholly owned subsidiary of
NextPath, was formed in November 1999. AES (Agro-Economic Systems) is the
acronym used to denote our self-sustaining, integrated agribusiness initiatives.
Status and Mission. Home-based in Tulsa, Oklahoma, NAES was established
to design, build, own, and operate AES facilities worldwide. Our AES facilities
are being designed to grow, process, and package fresh produce and fish on a
continuous, year-round basis. To the maximum extent possible, produce and fish
are to be certifiable as "organically" or "naturally" grown in accordance with
national organic growing standards. Commercial facilities are to include
self-contained energy systems. Light, temperature, humidity, nutrient streams,
water quality, effluent, and emissions at our AES facilities are to be fully
controlled. Fish-tank water is to be used in plant nutrition ("aquaponics"), and
effluent water from plant-beds and processing lines is to be filtered and
recycled. Waste products are to be recycled as fuel for the energy system.
Design Productivity. The target design-productivity of our typical AES
facility is to be considerably greater than that of known hydroponic or
aquaponic systems. Production and processing is to occur on a continuous basis,
and AES facilities are to be able to schedule just-in-time (JIT) delivery of
fresh food to retailers, with consequent savings in cold storage costs and
reduction in spoilage. Additionally, production costs are to be reduced by not
having to accommodate harvesting and processing "surges." Thus, processing lines
can be smaller, with fewer employees needed for harvesting and processing. At
the same time, technical tasks will be more sophisticated and varied, requiring
a larger proportion of trained, salaried workers.
Two Models. Two models are being developed: a large-scale, commercial
version and a "community food security" (CFS) model devised for developing
economies. Needful Provision, Inc. (NPI), a non-profit organization located
in Tahlequah, Oklahoma, which licenses proprietary processes and sub-systems to
NextPath, has been engaged to develop the CFS model, test basic bio-systems, and
provide training for operations and technical personnel.
Support Entities. A Tulsa architectural and construction management
firm, Ragsdale and Associates, has been engaged to oversee facilities design and
engineering. A gasifier-based energy system, designed and built by Thermogenics,
Inc., Albuquerque, New Mexico, has been selected for use at our AES facilities.
Our AES will employ proprietary aquaponics systems and technologies developed by
Agri-Covers, Ltd., of Gridley, Illinois. We have negotiated a definitive
agreement to acquire the assets and intellectual property of Agri-Covers, but
await funding to close the acquisition.
Prototype Commercial Facility. A number of potential Oklahoma sites are
being considered for the prototype facility. Upon completion of current design
and engineering work, contracts will be let to construct and equip that
facility.
Production and Installation Standards. AES facilities are to be built in
modules. Each module is to represent a specific set of growing and processing
conditions and production objectives. Energy requirements, and, therefore,
self-contained heating and electrical systems, are to be sized accordingly.
Modular structures, fixtures, and operating equipment are to incorporate
appropriate ISO 9001, ASME, and DIN specifications. Products, outputs,
environmental control features, and sizes of our AES facilities will vary by
<PAGE>
market region. Modular structures and equipment sets are to be supplied in kit
configuration, suitable for containerized shipment to foreign sites. The AES
program envisions installation of facilities at land reclamation sites, in urban
locations, in areas where severe climate prevents outdoor cultivation, and in
lesser-developed regions in order to enhance general nutrition. In some locales,
we may supplement production through contract growers using company-prescribed
techniques and systems under our supervision.
Marketing Plan and Revenue Sources. Revenues are to come from the sale
of bulk and packaged vegetables, fish, herbs, plant oil extracts (including
health-related products), and ornamental plants. Facilities are to be sized for
economies of scale, with some installations requiring more than fifty acres of
installation space. Target profit margins of 25% or greater per year have been
projected for AES facilities in developed-nation configurations. These are to be
achieved through precise selection of the types of produce grown and value-added
processing. Wholesale lots are to be marketed over the Internet and through
direct, forward supply contracts to large retailers. Some health-food related
products are to be direct-marketed through NextPath's Health Products Group. We
are studying the possibility of marketing fresh produce and fish via overnight
air delivery service.
Estimated Near-Term Capital Requirements. We estimate that approximately
$14,000,000 will be required to implement our business plan for NAES in the near
term.
NextPath Environmental Services, Inc.
In General. NextPath Environmental Services, Inc. ("NES"), also located
in Tulsa, Oklahoma, was formed in November 1999 to develop, sell, own, and
operate systems that convert waste to energy, clean-up water and soil
contaminated by fuel, oil, and chemical spills, provide potable water at
locations that have no water treatment systems, and provide on-site effluent
control, filtration and treatment systems, and, more recently, to acquire,
develop, and market devices to drastically reduce exhaust emissions from, while
increasing the energy efficiency of, internal combustion engines. Two entities
are, or are targeted to be, included under the NES umbrella, NextPath
Thermogenics, LLC and NextPath Separation Solutions, LLC.
NextPath Thermogenics, LLC.
---------------------------
In General. NextPath Thermogenics, LLC (the "Thermogenics, LLC") is a
limited liability company owned 51% by Thermogenics, Inc., Albuquerque, New
Mexico, and owned 49% by NES. The Thermogenics, LLC designs, fabricates and
sells proprietary gasification systems that use virtually any hydrocarbon-based
waste product as fuel to create a low-temperature, high-quality gas.
Technology Base. This gas is known as "producer gas" or "syngas".
Depending on the design of the system, the gas can be either low- or
medium-heating value. The process involves a first stage high temperature
decomposition without combustion in a low-oxygen environment. The system uses
neither a combustion process nor incineration. Further, when coupled to an
engine, gas turbine or boiler, there are no gaseous emissions from the
gasification system and therefore the system can meet rigorous air quality
standards. This gas can be cleanly burned, liquefied, or used in a bio-process
to produce ethanol. The Thermogenics, LLC is actively pursuing opportunities in
this regard with existing process equipment and catalyst suppliers as well as
with waste generators and academic research facilities. Typically, this gas
would be combusted to produce heat for heat exchangers or steam boilers, or
directly fed to an internal combustion or gas turbine engine linked to an
electricity generation device. Thus, these units can be used for small-scale
electrical power generation (co-generation). For these reasons, the Thermogenics
unit was selected as the on site energy system for NextPath's AES facilities
(see above). The unit itself has no regulated emissions. Inert solid residues
from the reaction process can be safely land-filled or mixed with a binder and
used as a paving or building material.
Mission. The purpose of the Thermogenics, LLC is to build, own, and
operate waste-to-energy systems installed for specific waste disposal and energy
generation tasks. This normally would involve multiple units configured to
handle various waste streams, including municipal solid waste (MSW), discarded
tires, oil sludge, trap grease, animal wastes, plant residues, dewatered sewage
sludge, coal tailings, textile waste, automobile shredder waste, industrial
wastes such as paint sludge and used oils, food processing wastes, and wood
products waste. After removal of larger metallic solids, these wastes can be
batched or blended, depending upon energy output requirements.
<PAGE>
Peripheral Equipment Requirements While Thermogenics, Inc. is the
provider and manufacturer of patented gasification systems that form the core of
the Thermogenics, LLC's waste-to-energy business, complete projects will utilize
equipment from a variety of international manufacturers for the processing of
waste and the conversion of the gas produced by the gasification systems into
different forms of energy. This could include shredders, grinders, a briquetting
system, various conveyor systems, internal combustion engines configured for use
with liquid petroleum or natural gas, gas turbines, electrical generators and
turbo-alternators steam boilers, heat-exchangers, distillation and
bio-conversion units (ethanol production) and other peripherals.
System Control, Safety, and Standards. Waste-to energy and peripheral
systems are to be electronically controlled through desktop computers, using
proprietary control logic, circuit boards, and software. All systems are to be
equipped with automated safety and shut-down systems. Facilities and equipment
designed and supplied by the Thermogenics, LLC are to be compliant with local
environmental regulations. The Thermogenics, LLC has committed to bring its
equipment and facilities into conformance with ISO 9000 and 9001 standards at
the earliest possible date.
Project Types and Bases
Build, Own, Operate (BOO). This type of project is to be a long-term (10
years or more) commitment by the Thermogenics, LLC to design, build and operate
a waste-to-energy facility. Typically a local partner will be involved and
contribute a portion of the equity, while Thermogenics, LLC provides the
majority of the funding. Long-term contracts for the supply of the waste and for
the sale of energy would be involved. In most cases the land for the facility is
supplied under a lease agreement with the customer with only a nominal rental
fee. In some cases improvements to the site are cost-shared with the customer
and landowner.
Build-Own-Operate-Transfer (BOOT). A BOOT project is similar to the BOO
project, except that there would be a predetermined time in the future, usually
3 to 5 years when ownership would be transferred to a governmental or private
entity. The Thermogenics, LLC would usually continue to operate and maintain the
facility under a long-term contract with the new owner.
Turn-Key With a Management Contract. This project type would allow an
owner to place a single contract for the entire facility, sometimes even
including the site preparation and civil work, and the Thermogenics, LLC would
serve as General Contractor, working with local contractors, to design,
construct, install and start-up the entire plant. The Thermogenics, LLC could,
at the owner's option, facilitate construction financing, with full payment made
when the installation and start-up phase is completed and the plant is in full
operation. The Thermogenics, LLC could then, under a long-term contract with the
owner, be responsible for operation and maintenance of the facility on a fee or
cost-plus basis.
Straight Turn-Key. While less attractive to the Thermogenics, LLC, this
form of project could be expedient when special financing conditions, or a need
for the technical skills dictate. In this instance the Thermogenics, LLC would
be paid progress payments during the design and construction phases, and fully
paid off when the plant is accepted and ready to begin full operation. Completed
facilities would remain under the Thermogenics, LLC service and maintenance
agreements for an indefinite period. Operators would be trained and certified by
the Thermogenics, LLC.
Development Plan. The initial development plan envisions 10 to 12
projects in the Western United States and Europe. Project costs to the
Thermogenics, LLC include manufacture and procurement of systems and related
equipment, and the hiring and training of operators. Some foreign projects could
involve co-ventures with waste management and power companies. In some
instances, bank financing and economic development incentives have been
proffered. The Thermogenics, LLC is exploring a number of public and private
project finance options.
Revenue Sources. Revenues are to be derived from on-site waste disposal
contracts; tipping fees (fees for the handling of waste--some running to more
than $400 per ton of waste received); contract management of the Thermogenics,
LLC provided waste-to-energy facilities; consulting services for purpose-design
of facilities to dispose of particular wastes or produce energy for particular
industrial purposes (for example, an ethanol plant, a foundry, AES facilities, a
sugar plant, and a wood products plant); generation of electrical power (in the
range of approximately three to 20 megawatts); generation of heat for central
<PAGE>
steam heating systems; production of derivative fuels including liquid petroleum
gas and ethanol/methanol; other byproducts (including ash, carbon dioxide, and
carbon monoxide); and the sale or leasing of complete systems. Rates of return
for these operations are being assessed; however, the Thermogenics, LLC criteria
for acceptance of contract proposals includes a requirement of projected
internal rates of return on equity greater than 20%.
Estimated Near-Term Capital Requirements. We estimate that approximately
$16,000,000 will be required to implement the business plan for the
Thermogenics, LLC in the near term.
NextPath Separation Solutions, LLC.
In General. NextPath Separation Solutions, LLC (the "Separation
Solutions, LLC") is a limited liability company owned 51% by the Lewis
Corporation (Tetra, Separation Systems, LLC), Pocatello, Idaho, and owned 49% by
NES.
Technology Base. Tetra, Separation Systems, LLC /Lewis designs,
fabricates, and sells proprietary oil-water separation and soil remediation
systems that feature patented and proprietary components. These systems are
transportable (skid-mounted) or mobile, and are capable of on-site clean-up of
petroleum and chemical spills, with accompanying on-site restoration of
contaminated soils as required. Systems are automated for two-person operation.
Independent laboratory test results disclose that these systems can reduce
petroleum contamination in soil to less than 100 parts per million and volatile
organic compounds (VOC's) to trace levels in a single-pass operation. Oil
contamination in water can be virtually eliminated in a single pass.
Demonstrations have been successfully conducted for environmental protection and
quality authorities.
Mission. The Separation Solutions, LLC has been formed to build, own,
and operate these systems for contract clean-up and remediation. Operations can
involve three systems, the sump system, the soil system, and the oil-water
system. Operating systems would be installed at clean-up sites such as gas
stations and fuel depots, environmental cleanup zones, industrial waste dumps,
waste transfer stations, and landfills.
Development Plan. Two production model systems are already in operation.
The initial development plan envisions equipping 18 operating locations with
sump systems. This includes manufacturing and procurement of the systems and
related equipment, localized marketing efforts, and the hiring and training of
operators. Initial target markets include the western and southwestern regions
of the United States. This plan would be accelerated to accommodate additional
domestic and European markets that have been identified. Depending upon market
conditions, and demand, the Separation Solutions, LLC is prepared to establish
up to 200 operating sites within the first seven years.
Revenue Sources. Revenues are to be derived from on-site water and soil
cleanup contracts. For example, a sump system operating at an average rate of 50
gallons per minute can process 24,000 gallons per 8-hour day. Processing
contracts, typically bring an average of $1 per gallon on a range of $.50 to
$1.50 per gallon. Therefore, the Separation Solutions, LLC projects average
operating-day revenue per sump system to be approximately $24,000, or $5.4
million per year if operated for 225 days per year. Current projections indicate
potential average margins exceeding 40% beginning in the third year.
Estimated Near-Term Capital Requirements. We estimate that approximately
$17,000,000 will be required to implement the business plan of the Separation
Solutions, LLC in the near term.
NextPath Bio-Products Research; Needful Provision, Inc.
In General. Applications research is to be sponsored by all NextPath
entities; however, the main bio-product development arm for the company is to be
Needful Provision, Inc, ("NPI"), an Oklahoma based non-profit organization that
licenses proprietary systems and processes to NextPath. David Nuttle, NextPath's
Chairman and interim President and CEO, is also President, CEO and Chairman of
NPI and the inventor of the proprietary technology owned by NPI and licensed to
NextPath. The scope of NPI operations for NextPath remains proprietary and
budgets for grants and research contracts to NPI are included in those of the
operating companies. NPI has been previously, or is now, engaged in cooperative
<PAGE>
research activities with Oklahoma State University, North Carolina State
University/Research Triangle Institute, and the National Renewable Energy
Laboratory. NextPath has a first right-of-refusal for commercialization of NPI's
products and processes. Some of NPI's development work on our behalf includes:
o development of genetic stocks of fish, plants, and micro-
organisms for AES operations;
o applied research into photo-flash methods for stimulating plant
growth;
o applied research into the production and refinement of biofuels
from fresh water micro-algae;
o applied engineering of effluent control systems using bio-
filtration and vegetative filter beds;
o applied research and engineering of aquaculture and hydroponic
systems;
o applied research into the nutritional properties of high-protein,
naturally occurring grains and "ethno-botanicals" (plants
cultivated and used for nutrition and medicinal purposes by
indigenous peoples);
o applied research into lipid/oil extraction from vegetation and
micro-organisms;
o applied research into the natural enhancement and control of
nutrients for hydroponic plants and aquaculture fish;
o training curricula and contract training for AES operators and
technicians; and
o information compendia for bio-systems development.
INTERNET AND E-COMMERCE GROUP
-----------------------------
PriMedium, LLC
On June 12, 1999, NextPath signed an Option Agreement with PriMedium,
LLC, a Dallas, Texas, based software development firm that specializes in
creating websites for Internet sales and purchase ordering. One of the primary
reasons NextPath signed the Option Agreement was to develop the means for direct
sale of NextPath and its subsidiaries' products and sales over the Internet with
all of NextPath websites linked. Among other terms, the Option Agreement
provides that NextPath would pay $1,500,000, issue 600,000 shares of NextPath
common stock, and grant an annual royalty payment of ten percent (10%) based on
the pre-tax profits of PriMedium to the equity owners of PriMedium. Although the
shares were issued by NextPath at the direction of our former President and CEO,
neither the Option Agreement nor the issuance of the stock was known to, or
approved by, the Board. We are reevaluating whether or not to enter into a
definitive agreement and there can be no assurances that one will ultimately be
consummated.
US CertifiedLetters LLC
US CertifiedLetters LLC ("USCL") was formed for the purpose of
licensing, developing and commercializing proprietary technology for
transmitting instruments by certified mail via the Internet or other medium (the
"C-mail Technology") in the continental United States, Alaska and Hawaii. C-mail
Technology will enable postal customers to send certified mail over the
Internet. On April 3, 2000, NextPath signed a definitive agreement to acquire
20% of USCL. The purchase price will consist of a combination of cash and stock,
of which NextPath has advanced $2,750,000. The parties expect to complete the
acquisition by June 4, 2000. There are no assurances that this transaction will
be closed within the anticipated timeframe or that it will close consistent with
terms of the initial agreement.
USCL provides electronic business-to-business and business-to-consumer
mail services, and has developed Internet technologies to provide new and more
efficient mail processing capabilities to consumers, particularly in the area of
<PAGE>
certified mail. USCL believes it is the first and only company to be granted
approval by the USPS to provide certified mail processing services online. In
1998, the U.S. Postal Service processed 510,878,000 pieces of certified mail
(according to the USPS website, www.usps.gov, and 1998 annual report). USCL
expects to capture a portion of this market.
Through its proprietary web site, www.USCertifiedLetters.com, USCL
believes that it will be one of the most reliable ways to send certified mail
within the continental United States, Alaska and Hawaii. William T. Carter, the
Manager and founder of USCL, has also developed www.globalcertifiedpost.com
(GCP) for overseas certified mail delivery.
USCL's licensed new generation of proprietary, patent pending,
information software, Automated Certified Mail, has been test marketed, is
approved by the USPS and is ready to mass market. This software allows the user
to create a letter (or insert one from a word processing program) at the
www.USCertifiedLetters.com. site, pay on-line, and then send the letter. The
automated certified mail system verifies the address, adds the barcode, prints
and folds the letter, and automatically completes the certification forms with
just a few clicks of a mouse. The customer can expect a return receipt within 4
to 6 days, compared to the average of 10 to 12 days for manual processing.
Global Certified Mail
Global Certified Mail, Inc. ("GCM") was formed by NextPath in October
1999 to commercialize the same proprietary electronic certified mail system for
areas outside the continental United States, Alaska and Hawaii. Many businesses
and organizations in other countries require verification of mail delivery to
the United States, but traditional delivery methods are expensive and time
consuming.
On April 3, 2000, NextPath signed an agreement to exchange a 20%
interest in GCM for a license from William T. Carter to use his C-mail
Technology to enable global postal customers to send certified mail over the
Internet outside of the continental United States, Alaska and Hawaii. The
Company will maintain an 80% ownership interest in GCM. The parties expect to
complete this transaction by June 4, 2000. There are no assurances that this
transaction will be closed within the anticipated timeframe or that it will
close consistent with terms of the initial agreement.
USCL is currently developing the web site to be used by GCM, where the
process will be similar to that of www.USCertifiedLetters.com. However, all
letters will be processed at one facility in Birmingham into a standard
certified letter, making the "point of origin" for the letter a point within the
United States, rather than a foreign city. This will reduce the delivery time,
speed return receipts, and reduce costs compared to the current alternatives.
GCM intends initially to target multinational businesses, financial institutions
and law firms in Europe.
USCL recently chose IBM Global Services (NYSE: IBM) and ITC^DeltaCom
(Nasdaq: ITCD) to design, manage and host both the new USCL site.
INVESTMENTS
-----------
United Paper, Inc.
We own 1,000 shares of non-voting Series A Preferred Stock of United
Paper, Inc., a Texas corporation ("United Paper"), for which we paid $1,000,000.
Each share of Series A Preferred Stock has the right to priority mandatory
cumulative dividends of $120 per year.
United Paper is an independent paper distributor to newspapers,
publishing companies, printers and catalog houses. It is the resulting company
of the August 10, 1999 merger of All-Pro Paper of Texas, Crown Converting of
Texas, G.B. Goldman Paper of Philadelphia, and The Paper Group of Chicago on
August 10, 1999.
All Pro and The Paper Group are merchant wholesalers that currently sell
paper in the South Central and Mid Western United States. These company's have
the ability to repackage, cut and customize paper for shipment. They sell
groundwood newsprint, groundwood coated free sheet, and coated free sheet to
printers and end users.
<PAGE>
G.B. Goldman is a paper wholesaler that specializes in uncoated free
sheet, coated free sheet, and coated paperboard. The company has a successful
history of selling in job lot quantities and providing competitive value added
services to the paper merchant and converter trade.
Crown Converting, with locations in Philadelphia PA, Lufkin TX, and
Nashville TN, can handle a full range of converting needs including rewinding,
slitting, and sheeting.
North American Paper was acquired by United Paper in December 1999 and
is a paper merchant wholesaler selling to publishing, catalogs, and other
periodicals. The company specializes in full graphic, print, and paper
solutions. Advantage Paper was acquired by United Paper in February 2000 and is
a printer direct seller, handling commodity offset and paper board.
GroupNow, Inc.
On November 24, 1999 we signed a Subscription Agreement to purchase
1,000,000 shares of Series A Convertible Preferred Stock in VentureNow, Inc.,
(now known as GroupNow, Inc.) at a price of $10 per share. The Series A
Convertible Preferred Stock has voting powers per share equal to GroupNow's
Common Stock. However, the holders of the Series A Convertible Preferred Stock
are entitled, as a class, to receive seventy percent (70%) of any dividend paid
by GroupNow, Inc. prior to conversion. Holders of the Series A Preferred Stock
will share dividends paid by GroupNow, Inc., if any, ratably in accordance with
their percentage ownership within the class of Series A Convertible
Stockholders. Each share of Series A Convertible Preferred Stock will
automatically convert to one share of Common Stock under certain circumstances.
As of December 31, 1999, we had paid $1,500,000 to GroupNow, Inc. in accordance
with the terms of the Subscription Agreement. Therefore, as of this date,
NextPath owns 15% of the Series A Convertible Preferred Stock. We have not
decided whether or not we will acquire the remaining 85% of the Series A
Convertible Preferred Stock for $8,500,000 and there can be no assurance that we
will acquire the remaining stock.
GroupNow, Inc. is a non-operating holding company, the operating
subsidiaries of which are VentureNow, LLC, VentureNow Holdings, LLC and Now
Securities, LLC.
VentureNow, LLC is a venture capital investment firm focusing on late
stage investments in Information Technology and Internet focused companies. In
addition to its proprietary funds, VentureNow plans to develop additional
private equity funds targeted toward different stages of investment (e.g. early
stage, second stage, etc.) in its target sectors. The company plans to derive
revenue from turnover of its proprietary investments and from fees for
management of the planned private equity funds.
VentureNow Holdings, LLC has been established to act as the general
partner of the proposed private equity funds for which VentureNow, LLC will
serve as manager. VentureNow Holdings, LLC plans to derive revenue through
capital gains on its investments and the general partner's share of any carried
interest of the private equity funds for which it plans to act as general
partner.
Now Securities, LLC is a financial advisory and investment banking firm
in development. It currently focuses on advising emerging growth companies
regarding corporate structuring and development, as well mergers and
acquisitions.
LATelco International, Inc.
On August 10, 1999, we purchased 666,666 Units in the capital of LATelco
International, Inc. ("LATelco") for $100,000, each Unit consisting of one common
share and one non-transferable share purchase warrant authorizing the holder to
purchase one common share at a price of $0.15 per share on or before August 10,
2000. There can be no assurance that we will exercise our warrants.
LATelco, a corporation continued under the laws of the Turks and Caicos
Islands, is headquartered in San Antonio, Texas. Its stock is traded on the
Canadian Venture Stock Exchange under the symbol "LTO." It maintains a website
at http://home.flash.net/~latelco. LATelco was organized in 1993 for the purpose
of developing wireless communications systems and providing specialized wireless
<PAGE>
services. Its principal business lines include the design, manufacture and
operation of wireless data systems and networks incorporating proprietary
software and equipment developed by LATelco.
ITEM 2. PROPERTIES
Our executive offices are located at 1615 N. 24th West Avenue, Tulsa,
Oklahoma. We occupy approximately 6,000 square feet of space on a month to month
lease. This space is shared with NextPath AES, Inc.
Each of our subsidiaries maintains executive office and manufacturing
facilities, as the case may be, as described in Item 1. Business. We believe
that our facility and those of our subsidiaries are adequate for our and their
current needs.
ITEM 3. LEGAL PROCEEDINGS
NextPath and its former President, James R. Ladd, are two of the named
defendants in the case of Tim McMurray vs. James R. Ladd, Robert Wehle et al.,
District Court of Dallas County, Texas (No. 00-00170) filed January 10, 2000.
The action alleges "tortious interference with existing and/or potential
business relations," "civil conspiracy," and negligence and also seeks
injunctive relief. NextPath believes that this action is wholly without merit
and intends to vigorously defend it.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
No matters were submitted to a vote of security holders during the
quarter ended December 31, 1999.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information
The Company's authorized common equity securities consist of par value
$0.001 common stock.
From January 27, 1998 until July 23, 1999, our common stock was quoted
on the OTC Bulletin Board under the symbol "HYPE." Since July 23, 1999, our
common stock has been quoted on the OTC Bulletin Board under the symbol "NPTK."
Prior to January 27, 1998, there was no established public market for our common
stock. The following table sets forth the high and low closing bid prices per
share of our common stock for each full quarterly period during the two most
recent fiscal years as reported by the OTC Bulletin Board:
<TABLE>
<CAPTION>
High Low
---- ---
Year Ended December 31, 1998
<S> <C> <C>
First Quarter ............................. $ N/A $ N/A
Second Quarter ............................ .50 .38
Third Quarter ............................. .44 .38
Fourth Quarter ............................ .63 .38
Year Ended December 31, 1999
First Quarter ............................. $1.00 $ .44
Second Quarter ............................ 2.38 .88
Third Quarter ............................. 7.00 1.93
Fourth Quarter............................. 25.00 7.00
</TABLE>
Bid prices for the OTC Bulletin Board reflect inter-dealer prices, do
not include retail mark-ups, mark-downs and commissions, and do not necessarily
reflect actual transactions.
<PAGE>
Holders
As of May 8, 2000, there were 1,234 shareholders of record of our common
stock. On May 8, 2000, the last reported sale price of our common stock on the
OTC Bulletin Board was $3.56 per share.
Dividends
We haven't declared or paid any dividends on our common stock in the
past, and we don't anticipate declaring or paying any dividends in the
foreseeable future. We intend to retain future earnings, if any, to reinvest in
our business. Any future determination as to the declaration and payment of
dividends will be at the discretion of our board of directors and will depend on
then existing conditions, including our financial condition, results of
operations, capital requirements, business prospects, and such other factors as
the board deems relevant.
Recent Sales of Unregistered Securities
On March 17, 2000, James Ladd, NextPath's Chairman, President, Chief
Executive Officer and Treasurer, resigned due to persistent problems with his
health. On March 30, 2000, Douglas McClain, a member of NextPath's Board,
resigned for personal reasons. Since that time, our new management team and
reconstituted Board has been using their best efforts to ascertain the full
extent to which NextPath, at the direction of Messrs. Ladd and McClain without
notice to the Board and without Board approval, may have sold securities, or may
have benefited from the sale of our stock held by Messrs. Ladd, McClain and
others, since January 27, 1998, which were not registered under the Securities
Act of 1933. As of May 8, 2000, we are aware of the following sales of
unregistered securities and transactions involving securities which were issued
in exchange for property, services, or other securities. The transactions set
forth below are not intended to be all inclusive and there may be other
transactions, the exact facts and details of which we are investigating.
However, should other transactions be discovered, they will be disclosed, if
required, in an amended 10-K or other appropriate report.
(a) Compact Power Merger. In connection with our acquisition of all
of the issued and outstanding common stock of Compact Power
International, Inc. on January 27, 1998, we issued approximately
5,480,000 shares of restricted common stock to the following
shareholders of Compact Power ("CP") in a stock-for-stock
transaction for shares of CP:
<TABLE>
<CAPTION>
Name Shares CP Shares
---- ------ ---------
<S> <C> <C>
James R. Ladd 4,223,000 1,175
Mary W. Harrison 580,000 150
Joseph P. Kane 387,000 100
Willow Holdings, Inc. 290,000 75
------- -----
Total 5,480,000 1,500
</TABLE>
This transaction was exempt from registration under the
Securities Act pursuant to Section 4(2) on the basis that the
transaction did not involve a public offering.
(b) First 1998 504 Offering. On February 1, 1998, we offered
1,500,000 shares of common stock for $.25 per share to certain
qualified investors in a private placement. This transaction was
exempt from the registration requirements of the Securities Act
pursuant to Section 3(b) and Rule 504 of Regulation D.
(c) Second 1998 504 Offering. On March 10, 1998, we offered 1,100,000
shares of common stock for $.25 per share to certain qualified
investors in a private placement. This transaction was exempt
from the registration requirements of the Securities Act pursuant
to Section 3(b) and Rule 504 of Regulation D.
(d) 1999 504 Offering. On January 1, 1999, we offered 1,500,000
shares of common stock for $.40 per share to certain qualified
investors in a private placement. This transaction was exempt
from the registration requirements of the Securities Act pursuant
to Section 3(b) and Rule 504 of Regulation D.
<PAGE>
(e) Regulation S Transaction. During 1999, we sold and issued
approximately 1,365,000 shares of restricted common stock for
approximately $15,430,000 to European investors. This transaction
was exempt from the registration requirements of the Securities
Act as an offshore transaction pursuant to Regulation S.
(f) NPI License. On September 23, 1999, we issued 500,000 shares of
restricted stock to Needful Provision, Inc. as required by our
License Agreement with NPI dated June 1, 1998.
(g) Sagebrush Acquisition. In connection with our acquisition of all
140,000 shares of outstanding common stock of Sagebrush
Technology, Inc. ("Sagebrush") on December 14, 1999, we paid cash
and issued 600,000 shares of common stock to the four
shareholders of Sagebrush in exchange for their restricted common
stock in Sagebrush. This transaction was exempt from the
registration requirements of the Securities Act pursuant to
Section 4(2) on the basis that the transaction did not involve a
public offering.
(h) Willow Acquisition. In connection with our acquisition of all 200
shares of the outstanding common stock of Willow Systems Limited
("Willow") on November 2, 1999, we paid cash and issued 500,000
shares of restricted common stock to the two shareholders of
Willow in exchange for their common stock in Willow. This
transaction was exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) on the basis that the
transaction did not involve a public offering.
(i) Reflex LLC Purchase Agreement. In connection with our acquisition
of Willow, we also acquired complete ownership of its subsidiary,
Reflex LLC. On November 2, 1999, we issued 50,000 shares of
restricted common stock to the owner of one-third of Reflex LLC
for his interest in Reflex. This transaction was exempt from the
registration requirements of the Securities Act pursuant to
Section 4(2) on the basis that the transaction did not involve a
public offering.
(j) LaserWireless Acquisition. In connection with our acquisition of
all 100 shares of the outstanding common stock of LaserWireless,
Inc. ("LaserWireless") on October 18, 1999, we paid cash and
issued 200,000 shares of restricted common stock to the sole
shareholder of Laser Wireless in exchange for his common stock
in LaserWireless. In addition, we placed 300,000 shares of
restricted common stock in a Restricted Stock Plan for the
benefit of the employees of LaserWireless. This transaction was
exempt from the registration requirements of the Securities Act
pursuant to Section 4(2) on the basis that the transaction did
not involve a public offering.
(k) NextWave Photonics Acquisition. In connection with our
acquisition of all 200 shares of the outstanding member interests
of NextWave Photonics, LLC ("NextWave") on November 2, 1999,
we issued 50,000 shares of restricted common stock to John
Hodges, an equity owner of NextWave, in exchange for his
membership interest in NextWave. This transaction was exempt from
the registration requirements of the Securities Act pursuant to
Section 4(2) on the basis that the transaction did not involve a
public offering.
(l) IC Holdings Agreement. On May 6, 1999, we issued 60,000 shares of
restricted common stock to IC Holdings III, LLC as partial
compensation for investor relations services to be provided by IC
Holdings to us. This transaction was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) on
the basis that the transaction did not involve a public offering.
(m) IPA Consulting Agreement. We issued 550,000 shares of restricted
common stock to International Profit Associates, Inc. as partial
compensation for consulting services to be provided by IPA to us
pursuant to a Consulting Agreement dated September 15, 1998. This
transaction was exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) on the basis that the
transaction did not involve a public offering.
<PAGE>
(n) Essentia Water, Inc. In connection with our acquisition of all
3,657,966 shares of outstanding common stock of Essentia Water,
Inc. ("Essentia") on January 21, 2000, we issued $7,654,294 worth
of our restricted common stock (585,760 shares) to the
shareholder of Essentia in exchange for its common stock. The
transaction was exempt from the registration requirements of the
Securities Act pursuant to Section 4(2) on the basis that the
transaction did not involve a public offering.
(o) PriMedium, Inc. On or about July 12, 1999, NextPath, at the
direction of James Ladd, issued 800,000 shares of restricted
stock to the owners of PriMedium, Inc., notwithstanding that the
issuance had not been brought to the attention of the Board, let
alone authorized by the Board. We are reevaluating whether or not
to enter into a definitive agreement and there can be no
assurances that one will ultimately be consummated.
(o) Consulting Agreements. We now believe that NextPath, at the
direction of Mr. Ladd, restricted common stock was issued to a
number of individuals and entities pursuant to consulting
agreements, including but not limited to, the following:
<TABLE>
Name Shares
---- ------
<S> <C>
Douglas McClain 5,000,000
W.O.W. Consulting Group 11,000,000
BLISS Unlimited, Inc.
(Interplex Capital & Equity Corp) 2,500,000
Affiliated Communications Co. 1,700,000
</TABLE>
(p) Compact Power Limited. In April 2000, we issued 250,000 shares of
restricted common stock with piggyback registration rights to
Compact Power Limited as consideration for the Mutual Release of
a Franchise Agreement we entered into with Compact Power Limited
on June 1, 1998. The transaction was exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) on
the basis that the transaction did not involve a public offering.
ITEM 6. SELECTED FINANCIAL DATA
Prior to our merger with Compact Power International on January 27,
1998, we had no operating history. Since that merger, we have been involved
primarily in activities related to the acquisition of our subsidiaries. Our
subsidiaries also have limited operating histories. Sagebrush Technology, Inc.
(NM) was incorporated on April 1, 1991; Willow Systems Limited (NM) was
incorporated on May 23, 1996; Essentia water, Inc. (WA) was incorporated on June
30, 1998; and Laser Wireless, Inc. was incorporated on March 2, 1998, but was
inactive until May of 1999.
The following sets forth selected consolidated financial date for the
periods indicated. The selected consolidated financial data were derived from,
and should be read in conjunction with, our Consolidated Financial Statements:
<TABLE>
<CAPTION>
Fiscal Year
1999 1998 1997
------------ ---------- -----
<S> <C> <C> <C>
Revenue $ 356,157 $ - $ -
Cost of Goods 235,788 - -
Gross Profit 120,369 - -
Expenses 33,079,957 528,142
Net Loss from Operations (32,958,588) - -
Net Loss (36,768,153) (528,142) -
Net Loss Per Share (2.22) (.069) (.000)
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
We don't have any significant operating history other than that of our
wholly owned subsidiaries. We currently derive all of our revenue from the
operations of our wholly owned subsidiaries and from our other investments.
During 1999, most of our efforts have been directed to the raising of sufficient
capital to finance our operations and costs associated with the negotiation and
closing of acquisition agreements with our subsidiaries. We intend to continue
to identify and pursue acquisitions which provide attractive investment
opportunities, particularly when we can add value through our technical
expertise. Our operating expenses are comprised of our general and
administrative overhead and the expenses of our subsidiaries.
We intend to provide our subsidiaries with sufficient funds so that they
can grow their businesses nationally and internationally by effectively
developing, marketing and expanding their products, services and market base.
However, absent an infusion of equity capital or financing on terms acceptable
to us, we do not believe that we have the liquidity and capital resources
necessary to operate our business and those of our subsidiaries for the
foreseeable future. We are actively engaged in negotiations with debt and equity
sources and we will continue to purse all such options on an aggressive basis.
Results of Operations
In 1999, we incurred a net loss of $36,768,153. In 1998 we incurred a
net loss of $528,142. See our Consolidated Financial Statements.
Liquidity and Capital Resources
We do not believe that our existing working capital, the anticipated
revenues of our subsidiaries, and the anticipated revenues from our other
investments will be sufficient to fund our cash requirements and capital needs
for the foreseeable future. See ITEM 1. BUSINESS. The extent of additional
financing needed will depend on the success of our business and our ability to
identify and pursue additional acquisitions that provide attractive investment
opportunities. While to the extent possible we intend to fund future
acquisitions primarily with our common stock, most acquisitions require that a
portion of the consideration be in the form of cash. If we significantly
increase the operations of our subsidiaries or our acquisitions beyond planned
levels or if our revenues are lower than anticipated, our cash needs will be
increased. In addition, our future capital requirements will depend on a number
of other factors, including the level of our product research and development,
the level of market acceptance of our goods and services, and the feasibility
and extent of international expansion.
Competition from larger and more established companies may hamper
marketability. NextPath and its subsidiaries may face intense competition from
similar, more well-established competitors, including national, regional and
local companies possessing substantially greater financial, marketing, personnel
<PAGE>
and other resources than NextPath. NextPath may not be able to market or sell
its products if faced with direct product competition from these larger or more
established companies.
Patents, trademark protection and proprietary marks. Notwithstanding any
potential registration of patents and certain trade names with the United States
Patent Office and the United States Trademark Office, there is no assurance that
NextPath or its subsidiaries would be able to enforce against use of any of the
proprietary products or marks of its subsidiaries. There is also no assurance
that NextPath will be able to prevent competitors from using the same or similar
products, names, marks, concepts or appearances of it or its subsidiaries or
that it will have the financial resources necessary to protect its marks against
infringing use.
Issuance of future shares may dilute investors' share value. The
Articles of Incorporation as amended of NextPath authorizes the issuance of
100,000,000 shares of common stock. The future issuance of all or part of the
remaining authorized common stock may result in substantial dilution in the
percentage of our common stock held by our then existing shareholders. Moreover,
any common stock issued in the future may be valued on an arbitrary basis by us.
The issuance of our shares for future services or acquisitions or other
corporate actions may have the effect of diluting the value of the shares held
by investors, and might have an adverse effect on any trading market.
Current trading market for the Company's securities. Our common stock is
traded on the OTC Bulletin Board operated by Nasdaq under the symbol NPTK. The
NASD has implemented a change in its rules requiring all companies trading
securities on the OTC Bulletin Board to be registered as a reporting company.
The Company was required to become a reporting company by the close of business
on December 15, 1999. NextPath effected the merger with Epilogue on November 11,
1999 and became a successor issuer thereto in order to comply with the reporting
company requirements implemented by the NASD.
Penny Stock Regulation. Our common stock may be deemed a penny stock.
Penny stocks generally are equity securities with a price of less than $5.00 per
share other than securities registered on certain national securities exchanges
or quoted on the Nasdaq Stock Market, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system. Our securities may be subject to "penny stock 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 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. Additionally, for any
transaction involving a penny stock, unless exempt, the "penny stock rules"
require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the SEC relating to the penny stock market. The broker-dealer also
must disclose the commissions payable to both the broker-dealer and the
registered representative and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information on the
limited market in penny stocks. Consequently, the "penny stock rules" may
restrict the ability of broker-dealers to sell our securities. The foregoing
required penny stock restrictions will not apply to our securities if such
securities maintain a market price of $5.00 or greater. As of the date of this
10-K/A, the trading price of our common stock is less than $5.00 per share, and
there can be no assurance that the price of our securities will exceed such a
level.
We are currently operating at a loss. Until the recent acquisition of
Sagebrush, Willow, LaserWireless and Essentia, we had no operations or revenues
and we borrowed funds or sold our securities to begin our operations and fund
our acquisitions. Our ability to develop operations is dependent upon our
ability to acquire companies for which we will need to raise capital through the
placement of our securities or from other debt or equity financing. If we are
not able to raise such financing or to obtain alternative sources of funding,
management will be required to curtail operations. There is no assurance that we
will be able to continue to operate if additional sales cannot be generated.
We have a limited operating history. We have only a limited history of
operations which to date have not been profitable. Our operations are subject to
the risks and competition inherent in the establishment of a relatively new
business enterprise. There can be no assurance that future operations will be
profitable. Revenues and profits, if any, will depend upon various factors,
including market acceptance of its concepts, market awareness, reliability and
<PAGE>
acceptance of the Internet, dependability of its distribution network, and
general economic conditions. There is no assurance that we will achieve our
expansion goals and the failure to achieve such goals would have an adverse
impact on us.
Possible inability to finance acquisitions. In transactions in which we
agree to acquire a company for cash, we will have to locate financing from
third-party sources such as banks or other lending sources or we will have to
raise cash through the sale of our securities. There is no assurance that such
funding will be available to us when required to close a transaction or if
available on terms acceptable to us.
Operation of LaserWireless business involves the use of lasers.
LaserWireless utilizes lasers. Although the lasers are of relatively low power
and to be located in unpopulated areas such as rooftops and although the laser
devices are marked with "hazard" signs, there can be no assurance that passersby
will not cross the path of a laser, causing damage to the eyes or causing other
health hazards.
Unforeseen risks of acquired companies. Companies that may be acquired
by us or with which we enter into business relationships may face competition
from more-established or better financed companies. In addition, any one or more
of these companies may produce or manufacture equipment, technology or other
goods that pose inherent risks in production or operation. It is impossible to
foresee these risks herein, but we will consider such risks before entering into
any business combination.
Our acquisition program may lead to uncertain liabilities. We are
currently engaged in an active acquisition program. Although we evaluate all
potential acquisitions, the acquisition of going concerns could potentially lead
to the acquisition of the target company's liabilities, including patent and
trademark infringement claims, product liability claims, breach of contract
claims, or shareholder derivative claims. There can be no assurance that any
companies that we acquire are free of potential liabilities.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See "Index to Financial Statements and Schedules" included on page 39
for information required under this Item 8.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Crouch, Bierwolf & Chisholm, Certified Public Accountants, whose address
is 50 West Broadway, Suite 1130, Salt Lake City, Utah 84101, the independent
accountant which was previously engaged as the principal accountant to audit
NextPath's financial statements, was dismissed on February 8, 2000 so that we
could engage the services of Gray & Northcutt Inc. Crouch, Bierwolf & Chisholm
stated in its report on the financial statements of NextPath for the past two
years (1997 and 1998) that they were prepared assuming that NextPath will
continue as a going concern and the report contained the firm's opinion that the
Company's recurring operating losses and lack of working capital raise
substantial doubt about its ability to continue as a going concern. The decision
to change accountants was recommended and approved by our Board of Directors.
During our two most recent fiscal years, there have not been any
disagreements with Crouch, Bierwolf & Chisholm on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
We provided Crouch, Bierwolf & Chisholm with a copy of the Current
Report on Form 8-K prior to its filing with the SEC and requested that Crouch,
Bierwolf & Chisholm furnish us with a letter addressed to the SEC stating
whether it agrees with the statements made in the Current Report on Form 8-K
and, if not, stating the respects in which it does not agree. The letter of
Crouch, Bierwolf & Chisholm is attached as an exhibit to the Current Report on
Form 8-K filed with the SEC February 14, 2000.
Weinberg & Company, P.A., Certified Public Accountants, whose address is
6100 Glades Road, Suite 314, Boca Raton, Florida 33434, the independent
accountant which was previously engaged as the principal accountant to the audit
financial statements of Epilogue Corporation, with whom we merged on November
<PAGE>
12, 1999, was dismissed on February 8, 2000 so that NextPath, as the surviving
corporation in the merger, could engage the services of Gray & Northcutt Inc.
Weinberg & Company audited the balance sheet of Epilogue Corporation (a
development stage company) as of June 7, 1999 and the related statements of
operations, changes is stockholder's equity and cash flows for the period from
June 4, 1999 (inception) to June 7, 1999. The decision to change accountants was
recommended and approved by our Board.
There have not been any disagreements with Weinberg & Company on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure.
We provided Weinberg & Company with a copy of the Current Report on Form
8-K prior to its filing with the SEC and requested that Weinberg & Company
furnish us with a letter addressed to the SEC stating whether it agrees with the
statements made in the Current Report on Form 8-K and, if not, stating the
respects in which it does not agree. The letter of Weinberg & Company is
attached as an exhibit to the Current Report on Form 8-K filed with the SEC on
February 14, 2000.
On February 8, 2000, Gray & Northcutt, located in Oklahoma City,
Oklahoma, was engaged by us to audit the consolidated balance sheets of NextPath
and its wholly-owned subsidiaries. Other than concerning its engagement, we had
not consulted with Gray & Northcutt Inc. prior to February 8, 2000.
On March 23, 2000, Gray & Northcutt, Inc. resigned from the audit
engagement of NextPath effective that date. Gray & Northcutt, Inc. agreed
to complete its audits of our subsidiaries, Laser Wireless, Inc., Willow
Systems, Inc. and Sagebrush Technology, Inc.
In its resignation letter, Gray & Northcutt, Inc. stated as follows: "In
the course of performing our work, we have concluded that NextPath lacks the
internal controls necessary for the development of reliable financial
statements. Further, information has come to our attention that leads us to
conclude that we should not rely upon the representations of NextPath's
management in place during the period covered by this audit".
We do not disagree with the statements of Gray & Northcutt, Inc. In
response to these statements (i) we retained Robert Woodward as Chief Financial
Officer; (ii) Mr. Woodward has taken over our financial books and records and
accounts; (iii) our bank accounts are being moved from our Hillsborough, North
Carolina headquarters to its new headquarters in Tulsa, Oklahoma; (iv) we have
retained the services of an accountant to organize our financial books and
records; (v) we have adopted the financial management plan proposed by Mr.
Woodward; (vi) our Audit Committee has been filled with three independent
directors; (vii) we have accepted the resignations of James Ladd, our former
President, CEO and Chairman, and of Douglas McClain, a former director; (viii)
we engaged Crouch, Bierwolf & Chisholm, our former auditors, to complete the
audit of the Company begun by Gray & Northcutt, Inc. so that the Form 10-K/A for
the fiscal year ended December 31, 1999, the 10-Q for the period ended March 31,
2000, and all required amended Form 8-K's can be filed as soon as possible; and
(ix) three new directors have been elected to the Board.
We provided Gray & Northcutt, Inc. with a copy of the Current Report on
Form 8-K prior to its filing with the SEC and requested that Gray & Northcutt,
Inc. furnish us with a letter addressed to the SEC stating whether it agrees
with the statements made in the Current Report on Form 8-K and, if not, stating
the respects in which it does not agree. The letter of Gray & Northcutt, Inc. is
attached as an exhibit to the Current Report on Form 8-K dated April 3, 2000.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists the names, ages and all positions held by our
directors and executive officers as of May 8, 2000.
<PAGE>
Name Age Position
---- --- --------
David A. Nuttle 63 Chairman, Interim President and Chief
Executive Officer, Secretary
Frederic F. Wolfer, Jr. 61 Vice President and Assistant Secretary
Robert Woodward 50 Director and Chief Financial Officer
Charles A. Gourd 51 Director
Kenneth E. Sweet 47 Director
Mr. Nuttle, who had been a director since January 1998, was appointed
Chairman and interim President and Chief Executive Officer on March 17, 2000. He
has over 40 years of economic and business development experience. Since June
1995, Mr. Nuttle has been Chairman, President and Chief Executive Office of
Needful Provision, Inc., a 503(c)(3) charity, which has licensed proprietary
technology to us.
Mr. Wolfer joined us in October 1999 as Vice President. He was elected
President of the Environmental Technologies Group on April 1, 2000. From April
1998 to August 1999, Mr. Wolfer was a Consultant to NextPath. From February 1997
to December 1997, he was a Country Representative for Citizens Network for
Foreign Affairs. From March 1991 to February 1997, Mr. Wolfer was President and
Chief Executive Officer of Controlled Environment Technologies, Inc., a sole
proprietorship consulting firm. Mr. Wolfer received a BA from the University of
North Carolina in 1960 and a M.A. from Central Washington State University in
1973.
Mr. Woodward became Chief Financial Officer of NextPath on March 17,
2000. He was elected a director on April 1, 2000. Since 1999 he has been a
Business Consultant at International Profit Associates. Mr. Woodward has over
twenty-five years of management consulting, public accounting and senior
management experience concentrated in the areas of strategic business planning,
corporate financial management, business infrastructure development and
administrative and operations management. From 1996 to 1999, Mr. Woodward was
an Independent Business Consultant. From 1989 to 1996, he was Chief Financial
Officer for Q-Com Corporation, a California environmental high technology
manufacturing company. Mr. Woodward received a BBA degree in 1972 from St.
Francis College, New York and an MBA degree in 1978 from Long Island University,
New York.
Dr. Gourd has been a Director since March 17, 2000. From August 1995 to
October 1999, he was Special Assistant to the Principal Chief of the Cherokee
Nation. From September 1993 to August 1995, Dr. Gourd was Director of Bilingual
Education at Keys Elementary School in Park Hill, Oklahoma. Dr. Gourd has
extensive academic and professional background in the practical application of
Anthropology for purposes of economic development. His professional background
includes economic development in third world countries, as well as work with the
U.S. State Department on multi-lateral Trade Agreements, development of an
international Free-Trade Zone, and is Fellow in the Entrepreneurial and MBA
Programs at Babson College in Boston, Massachusetts Dr. Gourd received his PhD
from the University of Kansas in 1984, a M.A. degree from the University of
Oklahoma in 1976, and a BS degree in History from Northeastern State University
in 1971.
Mr. Sweet has been a director since March 17, 2000. Mr. Sweet has over
nine years of executive director experience in management consulting, business
valuation, mergers and acquisitions, and financial advisory services. Since
1991, Mr. Sweet has been the Executive Director of Consulting Services and one
of the in-house counsel to International Profit Associates (IPA), an
international consulting firm. He has supervising and/or directing in excess of
21,000 client engagements to date. Prior to joining IPA, he was President of
Windbrook Securities, Inc., a broker/dealer, and The Compass Investment Group,
Inc., registered as a Commodity Trading Advisor (CTA). Mr. Sweet also worked
from 1981-1987 at E.F. Hutton & Company, Inc. as an Account Executive. He
received a BS in both Business Administration and Accounting, graduating Magna
Cum Laude from the University of San Diego in 1974. He also received a Juris
Doctorate degree from Western State College of Law in December 1977.
ITEM 11 EXECUTIVE COMPENSATION
Summary Compensation Table
The following summarizes, for the fiscal years indicated, and to the
knowledge of current management, the principal components of compensation for
our Chief Executive Officer and our only other executive officer. Mr. Ladd, our
Chief Executive Officer and President, was our only employee in 1998.
<PAGE>
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------
Annual Compensation Awards Payouts
----------------------------- -------------------- --------
Securities
Other Under-lying All
Annual Restricted Options/ LTIP Other
Name and Principal Compen Stock SARs Payouts Compen-
Position Year Salary Bonus -sation Award(s) (1) sation
- -------------------------- ------ -------- ------ -------- ---------- ---------- ------- -------
James R. Ladd
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Former Chairman, 1999 -- -- -- -- -- --
President (2) 1998 -- -- -- -- -- --
Richard F. Wolfer, Jr. 1999 $150,000 100,000
Vice President (3)
- -----------------------
</TABLE>
(1) Creativity Incentive Plan.
(2) Mr. Ladd resigned on March 17, 2000. To our knowledge as of this date,
he did not receive any compensation in the years indicated.
(3) Mr. Wolfer was employed on November 1, 1999.
Options/SAR Grant In Last Fiscal Year
Our executive officers were not granted any options or SARs during our
last fiscal year.
Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Values
Our executive officers have not been granted any options or SARs.
Employment Agreements
Mr. Wolfer has a five year employment agreement with us. It expires in
2004.
Compensation of Directors
We anticipate paying reasonable and customary fees to our directors who
are not officers for their services as directors and for attendance, in person
or by telephone, at each meeting of the board of directors, but not for
committee meetings. Officers who are also directors will not be paid any
director fees.
Restricted Stock Plan
As part of the consideration we paid for all of the stock of
LaserWireless, Inc., we placed 300,000 shares of restricted common stock in a
Restricted Stock Plan for the benefit of the employees of LaserWireless, Inc. An
employee will become vested with respect to the shares of common stock
represented by his or her Restricted Stock Award Agreement on the fifth
anniversary of the date of the grant, provided he or she continuously serves as
an employee of LaserWireless, Inc. or another of our subsidiaries at all times
beginning with the date of the grant and ending on the fifth anniversary of the
grant.
Stock Option Plan
We recognize the need to implement, and we intend to propose and submit
to our shareholders, a stock option plan so that we may attract and retain the
high quality employees, consultants and directors necessary to build our
infrastructure and to provide ongoing incentives to our employees by enabling
them to participate in our success.
401(k) Plan
We anticipate that we will adopt an employee investment plan under
Section 401(k) of the Code.
<PAGE>
Creativity Inventive Plan
In order to encourage and reward creativity, we will establish a
Creativity Incentive Plan in 2000. Employees who develop materials, inventions,
discoveries, improvements and designs will be eligible to participate in the
fruits of their inventiveness over and above any salary and other benefits they
may derive from their employment.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
We have not issued any preferred stock. The following table sets forth
certain information regarding the ownership of our common stock, as of May 8,
2000, by (i) each director and nominee for director; (ii) each of our executive
officers; (iii) all of our executive officers and directors as a group; and (iv)
all those known by us to be beneficial owners of more than 5% of our common
stock:
<TABLE>
<CAPTION>
Name and Address of Shares Benefically Percentage
Beneficial Owner Owned (1) Owned
- ------------------- ------------------ ----------
Directors and Executive Officers
<S> <C> <C>
David A. Nuttle (2) 475,000 1%
114 South Churton Street, Suite 101
Hillsborough, NC 27278
Frederic F. Wolfer, Jr. 100,000 *
Charles A. Gourd --
Kenneth E. Sweet (3) 56,907 *
Robert Woodward
All executive officers and directors
as a group (5 persons) 631,907 1.5%
5% Shareholders
James R. Ladd (4) 2,263,000 5.4%
7106 Sunrise Road
Chapel Hill, NC 27514
W.O.W. Consulting Group 6,467,877 15.0%
18352 Dallas Parkway, #136-440
Dallas, TX 75287
- -----------------------
</TABLE>
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
SEC and generally includes voting or investment power with respect to
securities. Shares of common stock subject to options or warrants
currently exercisable or convertible, or exercisable or convertible
within 60 days of September 30, 1999, are deemed outstanding for
computing the percentage of the person holding such option or warrant
but are not deemed outstanding for computing the percentage of any other
person. Except as indicated in the footnotes to this table and pursuant
to applicable community property laws, the persons named in the table
have sole voting and investment power with respect to all shares of
common stock beneficially owned.
(2) Mr. Nuttle is Chairman and President of Needful Provision, Inc., a
501(c)(3) charitable corporation in whose name this stock is registered.
(3) Mr. Sweet has the contractual right to acquire an additional 109,453
shares of 500,000 shares currently held by International Profit
Associates, with whom he has an agreement.
(4) Mr. Ladd's daughter, McGinnis Ladd, and his son, Joshua Ladd, own
250,000 and 500,000 shares of common stock respectively. We do not know
if Mr. Ladd claims any beneficial interest in the shares of his
children.
<PAGE>
Number, Terms and Election of Directors
The number of directors is currently set at seven. Each director will
serve for a term of one year or until the next annual meeting at which directors
are elected. In the election of directors, each stockholder is entitled to one
vote for each share of common stock he holds. There are currently three
vacancies on our Board of Directors.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Directors and Executive Officers
Loans. As of December 31, 1999, we owed Joshua Ladd $1,570,250 for
advances made on our behalf. Joshua Ladd is the son of James Ladd, our former
Chairman, President and Chief Executive Officer.
Other Transactions. Mr. Ladd's departure as Chairman, President and
Chief Executive Officer, Mr. McClain's departure as a Director, and various
transactions by NextPath which occurred while they were affiliated with NextPath
in those capacities and which were not reported to the Board, but which were
recently brought to the attention of the Board, have caused the Board to
establish a Special Committee which will review all transactions engaged in by
NextPath since January 27, 1998. The effects of the transactions to be reviewed
and their materiality to our financial condition and our operations cannot be
fully assessed until the Special Committee has completed its review. However,
once the review has been completed, we will report any and all reportable
transactions to the SEC and our shareholders.
Director, Officer and Ten Percent Stockholder Securities Reports. We
understand, and have so advised our officers and directors, that the Federal
securities laws require them, as well as persons who own more than ten percent
of our stock, to file with the SEC initial reports of ownership and reports of
changes in ownership of our stock owned by them. We are aware of the following
filings during 1999:
<TABLE>
<CAPTION>
Name Date Filing
---- ---- ------
<S> <C> <C>
James Ladd 12/21/99 Form 3
Frederic F. Wolfer, Jr. 11/24/99 Form 3
David A. Nuttle 11/24/99 Form 3
TPG Capital Corporation 12/13/99 SC 13G/A
</TABLE>
Based solely on our review of the copies of the reports we have been
furnished, it appears that (a) except for Mr. McClain, all of the officers and
directors filed a Form 3 as required, (b) Messrs. Ladd and McClain have not
filed a Form 4 or a Form 5, if required, (c) no greater than ten percent
beneficial owners made any required filings, and (d) Mr. Nuttle, if deemed
required to do so, did not file a Form 5 indicating the disposition of 25,000
shares of stock by Needful Provision, Inc. ("NPI"). Mr. Nuttle has advised us
that he will file a Form 5, notwithstanding that the stock is owned by NPI and
he has no beneficial ownership interest in it.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
FINANCIAL STATEMENTS
(a) and (d) Financial Statements
See "Index to Financial Statements and Schedules on page 39.
(b) Reports on Form 8-K filed during the last quarter of the period
covered by this report.
We filed a Form 8-K on November 12, 1999, which reported the closing of
an Agreement and Plan of Merger between Epilogue Corporation and related
matters.
<PAGE>
We filed a Form 8-K on December 13, 1999, which reported our acquisition
of Willow Systems Limited.
We filed a Form 8-K on December 23, 1999, which reported our acquisition
of Sagebrush Technology, Inc.
We filed a Form 8-K on December 28, 1999, which amended the Form 8-K we
filed on November 12, 1999 to reflect the stock ownership of our
officers and directors and those persons known to us to beneficially own
more 5% of our stock.
(c) Exhibits
See "Exhibit Index" at X-1.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
NEXTPATH TECHNOLOGIES, INC.
/s/ David A. Nuttle May 12, 2000
-----------------------------
David A. Nuttle
Chairman, Interim Chief Executive Officer
and President (principal executive officer)
NEXTPATH TECHNOLOGIES, INC.
/s/ Robert Woodward May 12, 2000
Robert Woodward
Vice Chairman and Chief Financial Officer
(principal financial and accounting officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
/s/ David A. Nuttle Chairman of the Board of Directors May 12, 2000
- --------------------
David A. Nuttle
/s/ Kenneth Sweet Director May 12, 2000
- --------------------
Kenneth Sweet
/s/ Robert Woodward Director May 12, 2000
- --------------------
Robert Woodward
/s/Charles Gourd Director May 12, 2000
- -------------------
Charles Gourd
<PAGE>
NextPath Technologies, Inc.
( Formerly, Hyperion Technologies, Inc.)
Consolidated Financial Statements
December 31, 1999 and 1998
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Page
Financial Statements Number
- --------------------- ------
Independent Auditor's Report............................................ F-3
Consolidated Balance Sheets............................................. F-4
Consolidated Statements of Operations................................... F-5
Consolidated Statements of Stockholders' Equity......................... F-6
Consolidated Statements of Cash Flows................................... F-7
Notes to Consolidated Financial Statements ............................. F-8
Schedules
All schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
NextPath Technologies, Inc.
We have audited the accompanying consolidated balance sheets of NextPath
Technologies, Inc. (a Delaware corporation) and subsidiaries as of December 31,
1999 and 1998 and the related consolidated statements of operations,
stockholders' equity and cash flows for the years ended December 31, 1999, 1998
and from inception on June 27, 1997 through December 31, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the financial
statements of Laser Wireless, Inc., Willow Systems, Inc. and Sagebrush
Technology, Inc. (the subsidiaries), all wholly owned subsidiaries which
statements reflect total assets of $1,300,131 as of December 31, 1999, and total
revenues of $356,157 for the periods of acquisition through December 31,
1999. Those statements were audited by other auditors whose report has been
furnished to us, and our opinion, insofar as it relates to the amounts
included for the subsidiaries, is based solely on the report of the other
auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of NextPath Technologies, Inc. and
subsidiaries as of December 31, 1999 and 1998 and the results of its operations
and cash flows for the years ended December 31, 1999 and 1998 and from inception
on June 27, 1997 through December 31, 1997 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2, the Company's
recurring operating losses and lack of working capital raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to those matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
Salt Lake City, Utah
May 12, 2000
<PAGE>
NextPath Technologies, Inc.
Consolidated Balance Sheets
Assets
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------- ------------
Current assets
<S> <C> <C>
Cash $ 658,837 $ -
Accounts receivable (net of allowance
Of $41,480) 282,051 -
Inventory 138,057 -
Prepaid expenses 42,674 -
Advances to shareholders 6,487 -
Advances & notes receivable (net of
allowance of $1,235,075)(Note 12) 3,260,161 -
---------- ---------
Total Current Assets 4,388,267 -
---------- ---------
Property & Equipment, Net (Note 3) 535,179 3,359
---------- ---------
Other Assets
Investments (Note 9) 2,600,000 -
Goodwill (Note 1) 17,883,754 -
Deposits 4,250 -
---------- ---------
Total Other Assets 20,488,004 -
---------- ---------
Total Assets $25,411,450 $ 3,359
========== =========
Liabilities and Stockholders' Equity
Current Liabilities
Bank overdraft - 5,397
Accounts payable 384,148 40,904
Accrued expenses 192,654 -
Deferred taxes (Note 1) 14,882 -
Notes payable (Note 7) 19,950 -
Notes payable - related party (Note 8) 3,435,919 68,650
---------- ---------
Total Current Liabilities 4,047,553 114,951
Stockholders' Equity
Common Stock, authorized
100,000,000 shares of $.001 par value,
issued and outstanding 37,136,430 and
8,356,843 shares, respectively 37,136 8,357
Additional Paid in Capital 58,623,056 408,193
Deficit Accumulated During the
Development Stage (37,296,295) (528,142)
---------- --------
Total Stockholders' Equity 21,363,897 (111,592)
---------- ---------
Total Liabilities and Stockholders' Equity $25,411,450 $ 3,359
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
NextPath Technologies, Inc.
Consolidated Statements of Operations
<TABLE>
<CAPTION>
From inception
On June 27,
For the Year Ended 1997 through
December 31, December 31,
1999 1998 1997
------------ ------------ -------------
<S> <C> <C> <C>
Revenues: $ 356,157 $ - $ -
Cost of Goods 235,788 - -
------------ ------------ ------------
Gross Profit 120,369 - -
Expenses:
General and administrative 3,830,344 528,142 -
Consulting 25,309,111 - -
Research & Development 2,334,392 - -
Bad Debt 1,605,110 - -
------------- ------------ ------------
Total Expenses 33,078,957 528,142 -
------------- ------------ ------------
Net Loss from Operations (32,958,588) - -
Other Income/(Expense)
Interest Income 5,982 - -
Dividend Income 16,813 - -
Loss on Investments (3,832,360) - -
------------- ------------ ------------
Net Loss $(36,768,153) $ (528,142) $ -
============= ============ ============
Net Loss Per Share $ (2.22) $ (.069) $ (.000)
============= ============ ============
Weighted average shares
outstanding 16,563,039 7,633,925 1,500
============= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
5
<PAGE>
NextPath Technologies, Inc.
Consolidated Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During the
Common Stock paid-in Development
Shares Amount capital Stage
----------- -------- ----------- -------------
<S> <C> <C> <C> <C>
Common stock, issued to organizers for cash 1,500 $ 2 $ 98 $ -
----------- -------- ----------- -------------
Net loss for the year ended December 31, 1997
Balance, December 31, 1997 1,500 2 98 -
Reverse acquisition for accounting purposes
of Compact Power International, Inc. 5,883,543 5,883 (5,883) -
Stock issued for cash in 504 offering 2,256,800 2,257 381,943 -
Stock issued for Services 215,000 215 32,035 -
Net loss for the year ended December 31, 1998 (528,142)
----------- -------- ----------- -------------
Balance, December 31, 1998 8,356,843 8,357 408,193 (528,142)
Stock issued for cash at $.20 per share in 504 offering 1,000,000 1,000 199,000 -
Stock issued for consulting services at $.40 per share 150,000 150 59,850 -
Stock issued for consulting at $.91875 per share 22,192,188 22,192 20,375,480 -
Stock issued for services at $1.575 per share 60,000 60 94,440 -
Stock issued for option exercised at $.75 per share 600,000 600 449,400 -
Stock issued for employees compensation at
$4.22 per share 180,000 180 1,934,436 -
Stock issued for licenses at $4.22 per share 500,000 500 2,109,500 -
Stock issued for advances at $4.79 per share 800,000 800 3,822,560 -
Stock issued for Laser Wireless acquisition 400,000 400 (400) -
Stock issued for Willow merger 650,000 650 4,947,020 -
Stock issued for cash in Reg S offering at
$9-12 per share 1,341,399 1,341 13,112,845 -
Stock issued for services at $11.81 per share 6,000 6 70,869 -
Stock issued for Sagebrush acquisition 600,000 600 6,540,900 -
Stock issued for Services at $15.22 per share 300,000 300 4,567,200 -
Offering costs - - (68,237) -
Net loss for the year ended December 31, 1999 - - - (36,768,153)
---------- --------- ----------- -------------
Balance, December 31, 1999 37,136,430 $37,136 $58,623,056 $(37,296,295)
========== ========= =========== =============
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
NextPath Technologies, Inc.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Year
ended
December 31,
1999 1998 1997
------------- ----------- ------------
Cash Flows form Operating Activities
<S> <C> <C> <C>
Net loss $(36,768,153 $ (528,142) $ -
Adjustments to reconcile
net loss to net cash
provided by operations:
Depreciation & Amortization 367,324 57 -
Bad Debt 1,680,110 - -
Stock issued for services 27,131,564 32,250 -
Loss on Investments 3,823,360 - -
Stock issued for R & D expenses 2,109,999 - -
Increase/(Decrease) in
assets/liabilities
(net of acquisitions)
Accounts receivable 11,483 - -
Inventory (23,010) - -
Prepaids (28,270) - -
Accounts payable 109,021 40,904 -
Accrueds 20,404 - -
Deferred taxes 572 - -
Bank overdrafts - 5,397 -
---------- -------- -----
Net Cash (Used) Provided by
Operating Activities (1,565,596) (449,534) -
---------- ------- -----
Cash Flows from Investment Activities:
Cash paid for advances & notes
receivable (6,498,177) - -
Cash paid for purchase of
fixed assets (2)1,061 - -
Cash paid for investments (7,816,473) - -
Cash acquired from subsidiary 268,540 (3,416) -
---------- ------- -----
Net Cash (Used) Provided by
Investing Activities (14,257,171) (3,416) -
---------- ------- -----
Cash Flows from Financing Activities:
Cash received from debt financing 5,012,854 - -
Cash received from stock issuance 13,764,186 - -
Cash paid for offering costs (68,236) - -
Cash paid for long term debt (2,227,200) - -
Issued common stock for cash - 384,200 100
Increase in notes payable -
related party - 68,650 -
---------- ------- -----
Net Cash (Used) Provided by
Financing Activities 16,481,604 482,850 100
---------- ------- -----
Net increase (decrease) in cash 658,837 (100) 100
Cash, beginning of year - 100 -
---------- ------- -----
Cash, end of year $ 658,837 $ - $ 100
========== ======= =====
</TABLE>
The accompanying notes are an integral part of these financial statements
7
<PAGE>
NextPath Technologies, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998
<PAGE>
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
NextPath Technologies, Inc. (formerly Hyperion Technologies,
Inc.)(the Company) was incorporated on March 23, 1984 as Petrogenetics,
Inc. a Colorado Corporation organized to engage in mining and oil
production. The Company raised $100,000 in a public offering in 1984 and
acquired various properties and investments. In 1986, the Company became
inactive and all assets became worthless. In 1990, the Company settled
all debts of the Company with the issuance of common stock. On May 8,
1997 the Company merged with FSC Holdings, Inc. (FSC) a Nevada
corporation, wherein FCS became the surviving corporation. On January
19, 1998 the Company engaged in a share exchange with Hyperion
Technologies, Inc. The share exchange with Compact, a Delaware
corporation organized on June 27, 1997, was accounted for as a reverse
acquisition. Due to accounting for the acquisition of Compact as a
reverse acquisition, the 1997 historical financial information presented
herein is that of Compact (the acquirer for accounting purposes) and
stockholders equity was retroactively restated for the equivalent number
of shares issued after giving effect to the difference in par value.
Hyperion issued 5,800,000 common shares for 100 percent of the
outstanding stock of Compact. On July 22, 1999, the Company changed
it's name to NextPath Technologies, Inc. The Company has never had any
operations and is in the development stage according to Financial
Accounting Standards Board Statement No. 7. The Company is currently
engaged in the development and acquisition of new technologies in high
growth market sectors.
On November 11, 1999 Epilogue Corporation ("Epilogue"), an inactive
Delaware corporation with no assets or liabilities, merged with NextPath
Technologies, Inc., a Nevada corporation. All the outstanding shares of
common stock of Epilogue were exchanged for 150,000 shares of common
stock of NextPath in a transaction in which NextPath was the surviving
company. Prior to the merger, Epilogue had 5,000,000 shares of common
stock outstanding. The merger was treated as a domicile merger and
therefore, no goodwill was recorded nor was any value associated with
the merger, or the stock issuance. The net equity of Epilogue was $0.
The Company acquired three companies in 1999: Laser Wireless, Inc. on
October 18, 1999, Willow Systems, Inc. on November 2, 1999, and
Sagebrush Technology, Inc. on December 14, 1999.
Laser Wireless, Inc. - Laser Wireless, Inc. ("Laser"), a Pennsylvania
company, designs and manufactures a wireless laser communication
technology which can transmit video, voice, and data through the
atmosphere on a beam of light for distances up to 2.5 kilometers. This
capability offers a solution for private communications where a leased
line cannot be used such as property separated by physical barriers
(rivers, highways, parking lots, etc.) which prevent the use of
conventional cables.
Willow Systems, Inc. - Willow Systems, Inc. ("Willow"), a Delaware
corporation, is an advanced technology company providing custom
real-time motion control and electronic solutions which expertise
includes gimbals (positioning devices), camera and electro-optical
system design, embedded software development, and system engineering and
development. Willow's technologies have potential application in a wide
range of businesses.
Sagebrush Technology, Inc. - Sagebrush Technology, Inc. ("Sagebrush"), a
Delaware corporation, was established on April 4, 1991. Sagebrush is
engaged in the business of designing, developing, manufacturing, and
marketing positioning devices (gimbals and antenna positioners) based
primarily on its patented and proprietary Roto-Lok(R) rotary drive
technology.
8
<PAGE>
NextPath Technologies, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 1 - Summary of Significant Accounting Policies (continued)
b. Accounting Method
The Company recognizes income and expense on the accrual basis of
accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on
the weighted average number of shares outstanding at the date of the
financial statements. Fully diluted earnings per share has not been
presented because it is anti-dilutive. 1,000,000 potentially issuable
common shares from options outstanding were excluded from the
calculation because their effect were anti-dilutive.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities
of three months or less to be cash equivalents. The balance of NextPaths
money market account was in excess of $100,000, leaving $155,000 at
risk.
Willow Systems, Inc. The balance of the Company's general checking
account was in excess of $100,000 as of December 31, 1999. The Federal
Deposit Insurance Corporation insures all bank accounts up to $100,000.
Management believes its exposure to loss is minimal considering only the
amounts in excess of $100,000 are at risk and the depository bank is a
well established national bank and one of the nation's largest financial
institutions.
e. Provision for Income Taxes
No provision for income taxes has been recorded due to net
operating loss carryforwards totaling approximately $37,296,000 that
will be offset against future taxable income. These NOL carryforwards
begin to expire in the year 2013. Management believes a portion of
these NOL carryforwards will be realized this year, however, no taxable
income has yet been generated and not tax asset has been recorded.
Deferred tax assets and the valuation account is as follows at
December 31, 1999 and 1998.
<TABLE>
<CAPTION>
1999 1998 1997
------------ ---------- ----------
Deferred tax asset:
<S> <C> <C> <C>
NOL carrryforward $12,680,000 $ 179,568 $ -
Valuation allowance (12,680,000) (179,568) -
------------ ---------- ----------
Total $ - $ - $ -
============ ========== ==========
</TABLE>
Willow Systems, Inc. Income taxes are provided for tax effect of
transactions reported in financial statements and consists of taxes
currently due plus deferred taxes. Deferred taxes arise primarily from
differences between the use of accelerated methods of depreciation for
tax purposes and straight-line methods for financial purposes. As of
December 31, 1999, the Company had a net operating carryforward of
approximately $580,000 the effect of which more than offsets the timing
differences between the reporting of book and tax depreciation,
therefore, no deferred income tax liability was reflected on the Company
books as of December 31, 1999.
9
<PAGE>
NextPath Technologies, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998
NOTE 1 - Summary of Significant Accounting Policies (continued)
Sagebrush Technology, Inc. For federal and state income tax purposes,
Sagebrush taxed as an S corporation during the period January 1, 1999
through December 13, 1999, thereafter its activity will be reported as
part of NextPath's consolidated returns. Income tax expense includes
deferred taxes rising from temporary timing differences between income
for financial reporting purposes and income tax reporting purposes. This
difference consists primarily of the difference between book and tax
depreciation as of December 14, 1999, the date the Company's subchapter
S election was terminated.
F. Research and Development Costs
Research and development costs are expensed as incurred. During the
fiscal year ended December 31, 1999, the Company incurred $2,334,392 in
research and development costs.
G. Patent
Sagebrush Technology, Inc. On April 21, 1992, the president of Sagebrush
was issued a United States Patent Number 5,105,672 for a Rotary Drive
Apparatus Having One Member With Smooth Outer Peripheral Surface. The
technology contained in this patent is utilized by Sagebrush in the
manufacture of the Company's gimbal product. Sagebrush incurred royalty
expense to the president of approximately $85,659 during the fiscal year
ended December 31, 1999, for the use of this technology.
H. Use of estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and revenues and expenses during the reporting
period. In these financial statements, assets involve extensive reliance
on management's estimates. Actual results could differ from those
estimates.
I. Impairment of Long Lived Assets
Fixed assets are evaluated annually by management and if impaired are
written down to the fair market value.
J. Goodwill
The Company recorded goodwill of $18,243,554 in connection with the
acquisitions of it's subsidiaries. Goodwill is being amortized over a
five year life, and amortization expense for 1999 was $359,800.
NOTE 2 - Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has had
significant losses for the year and is dependent upon financing or
raising capital to continue operations. The Company may be unable to
raise funds from the public sector, or from private investors. The
Company has large advances and investments in start up companies, the
realization of these assets are uncertain. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty. It is management's plan to market the technology of its
subsidiaries, and generate necessary revenues from that source.
10
<PAGE>
NextPath Technologies, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998
Sagebrush Technology, Inc. The accompanying financial statements have
been prepared in conformity with generally accepted accounting
principles, which contemplates continuation of the Company as a going
concern. However, the Company has sustained a substantial operating loss
during the current year. In addition, the company has used substantial
amounts of working capital in its operations. Further, at December
31,1999, current liabilities exceed current assets by $872,303 and total
liabilities exceed total assets by $582,367.
In view of the matters, realization of major portion of the assets in
the accompanying balance sheet is dependent upon continued operations of
the Company and the success of its future operations. Management
believes that actions presently being taken to revise the Company's
operating requirements provide the opportunity for the Company to
continue as a going concern.
NOTE 3 - Property and Equipment
Property and Equipment consists of the following at December 31,
1999 and 1998:
<TABLE>
<CAPTION>
December 31,
1999 1998 1997
---------- -------- -------
<S> <C> <C> <C>
Equipment $ 509,676 $ - $ -
Furniture & Fixtures 100,515 - -
Computer Equipment 111,159 3,416 -
Leasehold Improvement 4,018 - -
Accumulated Depreciation (190,189) (57) -
---------- -------- -------
Total Property & Equipment $ 535,179 $ 3,359 $ -
========== ======== =======
</TABLE>
Depreciation expense for the years ended December 31, 1999, 1998 and
1997 was $2,150, $57 and $0, respectively.
NOTE 4 - Related Party Transactions
NextPath. All expenses incurred in organizing Compact and other
incidental expenses were paid for by Compacts founders. These founders
have waived any claim for reimbursements for these expenses, thus no
expenses have been recorded on the books of the Company prior to
December 31, 1997.
A family member of James Ladd, the former president of the Company
loaned the Company $732,700 and $57,800 during the year ended December
31, 1999 and 1998, respectively. The Company made payments toward the
loan of $6,000 and $42,100, respectively. The note is non-interest
bearing, unsecured, and upon demand. The balance of the note at December
31,1999 and 1998 is $725,700 and $15,700, respectively.
A shareholder loaned the Company $8,000 during the year ended
December 31, 1998. The note is non-interest bearing, unsecured, and due
within one year. The balance of the note at December 31, 1999 and 1998
is $0 and $8,000, respectively.
The president of the Company owns stock in a corporation that
loaned the Company $25,000 during the year ended December 31, 1998. The
note is non-interest bearing, unsecured, and due within one year. The
balance of the note at December 31, 1999 and 1998 is $0 and $25,000,
respectively.
11
<PAGE>
NextPath Technologies, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998
A shareholder loaned the Company $19,950 during the year ended
December 31, 1998. The note is non-interest bearing, unsecured, and due
within one year. The balance of the note at December 31,
NOTE 4 - Related Party Transactions (continued)
1999 and 1998 is $19,950.
A shareholder loaned the Company $19,950 during the year ended
December 31, 1998. The note is non-interest bearing, unsecured, and due
within one year. The balance of the note at December 31, 1999 and 1998
is $19,950.
The Company purchased a license from Needful Provision for the
issuance of license agreement. Needful Provision is a 501(c)3
charity, whose director is David Nuttle, an officer of the Company. The
Company advanced $95,000 in cash and issued 500,000 shares of stock
valued at $2,110,000. The license is month to month, therefore no rights
exist if the monthly contributions for research and development ceases.
Management therefore determined there to be no future value in the
license and expensed the entire amount to Research and Development.
Needful Provision is in the development of Bio-diesel fuels with
Oklahoma State University.
Laser Wireless, Inc. On October 18, 1999, Laser entered into an
employment agreement with a shareholder for a period of five years and
ensures the employees, among other items, of an annual salary, vacation
and an automobile allowance.
As of December 31, 1999, Laser had advances due to affiliated companies
and individuals as follows:
Advances from Nextpath shareholder $ 417,500
Advances from Nextpath affiliate $25,000
Willow Systems, Inc. On November 2, 1999, Willow issued approximately 47
shares of its no par value common stock to two employees of Willow as an
agreed condition of employment between Willow and the employees. No cash
consideration was given by the employees of the stock.
As of December 31,1999, Willow had advances due to affiliated companies
and individuals as follows:
Advances from Nextpath shareholder $ 114,550
During the year ended December 31, 1999, Willow had sales to Sagebrush
Technologies, Inc. totaling $305,911 of which $145,637 remained unpaid
as of December 31, 1999.
On November 2, 1999, Willow entered into an employment agreements with
the three shareholders for a period of five years and ensures the
employees, among other items, of an annual salary, vacation and an
automobile allowance.
On November 2, 1999, Willow purchased two-thirds ownership in Reflex LLC
(Reflex), a New Mexico limited liability company engaged in the business
of stabilized camera systems from two of Willow's shareholders for
$1,000. Reflex thereby became a wholly owned subsidiary of Willow since
the Company already owned one-third of Reflex before the purchase.
Reflex is a holding company that currently owns 15% of Cineflex, a
California corporation. The ownership of Cineflex by Reflex will
increase to 20% upon successful completion of contracted work. At the
time of purchase, Reflex had no operating agreement or operating
history.
On November 2, 1999, Willow purchased NextWave Photonics LLC, a Florida
limited liability company, engaged in the business of designing and
marketing fiber optic switching and other fiber optic technology from
two of Willow's shareholders for $1,000. At the time of purchase,
Nextwave had no operating history.
12
<PAGE>
NextPath Technologies, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998
Sagebrush Technology, Inc. On December 14, 1999 Sagebrush entered into a
consulting agreement with one of the Company's stockholders for a period
of three years and ensures the stockholder, among other things,
compensation, additional shares of NextPath stock and reimbursement for
out-of-pocket expenses.
NOTE 4 - Related Party Transactions (continued)
On December 14,1999, Sagebrush entered into an employment agreement with
one of the Company's stockholders for a period of five years and
ensures, the employees, among other items, of an annual salary, vacation
and an automobile allowance.
As of December 31,1999, Willow had advances due to affiliated companies
and individuals as follows:
Advances from Nextpath shareholder $ 312,500
For the year ended December 31, 1999, the Company incurred obligations
for royalty payments to its former owner in the amount of $85,659 of
which $60,000 remained unpaid as of December 31,1999.
For the year ended December 31, 1999, the Company received billings for
services rendered from Willow Systems, Inc., an affiliated company,
totaling of $305,911 of which $145,637 was still outstanding as of
December 31, 1999.
NOTE 5 - Equity
During 1998, the Company issued 5,800,000 shares of common stock for
100 percent of the outstanding stock of Compact Power International,
Inc. However, these financial statements show an adjustment to bring the
shares from Compact's history to NextPath's issued and outstanding
shares.
During 1998, the Company issued 2,256,800 shares of common stock for
cash of $384,200.
During 1998, the Company issued 215,000 shares of common stock for
services valued at $32,250.
During 1999, the Company issued approximately 22,708,000 shares of
common stock to various individuals or companies for consulting services
valued at between $.40 and $15.22 per share. Several of these consulting
agreements were authorized by the Board of Directors during 1998, but no
shares were issued until 1999. Of the shares issued for services,
approximately 6,000,000 shares were issued without the approval of the
Board of Directors, but were issued due to the request of two previous
directors of the Company. Both directors resigned from the company in
March 2000. Although these shares were to be issued in 1998 as
restricted shares, the prior directors had the shares issued to many
individuals whom they sold stock for cash. The Company faces
potential sanctions or other actions if the SEC determines these sales
were illegal sales of restricted stock (see Legal Actions Note ). They
then loaned the funds to the Company for continued expansion.
Outstanding payables to one of these individuals at December 31,1999
totals 1,618,979. The other owes the Company 695,237. Advances also came
through a family member of the president and the balance is 725,700 at
December 31, 1999. A contingency may excist for this transaction. (See
Note 6).
During March 1999, the Company sold 1,000,000 shares of stock in a 504
exempt offering for $200,000 cash.
13
<PAGE>
NextPath Technologies, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998
In November and December, the Company sold 1,341,399 shares of stock
through a regulation S offering. The Company raised approximately
$13,100,000 from this offering.
The Company also issued 600,000 shares or cash of $450,000 from the
exercise of outstanding options issued in 1998.
NOTE 5 - Equity (continued)
The Company issued 180,000 shares to three employees of the Company for
bonuses valued at $1,934,616.
The Company issued 500,000 shares for a license with Needful Provision,
a related party, valued at 2,110,000.
The Company issued 800,000 shares in contemplation of a merger with
Primedium, LLC. The cash due on the acquisition was never issued and the
advance of stock was expensed. The shares were valued at $3,832,360.
Management has not determined whether to continue negotiations with
Primedium at this time.
In October 1999, the Company issued 400,000 shares and cash for the
acquisition of Laser Wireless, Inc. The 400,000 shares were to the
employees of Laser and vest in five years. The Company isssued the
stock, but is holding the shares until they vest, therefore no value was
placed on these shares, and will be valued if issued in the future.
In November 1999, the Company issued 650,000 shares to the shareholders
of Willow Systems, Inc. for the merger of this subsidiary. The shares
were valued at $4,947,670.
In December 1999, the Company issued 600,000 shares for the acquisition
of Sagebrush Technology, Inc. The shares were valued at $6,541,500.
NOTE 6 - Legal Actions
The Company and its former President, James R. Ladd, are two of the
named defendants in an action that alleges tortious interference with
existing and/or potential business relations, civil conspiracy, and
negligence and also seeks injunctive relief. The Company and its
attorney feel this action is wholly without merit. Counsel feels the
likelihood of an unfavorable outcome is such action is little to none.
The U. S. Securities and Exchange Commission (the "Commission") issued a
confidential formal order of investigation in December, 1999 concerning
the Company's public statements regarding its corporate acquisitions and
other business transactions, and regarding the possibility of a
manipulation of the price or volume of its common stock in the
over-the-counter market, and may include additional matters such as the
failure to register its securities under the Securities Act of 1933 and
other issues. The Commission has issued subpoenas for documents to the
Company, its subsidiaries, its affiliates, and other companies and
individuals associated with the Company. The Commission has also issued
subpoenas for testimony to certain directors, officers, and other
persons associated with the Company. In addition, the Commission has
conducted informal telephone interviews with companies and persons who
have conducted business with the Company, including, but not limited to,
certain customers, suppliers, contractors, consultants and investors,
14
<PAGE>
NextPath Technologies, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998
and others. The investigation by the Commission appears to be
continuing. The Commission has not initiated or filed any civil or
administrative proceedings against the Company or any person associated
with the Company. The Commission has the statutory authority under the
Securities Act of 1933 and Securities Exchange Act of 1934 to seek an
injunction and ancillary statutory and equitable remedies, including,
but not limited to, disgorgement and civil penalties regarding amounts
realized by the Company in violation of the federal securities laws.
Because no civil or administrative action has been commenced by the
Commission and no specific allegations have been asserted by the
Commission, it is not possible to reasonably estimate any potential
liability in connection with this contingency.
NOTE 6 - Commitments and Contingencies
NextPath and its subsidiaries lease office space and various equipment
under noncancelable operating leases expiring in various years as
follows:
NextPath: Leases expire in various years through 2003.
Minimum future rental payments under noncancelable operating leases
having remaining terms in excess of one year as of December 31, 1999 for
each of the next five years and in the aggregate are
<TABLE>
<S> <C>
2000 $ 119,930
2001 112,380
2002 98,580
2003 1,965
2004 -
----------------
Total minimum future rental payments $ 332,855
</TABLE>
Total rental expense was $120,406 for the year ended December 31, 1999.
NOTE 6 - Commitment and Contingencies (continued)
Certain operating leases provide for renewal, and/or purchase options.
Generally, purchase options are at prices representing the expected fair
market value of the property at the expiration of the lease term, if not
before.
Laser Wireless: Leases expire in various years through 2004.
Minimum future rental payments under noncancelable operating leases
having remaining terms in excess of one year as of December 31, 1999 for
each of the next five years and in the aggregate are
<TABLE>
<S> <C>
2000 $ 63,886
2001 63,886
2002 61,914
2003 7,322
2004 2,103
--------------
Total minimum future rental payments $ 199,111
</TABLE>
Certain operating leases provide for renewal, and/or purchase options.
Generally, purchase options are at prices representing the expected fair
market value of the property at the expiration of the lease term, if not
before.
15
<PAGE>
NextPath Technologies, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998
Willow Systems: Leases expire in various years through 2001.
Minimum future rental payments under noncancelable operating leases
having remaining terms in excess of one year as of December 31, 1999 for
each of the next five years and in the aggregate are
<TABLE>
<S> <C> <C>
2000 $ 48,000
2001 40,000
--------------
Total minimum future rental payments $ 88,000
</TABLE>
In addition to the noncancelable operating leases, the Company also is
verbally committed to lease additional office space in Albuquerque, New
Mexico and Largo, Florida on a month-to-month basis.
Certain operating leases provide for renewal, and/or purchase options.
Generally, purchase options are at prices representing the expected fair
market value of the property at the expiration of the lease term, if not
before.
Sagebrush Technology: Leases expire in various years through 2001.
Minimum future rental payments under noncancelable operating leases
having remaining terms in excess of one year as of December 31, 1999 for
each of the next five years and in the aggregate are
<TABLE>
<S> <C> <C>
2000 $ 57,450
2001 27,500
--------------
Total minimum future rental payments $ 84,950
</TABLE>
Certain operating leases provide for renewal, and/or purchase options.
Generally, purchase options are at prices representing the expected fair
market value of the property at the expiration of the lease term, if not
before.
Laser Wireless, Inc. In April of 1999, NextPath was placed on notice
that two of the Company's key employees may have used assets, databases
and possible technology during their employment with an unrelated
company for purposes of setting up Laser Wireless, Inc. Furthermore, it
was contended that the actions of these two employees may have
contributed to the closing of this unrelated company. As of the date of
this report, no actions have been filed on these claims. Management
believes these claims are without merit. As of December 31, 1999, no
accrual has been made on the Company's books for any potential liability
related to this notice.
The Company and its former President, James R. Ladd, are two of the
named defendants in an action that alleges tortious interference with
existing and/or potential business relations, civil conspiracy, and
negligence and also seeks injunctive relief. The Company and its
attorney feel this action is wholly without merit. Counsel feels the
likelihood of an unfavorable outcome in such action is little to none.
The U. S. Securities and Exchange Commission (the "Commission") issued a
confidential formal order of investigation in December, 1999 concerning
the Company's public statements regarding its corporate acquisitions and
other business transactions, and regarding the possibility of a
manipulation of the price or volume of its common stock in the over-the-
counter market, and may include additional matters such as the failure
to register its securities under the Securities Act of 1933 and other
issues. The Commission has issued subpoenas for documents to the
Company, its subsidiaries, its affiliates, and other companies and
individuals associated with the Company. The Commission has also issued
subpoenas for testimony to certain directors, officers, and other
persons associated with the Company. In addition, the Commission has
conducted informal telephone interviews with companies and persons who
have conducted business with the Company, including, but not limited to,
certain customers, suppliers, contractors, consultants and investors,
and others. The investigation by the Commission appears to be
continuing. The Commission has not initiated or filed any civil or
administrative proceedings against the Company or any person associated
with the Company. The Commission has the statutory authority under the
Securities Act of 1933 and Securities Exchange Act of 1934 to seek an
injunction and ancillary statutory and equitable remedies, including,
but not limited to, disgorgement and civil penalties regarding amounts
realized by the Company in violation of the federal securities laws.
Because no civil or administrative action has been commenced by the
Commission and no specific allegations have been asserted by the
Commission, it is not possible to reasonably estimate any potential
liability in connection with this contingency.
NOTE 7 - Notes Payable - Related Party
Notes payable - related party are detailed as follows:
<TABLE>
<CAPTION>
December 31,
1999 1998
---------- --------
Note payable to a family member of the
president of the Company, non-interest
bearing, due within one year and
<S> <C> <C>
unsecured $1,570,250 $15,700
Note payable to a shareholder of the
Company, non-interest bearing, due
within one year and unsecured - 8,000
</TABLE>
16
<PAGE>
NextPath Technologies, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998
<TABLE>
Note payable to a related party corporation,
non-interest bearing, due within one year
<S> <C> <C>
and unsecured - 25,000
Note payable to a shareholder of the
Company, non-interest bearing, due
upon demand 1,618,979 -
Notes payable to affiliates of the Company
From subsidiaries 246,690 -
Note payable to a shareholder of the
Company, non-interest bearing, due
within one year and unsecured 19,950 19,950
----------- --------
Total Notes Payable- Related Party $3,455,869 $68,650
=========== ========
</TABLE>
NOTE 8 - Stock Warrants
At January 1999, the Company had outstanding options to purchase
1,000,000 shares of it's common stock at a price of $2.0 per share. The
option was exercised in February 2000.
NOTE 9 - Investments
Securities investments note classified as either held-to-maturity or
trading securities are classified as available-for-sale securities.
Available-for-sale securities are recorded at the fair value of the
investments and is classified as other assets on the balance sheet, with
the change in fair value during the period excluded from earnings and
recorded net of tax as a component of other comprehensive income.
Investments in securities are summarized as follows at December 31,
1999:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Fair
Gain Loss Value
---------- ---------- -----------
Available-for-sale securities
<S> <C> <C> <C>
Common Stock $ - $ - $ 100,000
Preferred Stock - - 2,500,000
---------- ---------- -----------
$ - $ - $2,600,000
========== ========== ===========
</TABLE>
NOTE 10 - Fair Values of Financial Instruments
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS
No. 107, "Disclosure about Fair Value of Financial Instruments".
The carrying amounts and fair value of the Company's financial
instruments at December 31,1999 and 1998 are as follows:
17
<PAGE>
NextPath Technologies, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
------------------------ ------------------
Carrying Fair Carrying Fair
Amounts Values Amounts Values
---------- ----------- -------- -------
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 658,837 $ 658,837 $ - $ -
Notes and advances receivable 3,260,161 3,359,197 - -
Long-term debt including
current maturities 2,475,629 2,196,995 68,650 68,650
Investments 2,600,000 2,600,000 - -
</TABLE>
NOTE 10 - Fair Values of Financial Instruments (continued)
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments.
Cash and Cash Equivalents
The carrying amounts reported on the balance sheet for cash and cash
equivalents approximate their fair value.
Long-term Debt
The fair values of long-term debt are estimated using discounted cash
flow analyses based on the Company's incremental borrowing rate as
the discount rate.
Notes and Advances Receivables and Investments
The fair values of notes receivable is estimated using cash flow
analyses based on the risk free interest rate.
NOTE 11 - Subsequent Events
The Company has made additional acquisitions in 2000.
Essentia Water, Inc. - Essentia Water, Inc. ("Essentia") is a
Woodinville, Washington based bottled water marketing company. It was
acquired on January 21, 2000. Essentia develops, manufactures, packages,
and markets bottled alkaline and electrolyte enhanced premium water
products with health and hydration benefits. Essentia's process provides
water with 99.9% purity.
NextPath AES, Inc. - NextPath AES, Inc. ("NAES") was formed in November,
1999. It is a wholly owned subsidiary of NextPath. AES is the acronym
used to denote the agribusiness initiatives.
NextPath Environmental Services, Inc. - NextPath Environmental Services,
Inc. ("NES") was formed in November 1999 to develop, sell, own, and
operate systems that convert waste to energy, clean-up water and soil
contaminated by fuel, oil, and chemical spills, provide potable water at
locations that have no water treatment systems, and provide on-site
effluent control, filtration and treatment systems, and, more recently,
to acquire, develop, and market devices to drastically reduce exhaust
emissions from internal combustion engines while increasing fuel
efficiency. The two entities that are included under the NES umbrella
are:
18
<PAGE>
NextPath Technologies, Inc.
Notes to the Financial Statements
December 31, 1999 and 1998
NextPath Thermogenics, LLC - NextPath Thermoigenics, LLC ("Thermogenics,
LLC") is a limited liability company owned 51% by Thermogenics, Inc. and
49% by NES. Thermogenics, LLC designs, fabricates and sells proprietary
gasification systems that use virtually any hydrocarbon-based waste
product as fuel to create a low-temperature, high-quality gas.
NextPath Separation Solutions, LLC - NextPath Separation Solutions, LLC
("Separation Solutions, LLC") is a limited liability company owned 51%
by Lewis Corporation ("Tetra, Separation Systems, LLC") and 49% by NES.
Tetra, Separation Systems, LLC/Lewis designs, fabricates, and sells
proprietary oil-water separation and soil remediation systems that
feature patented and proprietary components. Separation Solutions, LLC
was formed to build, own, and operate these systems for contract
clean-up and remediation.
NOTE 11 - Subsequent Events (continued)
U S CertifiedLetters LLC - U S CertifiedLetters, LLC ("USCL") was formed
for the purpose of licensing, developing and commercializing proprietary
technology for transmitting instruments by certified mail via the
Internet or other medium (the "C-mail Technology") in the continental
United States, Alaska, and Hawaii. C-Mail Technology will enable postal
customers to send certified mail over the Internet. NextPath signed a
definitive agreement to acquire 20% of USCL on April 3, 2000. The
parties expect to complete the acquisition by June 4, 2000.
Global Certified Mail, Inc.- Global Certified Mail, Inc. ("GCM") was
formed by NextPath in October, 1999. On April 3, 2000 NextPath signed an
agreement to exchange a 20% interest in GCM for a license to use C-mail
Technology to enable global postal customers to send certified mail over
the Internet outside the continental United States, Alaska, and Hawaii.
The Company will maintain an 80% ownership interest in GCM. The parties
expect the transaction to close by June 4, 2000.
Loan to ITV Corporation - NextPath loaned ITV Corporation $675,000 on
January 5, 2000 at 8% per annum interest. The term of the note is due to
expire on July 31, 2000.
Additional Issuance of Regulation S Shares of NextPath common stock -
142,100 shares of NextPath common stock were issued after December 31,
1999 for cash of $1,754,000 on a Regulation S offering.
Exercise of Stock Options - 1,000,000 shares of NextPath common stock
were issued for $2,000,000 cash through the exercise of granted stock
options.
NOTE 12 - Notes and Advances Receivable
The Company advanced $4,495,236 to several start-up company's in
contemplation of joint ventures or merger agreements. The Company was to
provide additional funding to the organizations after the merger
agreements were completed, however, many of the agreements did not
close. The Company has therefore established an allowance for doubtful
collection of these advances of $1,235,075. All advances are due within
one year. Because of the status and nature of the advances, no interest
is being accrued.
19
<PAGE>
EXHIBIT INDEX
The following documents are the Exhibits to this Form 10-K/A. For
convenient reference, each Exhibit is listed according to the Exhibit Table of
Regulation S-K.
Exhibit No. Exhibit
*2.1 Agreement and Plan of Merger between Epilogue Corporation and
NextPath Technologies, Inc. dated November 11, 1999
*2.2 Agreement and Plan of Reorganization between FSC Holdings, Inc.
and Compact Power International, Inc. dated January 19, 1998
*2.3 Agreement and Plan of Merger between FSC Holdings, Inc. and
Petrogenetics, Inc. dated May 8, 1997
**3.1 Articles of Merger of NextPath Technologies, Inc. and Epilogue
Corporation as filed on November 16, 1999
**3.2 Certificate of Merger of Epilogue Corporation into NextPath
Technologies, Inc. as filed on November 12, 1999
**3.3 Articles of Merger for FSC Holdings, Inc. dated January 19, 1998
(filed January 27, 1998)
**3.4 Certificate of Correction to the Articles of Merger for FSC
Holdings, Inc. dated December 31, 1997
**3.5 Articles of Merger for FSC Holdings, Inc. dated May 8, 1997
(filed May 12, 1997 in NV)
**3.6 Articles of Merger for FSC Holdings, Inc. dated May 8, 1997
(filed May 12, 1997 in CO)
**3.7 Certificate of Amendment to Articles of Incorporation of
Hyperion Technologies, Inc. dated July 20, 1999
**3.8 Certificate of Amendment to the Articles of Incorporation of
Peak Development, Inc. as filed May 7, 1997
**3.9 Articles of Incorporation of Peak Development, Inc.
**3.10 Articles of Incorporation of Petrogenetics, Inc. dated March
23, 1984
**3.11 Bylaws of FSC Holdings, Inc.
**3.12 Seconded Amended Bylaws of NextPath Technologies, Inc. dated
November 1, 1999
**3.13 Amended Bylaws of NextPath Technologies, Inc. dated July 21,
1999
**10.1 Employment Agreement between NextPath and Frederic F. Wolfer,
Jr. dated November 1, 1999
*16.1 Letter of Crouch, Bierwolf & Chisholm dated February 8, 2000
regarding change in certifying accountant
*16.2 Letter of Weinberg & Company dated February 10, 2000 regarding
change in certifying accountant
*16.3 Letter of Gray & Northcutt, Inc. dated April 3, 2000 regarding
change in certifying accountant
**21.1 List of Registrant's Subsidiaries
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- -------
State of
Name Incorporation Ownership
---- ------------- ---------
<S> <C> <C>
Essentia Water, Inc. DE 100%
Global Certified Mail, Inc. DE 100%
Laser Wireless, Inc. DE 100%
Laser Wireless, Inc. PA 100%
NextPath AES, Inc. DE 100%
NextPath Environmental Services, Inc. DE 100%
NextPath Technologies, Inc. CA 100%
NextPath Technolgoies, Inc. DE 100%
Sagebrush Technology, Inc. DE 100%
Willow Systems, Inc. DE 100%
</TABLE>
**23.1 Consent of Crouch Bierwolf & Chisholm
**27.1 Financial Date Schedule
- ---------------------------------
* Previously filed
** Filed Herewith
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER between EPILOGUE CORPORATION, a Delaware
corporation ("Epilogue"), and NEXTPATH TECHNOLOGIES, INC., a Nevada corporation
("NextPath"), Epilogue and NextPath being sometimes referred to herein as the
"Constituent Corporations."
WHEREAS, the board of directors of each Constituent Corporation deems it
advisable that the Constituent Corporations merge into a single corporation in a
transaction intended to qualify as a reorganization within the meaning of
ss.368(a)(1)(A) of the Internal Revenue Code of 1986, as amended ("the Merger");
NOW, THEREFORE, in consideration of the premises and the respective
mutual covenants, representations and warranties herein contained, the parties
agree as follows:
1. Surviving Corporation. Epilogue shall be merged with and into
NextPath which shall be the surviving corporation in accordance with the
applicable laws of its state of incorporation.
2. Merger Date. The Merger shall become effective (the "Merger Date")
upon the completion of:
2.1. Adoption of this agreement by Epilogue pursuant to the
General Corporation Law of Delaware and by NextPath pursuant to Nevada Revised
Statutes and the Nevada General Corporation Law; and
2.2. Execution and filing by NextPath of Articles of Merger with
the Department of State of the State of Nevada in accordance with the Nevada
Revised Statutes.
2.3. Execution and filing by Epilogue of a Certificate of Merger
with the Secretary of State of the State of Delaware in accordance with the
General Corporation Law of Delaware.
3. Time of Filings. The Articles of Merger shall be filed with the
Department of State of the State of Nevada and the Certificate of Merger shall
be filed with the Secretary of State of Delaware upon the approval, as required
by law, of this agreement by the Constituent Corporations and the fulfillment or
waiver of the terms and conditions herein.
4. Governing Law. The surviving corporation shall be governed by the
laws of the State of incorporation of NextPath.
5. Certificate of Incorporation. The Articles of Incorporation of
NextPath shall be the Articles of Incorporation of the surviving corporation
from and after the Merger Date, subject to the right of NextPath to amend its
Articles of Incorporation in accordance with the laws of the State of its
incorporation.
<PAGE>
6. Bylaws. The Bylaws of the surviving corporation shall be the Bylaws
of NextPath as in effect on the date of this agreement.
7. Board of Directors and Officers. The officers and directors of
NextPath, or such other persons as shall be selected by it, shall be the
officers and directors of the surviving corporation following the Merger Date.
8. Name of Surviving Corporation. The name of the surviving corporation
will continue as "Nextpath Technologies, Inc." unless changed by NextPath.
9. Conversion. The mode of carrying the Merger into effect and the
manner and basis of converting the shares of Epilogue into shares of NextPath
are as follows:
9.1. The aggregate number of shares of Epilogue Common Stock
issued and outstanding on the Merger Date shall, by virtue of the Merger and
without any action on the part of the holders thereof, be converted into an
aggregate of 150,000 shares of NextPath Common Stock adjusted by any increase
for fractional shares and reduced by any Dissenting Shares (defined below).
The NextPath Common Stock to be issued hereunder ("the NextPath
Shares") will be issued pursuant to Rule 506 of the General Rules and
Regulations of the Securities and Exchange Commission, will be restricted as to
transferability pursuant to Rule 144 thereof, and will bear substantially the
following legend:
The securities represented by this certificate have not been
registered under the United States Securities Act of 1933 (the
"Act") and are "restricted securities" as that term is defined in
Rule 144 under the Act The securities may not be offered for
sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act, or pursuant to an
exemption from registration under the Act, the availability of
which is to be established to the satisfaction of the Company.
NextPath agrees to file a registration statement covering the
NextPath Shares with the Securities and Exchange Commission within six months of
the effective date of this Agreement.
9.2. Upon completion of the Merger, there shall be 30,122,031
shares of NextPath Common Stock issued and outstanding, subject to such
adjustments, held as follows: 150,000 common shares held by the former
shareholders of Epilogue and 29,972,031 common shares held by the other
shareholders of NextPath.
9.3. All outstanding Common or Preferred Stock of Epilogue and all
warrants, options or other rights to its Common or Preferred Stock shall be
retired and canceled as of the Merger Date.
<PAGE>
9.4. Each share of Epilogue Common Stock that is owned by
Epilogue as treasury stock shall, by virtue of the Merger and without any action
on the part of Epilogue, be retired and canceled as of the Merger Date.
9.5. Each certificate evidencing ownership of shares of NextPath
Common Stock issued and outstanding on the Merger Date or held by NextPath in
its treasury shall continue to evidence ownership of the same number of shares
of NextPath Common Stock.
9.6. NextPath Common Stock shall be issued to the holders of
Epilogue Common Stock in exchange for their shares on a pro rata basis in
accordance with each holder's relative ownership of the Epilogue Common Stock
that is being exchanged.
9.7. The shares of NextPath Common Stock to be issued in exchange
for Epilogue Common Stock hereunder shall be proportionately reduced by any
shares owned by Epilogue shareholders who shall have timely objected to the
Merger (the "Dissenting Shares") in accordance with the provisions of the
General Corporation Law of Delaware, as provided therein.
10. Exchange of Certificates. As promptly as practicable after the
Merger Date, each holder of an outstanding certificate or certificates
theretofore representing shares of Epilogue Common Stock (other than
certificates representing Dissenting Shares) shall surrender such certificate(s)
for cancellation to the party designated herein to handle such exchange (the
"Exchange Agent"), and shall receive in exchange a certificate or certificates
representing the number of full shares of NextPath Common Stock into which the
shares of Epilogue Common Stock represented by the certificate or certificates
so surrendered shall have been converted. Any exchange of fractional shares will
be rounded up to the next highest number of full shares. NextPath may, in its
discretion, require a bond in customary form before issuing any share
certificate where a corresponding share certificate has not been delivered by a
shareholder of Epilogue because of loss or other reason.
11. Unexchanged Certificates. Until surrendered, each outstanding
certificate that prior to the Merger Date represented Epilogue Common Stock
(other than certificates representing Dissenting Shares) shall be deemed for all
purposes, other than the payment of dividends or other distributions, to
evidence ownership of the number of shares of NextPath Common Stock into which
it was converted. No dividend or other distribution payable to holders of
NextPath Common Stock as of any date subsequent to the Merger Date shall be paid
to the holders of outstanding certificates of Epilogue Common Stock; provided,
however, that upon surrender and exchange of such outstanding certificates
(other than certificates representing Dissenting Shares), there shall be paid to
the record holders of the certificates issued in exchange therefor the amount,
without interest thereon, of dividends and other distributions that would have
been payable subsequent to the Merger Date with respect to the shares of
NextPath Common Stock represented thereby.
12. Effect of the Merger. On the Merger Date, the separate existence of
Epilogue shall cease (except insofar as continued by statute), and it shall be
merged with and into NextPath. All the property, real, personal, and mixed, of
each of the Constituent Corporations, and all debts due to either of them, shall
be transferred to and vested in NextPath, without further act or deed. NextPath
<PAGE>
shall thenceforth be responsible and liable for all the liabilities and
obligations, including liabilities to holders of Dissenting Shares, of each of
the Constituent Corporations, and any claim or judgment against either of the
Constituent Corporations may be enforced against NextPath.
13. Representations and Warranties of Epilogue. Epilogue represents and
warrants that:
13.1. Corporate Organization and Good Standing. Epilogue is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, and is qualified to do business as a foreign
corporation in each jurisdiction, if any, in which its property or business
requires such qualification.
13.2. Reporting Company Status. Epilogue has filed with the
Securities and Exchange Commission a registration statement on Form 10-SB which
became effective pursuant to the Securities Exchange Act of 1934 on August 16,
1999 and is a reporting company pursuant to ss. 12(g) thereunder.
13.3. Reporting Company Filings. Epilogue has timely filed and is
current on all reports required to be filed by it pursuant to ss.13 of the
Securities Exchange Act of 1934.
13.4. Capitalization. Epilogue's authorized capital stock
consists of 120,000,000 shares of Common Stock, $.0001 par value, of which
5,000,000 shares are issued and outstanding, and 20,000,000 shares
of non-designated preferred stock of which no shares are designated or issued.
13.5. Issued Stock. All the outstanding shares of its Common
Stock are duly authorized and validly issued, fully paid and non-assessable.
13.6. Stock Rights. Except as set out by attached schedule, there
are no stock grants, options, rights, warrants or other rights to purchase or
obtain Epilogue Common or Preferred Stock issued or committed to be issued.
13.7. Corporate Authority. Epilogue has nil requisite corporate
power and authority to own, operate and lease its properties, to carry on its
business as it is now being conducted and to execute, deliver, perform and
conclude the transactions contemplated by this agreement and all other
agreements and instruments related to this agreement.
13.8. Subsidiaries. Epilogue has no subsidiaries.
13.9. Financial Statements. Epilogue's financial statements dated
June 7, 1999, copies of which will have been delivered by Epilogue to NextPath
prior to the Merger Date (the "Epilogue Financial Statements"), fairly present
the financial condition of Epilogue as of the date therein and the results of
its operations for the periods then ended in conformity with generally accepted
accounting principles consistently applied.
<PAGE>
13.10. Absence of Undisclosed Liabilities. Except to the extent
reflected or reserved against in the Epilogue Financial Statements, Epilogue did
not have at that date any liabilities or obligations (secured, unsecured,
contingent, or otherwise) of a nature customarily reflected in a corporate
balance sheet prepared in accordance with generally accepted accounting
principles.
13.11. No Material Changes. There has been no material adverse
change in the business, properties, or financial condition of Epilogue since the
date of the Epilogue Financial Statements.
13.12. Litigation. There is not, to the knowledge of Epilogue,
any pending threatened, or existing litigation, bankruptcy, criminal, civil, or
regulatory proceeding or investigation, threatened or contemplated against
Epilogue or against any of its officers.
13.13. Contracts. Epilogue is not a party to any material
contract not in the ordinary course of business that is to be performed in whole
or in part at or after the date of this agreement.
13.14. Title. Epilogue has good and marketable title to all the
real property and good and valid title to all other property included in the
Epilogue Financial Statements. The properties of Epilogue are not subject to any
mortgage, encumbrance, or lien of any kind except minor encumbrances that do not
materially interfere with the use of the property in the conduct of the business
of Epilogue.
13.15. Tax Returns. All required tax returns for federal, state,
county, municipal, local, foreign and other taxes and assessments have been
properly prepared and filed by Epilogue for all years for which such returns are
due unless an extension for filing any such return has been filed. Any and all
federal, state, county, municipal, local, foreign and other taxes and
assessments, including any and all interest, penalties and additions imposed
with respect to such amounts have been paid or provided for. The provisions for
federal and state taxes reflected in the Epilogue Financial Statements are
adequate to cover any such taxes that may be assessed against Epilogue in
respect of its business and its operations during the periods covered by the
Epilogue Financial Statements and all prior periods.
13.16. No Violation. Consummation of the Merger will not
constitute or result in a breach or default under any provision of any charter,
bylaw, indenture, mortgage, lease, or agreement, or any order, judgment, decree,
law, or regulation to which any property of Epilogue is subject or by which
Epilogue is bound.
14. Representations and Warranties of NextPath. NextPath represents
and warrants that:
14.1. Corporate Organization and Good Standing. NextPath is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Nevada and is qualified to do business as a foreign
corporation in each jurisdiction, if any, in which its property or business
requires such qualification.
<PAGE>
14.2. Capitalization. NextPath's authorized capital stock
consists of l00,000,000 shares of Common Stock, $.001 par value, of which
29,972,031 shares are issued and outstanding, and 1,000,000 shares of preferred
stock, of which none are issued and outstanding.
14.3. Issued Stock. All the outstanding shares of its Common
Stock are duly authorized and validly issued, fully paid and non-assessable.
14.4. Stock Rights. There are no stock grants, options, rights,
warrants or other rights to purchase or obtain NextPath Common or Preferred
Stock issued or committed to be issued.
14.5. Corporate Authority. NextPath has all requisite corporate
power and authority to own, operate and lease its properties, to carry on its
business as it is now being conducted and to execute, deliver, perform and
conclude the transactions contemplated by this Agreement and all other
agreements and instruments related to this agreement.
14.6. Subsidiaries. Except as set out in Disclosure Schedule
14.6, NextPath has no subsidiaries.
14.7. Financial Statements. NextPath's financial statements dated
December 31, 1998 copies of which will have been delivered by NextPath to
Epilogue prior to the Merger Date (the "NextPath Financial Statements"), fairly
present the financial condition of NextPath as of the date therein and the
results of its operations for the periods then ended in conformity with
generally accepted accounting principles consistently applied.
14.8. Absence of Undisclosed Liabilities. Except to the extent
reflected or reserved against in the NextPath Financial Statements, NextPath did
not have at that date any liabilities or obligations (secured, unsecured,
contingent, or otherwise) of a nature customarily reflected in a corporate
balance sheet prepared in accordance with generally accepted accounting
principles.
14.9. No Material Changes. There has been no material adverse
change in the business, properties, or financial condition of NextPath since the
date of the NextPath Financial Statements.
14.10. Litigation. Except as set out in Disclosure Schedule
14.10, there is not, to the knowledge of NextPath, any pending, threatened, or
existing litigation, bankruptcy, criminal, civil, or regulatory proceeding or
investigation, threatened or contemplated against NextPath or against any of its
officers.
14.11. Contracts. NextPath is not a party to any material
contract not in the ordinary course of business or in the course of its proposed
acquisitions that is to be performed in whole or in part at or after the date of
this Agreement.
14.12. Title. NextPath has good and marketable title to all
the real property and good and valid title to all other property included in the
NextPath Financial Statements. The
<PAGE>
properties of NextPath are not subject to any mortgage, encumbrance, or lien of
any kind except minor encumbrances that do not materially interfere with the
use of the property in the conduct of the business of NextPath.
14.13. Tax Returns. All required tax returns for federal, state,
county, municipal, local, foreign and other taxes and assessments have been
properly prepared and filed by NextPath for all years for which such returns are
due unless an extension for filing any such return has been filed. Any and all
federal, state, county, municipal, local, foreign and other taxes and
assessments, including any and all interest, penalties and additions imposed
with respect to such amounts have been paid or provided for. The provisions for
federal and state taxes reflected in the NextPath Financial Statements are
adequate to cover any such taxes that may be assessed against NextPath in
respect of its business and its operations during the periods covered by the
NextPath Financial Statements and all prior periods.
14.14. No Violation. Consummation of the Merger will not
constitute or result in a breach or default under any provision of any charter,
bylaw, indenture, mortgage, lease, or agreement, or any order, judgment, decree,
law, or regulation to which any property of NextPath is subject or by which
NextPath is bound.
15. Conduct of Epilogue Pending the Merger Date. Epilogue covenants that
between the date of this Agreement and the Merger Date:
15.1. No change will be made in Epilogue's Articles of
Incorporation or bylaws.
15.2. Epilogue will not make any change in its authorized or
issued capital stock, declare or pay any dividend or other distribution or
issue, encumber, purchase, or otherwise acquire any of its capital stock other
than as provided herein.
15.3. Epilogue will use its best efforts to maintain and preserve
its business organization, employee relationships, and goodwill intact, and will
not enter into any material commitment except in the ordinary course of
business.
16. Conduct of NextPath Pending the Merger Date. NextPath covenants that
between the date of this Agreement and the Merger Date:
16.1. No change will be made in NextPath's Articles of
incorporation or bylaws.
16.2. NextPath will not make any change in its authorized or
issued capital stock, declare or pay any dividend or other distribution or
issue, encumber, purchase, or otherwise acquire any of its capital stock
otherwise than as provided herein.
16.3. NextPath will use its best efforts to maintain and preserve
its business organization, employee relationships, and goodwill intact, and will
not enter into any material commitment except in the ordinary course of
business.
<PAGE>
17. Conditions Precedent to Obligation of Epilogue. Epilogue's
obligation to consummate the Merger shall be subject to fulfillment on or before
the Merger Date of each of the following conditions, unless waived in writing by
Epilogue:
17.1. NextPath's Representations and Warranties. The
representations and warranties of NextPath set forth herein shall be true and
correct at the Merger Date as though made at and as of that date, except as
affected by transactions contemplated hereby.
17.2. NextPath's Covenants. NextPath shall have performed all
covenants required by this agreement to be performed by it on or before the
Merger Date.
17.3. Approval. This agreement shall have been approved by
NextPath in such manner as is required by law including all appropriate action
by directors and, if required, by shareholders.
17.4. Supporting Documents of NextPath. NextPath shall have
delivered to Epilogue supporting documents in form and substance satisfactory to
Epilogue to the effect that:
(i) NextPath is a corporation duly organized, validly existing,
and in good standing.
(ii) NextPath's authorized and issued capital stock is as set
forth herein.
(iii) The execution and adoption of this agreement have been duly
authorized by NextPath in such manner as is required by law including all
appropriate action by directors and, if required, by shareholders.
18. Conditions Precedent to Obligation of NextPath. NextPath's
obligation to consummate the Merger shall be subject to fulfillment on or before
the Merger Date of each of the following conditions, unless waived in writing by
NextPath:
18.1. Epilogue's Representations and Warranties. The
representations and warranties of Epilogue set forth herein shall be true and
correct at the Merger Date as though made at and as of that date, except as
affected by transactions contemplated hereby.
18.2. Epilogue's Covenants. Epilogue shall have performed all
covenants required by this agreement to be performed by it on or before the
Merger Date.
18.3. Approval. This Agreement shall have been approved by
Epilogue in such manner as is required by law including all appropriate action
by directors and, if required, by shareholders.
18.4. Supporting Documents of Epilogue. Epilogue shall have
delivered to NextPath supporting documents in form and substance satisfactory to
NextPath to the effect that:
<PAGE>
(i) Epilogue is a corporation duly organized, validly existing,
and in good standing.
(ii) Epilogue's authorized and issued capital stock is as set
forth herein.
(iii) The execution and adoption of this Agreement have been duly
authorized by Epilogue in such manner as is required by law including all
appropriate action by directors and, if required, by shareholders.
19. Access. From the date hereof to the Merger Date, NextPath and
Epilogue shall provide each other with such information and permit each other's
officers and representatives such access to its properties and books and records
as the other may from time to time reasonably request. If the Merger is not
consummated, all documents received in connection with this agreement shall be
returned to the party furnishing such documents, and all information so received
shall be treated as confidential.
20. Closing.
20.1. The transfers and deliveries to be made pursuant to this
agreement (the "Closing") shall be made by and take place at the offices of the
Exchange Agent or other location designated by the Constituent Corporations
without requiring the meeting of the parties hereof. All proceedings to be taken
and all documents to be executed at the Closing shall be deemed to have been
taken, delivered and executed simultaneously, and no proceeding shall be deemed
taken nor documents deemed executed or delivered until all have been taken,
delivered and executed.
20.2. Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission required by this agreement or any
signature required thereon may be used in lien of an original writing or
transmission or signature for any and all purposes for which the original could
be used, provided that such copy, facsimile telecommunication or other
reproduction shall be a complete reproduction of the entire original writing or
transmission or original signature.
20.3. At the Closing, Epilogue shall deliver to the Exchange
Agent in satisfactory form, if not already delivered to NextPath:
(i) A list of the holders of record of the shares of Epilogue
Common Stock being exchanged, with an itemization of the number of shares held
by each, the address of each holder, and the aggregate number of shares of
NextPath Common Stock to be issued to each holder,
(ii) Evidence of the execution and adoption of this Agreement in
such manner as is required by law including all appropriate action by directors
and, if required, by shareholders;
(iii) Certificate of the Secretary of State of Delaware as of a
recent date as to the good standing of Epilogue;
<PAGE>
(iv) Certified copies of the resolutions of the board of
directors of Epilogue authorizing the execution of this agreement and the
consummation of the Merger;
(v) The Epilogue Financial Statements;
(vi) Secretary's certificate of incumbency of the officers and
directors of Epilogue;
(vii) Any document as may be specified herein or required to
satisfy the conditions, representations and warranties enumerated elsewhere
herein; and
(viii) the share certificates for the outstanding Common Stock of
Epilogue to be exchanged hereunder or, where any such certificate is not
delivered, an affidavit of lost certificate or other reason for non-delivery.
20.4. At the Closing, NextPath shall deliver to the Exchange
Agent in satisfactory form, if not already delivered to Epilogue:
(i) A list of its shareholders of record;
(ii) Evidence of the execution and adoption of this Agreement in
such manner as is required by law including all appropriate action by directors
and, if required, by shareholders;
(iii) Certificate of the Secretary of State of its state of
incorporation as of a recent date as to the good standing of NextPath;
(iv) Certified copies of the resolutions of the board of
directors of NextPath authorizing the execution of this agreement and the
consummation of the Merger,
(v) The NextPath Financial Statements;
(vi) Secretary's certificate of incumbency of the officers and
directors of NextPath;
(vii) Any document as may be specified herein or required to
satisfy the conditions, representations and warranties enumerated elsewhere
herein; and
(viii) the share certificates of NextPath to be delivered to the
shareholders of Epilogue hereunder, in proper names and amounts, and bearing
legends, if any, required and appropriate under applicable securities laws.
21. Survival of Representations and Warranties. The representations and
warranties of the Constituent Corporations set out herein shall survive the
Merger Date.
<PAGE>
22. Arbitration.
22.1. Scope. The parties hereby agree that any and all claims
(except only for requests for injunctive or other equitable relief) whether
existing now, in the past or in the future as to which the parties or any
affiliates may be adverse parties, and whether arising out of this agreement or
from any other cause, will be resolved by arbitration before the American
Arbitration Association within the District of Columbia.
22.2. Consent to Jurisdiction, Situs and Judgement. The parties
hereby irrevocably consent to the jurisdiction of the American Arbitration
Association and the situs of the arbitration (and any requests for injunctive or
other equitable relief) within the District of Columbia. Any award in
arbitration may be entered in any domestic or foreign court having jurisdiction
over the enforcement of such awards.
22.3. Applicable Law. The law applicable to the arbitration and
this agreement shall be that of the State of Nevada, determined without regard
to its provisions which would otherwise apply to a question of conflict of laws.
22.4. Disclosure and Discovery. The arbitrator may, in its
discretion, allow the parties to make reasonable disclosure and discovery in
regard to any matters which are the subject of the arbitration and to compel
compliance with such disclosure and discovery order. The arbitrator may order
the parties to comply with all or any of the disclosure and discovery provisions
of the Federal Rules of Civil Procedure, as they then exist, as may be modified
by the arbitrator consistent with the desire to simplify the conduct and
minimize the expense of the arbitration.
22.5. Rules of Law. Regardless of any practices of arbitration to
the contrary, the arbitrator will apply the rules of contract and other law of
the jurisdiction whose law applies to the arbitration so that the decision of
the arbitrator will be, as much as possible, the same as if the dispute had been
determined by a court of competent jurisdiction.
22.6. Finality and Fees. Any award or decision by the American
Arbitration Association shall be final, binding and non-appealable except as to
errors of law or the failure of the arbitrator to adhere to the arbitration
provisions contained in this agreement. Each party to the arbitration shall pay
its own costs and counsel fees except as specifically provided otherwise in this
agreement.
22.7. Measure of Damages. In any adverse action, the parties
shall restrict themselves to claims for compensatory damages and\or securities
issued or to be issued and no claims shall be made by any party or affiliate for
lost profits, punitive or multiple damages.
22.8. Covenant Not to Sue. The parties covenant that under no
conditions will any party or any affiliate file any action against the other
(except only requests for injunctive or other equitable relief) in any forum
other than before the American Arbitration Association, and
<PAGE>
the parties agree that any such action, if filed, shall be dismissed upon
application and shall be referred for arbitration hereunder with costs and
attorney's fees to the prevailing party.
22.9. Intention. It is the intention of the parties and their
affiliates that all disputes of any nature between them, whenever arising,
whether in regard to this Agreement or any other matter, from whatever cause,
based on whatever law, rule or regulation, whether statutory, or common law, and
however characterized, be decided by arbitration as provided herein and that no
party or affiliate be required to litigate in any other forum any disputes or
other matters except for requests for injunctive or equitable relief. This
Agreement shall be interpreted in conformance with this stated intent of the
parties and their affiliates.
22.10. Survival. The provisions for arbitration contained herein
shall survive the termination of this agreement for any reason.
23. General Provisions.
23.1. Further Assurances. From time to time, each party will
execute such additional instruments and take such actions as may be reasonably
required to carry out the intent and purposes of this agreement.
23.2. Waiver. Any failure on the part of either party hereto to
comply with any of its obligations, agreements, or conditions hereunder may be
waived in writing by the party to whom such compliance is owed.
23.3. Brokers. Each party agrees to indemnify and hold harmless
the other party against any fee, loss, or expense arising out of claims by
brokers or finders employed or alleged to have been employed by the indemnifying
party.
23.4. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered in
person or sent by prepaid first-class certified mail, return receipt requested,
or recognized commercial courier service, as follows:
If to Epilogue, to:
Epilogue Corporation
1504 R Street, N.W.
Washington, D.C. 20009
If to NextPath, to:
Nextpath Technologies, Inc.
114 South Churton Street, Suite 101
Hillsborough, North Carolina 27278
<PAGE>
24. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Nevada.
2S. Assignment. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their successors and assigns; provided,
however, that any assignment by either party of its rights under this agreement
without the written consent of the other party shall be void.
26. Counterparts. This agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Signatures sent by
facsimile transmission shall be deemed to be evidence of the original execution
thereof.
27. Exchange Agent and Closing Date. The Exchange Agent shall be Cassidy
& Associates, Washington, D.C. The Closing shall take place upon the fulfillment
by each party of all the conditions of Closing required herein, but not later
than 15 days following execution of this Agreement unless extended by mutual
consent of the parties.
28. Review of Agreement. Each party acknowledges that it has had time to
review this Agreement and, as desired, consult with counsel. In the
interpretation of this agreement, no adverse presumption shall be made against
any party on the basis that it has prepared, or participated in the preparation
of, this Agreement.
29. Schedules. All schedules attached hereto, if any, shall be
acknowledged by each party by signature or initials thereon.
30. Effective Date. This effective date of this agreement shall be
November 11, 1999.
<PAGE>
Signature Page to Agreement and Plan of Merger
between Epilogue Corporation and
NextPath Technologies, Inc.
IN WITNESS WHEREOF, the parties have executed this Agreement.
EPILOGUE CORPORATION
By:/s/
NEXTPATH TECHNOLOGIES, INC.
By:/s/ James R. Ladd
-------------------------------
James R. Ladd, President
<PAGE>
NEXTPATH DISCLOSURE SCHEDULE 14.6
Subsidiaries of NextPath Technologies, Inc.,
-------------------------------------------
(As of November 11, 1999)
Name Date Formed State of Incorporation
---- ----------- ----------------------
Willow Systems, Inc. 10/12/99 Delaware
Sagebrush Technology, Inc. 10/12/99 Delaware
Laser Wireless, Inc. 10/12/99 Delaware
Laser Wireless, Inc. 3/2/98 Pennsylvania
Global Certified Mail, Inc. 10/14/99 Delaware
PriMedium, Inc. 10/14/99 Delaware
<PAGE>
NEXTPATH DISCLOSURE SCHEDULE 14.10
Litigation
----------
1. Demand letter dated April 29, 1999, addressed to Mr. James Ladd, President
of NextPath (formerly Hyperion) Technologies, Inc. from Dr. David Medved
of JOLT, Ltd.
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Plan") is made this
19th day of January, 1998, among FSC Holdings, Inc., a Nevada corporation
("FSC"); Compact Power International, Inc., a Delaware corporation, any and all
of its subsidiaries and fictitious names (hereinafter collectively referred to
as "CPI") and its shareholders (hereinafter "Shareholders").
FSC wishes to acquire one hundred percent (100%) of the issued
and outstanding stock of CPI for and in exchange for stock of FSC, in a stock
for stock transaction intending to qualify as a tax-flee exchange pursuant to
ss. 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. The parties
intend for this Plan to represent the terms and conditions of such tax-free
reorganization, which Plan the parties hereby adopt.
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, IT IS AGREED:
Section 1
Terms of Exchange
1.1 Number of Shares. Upon the execution hereof, the holders of
all the issued and outstanding stock of CPI agree to assign, transfer, and
deliver to FSC, free and clear of all liens, pledges, encumbrances, charges,
restrictions or known claims of any kind, nature or description, all of their
shares of CPI stock, and FSC agrees to acquire such shares on the date thereof,
or as soon as practicable thereafter, by issuing and delivering in exchange
therefore solely common shares of FSC's stock, par value $0.001, in the
aggregate of 5,800,000 shares, of the then issued and outstanding shares of FSC
subject to the provisions of this Plan. Such shares will represent at least 100%
of the issued and outstanding shares of CPI. Subsequent to the date hereof, the
Shareholders shall, upon the surrender of the CPI certificates representing
their respective beneficial and record ownership one hundred percent (100%) of
the issued and outstanding shares of CPI to FSC, as soon as practicable
hereafter, and further provided an exemption from the registration provisions of
Section 5 of the Securities Act of 1933 is available for the issuance thereof,
the Shareholders shall be entitled to receive a certificate(s) evidencing shares
of the exchanged FSC stock as provided for herein. Upon the consummation of the
transaction contemplated herein, FSC shall merge with CPI and become the
surviving corporation.
1.2 Anti-Dilution. For all relevant purposes of this Plan, the
number of FSC shares to be issued and delivered pursuant to this Plan shall be
appropriately adjusted to take into account any stock split, stock dividend,
reverse stock split, recapitalization, or similar change in FSC common stock,
which may occur between the date of the execution of this Plan and the date of
the delivery of such shares.
1.3 Delivery of Certificates, The Shareholders shall transfer to
FSC at the closing provided for in Section 2 (the "Closing") the shares of
common stock of CPI listed opposite their respective names on Exhibit A hereto
(the "CPI shares") in exchange for shares of the common stock
<PAGE>
of FSC as outlined above in Section 1.1 hereof (the "FSC Stock"). All of such
shares of FSC stock shall be issued at the closing to the Shareholders, in the
numbers shown opposite their respective names in Exhibit "A." The transfer of
CPI shares by the Shareholders shall be effected by the delivery to FSC at the
Closing of certificates representing the transferred shares endorsed in blank or
accompanied by stock powers executed in blank, with all signatures guaranteed by
a national bank and with all necessary transfer taxes and other revenue stamps
affixed and acquired at the Shareholders' expense.
1.4 Further Assurances. Subsequent to the execution hereof, and
from time to time thereafter, the Shareholders shall execute such additional
instruments and take such other action as FSC may request in order to more
effectively sell, transfer and assign clear title and ownership in the CPI
shares to FSC.
Section 2
Closing
2.1 Closing. The Closing contemplated by Section 1.3 shall be
held at the law offices of Daniel W. Jackson, Esq. on or before February 1, 1998
or at such other time or place as may be mutually agreed upon in writing by the
parties. The Closing may also be accomplished by wire, express mail or other
courier service, conference telephone communications or as otherwise agreed by
the respective parties or their duly authorized representatives. In any event,
the closing of the transactions contemplated by this Plan shall be effected as
soon as practicable after all of the conditions contained herein have been
satisfied.
2.2 Closing Events . At the Closing, each of the respective
parties hereto shall execute, acknowledge and deliver (or shall cause to be
executed, acknowledged, and delivered) any agreements, resolutions, rulings,
or other instruments required by this Plan to be so delivered at or prior to
Closing, together with such other items as may be reasonably requested by the
parties hereto and their respective legal counsel in order to effectuate or
evidence the transaction contemplated hereby.
2.3 Mediation Arbitration. If a dispute arises out of or relates
to this Plan, or the breach thereof, and if said dispute cannot be settled
through direct discussions, the parties agree to first endeavor to settle the
dispute in an amicable manner by mediation under the Commercial Mediation Rules
of the American Arbitration Association, before resorting to arbitration.
Thereafter, any Unresolved controversy or claim arising out of or relating this
Plan, or breach thereof, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the Award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof.
-2-
<PAGE>
Section 3
Representations, Warranties and Covenants of FSC
FSC represents and warrants to, and covenants with, the
Shareholders and CPI as follows:
3.1 Corporate Status. FSC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada. FSC
has full corporate power and is duly authorized, qualified, franchised, and
licensed under all applicable laws, regulations, ordinances, and orders of
public authorities to own all of its properties and assets and to carry on its
business on all material respects as it is now being conducted, and there is no
jurisdiction in which the character and location of the assets owned by it, or
the nature of the business transacted by it, requires qualification. Included in
the FSC schedules (defined below) are complete and correct copies of its
Articles of Incorporation and Bylaws as in effect on the date hereof. The
execution and delivery of this Plan does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of FSC's
Articles of Incorporation or Bylaws. FSC has taken all action required by law,
its Articles of Incorporation, its Bylaws, or otherwise, to authorize the
execution and delivery of this Plan.
3.2 Capitalization. The authorized capital stock of FSC as of the
date hereof consists of 100,000,000 common shares, par value $0.001 and
1,000,000 preferred shares, par value $.001. The common shares of FSC issued
and outstanding are fully paid, non-assessable shares. There are no outstanding
options, warrants, obligations convertible into shares of stock, or calls or
any understanding, agreements, commitments, contracts or promises with respect
to the issuance of FSC's common stock or with regard to any options, warrants or
other contractual rights to acquire any of FSC's authorized but unissued common
shares. There are no issued and outstanding preferred shares. As of the Closing,
FSC shall have not more than 7,885,043 shares issued and outstanding.
3.3 Financial Statements.
--------------------
(a) FSC hereby warrants and covenants to CPI that the
audited financial statements dated December 31, 1995 and 1996 and the
unaudited financial statements for the period ended September 30, 1997, fairly
and accurately represent the financial condition of FSC and that no material
change has occurred in the financial condition of FSC.
(b) FSC hereby warrants and represents that the audited
financial statements for the periods set forth in subparagraph (a), supra,
fairly and accurately represent the financial condition of FSC as submitted
heretofore to CPI for examination and review.
3.4 Conduct of Business. FSC is a development stage company and
has not engaged in any operational activities prior to the date hereof.
-3-
<PAGE>
FSC will use its best efforts to maintain and preserve its
business organization, employee relationships and goodwill intact, and will
not, without the prior written consent of CPI, enter into any material
commitments except in the ordinary course of business.
FSC will conduct itself in the following manner pending the
Closing:
(a) Certificate of Incorporation and Bylaws. No change
will be made in the Articles of Incorporation or Bylaws of FSC.
(b) Capitalization. etc. FSC will not make any change in
its authorized or issued shares of any class, declare or pay any dividend or
other distribution, or issue, encumber, purchase or otherwise acquire any
of its shares of any class.
3.5 Options. Warrants and Rights. FSC has no options, warrants or
stock appreciation fights related to the authorized but unissued FSC common
stock. There are no existing options, warrants, calls, Or commitments of any
character relating to the authorized and unissued FSC common stock, except
options, warrants, calls, or commitments, if any, to which FSC is not a party
and by which it is not bound.
3.6 Title to Property. FSC has good and marketable title to all
of its properties and assets, real and personal, proprietary or otherwise, as
will be reflected in the balance sheets of FSC, and the properties and assets of
FSC are subject to no mortgage, pledge, lien or encumbrance, unless as otherwise
disclosed in its financial statements.
3.7 Litigation. There are no material actions, suits, or
proceedings, pending, or, to the best knowledge of FSC, threatened by or against
or effecting FSC at law or in equity, or before any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind; FSC
does not have any knowledge of any default on its part with respect to any
judgment, order, writ, injunction, decree, warrant, rule, or regulation of any
court, arbitrator, or governmental agency or instrumentality.
3.8 Books and Record. From the date hereof, and for any
reasonable period subsequent thereto, FSC and its present management will (i)
give to the Shareholders and CPI, or their duly authorized representatives, full
access, during normal business hours, to all of its books, records, contracts
and other corporate documents and properties so that the Shareholders and CPI,
or their duly authorized representatives, may inspect them; and (ii) furnish
such information concerning the properties and affairs of FSC as the
Shareholders and CPI, or their duly authorized representatives, may reasonably
request. Any such request to inspect FSC's books shall be directed to FSC's
counsel, Daniel W. Jackson, at the address set forth herein under Section 10.4
Notices.
3.9 Confidentiality. Until the Closing (and thereafter if there
is no Closing), FSC and its representatives will keep confidential any
information which they obtain from the Shareholders or from CPI concerning its
properties, assets and the proposed business operations of CPI. If the terms and
conditions of this Plan imposed on the parties hereto are not consummated on or
before 5:00 p.m. MST on February 1, 1998 or otherwise waived or extended in
writing to a date
-4-
<PAGE>
3.17 Contracts or Agreements. FSC is not bound by any material
contracts, agreements or obligations which it has not already disclosed to CPI
in writing or in this Agreement or in any Exhibit attached hereto.
3.18 Governmental Authorizations. FSC has all licenses,
franchises, permits and other government authorizations that are legally
required to enable it to conduct its business in all material respects as
conducted on the date hereof.
3.19 Compliance with Laws and Regulations. FSC has complied with
all applicable statutes and regulations of any federal, state, or other
applicable jurisdiction or agency thereof, except to the extent that
noncompliance would not materially and adversely effect the business,
operations, properties, assets, or condition of FSC or except to the extent that
noncompliance would not result in the occurrence of any material liability, not
otherwise disclosed to CPI.
3.20 Approval of Plan. The Board of Directors of FSC has
authorized the execution and delivery of this Plan by FSC and have approved the
Plan and the transactions contemplated hereby. FSC has full power, authority,
and legal right to enter into this Plan and to consummate the transactions
contemplated hereby.
3.21 Investment Intent. FSC is acquiring the CPI shares to be
transferred to it under this Plan for the purpose of merging with CPI and not
with a view to the sale or distribution thereof, and FSC shall cancel the CPI
shares upon the completion of the merger.
3.22 Unregistered Shares and Access to Information. FSC
understands that the offer and sale of the CPI shares have not been registered
with or reviewed by the Securities and Exchange Commission under the Securities
Act of 1933, as amended, or with or by any state securities law administrator,
and no federal, state securities law administrator has reviewed or approved any
disclosure or other material concerning CPI or the CPI shares. FSC has been
provided with and reviewed all information concerning CPI, the CPI shares as it
has considered necessary or appropriate as a prudent and knowledgeable investor
to enable it to make an informed investment decision concerning the CPI shares.
FSC has made an investigation as to the merits and risks of its acquisition of
the CPI Shares and has had the opportunity to ask questions of, and has
received satisfactory answers from, the officers and directors of CPI concerning
CPI, the CPI shares and related matters, and has had an opportunity to obtain
additional information necessary to verify the accuracy of such information and
to evaluate the merits and risks of the proposed acquisition of the CPI shares.
3.23 Obligations. FSC is not aware of any outstanding obligations
to any of its employees or consultants as of the Closing.
3.24 FSC Schedules. FSC has delivered to CPI the following
items listed below, hereafter referred to as the "FSC Schedules", which
is hereby incorporated by reference and made a part hereof. A certification
executed by a duly authorized officer of FSC on or about the date within the
Plan is executed to certify that the FSC Schedules are tree and correct.
-6-
<PAGE>
(a) Copy of Articles of Incorporation, as amended, and
Bylaws;
(b) Financial statements;
(c) Shareholder list;
(d) Resolution of Directors approving Plan;
(e) Officers' Certificate as required under Section 6.2 of
the Plan;
(f) Opinion of counsel as required under Section 6.4 of
the Plan;
(g) Certificate of Good Standing;
(h) Consent of Shareholders approving Plan.
Section 4
Representations, Warranties and Covenants of CPI
CPI represents and warrants to, and covenants with, the
Shareholders and FSC as follows:
4.1 Corporate Status. CPI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
incorporated on June 27, 1997. CPI has full corporate power and is duly
authorized, qualified, franchised, and licensed under all applicable laws,
regulations, ordinances, and orders of public authorities to own all of its
properties and assets and to carry on its business on all material respects as
it is now being conducted, and there is no jurisdiction in which the character
and location of the assets owned by it, or the nature of the business transacted
by it, requires qualification. Included in the CPI schedules (defined below) are
complete and correct copies of its Articles of Incorporation and Bylaws as in
effect on the date hereof. The execution and delivery of this Plan does not, and
the consummation of the transactions contemplated hereby will not, violate any
provision of CPI's Articles of Incorporation or Bylaws. CPI has taken all action
required by law, its Articles of Incorporation, its Bylaws, or otherwise, to
authorize the execution and delivery of this Plan.
4.2 Capitalization. The authorized capital stock of CPI as of the
date hereof consists of 1,500 common shares. As of the date hereof all common
shares of CPI issued and outstanding are fully paid, non-assessable shares.
There are no outstanding options, warrants, obligations convertible into shares
of stock, or calls or any understanding, agreements, commitments, contracts or
promises with respect to the issuance of CPI's common stock or with regard to
any options, warrants or other contractual rights to acquire any of CPI's
authorized but unissued common shares.
4.3 Conduct of Business. Disposal of domestic waste is becoming
an increasing problem around the world, and existing sites are filling rapidly.
In order to reflect the tree cost of
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<PAGE>
disposal to landfills governments are starting to impose taxes and duties on
waste, such as the recently introduced landfill tax in the United Kingdom. The
transport required to take wastes from where they are disposed of is also an
environmental burden.
One solution to this problem is, or course, the use of municipal
solid waste to generate electricity and heat. Ideally this would happen is small
plants near to the source of the waste, supplying heat and power to the
community which generates the waste. This would minimize losses from
transmitting power and greatly reduce the amount of traffic to remove the waste.
CPI, Inc. is an alternative energy company which specializes in
waste to energy technologies. The Company's primary emphasis is on developing
projects which utilize one or both of the following technologies: (1) a
pyrolysis system which is capable of reducing solid wastes by eighty percent
while co-generating electricity and (2) an algae-based system which uses waste
eater streams to produce a renewable substitute for diesel fuels.
The pyrolysis system has numerous potential applications,
including disposal of Municipal Solid Wastes, conversion of waste coal which
cannot be used in normal combustion systems to electricity; disposal of animal
wastes from hogs and chickens which have become a major threat to the
environment in many rural states (again, white co-generating electricity); and
the safe destruction of hazardous materials such as hospital wastes. CPI is
currently pursuing several potential projects involving this technology,
including one with the Cherokee Nation in Oklahoma (municipal solid wastes) and
another with the government of Kazakhstan (waste coal).
The biodiesel algae production system has numerous applications
as well. First and foremost, it is a cost-effective method for producing a
clean-burning, renewable alternative to diesel fuel. In the context of CPI's
two-pronged mission of reducing harmful environmental pollutants, this system
also represents a tremendous method for cleaning up waste water streams,
especially those generated by large scale agricultural operations. These large
hog and chicken operations have become such a threat to the drinking water in
may southern states that several state legislatures have taken steps to either
curtail or impose moratoriums on the expansion of these industries. The Japan
National Oil Corporation, the Kingdom of Thailand, the US Department of
Agriculture and the Dairy Producers of New Mexico are all exploring the
potential application of this technology.
The technologies which the Company will apply all fit the
description of "appropriate technologies." They represent environmentally safe
ways to deal with two of the most serious dilemmas which confront modem
civilization: (1) how to dispose of waste products safely; and (2) how to supply
cost-effective, environmentally safe, renewable fuels.
CPI will use its best efforts to maintain and preserve its
business organization, employee relationships and goodwill intact, and will not,
without the prior written consent of FSC, enter into any material commitments
except in the ordinary course of business.
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CPI agrees that CPI will conduct itself in the following manner
pending the Closing:
(a) Certificate of Incorporation and Bylaws. No change
will be made in the Certificate of Incorporation or Bylaws of CPI.
(b) Capitalization. etc CPI will not make any change in
its authorized or issued shares of any class, declare or pay any dividend or
other distribution, or issue, encumber, purchase or otherwise acquire any
of its shares of any class.
4.4 Title to Property. CPI has good and marketable title to all
of its properties and assets, real and personal, proprietary or otherwise, as
will be reflected in the balance sheets of CPI, and the properties and assets of
CPI are subject to no mortgage, pledge, lien or encumbrance, unless as otherwise
disclosed in its financial statements.
4.5 Litigation. There are no material actions, suits, or
proceedings, pending, or, to the best knowledge of CPI, threatened by or against
or effecting CPI at law or in equity, or before any governmental agency or
instrumentality, domestic or foreign, or before any arbitrator of any kind; CPI
does not have any knowledge of any default on its part with respect to any
judgment, order, writ, injunction, decree, warrant, rule, or regulation of any
court, arbitrator, or governmental agency or instrumentality.
4.6 Books and Records. From the date hereof, and for any
reasonable period subsequent thereto, CPI and its present management will (i)
give to FSC, or their duly authorized representatives, full access, during
normal business hours, to all of its books, records, contracts and other
corporate documents and properties so that FSC, or their duly authorized
representatives, may inspect them; and (ii) furnish such information concerning
the properties and affairs of CPI as the Shareholders and CPI, or their duly
authorized representatives, may reasonably request. Any such request to inspect
CPI's books shall be directed to CPI's representative, at the address set forth
herein under Section 10.4 Notices.
4.7 Confidentiality. Until the Closing (and thereafter if
there is no Closing), CPI and its representatives will keep confidential any
information which they obtain from the Shareholders or from CPI concerning its
properties, assets and the proposed business operations of CPI. If the terms and
conditions of this Plan imposed on the parties hereto are not consummated on or
before 5:00 p.m. MST on February 1, 1998 or, otherwise waived or extended in
writing to a date mutually agreeable to the parties hereto, CPI will return to
FSC all written matter with regard to FSC obtained in connection with the
negotiations or consummation of this Plan.
4.8 Investment Intent. The Shareholders represent and covenant
that they are acquiring the unregistered and restricted common shares of FSC to
be delivered to them under this Plan for investment purposes and not with a view
to the subsequent sale or distribution thereof, and as agreed, supra, the
Shareholders, their successors and assigns agree to execute and deliver to FSC
on the date of Closing or no later than the date on which the restricted shares
are issued and delivered to the Shareholders, their assigns, or designees, an
Investment Letter similar in form to that attached hereto as Exhibit B.
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4.9 Unregistered Shares and Access to Information. CPI and the
Shareholders understand that the offer and sale of FSC shares to be exchanged
for the CPI shares have not been registered with or reviewed by the securities
and Exchange Commission under the Securities Act of 1933, as amended, or with or
by any state securities law administrator, and no federal or state securities
law administrator has reviewed or approved any disclosure or other material
facts concerning FSC or FSC stock. CPI and the Shareholders have been provided
with and reviewed all information concerning FSC and FSC shares, to be exchanged
for the CPI shares as they have considered necessary or appropriate as prudent
and knowledgeable investors to enable them to make informed investment decisions
concerning the FSC shares, to be exchanged for the CPI shares. CPI and the
Shareholders have made an investigation as to the merits and risks of their
acquisition of the FSC shares, to be exchanged for the CPI shares and have had
the opportunity to ask questions of, and have received satisfactory answers from
the officers and directors of FSC concerning FSC shares to be exchanged for the
CPI shares and related matters, and have had an opportunity to obtain additional
information necessary to verify the accuracy of such information and to evaluate
the merits and risks of the proposed acquisition of the FSC shares to be
exchanged for the CPI shares.
4.10 Title to Shares. The Shareholders are the beneficial and
record owners, free and clear of any liens and encumbrances, of whatever kind or
nature, of all of the shares of CPI of whatever class or series, which the
Shareholders have contracted to exchange.
4.11 Contracts.
(a) Set forth in the CPI Schedules are copies or
descriptions of all material contracts which written or oral, all agreements,
franchises, licenses, or other commitments to which CPI is a party or by which
CPI or its properties are bound.
(b) Except as may be set forth in the CPI Schedules,
CPI is not a party to any contract, agreement, corporate restriction, or subject
to any judgment, order, writ, injunction, decree, or award, which materially
and adversely effect the business, operations, properties, assets, or conditions
of CPI.
(c) Except as set forth in the CPI Schedules, CPI is not
a party to any material oral or written (i) contract for employment of any
officer which is not terminable on 30 days (or less) notice; (ii) profit
sharing, bonus, deferred compensation, stock option, severance, or any other
retirement plan of arrangement covered by Title IV of the Employee Retirement
Income Security Act, as amended, or otherwise covered; (iii) agreement providing
for the sale, assignment or transfer of any of its rights, assets or properties,
whether tangible or intangible, except sales of its property in the ordinary
course of business with a value of less than $2,000; or (iv) waiver of any right
of any value which in the aggregate is extraordinary or material concerning the
assets or properties scheduled by CPI, except for adequate value and pursuant
to contract. CPI has not entered into any material transaction which is not
listed in the CPI Schedules or reflected in the CPI financial statements.
4.12 Material Contract Defaults. CPI is not in default in any
material respect under the terms of any contract, agreement, lease or other
commitment which is material to the business,
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operations, properties or assets, or condition of CPI, and there is no event
of default or event which, with notice of lapse of time or both, would
constitute a default in any material respect under any such contract,
agreement, lease, or other commitment in respect of which CPI has not taken
adequate steps to prevent such default from occurring, or otherwise
compromised, reached a satisfaction of, or provided for extensions of time
in which to perform under any one or more contract obligations, among others.
4.13 Conflict with Other Instruments. The consummation of the
within transactions will not result in the breach of any term or provision of,
or constitute a default under any indenture, mortgage, deed of trust, or other
material agreement or instrument to which CPI was or is a party, or to which any
of its assets or operations are subject, and will not conflict with any
provision of the Articles of Incorporation or Bylaws of CPI.
4.14 Governmental Authori7ation.q' CPI is in good standing in the
State of Delaware. Except for compliance with federal and state securities laws,
no authorization, approval, consent or order of, or registration, declaration,
or filing with, any court or other governmental body is required in connection
with the execution and delivery by CPI of this Plan and the consummation by CPI
of the transactions contemplated hereby.
4.15 Compliance with Laws and Regulation.,:. CPI has complied
with all applicable statutes and regulations of any federal, state, or other
applicable jurisdiction or agency thereof, except to the extent that
noncompliance would not materially and adversely effect the business,
operations, properties, assets, or condition of CPI or except to the extent that
noncompliance would not result in the occurrence of any material liability, not
otherwise disclosed to FSC.
4.16 Approval of Plan, The Board of Directors of CPI have
authorized the execution and delivery of this Plan by CPI and have approved the
Plan and the transactions contemplated hereby. CPI has full power, authority,
and legal right to enter into this Plan and to consummate the transactions
contemplated hereby.
4.17 Information. The information concerning CPI set forth in
this Plan, and the CPI Schedules attached hereto, are complete and accurate in
all material respects and do not contain, or will not contain, when delivered,
any untrue statement or a material fact or omit to state a material fact the
omission of which would be misleading to FSC in connection with this Plan.
4.18 CPI Schedules. CPI has delivered to FSC the following items
listed below, hereafter referred to as the "CPI Schedules", which is hereby
incorporated by reference and made a part hereof. A certification executed by a
duly authorized officer of CPI on or about the date within the Plan is executed
to certify that the CPI Schedules are tree and correct.
(a) Copy of Articles of Incorporation and Bylaws;
(b) Financial Statements
(c) Resolution of Board of Directors approving Plan;
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(d) Consent of Shareholders approving Plan;
(e) A list of key employees, including current
compensation, with notation as to job description and whether or not such
employee is subject to written contract, and if subject to a contract or
employment agreement a copy of the same;
(f) A schedule showing the name and location of each
bank or other institution with which CPI has an account and the names of the
authorized persons to draw thereon or having access thereto;
(g) A schedule setting forth the shareholders,
together with the number of shares owned beneficially or of record by each (also
attached as Exhibit A);
(h) Officers' Certificate as required by Section 7.2
of the Plan;
(i) Certificate of Good Standing
Section 5
Special Covenants
5.1 CPI Information Incorporated in FSC's Report. CPI
represents and warrants to FSC that all the information furnished under this
Plan shall be tree and correct in all material respects and that there is no
omission of any material fact required to make the information stated not
misleading. CPI agrees to indemnify and hold FSC harmless, including each of its
Directors and Officers, and each person, if any, who controls such party, under
any applicable law from and against any and all losses, claims, damages,
expenses or liabilities to which any of them may become subject under applicable
law, or reimburse them for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such actions, whether or
not resulting in liability, insofar as such losses, claims, damages, expenses,
liabilities or actions arise out of or are based on any untrue statement,
alleged untrue statement, or omission of a material fact contained in such
information delivered hereunder.
5.2 FSC Information Incorporated in CPI's Reports. FSC represents
and warrants to CPI that all the information furnished under this Plan shall be
tree and correct in all material respects and that there is no omission of any
material fact required to make the information stated not misleading. The
current officers and directors of FSC agree to indemnify and hold CPI harmless,
including each of its Directors and Officers, and each person, if any, who
controls such party, under any applicable law from and against any and all
losses, claims, damages, expenses or liabilities to which any of them may become
subject under applicable law, or reimburse them for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such actions, whether or not resulting in liability, insofar as such losses,
claims, damages, expenses, liabilities or actions arise out of or are based on
any untrue statement, alleged untrue statement, or omission of a material fact
contained in such information delivered hereunder.
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<PAGE>
this Agreement, unless waived or extended in writing by the parties hereto. CPI
shall have been furnished with a certificate, signed by a duly authorized
executive officer of FSC and dated the Closing date, to the foregoing effect.
6.2 Officers' Certificate. CPI and the Shareholders shall have
been furnished with a certificate dated the Closing date and signed by a duly
authorized executive officer of FSC, to the effect that no litigation,
proceeding, investigation, claim, demand or inquiry is pending, or to the best
knowledge of FSC, threatened, which might result in an action to enjoin or
prevent the consummation of the transactions contemplated by this Plan, or which
might result in any material adverse change in the assets, properties, business,
or operations of FSC, and that this Agreement has been complied with in all
material respects.
6.3 No Material Adverse Change. Prior to the Closing date, there
shall have not occurred any material adverse change in the financial condition,
business or operations of FSC, nor shall any event have occurred which, with
lapse of time or the giving of notice or both, may cause or creme any material
adverse change in the financial condition, business or operations of FSC, except
as otherwise disclosed to CPI.
6.4 Opinion of Counsel of FSC. FSC shall furnish to CPI and the
Shareholders an opinion dated as of the Closing date and in form and substance
satisfactory to CPI and the Shareholders to the effect that:
(a) FSC is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Nevada, and with all
requisite corporate power to perform its obligations under this Plan.
(b) The business of FSC, as presently conducted,
including, upon the consummation hereof, the ownership of all of the issued and
outstanding shares of CPI, does not require it to register it to do business
as a foreign corporation on any jurisdiction other than under the jurisdiction
of its Articles of Incorporation or Bylaws and FSC has complied to the best of
its knowledge in all material respects with all the laws, regulations,
licensing requirements and orders applicable to its business activities and
has filed with the proper authorities, including the Department of Commerce,
Division of Corporations, and Secretary of State for the State of Nevada, all
statements and reports required to be filed.
(c) The authorized and outstanding capital stock of FSC as
set forth in Section 3.2 above, and all issued and outstanding shares have
been duly and validly authorized and issued and are fully paid and non-
assessable.
(d) There are no material claims, suits or other legal
proceedings pending or threatened against FSC of any court or before or by any
governmental body which might materially effect the business of FSC or the
financial condition of FSC as a whole and no such claims, suits or legal
proceedings are contemplated by governmental authorities against FSC.
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(e) To the best knowledge of such counsel, the
consummation of the transactions contemplated by this Plan will not violate or
contravene the provisions of the Certificate of Incorporation or Bylaws of FSC,
or any contract, agreement, indenture, mortgage, or order by which FSC is bound.
(f) This Plan constitutes a legal, valid and binding
obligation of FSC enforceable in accordance with its terms, subject to the
effect of any bankruptcy, insolvency, reorganization, moratorium, or similar law
effecting creditors' rights generally and general principles of equity
(regardless of whether such principles are considered in a proceeding in equity
or law).
(g) The execution and delivery of this Plan and the
consummation of the transactions contemplated hereby have been ratified by a
majority of the Shareholders of FSC and have been duly authorized by its Board
of Directors.
(h) FSC has not, nor will it undertake any action, the
result of which would endanger the tax-free nature of the Plan.
6.5 Good Standing. CPI shall have received a Certificate of
Good Standing from the State of Nevada, dated within sixty (60) days prior to
Closing, but in no event later than ten days subsequent to the execution hereof
certifying that FSC is in good standing as a corporation in the State of Nevada.
6.6 Other Items. CPI and the Shareholders shall have received
such further documents, certifications or instruments relating to the
transactions contemplated hereby as CPI and the Shareholders may reasonably
request.
Section 7
Conditions Precedent to Obligations of FSC
All obligations of FSC under this Plan are subject, at its
option, to the fulfillment, before the Closing, of each of the following
conditions:
7.1 Accuracy of Representations. The representations and
warranties made by CPI and the Shareholders under this Plan were true when made
and shall be true as of the Closing date (except for changes therein permitted
by this Plan) with the same force and effect as if such representations and
warranties were made at and as of the Closing date; and, FSC shall have
performed and complied with all aspects of this Agreement, unless waived or
extended in writing by the parties hereto. FSC shall have been furnished with a
certificate, signed by a duly authorized executive officer of CPI and dated the
Closing date, to the foregoing effect.
7.2 Officers' Certificate. FSC shall have been furnished with a
certificate dated the Closing date and signed by a duly authorized executive
officer of CPI, to the effect that no litigation, proceeding, investigation,
claim, deed, or inquiry is pending, or to the best knowledge of CPI, threatened,
which might result in an action to enjoin or prevent the consummation of the
transactions
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contemplated by this Plan, or which might result in any material adverse change
in the assets, properties, business, or operations of CPI, and that this
Agreement has been complied with in all material respects.
7.3 No Material Adverse Change. Prior to the Closing date, there
shall have not occurred any material adverse change in the financial condition,
business or operations of FSC, nor shall any event have occurred which, with
lapse of time or the giving of notice or both, may cause or create any material
adverse change in the financial condition, business or operations of CPI, except
as otherwise disclosed to FSC.
7.4 Dissenters' Rights Waived. Shareholders representing one
hundred percent (100%) of the issued and outstanding shares of CPI, and each of
them, have agreed and hereby waive any dissenters' rights, if any, under the
laws of the State of Delaware in regards to any objection to this Plan as
outlined herein and otherwise consent to and agree and authorize the execution
and consummation of the within Plan in accordance to the terms and conditions of
this Plan by the management of CPI.
7.5 Other Items. FSC shall have received such further documents,
certifications or instruments relating to the transactions contemplated hereby
as FSC may reasonably request.
7.6 Execution of Investment Letter. The Shareholders shall have
executed and delivered copies of Exhibit B to FSC.
Section 8
Termination
8.1 Termination by CPI or the Shareholders. This Plan may be
terminated at any time prior to the Closing date by action of CPI or the
Shareholders, if FSC shall fail to comply in any material respect with any of
the covenants or agreements contained in this Plan, or if any of its
representations and warranties contained herein shall be inaccurate in any
material respect.
8.2 Termination by FSC. This Plan may be terminated at any time
prior to the Closing date by action of FSC if CPI shall fail to comply in any
material respect with any of the covenants or agreements contained in this Plan,
or if any of its representations or warranties contained herein shall be
inaccurate in any material respect.
8.3 Termination by Mutual Consent
(a) This Plan may be terminated at any time prior to the
Closing date by mutual consent of FSC, expressed by action of its Board of
Directors, CPI or the Shareholders.
(b) If this Plan is terminated pursuant to Section 8, this
Plan shall be of no further force and effect and no obligation, right or
liability shall arise hereunder. Each party shall bare its own costs in
connection herewith.
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Section 9
Shareholders' Representative
The Shareholders hereby irrevocably designate and appoint James
R. Ladd, 1224 R. Street NW, Washington DC 20009, as their agent and attorney in
fact (the "Shareholders' Representative") with full power and authority until
the Closing to execute, deliver and receive on their behalf all notices,
requests and other communications hereunder; to fix and alter on their behalf
the date, time and place of the Closing; to waive, amend or modify any
provisions of this Plan and to take such other action on their behalf in
connection with this Plan, the Closing and the transactions contemplated hereby
as such agent deems appropriate; provided, however, that no such waiver,
amendment or modification may be made if it would decrease the number of shares
to be issued to the Shareholders under Section 1 hereof or increase the extent
of their obligation to FSC hereunder, unless agreed in writing by the
Shareholders.
Section 10
General Provisions
10.1 Further Assurances, At any time, and from time to time,
after the Closing date, each party will execute such additional instruments and
take such action as may be reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or otherwise to carry out
the intent and purposes of the Plan.
10.2 Payments of Costs and Fees, FSC and CPI shall each bear
their own costs and expenses, including any legal and accounting fees in
connection with the negotiation, execution and consummation of the Plan.
10.3 Press Release and Shareholders' Communications. On the date
of Closing, or as soon thereafter as practicable, CPI and the Shareholders shall
cause to have promptly prepared and disseminated a news release concerning the
execution and consummation of the Plan, such press release and communication to
be released promptly and within the time required by the laws, roles and
regulations as promulgated by the United States Securities and Exchange
Commission, and concomitant therewith to cause to be prepared a full and
complete letter to FSC's shareholders which shall contain information required
by Regulation 240.14f-1 as promulgated under Section 14(f) as mandated under the
Securities and Exchange Act of 1934, as amended.
10.4 Notices. All notices and other communications required or
permitted hereunder shall be sufficiently given if personally delivered, sent by
registered mail, or certified mail, return receipt requested, postage prepaid,
or by facsimile transmission addressed to the following parties hereto or at
such other addresses as follows:
If to FSC: FSC Holdings, Inc.
215 South State Street, Suite 1100
Salt Lake City, Utah 84111
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With a copy to: Daniel W. Jackson, Esq.
215 South State Street, Suite 1100
Salt Lake City, Utah 84111
If to CPI: Compact Power International, Inc.
7106 Sunrise Road
Chapel Hill, NC 27514
With a copy to: Steven A. Zrenda
1520 Liberty Tower
100 N. Broadway
Oklahoma City, OK 73102
or at such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, sent by
facsimile transmission, or telegraphed.
10.5 Entire Agreement, This Plan represents the entire agreement
between the parties relating to the subject matter hereof, including any
previous letters of intent, understandings, or agreements between FSC, CPI and
the Shareholders with respect to the subject matter hereof, all of which are
hereby merged into this Plan, which alone fully and completely expresses the
agreement of the parties relating to the subject matter hereof. Excepting the
foregoing agreement, there are no other courses of dealing, understandings,
agreements, representations, or warranties, written or oral, except as set forth
herein.
10.6 Governing Law. This Plan shall be governed by and construed
and enforced in accordance with the laws of the State of Nevada, except to the
extent preempted by federal law, in which event (and to that extent only)
federal law shall govern.
10.7 Tax Treatment. The transaction contemplated by this Plan is
intended to qualify as a "tax-free" reorganization under the provisions of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. CPI and
FSC acknowledge, however, that each are being represented by their own tax
advisors in connection with this transaction, and neither has made any
representations or warranties to the other with respect to treatment of such
transaction or any part or effect thereof under applicable tax laws, regulations
or interpretations; and no attorney's opinion or tax revenue ruling has been
obtained with respect to the tax consequences of the transactions contemplated
by the within Plan.
10.8 Attorney Fees. In the event that any party prevails in any
action or suit to enforce this Plan, or secure relief from any default hereunder
or breach hereof, the nonprevailing party or parties shall reimburse the
prevailing party or parties for all costs, including reasonable attorney fees,
incurred in connection therewith.
10.9 Amendment of Waiver. Every right and remedy provided herein
shall be cumulative with every other right and remedy, whether conferred herein,
at law or in equity, and may
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be enforced concurrently or separately, and no waiver by any party of the
performance of any obligation by the other shall be construed as a waiver of the
same or any other default then, therefore, or thereafter occurring or existing.
Any time prior to the expiration of thirty (30) days from the date hereof, this
Plan may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this Plan may
be waived or the time for performance thereof may be extended by a writing
signed by the party or parties for whose benefit the provision is intended.
10.10 Counterparts. This Plan may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be
an original, and all of which together shall constitute one and the same
instruments.
10.11 Headings. The section and subsection headings in this
Plan are inserted for convenience only and shall not effect in any way the
meaning or interpretation of the Plan.
10.12 Parties in Interest. Except as may be otherwise expressly
provided herein, all terms and provisions of this Plan shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
beneficiaries, personal and legal representatives, and assigns.
IN WITNESS WHEREOF, the parties have executed this Plan and
Agreement of Reorganization effective the day and year first set forth above.
FSC HOLDINGS, INC.
Attest:
/s/ By:/s/Robert Taylor
--------------------- -----------------------------------
Its President
COMPACT POWER INTERNATIONAL, INC.
Attest:
/s/ By:/s/Jack Ladd
---------------------- -----------------------------------
Its President
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SHAREHOLDERS:
Attest:
By:/s/Jack Ladd
- --------------------------------- -----------------------------------
Attest:
By:/s/Mary W. Harrison
- --------------------------------- -----------------------------------
Attest:
By:/s/Joseph P. Kane
- --------------------------------- -----------------------------------
<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is made as of the
8th day of May, 1997, by and between Petrogenetics, Inc., a Colorado
corporation "Petrogenetics"), and FSC Holdings, Inc., a Nevada corporation
("FSC").
RECITALS:
WHEREAS, Petrogenetics and FSC believe that it would be to their
mutual benefit if Petrogenetics were to merge into FSC, thereby moving
Petrogenetics' domicile to the State of Nevada; and
WHEREAS, pursuant to ss.ss. 368(a)(1)(A) and 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended, to date, ss. 7-7-101 of the Colorado
Revised Statutes, and ss. 78.461 of the Nevada Revised Statutes, as amended,
Petrogenetics and FSC desire that Petrogenetics merge with and into FSC,
pursuant to an agreement of merger whereby the separate corporate existence of
Petrogenetics shall cease.
AGREEMENT
NOW, THEREFORE, the parties agree as follows:
1. Merger. On the effective date of the merger, as hereinafter
defined, Petrogenetics shall be merged with and into FSC (the "Merger"). FSC
shall be the sole surviving corporation in the Merger, and its corporate
identity, existence, Property, franchises and rights shall continue unaffected
and unimpaired by the Merger. On the effective date of the Merger,
Petrogenetics's corporate identity property, purposes, powers, franchises,
rights and obligations shall be transferred to, vest in, and be merged with FSC
without further act or deed.
Exhibit A
<PAGE>
Petrogenetics hereby appoints and designates the president of FSC as its
attorney-in-fact to execute, acknowledge and deliver on behalf of Petrogenetics
any assignments, deed, statements, verifications or similar instruments deemed
necessary or appropriate by FSC, or its counsel, to effectuate or evidence the
transfer of vesting of any property, right, privilege or franchise of
Petrogenetics in FSC as a result of the Merger. Except as otherwise specifically
provided by law, Petrogenetics's separate existence shall cease on the effective
date of the Merger.
2. Issuance and Cancellation of Shares. The parties hereto
acknowledge and agree that shares of the common stock of FSC shall be issued to
the shareholders of Petrogenetics in connection with the Merger. The number of
newly issued shares shall equal the number of shares owned by the shareholders
of Petrogenetics on the effective date of the Merger. Upon the effective date of
the Merger, each share of issued and outstanding voting common stock of
Petrogenetics shall, without further action by Petrogenetics or FSC, be canceled
on the books and records of Petrogenetics.
3. Effective Date of Merger, The merger shall be effective upon
the filing of the Agreement.
4. Articles of Incorporation.
(a) The Articles of Incorporation of FSC, as in effect on the
effective date of the Merger, shall continue in full force and effect as the
Certificate of Incorporation of FSC and shall not be changed or amended by the
Merger.
(b) FSC reserves the right and power, after the effective date of
the Merger, to alter, amend, change, or repeal any of the provisions contained
in its Articles of Incorporation in
-2-
<PAGE>
the manner now or hereafter prescribed by statute, and all rights conferred on
officers, directors or shareholders of FSC and of Petrogenetics herein are
subject to this reservation.
5. Bylaws. The Bylaws of FSC, as such Bylaws exist on the
effective date of Merger, shall remain and be the Bylaws of FSC until altered,
ammended or repealed, or until new Bylaws shall be adopted in accordance with
the provisions thereof, the Articles of Incorporation, or in the manner
permitted by the applicable provisions of Nevada law.
6. Officers and Directors.
(a) The directors of FSC as of the effective date of the Merger
shall continue in office until the next annual meeting of the shareholders of
FSC. The number of directors of FSC shall be two. Anita Patterson and Robert
Taylor shall hold those positions.
(b) The following officers of FSC immediately prior to the
effective Date of the Merger shall continue in office after the effective date
of the Merger and until the next annual meeting of the Board of Directors of
FSC.
Anita Patterson President
Robert Taylor Secretary/Treasurer
7. Governing Law. This Agreement shall be governed by and
construed under and in accordance with the laws of the State of Nevada.
8. Binding Agreement. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
9, Amendments. This Agreement may not be amended except by an
instrument in writing signed by or on behalf of the parties hereto.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on its behalf as of the date and year first above
written.
PETROGENETICS, INC.
a Colorado corporation
By/s/Robert Taylor
---------------------------------
Robert Taylor, President
FSC HOLDINGS, INC.
a Nevada corporation
By/s/Anita Patterson
---------------------------------
Anita Patterson, President
ARTICLES OF MERGER
OF
NEXTPATH TECHNOLOGIES, INC., a Nevada corporation
and
EPILOGUE CORPORATION, a Delaware Corporation
The undersigned corporations, NEXTPATH TECHNOLOGIES, INC., a Nevada
corporation ("NextPath") and EPILOGUE CORPORATION, a Delaware corporation
("Epilogue"), do hereby certify:
1. NextPath is a corporation duly organized and validly existing under
the laws of the State of Nevada.
2. Epilogue is a corporation duly organized and validly existing under
the laws of the State of Delaware.
3. NextPath and Epilogue are parties to a Merger Agreement pursuant to
which Epilogue will be merged with and into NextPath. Nextpath will be the
surviving corporation in the merger and Epilogue will cease to exist. Pursuant
to the Merger Agreement the stockholders of Epilogue will receive stock in
Nextpath.
4. The Articles of Incorporation and Bylaws of NextPath as existing
prior to the effective date of the merger shall continue in full force as the
Articles of Incorporation and Bylaws of the surviving corporation.
5. The complete executed Agreement and Plan of Merger dated as of
November 11, 1999, which sets forth the plan of merger providing for the merger
of Epilogue with and into NextPath is on file at the corporate offices of
Nextpath.
6. A copy of the Agreement and Plan of Merger will be furnished by
NextPath on request and without cost to any stockholder of any corporation which
is a party to the merger.
7. The plan of merger as set forth in the Agreement and Plan of Merger
has been approved by the Board of Directors of NextPath at a meeting of the
Board of Directors held November 11, 1999.
8. Stockholders approval of the Agreement and Plan of Merger by the
stockholders of NextPath is not required pursuant to NRS 92A.130(1).
9. The plan of merger as set forth in the Agreement and Plan of Merger
has been approved by Unanimous Written Consent of the Board of Directors of
Epilogue dated November 11, 1999.
10. The plan of merger as set forth in the Agreement and plan of Merger
has been approved by Unanimous Written Consent of the Shareholders of Epilogue
dated November 11, 1999.
<PAGE>
11. The manner in which the exchange of issued share of Epilogue shall
be affected is set forth in the Merger Agreement.
IN WITNESS WHEREOF, the undersigned have executed these Article of
Merger on the 11th day of November, 1999.
NEXTPATH TECHNOLOGIES, INC. EPILOGUE CORPORATION
a Nevada Corporation a Delaware Corporation
By:/s/James R. Ladd By
---------------------------- ---------------------------
STATE OF
SS.
COUNTY OF
On before me, a Notary Public, personally appeared JAMES LADD
who is the president of NEXTPATH TECHNOLOGIES, INC>, and who is personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacities and that, by his signatures on
the instrument, the person or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
-----------------------------------
Notary Public
STATE OF City of Wash.
SS.
COUNTY OF District of Columbia
On November 12, 1999 before me, a Notary Public, personally appeared JAMES
who is the president of EPILOGUE CORPORATION, and who is personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacities and that, by his signatures on
the instrument, the person or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
-----------------------------------
Notary Public
<PAGE>
11. The manner in which the exchange of issued share of Epilogue shall
be affected is set forth in the Merger Agreement.
IN WITNESS WHEREOF, the undersigned have executed these Article of
Merger on the 11th day of November, 1999.
NEXTPATH TECHNOLOGIES, INC. EPILOGUE CORPORATION
a Nevada Corporation a Delaware Corporation
By:/s/James R. Ladd By
---------------------------- ---------------------------
STATE OF
SS.
COUNTY OF Orange
On November 12, 1999 before me, a Notary Public, personally appeared JAMES
LADD who is the president of NEXTPATH TECHNOLOGIES, INC., and who is personally
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he executed the same in his authorized capacities and that, by his
signatures on the instrument, the person or the entity upon behalf of which the
person acted, executed the instrument.
WITNESS my hand and official seal.
-----------------------------------
Notary Public
STATE OF
SS.
COUNTY OF
On November 12, 1999 before me, a Notary Public, personally appeared JAMES
who is the president of EPILOGUE CORPORATION, and who is personally known
to me (or proved to me on the basis of satisfactory evidence) to be the person
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his authorized capacities and that, by his signatures on
the instrument, the person or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
-----------------------------------
Notary Public
<PAGE>
NEXTPATH TECHNOLOGIES
Mr. Frederic F. Wolfer, Jr.
8602 S. Braden Avenue
Tulsa, Oklahoma 74137
Dear Sir,
Per your request, below you will find a signature, written by my hand.
I trust this will help you. Please don't hesitate to call should you
require any additional information.
/s/Frederic F. Wolfer, Jr.
- --------------------------
Frederic F. Wolfer, Jr.
For NextPath Technologies, Inc.
Vice President, Secretary
<PAGE>
Certificate of Merger
Of
Epilogue Corporation
(A Delaware corporation)
Into
Nextpath Technologies, Inc.
(A Nevada corporation)
Pursuant to Section 252 of the General
Corporation Law of the State of Delaware
NEXTPATH TECHNOLOGIES, INC., a Nevada corporation, and EPILOGUE
CORPORATION, a Delaware corporation, hereby certify as follows:
FIRST: The names and jurisdictions of the constituent corporations
are Epilogue Corporation, a Delaware corporation, and Nextpath Technologies,
Inc., a Nevada corporation.
SECOND: An Agreement and Plan of Merger (the "Merger Agreement") has
been approved, adopted, certified, executed and acknowledged by each of the
constituent corporations in accordance with Section 252 of the General
Corporation Law of the State of Delaware and the Nevada Revised Statutes.
THIRD: The Merger Agreement has been approved by action by unanimous
consent of the Board of Directors of Epilogue Corporation on November 11, 1999,
and by written consent without a meeting of a majority of the shareholders on
November 11, 1999.
FOURTH: The Merger Agreement has been approved by action by
unanimous consent of the Board of Directors of Nextpath Technologies, Inc.
on November 11, 1999 and pursuant to the Nevada Revised Statutes shareholder
approval is not required.
FIFTH: The surviving corporation is Nextpath Technologies, Inc. (the
"Surviving Corporation") and the articles of incorporation of the Surviving
Corporation are the articles of incorporation of Nextpath Technologies, Inc.
SIXTH: An executed copy of the Merger Agreement is on file at the
principal place of business of the Surviving Corporation at 114 South Churton
Street, Hillsborough, North Carolina 27278 and a copy of the Merger Agreement
will be furnished by the Surviving Corporation, on request and without cost, to
any stockholder of either constituent corporation.
SEVENTH: The authorized capital stock of Nextpath Technologies, Inc., a
Nevada corporation, is 100,000,000 shares of common stock, $.001 par value per
share of which 29,972,031 shares have been issued and are outstanding.
<PAGE>
EIGHTH: The Surviving Corporation may be served with process in the State of
Delaware in any proceeding for the enforcement of any obligation of any
corporation organized under the laws of the State of Delaware, which is a party
to the merger and in any proceeding for the enforcement of the rights of a
dissenting shareholder of any such corporation organized under the laws of the
State of Delaware against the surviving corporation;
The Delaware Secretary of State shall be and hereby is irrevocably
appointed as the agent of the Surviving Corporation to accept service of process
in any such proceeding for which the service of process shall be mailed to the
Surviving Corporation at 114 South Churton Street, Hillsborough, North Carolina
27278.
The Surviving Corporation will promptly pay to the dissenting
shareholders of any corporation organized under the laws of the State of
Delaware which is a party to the merger the amount, if any, to which they shall
be entitled under the provisions of the Delaware General Corporation Law with
respect to the rights of dissenting shareholders.
NINTH: This Certificate of Merger shall be effective immediately upon
its filing with the Secretary of State of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, Epilogue Corporation and Nextpath Technologies, Inc.
have caused this Certificate of Merger to be executed in their corporate names
by the Presidents and attested to on the 12th day of November, 1999.
EPILOGUE CORPORATION NEXTPATH TECHNOLOGIES, INC.
By:/s/James M. Cassidy By:/s/ James R. Ladd
------------------------------ ---------------------------------
Name: James M. Cassidy Name: James R. Ladd
Title: President Title: President
<PAGE>
ARTICLES OF MERGER FOR
FSC HOLDINGS, INC.,
A NEVADA CORPORATION
Pursuant to the provisions of Section 78.458 of the Nevada Revised
Statutes, FSC Holdings, Inc., a Nevada corporation (the "Corporation"), hereby
adopts and files the following Articles of Merger as the surviving corporation
to the merger of Compact Power International, Inc., a Delaware corporation
("Compact"), with and into the Corporation:
FIRST: The name and place of incorporation of each corporation which is
a party to this merger is as follows:
Name Place of Incorporation
---- ----------------------
FSC Holdings, Inc. Nevada
Compact Power International Delaware
SECOND: The Agreement and Plan of Merger (the "Plan") governing the
merger between the Corporation and Compact, has been adopted by the Board of
Directors of the Corporation and Compact.
THIRD: The approval of the shareholders of the Corporation and Compact
was required to effectuate the merger. The number of shares of stock outstanding
in each of the corporations (and the number of votes entitled to be cast) as of
the date of the adoption of the Plan was as follows:
Entity Type of Shares Number of Shares Outstanding
- ------ -------------- ----------------------------
FSC Holdings, Inc. Common 85,043
Compact Power International, Inc. Common 1,500
The number of shares of stock of each corporation which voted for and
against the Plan was as follows:
Entity Type of Share For Against
- ------ -------------- --- -------
FSC Holdings, Inc. Common 47,500 0
Compact Power International, Inc. Common 1,500 0
FOURTH: The number of votes cast for the Plan by each voting group
entitled to vote was sufficient for approval of the merger by each such voting
group.
FIFTH: Following the merger Article I to the Articles of Incorporation
of the surviving corporation shall be amended as follows:
<PAGE>
A. Delete Article I in its entirety and substitute in its place
the following:
Article One. The name of the Corporation is Hyperion Technologies,
Inc.
SIXTH: The complete executed Plan is on file at the registered office or
other place of business of the Corporation.
SEVENTH: A copy of the Plan will be furnished by the Corporation, on
request and without cost, to any shareholder of either corporation which is a
party to the merger.
EIGHTH: The merger will be effective upon the filing of the Articles of
Merger. DATED this 19th day of January, 1998.
FSC HOLDINGS, INC., a Nevada corporation
By/s/Robert Taylor
---------------------------------------
Robert Taylor, President
STATE OF UTAH
SS.
COUNTY OF SALT LAKE
On the 19th day of January, 1998, personally appeared before me
Robert Taylor, personally known to me or proved to me on the basis of
satisfactory evidence, and who, being by me duly sworn, did say that he is the
President of FSC Holdings, Inc., and that said document was signed by him in
behalf of said corporation by authority of its bylaws, and said Robert Taylor
acknowledged to me that said corporation executed the same. :.
/s/M. Jeanne Ball
-----------------------------------
NOTARY PUBLIC
By/s/Anita Patterson
---------------------------------
Anita Patterson, Secretary
<PAGE>
STATE OF UTAH
SS.
COUNTY OF SALT LAKE
On the 19th day of January, 1998, personally appeared before me
Anita Patterson, personally known to me or proved to me on the basis of
satisfactory evidence, and who, being by me duly sworn, did say that she is the
Secretary of FSC Holdings, Inc., and that said document was signed by her in
behalf of said corporation by authority of its bylaws, and said Anita Patterson
acknowledged to me that said corporation executed the same.
/s/M. Jeanne Ball
-----------------------------------
NOTARY PUBLIC
<PAGE>
CERTIFICATE OF CORRECTION
TO THE ARTICLES OF MERGER FOR FSC HOLDINGS, INC.,
A NEVADA CORPORATION
FSC Holdings, Inc., a Nevada corporation (the "Corporation"),
hereby files the following Certificate of Correction to the Articles of Merger
between the Corporation and Petrogenetics, Inc., a Colorado corporation. The
Articles of Merger were filed on May 12, 1997.
There is a typographical error in the Third paragraph under
"Number of Shares Outstanding". This paragraph states that Petrogenefics, Inc.
has 22,530,000 shares outstanding. The Third paragraph should state that
Petrogenetics, Inc. has 42.530.000 shares outstanding.
/s/Anita Patterson
-----------------------------------
Anita Patterson, President
<PAGE>
ARTICLES OF MERGER FOR
FSC HOLDINGS, INC.
A NEVADA CORPORATION
Pursuant to the provisions of Section 7-111-105 of the Colorado Revised
Statutes, FS(Holdings, Inc., a Nevada corporation (the "Corporation") with its
principal office located at 215 South State Street, Suite 1100, Salt Lake City,
Utah 84111, hereby adopts and files the following Articles of Merger as the
surviving corporation to the merger of Petrogenetics, Inc., a Colorado
corporation ("Petrogenetics"), with and into the Corporation:
FIRST: A complete and executed copy of the Agreement and Plan of
Merger (the "Plan") governing the merger between the Corporation and
Petrogenetics, as adopted by the Boards of Directors of the Corporation and
Petrogenetics and as approved by the shareholders of the Corporation and
Petrogenetics on May 8, 1997, is attached hereto as Exhibit "A". The Plan is
incorporated herein by this reference.
SECOND: The approval of the shareholders of the Corporation and
Petrogenetics was required to effectuate the merger.
THIRD: The number of votes cast for the plan by each voting
entitled to vote separately on the merger was sufficient for approval by that
voting group.
FOURTH: The merger is not being effected pursuant to section
7-111-104 of the Colorado Revised Statutes.
DATED this 8th day of May, 1997.
FSC HOLDINGS, INC., a Nevada corporation
By/s/Anita Patterson
---------------------------------------
Anita Patterson, President
By/s/Robert Taylor
---------------------------------------
Robert Taylor, Secretary
PETROGENETICS, INC.
By/s/Robert Taylor
---------------------------------------
Robert Taylor, President
By/s/Anita Patterson
---------------------------------------
Anita Patterson, Secretary
<PAGE>
ARTICLES OF MERGER FOR
FSC HOLDINGS, INC.
A NEVADA CORPORATION
Pursuant to the provisions of Section 78.458 of the Nevada
Revised Statutes, FSC Holdings, Inc., a Nevada corporation (the "Corporation"),
hereby adopts and files the following Articles of Merger as the surviving
corporation to the merger of Petrogenetics, Inc., a Colorado corporation
("Petrogenetics"), with and into the Corporation:
FIRST: The name and place of incorporation of each corporation
which is a party to this merger is as follows:
Name Place of Incorporation
---- -----------------------
Petrogenetics, Inc. Colorado
FSC Holdings, Inc. Nevada
SECOND: The Agreement and Plan of Merger (the "Plan") governing
the merger between the Corporation and Petrogenetics, has been adopted by the
Board of Directors of the Corporation and Petrogenetics.
THIRD: The approval of the shareholders of the Corporation and
Petrogenetics was required to effectuate the merger. The number of shares of
stock outstanding in each of the corporations (and the number of votes entitled
to be cast) as of the date of the adoption of the Plan was as follows:
Entity Type of Shares Number of Shares Outstanding
- ------ -------------- ----------------------------
Petrogenetics, Inc. Common
FSC Holdings, Inc. Common 100
The number of shares of stock of each corporation which voted for
and against the Plan was as follows:
Entity Type of Shares For Against
- ------ -------------- --- -------
Petrogenetics, Inc. Common 0
FSC Holdings, Inc. Common 100 0
FOURTH: The number of votes cast for thc Plan by each voting
group entitled to vote was sufficient for approval of the merger by each
such voting group.
FIFTH: Following the merger there are no amendments to the
Articles of Incorporation of the surviving company.
<PAGE>
SIXTH: The complete executed Plan is on file at the registered
office or other place of business of the Corporation.
SEVENTH: A copy of the Plan will be furnished by the Corporation,
on request and without cost, to any shareholder of either corporation which is a
party to the merger.
EIGHTH: The merger will be effective upon the filing of the
Articles of Merger. DATED this 8th day of May, 1997.
FSC HOLDINGS, INC., a Nevada corporation
By/s/Anita Patterson
--------------------------------------
Anita Patterson, President
STATE OF UTAH
SS
COUNTY OF SALT LAKE
On the 8th day of May, 1997, personally appeared before me Anita
Patterson, personally known to me or proved to me on the basis of satisfactory
evidence, and who, being by me duly sworn, did say that she is the President of
FSC Holdings, Inc., and that said document was signed by her in behalf of said
corporation by authority of its bylaws, and said Anita Patterson acknowledged to
me that said corporation executed the same.
/s/John S. Clayton
----------------------------------------
NOTARY PUBLIC
By/s/Robert Taylor
----------------------------------------
Robert Taylor, Secretary
STATE OF UTAH
SS
COUNTY OF SALT LAKE
On the 8th day of May, 1997, personally appeared before me Robert
Taylor, personally known to me or proved to me on the basis of satisfactory
evidence, and who, being by me duly sworn, did say that he is the Secretary of
FSC Holdings, Inc., and that said document was signed by her in behalf of said
corporation by authority of its bylaws, and said Anita Patterson acknowledged to
me that said corporation executed the same.
<PAGE>
/s/John S. Clayton
----------------------------------------
NOTARY PUBLIC
PETROGENETICS, INC.
By/s/Robert Taylor
--------------------------------------
Robert Taylor, President
STATE OF UTAH
SS
COUNTY OF SALT LAKE
On the 8th day of May, 1997, personally appeared before me Robert
Taylor, personally known to me or proved to me on the basis of satisfactory
evidence, and who, being by me duly sworn, did say that he is the President of
Petrogenetics, Inc., and that said document was signed by her in behalf of said
corporation by authority of its bylaws, and said Anita Patterson acknowledged to
me that said corporation executed the same.
/s/John S. Clayton
----------------------------------------
NOTARY PUBLIC
By/s/Anita Patterson
--------------------------------------
Anita Patterson, Secretary
STATE OF UTAH
SS
COUNTY OF SALT LAKE
On the 8th day of May, 1997, personally appeared before me Anita
Patterson, personally known to me or proved to me on the basis of satisfactory
evidence, and who, being by me duly sworn, did say that she is the Secretary of
Petrogenetics, Inc., and that said document was signed by her in behalf of said
corporation by authority of its bylaws, and said Anita Patterson acknowledged to
me that said corporation executed the same.
/s/John S. Clayton
----------------------------------------
<PAGE>
CERTIFICATE OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
HYPERION TECHNOLOGIES, INC.
We the undersigned as President and Secretary of Hyperion Technologies,
Inc. do hereby certify:
That the Board of Directors of said Corporation at a Hyperion
Technologies, Inc. meeting duly convened and held on the 29th day of June, 1999
adopted a Resolution to amend the original Articles as follows:
A. Delete Article I in its entirety and substitute in its place
the following:
Article One. The name of the Corporation is NextPath
Technologies, Inc.
Said amendment has been consented to and approved by the owners
of majority of the duly issued and outstanding shares of common stock which
represent a majority of sole class of common stock outstanding and entitled to
vote thereon. The change is effective immediately upon the filing of this
Certificate.
/s/James R. Ladd
-----------------------------------
James R. Ladd, President
/s/Joshua W. Ladd
-----------------------------------
Joshua W. Ladd, Secretary/Treasurer
STATE OF NORTH Carolina
SS
COUNTY OF Pebin
On this 20th day of July, 1999, personally appeared before me James R.
Ladd and Joshua W. Ladd personally known to me or provided to me on the basis of
satisfactory evidence to be the persons whose name is signed on the preceding
document, and acknowledged to me that they signed it voluntarily for its stated
purpose.
----------------------------------
NOTARY PUBLIC
<PAGE>
CERTIFICATE OF AMENDMENT TO
THE ARTICLES OF INCORPORATION OF
PEAK DEVELOPMENT, INC.
We the undersigned as President and Secretary of Peak Development, Inc.
do hereby certify:
That the Board of Directors of said Corporation at a Peak
Development, Inc. meeting duly convened and held via telephone on the
1st day of May, 1997 adopted a Resolution to amend the original Articles
as follows:
A. Delete Article I in its entirety and substitute in its
place the following:
Article One. The name of the Corporation is FSC Holdings,
Inc.
Said amendment has been consented to and approved by the owners of
majority of the duly issued and outstanding shares of common stock which
represent a majority of the sole class of common stock outstanding and entitled
to vote thereon. The change is effective immediately upon the filing of this
Certificate.
/s/Anita Patterson
----------------------------------
Anita Patterson, President
/s/Robert Taylor
----------------------------------
Robert Taylor, Secretary/Treasurer
STATE OF UTAH
SS
COUNTY OF SALT LAKE
On this 1st day of May, 1997, personally appeared before me Anita
Patterson, personally known to me or provided to me on the basis of satisfactory
evidence to be the person whose
<PAGE>
name is signed on the preceding document, and acknowledged to me that she signed
it voluntarily for its stated purpose.
/s/John S. Clayton
-----------------------------------
NOTARY PUBLIC
STATE OF UTAH
SS
COUNTY OF SALT LAKE
On this 1st day of May, 1997, personally appeared before me Robert
Taylor, personally known to me or provided to me on the basis of satisfactory
evidence to be the person whose name is signed on the preceding document, and
acknowledged to me that she signed it voluntarily for its stated purpose.
/s/John S. Clayton
-----------------------------------
NOTARY PUBLIC
<PAGE>
ARTICLES OF INCORPORATION
OF
PEAK DEVELOPMENT, INC.
The undersigned, natural person of eighteen years or more of age,
acting as incorporator of a Corporation (the "Corporation") under the Nevada
Revised Statutes, adopts the following Articles of Incorporation for the
Corporation:
ARTICLE I
NAME OF CORPORATION
The name of the Corporation is Peak Development, Inc.
ARTICLE II SHARES
The aggregate number of shares which this Corporation shall have
the authority to issue is 100,000,000 shares of Common Stock, $.001 par value
per share, all of such common shares shall have the same rights and preferences
and shall be nonassessable; and 1,000,000 shares of Preferred Stock, $.001 par
value per share the preferred stock to be issued in such series with such
rights, preferences and designations as determined by the Corporation's board
of directors. The board of directors of the Corporation shall have complete
authority to prescribe, the classes, series and number of each class or series
of preferred stock and the voting powers, designations, preferences,
limitations, restrictions and relative rights of each class or series of the
preferred stock.
ARTICLE III
REGISTERED OFFICE AND AGENT
The address of the initial registered office of the Corporation
is 1025 Ridgeview, Suite 400, Reno, Nevada 89509 and the name of its initial
registered agent at such address is Michael J. Morrison.
ARTICLE IV INCORPORATOR
The name and address of the incorporator is:
NAME ADDRESS
Anita Patterson 215 South State Street, Suite 1100
Salt Lake City, Utah 84111
<PAGE>
ARTICLE V
DIRECTORS
The members of the governing board of the Corporation shall be
known as directors, and the number of directors may from time to time be
increased or decreased in such manner as shall be provided by the bylaws of
the Corporation, provided that the number of directors shall not be reduced
to less than one (1). The name and post office address of the first board of
directors, which shall be two in number, are as follows:
NAME ADDRESS
Robert Taylor 620 East 3945 South
Salt Lake City, Utah 84107
Anita Patterson 380 East 4th Ave., Apt. A
Salt Lake City, Utah 84103
ARTICLE VI
GENERAL
A. The board of directors shall have the power and authority
to make and alter, or amend, the bylaws, to fix the amount in cash or
otherwise, to be reserved as working capital, and to authorize and cause to
be executed the mortgages and liens upon the property and franchises of the
Corporation.
B. The board of directors shall, from time to time, determine
whether, and to what extent, and at which times and places, and under what
conditions and regulations, the accounts and books of this Corporation, or any
of them, shall be open to the inspection of the stockholders; and no stockholder
shall have the right to inspect any account, book or document of this
Corporation except as conferred by the Statutes of Nevada, or authorized by the
directors or any resolution of the stockholders.
C. No sale, conveyance, transfer, exchange or other disposition
of all or substantially all of the property and assets of this Corporation shall
be made unless approved by the vote or written consent of the stockholders
entitled to exercise two-thirds (2/3) of the voting power of the Corporation.
D. The stockholders and directors shall have the power to hold
their meetings, and keep the books, documents and papers of the Corporation
outside of the State of Nevada, and at such place as may from time to time be
designated by the bylaws or by resolution of the board of directors or
stockholders, except as otherwise required by the laws of the State of Nevada.
2
<PAGE>
E. The Corporation shall indemnify each present and future
officer and director of the Corporation and each person who serves at the
request of the Corporation as an officer or director of the Corporation,
whether or not such person is also an officer or director of the Corporation,
against all costs, expenses and liabilities, including the amounts of
judgments, amounts paid in compromise settlements and amounts paid for
services of counsel and other related expenses, which may be incurred by or
imposed on him in connection with any claim, action, suit, proceeding,
investigation or inquiry hereafter made, instituted or threatened in which he
may be involved as a party or otherwise by reason of any past or future action
taken or authorized and approved by him or any omission to act as such officer
or director, at the time of the incurring or imposition of such costs,
expenses, or liabilities, except such costs, expenses or liabilities as shall
relate to matters as to which he shall in such action, suit or proceeding, be
finally adjudged to be liable by reason of his negligence or willful misconduct
toward the Corporation or such other Corporation in the performance of his
duties as such officer or director, as to whether or not a director or officer
was liable by reason of his negligence or willful misconduct toward the
Corporation or such other Corporation in the performance of his duties as such
officer or director, in the absence of such final adjudication of the existence
of such liability, the board of directors and each officer and director may
conclusively rely upon an opinion of legal counsel selected by or in the manner
designed by the board of directors. The foregoing right of indemnification shall
not be exclusive of other rights to which any such officer or director may be
entitled as a matter of law or otherwise, and shall inure to the benefit of the
heirs, executors, administrators and assigns of each officer or director.
The undersigned being the individual named in Article III, above,
as the initial registered agent of the Corporation, hereby consents to such
appointment.
/s/Michael J. Morrison
-----------------------------------
The undersigned incorporator executed these Articles of
Incorporation, certifying that the facts herein stated are true this 29th day
of April, 1997.
/s/Anita Patterson
----------------------------------
STATE OF UTAH
SS
COUNTY OF SALT LAKE
3
<PAGE>
Mail to:
Colorado Secretary of State
Corporations Office
1575 Sherman St., 2nd Floor
Denver, CO 80203
(303) 866-2361
ARTICLES OF INCORPORATION
I/We, the undersigned natural person(s) of the age of eighteen years or more,
acting as incorporator(s) of a corporation under the Colorado Corporation Act,
adopt the following Articles of Incorporation for such corporation:
FIRST: The name of the corporation is PETROCENETICS, INC.
SECOND: The period of duration is Perpetual
THIRD: The purpose or purposes for which the corporation is organized: Any Legal
and Lawful Purpose Pursuant to the Colorado Corporation Code. The purpose of the
corporation is to enhance oil production by the means of genetically engineered
microorganisms and any legal and lawful purpose pursuant to the Colorado
Corporation Code.
FOURTH: The aggregate number of shares which the corporation shall have the
authority to issue is 100,000,000 and the par value of each share shall be
1 mill (.001)
FIFTH: Cumulative voting of shares of stock is not aurthorized.
SIXTH: Provisions limiting or denying to shareholders the preemptive right to
acquire additional or treasury shares of the corporation, if any, are: to be
decided by a two-thirds majority of the Board of Directors.
SEVENTH: The address of the initial registered office of the corporation is 119
West Main, Florence, CO 81226
and the name of its initial registered agent as suchaddress is Craig B. Springer
EIGHTH: Address of the place ofbusiness: 119 West Main, Florence, CO 81226
NINTH: The number of directors constituting the initial board of directors of
the corporation is three, and the names and addresses of the persons who are to
serve as directors until the first annual meeting of shareholders or until their
successors are elected and shall qualify: (At least 3.)
NAME ADDRESS (include zip code)
Craig Springer Box 52, Florence. CO 81226
- ---------------------------------- ---------------------------
Jimmie Lloyd Box 229, Florence, CO 81226
- ---------------------------------- ---------------------------
George Barrante 811 Lincoln St. Su. 300.
- ---------------------------------- ---------------------------
Denver, CO 80203
<PAGE>
TENTH: The name and address of each incorporator is: (At least l).
NAME ADDRESS (include zip code)
Craig B. Springer Box 52, Florence, CO 81226
- ---------------------------------- ---------------------------
- ---------------------------------- ---------------------------
Signed /s/Craig B. Springer
----------------------------
STATE OF COLORADO
SS
COUNTY OF FREMONT
The foregoing instrument was acknowledged before me this 21 day of March 1984
by Craig B. Springer
In witness whereof I have hereunto set my hand and seal.
My commission expires 2/23/1986
---------------------------------------
Notary Public
119 West Main, Florence, CO 81226
---------------------------------------
Address
<PAGE>
BYLAWS
OF
FSC HOLDINGS, INC.
ARTICLE 1. OFFICES
1.1 Business Office. The principal office of the corporation
shall be located at any place either within or outside the State of Nevada as
designated in the corporation's most recent document on file with the Nevada
Secretary of State, Division of Corporations. The corporation may have such
other offices, either within or without the State of Nevada as the board of
directors may designate or as the business of the corporation may require from
time to time.
1.2 Registered Office. The registered office of the corporation
shall be located within the State of Nevada and may be, but need not be,
identical with the principal office. The address of the registered office may be
changed from time to time.
ARTICLE 2. SHAREHOLDERS
2.1 Annual Shareholder Meetine. The annual meeting of the
shareholders shall be held on the 8th day of May in each year, beginning with
the year 1997 at the hour of 2:00 p.m., or at such other time on such other day
within such month as shall be fixed by the board of directors, for the purpose
of electing directors and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be a legal
holiday in the State of Nevada, such meeting shall be held on the next
succeeding business day.
2.2 Special Shareholder Meetine. Special meetings of the
shareholders, for any purpose or purposes described in the meeting notice, may
be called by the president, or by the board of directors, and shall be called by
the president at the request of the holders of not less than one-fourth of all
outstanding votes of the corporation entitled to be cast on any issue at the
meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Nevada, as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consent, which may be in the form of waivers of notice or otherwise, all
shareholders entitled to vote at the meeting designate a different place, either
within or without the State of Nevada, as the place for the holding of such
meeting. If no designation is made by either the directors or unanimous action
of the voting shareholders, the place of meeting shall be at 215 South State
Street #1100, Salt Lake City, Utah 84111.
<PAGE>
2.4 Notice of Shareholder Meeting. Written notice stating the
date, time, and place of any annual or special shareholder meeting shall be
delivered not less than 10 nor more than 60 days before the date of the
meeting, either personally or by mail, by or at the direction of the
President, the board of directors, or other persons calling the meeting, to
each shareholder of record entitled to vote at such meeting and to any other
shareholder entitled by the Nevada Revised Statutes (the "Statutes") or the
articles of incorporation to receive notice of the meeting. Notice shall be
deemed to be effective at the earlier of: (1) when deposited in the United
States mail, addressed to the shareholder at his address as it appears on
the stock transfer books of the corporation, with postage thereon prepaid;
(2) on the date shown on the return receipt if sent by registered or
certified mail, return receipt requested, and the receipt is signed by or on
behalf of the addressee; (3) when received; or (4) 3 days after deposit in
the United States mail, if mailed postpaid and correctly addressed to an
address other than that shown in the corporation's current record of
shareholders.
If any shareholder meeting is adjourned to a different date, time
or place, notice need not be given of the new date, time and place, if the new
date, time and place is announced at the meeting before adjournment. But if the
adjournment is for more than 30 days or ifa new record date for the adjourned
meeting is or must be fixed, then notice must be given pursuant to the
requirements of the previous paragraph, to those persons who are shareholders as
of the new record date.
2.5 Waiver of Notice. A shareholder may waive any notice
required by the Statutes, the articles of incorporation, or these bylaws, by a
writing signed by the shareholder entitled to the notice, which is delivered to
the corporation (either before or after the date and time stated in the notice)
for inclusion in the minutes or filing with the corporate records.
A shareholder's attendance at a meeting:
(a) waives objection to lack of notice or defective
notice of the meeting, unless the shareholder at the beginning of
the meeting objects to holding the meeting or transacting
business at the meeting because of lack of notice or effective
notice; and
(b) waives objection to consideration of a
particular matter at the meeting that is not within the purpose
or purposes described in the meeting notice, unless the
shareholder objects to considering the matter when it is
presented.
2.6 Fixing of Record Date. For the purpose of determining
shareholders of any voting group entitled to notice of or to vote at any meeting
of shareholders, or shareholders entitled to receive payment of any
distribution, or in order to make a determination of shareholders for any other
proper purpose, the board of directors may fix in advance a date as the record
date. Such record date shall not be more than 70 days prior to the date on which
the particular action, requiring such determination of shareholders, is to be
taken. If no record date is
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so fixed by the board for the determination of shareholders entitled to notice
of, or to vote at a meeting of shareholders, the record date for determination
of such shareholders shall be at the close of business on the day the first
notice is delivered to shareholders. If no record date is fixed by the board
for the determination of shareholders entitled to receive a distribution, the
record date shall be the date the board authorizes the distribution. With
respect to actions taken in writing without a meeting, the record date shall be
the date the first shareholder signs the consent.
When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof unless the board of
directors fixes a new record date which it must do if the meeting is adjourned
to a date more than 120 days after the date fixed for the original meeting.
2.7 Shareholder List. After fixing a record date for a
shareholder meeting, the corporation shall prepare a list of the names of its
shareholders entitled to be given notice of the meeting. The shareholder list
must be available for inspection by any shareholder, beginning on the earlier of
10 days before the meeting for which the list was prepared or 2 business days
after notice of the meeting is given for which the list was prepared and
continuing through the meeting, and any adjournment thereof. The list shall be
available at the corporation's principal office or at a place identified
in the meeting notice in the city where the meeting is to be held.
2.8 Shareholder Quorum and Voting Requirements.
-------------------------------------------
2.8.1 Quorum. Except as otherwise required by the Statutes or
the articles of incorporation, a majority of the outstanding shares of the
corporation, represented by person or by proxy, shall constitute a quorum at
each meeting of the shareholders. If a quorum exists, action on a matter, other
than the election of directors, is approved if the votes cast favoring the
action exceed the votes cast opposing the action, unless the articles of
incorporation or the Statutes require a greater number of affirmative votes.
2.8.2 Voting of Shares. Unless otherwise provided in the
articles of incorporation or these bylaws, each outstanding share, regardless of
class, is entitled to one vote upon each matter submitted to a vote at a meeting
of shareholders.
2.9 Quorum and Voting reouirements of Voting Groups. If the
articles of, incorporation or the Statutes provide for voting by a single voting
group on a matter, action on that matter is taken when voted upon by that voting
group.
Once a share is represented for any purpose at a meeting, it
is deemed present for quorum purposes for the remainder of the meeting and for
any adjournment of that meeting unless a new record date is or must be set for
that adjourned meeting.
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Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares exists with
respect to that matter. Unless the articles of incorporation or the Statutes
provide otherwise, a majority of the votes entitled to be cast on the matter by
the voting group constitutes a quorum of that voting group for action on that
matter.
If the articles of incorporation or the Statutes provide for
voting by two or more voting groups on a matter, action on that matter is taken
only when voted upon by each of those voting groups counted separately. Action
may be taken by one voting group on a matter even though no action is taken by
another voting group entitled to vote on the matter.
If a quorum exists, action on a matter, other than the
election of directors, by a voting group is approved if the votes cast within
the voting group favoring the action exceed the votes cast opposing the action,
unless the articles of incorporation or the Statutes require a greater number of
affirmative votes.
2.10 Greater Quorum or Voting Requirements. The articles of
incorporation may provide for a greater quorum or voting requirement for
shareholders, or voting groups of shareholders, than is provided for by these
bylaws. An amendment to the articles of incorporation that adds, changes, or
deletes a greater quorum or voting requirement for shareholders must meet the
same quorum requirement and be adopted by the same vote and voting groups
required to take action under the quorum and voting requirement then in effect
or proposed to be adopted, whichever is greater.
2.11 Proxies. At all meetings of shareholders, a shareholder may
vote in person or by proxy which is executed in writing by the shareholder or
which is executed by his duly authorized attorney-in-fact. Such proxy shall be
filed with the Secretary of the corporation or other person authorized to
tabulate votes before or at the time of the meeting. No proxy shall be Valid
after 11 months from the date of its execution unless otherwise provided in the
proxy. All proxies are revocable unless they meet specific requirements of
irrevocability set forth in the Statutes. The death or incapacity of a voter
does not invalidate a proxy unless the corporation is put on notice. A
transferee for value who receives shares subject to an irrevocable proxy, can
revoke the proxy if he had no notice of the proxy.
2.12 Corporation's Acceptance of Votes.
2.12.1 If the name signed on a vote, consent, waiver,
proxy appointment, or proxy appointment revocation corresponds to the name of a
shareholder, the corporation, if acting in good faith, is entitled to accept
the vote, consent, waiver, proxy appointment, or proxy appointment revocation
and give it effect as the act of the shareholder.
2.12.2 If the name signed on a vote, consent, waiver, proxy
appointment, or proxy appointment revocation does not correspond to the name of
a shareholder, the corporation, if acting in good faith, is nevertheless
entitled to accept the vote, consent, waiver,
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<PAGE>
proxy appointment, or proxy appointment revocation and give it effect as the act
of the shareholder if:
(a) the shareholder is an entity as defined in
the Statutes and the name signed purports to be that of an
officer or agent of the entity;
(b) the name signed purports to be that of an
administrator, executor, guardian, or conservator
representing the shareholder and, if the corporation
requests, evidence of fiduciary status acceptable to the
corporation has been presented with respect to the vote,
consent, waiver, proxy appointment or proxy appointment
revocation;
(c) the name signed purports to be that of a
receiver or trustee in bankruptcy of the shareholder
and, if the corporation requests, evidence of this status
acceptable to the corporation has been presented with
respect to the vote, consent, waiver, proxy appointment, or
proxy appointment revocation; or
(d) the name signed purports to be that of a
pledgee, beneficial owner, or attorney-in-fact of the
shareholder and, if the corporation requests, evidence
acceptable to the corporation of the signatory's authority
to sign for the shareholder has been presented with respect
to the vote, consent, waiver, proxy appointment or proxy
appointment revocation; or
(e) two or more persons are the shareholder as co-
tenants or fiduciaries and the name signed purports to be
the name of at least one of the co-owners and the person
signing appears to be acting on behalf of all co-tenants or
fiduciaries.
2.12.3 If shares are registered in the names of two or more
persons, whether fiduciaries, members of a partnership, co-tenants, husband and
wife as community property, voting trustees, persons entitled to vote under a
shareholder voting agreement or otherwise, or if two or more persons (including
proxy holders) have the same fiduciary relationship respecting the same shares,
unless the secretary of the corporation or other officer or agent entitled to
tabulate votes is given written notice to the contrary and is furnished with a
copy of the instrument or order appointing them or creating the relationship
wherein it is so provided, their acts with respect to voting shall have the
following effect:
(a) if only one votes, such actbinds all;
(b) if more than one votes, the act of the majority
so voting bind all;
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(c) if more than one votes, but the vote is evenly
split on any particular matter, each raction may vote the
securities in question proportionately.
If the instrument so filed or the registration of the shares
shows that any tenancy is held in unequal interests, a majority or even split
for the purpose of this Section shall be a majority or even split in interest.
2.12.4 The corporation is entitled to reject a vote,
consent, waiver, proxy appointment or proxy appointment revocation if the
secretary or other officer or agent authorized to tabulate votes, acting in good
faith, has reasonable basis for doubt about the validity of the signature on
it or about the signatory's authority to sign for the shareholder.
2.12.5 The corporation and its officer or agent who accepts
or rejects a vote, consent, waiver, proxy appointment or proxy appointment
revocation in good faith and in accordance with the standards of this Section
are not liable in damages to the shareholder for the consequences of the
acceptance or rejection.
2.12.6 Corporate action based on the acceptance or rejection
of a vote, consent, waiver, proxy appointment or proxy appointment revocation
under this Section is valid unless a court of competent jurisdiction determines
otherwise.
2.13 Action bv Shareholders Without a Meeting.
2.13.1 Written Consent. Any action required or permitted to
be taken at a meeting of the shareholders may be taken without a meeting and
without prior notice if one or more consents in writing, setting forth the
action so taken, shall be signed by the holders of Outstanding shares having not
less than the minimum ntunber of votes that would be necessary to authorize'or
take such action at a meeting at which all shareholders entitled to vote with
respect to the subject matter thereof were present and voted. Action taken under
this Section has the same effect as action taken at a duly called and convened
meeting of shareholders and may be described as such in any document.
2.13.2 Post-Consent Notice. Unless the written consents of
all shareholders entitled to vote have been obtained, notice of any shareholder
approval withoui a meeting shall be given at least ten days before the
consummation of the action authorized by such approval to (i) those shareholders
entitled to vote who did not consent in writing, and (ii) those shareholders not
entitled to vote. Any such notice must be accompanied by the same material that
is required under the Statutes to be sent in a notice of meeting at which the
proposed action would have been submitted to the shareholders for action.
2.13.3 Effective Date and Revocation of Consents. No action
taken pursuant to this Section shall be effective unless all written consents
necessary to support the
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action are received by the corporation within a sixty-day period and not
revoked. Such action is effective as of the date the last written consent is
received necessary to effect the action, unless all of the written consents
specify an earlier or later date as the effective date of the action. Any
shareholder giving a written consent pursuant to this Section may revoke the
consent by a signed writing describing the action and stating that the consent
is revoked, provided that such writing is received by the corporation prior to
the effective date of the action.
2.13.4 Unanimous onsent for Election of Directors.
Notwithstanding subsection (a), directors may not be elected by written consent
unless such consent is unanimous by all shares entitled to vote for the election
of directors.
2.14 Voting for Director. Unless otherwise provided in the
articles of incorporation, every shareholder entitled to vote for the election
of directors has the fight to cast, in person or by proxy, all of the votes to
which the shareholder's shares are entitled for as many persons as there are
directors to be elected and for whom election such shareholder has the fight to
vote. Directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present.
ARTICLE 3. BOARD OF DIRECTORS
3.1 General Powers. Unless the articles of incorporation have
dispensed with or limited the authority of the board of directors by describing
who will perform some or all of the duties of a board of directors, all
corporate powers shall be exercised by or under the authority, and the business
and affairs of the corporation shall be managed under the direction, of the
board of directors.
3.2 Number, Tenure and Qualification of Directions. The
authorized number of directors shall be two (2); provided, however, that if the
corporation has less than two shareholders entitled to vote for the election
of directors, the board of directors may consist or a number of individuals
equal to or greater than the number of those shareholders. The current number
of directors shall be within the limit specified above, as determined (or as
amended form time to time) by a resolution adopted by either the shareholders
or the directors. Each director shall hold office until the next annual meeting
of shareholders or until the director's earlier death, resignation, or removal.
However, if his term expires, he shall continue to serve until his successor
shall have been elected and qualified, or until there is a decrease in the
number of directors. Directors do not need to be residents of Nevada or
shareholders of the corporation~
3.3 Regular Meetings of the Board of Directors. A regular meeting
of the board of directors shall be held without other notice than this bylaw
immediately after, and at the same place as, the annual meeting of shareholders,
for the purpose of appointing officers and transacting such other business as
may come before the meeting. The board of directors may provide, by resolution,
the time and place for the holding of additional regular meetings without
other notice than such resolution.
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3.4 Special Meetings of the Board of Directors. Special meetings
of the board of directors may be called by or at the request of the president or
any director. The person authorized to call special meetings of the board of
directors may fix any place as the place for holding any special meeting of the
board of directors.
3.5 Notice of, and Waiver of Notice for, Special Director
Meeting. Unless the articles of incorporation provide for a longer or shorter
period, notice of the date, time, and place of any special director meeting
shall be given at least two days previously thereto either orally or in writing.
Any director may waive notice of any meeting. Except as provided in the next
sentence, the waiver must be in writing and signed by the director entitled to
the notice. The attendance of a director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business and at the
beginning of the meeting (or promptly upon his arrival) objects to holding the
meeting or transacting business at the meeting, and does not thereafter vote
for or assent to action taken at the meeting. Unless required by the articles
of incorporation, neither the business to be transacted at, nor the purpose of,
any special meeting of the board of directors need be specified in the notice
or waiver of notice of such meeting.
3.6 Director Quorum and Voting.
3.6.1 Quorum. A majority of the number of directors
prescribed by resolution shall constitute a quorum for the transaction of
business at any meeting of the board of directors unless the articles of
incorporation require a greater percentage.
Unless the articles of incorporation provide otherwise, any
or all directors may participate in a regular or special meeting by, or conduct
the meeting through the use of, any means of communication by which all
directors participating may simultaneously hear each other during the meeting. A
director participating in a meeting by this means is deemed to be present in
person at the meeting.
A director who is present at a meeting of the board of
directors or a committee of the board of directors when corporate action is
taken is deemed to have assented to the action taken unless: (1) the director
objects at the beginning of the meeting (or promptly upon his arrival) to
holding or transacting business at the meeting and does not thereafter vote
for or assent to any action taken at the meeting; and (2) the director
contemporaneously requests his dissent or abstention as to any specific action
be entered in the minutes of the meeting; or (3) the director causes written
notice of his dissent or abstention as to any specific action be received by
the presiding officer of the meeting before its adjournment or to the
corporation immediately after adjournment of the meeting. The right of dissent
or abstention is not available to a director who votes in favor of the action
taken.
3.7 Director Action Without a Meeting. Any action required or
permitted to be taken by the board of directors at a meeting may be taken
without a meeting if all the directors
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consent to such action in writing. Action taken by consent is effective when
the last director signs the consent, unless, prior to such time, any director
has revoked a consent by a signed writing received by the corporation, or
unless the consent specifies a different effective date. A signed consent has
the effect of a meeting vote and may be described as such in any document.
3.8 Resignation of Directors. A director may resign at any time
by giving a written notice of resignation to the corporation. Such resignation
is effective when the notice is received by the corporation, unless the notice
specifies a later effective date.
3.9 Removal of Directors. The shareholders may remove one or more
directors at a meeting called for that purpose if notice has been given that a
purpose of the meeting is such removal. The removal may be with or without
cause unless the articles of incorporation provide that directors may only be
removed with cause. If a director is elected by a voting group of shareholders,
only the shareholders of that voting group may participate in the vote to remove
him. A director may be removed only if the number of votes cast to remove him
exceeds the number of votes cast not to remove him.
3.10 Board of Director Vacancies. Unless the articles of
incorporation provide otherwise, if a vacancy occurs on the board of directors,
including a vacancy resulting from an increase in the number of directors, the
shareholders may fill the vacancy. During such time that the shareholders fail
or are unable to fill such vacancies then and until the shareholders act:
(a) the board of directors may fill the vacancy; or
(b) if the board of directors remaining in office
constitute fewer than a quorum of the board, they may fill the
vacancy by the affirmative vote or a majority of all the
directors remaining in office.
If the vacant office was held by a'director elected by a voting
group of shareholders:
(a) if there are one or more directors elected by
the same voting group, only such directors are entitled to vote
to fill the vacancy if it is filled by the directors; and
(b) only the holders of shares of that voting group
are entitled to vote to fill the vacancy if it is filled by the
shareholders.
A vacancy that will occur at a specific later date (by reason of
a resignation effective at a later date) may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
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3.11 Director Compensation. By resolution of the board of
directors, each director may be paid his expenses, if any, of attendance at each
meeting of the board of directors and may be paid a stated salary as director
or a fixed sum for attendance at each meeting of the board of directors or both.
No such payment shall preclude any director from serving the corporation in
any other capacity and receiving compensation therefor.
3.12 Director Committees.
3.12.1 Creation of Committees. Unless the articles of
incorporation provide otherwise, the board of directors may create one or more
committees and appoint members of the board of directors to serve on them. Each
committee must have one or more members, who shall serve at the pleasure of the
board of directors.
3.12.2 Selection of Members. The creation of a committee
and appointment of members to it must be approved by the greater of (l) a
majority of all the directors in office when the action is taken or (2) the
number of directors required by the articles of incorporation to take such
action.
3.12.3 Required Procedures. Those Sections of this Article
3 which govern meetings, actions without meetings, notice and waiver of notice,
quorum and voting requirements of the board of directors, apply to committees
and their members.
3.12.4 Authority. Unless limited by the articles of
incorporation, each committee may exercise those aspects of the authority of
the board of directors which the board of directors confers upon such committee
in the resolution creating the committee. Provided, however, a committee may
not:
(a) authorize distributions;
(b) approve or propose to shareholders action that
the Statutes require be approved by shareholders;
(c) fill vacancies on the board of directors or on
any of its committees;
(d) amend the articles of incorporation pursuant to
the authority of directors to do so;
(e) adopt, amend or repeal bylaws;
(f) approve a plan of merger not requiring
shareholder approval;
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(g) authorize or approve reacquisition of shares,
except according to a formula or method prescribed by the board
of directors; or
(h) authorize or approve the issuance or sale or
contract for sale of shares or determine the designation and
relative rights, preferences and limitations of a class or series
of shares, except that the board of directors may authorize a
committee (or an officer) to do so within limits specifically
prescribed by the board of directors.
ARTICLE 4. OFFICERS
4.1 Number of Officers. The officers of the corporation Shall be
a president, a secretary and a treasurer, each of whom shall be appointed by
the board of directors. Such other officers and assistant officers as may be
deemed necessary, including any vice presidents, may also be appointed by the
board of directors. If specifically authorized by the board of directors, an
officer may appoint one or more officers or assistant officers. The same
individual may simultaneously hold more than one office in the corporation.
4.2 Appointment and Term of Office. The officers of the
corporation shall be appointed by the board of directors for a term as
determined by the board of directors. If no term is specified, they shall hold
office until the first meeting of the directors held after the next annual
meeting of shareholders. If the appointment of officers shall not be made at
such meeting, such appointment shall be made as soon thereafter as is
convenient. Each officer shall hold office until his successor shall have been
duly appointed and shall have qualified until his death, or until he shall
resign or is removed.
The designation of a specified term does not grant to the officer
any contract rights, and the board may remove the officer at any time prior to
the termination of such term.
4.3 Removal of Officers. Any officer or agent may be removed by
the board of directors at any time, with or without cause. Such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Appointment of an officer or agent shall not of itself create contract rights.
4.4 Resignation of Officers. Any officer may resign at any time,
subject to why rights or obligations under any existing contracts between the
officers and the corporation, by giving notice to the president or board of
directors. An officer's resignation shall take effect at the time specified
therein, and the acceptance of such resignation shall not be necessary to make
it effective.
4.5 President. Unless the board of directors has designated the
chairman of the board as chief executive officer, the president shall be the
chief executive officer of the corporation and, subject to the control of the
board of directors, shall in general supervise and
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control all of the business and affairs of the corporation. Unless there is a
chairman of the board, the president shall, when present, preside at all
meetings of the shareholders and of the board of directors. The president may
sign, with the secretary or any other proper officer of the corporation
thereunder authorized by the board of directors, certificates for shares of the
corporation and deeds, mortgages, bonds, contracts, or other instruments which
the board of directors has authorized to be executed, except in cases where the
signing and execution thereof shall be expressly delegated by the board of
directors or by these bylaws to some other officer or agent of the corporation,
or shall be required by law to be otherwise signed or executed; and in
general shall perform all duties incident to the office of president and such
other duties as may be prescribed by the board of directors from time to time.
4.6 Vice Presidents. If appointed, in the absence of the
president or in the event of his death, inability or refusal to act, the vice
president (or in the event there be more than one vice president, the vice
presidents in the order designate at the time of their election, or in
the absence of any designation, then in the order of their appointment) shall
perform the duties of the president, and when so acting, shall have all the
powers of, and be subject to, all the restrictions upon the president.
4.7 Secretary. The secretary shall: (a) keep the minutes of the
proceedings of the shareholders, the board of directors, and any committees of
the board in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with these provisions of these bylaws or as
required by law; (c) be custodian of the corporate records; (d) when requested
or required, authenticate any records of the corporation; (e) keep a register of
the post office address of each shareholder which shall be furnished to the
secretary by such shareholder; (f) sign with the president, or a vice president,
certificates for shares of the corporation, the issuance of which shall have
been authorized by resolution of the board of directors; (g) have general charge
of the stock transfer books of the corporation; and (h) in general perform all
duties incident to the office of secretary and such other duties as from time to
time may be assigned by the president or by the board of directors. Assistant
secretaries, if any, shall have the same duties and powers, subject to the
supervision of the secretary.
4.8 Treasurer. The treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the corporation; (b)
receive and give receipts for monies due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the corporation
in such bank, trust companies, or other depositaries shall be selected by the
board of directors; and (c) in general perform all of the duties incident to
the office of treasurer and such other duties as from time to time may be
assigned by the president or by the board of directors. If required by the
board of directors, the treasurer shall give a bond for the faithful discharge
of his or her duties in such sum and with such surety or sureties as the board
of directors shall determine. Assistant treasurers, if any, shall have the same
powers and duties, subject to the supervision of the treasurer.
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4.9 Salaries. The salaries of the officers shall be fixed from
time to time by the board of directors.
ARTICLE 5. INDEMNIFICATION OF DIRECTORS,
OFFICERS, AGENTS, AND EMPLOYEES
5.1 Indemnification of Directors. Unless otherwise provided in
the articles of incorporation, the corporation shall indemnify any individual
made a party to a proceeding because the individual is or was a director of the
corporation, against liability incurred in the proceeding, but only if such
indemnification is both (i) determined permissible and (ii) authorized, as such
are defined in subsection (a) of this Section 5. I.
5.1.1 Determination of Authorization. The corporation shall
not indemnify a director under this Section unless:
(a) a determination has been made in accordance
with the procedures set forth in the Statutes that the director
met the standard of conduct set forth in subsection (b) below,
and
(b) payment has been authorized in accordance with
the procedures set forth in the Statutes based on a conclusion
that the expenses are reasonable, the corporation has the
financial ability to make the payment, and the financial
resources of the corporation hould be devoted to this use rather
than some other use by the corporation.
5.1.2 Standard of Conduct. The individual shall demonstrate
that:
(a) he or she conducted himself in good faith; and
(b) he or she reasonably believed:
(i) in the case of conduct in his official
capacity with the corporation, that his conduct wasin its
best interests;
(ii) in all other cases, that his conduct was
at least not, opposed to its best interests; and
(iii) in the case of any criminal proceeding,
he or she had no reasonable cause to believe his conduct was
unlawful.
5.1.3 Indemnification in Derivative Actions Limited.
Indemnification permitted under this Section in connection with a proceeding by
or in the right of the corporation is limited to reasonable expenses incurred in
connection with the proceeding.
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5.1.4 Limitation on Indemnification. The corporation shall
not indemnify a director under this Section of Article 5:
(a) in connection with a proceeding by or in the
right of the corporation in which the director was adjudged
liable to the corporation; or
(b) in connection with any other proceeding charging
improper personal benefit to the director, whether or not
involving action in his or her official capacity, in which he or
she was adjudged liable on the basis that personal benefit was
improperly received by the director.
5.2 Advance of Expenses for Directors. If a determination is
made following the procedures of the Statutes, that the director has met the
following requirements, and if an authorization of payment is made following
the procedures and standards set forth in the Statutes, then unless otherwise
provided in the articles of incorporation, the corporation shall pay for or
reimburse the reasonable expenses incurred by a director who is a party to
a proceeding in advance of final disposition of the proceeding, if:
(a) the director furnishes the corporation a written
affirmation of his good faith belief that he has met the standard
of conduct described in this section;
(b) the director furnishes the corporation a written
undertaking, executed personally or on his behalf, to repay the
advance if it is ultimately determined that he di not meet the
standard of conduct;
(c) a determination is made that the facts then
known to those making the determination would not preclude
indemnification under this Section or the Statutes.
5.3 Indemnification of Officers. Agents and Employees Who Are Not
Directors. Unless otherwise provided in the articles of incorporation, the board
of directors may indemnify and advance expenses to any officer, employee, or
agent of the corporation, who is not a director of the corporation, to the
same extent as to a director, or to any greater extent consistent with. public
policy, as determined by the general or specific actions of the board of
directors.
5.4 Insurance. By action of the board of directors,
notwithstanding any interest of the directors in such action, the corporation
may purchase and maintain insurance on behalf of a person who is or was a
director, officer, employee, fiduciary or agent of the corporation, against
any liability asserted against or incurred by such person in that capacity or
arising from such person's status as a director, officer, employee, fiduciary,
or agent, whether or not the corporation would have the power to indemnify such
person under the applicable provisions of the Statutes.
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ARTICLE 6. STOCK
6.1 Issuance of Shares. The issuance or sale by the corporation
of any shares of its authorized capital stock of any class, including treasury
shares, shall be made only upon authorization by the board of directors, unless
otherwise provided by statute. The board of directors may authorize the issuance
of shares for consideration consisting of any tangible or intangible property or
benefit to the corporation, including cash, promissory notes, services
performed, contracts or arrangements for services to be performed, or other
securities of the corporation. Shares shall be issued for such consideration
expressed in dollars as shall be fixed from time to time by the board of
directors.
6.2 Certificates for Shares.
6.2.1 Content. Certificates representing shares of the
corporation shall at minimum, state on their face the name of the issuing
corporation and that it is formed under the laws of the State of Nevada; the
name of the person to whom issued; and the number and class of shares and the
designation of the series, if any, the certificate represents; and be in such
form as determined by the board of directors. Such certificates shall be signed
(either manually or by facsimile) by the president or a vice president and by
the secretary or an assistant secretary and may be sealed with a corporate seal
or a facsimile thereof. Each certificate for shares shall be consecutively
numbered or otherwise identified.
6.2.2 Legend as to Class or Series. If the corporation is
authorized to issue different classes of shares or different series within a
class, the designations, relative rights, preferences and limitations applicable
to each class and the variations in rights, preferences and limitations
determined for each series (and the authority of the board of directors to
determine variations for future series) must be summarized on the front or back
of each certificate. Alternatively, each certificate may state conspicuously on
its front or back that the corporation will furnish the shareholder this
information on request in writing and without charge.
6.2.3 Shareholder List. The name and address of the person
to whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the stock transfer books of the corporation.
6.2.4 Transferring Shares. All certificates surrendered to
the corporation for transfer shall be canceled and no new certificate shall be
issued until the former certificate for a like number of shares shall have been
surrendered and canceled, except that in cash of a lost, destroyed, or mutilated
certificate, a new one may be issued therefor upon such terms and indemnity to
the corporation as the board of directors may prescribe.
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6.3 Shares Without Certificates.
6.3.1 Issuing Shares Without Certificates. Unless the
articles of incorporation provide otherwise, the board of directors may
authorize the issue of some or all the shares of any or all of its classes or
series without certificates. The authorization does not affect shares already
represented by certificatesuntil they are surrendered to the corporation.
6.3.2 Information Statement Required. Within a reasonable
time after the issue or transfer of shares without certificates, the corporation
shall send the shareholder a written statement containing, at a minimum, the
information required by the Statutes.
6.4 Registration of the Transfer of Shares. Registration of the
transfer of shares of the corporation shall be made only on the stock transfer
books of the corporation. In order to register a transfer, the record owner
shall surrender the shares to the corporation for cancellation, properly
endorsed by the appropriate person or persons with reasonable assurances that
the endorsements are genuine and effective. Unless the corporation has
established a procedure by which a beneficial owner of shares held by a nominee
is to be recognized by the corporation as the owner, the person in whose name
shares stand in the books of the corporation shall be deemed by the corporation
to be the owner thereof for all purposes.
6.5 Restrictions on Transfer or Registration of Shares. The
board of directors or shareholders may impose restrictions on the transfer or
registration of transfer of shares (including any security convertible into, or
carrying a right to subscribe for or acquire shares). A restriction does not
affect shares issued before the restriction was adopted unless the holders of
the shares are parties to the restriction agreement or voted in favor of or
otherwise consented to the restriction.
A restriction on the transfer or registration of transfer of
shares may be authorized:
(a) to maintain the corporation's status when it is
dependent on the number or identity of its shareholders;
(b) to preserve entitlements, benefits or exemptions
under federal or local laws; and
(c) for any other reasonable purpose.
A restriction on the transfer or registration of transfer of
shares may:
(a) obligate the shareholder first to offer the
corporation or other persons (separately, consecutively or
simultaneously) an opportunity to acquire the restricted shares;
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(b) obligate the corporation or other persons
(separately, consecutively or simultaneously) to acquire the
restricted shares;
(c) require as a condition to such transfer or
registration, that any one or more persons, including the
holders of any of its shares, approve the transfer or
registration if the requirement is not manifestly
unreasonable; or
(d) prohibit the transfer or the registration
of transfer of the restricted shares to designated persons or
classes of persons, if the prohibition is not manifestly
unreasonable.
A restriction on the transfer or registration of transfer of
shares is valid and enforceable against the holder or a transferee of the holder
if the restriction is authorized by this Section and its existence is noted
conspicuously on the front or back of the certificate or is comained in the
information statement required by this Article 6 with regard to shares issued
without certificates. Unless so noted, a restriction is not enforceable against
a person without knowledge of the restriction.
6.6 Corporation's Acquisition of Shares. The corporation may
acquire its own shares and the shares so acquired constitute authorized but
unissued shares.
If the articles of incorporation prohibit the reissue of
acquired shares, the number of authorized shares is reduced by the number of
shares acquired, effective upon amendment of the articles of incorporation,
which amendment may be adopted by the shareholders or the board of directors
without shareholder action. The articles of amendment must be delivered to
the Secretary of State and must set forth:
(a) the name of the corporation;
(b) the reduction in the number of authorized
shares, itemized by class and series;
(c) the total number of authorized shares,
itemized by class and series, remaining after reduction of the
shares; and
(d) a statement that the amendment was adopted by
the board of directors without shareholder action and that
shareholder action was not required.
ARTICLE 7. DISTRIBUTIONS
7.1 Distributions to Shareholders. The board of directors may
authorize, and the corporation may make, distributions to the shareholders
of the corporation subject to any restrictions in the corporation's articles
of incorporation and in the Statutes.
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7.2 Unclaimed Distributions. If the corporation has mailed three
successive distributions to a shareholder at the shareholder's address as shown
on the corporation's current record of shareholders and the distributions have
been returned as undeliverable, no further attempt to deliver distributions to
the shareholder need be made until another address for the shareholder is made
known to the corporation, at which time all distributions accumulated by reason
of this Section, except as otherwise provided by law, be mailed to the
shareholder at such other address.
ARTICLE 8. MISCELLANEOUS
8.1 Inspection of Records by Shareholders and Directors. A
shareholder or director of a corporation is entitled to inspect and copy, during
regular business hours at the corporation's principal office, any of the records
of the corporation required to be maintained by the corporation under the
Statutes, if such person gives the corporation written notice of the demand at
least five business days before the date on which such a person wishes to
inspect and copy. The scope of Such inspection right shall be as provided under
the Statutes.
8.2 Corporate Seal. The board of directors may provide a
corporate seal which may be circular in form and have inscribed thereon any
designation including the name of the corporation, the state of incorporation,
and the words "Corporate Seal."
8.3 Amendments. The corporation's board of directors may amend
or repeal the corporation's bylaws at any time unless:
(a) the articles of incorporation or the Statutes
reserve this power exclusively to the shareholders in whole or
part; or
(b) the shareholders in adopting, amending, or
repealing a particular bylaw provide expressly that the board of
directors may not amend or repeal that bylaw; or
(c) the bylaw either establishes, amends, or
deletes, a greater shareholder quorum or voting requirement.
Any amendment which changes the voting or quorum requirement for
the board must meet the same quorum requirement and be adopted by the same vote
and voting groups required to take action under the quorum and voting
requirements then in effect or proposed to be adopted, whichever are greater.
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SECOND AMENDED BYLAWS
OF
NEXTPATH TECHNOLOGIES, INC.
ARTICLE 1. OFFICES
1.1 Business Office. The principal office of the corporation
shall be located at any place either within or outside the State of Nevada as
designated in the corporation's most recent document on file with the Nevada
Secretary of State. The corporation may have such other offices, either within
or without the State of Nevada, as the board of directors may designate or as
the business of the corporation may require from time to time.
1.2 Registered Office. The registered office of the corporation
shall be located within the State of Nevada and may be, but need not be,
identical with the principal office. The address of the registered office may be
changed from time to time.
ARTICLE 2. SHAREHOLDERS
2.1 Annual Shareholder Meeting. An annual meeting of the
shareholders for the election of directors and for the transaction of such other
business as may come before the meeting shall be held at the time, date and
place, within or outside the State of Nevada, designated by the board of
directors and stated in the meeting notice. If the day fixed for the annual
meeting is a legal holiday in the State of Nevada, the meeting shall be held on
the next succeeding business day.
2.2 Special Shareholder Meeting. Special meetings of the
shareholders, for any purpose or purposes described in the meeting notice, may
be called by the president, or by the board of directors, and shall be called by
the president at the request of the holders of not less than one-fourth of all
outstanding votes of the corporation entitled to be cast on any issue at the
meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Nevada, as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consent, which may be in the form of waivers of notice or otherwise, all
shareholders entitled to vote at the meeting designate a different place, either
within or without the State of Nevada, as the place for the holding of such
meeting.
2.4 Notice of Shareholder Meeting. Written notice stating the
date, time, and place of any annual or special shareholder meeting shall be
delivered not less than ten (10) nor more than sixty (60) days before the date
of the meeting, either personally or by mail, by or at the direction of the
President, the board of directors, or other persons calling the meeting, to each
shareholder of record entitled to vote at such meeting and to any other
shareholder entitled by the Nevada Revised Statues (the "Statutes") or the
corporation's Articles of Incorporation to receive notice of the meeting. Notice
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shall be deemed to be effective at the earlier of: (1) when deposited in the
United States mail, addressed to the shareholder at his address as it appears on
the stock transfer books of the corporation, with postage thereon prepaid; or
(2) on the date shown on the return receipt if sent by registered or certified
mail, return receipt requested, and the receipt is signed by or on behalf of the
addressee; or (3) when received; or (4) three (3) days after deposit in the
United States mail, if mailed postpaid and correctly addressed to an address
other than that shown in the corporation's current record of shareholders.
If any shareholder meeting is adjourned to a different date, time
or place, notice need not be given of the new date, time and place, if the new
date, time and place is announced at the meeting before adjournment. But if the
adjournment is for more than thirty (30) days or if a new record date for the
adjourned meeting is or must be fixed, then notice must be given pursuant to the
requirements of the previous paragraph, to those persons who are shareholders as
of the new record date.
2.5 Waiver of Notice. A shareholder may waive any notice required
by the Statutes, the Articles of Incorporation, or these Bylaws, by a writing
signed by the shareholder entitled to the notice, which is delivered to the
corporation (either before or after the date and time stated in the notice) for
inclusion in the minutes or filing with the corporate records.
A shareholder's attendance at a meeting:
(a) waives objection to lack of notice or defective notice
of the meeting, unless the shareholder at the beginning of the meeting
objects to holding the meeting or transacting business at the meeting
because of lack of notice or effective notice; and
(b) waives objection to consideration of a particular
matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the shareholder objects to
considering the matter when it is presented.
2.6 Fixing of Record Date. For the purpose of determining
shareholders of any voting group entitled to notice of, or to vote at, any
meeting of shareholders, or shareholders entitled to receive payment of any
distribution, or in order to make a determination of shareholders for any other
purpose, the board of directors may fix in advance a date as the record date.
The record date shall not be more than seventy (70) days prior to the date on
which the particular action requiring such determination of shareholders is to
be taken. If no record date is so fixed by the board for the determination of
shareholders entitled to notice of, or to vote at, a meeting of shareholders,
the record date for determination of those shareholders shall be at the close of
business on the day the first notice is delivered to shareholders. If no record
date is fixed by the board for the determination of shareholders entitled to
receive a distribution, the record date shall be the date the board authorizes
the distribution. With respect to actions taken in writing without a meeting,
the record date shall be the date the first shareholder signs the consent.
When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, that
determination shall apply to any adjournment of the meeting unless the board of
directors fixes a new record date, which it must do if the meeting is adjourned
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to a date more than one hundred twenty (120) days after the date fixed for the
original meeting.
2.7 Shareholder List. After fixing a record date for a
shareholder meeting, the corporation shall prepare a list of the names of its
shareholders entitled to be given notice of the meeting. The shareholder list
must be available for inspection by any shareholder, beginning on the earlier of
ten (10) days before the meeting for which the list was prepared or two (2)
business days after notice of the meeting is given for which the list was
prepared and continuing through the meeting, and any adjournment of the meeting.
The list shall be available at the corporation's principal office or at a place
identified in the meeting notice in the city where the meeting is to be held.
2.8 Shareholder Quorum and Voting Requirements.
2.8.1 Quorum. Except as otherwise required by the Statutes
or the Articles of Incorporation, a majority of the outstanding shares
of the corporation, represented by person or by proxy, shall constitute
a quorum at each meeting of the shareholders. If a quorum exists, action
on a matter, other than the election of directors, is approved if the
votes cast favoring the action exceed the votes cast opposing the
action, unless the Articles of Incorporation or the Statutes require a
greater number of affirmative votes.
2.8.2 Voting of Shares. Unless otherwise provided in the
Articles of Incorporation or these Bylaws, each outstanding share,
regardless of class, is entitled to one vote upon each matter submitted
to a vote at a meeting of shareholders.
2.9 Quorum and Voting Requirements of Voting Groups. If the
Articles of Incorporation or the Statutes provide for voting by a single voting
group on a matter, action on that matter is taken when voted upon by that voting
group.
Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of the meeting unless a new record date is or must be set for that
adjourned meeting.
Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares exists with
respect to that matter. Unless the Articles of Incorporation or the Statutes
provide otherwise, a majority of the votes entitled to be cast on the matter by
the voting group constitutes a quorum of that voting group for action on that
matter.
If the Articles of Incorporation or the Statutes provide for
voting by two or more voting groups on a matter, action on that matter is taken
only when voted upon by each of those voting groups counted separately. Action
may be taken by one voting group on a matter even though no action is taken by
another voting group entitled to vote on the matter.
If a quorum exists, action on a matter, other than the election
of directors, by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
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Articles of Incorporation or the Statutes require a greater number of
affirmative votes.
2.10 Greater Quorum or Voting Requirements. The Articles of
Incorporation may provide for a greater quorum or voting requirement for
shareholders, or voting groups of shareholders, than is provided for by these
Bylaws. An amendment to the Articles of Incorporation that adds, changes, or
deletes a greater quorum or voting requirement for shareholders must meet the
same quorum requirement and be adopted by the same vote and voting groups
required to take action under the quorum and voting requirement then in effect
or proposed to be adopted, whichever is greater.
2.11 Proxies. At all meetings of shareholders, a shareholder may
vote in person or by proxy which is executed in writing by the shareholder or
which is executed by his duly authorized attorney-in-fact. The proxy shall be
filed with the Secretary of the corporation or other person authorized to
tabulate votes before or at the time of the meeting. No proxy shall be valid
after eleven (11) months from the date of its execution unless otherwise
provided in the proxy. All proxies are revocable unless they meet specific
requirements of irrevocability set forth in the Statutes. The death or
incapacity of a voter does not invalidate a proxy unless the corporation is put
on notice. A transferee for value who receives shares subject to an irrevocable
proxy, can revoke the proxy if he had no notice of the proxy.
2.12 Corporation's Acceptance of Votes.
2.12.1 If the name signed on a vote, consent, waiver,
proxy appointment, or proxy appointment revocation corresponds to the
name of a shareholder, the corporation, if acting in good faith, is
entitled to accept the vote, consent, waiver, proxy appointment, or
proxy appointment revocation and give it effect as the act of the
shareholder.
2.12.2 If the name signed on a vote, consent, waiver,
proxy appointment, or proxy appointment revocation does not correspond
to the name of a shareholder, the corporation, if acting in good faith,
is nevertheless entitled to accept the vote, consent, waiver, proxy
appointment, or proxy appointment revocation and give it effect as the
act of the shareholder if:
(a) the shareholder is an entity as defined in the
Statutes and the name signed purports to be that of an officer or
agent of the entity;
(b) the name signed purports to be that of an
administrator, executor, guardian, or conservator representing
the shareholder and, if the corporation requests, evidence of
fiduciary status acceptable to the corporation has been presented
with respect to the vote, consent, wavier, proxy appointment or
proxy appointment revocation;
(c) the name signed purports to be that of a
receiver or trustee in bankruptcy of the shareholder and, if the
corporation requests, evidence of this status acceptable to the
corporation has been presented with respect to the vote, consent,
waiver, proxy appointment, or proxy appointment revocation; or
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(d) the name signed purports to be that of a
pledgee, beneficial owner, or attorney-in-fact of the shareholder
and, if the corporation requests, evidence acceptable to the
corporation of the signatory's authority to sign for the
shareholder has been presented with respect to the vote, consent,
waiver, proxy appointment or proxy appointment revocation; or
(e) two or more persons are the shareholder as
co-tenants or fiduciaries and the name signed purports to be the
name of at least one of the co-owners and the person signing
appears to be acting on behalf of all co-tenants or fiduciaries.
2.12.3 If shares are registered in the names of two or
more persons, whether fiduciaries, members of a partnership, co-tenants,
husband and wife as community property, voting trustees, persons
entitled to vote under a shareholder voting agreement or otherwise, or
if two or more persons (including proxy holders) have the same fiduciary
relationship respecting the same shares, unless the secretary of the
corporation or other officer or agent entitled to tabulate votes is
given written notice to the contrary and is furnished with a copy of the
instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the
following effect:
(a) if only one votes, such act binds all;
(b) if more than one votes, the act of the majority
so voting bind all;
(c) if more than one votes, but the vote is evenly
split on any particular matter, each fraction may vote the
securities in question proportionately.
If the instrument so filed or the registration of the
shares shows that any tenancy is held in unequal interests, a majority
or even split for the purpose of this Section shall be a majority or
even split in interest.
2.12.4 The corporation is entitled to reject a vote,
consent, waiver, proxy appointment or proxy appointment revocation if
the secretary or other officer or agent authorized to tabulate votes,
acting in good faith, has reasonable basis for doubt about the validity
of the signature on it or about the signatory's authority to sign for
the shareholder.
2.12.5 The corporation and its officer or agent who
accepts or rejects a vote, consent, waiver, proxy appointment or proxy
appointment revocation in good faith and in accordance with the
standards of this Section are not liable in damages to the shareholder
for the consequences of the acceptance or rejection.
2.12.6 Corporate action based on the acceptance or
rejection of a vote, consent, waiver, proxy appointment or proxy
appointment revocation under this Section is valid unless a court of
competent jurisdiction determines otherwise.
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2.13 Action by Shareholders Without a Meeting.
2.13.1 Written Consent. Any action required or permitted
to be taken at a meeting of the shareholders may be taken without a
meeting and without prior notice if one or more consents in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at
which all shareholders entitled to vote with respect to the subject
matter thereof were present and voted. Action taken under this Section
has the same effect as action taken at a duly called and convened
meeting of shareholders and may be described as such in any document.
2.13.2 Post-Consent Notice. Unless the written consents of
all shareholders entitled to vote have been obtained, notice of any
shareholder approval without a meeting shall be given at least ten days
before the consummation of the action authorized by such approval to (i)
those shareholders entitled to vote who did not consent in writing, and
(ii) those shareholders not entitled to vote. Any such notice must be
accompanied by the same material that is required under the Statutes to
be sent in a notice of meeting at which the proposed action would have
been submitted to the shareholders for action.
2.13.3 Effective Date and Revocation of Consents. No
action taken pursuant to this Section shall be effective unless all
written consents necessary to support the action are received by the
corporation within a sixty-day period and not revoked. Such action is
effective as of the date the last written consent is received necessary
to effect the action, unless all of the written consents specify an
earlier or later date of the action. Any shareholder giving a written
consent pursuant to this Section may revoke the consent by a signed
writing describing the action and stating that the consent is revoked,
provided that the writing is received by the corporation prior to the
effective date of the action.
2.13.4 Unanimous Consent for Election of Directors.
Notwithstanding subsection (a), directors may not be elected by written
consent unless such consent is unanimous by all shares entitled to vote
for the election of directors.
2.14 Voting for Directors. Unless otherwise provided in the
Articles of Incorporation, every shareholder entitled to vote for the election
of directors has the right to cast, in person or by proxy, all of the votes to
which the shareholder's shares are entitled for as many persons as there are
directors to be elected and for whom election such shareholder has the right to
vote. Directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present.
ARTICLE 3. BOARD OF DIRECTORS
3.1 General Powers. Unless the Articles of Incorporation have
dispensed with or limited the authority of the board of directors by describing
who will perform some or all of the duties of a board of directors, all
corporate powers shall be exercised by or under the authority, and the business
and affairs of the corporation shall be managed under the direction, of the
board of directors.
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3.2 Number. Tenure and Qualification of Directors. The authorized
number of directors shall be five (5); provided, however, that if the
corporation has less than two (2) shareholders entitled to vote for the election
of directors, the board of directors may consist of a number of individuals
equal to or greater than the number of those shareholders. The current number of
directors shall be within the limit specified above, as determined (or as
amended from time to time) by a resolution adopted by either the shareholders or
the directors. Each director shall hold office until the next annual meeting of
shareholders or until the director's earlier death, resignation, or removal.
However, if his term expires, he shall continue to serve until his successor
shall have been elected and qualified, or until there is a decrease in the
number of directors. Directors do not need to be residents of Nevada or
shareholders of the corporation.
3.3 Regular Meetings of the Board of Directors. A regular meeting
of the board of directors shall be held without other notice than this Bylaw
immediately after, and at the same place as, the annual meeting of shareholders,
for the purpose of appointing officers and transacting such other business as
may come before the meeting. The board of directors may provide, by resolution,
the time and place for the holding of additional regular meetings without other
notice than such resolution.
3.4 Special Meetings of the Board of Directors. Special meetings
of the board of directors may be called by or at the request of the president or
any director. The person authorized to call special meetings of the board of
directors may fix any place as the place for holding any special meeting of the
board of directors.
3.5 Notice of, and Waiver of Notice for, Special Director
Meeting. Unless the Articles of Incorporation provide for a longer or shorter
period, notice of the date, time, and place of any special director meeting
shall be given at least two days before the meeting either orally or in writing.
Any director may waive notice of any meeting. Except as provided in the next
sentence, the waiver must be in writing and signed by the director entitled to
the notice. The attendance of a director at a meeting shall constitute a waiver
of notice of the meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business and at the
beginning of the meeting (or promptly upon his arrival) objects to holding the
meeting or transacting business at the meeting, and does not thereafter vote for
or assent to action taken at the meeting. Unless required by the Articles of
Incorporation, neither the business to be transacted at, nor the purpose of, any
special meeting of the board of directors need be specified in the notice or
waiver of notice of the meeting.
3.6 Director Quorum and Voting.
3.6.1 Quorum. A majority of the number of directors
prescribed by resolution shall constitute a quorum for the transaction
of business at any meeting of the board of directors unless the Articles
of Incorporation require a greater percentage.
Unless the Articles of Incorporation provide otherwise,
any or all directors may participate in a regular or special meeting by,
or conduct the meeting through the use of, any means of communication by
which all directors participating may simultaneously hear each other
during the meeting. A director participating in a meeting by this means
is deemed to be present in person at the meeting.
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A director who is present at a meeting of the board of
directors or a committee of the board of directors when corporate action
is taken is deemed to have assented to the action taken unless: (1) the
director objects at the beginning of the meeting (or promptly upon his
arrival) to holding or transacting business at the meeting and does not
thereafter vote for or assent to any action taken at the meeting; and
(2) the director contemporaneously requests his dissent or abstention as
to any specific action be entered in the minutes of the meeting; or (3)
the director causes written notice of his dissent or abstention as to
any specific action be received by the presiding officer of the meeting
before its adjournment or to the corporation immediately after
adjournment of the meeting. The right of dissent or abstention is not
available to a director who votes in favor of the action taken.
3.7 Director Action Without a Meeting. Any action required or
permitted to be taken by the board of directors at a meeting may be taken
without a meeting if all the directors consent to such action in writing. Action
taken by consent is effective when the last director signs the consent, unless,
prior to that time, any director has revoked a consent by a signed writing
received by the corporation, or unless the consent specifies a different
effective date. A signed consent has the effect of a meeting vote and may be
described as such in any document.
3.8 Resignation of Directors. A director may resign at any time
by giving a written notice of resignation to the corporation. The resignation is
effective when the notice is received by the corporation, unless the notice
specifies a later effective date.
3.9 Removal of Directors. The shareholders may remove one or more
directors at a meeting called for that purpose if notice has been given that a
purpose of the meeting is such removal. The removal may be with or without cause
unless the Articles of Incorporation provide that directors may only be removed
with cause. If a director is elected by a voting group of shareholders, only the
shareholders of that voting group may participate in the vote to remove him. A
director may be removed only if the number of votes cast to remove him exceeds
the number of votes cast not to remove him.
3.10 Board of Directors Vacancies. Unless the Articles of
Incorporation provide otherwise, if a vacancy occurs on the board of directors,
including a vacancy resulting from an increase in the number of directors, the
shareholders may fill the vacancy. During the time that the shareholders fail or
are unable to fill such vacancies, then and until the shareholders act:
(a) the board of directors may fill the vacancy; or
(b) if the directors remaining in office constitute fewer
than a quorum of the board, they may fill the vacancy by the affirmative
vote of a majority of all the directors remaining in office.
If the vacant office was held by a director elected by a voting
group of shareholders:
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(a) if there are one or more directors elected by the same
voting group, only those directors are entitled to vote to fill the
vacancy if it is filled by the directors; and
(b) only the holders of shares of that voting group are
entitled to vote to fill the vacancy if it is filled by the
shareholders.
A vacancy that will occur at a specific later date (by reason of
a resignation effective at a later date) may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
3.11 Director Compensation. By resolution of the board of
directors, each director may be paid his expenses, if any, of attendance at each
meeting of the board of directors and may be paid a stated salary as director or
a fixed sum for attendance at each meeting of the board of directors or both. No
such payment shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
3.12 Director Committees.
3.12.1 Creation of Committees. Unless the Articles of
Incorporation provide otherwise, the board of directors may create one
or more committees and appoint members of the board of directors to
serve on them. Each committee must have one or more members, who shall
serve at the pleasure of the board of directors.
3.12.2 Selection of Members. The creation of a committee
and appointment of members to it must be approved by the greater of (1)
a majority of all the directors in office when the action is taken or
(2) the number of directors required by the Articles of Incorporation to
take such action.
3.12.3 Required Procedures. Those Sections of this Article
3 which govern meetings, actions without meetings, notice and waiver of
notice, quorum and voting requirements of the board of directors, apply
to committees and their members.
3.12.4 Authority. Unless limited by the Articles of
Incorporation, each committee may exercise those aspects of the
authority of the board of directors which the board of directors confers
upon such committee in the resolution creating the committee. Provided,
however, a committee may not:
(a) authorize distributions;
(b) approve or propose to shareholders action that
the Statutes require be approved by shareholders;
(c) fill vacancies on the board of directors
or on any of its committees;
(d) amend the Articles of Incorporation pursuant to
the authority of directors to do so;
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(e) adopt, amend or repeal bylaws;
(f) approve a plan of merger not requiring
shareholder approval;
(g) authorize or approve reacquisition of shares,
except according to a formula or method prescribed by the board
of directors; or
(h) authorize or approve the issuance or sale or
contract for sale of shares or determine the designation and
relative rights, preferences, and limitations of a class or
series of shares, except that the board of directors may
authorize a committee (or an officer) to do so within limits
specifically prescribed by the board of directors.
ARTICLE 4. OFFICERS
4.1 Number of Officers. The officers of the corporation shall be
a president, a secretary and a treasurer, each of whom shall be appointed by the
board of directors. Such other officers and assistant officers as may be deemed
necessary, including any vice presidents, may also be appointed by the board of
directors. If specifically authorized by the board of directors, an officer may
appoint one or more officers or assistant officers. The same individual may
simultaneously hold more than one office in the corporation.
4.2 Appointment and Term of Office. The officers of the
corporation shall be appointed by the board of directors for a term as
determined by the board of directors. If no term is specified, they shall hold
office until the first meeting of the directors held after the next annual
meeting of shareholders. If the appointment of officers shall not be made at
such meeting, such appointment shall be made as soon thereafter as is
convenient. Each officer shall hold office until his successor shall have been
duly appointed and shall have qualified until his death, or until he shall
resign or is removed.
The designation of a specified term does not grant to the officer
any contract rights, and the board may remove the officer at any time prior to
the termination of such term.
4.3 Removal of Officers. Any officer or agent may be removed by
the board of directors at any time, with or without cause. Such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Appointment of an officer or agent shall not of itself create contract rights.
4.4 Resignation of Officers. Any officer may resign at any time,
subject to any rights or obligations under any existing contracts between the
officers and the corporation, by giving notice to the president or board of
directors. An officer's resignation shall take effect at the time specified
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therein, and the acceptance of such resignation shall not be necessary to make
it effective.
4.5 President. Unless the board of directors has designated the
chairman of the board as chief executive officer, the president shall be the
chief executive officer of the corporation and, subject to the control of the
board of directors, shall in general supervise and control all of the business
and affairs of the corporation. Unless there is a chairman of the board, the
president shall, when present, preside at all meetings of the shareholders and
of the board of directors. The president may sign, with the secretary or any
other proper officer of the corporation thereunder authorized by the board of
directors, certificates for shares of the corporation and deeds, mortgages,
bonds, contracts, or other instruments which the board of directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the board of directors or by these
Bylaws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of president and such other duties as may be
prescribed by the board of directors from time to time.
4.6 Vice Presidents. If appointed, in the absence of the
president or in the event of his death, inability or refusal to act, the vice
president (or in the event there be more than one vice president, the vice
presidents in the order designate at the time of their election, or in the
absence of any designation, then in the order of their appointment) shall
perform the duties of the president, and when so acting, shall have all the
powers of, and be subject to, all the restrictions upon the president.
4.7 Secretary. The secretary shall: (a) keep the minutes of the
proceedings of the shareholders, the board of directors, and any committees of
the board in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these Bylaws or as
required by law; (c) be custodian of the corporate records; (d) when requested
or required, authenticate any records of the corporation; (e) keep a register of
the post office address of each shareholder which shall be furnished to the
secretary by such shareholder; (f) sign with the president, or a vice president,
certificates for shares of the corporation, the issuance of which shall have
been authorized by resolution of the board of directors; (g) have general charge
of the stock transfer books of the corporation; and (h) in general perform all
duties incident to the office of secretary and such other duties as from time to
time may be assigned by the president or by the board of directors. Assistant
secretaries, if any, shall have the same duties and powers, subject to the
supervision of the secretary.
4.8 Treasurer. The treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the corporation; (b)
receive and give receipts for monies due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the corporation in
such bank, trust companies, or other depositaries as shall be selected by the
board of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
by the president or by the board of directors. If required by the board of
directors, the treasurer shall give a bond for the faithful discharge of his or
her duties in such sum and with such surety or sureties as the board of
directors shall determine. Assistant Treasurers, if any, shall have the same
powers and duties, subject to the supervision of the treasurer.
4.9 Salaries. The salaries of the officers shall be fixed from
time to time by the board of directors.
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ARTICLE 5. INDEMNIFICATION OF DIRECTORS,
OFFICERS, AGENTS, AND EMPLOYEES
5.1 Indemnification of Directors. Unless otherwise provided in
the Articles of Incorporation, the corporation shall indemnify any individual
made a party to a proceeding because the individual is or was a director of the
corporation, against liability incurred in the proceeding, but only if such
indemnification is both (i) determined permissible and (ii) authorized, as such
are defined in subsection (a) of this Section 5.1.
5.1.1 Determination of Authorization. The corporation
shall not indemnify a director under this Section unless:
(a) a determination has been made in accordance
with the procedures set forth in the Statutes that the director
met the standard of conduct set forth in subsection (b) below,
and
(b) payment has been authorized in accordance with
the procedures set forth in the Statutes based on a conclusion
that the expenses are reasonable, the corporation has the
financial ability to make the payment, and the financial
resources of the corporation should be devoted to this use rather
than some other use by the corporation.
5.1.2 Standard of Conduct. The individual shall
demonstrate that:
(a) he or she conducted himself in good faith; and
(b) he or she reasonably believed:
(i) in the case of conduct in his or her
official capacity with the corporation, that his or her
conduct was in its best interests;
(ii) in all other cases, that his or her
conduct was at least not opposed to its best interests;
and
(iii) in the case of any criminal
proceeding, he or she had no reasonable cause to believe
his or her conduct was unlawful.
5.1.3 Indemnification in Derivative Actions Limited.
Indemnification permitted under this Section in connection with a
proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding.
5.1.4 Limitation on Indemnification. The corporation shall
not indemnify a director under this Section of Article 5:
(a) in connection with a proceeding by or in the
right of the corporation in which the director was adjudged
liable to the corporation; or
(b) in connection with any other proceeding
charging improper personal benefit to the director, whether or
not involving action in his or her official capacity, in which he
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or she was adjudged liable on the basis that personal benefit was
improperly received by the director.
5.2 Advance of Expenses for Directors. If a determination is made
following the procedures of the Statutes, that the director has met the
following requirements, and if an authorization of payment is made following the
procedures and standards set forth in the Statutes, then unless otherwise
provided in the Articles of Incorporation, the corporation shall pay for or
reimburse the reasonable expenses incurred by a director who is a party to a
proceeding in advance of final disposition of the proceeding, if:
(a) the director furnishes the corporation a written
affirmation of his or her good faith belief that he or she has met the
standard of conduct described in this section;
(b) the director furnishes the corporation a written
undertaking, executed personally or on his or her behalf, to repay the
advance if it is ultimately determined that he or she did not meet the
standard of conduct;
(c) a determination is made that the facts then known to
those making the determination would not preclude indemnification under
this Section or the Statutes.
5.3 Indemnification of Officers, Agents and Employees Who Are Not
Directors. Unless otherwise provided in the Articles of Incorporation, the board
of directors may indemnify and advance expenses to any officer, employee, or
agent of the corporation, who is not a director of the corporation, to the same
extent as to a director, or to any greater extent consistent with public policy,
as determined by the general or specific actions of the board of directors.
5.4 Insurance. By action of the board of directors,
notwithstanding any interest of the directors in such action, the corporation
may purchase and maintain insurance on behalf of a person who is or was a
director, officer, employee, fiduciary or agent of the corporation, against any
liability asserted against or incurred by such person in that capacity or
arising from such person's status as a director, officer, employee, fiduciary,
or agent, whether or not the corporation would have the power to indemnify such
person under the applicable provisions of the Statutes.
ARTICLE 6. STOCK
6.1 Issuance of Shares. The issuance or sale by the corporation
of any shares of its authorized capital stock of any class, including treasury
shares, shall be made only upon authorization by the board of directors, unless
otherwise provided by statute. The board of directors may authorize the issuance
of shares for consideration consisting of any tangible or intangible property or
benefit to the corporation, including cash, promissory notes, services
performed, contracts or arrangements for services to be performed, or other
securities of the corporation.
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6.2 Articless for Shares.
6.2.1 Content. Certificates representing shares of the
corporation shall at minimum, state on their face the name of the
corporation and that it is formed under the laws of the State of Nevada;
the name of the person to whom issued; and the number and class of
shares and the designation of the series, if any, the certificate
represents; and be in such form as determined by the board of directors.
The certificates shall be signed (either manually or by facsimile) by
the president or a vice president and by the secretary or an assistant
secretary and may be sealed with a corporate seal or a facsimile
thereof. Each certificate for shares shall be consecutively numbered or
otherwise identified.
6.2.2 Legend as to Class or Series. If the corporation is
authorized to issue different classes of shares or different series
within a class, the designations, relative rights, preferences and
limitations applicable to each class and the variations in rights,
preferences and limitations determined for each series (and the
authority of the board of directors to determine variations for future
series) must be summarized on the front or back of each certificate.
Alternatively, each certificate may state conspicuously on its front or
back that the corporation will furnish the shareholder this information
on request in writing and without charge.
6.2.3 Shareholder List. The name and address of the person
to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books
of the corporation.
6.2.4 Transferring Shares. All certificates surrendered to
the corporation for transfer shall be canceled and no new certificates
shall be issued until the former certificates for a like number of
shares shall have been surrendered and canceled, except that in case of
a lost, destroyed, or mutilated certificates, a new one may be issued
therefor upon such terms and indemnity to the corporation as the board
of directors may prescribe.
6.2.5 Lost Certificates. The board of directors may direct
a new certificate or certificates or uncertificated shares to be issued
in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming the
certificates of stock to be lost, stolen or destroyed. When authorizing
the issue of a new certificate or certificates or uncertificated shares,
the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of the lost, stolen
or destroyed certificate or certificates, or his legal representative,
to advertise the same in such manner as it shall require and/or to give
the corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the corporation with respect to the
certificates alleged to have been lost, stolen or destroyed.
6.3 Shares Without Certificates
6.3.1 Issuing Shares Without Certificates. Unless the
Articles of Incorporation provide otherwise, the board of directors may
authorize the issue of some or all the shares of any or all of its
classes or series without certificates. The authorization does not
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affect shares already represented by certificates until they are
surrendered to the corporation.
6.3.2 Information Statement Required. Within a reasonable
time after the issue or transfer of shares without certificates, the
corporation shall send the shareholder a written statement containing,
at a minimum, the information required by the Statutes.
6.4 Registration of the Transfer of Shares. Registration of the
transfer of shares of the corporation shall be made only on the stock transfer
books of the corporation. In order to register a transfer, the record owner
shall surrender the shares to the corporation for cancellation, properly
endorsed by the appropriate person or persons with reasonable assurances that
the endorsements are genuine and effective. Unless the corporation has
established a procedure by which a beneficial owner of shares held by a nominee
is to be recognized by the corporation as the owner, the person in whose name
shares stand in the books of the corporation shall be deemed by the corporation
to be the owner thereof for all purposes.
6.5 Restrictions on Transfer or Registration of Shares. The board
of directors or shareholders may impose restrictions on the transfer or
registration of transfer of shares (including any security convertible into, or
carrying a right to subscribe for or acquire shares). A restriction does not
affect shares issued before the restriction was adopted unless the holders of
the shares are parties to the restriction agreement or voted in favor of or
otherwise consented to the restriction.
A restriction on the transfer or registration of transfer of
shares may be authorized:
(a) to maintain the corporation's status when it is
dependent on the number or identity of its shareholders;
(b) to preserve entitlements, benefits or exemptions under
federal or local laws; and
(c) for any other reasonable purposes.
A restriction on the transfer or registration of transfer of
shares may:
(a) obligate the shareholder first to offer the
corporation or other persons (separately, consecutively or
simultaneously) an opportunity to acquire the restricted shares;
(b) obligate the corporation or other persons (separately,
consecutively or simultaneously) to acquire the restricted shares;
(c) require as a condition to such transfer or
registration, that any one or more persons, including the holders of any
of its shares, approve the transfer or registration if the requirement
is not manifestly unreasonable; or
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(d) prohibit the transfer or the registration of transfer
of the restricted shares to designated persons or classes of persons, if
the prohibition is not manifestly unreasonable.
A restriction on the transfer or registration of transfer of
shares is valid and enforceable against the holder or a transferee of the holder
if the restriction is authorized by this Section and its existence is noted
conspicuously on the front or back of the certificates or is contained in the
information statement required by this Article 6 with regard to shares issued
without certificates. Unless so noted, a restriction is not enforceable against
a person without knowledge of the restriction.
6.6 Corporation's Acquisition of Shares. The corporation may
acquire its own shares and the shares so acquired constitute authorized but
unissued shares.
If the Articles of Incorporation prohibit the reissue of acquired
shares, the number of authorized shares is reduced by the number of shares
acquired, effective upon amendment of the Articles of Incorporation, which
amendment may be adopted by the shareholders or the board of directors without
shareholder action. The articles of amendment must be delivered to the Secretary
of State and must set forth:
(a) the name of the corporation;
(b) the reduction in the number of authorized shares,
itemized by class and series;
(c) the total number of authorized shares, itemized by
class and series, remaining after reduction of the shares; and
(d) a statement that the amendment was adopted by the
board of directors without shareholder action and that shareholder
action was not required.
ARTICLE 7. DISTRIBUTIONS
7.1 Distributions to Shareholders. The board of directors may
authorize, and the corporation may make, distributions to the shareholders of
the corporation subject to any restrictions in the corporation's Articles of
Incorporation and in the Statutes.
7.2 Unclaimed Distributions. If the corporation has mailed three
successive distributions to a shareholder at the shareholder's address as shown
on the corporation's current record of shareholders and the distributions have
been returned as undeliverable, no further attempt to deliver distributions to
the shareholder need be made until another address for the shareholder is made
known to the corporation, at which time all distributions accumulated by reason
of this Section, except as otherwise provided by law, shall be mailed to the
shareholder at such other address.
ARTICLE 8. NASDAQ COMPLIANCE
8.1 In General. Notwithstanding anything to the contrary in these
Bylaws, the provisions of this Article 8 shall be applicable (a) so long as the
corporation's securities are listed on the NASDAQ SmallCap Market, or the NASDAQ
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National Market, or the OTC Bulletin Board, or (b) so long as the corporation's
securities are registered under the Securities Exchange Act of 1934; provided,
however, if the corporation's securities are not listed on a NASDAQ market or
the OTC Bulletin Board, notices and filings otherwise required to be given or
made to NASDAQ need not be given or made to NASDAQ.
8.2 Distribution of Annual and Interim Reports.
(a) The corporation shall distribute to its shareholders
copies of an annual report containing audited financial statements of
the corporation and its subsidiaries. The report shall be distributed to
the shareholders a reasonable period of time prior to the corporation's
annual meeting of shareholders and shall be filed with NASDAQ at the
time it is distributed to the shareholders.
(b) The corporation shall make available copies of
quarterly reports including statements of operating results to its
shareholders either prior to or as soon as practicable following the
corporation's filing of its Form 10-Q with the SEC. If the form of such
quarterly report differs from the Form 10-Q the corporation shall file
one copy of the report with NASDAQ in addition to filing its Form 10-Q
pursuant to NASDAQ Rule 4310(c)(14). The statement of operations
contained in quarterly reports shall disclose, as a minimum, any
substantial items of an unusual or nonrecurrent nature and net income
before and after estimated federal income taxes or net income and the
amount of estimated federal taxes.
8.3 Independent Directors. The corporation shall maintain a
minimum of two independent directors on its board of directors.
8.4 Audit Committee. The corporation shall establish and maintain
an Audit Committee, a majority of the members of which shall be independent
directors.
8.5 Shareholder Meetings. The corporation shall hold an annual
meeting of shareholders and shall provide notice of such meeting to NASDAQ.
8.6 Quorum. The corporation shall provide for a quorum as
specified in its Bylaws for any meeting of the holders of common stock;
provided, however, that in no case shall the quorum be less than thirty-three
and one-third percent (33-1/3) of the outstanding shares of the corporation's
common stock.
8.7 Solicitation of Proxies. The corporation shall solicit
proxies and provide proxy statements for all meetings of its shareholders and
shall provide copies of such proxy solicitation to NASDAQ.
8.8 Conflicts of Interest. The corporation shall conduct an
appropriate review of all related party transactions on an ongoing basis and
shall utilize the corporation's Audit Committee or a comparable body of the
Board of Directors for the review of potential conflict of interest situations
where appropriate.
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8.9 Shareholder Approval.
(i) The corporation shall require shareholder approval of
a plan or arrangement under subparagraph a. below, or prior to the
issuance of designated securities under subparagraph b., c., or d.
below:
a. when a stock option or purchase plan is to be
established or other arrangement made pursuant to which stock may
be acquired by officers or directors, except for warrants or
rights issued generally to security holders of the corporation or
broadly based plans or arrangements including other employees
(e.g. ESOPs). In a case where the shares are issued to a person
not previously employed by the corporation, as an inducement
essential to the individual's entering into an employment
contract with the corporation, shareholder approval will
generally not be required. The establishment of a plan or
arrangement under which the amount of securities which may be
issued does not exceed the lesser of one percent (1%) of the
number of shares of common stock, one percent (1%) of the voting
power outstanding, or twenty-five thousand (25,000) shares will
not generally require shareholder approval;
b. when the issuance will result in a change of
control of the corporation;
c. in connection with the acquisition of the
stock or assets of another company if;
1. any director, officer or substantial
shareholder of the corporation has a five percent (5%) or greater
interest (or such persons collectively have a ten percent (10%) or
greater interest), director or indirectly, in the corporation or assets
to be acquired or in the consideration to be paid in the transaction
or series of related transactions and the present or potential issuance
of common stock, or securities convertible into or exercisable for
common stock, could result in an increase in outstanding common shares
or voting power of five percent (5%) or more; or
2. where, due to the present or potential issuance
of common stock, or securities convertible into or exercisable for
common stock, other than a public offering for cash:
A. the common stock has or will have upon
issuance voting power equal to or in excess of twenty percent (20%) of
the voting power outstanding before the issuance of stock or securities
convertible into or exercisable for common stock; or
B. the number of shares of common stock to
be issued is or will be equal to or in excess of twenty percent (20%)
of the number of shares or common stock outstanding before the issuance
of the stock or securities; or
d. in connection with a transaction other than a
public offering involving:
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1. the sale or issuance by the corporation of
common stock (or securities convertible into or exercisable for common
stock) at a price less than the greater of book or market value which
together with sales by officers, directors or substantial
shareholders of the corporation equals twenty percent (20%) or more
of common stock or twenty percent (20%) or more of the voting power
outstanding before the issuance; or
2. the sale or issuance by the corporation of
common stock (or securities convertible into or exercisable for common
stock) equal to twenty percent (20%) or more of the common stock or
twenty percent (20%) or more of the voting power outstanding before
the issuance for less than the greater of book or market value of the
stock.
(ii) Exceptions may be made upon application to NASDAQ when:
a. the delay in securing shareholder approval would
seriously jeopardize the financial viability of the enterprise; and
b. reliance by the corporation on this exception is
expressly approved by the Audit Committee or a comparable body of the
Board of Directors.
A company relying on this exception must mail to all shareholders not
later than ten days before issuance of the securities a letter alerting
them to its omission to seek the shareholder approval that would
otherwise be required and indicating that the Audit Committee or a
comparable body of the Board of Directors has expressly approved the
exception.
(iii) Only shares actually issued and outstanding (excluding
treasury shares or shares held by a subsidiary) are to be used in making
any calculation provided for in this Section 8.9. Unissued shares
reserved for issuance upon conversion of securities or upon exercise of
options or warrants will not be regarded as outstanding.
(iv) Voting power outstanding as used in this Section 8.9 refers
to the aggregate number of votes which may be cast by holders of those
securities outstanding which entitle the holders thereof to vote
generally on all matters submitted to the corporation's security holders
for a vote.
(v) An interest consisting of less than either five percent (5%)
of the number of shares of commons tock or five percent (5%) of the
voting power outstanding of an issuer or party shall not be considered a
substantial interest or cause the holder of such an interest to be
regarded as a substantial security holder.
(vi) Where shareholder approval is required, the minimum vote
which will constitute shareholder approval shall be a majority of the
total votes cast on the proposal in person or by proxy.
8.10 Voting Rights. Voting rights of existing shareholders of
publicly traded common stock registered under Section 12 of the Securities
Exchange Act of 1934 cannot be disparately reduced or restricted through any
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corporate action or issuance. Examples of such corporate action or issuance
include, but are not limited to, the adoption of time-phased voting plans, the
adoption of capped voting rights plans, the issuance of super-voting stock, or
the issuance of stock with voting rights less than the per share voting rights
of the existing common stock through an exchange offer.
ARTICLE 9. MISCELLANEOUS
9.1 Inspection of Records by Shareholders and Directors. A
shareholder or director of the corporation is entitled to inspect and copy,
during regular business hours at the corporation's principal office, any of the
records of the corporation required to be maintained by the corporation under
the Statutes, if such person gives the corporation written notice of the demand
at least five business days before the date on which such a person wishes to
inspect and copy. The scope of the inspection right shall be as provided under
the Statutes.
9.2 Corporate Seal. The board of directors may provide a
corporate seal which may be circular in form and have inscribed thereon any
designation including the name of the corporation, the state of incorporation,
and the words "Corporate Seal."
9.3 Amendments. The corporation's board of directors may amend or
repeal the corporations' Bylaws at any time unless:
(a) the Articles of Incorporation or the Statutes reserve
this power exclusively to the shareholders in whole or part; or
(b) the shareholders in adopting, amending, or repealing a
particular bylaw provide expressly that the board of directors may not
amend or repeal that bylaw; or
(c) the bylaw either establishes, amends, or deletes, a
greater shareholder quorum or voting requirement.
Any amendment which changes the voting or quorum requirement for
the board must meet the same quorum requirement and be adopted by the same vote
and voting groups required to take action under the quorum and voting
requirements then in effect or proposed to be adopted, whichever is greater.
Dated as of November 1, 1999.
-----------------------------------------
James R. Ladd, Director
-----------------------------------------
David A. Nuttle, Director
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AMENDED BYLAWS
OF
NEXTPATH TECHNOLOGIES, INC.
ARTICLE 1. OFFICES
1.1 Business Office. The principal office of the corporation
shall be located at any place either within or outside the State of Nevada as
designated in the corporation's most recent document on file with the Nevada
Secretary of State, Division of Corporations. The corporation may have such
other offices, either within or without the State of Nevada, as the board of
directors may designate or as the business of the corporation may require from
time to time.
1.2 Registered Office. The registered office of the corporation
shall be located within the State of Nevada and may be, but need not be,
identical with the principal office. The address of the registered office may be
changed from time to time.
ARTICLE 2. SHAREHOLDERS
2.1 Annual Shareholder Meeting. The annual meeting of the
shareholders shall be held on the 8th day of May in each year, beginning with
the year 1997, at the hour of 2:00 p.m., or at such other time on such other day
within such month as shall be fixed by the board of directors, for the purpose
of electing directors and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting shall be a legal
holiday in the State of Nevada, such meeting shall be held on the next
succeeding business day.
2.2 Special Shareholder Meeting. Special meetings of the
shareholders, for any purpose or purposes described in the meeting notice, may
be called by the president, or by the board of directors, and shall be called by
the president at the request of the holders of not less than one-fourth of all
outstanding votes of the corporation entitled to be cast on any issue at the
meeting.
2.3 Place of Shareholder Meeting. The board of directors may
designate any place, either within or without the State of Nevada, as the place
of meeting for any annual or any special meeting of the shareholders, unless by
written consent, which may be in the form of waivers of notice or otherwise, all
shareholders entitled to vote at the meeting designate a different place, either
within or without the State of Nevada, as the place for the holding of such
meeting. If no designation is made by either the directors or unanimous action
of the voting shareholders, the place of meeting shall be at 215 South State
Street, #1100, Salt Lake City, Utah 84111.
2.4 Notice of Shareholder Meeting. Written notice sating the
date, time, and place of any annual or special shareholder meeting shall be
delivered not less than 10 nor more than 60 days before the date of the meeting,
either personally or by mail, by or at the direction of the President, the board
of directors, or other persons calling the meeting, to each shareholder of
record entitled to vote at such meeting and to any other shareholder entitled by
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the Nevada Revised Statutes (the "Statutes") or the articles of incorporation to
receive notice of the meeting. Notice shall be deemed to be effective at the
earlier of: (1) when deposited in the United States mail, addressed to the
shareholder at his address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid; (2) on the date shown on the return
receipt if sent by registered or certified mail, return receipt requested, and
the receipt is signed by or on behalf of the addressee; (3) when received; or
(4) 3 days after deposit in the United States mail, if mailed postpaid and
correctly addressed to an address other than that shown in the corporation's
current record of shareholders.
If any shareholder meeting is adjourned to a different date, time
or place, notice need not be given of the new date, time and place, if the new
date, time and place is announced at the meeting before adjournment. But if the
adjournment is for more than 30 days or if a new record date for the adjourned
meeting is or must be fixed, then notice must be given pursuant to the
requirements of the previous paragraph, to those persons who are shareholders as
of the new record date.
2.5 Waiver of Notice. A shareholder may waive any notice required
by the Statutes, the articles of incorporation, or these bylaws, by a writing
signed by the shareholder entitled to the notice, which is delivered to the
corporation (either before or after the date and time stated in the notice) for
inclusion in the minutes or filing with the corporate records.
A shareholder's attendance at a meeting:
(a) waives objection to lack of notice or defective notice
of the meeting, unless the shareholder at the beginning of the meeting
objects to holding the meeting or transacting business at the meeting
because of lack of notice or effective notice; and
(b) waives objection to consideration of a particular
matter at the meeting that is not within the purpose or purposes
described in the meeting notice, unless the shareholder objects to
considering the matter when it is presented.
2.6 Fixing of Record Date. For the purpose of determining
shareholders of any voting group entitled to notice of or to vote at any meeting
of shareholders, or shareholders entitled to receive payment of any
distribution, or in order to make a determination of shareholders for any other
purpose, the board of directors may fix in advance a date as the record date.
Such record date shall not be more than 70 days prior to the date on which the
particular action, requiring such determination of shareholders, is to be taken.
If no record date is so fixed by the board for the determination of shareholders
entitled to notice of, or to vote at a meeting of shareholders, the record date
for determination of such shareholders shall be at the close of business on the
day the first notice is delivered to shareholders. If no record date is fixed by
the board for the determination of shareholders entitled to receive a
distribution, the record date shall be the date the board authorizes the
distribution. With respect to actions taken in writing without a meeting, the
record date shall be the date the first shareholder signs the consent.
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When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof unless the board of
directors fixes a new record date which it must do if the meeting is adjourned
to a date more than 120 days after the date fixed for the original meeting.
2.7 Shareholder List. After fixing a record date for a
shareholder meeting, the corporation shall prepare a list of the names of its
shareholders entitled to be given notice of the meeting. The shareholder list
must be available for inspection by any shareholder, beginning on the earlier of
10 days before the meeting for which the list was prepared or 2 business days
after notice of the meeting is given for which the list was prepared and
continuing through the meeting, and any adjournment thereof. The list shall be
available at the corporation's principal office or at a place identified in the
meeting notice in the city where the meeting is to be held.
2.8 Shareholder Quorum and Voting Requirements.
2.8.1 Quorum. Except as otherwise required by the Statutes
or the articles of incorporation, a majority of the outstanding shares
of the corporation, represented by person or by proxy, shall constitute
a quorum at each meeting of the shareholders. If a quorum exists, action
on a matter, other than the election of directors, is approved if the
votes cast favoring the action exceed the votes cast opposing the
action, unless the articles of incorporation or the Statutes require a
greater number of affirmative votes.
2.8.2 Voting of Shares. Unless otherwise provided in the
articles of incorporation or these bylaws, each outstanding share,
regardless of class, is entitled to one vote upon each matter submitted
to a vote at a meeting of shareholders.
2.9 Quorum and Voting Requirements of Voting Groups. If the
articles of incorporation or the Statutes provide for voting by a single voting
group on a matter, action on that matter is taken when voted upon by that voting
group.
Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares exists with
respect to that matter. Unless the articles of incorporation or the Statutes
provide otherwise, a majority of the votes entitled to be cast on the matter by
the voting group constitutes a quorum of that voting group for action on that
matter.
If the articles of incorporation or the Statutes provide for
voting by two or more voting groups on a matter, action on that matter is taken
only when voted upon by each of those voting groups counted separately. Action
may be taken by one voting group on a matter even though no action is taken by
another voting group entitled to vote on the matter.
If a quorum exists, action on a matter, other than the election
of directors, by a voting group is approved if the votes cast within the voting
group favoring the action exceed the votes cast opposing the action, unless the
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articles of incorporation or the Statutes require a greater number of
affirmative votes.
2.10 Greater Quorum or Voting Requirements. The articles of
incorporation may provide for a greater quorum or voting requirement for
shareholders, or voting groups of shareholders, than is provided for by these
bylaws. An amendment to the articles of incorporation that adds, changes, or
deletes a greater quorum or voting requirement for shareholders must meet the
same quorum requirement and be adopted by the same vote and voting groups
required to take action under the quorum and voting requirement then in effect
or proposed to be adopted, whichever is greater.
2.11 Proxies. At all meetings of shareholders, a shareholder may
vote in person or by proxy which is executed in writing by the shareholder or
which is executed by his duly authorized attorney-in-fact. Such proxy shall be
filed with the Secretary of the corporation or other person authorized to
tabulate votes before or at the time of the meeting. No proxy shall be valid
after 11 months from the date of its execution unless otherwise provided in the
proxy. All proxies are revocable unless they meet specific requirements of
irrevocability set forth in the Statutes. The death or incapacity of a voter
does not invalidate a proxy unless the corporation is put on notice. A
transferee for value who receives shares subject to an irrevocable proxy, can
revoke the proxy if he had no notice of the proxy.
2.12 Corporation's Acceptance of Votes.
2.12.1 If the name signed on a vote, consent, waiver,
proxy appointment, or proxy appointment revocation corresponds to the
name of a shareholder, the corporation, if acting in good faith, is
entitled to accept the vote, consent, waiver, proxy appointment, or
proxy appointment revocation and give it effect as the act of the
shareholder.
2.12.2 If the name signed on a vote, consent, waiver,
proxy appointment, or proxy appointment revocation does not correspond
to the name of a shareholder, the corporation, if acting in good faith,
is nevertheless entitled to accept the vote, consent, waiver, proxy
appointment, or proxy appointment revocation and give it effect as the
act of the shareholder if:
(a) the shareholder is an entity as defined in the
Statutes and the name signed purports to be that of an officer or
agent of the entity;
(b) the name signed purports to be that of an
administrator, executor, guardian, or conservator representing
the shareholder and, if the corporation requests, evidence of
fiduciary status acceptable to the corporation has been presented
with respect to the vote, consent, wavier, proxy appointment or
proxy appointment revocation;
(c) the name signed purports to be that of a
receiver or trustee in bankruptcy of the shareholder and, if the
corporation requests, evidence of this status acceptable to the
corporation has been presented with respect to the vote, consent,
waiver, proxy appointment, or proxy appointment revocation; or
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(d) the name signed purports to be that of a
pledgee, beneficial owner, or attorney-in-fact of the shareholder
and, if the corporation requests, evidence acceptable to the
corporation of the signatory's authority to sign for the
shareholder has been presented with respect to the vote, consent,
waiver, proxy appointment or proxy appointment revocation; or
(e) two or more persons are the shareholder as
co-tenants or fiduciaries and the name signed purports to be the
name of at least one of the co-owners and the person signing
appears to be acting on behalf of all co-tenants or fiduciaries.
2.12.3 If shares are registered in the names of two or
more persons, whether fiduciaries, members of a partnership, co-tenants,
husband and wife as community property, voting trustees, persons
entitled to vote under a shareholder voting agreement or otherwise, or
if two or more persons (including proxy holders) have the same fiduciary
relationship respecting the same shares, unless the secretary of the
corporation or other officer or agent entitled to tabulate votes is
given written notice to the contrary and is furnished with a copy of the
instrument or order appointing them or creating the relationship wherein
it is so provided, their acts with respect to voting shall have the
following effect:
(a) if only one votes, such act binds all;
(b) if more than one votes, the act of the majority
so voting bind all;
(c) if more than one votes, but the vote is evenly
split on any particular matter, each fraction may vote the
securities in question proportionately.
If the instrument so filed or the registration of the
shares shows that any tenancy is held in unequal interests, a majority
or even split for the purpose of this Section shall be a majority or
even split in interest.
2.12.4 The corporation is entitled to reject a vote,
consent, waiver, proxy appointment or proxy appointment revocation if
the secretary or other officer or agent authorized to tabulate votes,
acting in good faith, has reasonable basis for doubt about the validity
of the signature on it or about the signatory's authority to sign for
the shareholder.
2.12.5 The corporation and its officer or agent who
accepts or rejects a vote, consent, waiver, proxy appointment or proxy
appointment revocation in good faith and in accordance with the
standards of this Section are not liable in damages to the shareholder
for the consequences of the acceptance or rejection.
2.12.6 Corporate action based on the acceptance or
rejection of a vote, consent, waiver, proxy appointment or proxy
appointment revocation under this Section is valid unless a court of
competent jurisdiction determines otherwise.
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2.13 Action by Shareholders Without a Meeting.
2.13.1 Written Consent. Any action required or permitted
to be taken at a meeting of the shareholders may be taken without a
meeting and without prior notice if one or more consents in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at
which all shareholders entitled to vote with respect to the subject
matter thereof were present and voted. Action taken under this Section
has the same effect as action taken at a duly called and convened
meeting of shareholders and may be described as such in any document.
2.13.2 Post-Consent Notice. Unless the written consents of
all shareholders entitled to vote have been obtained, notice of any
shareholder approval without a meeting shall be given at least ten days
before the consummation of the action authorized by such approval to (i)
those shareholders entitled to vote who did not consent in writing, and
(ii) those shareholders not entitled to vote. Any such notice must be
accompanied by the same material that is required under the Statutes to
be sent in a notice of meeting at which the proposed action would have
been submitted to the shareholders for action.
2.13.3 Effective Date and Revocation of Consents. No
action taken pursuant to this section shall be effective unless all
written consents necessary to support the action are received by the
corporation within a sixty-day period and not revoked. Such action is
effective as of the date the last written consent is received necessary
to effect the action, unless all of the written consents specify an
earlier or later date of the action. Any shareholder giving a written
consent pursuant to this Section may revoke the consent by a signed
writing describing the action and stating that the consent is revoked,
provided that such writing is received by the corporation prior to the
effective date of the action.
2.13.4 Unanimous Consent for Election of Directors.
Notwithstanding subsection (a), directors may not be elected by written
consent unless such consent is unanimous by all shares entitled to vote
for the election of directors.
2.14 Voting for Directors. Unless otherwise provided in the
articles of incorporation, every shareholder entitled to vote for the election
of directors has the right to cast, in person or by proxy, all of the votes to
which the shareholder's shares are entitled for as many persons as there are
directors to be elected and for whom election such shareholder has the right to
vote. Directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is present.
ARTICLE 3. BOARD OF DIRECTORS
3.1 General Powers. Unless the articles of incorporation have
dispensed with or limited the authority of the board of directors by describing
who will perform some or all of the duties of a board of directors, all
corporate powers shall be exercised by or under the authority, and the business
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and affairs of the corporation shall be managed under the direction, of the
board of directors.
3.2 Number. Tenure and Qualification of Directors. The authorized
number of directors shall be five (5); provided, however, that if the
corporation has less than two shareholders entitled to vote for the election of
directors, the board of directors may consist of a number of individuals equal
to or greater than the number of those shareholders. The current number of
directors shall be within the limit specified above, as determined (or as
amended from time to time) by a resolution adopted by either the shareholders or
the directors. Each director shall hold office until the next annual meeting of
shareholders or until the director's earlier death, resignation, or removal.
However, if his term expires, he shall continue to serve until his successor
shall have been elected and qualified, or until there is a decrease in the
number of directors. Directors do not need to be residents of Nevada or
shareholders of the corporation.
3.3 Regular Meetings of the Board of Directors. A regular meeting
of the board of directors shall be held without other notice than this bylaw
immediately after, and at the same place as, the annual meeting of shareholders,
for the purpose of appointing officers and transacting such other business as
may come before the meeting. The board of directors may provide, by resolution,
the time and place for the holding of additional regular meetings without other
notice than such resolution.
3.4 Special Meetings of the Board of Directors. Special meetings
of the board of directors may be called by or at the request of the president or
any director. The person authorized to call special meetings of the board of
directors may fix any place as the place for holding any special meeting of the
board of directors.
3.5 Notice of, and Waiver of Notice for, Special Director
Meeting. Unless the articles of incorporation provide for a longer or shorter
period, notice of the date, time, and place of any special director meeting
shall be given at least two days previously thereto either orally or in writing.
Any director may waive notice of any meeting. Except as provided in the next
sentence, the waiver must be in writing and signed by the director entitled to
the notice. The attendance of a director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business and at the
beginning of the meeting (or promptly upon his arrival) objects to holding the
meeting or transacting business at the meeting, and does not thereafter vote for
or assent to action taken at the meeting. Unless required by the articles of
incorporation, neither the business to be transacted at, nor the purpose of, any
special meeting of the board of directors need be specified in the notice or
waiver of notice of such meeting.
3.6 Director Quorum and Voting.
3.6.1 Quorum. A majority of the number of directors
prescribed by resolution shall constitute a quorum for the transaction
of business at any meeting of the board of directors unless the articles
of incorporation require a greater percentage.
Unless the articles of incorporation provide otherwise,
any or all directors may participate in a regular or special meeting by,
or conduct the meeting through the use of, any means of communication by
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which all directors participating may simultaneously hear each other
during the meeting. A director participating in a meeting by this means
is deemed to be present in person at the meeting.
A director who is present at a meeting of the board of
directors or a committee of the board of directors when corporate action
is taken is deemed to have assented to the action taken unless: (1) the
director objects at the beginning of the meeting (or promptly upon his
arrival) to holding or transacting business at the meeting and does not
thereafter vote for or assent to any action taken at the meeting; and
(2) the director contemporaneously requests his dissent or abstention as
to any specific action be entered in the minutes of the meeting; or (3)
the director causes written notice of his dissent or abstention as to
any specific action be received by the presiding officer of the meeting
before its adjournment or to the corporation immediately after
adjournment of the meeting. The right of dissent or abstention is not
available to a director who votes in favor of the action taken.
3.7 Director Action Without a Meeting. Any action required or
permitted to be taken by the board of directors at a meeting may be taken
without a meeting if all the directors consent to such action in writing. Action
taken by consent is effective when the last director signs the consent, unless,
prior to such time, any director has revoked a consent by a signed writing
received by the corporation, or unless the consent specifies a different
effective date. A signed consent has the effect of a meeting vote and may be
described as such in any document.
3.8 Resignation of Directors. A director may resign at any time
by giving a written notice of resignation to the corporation. Such resignation
is effective when the notice is received by the corporation, unless the notice
specifies a later effective date.
3.9 Removal of Directors. The shareholders may remove one or more
directors at a meeting called for that purpose if notice has been given that a
purpose of the meeting is such removal. The removal may be with or without cause
unless the articles of incorporation provide that directors may only be removed
with cause. If a director is elected by a voting group of shareholders, only the
shareholders of that voting group may participate in the vote to remove him. A
director may be removed only if the number of votes cast to remove him exceeds
the number of votes cast not to remove him.
3.10 Board of Directors Vacancies. Unless the articles of
incorporation provide otherwise, if a vacancy occurs on the board of directors,
including a vacancy resulting from an increase in the number of directors, the
shareholders may fill the vacancy. During such time that the shareholders fail
or are unable to fill such vacancies then and until the shareholders act:
(a) the board of directors may fill the vacancy; or
(b) if the board of directors remaining in office
constitute fewer than a quorum of the board, they may fill the vacancy
by the affirmative vote of a majority of all the directors remaining in
office.
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If the vacant office was held by a director elected by a voting
group of shareholders:
(a) if there are one or more directors elected by the same
voting group, only such directors are entitled to vote to fill the
vacancy if it is filled by the directors; and
(b) only the holders of shares of that voting group are
entitled to vote to fill the vacancy if it is filled by the
shareholders.
A vacancy that will occur at a specific later date (by reason of
a resignation effective at a later date) may be filled before the vacancy occurs
but the new director may not take office until the vacancy occurs.
3.11 Director Compensation. By resolution of the board of
directors, each director may be paid his expenses, if any, of attendance at each
meeting of the board of directors and may be paid a stated salary as director or
a fixed sum for attendance at each meeting of the board of directors or both. No
such payment shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
3.12 Director Committees.
3.12.1 Creation of Committees. Unless the articles of
incorporation provide otherwise, the board of directors may create one
or more committees and appoint members of the board of directors to
serve on them. Each committee must have one or more members, who shall
serve at the pleasure of the board of directors.
3.12.2 Selection of Members. The creation of a committee
and appointment of members to it must be approved by the greater of (1)
a majority of all the directors in office when the action is taken or
(2) the number of directors required by the articles of incorporation to
take such action.
3.12.3 Required Procedures. Those Sections of this Article
3 which govern meetings, actions without meetings, notice and waiver of
notice, quorum and voting requirements of the board of directors, apply
to committees and their members.
3.12.4 Authority. Unless limited by the articles of
incorporation, each committee may exercise those aspects of the
authority of the board of directors which the board of directors confers
upon such committee in the resolution creating the committee. Provided,
however, a committee may not:
(a) authorize distributions;
(b) approve or propose to shareholders action that
the Statutes require be approved by shareholders;
(c) fill vacancies on the board of directors
or on any of its committees;
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(d) amend the articles of incorporation pursuant to
the authority of directors to do so;
(e) adopt, amend or repeal bylaws;
(f) approve a plan of merger not requiring
shareholder approval;
(g) authorize or approve reacquisition of shares,
except according to a formula or method prescribed by the board
of directors; or
(h) authorize or approve the issuance or sale or
contract for sale of shares or determine the designation and
relative rights, preferences, and limitations of a class or
series of shares, except that the board of directors may
authorize a committee (or an officer) to do so within limits
specifically prescribed by the board of directors.
ARTICLE 4. OFFICERS
4.1 Number of Officers. The officers of the corporation shall be
a president, a secretary and a treasurer, each of whom shall be appointed by the
board of directors. Such other officers and assistant officers as may be deemed
necessary, including any vice presidents, may also be appointed by the board of
directors. If specifically authorized by the board of directors, an officer may
appoint one or more officers or assistant officers. The same individual may
simultaneously hold more than one office in the corporation.
4.2 Appointment and Term of Office. The officers of the
corporation shall be appointed by the board of directors for a term as
determined by the board of directors. If no term is specified, they shall hold
office until the first meeting of the directors held after the next annual
meeting of shareholders. If the appointment of officers shall not be made at
such meeting, such appointment shall be made as soon thereafter as is
convenient. Each officer shall hold office until his successor shall have been
duly appointed and shall have qualified until his death, or until he shall
resign or is removed.
The designation of a specified term does not grant to the officer
any contract rights, and the board may remove the officer at any time prior to
the termination of such term.
4.3 Removal of Officers. Any officer or agent may be removed by
the board of directors at any time, with or without cause. Such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Appointment of an officer or agent shall not of itself create contract rights.
4.4 Resignation of Officers. Any officer may resign at any time,
subject to any rights or obligations under any existing contracts between the
officers and the corporation, by giving notice to the president or board of
directors. An officer's resignation shall take effect at the time specified
therein, and the acceptance of such resignation shall not be necessary to make
it effective.
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4.5 President. Unless the board of directors has designated the
chairman of the board as chief executive officer, the president shall be the
chief executive officer of the corporation and, subject to the control of the
board of directors, shall in general supervise and control all of the business
and affairs of the corporation. Unless there is a chairman of the board, the
president shall, when present, preside at all meetings of the shareholders and
of the board of directors. The president may sign, with the secretary or any
other proper officer of the corporation thereunder authorized by the board of
directors, certificates for shares of the corporation and deeds, mortgages,
bonds, contracts, or other instruments which the board of directors has
authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the board of directors or by these
bylaws to some other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of president and such other duties as may be
prescribed by the board of directors from time to time.
4.6 Vice Presidents. If appointed, in the absence of the
president or in the event of his death, inability or refusal to act, the vice
president (or in the event there be more than one vice president, the vice
presidents in the order designate at the time of their election, or in the
absence of any designation, then in the order of their appointment) shall
perform the duties of the president, and when so acting, shall have all the
powers of, and be subject to, all the restrictions upon the president.
4.7 Secretary. The secretary shall: (a) keep the minutes of the
proceedings of the shareholders, the board of directors, and any committees of
the board in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these bylaws or as
required by law; (c) be custodian of the corporate records; (d) when requested
or required, authenticate any records of the corporation; (e) keep a register of
the post office address of each shareholder which shall be furnished to the
secretary by such shareholder; (f) sign with the president, or a vice president,
certificates for shares of the corporation, the issuance of which shall have
been authorized by resolution of the board of directors; (g) have general charge
of the stock transfer books of the corporation; and (h) in general perform all
duties incident to the office of secretary and such other duties as from time to
time may be assigned by the president or by the board of directors. Assistant
secretaries, if any, shall have the same duties and powers, subject to the
supervision of the secretary.
4.8 Treasurer. The treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the corporation; (b)
receive and give receipts for monies due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the corporation in
such bank, trust companies, or other depositaries as shall be selected by the
board of directors; and (c) in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
by the president or by the board of directors. If required by the board of
directors, the treasurer shall give a bond for the faithful discharge of his or
her duties in such sum and with such surety or sureties as the board of
directors shall determine. Assistant Treasurers, if any, shall have the same
powers and duties, subject to the supervision of the treasurer.
4.9 Salaries. The salaries of the officers shall be fixed from
time to time by the board of directors.
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ARTICLE 5. INDEMNIFICATION OF DIRECTORS,
OFFICERS, AGENTS, AND EMPLOYEES
5.1 Indemnification of Directors. Unless otherwise provided in
the articles of incorporation, the corporation shall indemnify any individual
made a party to a proceeding because the individual is or was a director of the
corporation, against liability incurred in the proceeding, but only if such
indemnification is both (i) determined permissible and (ii) authorized, as such
are defined in subsection (a) of this Section 5.1.
5.1.1 Determination of Authorization. The corporation
shall not indemnify a director under this Section unless:
(a) a determination has been made in accordance
with the procedures set forth in the Statutes that the director
met the standard of conduct set forth in subsection (b) below,
and
(b) payment has been authorized in accordance with
the procedures set forth in the Statutes based on a conclusion
that the expenses are reasonable, the corporation has the
financial ability to make the payment, and the financial
resources of the corporation should be devoted to this use rather
than some other use by the corporation.
5.1.2 Standard of Conduct. The individual shall
demonstrate that:
(a) he or she conducted himself in good faith; and
(b) he or she reasonably believed:
(i) in the case of conduct in his official
capacity with the corporation, that his conduct was in its
best interests;
(ii) in all other cases, that his conduct was
at least not opposed to its best interests; and
(iii) in the case of any criminal proceeding, he
or she had no reasonable cause to believe his conduct was
unlawful.
5.1.3 Indemnification in Derivative Actions Limited.
Indemnification permitted under this Section in connection with a
proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding.
5.1.4 Limitation on Indemnification. The corporation shall
not indemnify a director under this Section of Article 5:
(a) in connection with a proceeding by or in the
right of the corporation in which the director was adjudged
liable to the corporation; or
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(b) in connection with any other proceeding
charging improper personal benefit to the director, whether or
not involving action in his or her official capacity, in which he
or she was adjudged liable on the basis that personal benefit was
improperly received by the director.
5.2 Advance of Expenses for Directors. If a determination is made
following the procedures of the Statutes, that the director has met the
following requirements, and if an authorization of payment is made following the
procedures and standards set forth in the Statutes, then unless otherwise
provided in the articles of incorporation, the corporation shall pay for or
reimburse the reasonable expenses incurred by a director who is a party to a
proceeding in advance of final disposition of the proceeding, if:
(a) the director furnishes the corporation a written
affirmation of his good faith belief that he has met the standard of
conduct described in this section;
(b) the director furnishes the corporation a written
undertaking, executed personally or on his behalf, to repay the advance
if it is ultimately determined that he did not meet the standard of
conduct;
(c) a determination is made that the facts then known to
those making the determination would not preclude indemnification under
this Section or the Statutes.
5.3 Indemnification of Officers, Agents and Employees Who Are Not
Directors. Unless otherwise provided in the articles of incorporation, the board
of directors may indemnify and advance expenses to any officer, employee, or
agent of the corporation, who is not a director of the corporation, to the same
extent as to a director, or to any greater extent consistent with public policy,
as determined by the general or specific actions of the board of directors.
5.4 Insurance. By action of the board of directors,
notwithstanding any interest of the directors in such action, the corporation
may purchase and maintain insurance on behalf of a person who is or was a
director, officer, employee, fiduciary or agent of the corporation, against any
liability asserted against or incurred by such person in that capacity or
arising from such person's status as a director, officer, employee, fiduciary,
or agent, whether or not the corporation would have the power to indemnify such
person under the applicable provisions of the Statutes.
ARTICLE 6. STOCK
6.1 Issuance of Shares. The issuance or sale by the corporation
of any shares of its authorized capital stock of any class, including treasury
shares, shall be made only upon authorization by the board of directors, unless
otherwise provided by statute. The board of directors may authorize the issuance
of shares for consideration consisting of any tangible or intangible property or
benefit to the corporation, including cash, promissory notes, services
performed, contracts or arrangements for services to be performed, or other
securities of the corporation. Shares shall be issued for such consideration
expressed in dollars as shall be fixed from time to time by the board of
directors.
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6.2 Certificates for Shares.
6.2.1 Content. Certificates representing shares of the
corporation shall at minimum, state on their face the name of the
issuing corporation and that it is formed under the laws of the State of
Nevada; the name of the person to whom issued; and the number and class
of shares and the designation of the series, if any, the certificate
represents; and be in such form as determined by the board of directors.
Such certificates shall be signed (either manually or by facsimile) by
the president or a vice president and by the secretary or an assistant
secretary and may be sealed with a corporate seal or a facsimile
thereof. Each certificate for shares shall be consecutively numbered or
otherwise identified.
6.2.2 Legend as to Class or Series. If the corporation is
authorized to issue different classes of shares or different series
within a class, the designations, relative rights, preferences and
limitations applicable to each class and the variations in rights,
preferences and limitations determined for each series (and the
authority of the board of directors to determine variations for future
series) must be summarized on the front or back of each certificate.
Alternatively, each certificate may state conspicuously on its front or
back that the corporation will furnish the shareholder this information
on request in writing and without charge.
6.2.3 Shareholder List. The name and address of the person
to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books
of the corporation.
6.2.4 Transferring Shares. All certificates surrendered to
the corporation for transfer shall be canceled and no new certificates
shall be issued until the former certificate for a like number of shares
shall have been surrendered and canceled, except that in case of a lost,
destroyed, or mutilated certificate, a new one may be issued therefor
upon such terms and indemnity to the corporation as the board of
directors may prescribe.
6.3 Shares Without Certificates
6.3.1 Issuing Shares Without Certificates. Unless the
articles of incorporation provide otherwise, the board of directors may
authorize the issue of some or all the shares of any or all of its
classes or series without certificates. The authorization does not
affect shares already represented by certificates until they are
surrendered to the corporation.
6.3.2 Information Statement Required. Within a reasonable
time after the issue or transfer of shares without certificates, the
corporation shall send the shareholder a written statement containing,
at a minimum, the information required by the Statutes.
6.4 Registration of the Transfer of Shares. Registration of the
transfer of shares of the corporation shall be made only on the stock transfer
books of the corporation. In order to register a transfer, the record owner
shall surrender the shares to the corporation for cancellation, properly
endorsed by the appropriate person or persons with reasonable assurances that
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the endorsements are genuine and effective. Unless the corporation has
established a procedure by which a beneficial owner of shares held by a nominee
is to be recognized by the corporation as the owner, the person in whose name
shares stand in the books of the corporation shall be deemed by the corporation
to be the owner thereof for all purposes.
6.5 Restrictions on Transfer or Registration of Shares. The board
of directors or shareholders may impose restrictions on the transfer or
registration of transfer of shares (including any security convertible into, or
carrying a right to subscribe for or acquire shares). A restriction does not
affect shares issued before the restriction was adopted unless the holders of
the shares are parties to the restriction agreement or voted in favor of or
otherwise consented to the restriction.
A restriction on the transfer or registration of transfer of
shares may be authorized:
(a) to maintain the corporation's status when it is
dependent on the number or identity of its shareholders;
(b) to preserve entitlements, benefits or exemptions under
federal or local laws; and
(c) for any other reasonable purposes.
A restriction on the transfer or registration of transfer of
shares may:
(a) obligate the shareholder first to offer the
corporation or other persons (separately, consecutively or
simultaneously) an opportunity to acquire the restricted shares;
(b) obligate the corporation or other persons (separately,
consecutively or simultaneously) to acquire the restricted shares;
(c) require as a condition to such transfer or
registration, that any one or more persons, including the holders of any
of its shares, approve the transfer or registration if the requirement
is not manifestly unreasonable; or
(d) prohibit the transfer or the registration of transfer
of the restricted shares to designated persons or classes of persons, if
the prohibition is not manifestly unreasonable.
A restriction on the transfer or registration of transfer of
shares is valid and enforceable against the holder or a transferee of the holder
if the restriction is authorized by this Section and its existence is noted
conspicuously on the front or back of the certificate or is contained in the
information statement required by this Article 6 with regard to shares issued
without certificates. Unless so noted, a restriction is not enforceable against
a person without knowledge of the restriction.
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6.6 Corporation's Acquisition of Shares. The corporation may
acquire its own shares and the shares so acquired constitute authorized but
unissued shares.
If the articles of incorporation prohibit the reissue of acquired
shares, the number of authorized shares is reduced by the number of shares
acquired, effective upon amendment of the articles of incorporation, which
amendment may be adopted by the shareholders or the board of directors without
shareholder action. The articles of amendment must be delivered to the Secretary
of State and must set forth:
(a) the name of the corporation;
(b) the reduction in the number of authorized shares,
itemized by class and series;
(c) the total number of authorized shares, itemized by
class and series, remaining after reduction of the shares; and
(d) a statement that the amendment was adopted by the
board of directors without shareholder action and that shareholder
action was not required.
ARTICLE 7. DISTRIBUTIONS
7.1 Distributions to Shareholders. The board of directors may
authorize, and the corporation may make, distributions to the shareholders of
the corporation subject to any restrictions in the corporation's articles of
incorporation and in the Statutes.
7.2 Unclaimed Distributions. If the corporation has mailed three
successive distributions to a shareholder at the shareholder's address as shown
on the corporation's current record of shareholders and the distributions have
been returned as undeliverable, no further attempt to deliver distributions to
the shareholder need be made until another address for the shareholder is made
known to the corporation, at which time all distributions accumulated by reason
of this Section, except as otherwise provided by law, shall be mailed to the
shareholder at such other address.
ARTICLE 8. MISCELLANEOUS
8.1 Inspection of Records by Shareholders and Directors. A
shareholder or director of the corporation is entitled to inspect and copy,
during regular business hours at the corporation's principal office, any of the
records of the corporation required to be maintained by the corporation under
the Statutes, if such person gives the corporation written notice of the demand
at least five business days before the date on which such a person wishes to
inspect and copy. The scope of such inspection right shall be as provided under
the Statutes.
8.2 Corporate Seal. The board of directors may provide a
corporate seal which may be circular in form and have inscribed thereon any
designation including the name of the corporation, the state of incorporation,
and the words "Corporate Seal."
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8.3 Amendments. The corporation's board of directors may amend or
repeal the corporations' bylaws at any time unless:
(a) the articles of incorporation or the Statutes reserve
this power exclusively to the shareholders in whole or part; or
(b) the shareholders in adopting, amending, or repealing a
particular bylaw provide expressly that the board of directors may not
amend or repeal that bylaw; or
(c) the bylaw either establishes, amends, or deletes, a
greater shareholder quorum or voting requirement.
Any amendment which changes the voting or quorum requirement for
the board must meet the same quorum requirement and be adopted by the same vote
and voting groups required to take action under the quorum and voting
requirements then in effect or proposed to be adopted, whichever is greater.
DATED this 21st day of July, 1999.
-----------------------------------
James R. Ladd, Director
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EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Agreement") is made and entered into as
of November 1, 1999 (the "Effective Date"), by and between NextPath
Technologies, Inc., a Nevada corporation, whose principal executive offices are
located at 114 South Churton Street, Suite 101, Hillsborough, North Carolina
27278 (the "Company"), and Frederic F. Wolfer, Jr., whose address is 8602 South
Braden Avenue, Tulsa, Oklahoma 73137 (the "Employee"). The Company and the
Employee are collectively referred to as the "Parties."
WITNESSETH:
WHEREAS, the Company desires to employ the Employee as Vice President of
the Company to devote his full time, professional and technical services to the
business of the Company, and the Employee desires to be so employed; and
WHEREAS, the Company and the Employee desire to enter into this
Agreement for the period and on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements set
forth in this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree as
follows:
Section 1. Employment. Subject to the terms and conditions of this
Agreement, the Company agrees to employ the Employee as Vice President of the
Company and the Employee agrees to be employed in such capacity.
Section 2. Duties. The Employee agrees to devote substantially all of
his business hours to, and during such time, make the best use of his energy,
knowledge, and training, advancing the Company's interests. The Employee agrees
to diligently and conscientiously perform his duties for the term of this
Agreement, within the general guidelines as determined by the President of the
Company. The Employee will report to the President of the Company, who will be
responsible on behalf of the Company for evaluating the Employee's job
performance and determining the extent to which the Employee is fulfilling his
duties.
Section 3. Term. Subject to earlier termination in accordance with
Section 14 of this Agreement, this Agreement shall continue in effect for a
period of five (5) years beginning on the Effective Date.
Section 4. Compensation.
------------
Section 4.1. Salary. In consideration for the Employee's services
under this Agreement, the Company agrees to pay the Employee an annual
salary of One Hundred Fifty Thousand Dollars ($150,000). The Employee's
compensation shall be paid in accordance with standard Company payroll
practices, subject to applicable withholding requirements. Subsequent
adjustments to salary shall be determined by the Board of Directors of
the Company.
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<PAGE>
Section 4.2. Bonus. In addition to other compensation to be paid
under this Agreement, the Employee may receive, in the sole discretion
of the Company, periodic performance bonuses from time to time.
Section 4.3. Signing Bonus. In addition to other compensation to
be paid under this Agreement, the Company shall deliver to the Employee
One Hundred Thousand (100,000) shares of the Company's restricted common
stock, par value $.001 (the "Shares"), within thirty (30) days of the
Effective Date.
The Shares will be "Restricted Securities," as defined by Rule
144 under the Securities Act of 1933, will be restricted as to
transferability, and will bear substantially the following legend:
The securities represented by this Certificate have not been
registered under the United States Securities Act of 1933 (the
"Act") and are "restricted securities" as that term is defined in
Rule 144 under the Act. The securities may not be offered for
sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act, or pursuant to an
exemption from registration under the Act, the availability of
which is to be established to the satisfaction of the Company.
The Company agrees to file a registration statement covering the
Shares with the Securities and Exchange Commission within six months of
the Effective Date.
Section 5. Participation in Employee Benefit Programs. The Employee
shall be entitled to participate in all the employee benefit programs of the
Company in effect from time to time including, but not limited to, the Company's
group health and dental insurance plans, group life insurance plans, disability
insurance plans, retirement plans, deferred compensation plans, stock option
plans, employee stock purchase plans developed for key personnel (including
performance based plans and plans providing lower than market value exercise
prices), and any other employee benefit programs as may from time to time be in
effect.
Section 6. Mandatory Employee Benefits.
Section 6.1. Health Insurance. In the event that the Company does
not maintain a group health insurance plan, the Company shall pay the
premiums on a health, dental and vision insurance policy for the
Employee and his dependents. In the event that the annual premiums for
the policy exceed Two Thousand Five Hundred Dollars ($2,500), the
Employee shall be responsible for and shall pay any excess.
Section 6.2. Life Insurance. In the event that the Company does
not maintain a group life insurance plan or such plan does not provide
the Employee with life insurance coverage in the amount of $250,000, the
Company shall pay the premiums on a term policy on the Employee's life
that provides a death benefit in the amount of $250,000. The
beneficiaries of such life insurance policy shall be designated by the
Employee in his sole and absolute discretion.
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<PAGE>
Section 7. Business Expenses. In addition to other compensation to be
paid under this Agreement, the Company shall be responsible for and shall bear
all ordinary and necessary business expenses which the Employee incurs while
performing his duties under this Agreement, provided that the Employee accounts
properly for these expenses to the Company in the manner that the Company
prescribes and such expenses are incurred in accordance with the policies of the
Company.
Section 8. Vacation and Sick Leave. The Employee shall be entitled to
thirty-five (35) working days of paid time off per calendar year to be used for
vacation and/or sick leave as required (the "Time Off"). If the Employee does
not use his Time off in its entirety in any given year, it shall be deemed
forfeited, it shall not be carried over, and the Employee shall not be entitled
to compensation for any unused Time Off.
Section 9. Automobile Allowance. In the event that the other executive
officers are provided with automobiles, the Company shall lease and provide the
Employee with the use of an automobile of the Employee's choice; provided,
however, that the monthly lease payment for such automobile does not exceed Four
Hundred Dollars ($400) per month. In addition, the Company shall be responsible
for, and shall pay, all gas, insurance, maintenance and repair expenses relating
to such automobile. Unless prohibited by the lease or otherwise, the Employee
shall have a thirty (30) day option, in his sole discretion, to purchase the
automobile upon the expiration of the lease term and at the purchase price set
forth in the lease.
Section 10. Other Benefits. The Company shall provide the Employee with
a suitable office and related secretarial assistance during the term of this
Agreement.
Section 11. Place of Employment. Unless otherwise mutually agreed upon
between the Parties, the Employee shall be employed at the Company's offices in
Tulsa, Oklahoma.
Section 12. Rights in Work Product. All materials, inventions,
discoveries, improvements and designs developed by the Employee in the
performance of his duties during the term of this Agreement, all goodwill
associated therewith, and all related documents, data, models, plans,
specifications and similar materials, shall become the sole and exclusive
property of the Company when prepared or created, and shall be immediately
disclosed to the Company by the Employee. The Employee hereby assigns all
rights, title and interest in all such items, all goodwill associated therewith,
and all related intellectual property to the Company. In addition, the Employee
agrees that any copyrightable materials created under this Agreement constitute
"work made for hire" under 17 U.S.C. ss. 101. If for any reason such material
does not constitute works made for hire, the Employee hereby irrevocably and
exclusively grants, assigns and conveys all right, title and interest thereto,
including any copyrights relating thereto, to the Company. The Employee agrees
to execute such further documents as the Company deems necessary to confirm the
Company's ownership of the items and intellectual property described in this
Section 12.
Section 13. Competitive Activities. Without the prior written permission
of the Company, which permission may be withheld in the sole discretion of the
Company, the Employee agrees that during the term of this Agreement and for a
period of two (2) years thereafter, the Employee will not, alone or with others,
directly or indirectly, as principal, agent, trustee or through the agency of
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any corporation, partnership, association or agent or agency, (i) participate or
engage in the business of the Company, (ii) service or solicit any of the
Company's business from any customer of the Company, (iii) request or advise any
customer of the Company to withdraw, curtail or cancel such customer's business
with the Company, or (iv) solicit for employment any person employed by the
Company; provided however, that (i) no owner of less than five percent (5%) of
the outstanding stock of any publicly traded corporation shall, for purposes of
this Section 13, be deemed to engage solely by reason of his stock position in
any of its businesses, and (ii) the future acquisition by the Employee or his
affiliates of any company engaged in the Business shall not be deemed to violate
this Section 13 if less than ten percent (10%) of the total revenues of the
acquired company are derived from the Business. In the event this provision is
breached, the Company may terminate this Agreement and pursue all rights and
remedies available to the Company at law, in equity or by statute. To the extent
not in contravention of this Section 13, the Employee may use his general
knowledge and skills to gain and use in other employment. As used in this
Section 13, the term "Company" shall mean the Company and its subsidiaries,
parents and affiliates.
Section 14. Termination. This Agreement may be terminated prior to the
end of its term as follows:
Section 14.1. Termination for Cause. The Company may terminate
this Agreement for "Cause" on ten (10) days written notice to the
Employee in which case termination shall be effective on the eleventh
(11th) day following the date of the notice as used in this Agreement.
"Cause" shall mean the Employee's conviction of (a) a felony, or (b) a
misdemeanor involving embezzlement, fraud, conversion or misuse of the
Company's funds or resources or that negatively affects the Company's
business, operations or reputation or substantially impairs the
Employee's qualifications, character or ability to perform his duties
under this Agreement. In such case, the Company will be obligated to pay
the Employee only compensation that is then due and owing to him under
Section 4 up to the effective date of the termination.
Section 14.2. Termination Without Cause. Either party may
terminate this Agreement without Cause for any reason whatsoever upon
ninety (90) days written notice to the other Party. The termination
shall be effective on the ninety-first (91st) day following the date of
the notice. If termination is by the Company without Cause, the Employee
shall be entitled to compensation through the date of termination
pursuant to Section 4 regardless of whether the Employee continues to
render personal services during this time period. If termination is by
the Employee without Cause, the Employee shall be entitled to
compensation through the date of termination pursuant to Section 4, but
only if the Employee continues to render personal services during this
time period. In addition, in the event that the Employee is terminated
by the Company without Cause, the Employee shall be entitled to a lump
sum payment in cash in an amount equal to two (2) years of the
Employee's annual salary in effect at the time of such termination.
Section 14.3. Death or Disability of Employee. This Agreement
will terminate immediately upon the Employee's death or upon the
Employee's permanent disability that prevents him from performing his
duties under this Agreement for a continuous period of three (3) months,
in which case the Employee (or, in the case of his death, the Employee's
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legal representative) will be entitled to receive all compensation due
and owing to the Employee under Section 4 up to the date of termination.
Section 14.4. Termination Not to Affect Accrued Rights. The
termination of this Agreement shall not affect any right or claim of
either party incurred or accruing prior to the date of termination,
including any right or claim of the Employee for compensation payable
for services rendered or reimbursable expenses incurred prior to the
date of termination.
Section 15. Confidentiality. The Employee acknowledges that, in
performing his duties, he may have access to information regarding the business
and operations of the Company and its affiliates and subsidiaries ("Confidential
Information"). Without the prior written consent of the Company, the Employee
(a) shall use the Confidential Information only for performing his duties, (b)
shall not release, reveal or disclose to any third party any Confidential
Information, and (c) shall not duplicate any Confidential Information. Upon
execution of this Agreement, the Employee shall sign and deliver the
Confidentiality Agreement attached to this Agreement to the Company.
Section 16. Notice.
Section 16.1 Notice to the Company. Any notice to be given to the
Company under this Agreement shall be sent via facsimile and via
certified mail, return receipt requested to:
James R. Ladd
114 South Churton Street, Suite 101
Hillsborough, NC 27278
Section 16.2 Notice to the Employee. Any notice to be given to
the Employee under this Agreement shall be sent via certified mail,
return receipt requested to:
Frederic F. Wolfer, Jr.
8602 South Braden Avenue
Tulsa, OK 73137
Section 16.3 Notices Effective upon Mailing. Except as may
otherwise be specifically provided in this Agreement, any notice sent to
either party shall be effective on, and the time for any action to be
taken in response to such notice shall be calculated from, the date such
notice was deposited in the United States mail as certified mail, return
receipt requested.
Section 17. General Provisions.
Section 17.1. Assignability. The rights of the Employee under
this Agreement are personal to the Employee and may not be assigned or
transferred to any other person, corporation or entity. The Company may
not assign or transfer any right, duty or obligation hereunder to any
other person, corporation or entity other than an affiliate without the
prior written consent of the Employee.
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Section 17.2. Binding Effect. This Agreement shall inure to the
benefit of and be binding upon the Parties and their respective heirs,
representatives, successors and permitted assigns.
Section 17.3. Amendment. This Agreement may only be amended or
modified by a writing signed by the Parties and no oral statement shall
in any manner amend, modify or otherwise affect the terms and conditions
of this Agreement.
Section 17.4. Waiver. No failure or delay by a party in
exercising any right or remedy under this Agreement will waive any
provision of this Agreement. Nor will any single or partial exercise by
a party of any right or remedy under this Agreement preclude it from
otherwise or further exercising any rights or remedies which it may
have, or any other rights or remedies granted by any law or any related
document.
Section 17.5. Construction. This Agreement shall be interpreted
and enforced under the laws of the State of Oklahoma. The prevailing
party in any dispute to enforce this Agreement shall be entitled to
recover from the losing party its costs and a reasonable attorneys' fee
to be determined by the court.
Section 17.6. Severability. The provisions of Section 13
(Competitive Activities) and Section 15 (Confidentiality) shall be
deemed to consist of a series of separate covenants. The Employee agrees
that the character, duration and geographical scope of those provisions
are reasonable. However, should a determination be made by a court of
competent jurisdiction or other tribunal at a later date that the
character, duration or geographical scope of those provisions is
unreasonable, then it is the intention and the agreement of the Parties
that those provisions shall be construed by the court in such a manner
as to impose only those restrictions on the conduct of the Employee
which are reasonable in light of the circumstances as they then exist
and as are necessary to assure the Company of the intended benefit of
this Agreement. If in any judicial or other legal proceeding, a court or
other tribunal shall refuse to enforce all of the separate covenants
included in this Agreement because they are more extensive than
necessary to assure the Company of the intended benefit of this
Agreement, then those covenants which, if eliminated, would permit the
remaining separate covenants to be enforced in such proceeding shall,
for the purpose of such proceeding, be deemed eliminated from this
Agreement.
Section 17.7. Survival of Terms. The terms and provisions of
Sections 13 (Competitive Activities), 14.4 (Termination Not to Affect
Accrued Rights) and 15 (Confidentiality) shall survive the termination
or expiration of this Agreement.
Section 17.8. Counterparts/Facsimile. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original but all of which together will constitute one and the same
instrument. A facsimile or other reproduction of this Agreement may be
executed by one or more of the Parties, and an executed copy of this
Agreement may be delivered by one or more of the Parties by facsimile or
similar instantaneous electronic transmission device pursuant to which
the signature of or on behalf of such party can be seen, and such
execution and delivery shall be considered valid, binding and effective
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for all purposes. At the request of either Party, the Parties agree to
execute an original of this Agreement as well as any facsimile or other
reproduction of this Agreement.
Section 17.9. Release. Upon his execution of this Agreement, the
Employee, for himself and his successors and heirs, does hereby forever
release and discharge the Company, and its affiliates, parents,
subsidiaries, officers, directors, agents, servants, attorneys and
employees of and from any and all claims, complaints, petitions,
damages, attorney fees, costs, expenses, losses, demands, actions and
causes of action, known or unknown, which he may have, own or hold by
reason of any conduct, matter or thing whatsoever which has been done,
omitted or suffered to have been done prior to the Effective Date of
this Agreement.
Section 17.10.Entire Agreement. This Employment Agreement
constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements or representations by or between the
Parties, whether oral or written, that may have related in any way to
the subject matter of this Employment Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.
COMPANY: NextPath Technologies, Inc.
By:
--------------------------
James R. Ladd, President
EMPLOYEE:
--------------------------
Frederic F. Wolfer, Jr.
