<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ____________________.
Commission file number: 0-27249
EZCONNECT, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 87-0284731
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
716 East 4500 South, Suite N-142, Murray, Utah 84107
- ---------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(801) 270-9711
----------------------------------------------------
(Registrant's telephone number, including area code)
DIVERSIFIED INDUSTRIES, INC.
- ------------------------------------------------------------------------------
(Former name, former address, and former fiscal year, if changed since last
report.)
Indicate 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), Yes [X] No [X] and (2) has been
subject to such filing requirements for the past 90 days. Yes [ ] No [X]
The number of shares outstanding of each of the issuer's classes of common
stock, was 8,660,464 shares of common stock, par value $0.001, as of October
22, 1999.
<PAGE>
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
(A) The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
the financial position, results of operations, cash flows, and stockholders'
equity in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position have been
included and all such adjustments are of a normal recurring nature.
The unaudited balance sheet of the Company as of September 30, 1999; the
related audited balance sheet of the Company as of June 30, 1999; the
related unaudited statements of operations and cash flows for the three month
period ended September 30, 1998 and 1997 and from November 1, 1996 (inception
of development stage)through September 30, 1999; and the unaudited statement
of shareholders' equity for the period from November 1, 1996 (inception of
development stage) through September 30, 1998 are attached hereto and
incorporated herein by this reference
<PAGE>
<PAGE> 3
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
SEPTEMBER 30, JUNE 30,
1999 1999
------------ ------------
(Unaudited)
Current Assets:
Cash $ 615 $ -
Loans receivable - related party 30,000 -
------------ -----------
Total Current Assets 30,615 -
------------ -----------
TOTAL ASSETS $ 30,615 $ -
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 80 $ -
Loans from shareholders 3,417 -
------------ -----------
Total Current Liabilities 3,497 -
------------ -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.01 par value, 100,000,000
shares authorized, 6,463,659 and 3,463,659
shares issued and outstanding, respectively 64,637 34,637
Additional paid-in capital 1,238,294 1,061,294
Stock subscriptions receivable (168,500) -
Deficit accumulated prior to November 1, 1996 (654,259) (654,259)
Deficit accumulated during the development
stage (453,054) (441,672)
------------ -----------
Total Stockholders' Equity (Deficit) 27,118 -
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 30,615 $ -
============ ===========
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 4
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From
Inception
of Development
For the For the Stage on
Three Months Three Months November 1,
Ended Ended 1996 Through
September 30, September 30, September 30,
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES $ - $ - $ -
------------ ------------ ------------
EXPENSES
Depreciation - - 2,030
General and Administrative 11,382 5,045 414,234
------------ ------------ ------------
Total Expenses 11,382 5,045 416,264
------------ ------------ ------------
LOSS BEFORE OTHER INCOME (EXPENSES) (11,382) (5,045) (416,264)
------------ ------------ ------------
OTHER INCOME (EXPENSES)
Interest expense - - (13,259)
Loss on sale of assets - - (27,781)
Other income - - 4,250
------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSES) - - (36,790)
------------ ------------ ------------
NET LOSS $ (11,382) $ (5,045) $ (453,054)
============ ============ ============
NET LOSS PER SHARE $ (0.00) $ (0.00)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 3,963,659 3,463,659
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 5
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Additional Stock
Common Stock Paid-in Subscription Accumulated
Shares Amount Capital Receivable Deficit
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance, November 1, 1996 (inception
of the development stage) 449,972 $ 4,500 $ 659,759 $ - $ (654,259)
Common stock issued for services
valued at $0.10 per share 1,625,000 16,250 146,250 - -
Common stock issued for cash at
$0.10 per share 520,000 5,200 46,800 (1,000) -
Stock offering costs - - (12,500) - -
Net loss from inception of the
development stage on November 1,
1996 through June 30, 1997 - - - - (195,355)
------------ ------------ ------------ ------------ ------------
Balance, June 30, 1997 2,594,972 25,950 840,309 (1,000) (849,614)
Cash received on stock subscription
receivable - - - 1,000 -
Common stock issued for services
valued at $0.25 per share 100,251 1,003 24,060 - -
Common stock issued for the
conversion of debentures at
$0.25 per share 718,436 7,184 172,425 - -
Common stock issued for the
conversion of a note payable
at $0.50 per share 50,000 500 24,500 - -
Net loss for the year ended
June 30, 1998 - - - - (190,411)
------------ ------------ ------------ ------------ ------------
Balance, June 30, 1998 3,463,659 34,637 1,061,294 - (1,040,025)
Net loss for the year ended
June 30, 1999 - - - - (55,906)
------------ ------------ ------------ ------------ ------------
Balance, June 30, 1999 3,463,659 $ 34,637 $ 1,061,294 $ - $ (1,095,931)
Common stock issued for cash at
$0.07 per share 442,857 4,429 26,571 - -
Common stock issued for services
valued at $0.05 per share 150,000 1,500 6,000 - -
Common stock issued on subscription
at $0.07 per share 2,407,143 24,071 144,429 (168,500) -
Net loss for the three months ended
September 30, 1999 (Unaudited) - - - - (11,382)
------------ ------------ ------------ ------------ ------------
Balance, September 30, 1999 6,463,659 $ 64,637 $ 1,238,294 $ (168,500) $ (1,107,313)
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 6
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
Statements of Cash Flows
From
Inception of
Development
For The Stage on
Three Months Ended November 1,
September 30, 1996 Through
------------------------ September 30,
1999 1998 1999
----------- ----------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (11,382) $ (5,045) $ (453,054)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation - - 2,030
Loss from sale of assets - - 27,781
Stock issued for services 7,500 - 195,063
Changes in assets and liability accounts:
(Increase) decrease in prepaid - - 2,533
(Increase) decrease in other assets - - 5,867
(Increase) decrease in accounts payable 80 - 80
(Increase) decrease in accrued expenses - - 10,259
----------- ----------- ------------
Net Cash Used by Operating Activities (3,802) (5,045) (209,441)
----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Advances on notes receivable (30,000) - (30,000)
Sale of property - - 25,000
Purchase of property - - (54,811)
----------- ----------- ------------
Net Cash Provided (Used) by
Investing Activities (30,000) - (59,811)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 31,000 - 83,000
Stock offering costs - - (12,500)
Proceeds from convertible debentures - - 169,350
Proceeds from shareholders loans 3,417 - 3,417
Proceeds from notes payable - - 25,000
----------- ----------- ------------
Net Cash Provided by
Financing Activities $ 34,417 $ - $ 268,267
----------- ----------- ------------
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 7
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
Statements of Cash Flows (Continued)
From
Inception of
Development
For The Stage on
Three Months Ended November 1,
September 30, 1996 Through
------------------------ September 30,
1999 1998 1999
----------- ----------- ------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ 615 $ (5,045) $ (985)
CASH AT BEGINNING OF YEAR 5,750 2,875 1,600
----------- ----------- ------------
CASH AT END OF YEAR $ 615 $ 705 $ 615
=========== =========== ============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
CASH PAID FOR:
Taxes $ 385 $ - $ 385
Interest $ - $ 1,000 $ 2,500
NON-CASH FINANCING ACTIVITIES:
Common stock issued for accrued
interest $ - $ - $ 10,259
Common stock issued for the
conversion of debentures $ - $ - $ 169,350
Common stock issued for the
conversion of a note payable $ - $ - $ 25,000
Common stock issued for services
rendered $ 7,500 $ - $ 195,063
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 8
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
September 30, 1999 and 1998
NOTE 1 - FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at September 30, 1999 and for
all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's June 30, 1999 audited financial
statements. The results of operations for the periods ended September 30 are
not necessarily indicative of the operating results for the full year.
<PAGE>
<PAGE> 9
INDEPENDENT AUDITOR'S REPORT
BOARD OF DIRECTORS
EZConnect USA, Inc.
I have audited the accompanying balance sheet of EZConnect USA, Inc. (a
development stage company) as of September 30, 1999 and the related statements
of operations, stockholders' equity and cash flows from inception (September
23, 1999) to September 30, 1999. These financial statements are the
responsibility of the Company's management. My responsibility is to express
an opinion on the financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. 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. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of EZConnect USA, Inc. (a
development stage company) as of September 30, 1999, and the results of its
operations and its cash flows from Inception (September 23, 1999) to September
30, 1999 in conformity with generally accepted accounting principles.
As discussed on Note 1, the Company has been in the development stage since
its inception on September 23, 1999. The Company has limited operating
capital with current liabilities exceeding current assets by $32,688 and no
operations. Realization of a major portion of the assets is dependent upon
the Company's ability to meet its future financing requirements, and the
success of future operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
/S/ DAVID T. THOMSON, CPA
Salt Lake City, Utah
October 25, 1999
<PAGE>
<PAGE>
EZCONNECT USA, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
SEPTEMBER 30,
1999
--------------
Current Assets:
Cash $ 6,169
------------
Total Current Assets 6,169
------------
PROPERTY AND EQUIPMENT
Computer equipment, net of depreciation
of $-0- 3,684
Assets held under capital lease, net of
amortization of $-0- 12,614
------------
Total property and equipment 16,298
------------
OTHER ASSETS
Security deposit and last month payment
on lease obligation 1,967
Organization costs, less amortization of $-0- 350
Intangible assets, less amortization of $-0- 10
------------
Total other assets 2,327
------------
TOTAL ASSETS $ 24,794
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,350
Current portion of capital lease obligation 5,507
Note payable - related party 30,000
------------
Total Current Liabilities 38,857
------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $.001 par value, 1,000
shares authorized, 1,000 shares issued
and outstanding 1
Additional paid-in capital 1,759
Earnings (deficit) accumulated during the
development stage (22,266)
------------
Total Stockholders' Equity (Deficit) 20,506
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 24,794
============
The accompanying notes are an integral part of these financial statements.
<PAGE> 11
EZCONNECT USA, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
From
Inception
(September 23, 1999)
to September 30,
1999
------------
REVENUE $ -
------------
EXPENSES
Bank charges 15
Property taxes 41
Finance charges 150
Legal fees 3,000
Consulting fees 6,500
Web page construction 12,560
------------
Total Expenses 22,266
------------
NET INCOME (LOSS) $ (22,266)
============
EARNINGS (LOSS) PER SHARE $ (22.27)
============
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 12
EZ CONNECT USA, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
<TABLE>
<CAPTION>
From
Inception
(September 23,
Additional 1999, to
Common Stock Paid-in September 30,
Shares Amount Capital 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, September 23, 1999 (Inception) - $ - $ - $ -
Shares issued for computer equipment,
services, and intangible assets, at
$1.76 per share on September 23, 1999 1,000 1 1,759 -
Net income (loss) from September 23,
1999 (Inception) to September 30, 1999 - - - (22,266)
------------ ----------- ----------- -----------
BALANCE, September 30, 1999 1,000 $ 1 $ 1,759 $ (22,266)
============ =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 13
DIVERSIFIED INDUSTRIES, INC.
(A Development Stage Company)
Statements of Cash Flows
From
Inception of
(September 30, 1999)
to September 30,
1999
----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Cash paid services, fees and expenses $ (18,266)
----------------
Total cash used in operating activities (18,266)
----------------
CASH FLOWS FROM INVESTING ACTIVITIES
-
----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash used to acquire computer equipment (5,565)
Cash from note payable 30,000
----------------
Total cash provided by financing activities 24,435
----------------
NET INCREASE (DECREASE) IN CASH 6,169
CASH - BEGINNING OF PERIOD -
CASH - END OF PERIOD $ 6,169
================
RECONCILIATION OF NET INCOME (LOSS) TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVIITES
NET INCOME (LOSS) $ (22,266)
----------------
Adjustment to reconcile net income (loss) to
net cash provided (used) by operating activities
Common stock issued for services 1,000
Changes in assets and liabilities
Increase in accounts payable 3,000
----------------
Total Adjustments 4,000
----------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ (18,266)
================
SUPPLEMENTAL INFORMATION
Common stock issued for intangible assets
and computer equipment $ 760
================
The accompanying notes are an integral part of these financial statements.
<PAGE>
<PAGE> 14
EZ CONNECT USA, INC.
(A Development Stage Company)
Notes to Financial Statements
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - EZConnect USA, Inc. (The Company) was organized under the laws of
the State of Utah on September 23, 1999 and has elected a fiscal year end of
June 30th. The Company was formed to engage in the remote establishment and
disconnection of utility services. The Company has developed software which
allows its corporate clients to change the utility services of end users without
the hassle of telephoning the various utilities. The Company has not commenced
planned principle operations and is considered a development stage company as
defined in SFAS No. 7. The Company, has at the present time, not paid any
dividends and any dividends that may be paid in the future will depend upon the
financial requirements of the Company and other relevant factors.
Net Earnings Per Share - The computation of net income (loss) per share of
common stock is based on the weighted average number of shares outstanding
during the period presented.
Organization Costs - The Company will amortize its organization costs, which
reflect amounts expended to organize the Company, over sixty (60) months using
the straight-line method.
Intangible Costs - The Company will amortize its costs associated with the
acquisition of its intangible assets (see note 4) over legal terms of protection
or actual estimated life whichever is less.
Income Taxes - Due to no operations and a net loss at September 30, 19999, no
provision for income taxes has been made. There are no deferred income taxes
resulting from income and expense items being reported for financial accounting
and tax reporting purposes in different periods.
Cash and Cash Equivalents - For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments purchased with a maturity
of three months or less to be cash equivalents. The Company has had no noncash
financing activities.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Property and Equipment - Property and equipment are stated at cost and will be
depreciated using the straight-line method over their estimated useful lives.
The depreciation and amortization periods are as follows:
Computer equipment and software 3-5 years
Upon retirement or other disposition of property and equipment, the cost and
related accumulated depreciation and amortization are removed from the accounts.
The resulting gain or loss is reflected in income. Major renewals and
betterments are capitalized while minor expenditures for maintenance and repairs
are charged to expense as incurred.
<PAGE>
<PAGE> 15
EZ CONNECT USA, INC.
(A Development Stage Company)
Notes to Financial Statements
NOTE 2 - COMMON STOCK TRANSACTIONS
The Company on September 23, 1999 (Inception) issued 1,000 of its $.001 par
value common stock for services rendered, a patent pending, trademark,
copyright, and computer equipment. At the time of the issuance of the common
stock the fair value of the assets and services rendered was deemed by
management to be $1,760.
NOTE 3 - RELATED PARTY TRANSACTIONS
Through September 30, 1999 an officer provided free office space to the Company.
The free rent was determined to have only nominal value. The Company subsequent
to September 30, 1999 obtained office space in Salt Lake City, Utah and is
presently negotiating a lease for that office space.
As of September 30, 1999 no compensation has been paid or accrued to any
officers or directors of the Company.
NOTE 4 - INTANGIBLE ASSETS
At inception an officer and stockholder assigned and transferred a patent
pending, trademark and copyright to the Company. These intangible assets were
associated with the Company's business purpose as discussed in the organization
footnote. At the time of the acquisition the intangible assets were valued at
$10.
NOTE 5 - CAPITAL LEASES
The Company is the lessee of computer hardware under a capital lease expiring in
2001. The assets and liability under the capital lease is recorded at the lower
of the present value of the minimum lease payments or the fair value of the
assets. The assets are amortized (or depreciated) over the lower of their
related lease terms or their estimated productive lives. Amortization (or
depreciation) of assets under capital leases will be included in future
depreciation expense.
Following is a summary of property held under capital leases:
Computer equipment $ 12,a694
Minimum future lease payments under the terms of the capital lease are:
Period ending September 30, Amount
- --------------------------- --------
2000 $ 7,966
2001 7,302
--------
Total Minimum Lease Payments 15,268
Less: Executory Costs -
--------
Net Minimum Lease Payments 15,268
Less: Amount Representing Interest (3,318)
--------
Present value of net minimum lease payments 11,950
Less: Current Portion (5,507)
--------
Long-term Portion $ 6,443
========
<PAGE> 16
EZ CONNECT USA, INC.
(A Development Stage Company)
Notes to Financial Statements
NOTE 6 - NOTE PAYABLE
On September 27, 1999, the Company signed an interim loan agreement with
Diversified Industries, Inc. (Diversified) (See Note 7). Under the agreement
Diversified will loan up to $200,000 to the Company in anticipation of the
completion of a business combination with Diversified. If the business
combination was not consummated prior to October 31, 1999, the Company would pay
interest at 1% per month until the total amount loaned was to be paid back three
(3) months from October 31, 1999. The Loan was secured by all assets of the
Company. At September 30, 1999, the Company had received $30,000 under the
agreement and an additional $30,000 prior to October 15, 1999. Since the
business combination was completed (see below) all loans prior to October 15,
1999 have become intercompany loans between parent and subsidiary.
NOTE 7 - SUBSEQUENT EVENT
On October 15, 1999, the Company's stockholders approved a business combination
with EZ Merger Co. which was a corporation used to change Diversified's domicile
to Nevada. Concurrent with the above transaction, Diversified changed its name
to EZConnect, Inc. The Company exchanged all of its issued and outstanding
shares of common stock for 6,075,000 shares of Diversified and the Company
became a wholly-owned subsidiary of Diversified.
<PAGE>
<PAGE> 17
(C) The pro forma financial information required under Article 11 of Regulation
S-X giving effect to the transaction described in "Item 5. OTHER INFORMATION."
The following unaudited proforma combined balance sheet and statement of income
aggregates the unaudited balance sheet and statement of operations of EZConnect,
Inc., formerly Diversified Industries, Inc. (Parent) (A Nevada corporation) as
of September 30, 1999, and the audited balance sheet and statement of income of
EZConnect USA, Inc. (Subsidiary) (a Utah corporation) as of September 30, 1999
giving effect to a transaction which was completed on October 15, 1999, wherein
Parent acquired Subsidiary as a wholly-owned subsidiary (the "Acquisition").
This business combination is a reverse acquisition and is treated as a
recapitalization of Subsidiary. Parent issued common stock in exchange for all
of the issued and outstanding shares of Subsidiary. The following proforma
balance sheet and statement of income uses the assumptions as described in the
notes and the historical financial information available at September 30, 1999.
The financial statements of Parent at September 30, 1999 are unaudited. The
financial statements of Subsidiary at September 30, 1999 are audited.
The unaudited proforma combined balance sheet and statement of income should be
read in conjunction with the separate financial statements and related notes
thereto of Parent and Subsidiary. The unaudited proforma condensed combined
balance sheet and statement of income is not necessarily indicative of the
condensed combined balance sheet and statement of income which might have
existed for the period indicated or the results of operations as they may appear
now or in the future.
<PAGE>
<PAGE> 18
PRO FORMA FINANCIAL INFORMATION
EZ CONNECT, INC.
(Formerly Diversified Industries, Inc.)
PROFORMA COMBINED BALANCE SHEET
(Unaudited)
Giving effect to an Acquisition on October 15, 1999
<TABLE>
<CAPTION>
EZConnect Proforma
EZConnect, USA Increase Proforma
Inc. Inc. (Decrease) Combined
------------ ------------ ------------ ------------
(9-30-99) (9-30-99)
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 615 $ 6,169 $ 168,500 (1) $ 175,284
Loans receivable 30,000 - (30,000)(6) -
------------ ------------ ----------- ------------
Total Current Assets 30,615 6,169 138,500 175,284
------------ ------------ ----------- ------------
Property and Equipment, net
Computer equipment, net - 3,684 - 3,684
Assets held under capital leases - 12,614 - 12,614
------------ ------------ ----------- ------------
Total Property and Equipment - 16,298 - 16,298
------------ ------------ ----------- ------------
Other assets
Security deposit and last month
lease payment - 1,967 - 1,967
Organization costs, net - 350 350
Intangible assets, net - 10 - 10
------------ ------------ ----------- ------------
Total Other Assets - 2,327 - 2,327
------------ ------------ ----------- ------------
Total Assets $ 30,615 $ 24,794 $ - $ 193,909
============ ============ =========== ============
LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable $ 80 $ 3,350 $ - $ 3,430
Loans from shareholder 3,417 - - 3,417
Current portion of capital lease
obligation - 5,507 - 5,507
Note payable - 30,000 (30,000)(6) -
------------ ------------ ----------- ------------
Total current liabilities 3,497 38,857 (30,000) 12,354
------------ ------------ ----------- ------------
Noncurrent liabilities
Long-term portion of capital lease
obligation - 6,443 - 6,443
------------ ------------ ----------- ------------
Stockholders' equity
Preferred stock; $.001 par value
5,000,000 shares authorized, no
shares issued and outstanding - - - -
Common stock; $.001 par value
40,000,000 shares authorized,
8,660,464 shares issued and outstanding 64,637 1 (58,173)(2) 8,660
(3,879)(3)
(1)(4)
6,075 (4)
Additional paid-in capital 1,238,294 1,759 58,173 (2) 1,273,765
3,879 (3)
1 (4)
(6,075)(4)
(22,266)(5)
Stock subscription receivable (168,500) - 168,500 (1)
Deficit accumulated prior to November 1,
1986 (654,259) - - (654,259)
Deficit accumulated during development
stage (453,054) (22,266) 22,266 (5) (453,054)
------------ ------------ ----------- ------------
Total stockholders' equity (deficit) 27,118 (20,506) 168,500 175,112)
------------ ------------ ----------- ------------
Total liabilities and
stockholders' equity (deficit) $ 30,615 $ 24,794 $ 138,500 $ 193,909
============ ============ =========== ============
</TABLE>
The accompanying notes are an integral part of this balance sheet.
<PAGE> 19
EZ CONNECT, INC.
(Formerly Diversified Industries, Inc.)
PROFORMA COMBINED STATEMENT OF INCOME
(Unaudited)
Giving effect to an Acquisition on October 15, 1999
<TABLE>
<CAPTION>
EZConnect Proforma
EZConnect, USA Increase Proforma
Inc. Inc. (Decrease) Combined
------------ ------------ ------------ ------------
(Three months (9-23-99
ended to
9-30-99) (9-30-99)
<S> <C> <C> <C> <C>
Revenues $ - $ - $ - $ -
----------- ----------- ----------- -----------
Operating Expenses
General and administrative 11,382 22,266 - 33,648
----------- ----------- ----------- -----------
Total operating expenses 11,382 22,266 - 33,648
----------- ----------- ----------- -----------
Net Income (Loss) $ (11,382) $ (22,266) $ - $ (33,648)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement of income.
<PAGE>
<PAGE> 20
EZCONNECT, INC.
(Formerly Diversified Industries, Inc.)
EZCONNECT USA, INC.
PROFORMA COMBINED NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
EZCONNECT, INC. (the Company) - (Formerly Diversified Industries, Inc.) from
November 1, 1996 through October 15, 1999, has been considered a "shell"
company and its business purpose has been to locate and consummate a merger or
acquisition with a private entity. On October 15, 1999, the Company completed
the acquisition of EZConnect USA, Inc., a Utah corporation. Prior to the
Company's acquisition, the Company was settling with creditors in order to
reduce the Company's liabilities so that the Company could recommence business
operations.
EZCONNECT USA, INC. (USA) - USA was incorporated in Utah on September 23,
1999. USA was formed to engage in the remote establishment and disconnection
of utility services. The Company has developed software which allows its
corporate clients to change the utility services of end users.
PROFORMA ADJUSTMENTS - (1) The Company received the rest of the cash under its
stock subscription receivable. (2) At the time the Company changed its
domicile to Nevada, it also changed its par value from $0.01 to $.001 per
share. The change in par value caused an increase in paid-in capital with a
corresponding decrease in common stock of $58,173. (3) The Company reversed
split its common stock on a 1 for 2.5 share basis. Common stock was reduced to
2,585,464 shares of common stock. (4) The Company acquired all of the issued
and outstanding shares of USA in exchange for 6,075,000 restricted shares of
previously authorized but unissued shares of its common stock. The business
combination is a reverse acquisition and has been treated as a
recapitalization of USA. (5) This is part of the recapitalization transaction
and entry. It eliminates the retained deficit of the Company accounting for
the transaction as if the shares were exchanged by USA for the net assets of
the Company. (6) This eliminates the intercompany loan receivable and note
payable.
STOCK OPTIONS - The Company has granted options to purchase 670,000 shares of
common stock of the Company at an exercise price of $1.50 per share, which was
$0.25 per share higher than the current bid price on the common stock at the
time of the grant. Of the 670,000 shares, 570,000 shares were granted to
officers and directors of the Company.
PRIVATE PLACEMENT - Following October 18, 1999, but no longer than 120 days
from such date, the Company intends to raise an additional $400,000 and up to
$1,000,000 in working capital through a private placement of the Company's
common stock. The price of the shares to be issued and the number of shares
to be offered has not yet been determined. If the Company is unable to raise
additional funds through the private placement, an officer and stockholder of
the Company has agreed to purchase the $400,000 minimum.
<PAGE>
<PAGE> 21
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward-looking Statements
- ---------------------------------------------------------
This report may contain "forward-looking" statements. The Company is
including this cautionary statement for the express purpose of availing itself
of the protections of the safe harbor provided by the Private Securities
Litigation Reform Act of 1995 with respect to all such forward-looking
statements. Examples of forward-looking statements include, but are not
limited to: (a) projections of revenues, capital expenditures, growth,
prospects, dividends, capital structure and other financial matters; (b)
statements of plans and objectives of the Company or its management or Board
of Directors; (c) statements of future economic performance; (d) statements of
assumptions underlying other statements and statements about the Company and
its business relating to the future; and (e) any statements using the words
"anticipate," "expect," "may," "project," "intend" or similar expressions.
Overview
- --------
From November 1, 1996, through October 15, 1999, the Company has been
considered a "shell" company and its business purpose has been to locate and
consummated a merger or acquisition with a private entity. On October 15,
1999, the Company completed the acquisition of EZ Connect USA, Inc., a Utah
corporation ("EZ"). (See "ITEM 5. OTHER INFORMATION.")
Prior to the Company's acquisition of EZ, the Company was settling with
creditors in order to reduce the Company's liabilities so that the Company
could recommence business operations. Additionally, management of the Company
was actively looking for a merger candidate. The Company has had unrestricted
discretion in seeking and participating in a business opportunity, subject to
the availability of such opportunities, economic conditions, and other
factors.
The costs and expenses associated with the maintaining the Company's
operations have been provided by existing shareholders who have in the past
made loans to the Company or been issued shares of the Company's restricted
common stock as compensation for services. It is anticipated that the working
capital necessary to maintain the Company's corporate viability will most
likely be provided by the Company's existing shareholders and/or its officers
and directors in the immediate future.
Current Business Activities
- ----------------------------
On September 27, 1999, the Company entered into an Agreement and Plan of
Reorganization (the "Acquisition Agreement") relating to the acquisition of EZ
through a share exchange. The Acquisition Agreement was approved by the board
of directors and shareholders of EZ and the board of directors of the Company,
and was approved by the Company's shareholders at a special meeting on October
15, 1999. In connection with the acquisition the Company's shareholders
approved proposals changing the Company's corporate domicile to Nevada;
changing the Company's name to "EZConnect, Inc."; effecting a 1-for-2.5
reverse split of the Company's issued and outstanding shares; and electing new
directors. (See "ITEM 5. OTHER INFORMATION.")
<PAGE> 22
EZ was formed in 1999, to engage in the remote establishment and
disconnection of utility services and should be considered a start-up or
development stage business. EZ is the result of two years of effort by its
founders who develop the concept and the software which allows EZ to change
utilities and other services without the hassle of telephoning the individual
providers. EZ has filed for patent protection on its concept and software and
intends to make its services available via the internet.
Discussion and Analysis of Financial Condition and Results of Operations
- ------------------------------------------------------------------------
Despite the acquisition of EZ, the Company's business activities are
subject to several significant risks which arise primarily as a result of the
fact that the Company is still in the development stage.
Liquidity and Capital Resources
- -------------------------------
During the reporting period the Company had only limited expenses, it
incurred additional legal and accounting costs to prepare and file a general
form of registration on Form 10SB with the Securities and Exchange Commission.
Management anticipates that as a result of the acquisition of EZ the Company
will incur more cost including legal and accounting fees associated with
completing the acquisition of EZ and meeting its ongoing reporting
requirements under the Securities Exchange Act of 1934, as amended.
At September 30, 1999, the Company had current assets of $30,615 and
current liabilities of $3,497, for working capital of $27,118. The Company
has only incidental ongoing expenses primarily associated with maintaining its
corporate status and professional fees associated with accounting and legal
costs. Officers of the Company have advanced $3,497 to the Company from time
to time for certain expenses during the period. On September 27, 1999, the
Company entered into subscription agreements to sell 2,850,000 shares of its
restricted common stock at $0.07 per share. At September 30, 1999, the
Company had received $31,000 cash under the subscriptions and had a
subscription receivable for $169,000. The balance of the subscription
receivable was paid to the Company on October 14, 1999.
Prior to the completion of the acquisition of EZ, the former president of
the Company was providing the Company with a location for its offices on a
"rent free basis" and no salaries or other form of compensation were paid by
the Company for the time and effort required by management to run the Company.
Following the acquisition of EZ the Company's executive offices have been
moved to the executive offices of EZ.
Results of Operations
- ---------------------
Since discontinuing operations in November 1996, the Company has not
generated revenue. For the three month period ended September 30, 1999, the
Company has incurred $11,382 in general and administrative expenses. Since
inception of the development stage the Company has an accumulated deficit of
$(453,054). For the three month period ended September 30, 1998, the Company
incurred $5,045 in general and administrative expenses.
<PAGE>
<PAGE> 23
Impact of Inflation
- -------------------
The Company does not anticipate that inflation will have a material
impact on its current or proposed business operations.
Principal Customers
- -------------------
During the quarter ended September 30, 1999, the Company had no revenues.
Seasonality
- -----------
Management of the Company knows of no seasonal aspects relating to the
nature of the Company business operations that had a material effect on the
financial condition or results of operation of the Company.
Year 2000 Computer Problem
- --------------------------
The Year 2000, or Y2K problem concerns potential failure of certain
computer software to correctly process information because of the software's
inability to calculate dates. The Registrant has no operations or current
equipment which might be affected by the Year 2000 computer glitch. The
Registrant has made every effort to determine the Y2K preparedness of EZ, and
the paragraphs below address the preparedness of EZ, based on EZ's
representations.
EZ's State of Readiness
- -----------------------
Management of EZ has confirmed that EZ has completed its assessment of
potential Y2K problems and is confident that its existing hardware and
software is fully Y2K compliant.
Costs to Address Y2K
- --------------------
The costs of preparing for Y2K have been included as an integral part of
the development of EZ's proprietary technology, and EZ has no discreet costs
directly attributable to Y2K.
Risks of Y2K
- ------------
Management of EZ does not anticipate that Y2K poses any significant risks
to the internal operations of its proprietary technology. However, external
systemic failures of electrical or internet systems could have a significant
impact on the success of EZ's operations.
Contingency Plans
- -----------------
Because management believes the risks of significant Y2K problems comes
from external sources over which the Company has no control, the Company has
not and does not intend to prepare any contingency plan. If the kind of
systemic failure noted above occurs, it could have a material impact on the
operations and expected revenues of the Company.
<PAGE> 24
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
In connection with the acquisition of EZ (discussed in "Item 5. OTHER
INFORMATION") below, the Company effected a 1 for 2.5 reverse stock split (the
"Reverse Split") of the Company's Common Stock, so that shareholders of the
Company prior to such Reverse Split received 1 share of the Company's Common
Stock for each 2.5 shares of Common Stock held on the Record Date (October 4,
1999). The Reverse Split reduced the Company's issued and outstanding stock
from 6,463,659 to 2,585,464 shares. After giving effect to the Reverse Split
and the issuance of 6,075,000 post-Reverse Split shares of Common Stock to the
EZ Shareholders, the Company has 8,660,464 shares issued and outstanding. The
issuance of the 6,075,000 shares of the Company's Common Stock resulted in a
change of control of the Company.
The rights of the Company's existing shareholders were not altered and no
shareholders were eliminated as a result of the Acquisition Agreement and the
Reverse Split.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Company's shareholders
during the reporting period (see "Item 5. OTHER INFORMATION" below).
ITEM 5. OTHER INFORMATION
On September 27, 1999, the Company and EZConnect USA, Inc. entered into
an Agreement and Plan of Reorganization (the "Acquisition Agreement"), which
was approved by a majority of the Company's shareholders at a special meeting
held October 15, 1999.
The Acquisition Agreement provided that the Company acquire all the
issued and outstanding shares of EZ Common Stock held by the EZ Shareholders
in exchange for 6,075,000 shares of the Company's Common Stock pro rata based
on the EZ Shareholders' percentage ownership of the EZ Common Stock. As a
condition of the Acquisition Agreement, the Company merged with and into EZ
Merger Co., a Nevada corporation ("Merger Co."), established by the Company,
solely for the purpose of changing the Company's corporate domicile to the
state of Nevada.
As a condition to the Acquisition Agreement, the Company effected a 1 for
2.5 Reverse Split of the Company's Common Stock, so that shareholders of the
Company prior to such Reverse Split received 1 share of the Company's Common
Stock for each 2.5 shares of Common Stock held on the Record Date (October 4,
1999). The Reverse Split reduced the Company's issued and outstanding stock
from 6,463,659 to 2,585,464 shares. After giving effect to the Reverse Split
and the issuance of 6,075,000 shares of Common Stock to the EZ Shareholders,
the Company has 8,660,464 shares issued and outstanding. The issuance of the
6,075,000 shares of the Company's Common Stock resulted in a change of control
of the Company.
<PAGE> 25
The rights of the Company's existing shareholders were not altered and no
shareholders were eliminated as a result of the Acquisition Agreement and the
Reverse Split.
As a condition precedent to the consummation of the Acquisition
Agreement, the shareholders of the Company adopted and approve all required or
necessary resolutions to adopt an amendment to the Company's certificate of
incorporation that provides for changing the name of the Company to
"EZConnect, Inc," and elected Adam Leffler, Vaughn Nelson, and Frank Gillen to
the Company's Board of Directors. The board of directors will be expanded to
five members once the Company's new board of directors locates suitable
candidates. The "Effective Date" of the acquisition was October 18, 1999.
The Company has raised $200,000 in working capital through a private
placement of the Company's common stock. Following the Effective Date, but in
no event longer than 120 days thereafter, the Company intends to raise an
additional minimum of $400,000 and up to $1,000,000 in working capital through
an additional private placement of the Company's common stock. The offering
price for the sale of the Company's common stock in the private placement will
be based on a percentage of market price of the Company's common stock at the
time of offering. If the Company is unable to raise additional funds through
the private placement, Mr. Gillen has agreed to purchase the $400,000 minimum.
Election of Board of Directors
- ------------------------------
Set forth below is certain information regarding the individuals elected
to serve as directors and the Company and appointed by the board of directors
to serve as officers of the Company:
Position with
Name Age the Company
- ----------------------------------------------------------------------------
Adam Leffler 28 President and Director
Vaughn Nelson 49 Vice-President and Director
Frank Gillen 30 Secretary/Treasurer, C.F.O. and Director
Certain biographical information with respect to each of such persons is
set forth herein below. Each director, if elected by the shareholders, will
serve until the next annual meeting and until his successor is duly elected
and qualified.
Adam Leffler, age28, is employed by Franklin Covey, Salt Lake City, Utah, as a
real estate coach helping clients understand basic real estate principals. In
Mr. Leffler has been a licensed real estate agent with Coldwell Banker
Premier, West Jordan, Utah from 1996. From 1995 through 1996, Mr. Leffler was
a manager for Arby's Restaurants, Salt Lake City, UT. Mr. Leffler received
his M.A. in Communications for the University of Illinois, Springfield,
Illinois in 1994 and his B.A. in Communications from Illinois College,
Jacksonville, Illinois, in 1993.
Vaughn Nelson, age 49, has been in sales most of his business career. Mr.
Nelson will be responsible for all marketing and operations of EZ. Mr. Nelson
is a vice president at Backman-Stewart Title Agency, Salt Lake City, Utah
since October 1998. Prior to joining Backman-Stewart Title Agency, Mr. Nelson
was with Equity Title and Associated Title for the previous six years.
<PAGE> 26
Frank Gillen, age 30, is currently the president of Maven Properties, Ltd.
("Maven"), Salt Lake City, Utah, a business consulting firm. From 1991 to June
1999, Mr. Gillen was employed as a registered representative by Alpine
Securities Corporation ("Alpine"), Salt Lake City, Utah, a registered broker-
dealer. While at Alpine, Mr. Gillen headed several private placements and
public underwritings for companies. Mr. Gillen also acted as one of Alpine's
designated traders and covered market making activities for several public
companies. Mr. Gillen also serves as a director of Faraday Financial, Inc.,
Salt Lake City, Utah, a "shell" company with no operations.
Business of EZ
- --------------
All information with respect to EZ's business activities has been
provided by the management of EZ and is presented herein without independent
verification. EZ has represented that the information is accurate and
complete in all material respects.
EZ was formed in September 1999, to engage in the remote establishment
and disconnection of utility services and should be considered a start-up or
development stage business. EZ is the result of two years of effort by its
founders who developed the concept and the software which allows EZ and its
corporate clients to change the utility services of end users without the
hassle of telephoning the various utilities. EZ has filed for patent
protection on its concept and software. There is no assurance at this point
that EZ will receive patent protection for its concept or its software. Even
with patent protection, there can be no assurances that competitors will not
circumvent the patent and compete directly with EZ.
EZ has no material assets others than its software and intellectual
property rights. EZ borrowed $30,000 of interim working capital from the
Company for the purpose of developing is business and intends to utilize the
balance of the $200,000 of funding provided by the Company to further the
development of its internet web site and the marketing of its services. To
date EZ has had no sales and is only now soliciting business for its software.
Presently, when a user of utility services; whether that is gas,
electric, telephone or other services; moves, they must telephone or visit
each separate utility to have the services disconnected at their present
address and connected at their new address. This process is time consuming
and costly, in time, for the individual, and costly, monetarily, for the
utility which must employee telephone operators to assist the individual. EZ
has developed software and is completing development of an Internet site that
will allow individuals to change the services, for a small fee, without the
hassle of contacting each utility separately. EZ believes that its product
can be expanded into many different avenues and that its web site will
eventually be a prime advertising arena for the utilities and others trying to
direct business to their services.
Initially, EZ services will be available only through title companies who
will charge a fee to change utility services for customers. Once the
utilities become more accepting of the electronic format used by EZ, the
service will be expanded to allow individuals to access EZ's internet site and
change the services themselves.
Presently, EZ is installing its system in title companies who charge a
fee, at home closings, to its customers to change the utility services. EZ
provides its software free to the title companies to encourage them to use the
software. The title companies then profit by charging their customers a fee
at each closing. Part of this fee is paid to EZ for the use of its software.
<PAGE> 27
EZ is completing a web based application of its software which will be
available in approximately 60 days. EZ believes once the web based
application is available EZ will be able to aggressively market its products
to every title company in the United States. EZ's software is designed to be
very user friendly with easy to follow templates directing the user on the
information required to be complete to change the appropriate utilities of the
customer. Each template is designed to be a similar and uniform as possible
to the format used by utilities across the country.
EZ is starting its marketing efforts with title companies as they are
perceived to be a very secure source of information by the utilities. As the
utilities become more accepting of the security aspects of EZ's software, EZ
will expand into offering its services to renters across the country and in
Canada who will be able to access EZ's web site.
Once established, EZ will eventually start offering advertising space on
its web site to utilities such as long distance carriers and other consumer
oriented business like credit card companies who would want to direct
individuals to their services. Initial discussions with these entities has
received very favorable response on wanting to advertise on EZ's web site.
Shareholders and potential investors should be aware that EZ is a start up
business and its core business concept has not been proven to be in demand nor
profitable.
EZ's management feels there is currently little competition for its
services. EZ's management knows of only one other internet site offering
services similar in nature to those offered by EZ. EZ's management feels that
it currently is positioned to take advantage of the lack of competition to
establish substantial market share for its services.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
Exhibit No. SEC Ref. No. Title of Document
- ----------- ------------ -----------------
2 2.01 Articles of Merger and related Plan of Merger
between the Company and EZ Merger Co.
2 2.02 Agreement and Plan of Reorganization
3(i) 3.01 Articles of Incorporation of EZ Merger Co.
3(ii) 3.02 Bylaws of EZ Merger Co.
4 4.01 Specimen Stock Certificate of EZConnect, Inc.
27 27 Financial Data Schedule
(b) REPORTS ON FORM 8-K.
None.
<PAGE>
<PAGE> 28
SIGNATURES
Pursuant to the requirements 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.
EZCONNECT, INC.
[Registrant]
Dated: October 26, 1999 /S/Frank Gillen, Secretary/Treasurer
and Principal Accounting Officer
<PAGE> 1
EXHIBIT 2.01
Articles of Merger
of
Diversified Industries, Inc.,
a Utah corporation
with and into
EZ Merger Co
a Nevada corporation
THESE ARTICLES OF MERGER are executed and entered into this 15th day of
October, 1999, by and between EZ Merger Co, a Nevada corporation (hereinafter
referred to as "EZ" or the "Surviving Corporation"), and Diversified
Industries, Inc., a Utah corporation (hereinafter referred to as "DII").
Witnesseth
I. Plan of Merger
Pursuant to these Articles of Merger, it is intended and agreed that DII will
be merged with and into EZ and that EZ shall be the Surviving Corporation, as
provided below. The terms, conditions, and understandings of the merger are
set forth in the Agreement and Plan of Merger between EZ and DII dated as of
September 26, 1999, a copy of which is attached hereto as Exhibit "A" and
incorporated herein by this reference.
II. Articles of Incorporation and Bylaws
On the consummation of the merger, the articles of incorporation and bylaws of
EZ shall be the articles of incorporation and bylaws of the Surviving
Corporation.
III. Name of Surviving Corporation
The name of the Surviving Corporation, which will continue in existence after
the merger, shall be EZConnect, Inc.
IV. Officers and Directors
The officers and directors of EZ, shall become the officers and directors of
the Surviving Corporation.
V. Authorized and Outstanding Shares of DII
DII is authorized to issue 100,000,000 shares of common stock, $0.01 par
value, of which 6,463,659 shares are issued and outstanding as of the date
hereof.
VI. Authorized and Outstanding Shares of EZ
EZ is authorized to issue 45,000,000 shares of common stock, par value $0.001
per share, of which 1000 shares are issued and outstanding and 5,000,000
shares of preferred stock, par value $0.001 per share, none of which is issued
and outstanding as of the date hereof.
VII. Approval by Shareholders of DII
Of the 6,463,659 shares of common stock of DII issued and outstanding,
5,088,436 shares were voted in favor of the Agreement and Plan of Merger, with
- -0- shares voting against or abstaining, all in accordance with the provisions
of the Utah Revised Business Corporation Act. Such shares were voted as a
class; no shares of any other class of stock were issued and outstanding and
entitled to vote thereon.
<PAGE> 2
VIII. Approval by Shareholder of EZ
Of the 1,000 shares of common stock of EZ issued and outstanding all 1,000
shares were voted in favor of the Agreement and Plan of Merger, with no shares
voting against or abstaining, all in accordance with the provisions of the
Nevada Revised Statutes. Such shares were voted as a class; no share of any
other class of stock were issued and outstanding and entitled to vote thereon.
IX. Statutory Basis for Merger
The merger of DII with and into EZ is allowed pursuant to Section 1107 of the
Utah Revised Business Corporation Act and Sections 92A.190 of the Nevada
Revised Statutes.
X. Agreement of Surviving Corporation
The Surviving Corporation hereby consents and agrees that:
(a) The Surviving Corporation may be served with process in the State of
Utah in any proceeding for the enforcement of any obligation of DII as well as
for enforcement of any obligation of the Surviving Corporation arising from
the merger and in any proceeding for the enforcement of the rights of a
dissenting shareholder of DII against the Surviving Corporation;
(b) The Secretary of State of the State of Utah shall be, and hereby is,
irrevocable appointed as the agent of such Surviving Corporation to accept
service of process in any such proceeding;
(c) The Surviving Corporation's address for any service of process received
by the Secretary of State is Nevada Agency and Trust Co, 50 West Liberty
Street, Suite 880, Reno, Nevada 89501.
(d) Such Surviving Corporation will promptly pay to the dissenting
shareholders of DII the amount, if any, to which they shall be entitled under
the provisions of the Utah Revised Business Corporation Act with respect to
the rights of dissenting shareholders; and
(e) The Surviving Corporation shall keep on file at its principal place of
business a copy of the Agreement and Plan of Merger, as filed in the State of
Utah, which will be provided, without cost, to shareholders of the Surviving
Corporation when request.
IN WITNESS WHEREOF, the undersigned corporations, acting by their respective
Presidents and Secretaries, have executed these Articles of Merger as of the
date first above written.
Diversified Industries, Inc.
Attest: a Utah corporation
By: /S/ Elliott N. Taylor, Secretary By: /S/ Frank Gillen, President
EZ Merger Co
Attest: a Nevada corporation
By: /S/ Elliott N. Taylor By: /S/ Frank Gillen, President
<PAGE>
<PAGE> 3
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
I, the undersigned notary public, hereby certify that on the 15th day of
October, 1999, personally appeared before me Frank Gillen and Elliott Taylor,
the President and Secretary, respectively, of Diversified Industries, Inc., a
Utah corporation, who being by me first duly sworn, severally declared that
they are the persons who signed the foregoing documents as President and
Secretary of Diversified Industries, Inc., a Utah corporation, and that the
statements therein contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/
- -----------------------
Notary Public
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
I, the undersigned notary public, hereby certify that on the 15th day of
October, 1999, personally appeared before me Frank Gillen, the President of EZ
Merger Co, a Nevada corporation, who being by me first duly sworn, severally
declared that he is the person who signed the foregoing documents as President
of EZ Merger Co, a Nevada corporation, and that the statements therein
contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/
- -----------------------
Notary Public
<PAGE>
<PAGE> 4
Plan of Merger
of
Diversified Industries, Inc.
and
EZ Merger Co
THIS PLAN OF MERGER (the "Plan") dated as of September 26, 1999 is entered
into by and between Diversified Industries, Inc., a Utah corporation ("DII"),
and EZ Merger Co, a Nevada corporation ("EZ"), such corporations being
hereinafter collectively referred to as the "Constituent Corporations."
Premises
WHEREAS, EZ is a corporation duly organized and existing under the laws of the
state of Nevada, having an authorized capital of 45,000,000 shares of common
stock, par value $0.001 per share (the "Common Stock of EZ"), of which 1000
shares are issued and outstanding as of the date hereof and 5,000,000 shares
of preferred stock, par value $0.001 per share, none of which is issued and
outstanding;
WHEREAS, DII is a corporation duly organized and existing under the laws of
the state of Utah, having an authorized capital of 100,000,000 shares of
common stock, par value $0.01 per share (the "Common Stock of DII"), of which
6, 463,659 shares are issued and outstanding as of the date hereof; and
WHEREAS, the respective boards of directors and shareholders of the
Constituent Corporations have each duly approved this Plan providing for the
merger of DII with and into EZ with EZ as the surviving corporation as
authorized by the statutes of the states of Utah and Nevada.
Agreement
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, and for the purpose of setting forth the terms
and conditions of said merger and the manner and basis of causing the shares
of DII to be converted into shares of stock of EZ and such other provisions as
are deemed necessary or desirable, the parties hereto have agreed and do
hereby agree, subject to the approval and adoption of this Plan by the
requisite vote of the stockholders of each Constituent Corporation, and
subject to the conditions hereinafter set forth, as follows:
Article I
Merger and Name of Surviving Corporation
On the effective date of the merger, DII and EZ shall cease to exist
separately and DII shall be merged with and into EZ, which is hereby
designated as the "Surviving Corporation," the name of which on and after the
Effective Date (as hereinafter defined) of the merger shall be "EZConnect,
Inc." or such other name as may be available and to which the parties may
agree.
Article II
Terms and Conditions of Merger
The terms and conditions of the merger (in addition to those set forth
elsewhere in this Plan) are as follows:
(a) On the Effective Date of the merger:
<PAGE> 5
(1) DII shall be merged into EZ to form a single corporation, and EZ shall be
designated herein as the Surviving Corporation.
(2) The separate existence of DII shall cease.
(3) The Surviving Corporation shall have all the rights, privileges,
immunities, and powers and shall be subject to all duties and liabilities of a
corporation organized under the laws of the state of Nevada.
(4) The Surviving Corporation shall thereupon and thereafter possess all the
rights, privileges, immunities, and franchises, of a public as well as a
private nature, of each of the Constituent Corporations; all property, real,
personal, and mixed, and all debts due of whatever account, including
subscriptions to shares, and all and every other interest, of or belonging to
or due to each of the Constituent Corporation shall be taken and deemed to be
transferred to and vested in the Surviving Corporation without further act or
deed; the title to any real estate, or any interest therein, vested in either
Constituent Corporation shall not revert or be in any way impaired by reason
of the merger; the Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of each of the Constituent
Corporations; any claim existing or action or proceeding pending by or against
either of such Constituent Corporations may be prosecuted as if the merger had
not taken place, or the Surviving Corporation may be substituted in place of
the Constituent Corporation; and neither the rights of creditors nor any liens
on the property of either of the Constituent Corporations shall be impaired by
the merger.
(b) On the Effective Date of the merger, the board of directors of the
Surviving Corporation shall consist of the members of the board of directors
of EZ immediately prior to the merger, to serve thereafter in accordance with
the bylaws of the Surviving Corporation and until their respective successors
shall have been duly elected and qualified in accordance with such bylaws and
the laws of the state of Nevada.
(c) On the Effective Date of the merger, the officers of the Surviving
Corporation shall be the officers of EZ immediately prior to the merger, with
such officers to serve thereafter in accordance with the bylaws of the
Surviving Corporation and until their respective successors shall have been
duly elected and qualified in accordance with such bylaws and the laws of the
state of Nevada.
If on the Effective Date of the merger, a vacancy shall exist in the board of
directors or in any of the offices of the Surviving Corporation, such vacancy
may be filled in the manner provided for in the bylaws of the Surviving
Corporation.
Article III
Manner and Basis of Converting Shares
The manner and basis of converting the shares of the Constituent Corporations
and the mode of carrying the merger into effect are as follows.
(a) Each share of Common Stock of DII outstanding on the Effective Date of
the merger shall, without any action on the part of the holder thereof, be
converted into one fully paid and nonassessable share of Common Stock of EZ
which shall, on such conversion, be validly issued and outstanding, fully
paid, and nonassessable, and shall not be liable to any further call, nor
shall the holder thereof be liable for any further payments with respect
<PAGE> 6
thereto. After the Effective Date of the merger, each holder of an
outstanding certificate which prior thereto represented shares of Common Stock
of DII shall be entitled, on surrender thereof along with the payment of $15
to DII transfer agent Colonial Stock Transfer, 440 East 400 South, Suite 1,
Salt Lake City, Utah 84111, to receive in exchange therefor a certificate or
certificates representing the number of whole shares of Common Stock of EZ,
which such shares shall have converted into. Until so surrendered, each such
outstanding certificate (which prior to the Effective Date of the merger
represented shares of Common Stock of DII) shall for all purposes evidence the
ownership of the shares of EZ into which such shares shall have been
converted.
(b) All shares of the Common Stock of EZ into which shares of the Common
Stock of DII shall have been converted pursuant to Article III shall be
issued in full satisfaction of all rights pertaining to the shares of Common
Stock of DII, as applicable.
(c) If any certificate for shares of EZ is to be issued in a name other than
that in which the certificate surrendered in exchange therefor is registered,
it shall be a condition of the issuance thereof that the certificate so
surrendered shall be properly endorsed and otherwise in proper form for
transfer, that the transfer be in compliance with applicable federal and state
securities laws, and that the person requesting such exchange pay to EZ or any
agent designated by it any transfer or other taxes required by reason of the
issuance of a certificate for shares of EZ in any name other than that of the
registered holder of the certificate surrendered, or establish to the
satisfaction of EZ or any agent designated by it that such tax has been paid
or is not payable.
Article IV
Certificate of Incorporation and Bylaws
The articles of incorporation of EZ shall, on the merger becoming effective,
be and constitute the articles of incorporation of the Surviving Corporation
until amended in the manner provided by law. The bylaws of EZ shall, on the
merger becoming effective, be and constitute the bylaws of the Surviving
Corporation until amended in the manner provided by law.
Article V
Shareholder Approval
This Plan shall be submitted to the stockholders of each of the Constituent
Corporations as provided by the laws of the States of Utah and Nevada. After
the approval or adoption thereof by the stockholders of each Constituent
Corporation in accordance with the requirements of the applicable laws, all
required documents shall be executed, filed, and recorded, and all required
acts shall be done in order to accomplish the merger under the provisions of
the laws of the states of Utah and Nevada.
Article VI
Officers and Directors
The officers and directors of EZ shall remain the officers and directors of
EZ, after the Merger, and such officers and directors shall serve until the
next annual meeting of shareholders and until such time as their successors
are duly elected and shall qualify.
<PAGE> 7
Article VII
Approval and Effective Date of the Merger; Miscellaneous Matters
1. The merger shall become effective when all the following actions shall
have been taken:
(a) This Plan shall be authorized, adopted, and approved by and on behalf of
each Constituent Corporation in accordance with the laws of the states of Utah
and Nevada;
(b)This Plan, or certificate of merger in the form required, executed and
verified in accordance with the laws of the states of Utah and Nevada, shall
be filed in the Offices of the Secretary of State of Utah and Nevada; and
(c) The date on which such actions are completed and such merger is effected
is herein referred to as the "Effective Date."
2. If at any time the Surviving Corporation shall deem or be advised that any
further grants, assignments, confirmations, or assurances are necessary or
desirable to vest, perfect, or confirm title in the Surviving Corporation, of
record or otherwise, to any property of DII acquired or to be acquired by, or
as a result of, the merger, the officers and directors of DII or any of them
shall be severally and fully authorized to execute and deliver any and all
such deeds, assignments, confirmations, and assurances and to do all things
necessary or proper so as to best prove, confirm, and ratify title to such
property in the Surviving corporation and otherwise carry out the purposes of
the merger and the terms of this Plan.
3. The Surviving Corporation may be served with process in the State of Utah
in any proceeding for the enforcement of any obligation of DII as well as for
enforcement of any obligation of the Surviving Corporation arising from the
merger and in any proceeding for the enforcement of the rights of a dissenting
shareholder of DII against the Surviving Corporation.
4. The Secretary of State of the State of Utah shall be irrevocable appointed
as the agent of the Surviving Corporation to accept service of process in any
such proceeding;
5. The Surviving Corporation's address for any service of process received by
the Secretary of State is Nevada Agency and Trust Co, 50 West Liberty Street,
Suite 880, Reno, Nevada 89501.
6. This Plan cannot be altered or amended, except pursuant to an instrument
in writing signed on behalf of the parties hereto.
7. For the convenience of the parties and to facilitate the filing and
recording of this Plan, any number of counterparts hereof may be executed,
each such counterpart shall be deemed to be an original instrument, and all
such counterparts together shall be considered one instrument.
8. This Plan shall be governed by and construed in accordance with the laws
of the state of Nevada.
The foregoing Plan of Merger, having been approved by the board of directors
of each Constituent Corporation, the president and secretary of DII, and the
president of EZ, do hereby execute this Plan of Merger this 26th day of
September, 1999, declaring and certifying that this is our act and deed and
the facts herein stated are true.
Diversified Industries, Inc.
Attest: a Utah corporation
By: /S/ Elliott N. Taylor, Secretary By: /S/ Frank Gillen, President
EZ Merger Co
Attest: a Nevada corporation
By: /S/ Elliott N. Taylor By: /S/ Frank Gillen, President
<PAGE>
<PAGE> 9
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
I, the undersigned notary public, hereby certify that on the 15th day of
October, 1999, personally appeared before me Frank Gillen and Elliott Taylor,
the President and Secretary, respectively, of Diversified Industries, Inc., a
Utah corporation, who being by me first duly sworn, severally declared that
they are the persons who signed the foregoing documents as President and
Secretary of Diversified Industries, Inc., a Utah corporation, and that the
statements therein contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/
- -----------------------
Notary Public
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
I, the undersigned notary public, hereby certify that on the 15th day of
October, 1999, personally appeared before me Frank Gillen, the President of EZ
Merger Co, a Nevada corporation, who being by me first duly sworn, severally
declared that he is the person who signed the foregoing documents as President
of EZ Merger Co, a Nevada corporation, and that the statements therein
contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/
- -----------------------
Notary Public
<PAGE>
<PAGE> 10
OFFICER'S CERTIFICATE
DIVERSIFIED INDUSTRIES, INC.
I, Frank Gillen, President of Diversified Industries, Inc., a Utah
corporation ("DII"), hereby certify in accordance with the Utah Revised
Business Corporation Act that the Plan of Merger to which this certificate is
attached, after having been first duly approved and adopted by DII and EZ
Merger Co, a Nevada Corporation ("EZ"), was duly approved and adopted pursuant
to section 16-10a-1107 of the Utah Revised Business Corporation Act of the
State of Utah by the vote of holders of a majority of all of the outstanding
stock of DII; and that thereby the Plan of Merger was duly adopted as the act
of the stockholders of said corporation and is the duly adopted agreement and
act of said corporation.
I have executed this certificate this 15th day of October, 1999.
By: /S/ Frank Gillen, President
OFFICER'S CERTIFICATE
EZ Merger Co
I, Frank Gillen, President of EZ Merger Co, a Nevada corporation ("EZ"),
hereby certify in accordance with the Nevada Revised Statutes that the Plan of
Merger to which this certificate is attached, after having first duly approved
and adopted pursuant to section 92A.190 of the Nevada Revised Statutes by the
vote of holders of a majority of all of the outstanding stock of EZ; and that
thereby the Plan of Merger was duly adopted as the act of the stockholders of
said corporation and is the duly adopted agreement and act of said
corporation.
I have executed this certificate this 15th day of October, 1999.
By: /S/ Frank Gillen, President
EXECUTION AND ACKNOWLEDGMENT
The foregoing Plan of Merger, having been approved by the board of
directors of each Constituent Corporation, having been adopted by the
stockholders of Diversified Industries, Inc. ("DII"), in accordance with the
Utah Revised Business Corporation Act and the laws of the State of Utah, and
the majority vote of the stockholders of EZ Merger Co, a Nevada corporation
("EZ"), in accordance with the Nevada Revised Statutes and the laws of the
State of Nevada the president and secretary of DII and the president EZ do
hereby execute this Plan of Merger this 15th day of October, 1999, declaring
and certifying that this is our act and deed and the facts herein stated are
true.
Diversified Industries, Inc.
Attest: a Utah corporation
By: /S/ Elliott N. Taylor, Secretary By: /S/ Frank Gillen, President
EZ Merger Co
Attest: a Nevada corporation
By: /S/ Elliott N. Taylor By: /S/ Frank Gillen, President
<PAGE>
<PAGE> 11
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
I, the undersigned notary public, hereby certify that on the 15th day of
October, 1999, personally appeared before me Frank Gillen and Elliott Taylor,
the President and Secretary, respectively, of Diversified Industries, Inc., a
Utah corporation, who being by me first duly sworn, severally declared that
they are the persons who signed the foregoing documents as President and
Secretary of Diversified Industries, Inc., a Utah corporation, and that the
statements therein contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/
- -----------------------
Notary Public
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE )
I, the undersigned notary public, hereby certify that on the 15th day of
October, 1999, personally appeared before me Frank Gillen, the President of EZ
Merger Co, a Nevada corporation, who being by me first duly sworn, severally
declared that he is the person who signed the foregoing documents as President
of EZ Merger Co, a Nevada corporation, and that the statements therein
contained are true.
WITNESS MY HAND AND OFFICIAL SEAL
/S/
- -----------------------
Notary Public
<PAGE> 1
EXHIBIT 2.02
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made this 27th
day of September 1999, by and among Diversified Industries, Inc., a Utah
corporation ("Diversified"); EZ Merger Co., a Nevada Corporation ("Merger
Co."), EZConnect USA, Inc., a Utah corporation ("EZ"); and the persons listed
in Exhibit A-1 hereof who are the owners of record of all the issued and
outstanding stock of EZ who execute and deliver the Agreement ("EZ
Stockholders"), based on the following:
Recitals
Diversified wishes to acquire all the issued and outstanding stock of EZ in
exchange for stock of Diversified in a transaction intended to qualify as a
tax-free exchange pursuant to section 368(a)(1)(B) of the Internal Revenue
Code of 1986, as amended. As a condition of the acquisition, Diversified will
merge with and into Merger Co. for the sole purpose of changing Diversified's
domicile to Nevada. When referred to in this Agreement, unless the contents
otherwise require, "Diversified" shall refer to Diversified Industries, Inc.,
the Utah corporation, and EZ Merger Co., the Nevada corporation. The parties
intend for this Agreement to represent the terms and conditions of such tax-
free reorganization, which Agreement the parties hereby adopt. However,
neither party is seeking tax counsel or legal or accounting opinions on
whether the transaction qualifies for tax free treatment.
Agreement
Based on the stated premises, which are incorporated herein by reference, and
for and in consideration of the mutual covenants and agreements hereinafter
set forth, the mutual benefits to the parties to be derived herefrom, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, it is hereby agreed as follows:
ARTICLE I
EXCHANGE OF STOCK
1.01 Exchange of Shares. On the terms and subject to the conditions set
forth in this Agreement, on the Closing Date (as defined in Section 1.05
hereof), the EZ Stockholders shall assign, transfer, and deliver to
Diversified, free and clear of all liens, pledges, encumbrances, charges,
restrictions, or claims of any kind, nature, or description, all issued and
outstanding shares of common stock of EZ (the "EZ Shares") held by EZ
Stockholders which shares shall represent all issued and outstanding shares of
EZ common stock, and Diversified agrees to acquire such shares on such date by
issuing and delivering in exchange therefor an aggregate of 6,075,000
restricted shares of Diversified common stock, par value $0.01 per share, (the
"Diversified Common Stock"). Such shares of Diversified Common Stock shall be
issued pro rata based on the number of EZ Shares held and as set forth
opposite the EZ Stockholder's respective names in Exhibit A-1. All 6,075,000
shares of Diversified Common Stock to be issued and delivered pursuant to this
Agreement shall be appropriately adjusted to take into account any stock
split, stock dividend, reverse stock split, recapitalization, or similar
change in the Diversified Common Stock which may occur between the date of the
execution of this Agreement and the Closing Date except for the Reverse Stock
Split set forth in Section 4.02.
<PAGE> 2
1.02 Delivery of Certificates by EZ Stockholders. The transfer of EZ Shares
by the EZ Stockholders shall be effected by the delivery to Diversified at the
Closing (as set forth in Section 1.05 hereof) of certificates representing the
transferred shares endorsed in blank or accompanied by stock powers executed
in blank, with all signatures medallion guaranteed and with all necessary
transfer taxes and other revenue stamps affixed and acquired at the EZ
Stockholders' expense.
1.03 Operation as Wholly-Owned Subsidiary. After giving effect to the
transaction contemplated hereby, Diversified will own all the issued and
outstanding shares of EZ and EZ will be a wholly-owned subsidiary of
Diversified operating under the name EZConnect USA, Inc.. or such other name
selected by the shareholders and management of EZ.
1.04 Further Assurances. At the Closing and from time to time thereafter, the
EZ Stockholders shall execute such additional instruments and take such other
action as Diversified may reasonably request, without undue cost to the EZ
Stockholders in order to more effectively sell, transfer, and assign clear
title and ownership in the EZ Shares to Diversified.
1.05 Closing and Parties. The Closing contemplated hereby shall be held at a
mutually agreed upon time and place on or before October 31, 1999, or on
another date to be agreed to in writing by the parties (the "Closing Date").
The Agreement may be closed at any time following approval by a majority of
the shareholders of Diversified Common Stock as set forth in Section 4.01
hereof and the EZ Stockholders as set forth in Section 5.02. The Closing may
be accomplished by wire, express mail, overnight courier, conference telephone
call or as otherwise agreed to by the respective parties or their duly
authorized representatives.
1.06 Closing Events.
(a) Diversified Deliveries. Subject to fulfillment or waiver of the
conditions set forth in Article IV, Diversified shall deliver to EZ at Closing
all the following:
(i) A certificate of good standing from the Department of Commerce of the
State of Utah, issued as of a date within sixty days prior to the Closing
Date, certifying that Diversified is in good standing as a corporation in the
State of Utah;
(ii) A certificate of merger from the secretary of State of Nevada
certifying that Diversified has been merged with and into Merger Co.
(iii) Incumbency and specimen signature certificates dated the Closing Date
with respect to the officers of Diversified executing this Agreement and any
other document delivered pursuant hereto on behalf of Diversified;
(iv) Copies of the resolutions/consents of Diversified's board of directors
and shareholder minutes or consents authorizing the execution and performance
of this Agreement and the contemplated transactions, certified by the
secretary or an assistant secretary of Diversified as of the Closing Date;
(v) The certificate contemplated by Section 4.03, duly executed by the
chief executive officer of Diversified;
(vi) The certificate contemplated by Section 4.04, dated the Closing Date,
signed by the chief executive officer of Diversified;
<PAGE> 3
(vii) Certificates for 6,075,000 shares of Diversified Common Stock in the
names of the EZ Stockholders and in the amounts set forth in Exhibit "A;" and
In addition to the above deliveries, Diversified shall take all steps and
actions as EZ and EZ Stockholders may reasonably request or as may otherwise
be reasonably necessary to consummate the transactions contemplated hereby.
(b) EZ Deliveries. Subject to fulfillment or waiver of the conditions set
forth in Article V, EZ and/or EZ Stockholder's shall deliver to Diversified at
Closing all the following:
(i) A certificate of good standing from the Department of Commerce of the
State of Utah, issued as of a date within five days prior to the Closing Date
certifying that EZ is in good standing as a corporation in the State of Utah;
(ii) Incumbency and specimen signature certificates dated the Closing Date
with respect to the officers of EZ executing this Agreement and any other
document delivered pursuant hereto on behalf of EZ;
(iii) Copies of resolutions/consents of the board of directors and of the
stockholders of EZ authorizing the execution and performance of this Agreement
and the contemplated transactions, certified by the secretary or an assistant
secretary of EZ as of the Closing Date;
(iv) The certificate contemplated by Section 5.03, executed by the chief
operating officer of EZ; and
(v) The certificate contemplated by Section 5.04, dated the Closing Date,
signed by the chief operating officer of EZ.
In addition to the above deliveries, EZ shall take all steps and actions as
Diversified may reasonably request or as may otherwise be reasonably necessary
to consummate the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF DIVERSIFIED
As an inducement to, and to obtain the reliance of EZ, Diversified and Merger
Co. represent and warrant as follows:
2.01 Organization.
(a) Diversified is, and will be on the Closing, a corporation duly organized,
validly existing, and in good standing under the laws of the State of Utah and
has the corporate power and is and will be 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 in all material respects as it is now being
conducted, and there are no other jurisdictions in which it is not so
qualified in which the character and location of the assets owned by it or the
nature of the material business transacted by it requires qualification,
except where failure to do so would not have a material adverse effect on its
business, operations, properties, assets or condition. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will not,
violate any provision of Diversified's articles of incorporation or bylaws, or
other agreement to which it is a party or by which it is bound.
<PAGE> 4
(b) Merger Co. is, and will be on the Closing, a corporation duly organized,
validly existing, and in good standing under the laws of the State of Nevada
and has the corporate power and is and will be 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 in all material respects as it is now being
conducted, and there are no other jurisdictions in which it is not so
qualified in which the character and location of the assets owned by it or the
nature of the material business transacted by it requires qualification,
except where failure to do so would not have a material adverse effect on its
business, operations, properties, assets or condition. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will not,
violate any provision of Merger Co.'s articles of incorporation or bylaws, or
other agreement to which it is a party or by which it is bound.
2.02 Approval of Agreement. Diversified and Merger Co. have full power,
authority, and legal right and have taken, or will take, all action required
by law, their articles of incorporation, bylaws, and otherwise to execute and
deliver this Agreement and to consummate the transactions herein contemplated.
The board of directors of Diversified and Merger Co. have authorized and
approved the execution, delivery, and performance of this Agreement and the
transactions contemplated hereby; subject to the approval of the Diversified
shareholders and compliance with state and federal corporate and securities
laws.
2.03 Capitalization. The authorized capitalization of Diversified consists of
100,000,000 shares, of common stock, $0.01 par value, of which 3,463,659
shares are issued and outstanding. All issued and outstanding shares of
Diversified are legally issued, fully paid, and nonassessable and not issued
in violation of the preemptive or other right of any person. There are no
dividends or other amounts due or payable with respect to any of the shares of
capital stock of Diversified. The authorized capitalization of Merger Co.
consist of 50,000,000 shares consisting of 45,000,000 shares of common stock,
$0.001 par value, of which 100 shares are issued and outstanding, and
5,000,000 shares of preferred stock, $0.001 par value, none of which are
issued and outstanding. All issued and outstanding shares of Diversified and
Merger Co. are legally issued, fully paid, and nonassessable and not issued in
violation of the preemptive or other right of any person. There are no
dividends or other amounts due or payable with respect to any of the shares of
capital stock of Diversified or Merger Co. At Closing Merger Co. will have
2,585,463 shares issued and outstanding representing the merger of Diversified
into Merger Co. and the issuance of shares of Merger Co. to the shareholders
of Diversified.
2.04 Financial Statements.
(a) Included in Schedule 2.04 are the audited balance sheet of Diversified as
of June 30, 1999, and the related statements of operations, stockholders'
equity (deficit), and cash flows for the fiscal year ended June 30, 1999, and
1998, and from inception of reorganization (November 1, 1996) through June 30,
1999, including the notes thereto, and the accompanying report of Jones Jensen
and Co.; independent certified public accountants.
(b) The financial statements of Diversified delivered pursuant to Section
2.04(a) have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved as explained
in the notes to such financial statements. The Diversified financial
<PAGE> 5
statements present fairly, in all material respects, as of their respective
dates, the financial position of Diversified. Diversified did not have, as of
the date of any such financial statements, except as and to the extent
reflected or reserved against therein, any liabilities or obligations
(absolute or contingent) which should be reflected therein in accordance with
generally accepted accounting principles, and all assets reflected therein
presently fairly the assets of Diversified in accordance with generally
accepted accounting principles
(c) Diversified has filed or will file as the Closing Date its tax returns
required to be filed for its two most recent fiscal years. All such returns
and reports are accurate and correct in all material respect. Diversified has
no material liabilities with respect to the payment of any federal, state,
county, local, or other taxes (including any deficiencies, interest, or
penalties) accrued for or applicable to the period ended on the date of the
most recent balance sheet of Diversified, except to the extent reflected on
such balance sheet and all such dates and years and periods prior thereto and
for which Diversified may at said date have been liable in its own right or as
transferee of the assets of, or as successor to, any other corporation or
entity, except for taxes accrued but not yet due and payable, and to the best
knowledge of Diversified, no deficiency assessment or proposed adjustment of
any such tax return is pending, proposed or contemplated. To the best
knowledge of Diversified, none of such income tax returns has been examined or
is currently being examined by the Internal Revenue Service and no deficiency
assessment or proposed adjustment of any such return is pending, proposed or
contemplated. Diversified has not made any election pursuant to the
provisions of any applicable tax laws (other than elections that relate solely
to methods of accounting, depreciation, or amortization) that would have a
material adverse affect on Diversified, its financial condition, its business
as presently conducted or proposed to be conducted, or any of its respective
properties or material assets. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any tax return of
Diversified.
2.05 Outstanding Warrants and Options. At Closing, Diversified and Merger Co.
will have no existing warrants or options, calls, or commitments of any nature
relating to the authorized and unissued Diversified or Merger Co. Common
Stock.
2.06 Information. The information concerning Diversified and Merger Co. set
forth in this Agreement is complete and accurate in all material respects and
does not contain any untrue statement of a material fact or omit to state a
material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading. Diversified and
Merger Co. shall cause the schedules delivered by it pursuant hereto and the
instruments delivered to EZ hereunder to be updated after the date hereof up
to and including the Closing Date.
2.07 Absence of Certain Changes or Events. Except as set forth in this
Agreement or the schedules hereto, since the date of the most recent
Diversified balance sheet described in Section 2.04 and included in the
information referred to in Section 2.06:
(a) There has not been (i) any material adverse change in the business,
operations, properties, level of inventory, assets, or condition of
Diversified or (ii) any damage, destruction, or loss to Diversified (whether
or not covered by insurance) materially and adversely affecting the business,
operations, properties, assets, or conditions of Diversified;
<PAGE> 6
(b) Diversified has not (i) amended its articles of incorporation or bylaws;
(ii) declared or made, or agreed to declare or make, any payment of dividends
or distributions of any assets of any kind whatsoever to stockholders or
purchased or redeemed, or agreed to purchase or redeem, any of its capital
stock; (iii) waived any rights of value which in the aggregate are
extraordinary or material considering the business of Diversified; (iv) made
any material change in its method of management, operation, or accounting; (v)
entered into any other material transactions; (vi) made any accrual or
arrangement for or payment of bonuses or special compensation of any kind or
any severance or termination pay to any present or former officer or employee;
(vii) increased the rate of compensation payable or to become payable by it to
any of its officers or directors or any of its employees whose monthly
compensation exceeds $1,000; or (viii) made any increase in any profit-
sharing, bonus, deferred compensation, insurance, pension, retirement, or
other employee benefit plan, payment, or arrangement made to, for, or with its
officers, directors, or employees;
(c) Diversified has not (i) granted or agreed to grant any options, warrants,
or other rights for its stocks, bonds, or other corporate securities calling
for the issuance thereof; (ii) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability (absolute
or contingent) except liabilities incurred in the ordinary course of business;
(iii) paid any material obligation or liability (absolute or contingent) other
than current liabilities reflected in or shown on the most recent Diversified
balance sheet and current liabilities incurred since that date in the ordinary
course of business; (iv) sold or transferred, or agreed to sell or transfer,
any of its material assets, properties, or rights (except assets, properties,
or rights not used or useful in its business which, in the aggregate have a
value of less than $5,000 or canceled, or agreed to cancel, any debts or
claims (except debts and claims which in the aggregate are of a value of less
than $5,000); (v) made or permitted any amendment or termination of any
contract, agreement, or license to which it is a party if such amendment or
termination is material, considering the business of Diversified; or (vi)
issued, delivered, or agreed to issue or deliver any stock, bonds, or other
corporate securities including debentures (whether authorized and unissued or
held as treasury stock); and
(d) To the best knowledge of Diversified, it has not become subject to any law
or regulation which materially and adversely affects, or in the future would
be reasonably expected to adversely affect, the business, operations,
properties, assets, or condition of Diversified.
2.08 Litigation and Proceedings. There are no material actions, suits, or
administrative or other proceedings pending or, to the knowledge of
Diversified, threatened by or against Diversified or adversely affecting
Diversified or its properties, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. Diversified does not have any knowledge of any
default on its part with respect to any judgment, order, writ, injunction,
decree, award, rule, or regulation of any court, arbitrator, or governmental
agency or instrumentality.
2.09 Compliance With Laws and Regulations. Diversified has complied with all
applicable statutes and regulations of any federal, state, or other
governmental entity or agency thereof, except to the extent that noncompliance
(i) could not materially and adversely affect the business, operations,
properties, assets, or condition of Diversified or (ii) could not result in
the occurrence of any material liability for Diversified. To the best
<PAGE> 7
knowledge of Diversified, the consummation of this transaction will comply
with all applicable statutes and regulations, subject to the preparation and
filing of any forms required by state and federal securities laws.
2.10 Material Contract Defaults. Diversified is not in default in any
material respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to the business, operations,
properties, assets, or condition of Diversified, and there is no event of
default or other event which, with notice or 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 Diversified has not
taken adequate steps to prevent such a default from occurring.
2.11 No Conflict With Other Instruments. The execution of this Agreement and
the consummation of the transactions contemplated by this Agreement will not
result in the breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust, or other
material contract, agreement, or instrument to which Diversified is a party or
to which any of its properties or operations are subject.
2.12 Subsidiary. Diversified does not own, beneficially or of record, any
equity securities in any other entity except for Merger Co. which is a wholly
owned subsidiary formed for the sole purpose of changing Diversified's
domicile to Nevada. Diversified does not have a predecessor as that term is
defined under generally accepted accounting principles or Regulation S-X
promulgated by the Securities and Exchange Commission.
2.13 Diversified Schedules. Diversified has delivered to EZ the following
schedules, which are collectively referred to as the "Diversified Schedules"
and which consist of the following separate schedules dated as of the date of
execution of this Agreement, all certified by a duly authorized officer of
Diversified as complete, true, and accurate:
(a) A schedule including copies of the articles of incorporation and bylaws of
Diversified in effect as of the date of this Agreement;
(b) A schedule containing copies of resolutions adopted by the board of
directors of Diversified approving this Agreement and the transactions herein
contemplated;
(c) A schedule setting forth a description of any material adverse change in
the business, operations, property, inventory, assets, or condition of
Diversified since the most recent
Diversified balance sheet, required to be provided pursuant to Section 2.04
hereof;
(d) A schedule setting forth the financial statements required pursuant to
Section 2.04(a) hereof; and
(e) A schedule setting forth any other information, together with any required
copies of documents, required to be disclosed in the Diversified Schedules by
Sections 2.01 through 2.12.
Diversified shall cause the Diversified Schedules and the instruments
delivered to EZ hereunder to be updated after the date hereof up to and
including a specified date not more than three business days prior to the
Closing Date. Such updated Diversified Schedules, certified in the same
manner as the original Diversified Schedules, shall be delivered prior to and
as a condition precedent to the obligation of EZ to close.
<PAGE> 8
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF EZ
As an inducement to, and to obtain the reliance of, Diversified, EZ represents
and warrants as follows:
3.01 Organization. EZ is, and will be on the Closing Date, a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Utah and has the corporate power and is and will be 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 in all material respects as it is now
being conducted, and there are no other jurisdictions in which it is not so
qualified in which the character and location of the assets owned by it or the
nature of the material business transacted by it requires qualification,
except where failure to do so would not have a material adverse effect on its
business, operations, properties, assets or condition of EZ. The execution
and delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement in accordance with the terms
hereof will not, violate any provision of EZ's articles of incorporation or
bylaws, or other material agreement to which it is a party or by which it is
bound.
3.02 Approval of Agreement. EZ has full power, authority, and legal right and
has taken, or will take, all action required by law, its articles of
incorporation, bylaws, or otherwise to execute and deliver this Agreement and
to consummate the transactions herein contemplated. The board of directors of
EZ have authorized and approved the execution, delivery, and performance of
this Agreement and the transactions contemplated hereby; subject to the
approval of the EZ Stockholders and compliance with state and federal
corporate and securities laws.
3.03 Capitalization. The authorized capitalization of EZ consists of 1,000
shares, consisting of common stock, no par value, of which as of the date
hereof 1,000 shares are issued and outstanding. All issued and outstanding
shares of EZ are legally issued, fully paid, and nonassessable and not issued
in violation of the preemptive or other right of any person. There are no
dividends or other amounts due or payable with respect to any of the shares of
capital stock of EZ.
3.04 Financial Statements.
(a) Included in Schedule 3.04 are the audited balance sheet (which will be
delivered prior to Closing) of EZ as of September 30, 1999, and the related
statements of operations, cash flows, and stockholders' equity for the period
from inception to September 30, 1999, including the notes thereto, and the
accompanying report of David Thompson, independent certified public
accountants. The chief operating officer shall certify that such financial
statements contain all adjustments (all of which are normal recurring
adjustments) necessary to present fairly the results of operations and
financial position for the periods and as of the dates indicated.
(b) The audited financial statements delivered pursuant to Section 3.04(a)
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved. The financial
statements of EZ present fairly, as of their respective dates, the financial
position of EZ. EZ did not have, as of the date of any such balance sheets,
except as and to the extent reflected or reserved against therein, any
liabilities or obligations (absolute or contingent) which should be reflected
in any financial statements or the notes thereto prepared in accordance with
<PAGE> 9
generally accepted accounting principles, and all assets reflected therein
present fairly the assets of EZ, in accordance with generally accepted
accounting principles. The statements of revenue and expenses and cash flows
present fairly the financial position and result of operations of EZ as of
their respective dates and for the respective periods covered thereby.
3.05 Outstanding Warrants and Options. EZ has no issued warrants or options,
calls, or commitments of any nature relating to the authorized and unissued EZ
Common Stock.
3.06 Information. The information concerning EZ set forth in this Agreement
and in the schedules delivered by EZ pursuant hereto is complete and accurate
in all material respects and does not contain any untrue statement of a
material fact or omit to state a material fact required to make the statements
made, in light of the circumstances under which they were made, not
misleading. EZ shall cause the schedules delivered by EZ pursuant hereto to
Diversified hereunder to be updated after the date hereof up to and including
the Closing Date.
3.07 Absence of Certain Changes or Events. Except as set forth in this
Agreement since the date of the most recent EZ balance sheet described in
Section 3.04 and included in the information referred to in Section 3.06:
(a) There has not been (i) any material adverse change in the business,
operations, properties, level of inventory, assets, or condition of EZ or (ii)
any damage, destruction, or loss to EZ materially and adversely affecting the
business, operations, properties, assets, or conditions of EZ.
(b) EZ has not (i) amended its articles of incorporation or bylaws; (ii)
declared or made, or agreed to declare or make, any payment of dividends or
distributions of any assets of any kind whatsoever to stockholders or
purchased or redeemed, or agreed to purchase or redeem, any of its capital
stock; (iii) waived any rights of value which in the aggregate are
extraordinary and material considering the business of EZ; (iv) made any
material change in its method of accounting; (v) entered into any other
material transactions other than those contemplated by this Agreement; (vi)
made any material accrual or material arrangement for or payment of bonuses or
special compensation of any kind or any severance or termination pay to any
present or former officer or employee; or (vii) made any material increase in
any profit-sharing, bonus, deferred compensation, insurance, pension,
retirement, or other employee benefit plan, payment, or arrangement made to,
for, or with their officers, directors, or employees;
(c) EZ has not (i) granted or agreed to grant any options, warrants, or other
rights for its stocks, bonds, or other corporate securities calling for the
issuance thereof; (ii) borrowed or agreed to borrow any funds or incurred, or
become subject to, any material obligation or liability (absolute or
contingent) except liabilities incurred in the ordinary course of business;
(iii) paid any material obligation or liability (absolute or contingent) other
than current liabilities reflected in or shown on the most recent EZ balance
sheet and current liabilities incurred since that date in the ordinary course
of business; (iv) sold or transferred, or agreed to sell or transfer, any of
its material assets, properties, or rights, or agreed to cancel, any material
debts or claims; (v) made or permitted any amendment or termination of any
contract, agreement, or license to which it is a party if such amendment or
termination is material, considering the business of EZ; or (vi) issued,
delivered, or agreed to issue or deliver any stock, bonds, or other corporate
securities including debentures (whether authorized and unissued or held as
treasury stock); and
<PAGE> 10
(d) To the best knowledge of EZ, it has not become subject to any law or
regulation which materially and adversely affects, or in the future would be
reasonably expected to adversely affect, the business, operations, properties,
assets, or condition of EZ.
3.08 Title and Related Matters. Except as provided herein or disclosed in the
most recent EZ balance sheet and the notes thereto, EZ has good and marketable
title to all of its properties, inventory, interests in properties,
technology, whether patented or un-patented, including, but not limited to the
EZ Connect computer software, and assets, which are reflected in the most
recent EZ balance sheet or acquired after that date (except properties,
interests in properties, and assets sold or otherwise disposed of since such
date in the ordinary course of business), free and clear of all mortgages,
liens, pledges, charges, or encumbrances, except (i) statutory liens or claims
not yet delinquent; and (ii) such imperfections of title and easements as do
not, and will not, materially detract from, or interfere with, the present or
proposed use of the properties subject thereto or affected thereby or
otherwise materially impair present business operations on such properties. To
the best knowledge of EZ, its technology does not infringe on the copyright,
patent, trade secret, know-how, or other proprietary right of any other person
or entity and comprises all such rights necessary to permit the operation of
the business of EZ as now being conducted or as contemplated.
3.09 Litigation and Proceedings. There are no material actions, suits, or
proceedings pending or, to the knowledge of EZ, threatened by or against EZ or
adversely affecting EZ, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. EZ does not have any knowledge of any default on its
part with respect to any judgment, order, writ, injunction, decree, award,
rule, or regulation of any court, arbitrator, or governmental agency or
instrumentality.
3.10 Material Contract Defaults. EZ is not in default in any material respect
under the terms of any outstanding contract, agreement, lease, or other
commitment which is material to the business, operations, properties, assets,
or condition of EZ, and there is no event of default or other event which,
with notice or 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 EZ has not taken adequate steps to prevent such
a default from occurring.
3.11 No Conflict With Other Instruments. The execution of this Agreement and
the consummation of the transactions contemplated by this Agreement will not
result in the breach of any term or provision of, or constitute an event of
default under, any material indenture, mortgage, deed of trust, or other
material contract, agreement, or instrument to which EZ is a party or to which
any of its properties or operations are subject.
3.12 Governmental Authorizations. EZ has all licenses, franchises, permits,
and other governmental authorizations that are legally required to enable it
to conduct its business in all material respects as conducted on the date of
this Agreement. Except for compliance with federal and state securities and
corporation laws, as hereinafter provided, 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 EZ of this Agreement and the consummation by EZ of the
transactions contemplated hereby.
<PAGE> 11
3.13 Compliance With Laws and Regulations. EZ has complied with all
applicable statutes and regulations of any federal, state, or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations,
properties, assets, or condition of EZ or except to the extent that
noncompliance would not result in the occurrence of any material liability for
EZ. To the best knowledge of EZ, the consummation of this transaction will
comply with all applicable statutes and regulations, subject to the
preparation and filing of any forms required by state and federal security
laws.
3.14 Subsidiary. EZ does not own, beneficially or of record, any equity
securities in any other entity. EZ does not have a predecessor as that term
is defined under generally accepted accounting principles or Regulation S-X
promulgated by the Securities and Exchange Commission.
3.15 EZ Schedules. EZ has delivered to Diversified the following schedules,
which are collectively referred to as the "EZ Schedules" and which consist of
the following separate schedules dated as of the date of execution of this
Agreement, and instruments and Diversified as of such date, all certified by
the chief executive officer of EZ as complete, true, and accurate:
(a) A schedule including copies of the articles of incorporation and bylaws of
EZ and all amendments thereto in effect as of the date of this Agreement;
(b) A schedule containing copies of resolutions adopted by the board of
directors of EZ approving this Agreement and the transactions herein
contemplated as referred to in Section 3.02;
(c) A schedule setting forth a description of any material adverse change in
the business, operations, property, inventory, assets, or condition of EZ
since the most recent EZ balance sheet, required to be provided pursuant to
Section 3.04 hereof;
(d) A schedule setting forth the financial statements required pursuant to
Section 3.04 (a) hereof; and
(e) A schedule setting forth any other information, together with any required
copies of documents, required to be disclosed in the EZ Schedules by Sections
3.01 through 3.14.
EZ shall cause the EZ Schedules and the instruments delivered to Diversified
hereunder to be updated after the date hereof up to and including a specified
date not more than three business days prior to the Closing Date. Such
updated EZ Schedules, certified in the same manner as the original EZ
Schedules, shall be delivered prior to and as a condition precedent to the
obligation of Diversified to close.
ARTICLE IV
CONDITIONS PRECEDENT TO OBLIGATIONS OF EZ
The obligations of EZ under this Agreement are subject to the satisfaction of
EZ, at or before the Closing Date, of the following conditions:
4.01 Shareholder Approval. Diversified shall call and hold a meeting of its
shareholders, or obtain the written consent of a majority of its shareholders,
to approve the transactions contemplated by this Agreement including the
<PAGE> 12
acquisition of EZ through the issuance of Diversified Common Stock for all of
the issued and outstanding EZ Shares; the reverse split of the issued and
outstanding shares of Diversified's Common Stock; the change of domicile of
Diversified from Utah to Nevada and the change of name of Diversified to
"EZConnect, Inc." or such other derivation thereof as may be agreed to by the
board of directors of EZ.
4.02 Reverse Split. Diversified shall call and hold a meeting of its
shareholders to approve the reverse split of its issued and outstanding shares
so that at the closing of the reorganization, there will be approximately
2,585,463 shares of Diversified outstanding prior to the issuance of the
shares to the EZ Shareholders. The approximately 2,585,463 issued and
outstanding shares at closing shall include those shares to be issued to raise
the $200,000, which shall be non-refundable, required by section 6.11.
4.03 Accuracy of Representations. The representations and warranties made by
Diversified in this Agreement were true when made and shall be true at the
Closing Date with the same force and affect as if such representations and
warranties were made at and as of the Closing Date (except for changes therein
permitted by this Agreement), and Diversified shall have performed or complied
with all covenants and conditions required by this Agreement to be performed
or complied with by Diversified prior to or at the Closing. EZ shall be
furnished with certificates, signed by duly authorized officers of Diversified
and dated the Closing Date, to the foregoing effect.
4.04 Officer's Certificates. EZ shall have been furnished with certificates
dated the Closing Date and signed by the duly authorized chief executive
officer of Diversified to the effect that to such officer's best knowledge no
litigation, proceeding, investigation, or inquiry is pending or, to the best
knowledge of Diversified threatened, which might result in an action to enjoin
or prevent the consummation of the transactions contemplated by this
Agreement. Furthermore, based on certificates of good standing,
representations of government agencies, and Diversified's own documents and
information, the certificate shall represent, to the best knowledge of the
officer, that:
(a) This Agreement has been duly approved by Diversified's board of directors
and shareholders and has been duly executed and delivered in the name and on
behalf of Diversified by its duly authorized officers pursuant to, and in
compliance with, authority granted by the board of directors of Diversified
pursuant to a unanimous consent;
(b) There have been no material adverse changes in Diversified up to and
including the date of the certificate;
(c) All conditions required by this Agreement have been met, satisfied, or
performed by Diversified;
(d) All authorizations, consents, approvals, registrations, and/or filings
with any governmental body, agency, or court required in connection with the
execution and delivery of the documents by Diversified have been obtained and
are in full force and effect or, if not required to have been obtained, will
be in full force and effect by such time as may be required; and
(e) There is no material action, suit, proceeding, inquiry, or investigation
at law or in equity by any public board or body pending or threatened against
Diversified, wherein an unfavorable decision, ruling, or finding could have an
adverse effect on the financial condition of Diversified, the operation of
<PAGE> 13
Diversified, or the acquisition and reorganization contemplated herein, or any
agreement or instrument by which Diversified is bound or in any way contests
the existence of Diversified.
4.05 No Material Adverse Change. Prior to the Closing Date, there shall not
have occurred any material adverse change in the financial condition,
business, or operations of Diversified, nor shall any event have occurred
which, with the lapse of time or the giving of notice, may cause or create any
material adverse change in the financial condition, business, or operations of
Diversified.
4.06 Good Standings. EZ shall have received a certificate of good standing
from the Department of Commerce of the State of Utah and from the Secretary of
State of Nevada, dated as of the date within five days prior to the Closing
Date, certifying that Diversified and Merger Co. is in good standing as a
corporation in the State of Utah.
4.07 Other Items. EZ shall have received such further documents,
certificates, or instruments relating to the transactions contemplated hereby
as EZ may reasonably request.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF DIVERSIFIED
The obligations of Diversified under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
5.01 Shareholder Approval. Diversified shall call and hold a meeting of its
shareholders, or obtain through a majority written consent of its
shareholders, whereby the shareholders of Diversified authorize and approve
this Agreement and the transactions contemplated hereby. If Diversified is
unable to obtain shareholder approval, Diversified is under no further
obligation to proceed with the transactions contemplated under this Agreement.
5.02 EZ Shareholders. Holders of all of the issued and outstanding EZ Shares
shall agree to this Agreement and the exchange of shares contemplated by this
Agreement.
5.03 Accuracy of Representations. The representations and warranties made by
EZ and the EZ Stockholders in this Agreement were true when made and shall be
true at the Closing Date with the same force and affect as if such
representations and warranties were made at and as of the Closing Date (except
for changes therein permitted by this Agreement), and EZ shall have performed
or complied with all covenants and conditions required by this Agreement to be
performed or complied with by EZ prior to or at the Closing. Diversified
shall be furnished with a certificate, signed by a duly authorized officer of
EZ and dated the Closing Date, to the foregoing effect.
5.04 Officer's Certificates. Diversified shall have been furnished with
certificates dated the Closing Date and signed by the duly authorized chief
operating officer of EZ to the effect that no litigation, proceeding,
investigation, or inquiry is pending or, to the best knowledge of EZ,
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement. Furthermore,
based on certificates of good standing, representations of government
agencies, and EZ's own documents, the certificate shall represent, to the best
knowledge of the officer, that:
<PAGE> 14
(a) This agreement has been duly approved by EZ's board of directors and
shareholders and has been duly executed and delivered in the name and on
behalf of EZ by its duly authorized officers pursuant to, and in compliance
with, authority granted by the board of directors of EZ pursuant to a
unanimous consent of its board of directors and a majority vote of its
stockholders;
(b) Except as provided or permitted herein, there have been no material
adverse changes in EZ up to and including the date of the certificate;
(c) All authorizations, consents, approvals, registrations, and/or filing with
any governmental body, agency, or court required in connection with the
execution and delivery of the documents by EZ have been obtained and are in
full force and effect or, if not required to have been obtained will be in
full force and effect by such time as may be required; and
(d) There is no material action, suit, proceeding, inquiry, or investigation
at law or in equity by any public board or body pending or threatened against
EZ, wherein an unfavorable decision, ruling, or finding would have an adverse
affect on the financial condition of EZ, the operation of EZ, or the
acquisition and reorganization contemplated herein, or any material agreement
or instrument by which EZ is bound or would in any way contest the existence
of EZ.
5.05 No Material Adverse Change. Prior to the Closing Date, there shall not
have occurred any material adverse change in the financial condition, business
or operations of EZ, nor shall any event have occurred which, with the lapse
of time or the giving of notice, may cause of create any material adverse
change in the financial condition, business, or operations of EZ. EZ shall
have no more than $15,000 in liabilities excluding any loans from Diversified.
5.06 Good Standing. Diversified shall have received a certificate of good
standing from the appropriate authority, dated as of a date with five days
prior to the Closing Date, certifying that the EZ is in good standing as a
corporation in the State of Utah.
5.07 Technology Transfer. All rights, title and interest in and to the trade
names, technology, software and software codes related to the EZ connect
software used to transfer utility accounts shall have been transferred free
and clear of any and all liens, encumbrances, royalties and claims to EZ prior
to Closing.
5.08 Other Items. Diversified shall have received such further documents
certificates, or instruments relating to the transactions contemplated hereby
as Diversified may reasonably request.
ARTICLE VI
SPECIAL COVENANTS
6.01 Activities of Diversified and EZ
(a) From and after the date of this Agreement until the Closing Date and
except as set forth in the respective schedules to be delivered by Diversified
and EZ pursuant hereto or as permitted or contemplated by this Agreement,
Diversified and EZ will each:
(i) Carry on its business in substantially the same manner as it has
heretofore;
<PAGE> 15
(ii) Maintain in full force and effect insurance comparable in amount and in
scope of coverage to that now maintained by it;
(iii) Perform in all material respects all of its obligations under
material contracts, leases, and instruments relating to or affecting its
assets, properties, and business;
(iv) Use its best efforts to maintain and preserve it business organization
intact, to retain its key employees, and to maintain its relationships with
its material suppliers and customers;
(v) Duly and timely file for all taxable periods ending on or prior to the
Closing Date all federal, state, county, and local tax returns required to be
filed by or on behalf of such entity or for which such entity may be held
responsible and shall pay, or cause to pay, all taxes required to be shown as
due and payable on such returns, as well as all installments of tax due and
payable during the period commencing on the date of this Agreement and ending
on the Closing Date.; and
(vi) Fully comply with and perform in all material respects all obligations
and duties imposed on it by all federal and state laws and all rules,
regulations, and orders imposed by federal or state governmental authorities.
(b) From and after the date of this Agreement and except as provided herein
until the Closing Date, Diversified and EZ will not:
(i) Make any change in its articles of incorporation or bylaws;
(ii) Enter into or amend any material contract, agreement, or other
instrument of any of the types described in such party's schedules, except
that a party may enter into or amend any contract, agreement, or other
instrument in the ordinary course of business; and
(iii) Enter into any agreement for the sale of EZ or Diversified securities
without the prior approval of the other party.
6.02 Access to Properties and Records. Until the Closing Date, EZ and
Diversified will afford to the other party's officers and authorized
representatives full access to the properties, books, and records of the other
party in order that each party may have full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of EZ or
Diversified and will furnish the other party with such additional financial
and other information as to the business and properties of EZ or Diversified
as each party shall from time to time reasonably request.
6.03 Indemnification by EZ. EZ will indemnify and hold harmless Diversified
and its directors and officers, and each person, if any, who controls
Diversified within the meaning of the Securities Act, from and against any and
all losses, claims, damages, expenses, liabilities, or actions to which any of
them may become subject under applicable law (including the Securities Act and
the Securities Exchange Act) and directly pay for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
claims or actions, whether or not resulting in liability, insofar as such
losses, claims, damages, expenses, liabilities, or actions arise out of or are
based upon any untrue statement or alleged untrue statement of material fact
contained in any application or statement filed with a governmental body or
arising out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein, or necessary in order
<PAGE> 16
to make the statements therein not misleading, but only insofar as any such
statement or omission was made in reliance upon and in conformity with
information furnished in writing by EZ expressly for use therein. The
indemnity agreement contained in this Section 6.03 shall remain operative and
in full force and effect, regardless of any investigation made by or on behalf
of Diversified and shall survive the consummation of the transactions
contemplated by this Agreement for a period of six months.
6.04. Indemnification by Diversified. Diversified will indemnify and hold
harmless EZ, the EZ Stockholders, EZ's directors and officers, and each
person, if any, who controls EZ within the meaning of the Securities Act, from
and against any and all losses, claims, damages, expenses, liabilities, or
actions to which any of them may become subject under applicable law
(including the Securities Act and the Securities Exchange Act) and will
directly pay for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any claims or actions, whether or
not resulting in liability, insofar as such losses, claims, damages, expenses,
liabilities, or actions arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in any application or
statement filed with a governmental body or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary in order to make the statements therein not
misleading, but only insofar as any such statement or omission was made in
reliance upon and in conformity with information furnished in writing by
Diversified expressly for use therein. The indemnity agreement contained in
this Section 6.04 shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of EZ and shall survive
the consummation of the transactions contemplated by this Agreement for a
period of six months.
6.05 The Acquisition of Diversified Common Stock. Diversified and EZ
understand and agree that the consummation of this Agreement including the
issuance of the Diversified Common Stock to EZ in exchange for the EZ Shares
as contemplated hereby, constitutes the offer and sale of securities under the
Securities Act and applicable state statutes. Diversified and EZ agree that
such transactions shall be consummated in reliance on exemptions from the
registration and prospectus delivery requirements of such statutes that
depend, among other items, on the circumstances under which such securities
are acquired.
(a) In order to provide documentation for reliance upon exemptions from the
registration and prospectus delivery requirements for such transactions, the
signing of this Agreement and the delivery of appropriate separate
representations shall constitute the parties acceptance of, and concurrence
in, the following representations and warranties:
(i) The EZ Stockholders acknowledge that neither the SEC nor the securities
commission of any state or other federal agency has made any determination as
to the merits of acquiring Diversified Common Stock, and that this transaction
involves certain risks.
(ii) The EZ Stockholders have received and read the Agreement and
understand the risks related to the consummation of the transactions herein
contemplated.
(iii) EZ Stockholders have such knowledge and experience in business and
financial matters that they are capable of evaluating each business.
<PAGE> 17
(iv) The EZ Stockholders have been provided with copies of all materials
and information requested by them or their representatives, including any
information requested to verify any information furnished (to the extent such
information is available or can be obtained without unreasonable effort or
expense), and the parties have been provided the opportunity for direct
communication regarding the transactions contemplated hereby.
(v) All information which the EZ Stockholders have provided to Diversified
or their representatives concerning their suitability and intent to hold
shares in Diversified following the transactions contemplated hereby is
complete, accurate, and correct.
(vi) The EZ Stockholders have not offered or sold any securities of
Diversified or interest in this Agreement and have no present intention of
dividing the Diversified Common Stock or EZ Shares to be received or the
rights under this Agreement with others or of reselling or otherwise disposing
of any portion of such stock or rights, either currently or after the passage
of a fixed or determinable period of time or on the occurrence or
nonoccurrence of any predetermined event or circumstance.
(vii) The EZ Stockholders understand that the Diversified Common Stock has
not been registered, but is being acquired by reason of a specific exemption
under the Securities Act as well as under certain state statutes for
transactions not involving any public offering and that any disposition of the
subject Diversified Common Stock may, under certain circumstances, be
inconsistent with this exemption and may make EZ or Diversified an
"underwriter", within the meaning of the Securities Act. It is understood
that the definition of "underwriter" focuses upon the concept of
"distribution" and that any subsequent disposition of the subject Diversified
Common Stock can only be effected in transactions which are not considered
distributions. Generally, the term "distribution" is considered synonymous
with "public offering" or any other offer or sale involving general
solicitation or general advertising. Under present law, in determining
whether a distribution occurs when securities are sold into the public market,
under certain circumstances one must consider the availability of public
information regarding the issuer, a holding period for the securities
sufficient to assure that the persons desiring to sell the securities without
registration first bear the economic risk of their investment, and a
limitation on the number of securities which the stockholder is permitted to
sell and on the manner of sale, thereby reducing the potential impact of the
sale on the trading markets. These criteria are set forth specifically in
rule 144 promulgated under the Securities Act, and, after one year after the
date the Diversified Common Stock or EZ Shares is fully paid for, as
calculated in accordance with rule 144(d), sales of securities in reliance
upon rule 144 can only be made in limited amounts in accordance with the terms
and conditions of that rule. After two years from the date the securities are
fully paid for, as calculated in accordance with rule 144(d), they can
generally be sold without meeting those conditions, provided the holder is not
(and has not been for the preceding three months) an affiliate of the issuer.
(viii) The EZ Stockholders acknowledge that the shares of Diversified Common
Stock , must be held and may not be sold, transferred, or otherwise disposed
of for value unless they are subsequently registered under the Securities Act
or an exemption from such registration is available. Diversified is not under
any obligation to register the Diversified Common Stock under the Securities
Act. If rule 144 is available after one year and prior to two years following
the date the shares are fully paid for, only routine sales of such Diversified
Common Stock in limited amounts can be made in reliance upon rule 144 in
<PAGE> 18
accordance with the terms and conditions of that rule. Diversified is not
under any obligation to make rule 144 available except as set forth in this
Agreement and in the event rule 144 is not available, compliance with
Regulation A or some other disclosure exemption may be required before EZ
Stockholders can sell, transfer, or otherwise dispose of such Diversified
Common Stock without registration under the Securities Act. Subject to
compliance with federal and state securities laws, Diversified' registrar and
transfer agent will maintain a stop transfer order against the registration of
transfer of the Diversified Common Stock held by EZ Stockholders and the
certificates representing the Diversified Common Stock will bear a legend in
substantially the following form so restricting the sale of such securities:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND ARE
"RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144 PROMULGATED UNDER THE
SECURITIES ACT. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD OR TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION OR OTHER COMPLIANCE UNDER THE SECURITIES ACT.
(ix) Subject to compliance with federal and state securities laws,
Diversified may refuse to register further transfers or resales of the
Diversified Common Stock in the absence of compliance with rule 144 unless the
EZ Stockholders furnish Diversified with an opinion of counsel reasonably
acceptable to Diversified stating that the transfer is proper. Further,
unless such opinion states that the shares of Diversified Common Stock are
free of any restrictions under the Securities Act, Diversified may refuse to
transfer the securities to any transferee who does not furnish in writing to
Diversified the same representations and agree to the same conditions with
respect to such Diversified Common Stock as set forth herein. Diversified may
also refuse to transfer the Diversified Common Stock if any circumstances are
present reasonably indicating that the transferee's representations are not
accurate.
(b) In connection with the transaction contemplated by this Agreement, EZ and
Diversified shall each file, with the assistance of the other and their
respective legal counsel, such notices, applications, reports, or other
instruments as may be deemed by them to be necessary or appropriate in an
effort to document reliance on such exemptions, and the appropriate regulatory
authority in the states where the EZ Stockholders reside unless an exemption
requiring no filing is available in such jurisdictions, all to the extent and
in the manner as may be deemed by such parties to be appropriate.
(c) In order to more fully document reliance on the exemptions as provided
herein, EZ, the EZ Stockholders, and Diversified shall execute and deliver to
the other, at or prior to the Closing, such further letters of representation,
acknowledgment, suitability, or the like as Diversified or EZ and their
respective counsel may reasonably request in connection with reliance on
exemptions from registration under such securities laws.
(d) The EZ Stockholders acknowledge that the basis for relying on exemptions
from registration or qualifications are factual, depending on the conduct of
the various parties, and that no legal opinion or other assurance will be
required or given to the effect that the transactions contemplated hereby are
in fact exempt from registration or qualification.
6.06 Diversified Liabilities. Immediately prior to the Closing Date,
Diversified shall have no material assets and no liabilities in excess of
$5,000, and all expenses related to this Agreement or otherwise shall have
been paid.
<PAGE> 19
6.07 Securities Filings. Diversified shall be responsible for the preparation
of a Form D and its filing with the Securities and Exchange Commission and EZ
will be responsible for any and all filings in any jurisdiction where its
shareholders reside which would require a filing with a governmental agency as
a result of the transactions contemplated in this Agreement.
6.08 Sales of Securities Under Rule 144, If Applicable.
(a) Diversified will use its best efforts to at all times satisfy the current
public information requirements of rule 144 promulgated under the Securities
Act so that its shareholders can sell restricted securities that have been
held for one year or more or such other restricted period as required by rule
144 as it is from time to time amended.
(b) Upon being informed in writing by any person holding restricted stock of
Diversified as of the date of this Agreement that such person intends to sell
any shares under rule 144 promulgated under the Securities Act (including any
rule adopted in substitution or replacement thereof), Diversified will certify
in writing to such person that it is compliance with rule 144 current public
information requirement to enable such person to sell such person's restricted
stock under rule 144, as may be applicable under the circumstances.
(c) If any certificate representing any such restricted stock is presented to
Diversified's transfer agent for registration or transfer in connection with
any sales theretofore made under rule 144, provided such certificate is duly
endorsed for transfer by the appropriate person(s) or accompanied by a
separate stock power duly executed by the appropriate person(s) in each case
with reasonable assurances that such endorsements are genuine and effective,
and is accompanied by an opinion of counsel satisfactory to Diversified and
its counsel that such transfer has complied with the requirements of rule 144,
as the case may be, Diversified will promptly instruct its transfer agent to
register such transfer and to issue one or more new certificates representing
such shares to the transferee and, if appropriate under the provisions of rule
144, as the case may be, free of any stop transfer order or restrictive
legend. The provisions of this Section 6.08 shall survive the Closing and the
consummation of the transactions contemplated by this Agreement for a period
of two years.
(d) The shareholders of Diversified as of the date of this Agreement, as well
as those receiving Diversified Common Stock pursuant to this Agreement, are
intended third-party beneficiaries of this Section 6.08.
6.09 New Board of Directors and Officers. Upon closing of the transactions
contemplated by this Agreement, the current board of directors and officers of
Diversified shall resign and in their place nominees of EZ shall be appointed,
subject to the approval of the suitability and qualifications of such
nominees. Additionally, for a period of one year from the closing of the
reorganization, the new board of directors of Diversified shall consist of
five members with two chosen by the current management of Diversified, two
chosen by the management/shareholders of EZ and one mutually agreed upon by
the four new directors/nominees.
6.10 Diversified Capitalization. For a period of eighteen months from the
Closing Date, Diversified will not engage in any reverse split of its issued
and outstanding Common Stock without the prior written approval of the holders
of a majority in interest of the issued and outstanding Diversified Common
Stock on the date of this Agreement except those options set forth in Section
6.12 hereof.
<PAGE> 20
6.11 Financing. At or prior to Closing of the reorganization, Diversified
will have raised $200,000, which shall be non-refundable, through the sale of
shares of Diversified Common Stock. After Closing, at such time as management
of Diversified deems appropriate, but in no event longer than 120 days after
Closing, Diversified shall raise a minimum of $400,000 and up to $1,000,000
through the sale of shares of Diversified Common Stock. The offering price of
the shares of Diversified Common Stock shall be between 50 and 80% of the then
current market price for the Common Stock. If Diversified is unable to raise
such funds, Frank Gillen will purchase that number of shares being offered for
$400,000.
6.12 Options. At or after Closing, the board of directors of Diversified
shall issue up to 1,000,000 options to the new management and employees of EZ
with such options performance based so that if certain set criteria are not
achieved, the options shall expire. The performance criteria shall be based
on those gross revenue projections for there years commencing in 2002 as set
forth in EZ's business plan dated September 10, 1999, and delivered to
Diversified. The options shall vest on a one third per year basis commencing
at the end of 2002 based on such revenue projections. Diversified shall also
reserve for issuance to employees, officers, directors and consultants up to
1,425,000 shares of Diversified Common Stock.
ARTICLE VII
MISCELLANEOUS
7.01 Brokers. Except as provided herein, Diversified and EZ agree that there
were no finders or brokers involved in bringing the parties together or who
were instrumental in the negotiation, execution, or consummation of this
Agreement. Further, Diversified and EZ each agree to indemnify the other
against any claim by any third person for any commission, brokerage, or
finder's fee or other payment with respect to this Agreement or the
transactions contemplated hereby based on any alleged agreement or
understanding between such party and such third person, whether express or
implied, from the actions of such party.
The covenants set forth in this section shall survive the Closing Date and the
consummation of the transactions herein contemplated.
7.02 No Representation Regarding Tax Treatment. No representation or
warranty is being made by any party to any other regarding the treatment of
this transaction for federal or state income taxation. Each party has relied
exclusively on its own legal, accounting, and other tax adviser regarding the
treatment of this transaction for federal and state income taxes and on no
representation, warranty, or assurance from any other party or such other
party's legal, accounting, or other adviser.
7.03 Governing Law. This Agreement shall be governed by, enforced and
construed under and in accordance with the laws of the State of Utah.
7.04 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if personally delivered, if sent by
facsimile or telecopy transmission or other electronic communication confirmed
by registered or certified mail, postage prepaid, or if sent by prepaid
overnight courier addressed as follows:
<PAGE>
<PAGE> 21
If to Diversified/ Merger Co., to: If to EZ, to: Vaughn L. Nelson
Frank Gillen, President Secretary/Treasure
Diversified Industries, Inc. EZConnect USA, Inc.
175 South Main Street, Suite 1240 354 W. Quail Nest Circle
Salt Lake City, Utah 8411 Farmington, Utah 84025
Fax: (801) 961-7333 Fax: (801) 451-4648
or 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 or sent by
facsimile or telecopy transmission or other electronic communication, or one
day after the date so sent by overnight courier.
7.05 Attorney's Fees. In the event that any party institutes any action or
suit to enforce this Agreement or to secure relief from any default hereunder
or breach hereof, the breaching party or parties shall reimburse the
nonbreaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
7.06 Schedules; Knowledge. Whenever in any section of this Agreement
reference is made to information set forth in the schedules provided by
Diversified or EZ such reference is to information specifically set forth in
such schedules and clearly marked to identify the section of this Agreement to
which the information relates. Whenever any representation is made to the
"knowledge" of any party, it shall be deemed to be a representation that no
officer or director of such party, after reasonable investigation, has any
knowledge of such matters.
7.07 Entire Agreement. This Agreement represents the entire agreement
between the parties relating to the subject matter hereof. All previous
agreements between the parties, whether written or oral, have been merged into
this Agreement. This Agreement alone fully and completely expresses the
agreement of the parties relating to the subject matter hereof. There are no
other courses of dealing, understandings, agreements, representations, or
warranties, written or oral, except as set forth herein.
7.08 Survival; Termination. The representations, warranties, and covenants
of the respective parties shall survive the Closing Date and the consummation
of the transactions herein contemplated for a period of six months from the
Closing Date, unless otherwise provided herein.
7.09 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original and all of which taken together
shall be but a single instrument.
7.10 Amendment or 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 such remedies may be enforced concurrently, 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, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement 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 Agreement 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.
<PAGE> 22
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to
be executed by their respective officers, hereunto duly authorized, as of the
date first above written.
DIVERSIFIED INDUSTRIES, INC ., EZCONNECT USA, INC.,
a Utah corporation a Utah corporation
By: /S/ Frank Gillen, President By: /S/ Adam Leffler
EZ Merger, CO.,
A Nevada Corporation
By: /S/ Frank Gillen, President
STATE OF UTAH )
ss.
COUNTY OF SALT LAKE )
On this 27th day of September, 1999, personally appeared before me Frank
Gillen, whose identity is personally known to me and who by me duly sworn, did
say that he is the President of Diversified Industries, Inc. and EZ Merger,
Co. and that said document was signed by him of behalf of said corporations by
authority of their bylaws, and said Frank Gillen acknowledged to me that said
corporation executed the same.
/S/
- --------------------------
NOTARY PUBLIC
STATE OF UTAH )
ss.
COUNTY OF SALT LAKE )
On this 27th day of September, 1999, personally appeared before me Adam
Leffler, whose identity is personally known to me and who by me duly sworn,
did say that he is the President of EZConnect USA, Inc. and that said document
was signed by him of behalf of said corporation by authority of its bylaws,
and said Adam Leffler acknowledged to me that said corporation executed the
same.
/S/
- --------------------------
NOTARY PUBLIC
<PAGE> 1
EXHIBIT 3.01
ARTICLES OF INCORPORATION
OF
EZ MERGER CO.
The undersigned incorporator, being a natural person more than eighteen (18)
years of age and acting as the sole incorporator of the above-named corporation
(hereinafter referred to as the "Corporation") hereby adopts the following
Articles of Incorporation for the Corporation.
ARTICLE I
NAME
The name of the Corporation shall be: EZ Merger Co.
ARTICLE II
PERIOD OF DURATION
The Corporation shall continue in existence perpetually unless sooner dissolved
according to law.
ARTICLE III
PURPOSES
The Corporation is organized for the purpose conducting any lawful business for
which a corporation may be organized under the laws of the State of Nevada.
ARTICLE IV
AUTHORIZED SHARES
The Corporation is authorized to issue a total of 50,000,000 shares, consisting
of 5,000,000 shares of preferred stock having a par value of $0.001 per share
(hereinafter referred to as "Preferred Stock") and 45,000,000 shares of common
stock having a par value $0.001 per share (hereinafter referred to as "Common
Stock"). Shares of any class of stock may be issued, without shareholder
action, from time to time in one or more series as may from time to time be
determined by the board of directors. The board of directors of this
Corporation is hereby expressly granted authority, without shareholder action,
and within the limits set forth in the Nevada Revised Statutes, to:
(a) designate in whole or in part, the powers, preferences, limitations, and
relative rights, of any class of shares before the issuance of any shares of
that class;
(b) create one or more series within a class of shares, fix the number of
shares of each such series, and designate, in whole or part, the powers,
preferences, limitations, and relative rights of the series, all before the
issuance of any shares of that series;
(c) alter or revoke the powers, preferences, limitations, and relative rights
granted to or imposed upon any wholly unissued class of shares or any wholly
unissued series of any class of shares; or
(d) increase or decrease the number of shares constituting any series, the
number of shares of which was originally fixed by the board of directors,
either before or after the issuance of shares of the series; provided that, the
<PAGE> 2
number may not be decreased below the number of shares of the series then
outstanding, or increased above the total number of authorized shares of the
applicable class of shares available for designation as a part of the series.
The allocation between the classes, or among the series of each class, of
unlimited voting rights and the right to receive the net assets of the
Corporation upon dissolution, shall be as designated by the board of directors.
All rights accruing to the outstanding shares of the Corporation not expressly
provided for to the contrary herein or in the Corporation's bylaws or in any
amendment hereto or thereto shall be vested in the Common Stock. Accordingly,
unless and until otherwise designated by the board of directors of the
Corporation, and subject to any superior rights as so designated, the Common
Stock shall have unlimited voting rights and be entitled to receive the net
assets of the Corporation upon dissolution.
ARTICLE V
NON-ACCESSIBILITY FOR DEBTS OF CORPORATION
After the amount of the subscription price, the purchase price, or the par
value of the stock of any class or series is paid into the Corporation, owners
or holders of shares of any stock in the Corporation may never be assessed to
pay the debts of the Corporation.
ARTICLE VI
NO CUMULATIVE VOTING
Except as may otherwise be required by law, these articles of incorporation, or
the provisions of the resolution or resolutions as may be adopted by the board
of directors pursuant to Article IV of these articles of incorporation, in all
matters as to which the vote or consent of stockholders of the Corporation
shall be required to be taken, the holders of Common Stock shall have one vote
per share of Common Stock held. Cumulative Voting on the election of directors
or on any other matter submitted to the stockholders shall not be permitted.
ARTICLE VII
NO PREEMPTIVE RIGHTS
No holder of any of the shares of any class or series of stock or of options,
warrants, or other rights to purchase shares of any class or series of stock or
of other securities of the Corporation shall have any preemptive right to
purchase or subscribe for any unissued stock of any class or series of any
additional shares of any class or series to be issued by reason of any increase
of the authorized capital stock of the Corporation of any class or series, or
bonds, certificates of indebtedness, debentures, or other securities
convertible into or exchangeable for stock of the Corporation of any class or
series, or carrying any rights to purchase stock of any class or series, but
any such unissued stock, additional authorized issue of shares of any class or
series of stock, or securities convertible into or exchangeable for stock
carrying any right to purchase stock may be issued and disposed of pursuant to
an appropriate resolution of the board of directors to such persons, firms,
corporations, or associations and on such terms as may be deemed advisable by
the board of directors in the exercise of its sole discretion.
<PAGE> 3
ARTICLE VIII
TRANSACTIONS WITH OFFICERS AND DIRECTORS
No contract or other transaction between the Corporation and one or more or its
directors or officers, or between the Corporation and any corporation, firm or
association in which one or more of its directors or officers are directors or
officers or are financially interested, is void or voidable solely for this
reason or solely because any such director or officer is present at the meeting
of the board of directors or a committee thereof which authorizes or approves
the contract or transaction, or because the vote or votes of common or
interested directors are counted for that purpose, if the circumstances
specified in any of the following paragraphs exist:
(a) The fact of the common directorship, office or financial interest is
disclosed or known to the board of directors or committee and noted in the
minutes, and the board or committee authorizes, approves or ratifies the
contract or transaction in good faith by a vote sufficient for the purpose
without counting the vote or votes of the common or interested director or
directors;
(b) The fact of the common directorship, office or financial interest is
disclosed or known to the stockholders, and they approve or ratify the contract
or transaction in good faith by a majority vote of stockholders holding a
majority of the voting power. The votes of the common or interested directors
or officers must be counted in any such vote of stockholders; or
(c) The contract or transaction is fair as to the Corporation at the time it
is authorized or approved.
ARTICLE IX
INDEMNIFICATION OF OFFICERS, DIRECTORS, AND OTHERS
(a) The Corporation shall indemnify each director and officer of the
Corporation and their respective heirs, administrators, and executors against
all liabilities and expenses reasonably incurred in connection with any action,
suit, or proceeding to which he may be made a party by reason of the fact that
he is or was a director or officer of the Corporation, to the full extent
permitted by the laws of the state of Nevada now existing or as such laws may
hereafter be amended. The expenses of officers and directors incurred in
defending a civil or criminal action, suit, or proceeding shall be paid by the
Corporation as they are incurred and in advance of the final disposition of the
action, suit, or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by
the Corporation.
(b) The Corporation may indemnify each director, officer, employee, or agent
of the Corporation and their respective heirs, administrators, and executors
against all liabilities and expenses reasonably incurred in connection with any
action, suit, or proceeding to which such person may be made a party by reason
of such person being, or having been, a director, officer, employee, or agent
of the Corporation, to the full extent permitted by the laws of the state of
Nevada now existing or as such laws may hereafter be amended.
<PAGE> 4
ARTICLE X
LIMITATION ON DIRECTORS LIABILITY
To the full extent permitted by the Nevada Revised Statutes, directors and
officers of the Corporation shall have no personal liability to the Corporation
or its stockholders for damages for breach of their fiduciary duty as a
director or officer, except for damages resulting from (a) acts or omissions
which involve intentional misconduct, fraud or a knowing violation of law; (b)
the payment of distribution in violation of section 78.300 of the Nevada
Revised Statutes, as it may be amended from time to time, or any successor
statute thereto.
ARTICLE XI
NO LIMITATIONS ON VOTING RIGHTS
To the extent permissible under the applicable law of any jurisdiction to which
the Corporation may become subject by reason of the conduct of business, the
ownership of assets, the residence of shareholders, the location of offices or
facilities, or any other item, the Corporation elects not to be governed by the
provisions of any statute that (i) limits, restricts, modifies, suspends,
terminates, or otherwise effects the rights of any shareholder to cast one vote
for each share of Common Stock registered in the name of such shareholder on
the books of the Corporation, without regard to whether such shares were
acquired directly from the Corporation or from any other person and without
regard to whether such shareholder has the power to exercise or direct the
exercise of voting power over any specific fraction of the shares of Common
Stock of the Corporation issued and outstanding or (ii) grants to any
shareholder the right to have his or her stock redeemed or purchased by the
Corporation or any other shareholder of the Corporation. Without limiting the
generality of the foregoing, the Corporation expressly elects not to be
governed by or be subject to the provisions of sections 78.378 through 78.3793
of the Nevada Revised Statutes or any similar or successor statutes adopted by
any state which may be deemed to apply to the Corporation from time to time.
ARTICLE XII
PRINCIPAL OFFICE AND RESIDENT AGENT
The address of the Corporation in the State of Nevada is 50 West Liberty St.,
Suite 880, Reno, Nevada 89501. The name and address of the Corporation's
initial resident agent is:
Nevada Agency & Trust, Co.
50 West Liberty St., Suite 880
Reno, Nevada 89501
Either the principal office or the resident agent may be changed in the manner
provided by law.
ARTICLE XIII
AMENDMENTS
<PAGE> 5
The Corporation reserves the right to amend, alter, change, or repeal all or
any portion of the provisions contained in these articles of incorporation from
time to time in accordance with the laws of the state of Nevada; and all rights
conferred herein on stockholders are granted subject to this reservation.
ARTICLE XIV
ADOPTION AND AMENDMENT OF BYLAWS
The initial bylaws of the Corporation shall be adopted by the board of
directors. The power to alter, amend, or repeal the bylaws or adopt new bylaws
shall be vested in the board of directors. The bylaws may contain any
provisions for the regulation or management of the affairs of the Corporation
not inconsistent with these articles of incorporation and the laws of the state
of Nevada now or hereafter existing.
ARTICLE XV
GOVERNING BOARD
The governing board of the Corporation shall be known as the "board of
directors." The board of directors must have at least one director or as
otherwise specified in its bylaws or director's resolutions.
The first board of directors shall consist of one person. The name and address
of the person who is to serve as the initial director until the first annual
meeting of the stockholders and until such person's successor is elected and
shall qualify is as follows:
NAME ADDRESS
- ---- -------
Frank Gillen 175 South Main Street, Suite 1240
Salt Lake City, Utah 84111
ARTICLE XI
POWERS OF GOVERNING BOARD
The governing board of the Corporation is specifically granted by these
articles of incorporation all powers permitted to be vested in the governing
board of a corporation by the applicable provisions of the laws of the state of
Nevada now or hereafter existing.
ARTICLE XVII
INCORPORATOR
The name and mailing address of the incorporator signing these articles of
incorporation is as follows:
NAME ADDRESS
- ---- -------
Frank Gillen 175 South Main Street, Suite 1240
Salt Lake City, Utah 84111
<PAGE>
<PAGE> 6
The undersigned, being the sole incorporator of the Corporation herein before
named, hereby makes and files these articles of incorporation, declaring and
certifying that the facts contained herein are true.
DATED this 21st day of September 1999.
/S/ Frank Gillen
STATE OF UTAH )
:ss
COUNTY OF SALT LAKE)
On this 21st day of September 1999, before me, a Notary Public, personally
appeared Frank Gillen who, upon being first duly sworn, declared to me that he
is the sole incorporator of EZ Merger Co., and acknowledged to me that he
executed the foregoing articles of incorporation as his free act and deed.
/S/
- ------------------------
Notary Public
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
IN THE MATTER OF EZ MERGER CO., Nevada Agency & Trust, Co. hereby certifies
that on the 20th day of August 1999, it accepted appointment as Resident Agent
of the above-entitled corporation in accordance with Sec. 78.090, NRS 1957, as
amended.
Furthermore, that the principal office in this State is located at 50 West
Liberty St., Suite 880, Reno, Nevada 89501.
IN WITNESS WHEREOF it has hereunto set its hand this 20th day of September
1999.
Nevada Agency & Trust Co.
Resident Agent
By: /S/
<PAGE> 1
EXHIBIT 3.02
BYLAWS
OF
EZ MERGER CO.
ARTICLE I
OFFICES
Section 1.01 Registered Office. The registered office shall be in
Carson City, State of Nevada.
Section 1.02 Location of Offices. The corporation may maintain such
offices within or without the state of Nevada as the board of directors may
from time to time designate or require.
Section 1.03 Principal Office. The address of the principal office of
the corporation shall be at the address of the Registered office of the
corporation as so designated in the office of the Lieutenant
Governor/Secretary of State of the state of incorporation, or at such other
address as the board of directors shall from time to time determine.
ARTICLE II
SHAREHOLDERS
Section 2.01 Annual Meeting. The annual meeting of the stockholders
shall be held on the second Tuesday of the third month following the
anniversary of incorporation or at such other time designated by the board of
director and as is provided for in the notice of the meeting; provided, that
whenever such date falls on a legal holiday, the meeting shall be held on the
next succeeding business day, beginning with the year following the filing of
the articles of incorporation, for the purpose of electing directors and for
the transaction of such other business as may come before the meeting. If the
election of directors shall not be held on the day designated herein for the
annual meeting of the stockholders, or at any adjournment thereof, the board
of directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as may be convenient.
Section 2.02 Special Meetings. Special meetings of the stockholders may
be called at any time by the chairman of the board, the president, or by the
board of directors, or in their absence or disability, by any vice president,
and shall be immediately called by the president or, in his absence or
disability, by a vice president or by the secretary on the written request of
the holders of not less than one-tenth of all the shares entitled to vote at
the meeting, such written request to state the purpose or purposes of the
meeting and to be delivered to the president, each vice-president, or
secretary. In case of failure to call such meeting within 20 days after such
request, such shareholder or shareholders may call the same.
Section 2.03 Place of Meetings. The board of directors may designate
any place, either within or without the state of incorporation, as the place
of meeting for any annual meeting or for any special meeting called by the
board of directors. A waiver of notice signed by all stockholders entitled to
vote at a meeting may designate any place, either within or without the state
of incorporation, as the place for the holding of such meeting. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be at the principal office of the corporation.
Section 2.04 Notice of Meetings. The secretary or assistant secretary,
if any, shall cause notice of the time, place, and purpose or purposes of all
<PAGE> 2
meetings of the shareholders (whether annual or special), to be mailed at
least ten days, but not more than 50 days, prior to the meeting, to each
shareholder of record entitled to vote.
Section 2.05 Waiver of Notice. Any stockholder may waive notice of any
meeting of shareholders (however called or noticed, whether or not called or
noticed and whether before, during, or after the meeting), by signing a
written waiver of notice or a consent to the holding of such meeting, or an
approval of the minutes thereof. Attendance at a meeting, in person or by
proxy, shall constitute waiver of all defects of call or notice regardless of
whether waiver, consent, or approval is signed or any objections are made.
All such waivers, consents, or approvals shall be made a part of the minutes
of the meeting.
Section 2.06 Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any annual meeting of
shareholders or any adjournment thereof, or shareholder entitled to receive
payment of any dividend or in order to make a determination of shareholders
for any other proper purpose, the board of directors of the corporation may
provide that the share transfer books shall be closed, for the purpose of
determining shareholders entitled to notice of or to vote at such meeting, but
not for a period exceeding fifty (50) days. If the share transfer books are
closed for the purpose of determining shareholders entitled to notice of or to
vote at such meeting, such books shall be closed for at least ten (10) days
immediately preceding such meeting.
In lieu of closing the share transfer books, the board of directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than fifty (50) and, in
case of a meeting of shareholders, not less than ten (10) days prior to the
date on which the particular action requiring such determination of
shareholders is to be taken. If the share transfer books are not closed and
no record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting or to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the board of directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. 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. Failure to comply with
this section shall not affect the validity of any action taken at a meeting of
shareholders.
Section 2.07 Voting Lists. The officer or agent of the corporation
having charge of the share transfer books for shares of the corporation shall
make, at least ten (10) days before each meeting of shareholders, a complete
list of the shareholders entitled to vote at such meeting or any adjournment
thereof, arranged in alphabetical order, with the address of, and the number
of shares held by each, which list, for a period of ten (10) days prior to
such meeting, shall be kept on file at the registered office of the
corporation and shall be subject to inspection by any shareholder during the
whole time of the meeting. The original share transfer book shall be prima
facia evidence as to the shareholders who are entitled to examine such list or
transfer books, or to vote at any meeting of shareholders.
Section 2.08 Quorum. One-half of the total voting power of the
outstanding shares of the corporation entitled to vote, represent in person or
by proxy, shall constitute a quorum at a meeting of the shareholders. If a
<PAGE> 3
quorum is present, the affirmative vote of the majority of the voting power
represented by shares at the meeting and entitled to vote on the subject shall
constitute action by the shareholders, unless the vote of a greater number or
voting by classes is required by the laws of the state of incorporation of the
corporation or the articles of incorporation. If less than one-half of the
outstanding voting power is represented at a meeting, a majority of the voting
power represented by shares so present may adjourn the meeting from time to
time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might
have been transacted at the meeting as originally noticed.
Section 2.09 Voting of Shares. Each outstanding share of the
corporation entitled to vote shall be entitled to one vote on each matter
submitted to vote at a meeting of shareholders, except to the extent that the
voting rights of the shares of any class or series of stock are determined and
specified as greater or lesser than one vote per share in the manner provided
by the articles of incorporation.
Section 2.10 Proxies. At each meeting of the shareholders, each
shareholder entitled to vote shall be entitled to vote in person or by proxy;
provided, however, that the right to vote by proxy shall exist only in case
the instrument authorizing such proxy to act shall have been executed in
writing by the registered holder or holders of such shares, as the case may
be, as shown on the share transfer of the corporation or by his attorney
thereunto duly authorized in writing. Such instrument authorizing a proxy to
act shall be delivered at the beginning of such meeting to the secretary of
the corporation or to such other officer or person who may, in the absence of
the secretary, be acting as secretary of the meeting. In the event that any
such instrument shall designate two or more persons to act as proxies, a
majority of such persons present at the meeting, or if only one be present,
that one shall (unless the instrument shall otherwise provide) have all of the
powers conferred by the instrument on all persons so designated. Persons
holding stock in a fiduciary capacity shall be entitled to vote the shares so
held and the persons whose shares are pledged shall be entitled to vote,
unless in the transfer by the pledge or on the books of the corporation he
shall have expressly empowered the pledgee to vote thereon, in which case the
pledgee, or his proxy, may represent such shares and vote thereon.
Section 2.11 Written Consent to Action by Stockholders. Any action
required to be taken at a meeting of the shareholders, or any other action
which may be taken at a meeting of the shareholders, may be taken without a
meeting, if a consent in writing, setting forth the action so taken, shall be
signed by all of the shareholders entitled to vote with respect to the subject
matter thereof.
ARTICLE III
DIRECTORS
Section 3.01 General Powers. The property, affairs, and business of the
corporation shall be managed by its board of directors. The board of
directors may exercise all the powers of the corporation whether derived from
law or the articles of incorporation, except such powers as are by statute, by
the articles of incorporation or by these Bylaws, vested solely in the
shareholders of the corporation.
Section 3.02 Number, Term, and Qualifications. The board of directors
shall consist of two to nine persons. Increases or decreases to said number
may be made, within the numbers authorized by the articles of incorporation,
<PAGE> 4
as the board of directors shall from time to time determine by amendment to
these Bylaws. An increase or a decrease in the number of the board of
directors may also be had upon amendment to these Bylaws by a majority vote of
all of the shareholders, and the number of directors to be so increased or
decreased shall be fixed upon a majority vote of all of the shareholders of
the corporation. Each director shall hold office until the next annual
meeting of shareholders of the corporation and until his successor shall have
been elected and shall have qualified. Directors need not be residents of the
state of incorporation or shareholders of the corporation.
Section 3.03 Classification of Directors. In lieu of electing the
entire number of directors annually, the board of directors may provide that
the directors be divided into either two or three classes, each class to be as
nearly equal in number as possible, the term of office of the directors of the
first class to expire at the first annual meeting of shareholders after their
election, that of the second class to expire at the second annual meeting
after their election, and that of the third class, if any, to expire at the
third annual meeting after their election. At each annual meeting after such
classification the number of directors equal to the number of the class whose
term expires at the time of such meeting shall be elected to hold office until
the second succeeding annual meeting, if there be two classes, or until the
third succeeding annual meeting if there be three classes.
Section 3.04 Regular Meetings. A regular meeting of the board of
directors shall be held without other notice than this bylaw immediately
following, and at the same place as, the annual meeting of shareholders. The
board of directors may provide by resolution the time and place, either within
or without the state of incorporation, for the holding of additional regular
meetings without other notice than such resolution.
Section 3.05 Special Meetings. Special meetings of the board of
directors may be called by or at the request of the president, vice president,
or any to directors. The person or persons authorized to call special
meetings of the board of directors may fix any place, either within or without
the state of incorporation, as the place for holding any special meeting of
the board of directors called by them.
Section 3.06 Meetings by Telephone Conference Call. Members of the
board of directors may participate in a meeting of the board of directors or a
committee of the board of directors by means of conference telephone or
similar communication equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to
this section shall constitute presence in person at such meeting.
Section 3.07 Notice. Notice of any special meeting shall be given at
least ten (10) days prior thereto by written notice delivered personally or
mailed to each director at his regular business address or residence, or by
telegram. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Any
director may waive notice of any meeting. Attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting solely for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
<PAGE> 5
Section 3.08 Quorum. A majority of the number of directors shall
constitute a quorum for the transaction of business at any meeting of the
board of directors, but if less than a majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice.
Section 3.09 Manner of Acting. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the
board of directors, and the individual directors shall have no power as such.
Section 3.10 Vacancies and Newly created Directorship. If any vacancies
shall occur in the board of directors by reason of death, resignation or
otherwise, or if the number of directors shall be increased, the directors
then in office shall continue to act and such vacancies or newly created
directorships shall be filled by a vote of the directors then in office,
though less than a quorum, in any way approved by the meeting. Any
directorship to be filled by reason of removal of one or more directors by the
shareholders may be filled by election by the shareholders at the meeting at
which the director or directors are removed.
Section 3.11 Compensation. By resolution of the board of directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the board of directors, and may be paid a fixed sum for attendance at each
meeting of the board of directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 3.12 Presumption of Assent. A director of the corporation who
is present at a meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent shall be entered in the minutes of the meeting,
unless he shall file his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof, or shall
forward such dissent by registered or certified mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
Section 3.13 Resignations. A director may resign at any time by
delivering a written resignation to either the president, a vice president,
the secretary, or assistant secretary, if any. The resignation shall become
effective on its acceptance by the board of directors; provided, that if the
board has not acted thereon within ten days from the date presented, the
resignation shall be deemed accepted.
Section 3.14 Written Consent to Action by Directors. Any action
required to be taken at a meeting of the directors of the corporation or any
other action which may be taken at a meeting of the directors or of a
committee, may be taken without a meeting, if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors, or all of
the members of the committee, as the case may be. Such consent shall have the
same legal effect as a unanimous vote of all the directors or members of the
committee.
Section 3.15 Removal. At a meeting expressly called for that purpose,
one or more directors may be removed by a vote of a majority of the shares of
outstanding stock of the corporation entitled to vote at an election of
directors.
<PAGE> 6
ARTICLE IV
OFFICERS
Section 4.01 Number. The officers of the corporation shall be a
president, one or more vice-presidents, as shall be determined by resolution
of the board of directors, a secretary, a treasurer, and such other officers
as may be appointed by the board of directors. The board of directors may
elect, but shall not be required to elect, a chairman of the board and the
board of directors may appoint a general manager.
Section 4.02 Election, Term of Office, and Qualifications. The officers
shall be chosen by the board of directors annually at its annual meeting. In
the event of failure to choose officers at an annual meeting of the board of
directors, officers may be chosen at any regular or special meeting of the
board of directors. Each such officer (whether chosen at an annual meeting of
the board of directors to fill a vacancy or otherwise) shall hold his office
until the next ensuing annual meeting of the board of directors and until his
successor shall have been chosen and qualified, or until his death, or until
his resignation or removal in the manner provided in these Bylaws. Any one
person may hold any two or more of such offices, except that the president
shall not also be the secretary. No person holding two or more offices shall
act in or execute any instrument in the capacity of more than one office. The
chairman of the board, if any, shall be and remain director of the corporation
during the term of his office. No other officer need be a director.
Section 4.03 Subordinate Officers, Etc. The board of directors from
time to time may appoint such other officers or agents as it may deem
advisable, each of whom shall have such title, hold office for such period,
have such authority, and perform such duties as the board of directors from
time to time may determine. The board of directors from time to time may
delegate to any officer or agent the power to appoint any such subordinate
officer or agents and to prescribe their respective titles, terms of office,
authorities, and duties. Subordinate officers need not be shareholders or
directors.
Section 4.04 Resignations. Any officer may resign at any time by
delivering a written resignation to the board of directors, the president, or
the secretary. Unless otherwise specified therein, such resignation shall
take effect on delivery.
Section 4.05 Removal. Any officer may be removed from office at any
special meeting of the board of directors called for that purpose or at a
regular meeting, by vote of a majority of the directors, with or without
cause. Any officer or agent appointed in accordance with the provisions of
section 4.03 hereof may also be removed, either with or without cause, by any
officer on whom such power of removal shall have been conferred by the board
of directors.
Section 4.06 Vacancies and Newly Created Offices. If any vacancy shall
occur in any office by reason of death, resignation, removal,
disqualification, or any other cause, or if a new office shall be created,
then such vacancies or new created offices may be filled by the board of
directors at any regular or special meeting.
Section 4.07 The Chairman of the Board. The chairman of the board, if
there be such an officer, shall have the following powers and duties.
(a) He shall preside at all shareholders' meetings;
<PAGE> 7
(b) He shall preside at all meetings of the board of directors; and
(c) He shall be a member of the executive committee, if any.
Section 4.08 The President. The president shall have the following
powers and duties:
(a) If no general manager has been appointed, he shall be the chief
executive officer of the corporation, and, subject to the direction of the
board of directors, shall have general charge of the business, affairs, and
property of the corporation and general supervision over its officers,
employees, and agents;
(b) If no chairman of the board has been chosen, or is such officer
is absent or disabled, he shall preside at meetings of the stockholders and
board of directors;
(c) He shall be a member of the executive committee, if any;
(d) He shall be empowered to sign certificates representing shares
of the corporation, the issuance of which shall have been authorized by the
board of directors; and
(e) He shall have all power and shall perform all duties normally
incident to the office of a president of a corporation, and shall exercise
such other powers and perform such other duties as from time to time may be
assigned to him by the board of directors.
Section 4.09 The Vice Presidents. The board of directors may, from time
to time, designate and elect one or more vice presidents, one of whom may be
designated to serve as executive vice president. Each vice president shall
have such powers and perform such duties as from time to time may be assigned
to him by the board of directors or the president. At the request or in the
absence or disability of the president, the executive vice president or, in
the absence or disability of the executive vice president, the vice president
designated by the board of directors or (in the absence of such designation by
the board of directors) by the president, the senior vice president, may
perform all the duties of the president, and when so acting, shall have all
the powers of, and be subject to all the restrictions upon, the president.
Section 4.10 The Secretary. The secretary shall have the following
powers and duties:
(a) He shall keep or cause to be kept a record of all of the
proceedings of the meetings of the shareholders and of the board or directors
in books provided for that purpose;
(b) He shall cause all notices to be duly given in accordance with
the provisions of these Bylaws and as required by statute;
(c) He shall be the custodian of the records and of the seal of the
corporation, and shall cause such seal (or a facsimile thereof) to be affixed
to all certificates representing shares of the corporation prior to the
issuance thereof and to all instruments, the execution of which on behalf of
the corporation under its seal shall have been duly authorized in accordance
with these Bylaws, and when so affixed, he may attest the same;
(d) He shall assume that the books, reports, statements,
certificates, and other documents and records required by statute are properly
kept and filed;
<PAGE> 8
(e) He shall have charge of the share books of the corporation and
cause the share transfer books to be kept in such manner as to show at any
time the amount of the shares of the corporation of each class issued and
outstanding, the manner in which and the time when such stock was paid for,
the names alphabetically arranged and the addresses of the holders of record
thereof, the number of shares held by each holder and time when each became
such holder or record; and he shall exhibit at all reasonable times to any
director, upon application, the original or duplicate share register. He
shall cause the share book referred to in section 6.04 hereof to be kept and
exhibited at the principal office of the corporation, or at such other place
as the board of directors shall determine, in the manner and for the purposes
provided in such section;
(f) He shall be empowered to sign certificates representing shares
of the corporation, the issuance of which shall have been authorized by the
board of directors; and
(g) He shall perform in general all duties incident to the office
of secretary and such other duties as are given to him by these Bylaws or as
from time to time may be assigned to him by the board of directors or the
president.
Section 4.11 The Treasurer. The treasurer shall have the following
powers and duties:
(a) He shall have charge and supervision over and be responsible
for the monies, securities, receipts, and disbursements of the corporation;
(b) He shall cause the monies and other valuable effects of the
corporation to be deposited in the name and to the credit of the corporation
in such banks or trust companies or with such banks or other depositories as
shall be selected in accordance with section 5.03 hereof;
(c) He shall cause the monies of the corporation to be disbursed by
checks or drafts (signed as provided in section 5.04 hereof) drawn on the
authorized depositories of the corporation, and cause to be taken and
preserved property vouchers for all monies disbursed;
(d) He shall render to the board of directors or the president,
whenever requested, a statement of the financial condition of the corporation
and of all of this transactions as treasurer, and render a full financial
report at the annual meeting of the stockholders, if called upon to do so;
(e) He shall cause to be kept correct books of account of all the
business and transactions of the corporation and exhibit such books to any
director on request during business hours;
(f) He shall be empowered from time to time to require from all
officers or agents of the corporation reports or statements given such
information as he may desire with respect to any and all financial
transactions of the corporation; and
(g) He shall perform in general all duties incident to the office
of treasurer and such other duties as are given to him by these Bylaws or as
from time to time may be assigned to him by the board of directors or the
president.
Section 4.12 General Manager. The board of directors may employ and
appoint a general manager who may, or may not, be one of the officers or
directors of the corporation. The general manager, if any shall have the
following powers and duties:
<PAGE> 9
(a) He shall be the chief executive officer of the corporation and,
subject to the directions of the board of directors, shall have general charge
of the business affairs and property of the corporation and general
supervision over its officers, employees, and agents:
(b) He shall be charged with the exclusive management of the
business of the corporation and of all of its dealings, but at all times
subject to the control of the board of directors;
(c) Subject to the approval of the board of directors or the
executive committee, if any, he shall employ all employees of the corporation,
or delegate such employment to subordinate officers, and shall have authority
to discharge any person so employed; and
(d) He shall make a report to the president and directors as often
as required, setting forth the results of the operations under his charge,
together with suggestions looking toward improvement and betterment of the
condition of the corporation, and shall perform such other duties as the board
of directors may require.
Section 4.13 Salaries. The salaries and other compensation of the
officers of the corporation shall be fixed from time to time by the board of
directors, except that the board of directors may delegate to any person or
group of persons the power to fix the salaries or other compensation of any
subordinate officers or agents appointed in accordance with the provisions of
section 4.03 hereof. No officer shall be prevented from receiving any such
salary or compensation by reason of the fact that he is also a director of the
corporation.
Section 4.14 Surety Bonds. In case the board of directors shall so
require, any officer or agent of the corporation shall execute to the
corporation a bond in such sums and with such surety or sureties as the board
of directors may direct, conditioned upon the faithful performance of his
duties to the corporation, including responsibility for negligence and for the
accounting of all property, monies, or securities of the corporation which may
come into his hands.
ARTICLE V
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY,
AND DEPOSIT OF CORPORATE FUNDS
Section 5.01 Execution of Instruments. Subject to any limitation
contained in the articles of incorporation or these Bylaws, the president or
any vice president or the general manager, if any, may, in the name and on
behalf of the corporation, execute and deliver any contract or other
instrument authorized in writing by the board of directors. The board of
directors may, subject to any limitation contained in the articles of
incorporation or in these Bylaws, authorize in writing any officer or agent to
execute and delivery any contract or other instrument in the name and on
behalf of the corporation; any such authorization may be general or confined
to specific instances.
Section 5.02 Loans. No loans or advances shall be contracted on behalf
of the corporation, no negotiable paper or other evidence of its obligation
under any loan or advance shall be issued in its name, and no property of the
corporation shall be mortgaged, pledged, hypothecated, transferred, or
conveyed as security for the payment of any loan, advance, indebtedness, or
liability of the corporation, unless and except as authorized by the board of
directors. Any such authorization may be general or confined to specific
instances.
<PAGE> 10
Section 5.03 Deposits. All monies of the corporation not otherwise
employed shall be deposited from time to time to its credit in such banks and
or trust companies or with such bankers or other depositories as the board of
directors may select, or as from time to time may be selected by any officer
or agent authorized to do so by the board of directors.
Section 5.04 Checks, Drafts, Etc. All notes, drafts, acceptances,
checks, endorsements, and, subject to the provisions of these Bylaws,
evidences of indebtedness of the corporation, shall be signed by such officer
or officers or such agent or agents of the corporation and in such manner as
the board of directors from time to time may determine. Endorsements for
deposit to the credit of the corporation in any of its duly authorized
depositories shall be in such manner as the board of directors from time to
time may determine.
Section 5.05 Bonds and Debentures. Every bond or debenture issued by
the corporation shall be evidenced by an appropriate instrument which shall be
signed by the president or a vice president and by the secretary and sealed
with the seal of the corporation. The seal may be a facsimile, engraved or
printed. Where such bond or debenture is authenticated with the manual
signature of an authorized officer of the corporation or other trustee
designated by the indenture of trust or other agreement under which such
security is issued, the signature of any of the corporation's officers named
thereon may be a facsimile. In case any officer who signed, or whose
facsimile signature has been used on any such bond or debenture, should cease
to be an officer of the corporation for any reason before the same has been
delivered by the corporation, such bond or debenture may nevertheless be
adopted by the corporation and issued and delivered as through the person who
signed it or whose facsimile signature has been used thereon had not ceased to
be such officer.
Section 5.06 Sale, Transfer, Etc. of Securities. Sales, transfers,
endorsements, and assignments of stocks, bonds, and other securities owned by
or standing in the name of the corporation, and the execution and delivery on
behalf of the corporation of any and all instruments in writing incident to
any such sale, transfer, endorsement, or assignment, shall be effected by the
president, or by any vice president, together with the secretary, or by any
officer or agent thereunto authorized by the board of directors.
Section 5.07 Proxies. Proxies to vote with respect to shares of other
corporations owned by or standing in the name of the corporation shall be
executed and delivered on behalf of the corporation by the president or any
vice president and the secretary or assistant secretary of the corporation, or
by any officer or agent thereunder authorized by the board of directors.
ARTICLE VI
CAPITAL SHARES
Section 6.01 Share Certificates. Every holder of shares in the
corporation shall be entitled to have a certificate, signed by the president
or any vice president and the secretary or assistant secretary, and sealed
with the seal (which may be a facsimile, engraved or printed) of the
corporation, certifying the number and kind, class or series of shares owned
by him in the corporation provided, however, that where such a certificate is
countersigned by (a) a transfer agent or an assistant transfer agent, or (b)
registered by a registrar, the signature of any such president, vice
president, secretary, or assistant secretary may be a facsimile. In case any
officer who shall have signed, or whose facsimile signature or signatures
shall have been used on any such certificate, shall cease to be such officer
<PAGE> 11
of the corporation, for any reason, before the delivery of such certificate by
the corporation, such certificate may nevertheless be adopted by the
corporation and be issued and delivered as though the person who signed it, or
whose facsimile signature or signatures shall have been used thereon, has not
ceased to be such officer. Certificates representing shares of the
corporation shall be in such form as provided by the statutes of the state of
incorporation. There shall be entered on the share books of the corporation
at the time of issuance of each share, the number of the certificate issued,
the name and address of the person owning the shares represented thereby, the
number and kind, class or series of such shares, and the date of issuance
thereof. Every certificate exchanged or returned to the corporation shall be
marked "Canceled" with the date of cancellation.
Section 6.02 Transfer of Shares. Transfers of shares of the
corporation shall be made on the books of the corporation by the holder of
record thereof, or by his attorney thereunto duly authorized by a power of
attorney duly executed in writing and filed with the Secretary of the
corporation or any of its transfer agents, and on surrender of the certificate
or certificates, properly endorsed or accompanied by proper instruments of
transfer, representing such shares. Except as provided by law, the
corporation and transfer agents and registrars, if any, shall be entitled to
treat the holder of record of any stock as the absolute owner thereof for all
purposes, and accordingly shall not be bound to recognize any legal,
equitable, or other claim to or interest in such shares on the part of any
other person whether or not it or they shall have express or other notice
thereof.
Section 6.03 Regulations. Subject to the provisions of this section VI
and of the articles of incorporation, the board of directors may make such
rules and regulations as they may deem expedient concerning the issuance,
transfer, redemption, and registration of certificates for shares of the
corporation.
Section 6.04 Maintenance of Stock Ledger at Principal Place of Business.
A share book (or books where more than one kind, class, or series of stock is
outstanding) shall be kept at the principal place of business of the
corporation, or at such other place as the board of directors shall determine,
containing the names, alphabetically arranged, of original shareholders of the
corporation, their addresses, their interest, the amount paid on their shares,
and all transfers thereof and the number and class of shares held by each.
Such share books shall at all reasonable hours be subject to inspection by
persons entitled by law to inspect the same.
Section 6.05 Transfer Agents and Registrars. The board of directors may
appoint one or more transfer agents and one or more registrars with respect to
the certificates representing shares of the corporation, and may require all
such certificates to bear the signature of either or both. The board of
directors may from time to time define the respective duties of such transfer
agents and registrars. No certificate for shares shall be valid until
countersigned by a transfer agent, if at the date appearing thereon the
corporation had a transfer agent for such shares, and until registered by a
registrar, if at such date the corporation had a registrar for such shares.
Section 6.06 Closing of Transfer Books and Fixing of Record Date.
(a) The board of directors shall have power to close the share
books of the corporation for a period of not to exceed 50 days preceding the
<PAGE> 12
date of any meeting of shareholders, or the date for payment of any dividend,
or the date for the allotment of rights, or capital shares shall go into
effect, or a date in connection with obtaining the consent of shareholders for
any purpose.
(b) In lieu of closing the share transfer books as aforesaid, the
board of directors may fix in advance a date, not exceeding 50 days preceding
the date of any meeting of shareholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital shares shall go into effect, or a date in
connection with obtaining any such consent, as a record date for the
determination of the shareholders entitled to a notice of, and to vote at, any
such meeting and any adjournment thereof, or entitled to receive payment of
any such dividend, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of capital stock,
or to give such consent.
(c) If the share transfer books shall be closed or a record date
set for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for, or such
record date shall be, at least ten (10) days immediately preceding such
meeting.
Section 6.07 Lost or Destroyed Certificates. The corporation may issue
a new certificate for shares of the corporation in place of any certificate
theretofore issued by it, alleged to have been lost or destroyed, and the
board of directors may, in its discretion, require the owner of the lost or
destroyed certificate or his legal representatives, to give the corporation a
bond in such form and amount as the board of directors may direct, and with
such surety or sureties as may be satisfactory to the board, to indemnify the
corporation and its transfer agents and registrars, if any, against any claims
that may be made against it or any such transfer agent or registrar on account
of the issuance of such new certificate. A new certificate may be issued
without requiring any bond when, in the judgment of the board of directors, it
is proper to do so.
Section 6.08 No Limitation on Voting Rights; Limitation on Dissenter's
Rights. To the extent permissible under the applicable law of any jurisdiction
to which the corporation may become subject by reason of the conduct of
business, the ownership of assets, the residence of shareholders, the location
of offices or facilities, or any other item, the corporation elects not to be
governed by the provisions of any statute that (i) limits, restricts,
modified, suspends, terminates, or otherwise affects the rights of any
shareholder to cast one vote for each share of common stock registered in the
name of such shareholder on the books of the corporation, without regard to
whether such shares were acquired directly from the corporation or from any
other person and without regard to whether such shareholder has the power to
exercise or direct the exercise of voting power over any specific fraction of
the shares of common stock of the corporation issued and outstanding or (ii)
grants to any shareholder the right to have his stock redeemed or purchased by
the corporation or any other shareholder on the acquisition by any person or
group of persons of shares of the corporation. In particular, to the extent
permitted under the laws of the state of incorporation, the corporation elects
not to be governed by any such provision, including the provisions of the
Nevada Control Share Acquisition Act, section 78.378 et seq., of the General
Corporation Law of the State of Nevada, as amended, or any statute of similar
effect or tenor.
<PAGE> 13
ARTICLE VII
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 7.01 How Constituted. The board of directors may designate an
executive committee and such other committees as the board of directors may
deem appropriate, each of which committees shall consist of two or more
directors. Members of the executive committee and of any such other
committees shall be designated annually at the annual meeting of the board of
directors; provided, however, that at any time the board of directors may
abolish or reconstitute the executive committee or any other committee. Each
member of the executive committee and of any other committee shall hold office
until his successor shall have been designated or until his resignation or
removal in the manner provided in these Bylaws.
Section 7.02 Powers. During the intervals between meetings of the board
of directors, the executive committee shall have and may exercise all powers
of the board of directors in the management of the business and affairs of the
corporation, except for the power to fill vacancies in the board of directors
or to amend these Bylaws, and except for such powers as by law may not be
delegated by the board of directors to an executive committee.
Section 7.03 Proceedings. The executive committee, and such other
committees as may be designated hereunder by the board of directors, may fix
its own presiding and recording officer or officers, and may meet at such
place or places, at such time or times and on such notice (or without notice)
as it shall determine from time to time. It will keep a record of its
proceedings and shall report such proceedings to the board of directors at the
meeting of the board of directors next following.
Section 7.04 Quorum and Manner of Acting. At all meeting of the
executive committee, and of such other committees as may be designated
hereunder by the board of directors, the presence of members constituting a
majority of the total authorized membership of the committee shall be
necessary and sufficient to constitute a quorum for the transaction of
business, and the act of a majority of the members present at any meeting at
which a quorum is present shall be the act of such committee. The members of
the executive committee, and of such other committees as may be designated
hereunder by the board of directors, shall act only as a committee and the
individual members thereof shall have no powers as such.
Section 7.05 Resignations. Any member of the executive committee, and
of such other committees as may be designated hereunder by the board of
directors, may resign at any time by delivering a written resignation to
either the president, the secretary, or assistant secretary, or to the
presiding officer of the committee of which he is a member, if any shall have
been appointed and shall be in office. Unless otherwise specified herein,
such resignation shall take effect on delivery.
Section 7.06 Removal. The board of directors may at any time remove any
member of the executive committee or of any other committee designated by it
hereunder either for or without cause.
Section 7.07 Vacancies. If any vacancies shall occur in the executive
committee or of any other committee designated by the board of directors
hereunder, by reason of disqualification, death, resignation, removal, or
otherwise, the remaining members shall, until the filling of such vacancy,
constitute the then total authorized membership of the committee and, provided
that two or more members are remaining, continue to act. Such vacancy may be
filled at any meeting of the board of directors.
<PAGE> 14
Section 7.08 Compensation. The board of directors may allow a fixed sum
and expenses of attendance to any member of the executive committee, or of any
other committee designated by it hereunder, who is not an active salaried
employee of the corporation for attendance at each meeting of said committee.
ARTICLE VIII
INDEMNIFICATION, INSURANCE, AND
OFFICER AND DIRECTOR CONTRACTS
Section 8.01 Indemnification: Third Party Actions. The corporation
shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee,
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses
(including attorneys' fees) judgments, fines, and amounts paid in settlement
actually and reasonably incurred by him in connection with any such action,
suit or proceeding, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit, or proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
Section 8.02 Indemnification: Corporate Actions. The corporation shall
have the power to indemnify any person who was or is a party or is threatened
to be made a party to any threatened, pending, or completed action or suit by
or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee, or agent
of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit, if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made in
respect of any claim, issue, or matter as to which such a person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation, unless and only to the extent that the court in
which the action or suit was brought shall determine on application that,
despite the adjudication of liability but in view of all circumstances of the
case, the person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.
Section 8.03 Determination. To the extent that a director, officer,
employee, or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in section
8.01 and 8.02 hereof, or in defense of any claim, issue, or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith. Any other indemnification
under section 8.01 and 8.02 hereof, shall be made by the corporation upon a
determination that indemnification of the officer, director, employee, or
agent is proper in the circumstances because he has met the applicable
<PAGE> 15
standard of conduct set forth in sections 8.01 and 8.02 hereof. Such
determination shall be made either (i) by the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit, or proceeding; or (ii) by independent legal counsel on a written
opinion; or (iii) by the shareholders by a majority vote of a quorum of
shareholders at any meeting duly called for such purpose.
Section 8.04 General Indemnification. The indemnification provided by
this section shall not be deemed exclusive of any other indemnification
granted under any provision of any statute, in the corporation's articles of
incorporation, these Bylaws, agreement, vote of shareholders or disinterested
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee, or agent, and
shall inure to the benefit of the heirs and legal representatives of such a
person.
Section 8.05 Advances. Expenses incurred in defending a civil or
criminal action, suit, or proceeding as contemplated in this section may be
paid by the corporation in advance of the final disposition of such action,
suit, or proceeding upon a majority vote of a quorum of the board of directors
and upon receipt of an undertaking by or on behalf of the director, officers,
employee, or agent to repay such amount or amounts unless if it is ultimately
determined that he is to indemnified by the corporation as authorized by this
section.
Section 8.06 Scope of Indemnification. The indemnification authorized
by this section shall apply to all present and future directors, officers,
employees, and agents of the corporation and shall continue as to such persons
who ceases to be directors, officers, employees, or agents of the corporation,
and shall inure to the benefit of the heirs, executors, and administrators of
all such persons and shall be in addition to all other indemnification
permitted by law.
Section 8.07. Insurance. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, employee, or agent
of the corporation, or is or was serving at the request of the corporation as
a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against any such liability and under the laws of the state of
incorporation, as the same may hereafter be amended or modified.
ARTICLE IX
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors.
ARTICLE X
DIVIDENDS
The board of directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and on the terms
and conditions provided by the articles of incorporation and these Bylaws.
ARTICLE XI
AMENDMENTS
<PAGE> 16
All Bylaws of the corporation, whether adopted by the board of directors
or the shareholders, shall be subject to amendment, alteration, or repeal, and
new Bylaws may be made, except that:
(a) No Bylaws adopted or amended by the shareholders shall be
altered or repealed by the board of directors.
(b) No Bylaws shall be adopted by the board of directors which
shall require more than a majority of the voting shares for a quorum at a
meeting of shareholders, or more than a majority of the votes cast to
constitute action by the shareholders, except where higher percentages are
required by law; provided, however that (i) if any Bylaw regulating an
impending election of directors is adopted or amended or repealed by the board
of directors, there shall be set forth in the notice of the next meeting of
shareholders for the election of directors, the Bylaws so adopted or amended
or repealed, together with a concise statement of the changes made; and (ii)
no amendment, alteration or repeal of this section XI shall be made except by
the shareholders.
CERTIFICATE OF SECRETARY
The undersigned does hereby certify that he is the secretary of EZ MERGER
CO., a corporation duly organized and existing under and by virtue of the laws
of the state of Nevada; that the above and foregoing Bylaws of said
corporation were duly and regularly adopted as such by the board of directors
of the corporation at a meeting of the board of directors, which was duly and
regularly held on the 21st day of September, 1999, and that the above and
foregoing Bylaws are now in full force and effect.
DATED THIS 21st day of September 1999.
/s/Frank Gillen, Secretary
<PAGE>
EXHIBIT 4.01
INCORPORATED IN THE STATE OF NEVADA
No. Xxxxx EZCONNECT, INC. Xxxxxx
PAR VALUE 50,000,000 SHARES AUTHORIZED NON-ASSESSIBLE
$.001 PER SHARE CUSIP NO. 30231 A105
This Certifies that VOID
is the record holder of XXXXXXXXXXXXXXX
Shares of the Common Stock transferable on the books of the Corporation
in person or by duly authorized attorney upon surrender of this Certificate
properly endorsed.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated: XXXXXXXX
[Seal of the Corporation]
- ------------------------------ -----------------------------
President Secretary
SHARES NO VALID UNTIL COUNTERSIGNED
BY TRANSFER AGENT
Colonial Stock Transfer
455 East 400 South #100
Salt Lake City, UT 84111
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