SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of event reported): April 13, 2000.
SOURCE ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number: 0-29129
Utah 87-0370820
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7412 Rosalind Circle 84121
Salt Lake City, Utah
(Address of principal executive (Zip Code)
offices)
Registrant's Telephone Number: (801)
Newven Acquisition Corporation
8 East Broadway, Suite 620, Salt Lake City, UT 84111
(Former name or former address, if changed since last report)
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Item 1. Changes in Control of Registrant.
The Transaction
On April 13, 2000, Source Energy Corporation, a Utah
corporation ("Source") acquired Newven Acquisition Corporation, a
Nevada corporation ("Newven") as a wholly owned subsidiary
through a stock for stock exchange. Immediately following the
exchange, Source and Newven entered into a Plan of Merger
pursuant to which Newven was merged with and into Source.
Prior to the transaction, Newven had 500,000 shares of
common stock outstanding, which were exchanged for 25,000 shares
of the restricted common stock of Source.
Securities of Source
The authorized capital stock of Source consists of
200,000,000 shares of Common Stock, par value $0.00025 of which
329,451 shares are issued and outstanding on April 13, 2000. All
outstanding shares of Common Stock are fully paid and non-
assessable. The holders of Common Stock are entitled to one vote
per share on each matter submitted to a vote at any meeting of
shareholders. Shares of Common Stock do not carry cumulative
voting rights and, therefore, a majority of the shares of
outstanding Common Stock will be able to elect the entire board
of directors and, if they do so, minority shareholders would not
be able to elect any persons to the board of directors. The
Company's bylaws provide that a majority in number of the issued
and outstanding shares of the Company shall constitute a quorum
for shareholders' meetings, except with respect to certain
matters for which a greater percentage quorum is required by
statute of the bylaws. Shareholders of the Company have no
preemptive rights to acquire additional shares of Common Stock or
other securities. The Common Stock is not subject to redemption
and carries no subscription or conversion rights. In the event
of liquidation of the Company, the shares of Common Stock are
entitled to share equally in corporate assets after satisfaction
of all liabilities and the liquidation preferences of any
outstanding shares of preferred stock.
Holders of Source Common Stock are entitled to dividends in
the discretion of the Board of Directors and payment thereof will
depend upon, among other things, Source's earnings, its capital
requirements and its overall financial condition. Source has not
paid any cash dividends on its Common Stock since inception and
intends to follow a policy of retaining any earnings to finance
the development and growth of its business. Accordingly, it does
not anticipate the payment of cash dividends in the foreseeable
future.
Market For Common Shares
There is currently a limited trading market for Source
Common Stock. Source's Common Stock trades on the Over the
Counter Bulletin Board under the symbol SRXCE.
Share Eligible for Future Sale
Source presently has outstanding 329,451 shares of Common
Stock. Of these shares, 225,000 shares of outstanding Common
Stock were issued and sold by Source in private transactions in
reliance upon exemptions from registration under the Securities
Act of 1933 (the "Act"). Such shares may
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be sold only pursuant to an effective registration statement
filed by Source or an applicable exemption, including the
exemption contained in Rule 144 promulgated under the Act.
In general, under Rule 144 as currently in effect, a
shareholder, including an affiliate of Source may sell shares of
Common Stock after at least one year has elapsed since such
shares were acquired from Source or an affiliate of Source. The
number of shares of Common Stock which may be sold within any
three-month period is limited to the greater of one percent of
the then outstanding Common Stock or the average weekly trading
volume in the Common Stock during the four calendar weeks
preceding the date on which notice of such sale was filed under
Rule 144. Certain other requirements of Rule 144 concerning
availability of public information, manner of sale and notice of
sale must also be satisfied. In addition, a shareholder who is
not an affiliate of Source (and who has not been an affiliate of
Source for 90 days prior to the sale) and who has beneficially
owned shares acquired from Source or an affiliate of Source for
over two years may resell the shares of Common Stock without
compliance with the foregoing requirements under Rule 144.
No predictions can be made as to the effect, if any, that
future sales of shares, or the availability of shares for future
sale, will have on the market price of the Common Stock
prevailing from time to time. Nevertheless, sales of substantial
amounts of Common Stock, or the perception that such sales may
occur, could have a material adverse effect on prevailing market
prices.
Security Ownership of Certain Beneficial Owners and Management of
Source
The following tables set forth, as of April 13, 2000, the
number of shares of Common Stock of Source beneficially owned by
all persons known to be holders of more than five percent of
Source's Common Stock and by all executive officers and directors
of Source individually and as a group. Source is not aware of
anyone other than officers and directors who holds five percent
or more of the outstanding shares.
Title of Name and address Amount and Percent
Class of beneficial owners Nature of
of beneficial Class
ownership (1)
Common Stock Craig Carpenter 209,831 63.7
7412 Rosalind Circle
Salt Lake City, UT
84121
Common Stock Helen G. Carpenter -0- (2) -0-
7412 Rosalind Circle
Salt Lake City, UT
84121
Common Stock Kathleen L. Morrison -0- -0-
5525 S. 900 East, Ste.
110
Salt Lake City, UT
84117
Total All Officers & 209,831 63.7
Directors
as a group
beneficially
own
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(1) The listed beneficial owners have no rights to acquire
any shares within 60 days of the date of this Form 8-K from
options, warrants, rights, conversion privileges or similar
obligations.
(2) Helen Carpenter is the spouse of Craig Carpenter, so
she may be deemed to have shared voting and investment control
with respect to the shares of Common Stock owned by Craig
Carpenter.
Change in Control
There are no arrangements, including any pledge by any
person of securities of Source, the operation of which may at a
subsequent date result in a change in control of the registrant.
Directors, Executive Officers, Promoters and Control Persons
The following Table sets forth certain information regarding
the executive officers and directors of Source as of January
20,2000.
Name Age Title
Craig Carpenter 56 Director and President
Helen G. Carpenter 49 Director and Vice
President
Kathleen L. Morrison 43 Director and Secretary
Craig Carpenter, Director and President, age 56, was born
and raised in Salt Lake City, Utah, where he attended East High
School. Aside from his involvement in Source, Mr. Carpenter has
been retired for the past seven years.
Helen G. Carpenter, Director and Vice President, age 49,
recently retired after 30 years at US West Communications. The
last position she held at US West was Manager of Computer
Operations.
Kathleen L. Morrison, Director and Secretary, age 43, has
spent the past seven years as the office manger for two entities.
For seven years, she was the editor of "Super Group," a vertical
market computer magazine targeting HP3000 users. Mrs. Morrison
received a B.A. degree from Colorado State University in 1978.
The directors of Source hold no other directorship in any
other reporting company, except for Kathleen L. Morrison who has
served since March 1999 as a director and secretary of Cardiff
International, a Colorado corporation. All directors hold office
until the next annual meeting of stockholders and until their
successors are duly elected and qualified.
Indemnification of Officers and Directors
Section 16-10a-902 of the Utah Code Annotated provides in
relevant part as follows:
(1) Except as provided in Subsection (4), a corporation may
indemnify an individual made a party to a proceeding because he
is or was a director, against liability incurred in the
proceeding if:
(a) his conduct was in good faith; and
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(b) he reasonably believed that his conduct was in, or not
opposed to, the corporation's best interests; and
(c) in the case of any criminal proceeding, he had no
reasonable cause to believe his conduct was unlawful.
(4) A corporation may not indemnify a director under this
section:
(a) in connection with a proceeding by or in the right of
the corporation in which the director was adjudged liable to the
corporation; or
(b) in connection with any other proceeding charging that
the director derived an improper personal benefit, whether or not
involving action in his official capacity, in which proceeding he
was adjudged liable on the basis that he derived an improper
personal benefit.
(5) Indemnification permitted under this section in
connection with a proceeding by or in the right of the
corporation is limited to reasonable expenses incurred in
connection with the proceeding.
Section 16-10a-903 of the Utah Code Annotated provides in
relevant part as follows:
Unless limited by its articles of incorporation, a
corporation shall indemnify a director who was successful, on the
merits or otherwise, in the defense of any proceeding, or in the
defense of any claim, issue, or matter in the proceeding, to
which he was a party because he is or was a director of the
corporation, against reasonable expenses incurred by him in
connection with the proceeding or claim with respect to which he
has been successful.
Section 16-10a-907 of the Utah Code Annotated provides in
relevant part as follows:
Unless a corporation's articles of incorporation provide
otherwise:
(1) an officer of the corporation is entitled to mandatory
indemnification under Section 16-10a-903, and is entitled to
apply for court-ordered indemnification under Section 16-10a-905,
in each case to the same extent as a director;
(2) the corporation may indemnify and advance expenses to an
officer, employee, fiduciary, or agent of the corporation to the
same extent as to a director; and
(3) a corporation may also indemnify and advance expenses to
an officer, employee, fiduciary, or agent who is not a director
to a greater extent, if not inconsistent with public policy, and
if provided for by its articles of incorporation, bylaws, general
or specific action of its board of directors, or contract.
Source's by-laws provide that it shall indemnify to the full
extent of its power to do so under Utah law, all directors and
officers for any liability including costs of defense reasonably
incurred in connection with any action, suit, or proceeding to
which such person may be a party by reason of such person's
position with Source, if the officer or director acted in good
faith and in a manner the officer or director reasonably believed
to be
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in, or not opposed to, the best interests of the corporation.
Consequently, Source intends to indemnify its officers and
directors to the full extent permitted by the statute noted
above.
Executive Compensation
Source has no agreement or understanding, express or
implied, with any officer, director, or principal stockholder, or
their affiliates or associates, regarding employment with Source
or compensation for services. No cash compensation, stock
options, other consideration was paid or granted to the current
executive officers during 1999 or the first quarter of 2000.
Source does not expect any compensation arrangements will be
considered or implemented unless it obtains additional capital to
expand its business operations.
Certain Relationships and Related Transactions
T.R. Kraft was an officer and director of Source until March
10, 2000, when a judgement entered by the U.S. District Court,
District of Utah, described under Item 2 of this report on Form 8-
K removed him from office and appointed former management of
Source. Mr. Kraft was removed from office on the basis of
fraudulent representations he made in connection with the
transaction pursuant to which he became an officer and director.
The judgement granted to Craig Carpenter $75,000 as compensation
for the benefit derived by Source and its stockholders from the
removal of Mr. Kraft and rescission of the transaction in which
Mr. Kraft acquired control of Source, and awarded Source damages
against Mr. Kraft in the amount of $75,000. Source was also
liable to Mr. Carpenter for legal fees and expenses of the
litigation in the amount of $15,039.
Mr. Kraft has not paid the judgement to Source, and we can
not predict at this time whether Source will be able to collect
any of the judgement. Source settled its legal cost obligation
to Craig Carpenter on April 13, 2000 by issuing to him 200,000
shares of restricted common stock to cancel the $15,039
obligation. Source is still indebted to Mr. Carpenter under the
judgement in the amount of $75,000.
Item 2. Acquisition or Disposition of Assets
The consideration exchanged in the acquisition was
negotiated between Newven and Source. In evaluating Source as a
candidate for the exchange, the stockholders of Newven evaluated
the assets, present and anticipated operations, and management of
Source. The following is a description of Source's history and
the business Source will pursue.
History
Source was originally incorporated under the name Exit, Inc.
in accordance with the laws of the State of Utah on January 30,
1981. In April of 1984, the Company changed its name to Parker
Energy Technology, Inc. From its inception until May 20, 1997,
the Company had been in the business of oil and gas exploration
and production activities. Currently, the Company has one
producing well, located in Grand County, Utah.
On May 20, 1997, the Company effected a reverse split of its
outstanding shares from 81,637,100 to 1,632,742. Simultaneous
thereto, the Company entered into an agreement with a T.R. Kraft
and Point Source Energy ("Point") to engage in the business of
distillate fuel systems process plants, issued
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12,305,800 shares of common stock in connection with the
transaction and changed its name to Source Energy Corporation.
Subsequently, Craig Carpenter, a former officer and director
of Source and a stockholder, filed a shareholder derivative suit
in the United States District Court, District of Utah, case no.
2:99CV0332K, against T.R. Kraft, Point, and Source alleging that
Kraft and Point committed fraud to induce plaintiffs to enter
into the original transaction.
On March 10, 2000 the District Court issued a judgement and
order rescinding the May 20, 1997 transaction. The judgement
states that Source be returned, as nearly as possible, to its
status prior to consummation of said transaction. This included
canceling 12,305,800 shares of common stock issued in the
transaction to Kraft by Source, reinstating Craig Carpenter,
Helen G. Carpenter, and Kathy Morrison as officers and directors
of Source, and the return of 182,852 shares of Common Stock from
Kraft to Carpenter, which were originally sold directly by
Carpenter to Kraft. Craig Carpenter was granted an award against
Source in the amount of $75,000 to compensate him for the benefit
he conferred on the stockholders of Source by prosecuting the
action against Kraft and Point. Source was awarded damages
against Kraft in the amount of $75,000. In addition, Source is
liable for legal fees and expenses of the suit in the amount of
$15,039. To settle the legal fees and expenses, Source issued
200,000 shares of its Common Stock to Mr. Carpenter. Source
intends to pursue its damage award against T.R. Kraft, but can
not predict at this time whether it will be successful in
collecting.
On April 10, 2000, Source effected a 1 for 40 reverse split
in its issued and outstanding Common Stock.
Business
Existing operations and plan of operation
In 1981, Source purchased a working interest in, and became
the operator of, the property known as Bureau of Land Management
Federal Oil and Gas Lease No. U-14654 consisting of 480 acres.
Located in Grand County, Utah, this is Source's only oil and gas
property. The Company has one producing well on this lease. At
the present time the Company maintains a 68.78% working interest
in the property.
Source has previously drilled two other dry holes on the
lease. We intend to evaluate the lease for new sites that show a
reasonable chance of success in drilling producing wells. We
will also look for opportunities to acquire additional oil and
gas properties for development in the states of Utah and Wyoming.
We sell all of our oil production to Giant Industries at
spot prices. The spot price on April 10, 2000 was $32 per barrel
for the oil from our well, which is Yellow Wax Crude. Emerging
from a two-year downturn, oil prices reached their highest level
since the Gulf War in 1999 and have continued to rise. The
industry forecasts even higher prices the next two years. Giant
Industries will take all of the oil that we can produce.
Prices for oil and gas are driven strictly by supply and
demand. We can sell our products to any one of five local
distributors. Prices among the five distributors are nearly
equal. We decided to sell to Giant Industries
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based on quality of service and proximity of their delivery point
to our lease. We do not use commodity futures contracts or price
swaps in marketing our crude oil.
Source has been unable pursue any meaningful business
operations during the past two years because of the litigation
resulting form the transaction with T.R. Kraft and Point. The
litigation was resolved by a judgement entered in March 2000, so
Source believes it is now in a position to pursue more active
business operations.
As a result of these circumstances, operations were limited
in the past two years to maintaining production from our one
producing oil well in Grand County. Revenue from oil production
in 1999 and 1998 was $26,043 and $20,143, respectively. Revenue
for the first three months of 2000 was $14,605, compared to
$4,694 for the same period in 1999. The increase in revenue from
fiscal year 1998 to fiscal year 1999 and from the first calendar
quarter of 1999 to the first quarter of 2000 is attributable
primarily to rising oil prices.
Oil producing expense was $26,523 for the year ended
December 31, 1998, as compared to $16,050 for the year ended
December 31, 1999. For the three months ended March 31, 2000,
oil producing cost was $7,155 as compared to $3,761 for the same
period in 1999. Oil producing expense as a percentage of revenue
decreased substantially in the year ended December 31, 1999 and
the first calendar quarter of 2000 as a result of lower
production costs attributable to the oil produced and lower
depletion cost.
Source realized income from oil activities of $9,993 for the
year ended December 31, 1999, and a loss from oil activities of
$6,375 for the year ended December 31, 1998. Income from oil
activities was $7,430 for the three months ended March 31, 2000,
as compared to $993 for the comparable period in 1999.
General and administrative expense was $5,125 for the year
ended December 31, 1999 and $10,881 for the year ended December
31, 1998. Consequently, Source realized net income of $4,775 for
1999 as compared to a net loss of $17,235 for 1998.
For the three months ended March 31, 2000, general and
administrative expense was $320, as compared to $2,573 for the
same period in 1999. However, Source realized and extraordinary
judgement expense of $90,039 in the shareholder derivative
lawsuit brought against T.R. Kraft, Point, and Source. As a
result, Source had a net loss of $82,902 for the first three
months of 2000, and a net loss of $1,638 for the first three
months of 1999.
At March 31, 2000, total current assets were $26,852.
Current liabilities at March 31, 2000, were $90,139, which
included a judgement payable to Craig Carpenter, an officer and
director, in the amount of $90,039 resulting form the litigation
with T.R. Kraft and Point. A portion of the liability to Mr.
Carpenter in the amount of $15,039 was settled in April 2000
through the issuance of 200,000 shares of Source Common Stock.
Therefore, Source has a working capital deficit of $48,248.
Craig Carpenter has advised the Board of Directors that he does
not intend to take any collection action against Source on the
$75,000 we currently owe to him, while Source seeks ne capital to
pursue expansion of its operations. So long as Mr. Carpenter
forbears, we believe we have sufficient cash resources and income
from oil activities to sustain our current operations over the
next 12 months.
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However, these resources are not sufficient to embark on new
drilling activity on our existing lease or to acquire and develop
any other oil and gas properties. Consequently, we intend to
seek additional debt or equity financing over the next year to
fund expansion of our operations. However, there can be no
assurance that additional funding will be available or, if
available, that it will be available on acceptable terms or in
required amounts. If we do find financing, there is no assurance
that we will succeed in expanding our operations or remain
profitable.
Title to properties
As is customary in the oil and gas industry, only a
perfunctory title examination is conducted at the time oil and
gas leases are acquired. Prior to the commencement of drilling
operations, a thorough title examination is conducted. We
believe the title to our lease is good and indefeasible in
accordance with standards generally accepted in the oil and gas
industry. Our existing and future leases may be burdened by
customary royalty interests, liens incident to oil and gas
operations, and liens for taxes and other governmental charges as
well as encumbrances, easements and restrictions. We do not
believe that any of these burdens will materially interfere with
the use of the property.
Regulation
All aspects of the oil and gas industry are extensively
regulated by federal, state, and local governments. Regulations
govern such things as drilling permits, production rates,
environmental protection and pollution control, royalty rates,
and taxation rates. These regulations may substantially increase
the cost of doing business and sometimes prevent or delay the
start or continuation of any given exploration or development
project. Regulations are subject to future changes by
legislative and administrative actin and by judicial decisions,
which may adversely affect the petroleum industry.
We believe our operations comply with all applicable
legislation and regulations in all material respects and that the
existence of such regulations has had no more restrictive effect
on our method of operations than other similar companies in the
industry. Although we do not believe our business operations
presently impair environmental quality, compliance wit federal,
state and local regulations which have been enacted or adopted
regulating the discharge of materials into the environment could
have an adverse effect upon our capital expenditures, earnings
and competitive position.
In the areas which we conduct our operations, there are
statutory provisions regulating the production of oil and natural
gas. These rules may restrict the oil and gas production rate to
below the rate our existing and future wells can produce. We are
also subject to numerous laws and regulations governing the
discharge of materials into the environment or otherwise relating
to environmental protection. We may be required to obtain
permits before drilling and operating our wells. Also, we may be
subject to liability for pollution that results from our
operations. It is impossible to predict if and to what extent
these regulations may impact our operations.
State regulatory authorities have established rules and
regulations requiring permits for drilling operations, drilling
bonds and/or reports concerning operations. The state regulatory
authorities may also have
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statutes and regulations concerning the spacing of wells,
environmental matters and conservation.
We intend to comply with all regulations pertaining to our
operations. However, future legislation and regulation may have
an adverse impact on our business.
Competition
The oil and gas industry is highly competitive in all
phases. We will encounter strong competition from other
independent oil companies in all areas of our business including
marketing, production and obtaining external financing. Most of
our competitors have financial resources, personnel, and
facilities substantially greater than ours. However, unless
there is a substantial drop in the market for oil and natural
gas, we can sell our products at daily spot prices.
Employees
Source has no employees. It relies on independent
contractors to to perform the services required to maintain its
producing well.
Legal proceedings
Source is not a party to any material pending legal
proceedings, and to the best of its knowledge, no such
proceedings by or against Source have been threatened.
Offices
Source is headquartered in Utah and has its corporate
offices and principal place of business located at 7412 Rosalind
Circle, Salt Lake City, Utah 84121, which is the residence of
Craig Carpenter, an officer and director. Source's telephone
number is (801) 943-5490.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1985
provides a safe harbor for forward-looking statements made by
Source, except where such statements are made in connection with
an initial public offering. All statements, other than
statements of historical fact, which address activities, actions,
goals, prospects, or new developments that Source expects or
anticipates will or may occur in the future, including such
things as expansion and growth of its operations and other such
matters are forward-looking statements. Any one or a combination
of factors could materially affect Source's operations and
financial condition. These factors include fluctuating oil
prices, competitive pressures, success or failure of oil and gas
development activities, legal and regulatory initiatives
affecting oil and gas production, and conditions in the capital
markets. Forward-looking statements made by Source are based on
knowledge of its business and the environment in which it
operates as of the date of this report. Because of the factors
listed above, as well as other factors beyond its control, actual
results may differ from those in the forward-looking statements.
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Item 5. Other Events
Market For Common Equity and Related Stockholder Matters
Source's Common Stock is currently traded on the Over-the-
Counter Bulletin Board ("OTCBB") under the symbol "SRXCE." Source
is presently not required to file reports with the SEC pursuant
to the Exchange Act. However, under the OTC Eligibility Rule,
effective January 4, 1999, companies whose securities are quoted
on the OTCBB will be required to file periodic reports with the
SEC to continue quoting their securities (the "Eligibility
Rule"). As a result of the acquisition of Newven, Source is
assuming the reporting status of Newven for purposes of
satisfying the requirements of the Eligibility Rule.
On April 7, 2000, the OTCBB and SEC expressed an
interpretation of existing regulations to the effect that the
acquisition of Newven will not constitute compliance with the
Eligibility Rule if this report on Form 8-K is selected for
review by the SEC and all comments from the SEC are not cleared
before the deadline for determination of our compliance with the
Eligibility Rule. Our deadline for this determination is April
19, 2000. Since Source was unable to act sooner to comply with
the Eligibility Rule because of the litigation with T.R. Kraft
and former management, which was just resolved in March 2000, we
have opted to attempt to comply with the Eligibility Rule by
acquiring Newven and filing this report in hopes that it will not
be selected for review and the OTCBB will otherwise determine we
are in compliance prior to April 19, 2000. There is no assurance
we will be successful in this effort. If Source does not satisfy
the Eligibility Rule by the deadline, we will attempt to continue
quotation on the NQB "Pink Sheets" and apply for relisting on the
OTCBB as soon as all regulatory requirements are satisfied.
The following table sets forth the range of the high and low
closing bid prices per share of Source's Common Stock during each
of the calendar quarters identified below. These bid prices were
obtained from the national Quotation Bureau, and do not
necessarily reflect actual transactions, retail markups,
markdowns or commissions. Based on the very limited public float
and trading in Source's Common Stock, Source believes that such
data is anecdotal and may bear no relation to the true value of
Source's Common Stock or the range of prices that would prevail
in a liquid market.
The high and low bid sales prices, as adjusted retroactively
for the 1 for 40 reverse split effected in April 2000, for each
full quarterly period within the two most recent fiscal years and
any subsequent interim period for which financial statements are
included are as follows:
High Bid ($) Low Bid ($)
1998
First Quarter 57.50 8.75
Second Quarter 36.25 7.50
Third Quarter 22.50 8.75
Fourth Quarter 12.50 2.00
1999
First Quarter 3.00 2.00
Second Quarter 2.80 0.40
Third Quarter 1.00 0.70
Fourth Quarter 1.20 0.04
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2000
First Quarter 5.00 1.00
Successor Issuer Election
Upon completing the acquisition of Newven, Pursuant to Rule
12g-3(a) of the General Rules and Regulations of the Securities
and Exchange Commission, Source became the successor issuer to
Newven for reporting purposes under the Securities Exchange Act
of 1934, and hereby elects to report under said Act effective
April 14, 2000. A copy of this report on Form 8-K was delivered
to each of the stockholders of Newven on April 14, 2000, in
satisfaction of the requirements of Rule 14f-1 promulgated under
the Securities Exchange Act of 1934.
Item 7. Financial Statements and Exhibits
Financial Statements
Included with this report are the following financial
statements of Source:
Years ended December 31, 1999 and 1998
Independent Auditors' Report
Audited Balance Sheet at December 31, 1999
Audited Statements of Operations for the Years Ended
December 31, 1999 and 1998
Audited Statements of Stockholders' Equity for the Years
Ended December 31, 1999 and 1998
Audited Statements of Cash Flows for the Years Ended
December 31, 1999 and 1998
Interim Periods ended March 31, 2000 and 1999
Unaudited Balance Sheet at March 31, 2000
Unaudited Statements of Operations for the Three Months
Ended March 31, 2000 and 1998
Unaudited Statements of Cash Flows for the Three Months
Ended March 31, 2000 and 1998
No financial information for Newven and no pro forma
financial information is required under the criteria set forth in
Item 310 (c) and (d) of Regulation S-B.
Exhibits
Exhibit SEC Ref. Title of Document
No. No.
1 (2) Plan of Merger Between Source and Newven
2 (3)(i) Articles of Incorporation, as amended, of
Source
3 (3)(ii) By-Laws of Source
4 (10) Judgement entered by the U.S. District
Court,
District of Utah, Case No. 2:99CV0332K
5 (27) Financial Data Schedule
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the Registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.
Source Energy Corporation
DATED: April 14, 2000 By: /s/ Craig Carpenter
President
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SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Financial Statements
December 31, 1999 and 1998
TABLE OF CONTENTS
Page
14
Independent Auditors' Report
Balance Sheet -- December 31, 1999 15
Statements of Operations for the Years 16
Ended December 31, 1999 and 1998.
Statements of Stockholders' Equity for 17
the Years Ended December 31, 1999 and
1998.
Statements of Cash Flows for the Years 18
Ended December 31, 1999 and 1998.
Notes to Financial Statements 19 - 22
Unaudited Supplemental Information 23
Concerning Oil and Gas Producing
Properties
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INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Source Energy Corporation
We have audited the accompanying balance sheet of Source Energy
Corporation, formerly known as Parker Energy Technology, Inc. as
of December 31, 1999, and the related statements of operations,
stockholders' equity, and cash flows for the years ended December
31, 1999 and 1998. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Source Energy Corporation, formerly known as Parker Energy
Technology, Inc., as of December 31, 1999, and the results of
their operations and their cash flows for the years ended
December 31, 1999 and 1998 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 3 to the financial statements, the Company has
experienced losses from operations since its inception and has
not yet begun generating significant revenue which raises
substantial doubt about the ability to continue as a going
concern. Management's plans in regard to these matters are also
described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
Mantyla McReynolds
Salt Lake City, Utah
April 11, 2000
15
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Balance Sheet
December 31, 1999
ASSETS
Current Assets
Cash and cash equivalents $ 10,714
Accounts receivable 5,084
Total Current Assets 15,798
Property and Equipment (Note 2)
Equipment 5,476
Proved oil and gas properties 597,353
Total Property and Equipment 602,829
Less: Accumulated Depreciation and Depletion (510,782)
Net Property and Equipment 92,047
Total Assets $ 107,845
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Taxes Payable $ 100
Total Current Liabilities 100
Total Liabilities 100
Stockholders' Equity (Note 1)
Capital Stock -- 200,000,000 shares
authorized having a
par value of $.00025 per share; 1,022
4,088,981 shares issued and outstanding
Additional Paid-in Capital 1,226,929
Accumulated Deficit (1,120,206)
Total Stockholders' Equity 107,745
Total Liabilities and Stockholders' Equity $ 107,845
See accompanying notes to financial statements.
16
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Statements of Operations
For the Years Ended December 31, 1999 and 1998
1999 1998
Revenues from Oil and Gas Activities $ 26,043 $ 20,148
Oil and Gas Producing Expense:
Production costs 7,317 12,985
Depletion (Note 2) 8,733 13,538
Total Oil and Gas Producing Expense 16,050 26,523
Income/(Loss) from Oil and Gas Activities 9,993 (6,375)
Other Income/(Expense):
General and administrative expense (5,125) (10,881)
Interest 7 21
Total Other Income/(Expense) (5,118) (10,860)
Net Income/(Loss) before income tax 4,875 (17,235)
Provision for income tax (Notes 1 & 4) 100 -0-
Net Income/(Loss) $ 4,775 $ (17,235)
Profit/(Loss) per Share $ .01 $ (.01)
Weighted Average Shares Outstanding 4,088,981 4,088,981
See accompanying notes to financial statements.
17
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Statements of Stockholders' Equity
For the Years Ended December 31, 1999 and 1998
Additional Net
Common Common Paid-in Accumulated Stockholders'
Shares Stock Capital Deficit Equity
Balance,
December 31, 1997 3,698,981 $ 925 $ 1,215,326 $ (1,107,746) $ 108,505
Issuance of shares
for cash 390,000 97 11,603 11,700
Net Loss for the
Year Ended December
31, 1998 (17,235) (17,235)
Balance,
December 31, 1998 4,088,981 1,022 1,226,929 (1,124,981) 102,970
Net Income for the
Year Ended December
31, 1999 4,775 4,775
Balance,
December 31, 1999 4,088,981 1,022 1,226,929 (1,120,206) 107,745
See accompanying notes to financial statements.
18
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Statements of Cash Flows
For the Years Ended December 31, 1999 and 1998
1999 1998
Cash Flows Provided by/(Used for) Operating
Activities
Net loss $ 4,775 $ (17,235)
Adjustments to reconcile net income to net
cash provided by
operating activities:
Depreciation and depletion 8,732 14,632
(Increase)/decrease in accounts receivable (5,084)
Increase/(decrease) in current liabilities 100 (18,250)
Net Cash Used for Operating Activities 8,523 (20,853)
Cash Flows Provided by/(Used for) Financing
Activities
Proceeds from issuance of shares -0- 11,700
Net Cash Provided by Financing Activities -0- 11,700
Net Increase/(Decrease) in Cash 8,523 (9,153)
Beginning Cash Balance 2,190 11,343
Ending Cash Balance $ 10,713 $ 2,190
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the year for income taxes $ 100 $ -0-
See accompanying notes to financial statements.
19
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Notes to Financial Statements
December 31, 1999
Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(a) Organization
The Company was originally incorporated under the name
Exit, Inc. in accordance with the laws of the State of
Utah on January 30, 1981. In April of 1984, the
Company changed its name to Parker Energy Technology,
Inc. From its inception until May 20, 1997, the
Company had been in the business of oil and gas
exploration and production activities. Currently, the
Company has one producing well, located in Grand
County, Utah. On May 20, 1997, the Company effected a
reverse split of its outstanding shares from 81,637,100
to 1,632,742. Simultaneous thereto, the Company
entered into an agreement with an individual to engage
in the business of distillate fuel systems process
plants and changed its name to Source Energy
Corporation. On March 10, 2000 a U.S. district court
judge rescinded the May 20, 1997 agreement and ordered
that the Company be returned, as nearly as possible, to
its status prior to consummation of said agreement.
This included cancelling 12,305,800 shares of common
stock issued in the transaction. As nearly as
possible, these financial statements have been prepared
in accordance with the judge's order.
The financial statements of the Company have been
prepared in accordance with generally accepted
accounting principles. The following summarizes the
more significant of such policies.
(b) Proved Oil and Gas Properties
The Company utilizes the successful efforts method of
accounting for its oil and gas producing activities.
This method of accounting requires the capitalization
of exploration and development activities related to
the discovery of producing properties and the expensing
of costs related to the discovery of unsuccessful
exploration efforts.
Depletion of oil and gas properties is provided by
utilizing the units of production method. The cost of
the property ($597,353) is divided by the total
estimated reserves (128,740 barrels) resulting in a
unit depletion amount of $4.64.
(c) Property and Equipment
Equipment is stated at cost. Depreciation is provided
using the straight-line method over a five year period.
Maintenance and repair costs are charged to expense as
incurred.
2O
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Notes to Financial Statements
December 31, 1999
Note 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES [continued]
(d) Income Taxes
Effective January 1, 1993, the Company adopted the
provisions of Statement of Financial Accounting
Standards No. 109 [the Statement], Accounting for
Income Taxes. The Statement requires an asset and
liability approach for financial accounting and
reporting for income taxes, and the recognition of
deferred tax assets and liabilities for the temporary
differences between the financial reporting basis and
tax basis of the Company's assets and liabilities at
enacted tax rates expected to be in effect when such
amounts are realized or settled. The cumulative effect
of this change in accounting for income taxes as of
December 31, 1999 is $0 due to the valuation allowance
established as described below.
(e) Net Income Per Common Share
In accordance with Financial Accounting Standards No.
128, "Earnings Per Share," basic loss per common share
is computed using the weighted average number of common
shares outstanding.
(f) Cash and Cash Equivalents
For purposes of the statements of cash flows, the
Company considers cash on deposit in the bank and in
its money market account to be cash.
(g) Use of Estimates in Preparation of Financial
Statements
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that
affect the reported amounts of assets and liabilities;
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.
21
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Notes to Financial Statements
December 31, 1999
Note 2 PROPERTY AND EQUIPMENT
Oil and Gas Producing Activities
During 1981, the Company purchased a working interest
in, and became the operator of, the property known as
Bureau of Land Management Federal Oil and Gas Lease No.
U-14654 consisting of 480 acres. Located in Grand
County, Utah, this is the Company's only oil and gas
property. The Company has one producing well on this
lease. At the present time the Company maintains a
68.78% working interest in the property.
Information on capitalized costs relating to oil and
gas producing activities is presented below:
Proved Oil and Gas Properties $ 597,353
Accumulated Depletion ($8,733 during 1999 and
13,538 during 1998)
(505,306)
Net Capitalized Costs
$ 92,047
Other Property and Equipment
Equipment at cost $ 5,476
Accumulated depreciation (5,476)
Net property and equipment $ -0-
Note 3 LIQUIDITY
The Company has accumulated losses from inception
through December 31, 1999 amounting to $1,120,206. The
Company's ability to achieve a level of consistent
profitable operations and/or additional financing may
impact the Company's ability to continue as it is
presently organized. Management intends to raise
additional capital through private or registered
placement, debt or other offerings.
Note 4 INCOME TAXES
The Company adopted the provisions of Statement of
Financial Accounting Standards No. 109 [the Statement],
Accounting for Income Taxes, during 1993. Prior years'
financial statements have not been restated to apply
the provisions of the Statement. No provision has been
made for income taxes in the financial statements
because the Company has accumulated substantial losses
since inception.
22
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Notes to Financial Statements
December 31, 1999
INCOME TAXES [continued]
The tax effects of temporary differences that give rise
to significant portions of the deferred tax asset at
December 31, 1999 have no impact on the financial
position of the Company. A valuation allowance is
provided when it is more likely than not that some
portion of the deferred tax asset will not be realized.
Because of the lack of taxable earnings history, the
Company has established a valuation allowance for all
future deductible temporary differences.
Note 5 SIGNIFICANT CONCENTRATIONS OF CREDIT RISK
The Company's primary operations have been located in
the geographic region of Grand County, Utah. Since its
reorganization, the Company seeks a worldwide market.
The accounts receivable of the Company are unsecured.
Should the primary customer of the Company, a wholesale
oil purchaser, default on its payment, the Company
would be required to seek relief as an unsecured
creditor. If the current purchaser of the Company's
oil production were to cease to do business with the
Company, it is reasonably certain that other purchasers
would be readily available in the market place.
Note 6 RELATED-PARTY TRANSACTIONS
A shareholder of the Company is also a 16.9% working
interest owner in the Company's lease located in Grand
County, Utah.
Note 7 SUBSEQUENT EVENTS
On March 10, 2000, a U.S. district court judge
rescinded the May 20, 1997 agreement referenced in Note
1, and ordered that the Company be returned, as nearly
as possible, to its status prior to consummation of
said agreement. The Court further ordered that the
Company pay the plaintiff in the legal action his
attorneys fees in the amount of $15,039 and an award of
$75,000 to compensate him for the benefit conferred on
Source Energy Corporation shareholders in prosecuting
this action. The plaintiff in this case was returned
by the Court to the presidency of Source Energy
Corporation, a position he held prior to the May 20,
1997 agreement.
The Court also ordered that the other defendants in the
case, T.R. Kraft, and Point Source Energy Corporation,
an Oregon corporation, to pay an award to the Company
in the amount of $225,000. The Company does not
intend to record this amount as a receivable on its
books because the defendants whereabouts are unknown
and ability to collect from them is in question.
The Company effected a 1 for 40 reverse split, which
became effective April 10, 2000.
23
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Unaudited Supplemental Information
Oil and Gas Producing Activities
December 31, 1999
Reserve Quantity Information (Unaudited)
Proved Developed Reserves:
Beginning of year 21,725
Production ( 1,883)
End of year 19,842
Note: The Company has previously drilled two other dry
holes on the lease where these proved reserves are located.
Since there are no additional known reserves, the Company
has not estimated proved undeveloped reserves.
Standardized Measure of Discounted Future Net Cash Flows and
Changes Therein Relating to Proved Oil and Gas Reserves at
December 31, 1999 (Unaudited)
Future cash inflows * $ 268,442
Future production and development costs* (107,305)
Future income tax expenses** -
Future net cash flows 161,137
10% annual discount for estimated timing of cash flows ( 75,804)
Standardized measure of discounted future net cash flows $ 85,333
Note: There have been no principal sources of change for
the year ended December 31, 1999.
* Future net cash flows were computed using year-end prices
and costs, and year-end statutory tax rates that related to
existing proved oil and gas reserves in which the Company
has mineral interests.
** Due to large net operating loss carry forwards, the
Company (under its present organizational structure) does
not anticipate paying income taxes on the subject reserves.
24
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Unaudited Financial Statements
March 31, 1999 and 1998
TABLE OF CONTENTS
Page
Balance Sheet -- March 31, 2000 25
Statements of Operations for the Three 26
Months Ended March 31, 2000 and 1999.
Statements of Cash Flows for the Three 27
Months Ended March 31, 2000 and 1999.
Notes to Financial Statements 28
25
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Condensed Balance Sheet
March 31, 2000
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 12,247
Accounts receivable 14,605
Total Current Assets 26,852
Property and Equipment
Equipment 5,476
Proved oil and gas properties 597,353
Total Property and Equipment 602,829
Less: Accumulated Depreciation and Dep (514,700)
letion
Net Property and Equipment 88,129
Total Assets $ 114,981
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Current Liabilities
Judgement payable - related party $ 90,039
Taxes Payable 100
Total Current Liabilities
90,139
Total Liabilities
90,139
Stockholders' Equity
Capital Stock -- 200,000,000 shares
authorized having a par value of $.00025
per share; 4,088,981 shares issued
and outstanding 1,022
Additional Paid-in Capital 1,226,929
Accumulated Deficit (1,203,109)
Total Stockholders' Equity 24,842
Total Liabilities and Stockholders' Equity $ 114,981
See accompanying notes to financial statements.
26
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Condensed Statements of Operations
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
For Three For Three
Months Months
Ended Ended
March 31, March 31,
2000 1999
Revenues from Oil and Gas $ 14,605 $ 4,694
Activities
Oil and Gas Producing Expense:
Production costs 3,237 2,193
Depletion (Note 2) 3,918 1,568
Total Oil and Gas Producing Expense 7,155 3,761
Income/(Loss) from Oil and Gas
Activities 7,450 933
Other Income/(Expense):
General and administrative expense (320) (2,573)
Judgement expense (90,039)
Interest 7 2
Total Other Income/(Expense) (90,352) (1,638)
Net loss before income tax (89,902) (1,638)
Provision for income tax (Notes 1 & 4) -0- -0-
Net Loss $ (89,902) $ (1,638)
Profit/(Loss) per Share $ (.02) $ (.01)
Weighted Average Shares Outstanding 4,088,981 4,088,981
See accompanying notes to financial statements.
27
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Statements of Cash Flows
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
For Three For Three
Months Months
Ended Ended
March 31, March 31,
2000 1999
Cash Flows Provided by/(Used for)
Operating Activities
Net loss $ (82,902) $ (1,638)
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and depletion 3,918 1,568
(Increase)/decrease in accounts (9,521) -0-
receivable
Increase/(decrease) in current 90,039 -0-
liabilities
Net Cash Used for Operating 1,534 (70)
Activities
Cash Flows Provided by/(Used for)
Financing Activities
Proceeds from issuance of shares -0- -0-
Net Cash Provided by Financing -0- -0-
Activities
Net Increase/(Decrease) in Cash 1,534 (70)
Beginning Cash Balance 10,713 2,190
Ending Cash Balance $ 12,247 $ 2,120
Supplemental Disclosure of Cash
Flow Information:
Cash paid during the year for $ -0- $ -0-
income taxes
See accompanying notes to financial statements.
28
<PAGE>
SOURCE ENERGY CORPORATION
Formerly known as Parker Energy Technology, Inc.
Notes to Financial Statements
March 31, 2000
Note 1 PRELIMINARY NOTE
The accompanying condensed consolidated financial
statements have been prepared without audit, pursuant
to the rules and regulations of the Securities and
Exchange Commission. Certain information and
disclosures normally included in financial statements
prepared in accordance with generally accepted
accounting principles have been condensed or omitted.
It is suggested that these condensed financial
statements be read in conjunction with the financial
statements and notes thereto included in the Company's
Annual Audit for the year ended December 31, 1999.
Note 2 ORGANIZATION
The Company was originally incorporated under the name
Exit, Inc. in accordance with the laws of the State of
Utah on January 30, 1981. In April of 1984, the
Company changed its name to Parker Energy Technology,
Inc. From its inception until May 20, 1997, the
Company had been in the business of oil and gas
exploration and production activities. Currently, the
Company has one producing well, located in Grand
County, Utah. On May 20, 1997, the Company effected a
reverse split of its outstanding shares from 81,637,100
to 1,632,742. Simultaneous thereto, the Company
entered into an agreement with an individual to engage
in the business of distillate fuel systems process
plants and changed its name to Source Energy
Corporation. On March 10, 2000 a U.S. district court
judge rescinded the May 20, 1997 agreement and ordered
that the Company be returned, as nearly as possible, to
its status prior to consummation of said agreement.
This included cancelling 12,305,800 shares of common
stock issued in the transaction.
On April 10, 2000, the Company effected a 1 for 40
reverse split.
29
<PAGE>
Exhibit No. 1
Form 8-K
Source Energy Corporation
File No. 0-29129
PLAN OF MERGER
This PLAN OF MERGER (the "Plan of Merger"), is made as of
the 13th day of April, 2000, by and between SOURCE ENERGY
CORPORATION, a Utah corporation ("Source"), and NEWVEN
ACQUISITION CORPORATION, a Nevada corporation ("Newven"). Source
is hereinafter sometimes referred to as the "Surviving
Corporation," and together with Newven are referred to as the
"Constituent Corporations.
The authorized capital stock of Newven consists of
50,000,000 shares of common stock, par value $0.001 ("Newven
Common Stock") of which 500,000 shares are issued and outstanding
and held of record by Source, and 10,000,000 shares of preferred
stock, par value $0.001, of which no shares are issued and
outstanding.
The directors of the Constituent Corporations deem it
advisable and to the advantage of said corporations that Newven
merge into Source upon the terms and conditions provided herein.
NOW, THEREFORE, the parties hereby adopt the plan of
reorganization encompassed by this Plan of Merger and hereby
agree that Newven shall merge into Source on the following terms,
conditions and other provisions:
1. Terms and Conditions.
1.1 Merger. Newven shall be merged with and into Source,
which shall be the surviving corporation effective on the date
when this Plan of Merger is filed as part of the required
Articles of Merger with the Division of Corporations and
Commercial Code of the state of Utah and the Nevada Secretary of
State, but in no event prior to April 25, 2000 (the "Effective
Date").
1.2 Succession. On the Effective Date, Source shall
succeed to all of the rights, privileges, powers, immunities and
franchises and all the property, real, personal and mixed of
Newven, without the necessity for any separate transfer. Source
shall thereafter be responsible and liable for all liabilities
and obligations of Newven, and neither the rights of creditors
nor any liens on the property of the Merger Companies shall be
impaired by the merger.
1.3 Common Stock of Newven. Upon the Effective Date, by
virtue of the merger and without any further action on the part
of the Constituent Corporations or their stockholders, each share
of Newven Common Stock issued and outstanding immediately prior
to the Effective Date shall be cancelled and shall no longer
represent any interest in any corporation.
2. Charter Documents, Directors and Officers
<PAGE>
2.1 Articles of Incorporation and By-Laws. The Articles of
Incorporation and Bylaws of Source as in effect immediately prior
to the Effective Date shall remain the Articles of Incorporation
and Bylaws of Source after the Effective Date without change or
modigfication.
2.2 Directors and Officers. On the Effective Date, the
Board of Directors of Source will consist of the members of the
Board of Directors of Source immediately prior to the Merger.
The individuals serving as executive officers of Source
immediately prior to the Merger will serve as executive officers
of Source upon the effectiveness of the Merger.
3. Miscellaneous
3.1 Further Assurances. From time to time, and when
required by Source or by its successors and assigns, there shall
be executed and delivered on behalf of the Newven such deeds and
other instruments, and there shall be taken or caused to be taken
by them such further and other action, as shall be appropriate
and necessary in order to vest or perfect, or to conform of
record or otherwise, in Source the title to and possession of all
the property, intents, assets, rights, privileges, immunities,
powers, franchises and authority of Newven and otherwise to carry
out the purposes of this Plan of Merger, and the directors and
officers of Source are fully authorized in the name and on behalf
of Newven or otherwise to take any and all such action and to
execute and deliver any and all such deeds and other instruments.
3.2 Approval. This Plan of Merger has been duly adopted
and approved by each of the Boards of Directors of the
Constituent Corporations and no approval of the stockholders of
either of the Constituent Corporations is required since Source
holds all of the issued and outstanding capital stock of Newven.
3.3 Governing Law. This Plan of Merger shall be governed
by and construed in accordance with the laws of the state of
Utah.
IN WITNESS WHEREOF, this agreement has been signed as of the
date first-above written for and on behalf of the corporate
parties hereto by the undersigned thereunto duly authorized.
SOURCE ENERGY CORPORATION
By________________________________________
Craig Carpenter, President
NEWVEN ACQUISITION CORPORATION
By________________________________________
Mark E. Lehman, President
<PAGE>
16
Exhibit No. 2
Form 8-K
Source Energy Corporation
File No. 0-29129
ARTICLES OF AMENDMENT
TO THE ARTICLFS OF INCORPORATION
PARKER ENERGY TECHNOLOGY, INC.
Pursuant to the provisions of Section 16-10a-1006 of the
Utah Revised Business Corporation Act, the undersigned
corporation hereby adopts the following Articles of Amendment to
its Articles of Incorporation.
FIRST: The name of the corporation is Parker Energy
Technology, Inc. (the "Corporation").
SECOND: The following amendment to the Articles of
Incorporation of the Corporation was duly adopted by the
stockholders of the Corporation at a meeting held June 6,
1997, in the manner prescribed by the Utah Revised Business
Corporation Act to-wit:
ARTICLE I
The name of the Corporation is Source Energy Corporation.
THIRD: The amendment does not provide for an
exchange, reclassification or cancellation of issued shares.
FOURTH: The amendment was adopted by the stockholders
at a special meeting held June 6, 1997, in accordance with
the Utah Revised Business Corporation Act.
FIFTH: The amendment was not adopted by the
incorporators or the Board of Directors without stockholder
action.
SIXTH: (a) The designation and number of
outstanding shares of each class entitled to vote thereon as
a class were as follows, to-wit:
CLASS NUMBER OF SHARE.S
Common 13,938,542
(b) The number of shares voted for the
amendment was 12,305,800, with none opposing and none
abstaining.
<PAGE>
IN WITNESS WHEREOF, the undersigned President and
Secretary, having been thereunto duly authorized, have executed
the foregoing Articles of Amendment for the Corporation under the
penalties of perjury this 6 day of June, 1997.
PARKER ENERGY TECHNOLOGY, INC.
By /S/ TIMOTHY R. KRAFT
------------------------------------
Timothy R. Kraft, President
Attest:
/S/ CRAIG CARPENTER
- --------------------------------
Craig Carpenter, Secretary
<PAGE>
ARTICLES OF AMENDMENT
TO
THE ARTICLES OF INCORPORATIION
OF
EXIT, INC.
A Utah Corporation
PURSUANT to the provisions of Section 16-10-57 of the
Utah Business Corporation Act, the undersigned Corporation adopts
the following Articles of Amendment to its Articles of
Incorporation:
First: The name of the Corporation is EXIT, INC., A Utah
Corporation.
Second: The following amendment of the Articles of Incorporation
was adopted by the shareholders of the Corporation on the 12th
day of April, 1984, in the manner prescribed by the Utah Business
Corporation Act:
ARTICLE I
Name of Corporation
The name of the Corporation is PARKER ENERGY
TECHNOLOGY, INC., A Utah Corporation.
Third: The number of shares of the Corporation out-
standing at the time of said adoption was 72,857,100, and the
number of shares entitled to vote thereon was 72,857,100.
Fourth: The designation and number of outstanding shares of each
class entitled to vote thereon as a class were as follows:
Class Number of Shares
Common Stock 72,857,100
Fifth: The number of shares voted f or such amendment was
47,000,000 and the number of shares voted against such amendment
was 390,000.
<PAGE>
DATED this 20th day of April, 1984.
EXIT, INC.,
A Utah Corporation,
BY /S/ CRAIG CARPENTER
----------------------
Its President
BY /S/ HELEN M. GORDON
----------------------
Its Secretary
STATE OF UTAH,
COUNTY OF SALT LAKE, ss:
On the 20th day of April, 1984, personally
appeared before me CRAIG CARPENTER and HELEN GORDON, who being by
me first duly sworn did say that they are the President and
Secretary, respectively, of EXIT, INC., A Utah Corporation, and
that they did sign the above and foregoing Articles of Amendment
on behalf of said Corporation and that said Corporation did
execute the same.
/s/ Notary
My commission expires:
<PAGE>
ARTICLES OF INCORPORATION
OF
EXIT, INC.
We, the undersigned natural persons of the age of twenty-
one or more, acting as incorporators of a corporation
under the Utah Business Corporation Act, adopt the
following Articles of Incorporation for such corporation:
ARTICLE I
NAME
The name of the corporation is EXIT, INC.
ARTICLE II
PERIOD OF DURATION
The period of duration of the corporation is perpetual.
ARTICLE III
PURPOSE
The purposes for which the Corporation is organized are:
1. To engage in all phases of mining, oil and gas, industry,
property and nature resources development.
2. To engage in any other lawful business authorized by
Title 16 of the Utah Code.
3. To subscribe for, purchase or otherwise acquire,
underwrite, obtain an interest in, own, hold, pledge,
hypothecate, mortgage, assign, deposit, create trusts
with respect thereto, to sell, exchange or otherwise
dispose of and generally deal in and with property and
securities of every kind and description of any
government, state, territory, district, municipality or
other political or government division or subdivision,
body politic, corporation, association, partnership,
firm, trustee, syndicate, individual, combination,
organization or unity, wheresoever located in or
organized under the laws in any geographical location
whatsoever including, without limiting the generality
of the foregoing, stock, shares, voting trust
certificates, bonds, mortgages, debentures, notes, land
trust certificates, warrants, rights, scripts, further
payments or assessments, to exercise any and all
rights, powers and privileges of individual ownership
or interest in respect of any such securities,
including the right to vote thereon, and otherwise act
with respect thereto.
4. To carry on and conduct a general business, to act and
appoint others to act as general agent, special agents, broker,
factor, manufacturer's agent, purchasing
<PAGE>
5. agent, sales agent, distributing agent, representative and
commission merchant for individuals, firms, associations and
corporation, and the distribution, delivery, purchase and sale of
goods, wares, merchandise, property, commodities and articles of
commerce of every kind and description, and in selling, promoting
the sale of, advertising and introducing, and contracting for the
sale, introduction, advertisement and use of services of all
kinds relating to any and all kinds of businesses and for any and
all purposes.
5. To specifically act as a franchise agent for the sale
and service of all types of commodities.
6. To acquire by purchase, exchange or otherwise, all or
any part of any interest in the properties, assets,
business and good will of any one or more persons,
firms, association or corporations heretofore or
hereafter engaged in any business for which a
corporation may now or hereafter be organized under the
laws of this state, to pay for the same in cash,
property of its own or other securities, to hold,
operate, organize, liquidate, sell, purchase an
contracts, trust deeds or mortgages, or in any manner
dispose of for a whole, or any part thereof, and in
connection therewith, to assume or guarantee
performances of any liabilities, obligations or
contracts of such persons, firms, associations or other
corporations, and to conduct the whole or any part of
any business so acquired.
7. To borrow or raise monies for any of the purposes of the
Corporation from time to time without limit as to amount, to
draw, make, accept, endorse, guarantee, execute and issue
promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable and non-negotiable instruments
and other evidences of indebtedness, and to secure the payment
thereof and of the interest thereon by mortgage on, or pledge,
conveyance or assignment, in trust of the whole or any part of
the assets of the corporation, real, personal or mixed, including
contract rights, whether at the time owned or thereafter
required.
8. To acquire property by purchase of property at tax sales, or
to assume mortgages, trust deeds, or to acquire land by real
estate contracts, and to acquire real property in any other
manner prescribed by law and authorized under the laws of the
State of Utah or any other state in the United States.
9. To lend and advance monies or give credit for corporate
purposes with or without requiring interest or any
security for the payment thereof.
10. To purchase, take, receive or otherwise acquire,
hold, own, pledge, transfer or otherwise dispose of
shares of Its own capital stock; but any purchase of
its own shares of stock, whether direct or indirect,
shall be made only to the extent of unreserved and
unrestricted capital surplus available therefor, if
permitted by the Utah Corporation Act and other
applicable law and these Articles of Incorporation.
<PAGE>
11. To become a party to any lawful arrangement for
sharing of profits, or to any union of interest,
reciprocal concession, partnership, syndicate, entity
or any governmental, municipal or public authority,
domestic or foreign, in carrying on of any business
which the corporation is authorized to carry one, or
any business or transaction deemed necessary,
convenient or incidental to the carrying out of any
other purpose of the corporation.
12. To organize and create for the benefit of its employees a
duly qualified profit sharing or pension plan.
13. To such extent as a corporation organized under the Business
Corporation Act of the State of Utah may now or hereafter
lawfully do, to do either as principal or agent, and either alone
or in connection with other corporations, firms or individuals,
all and everything necessary, suitable, convenient or proper for,
in connection with or incident to the accomplishment of any other
purposes, or the attainment of any one or more of the objects
herein enumerated or designed, directly or indirectly, to promote
the interest of this Corporation or to enhance the value of its
properties, and in general to do any and all things, and exercise
any and all powers, rights, privileges which a corporation may
now or may hereafter be organized to do or to exercise under the
Business Corporation Act of the State of Utah or under any act
amendatory thereof, supplemental thereto or substituted in the
stead thereof.
14. The foregoing clauses shall be construed as powers as well
as objects and purposes; and the matters in each clause shall,
unless otherwise expressly provided, be in no way limited by
reference to or inference from the terms of any other clause or
section but shall be regarded as independent projects, purposes
and powers; and the enumeration of specific objects, purposes and
powers shall not be construed to limit or restrict in any manner
the meaning of the general terms or the general powers of the
corporation, nor shall the expression of one thing be deemed to
exclude another not expressed, although it be of like nature.
ARTICLE IV
AUTHORIZED SHARES
This corporation is authorized to issue one class of
common stock. The total authorized common stock of this
Corporation shall be Two Hundred Million (200,000,000)
shares of Twenty-five One-Hundred-Thousandths of a Cent
($.00025) par value per share. These shares shall bear
voting rights and share equally in distribution of profits
of the Corporation.
ARTICLE V
PRE-EMPTIVE RIGHTS
No stockholder of the Corporation shall, because of
ownership of stock, have a pre-emptive or other right to
purchase, subscribe for or take part of any stock, or any
part
<PAGE>
of the notes, debentures, bonds or other securities
convertible into or carrying options for warrants to
purchase stock of the Corporation issued, optioned or sold
by i t after its incorporation, except as may be otherwise
stated in these Articles of Incorporation. Any part of
the capital stock and any part of the notes, debentures,
bonds or other securities convertible into or carrying
options or warrants to purchase stock of the Corporation
authorized by these Articles of Incorporation or by an
amended certificate duly filed, may at any time be issued,
optioned for sale and sold or disposed of by the
Corporation, pursuant to resolution of its Board of
Directors, to such persons and upon such terms as may to
such Board seem proper, without first offering such stock
or securities or any part thereof to existing
stockholders.
ARTICLE VI
COMMENCEMENT OF BUSINESS
This Corporation shall not commence business until at
least One Thousand Dollars ($1,000.00) has been received
by its as consideration for the issuance of shares.
ARTICLE VII
VOTING OF SHARES
Each outstanding share of the common stock of the
Corporation shall be entitled to one vote on each matter
submitted to a vote at a meeting of
the stockholders. At each election for directors each
shareholder entitled to vote at such election shall have
the right to vote in person or by proxy the number of
shares owned by him or it for as many persons as there are
directors to be elected and for whose election he or it
has a right to vote, but the shareholders shall have no
right whatsoever to accumulate his or its votes with
regard to such election.
ARTICLE VIII
PROVISIONS FOR REGULATION OF THE
INTERNAL AFFAIRS OF THE CORPORATION
1. Meetings of Shareholders. All meetings of the shareholders
of the Corporation shall be held at such place, either within or
without the State of Utah, as may be provided in the Bylaws of
the Corporation. In the absence of any such provision all such
meetings shall be held at the registered office of the
Corporation.
2. Quorum of Shareholders. Unless otherwise provided In
the Act or other applicable law, a majority of the
shares of the common stock of the Corporation entitled
to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of the shareholders of
the Corporation.
3. Meetings of Directors. Meetings of the Board of
Directors of the Corporation, whether regular or
special, may be held either within or without the State
of Utah, and upon such notice as may be prescribed in
the Bylaws of the Corporation.
<PAGE>
4. Quorum of Directors. The number of Directors of the
Corporation which shall constitute a quorum for the transaction
of business at any meeting of the Board of Directors shall be
fixed in the Bylaws of the Corporation.
5. Designation of Committees by the Board of Directors. The
Board of Directors may, by a resolution or resolutions passed by
a majority of the whole Board, designate a committee or
committees consisting of not less than three (3) directors which
committee or committees, to the extent provided In such
resolution or resolutions, shall have and may exercise all the
authority so provided, but the designations of such committees
and the delegation thereto for such authority shall not operate
to relieve the Board of Directors, or any member thereof, of any
responsibility imposed upon it or by him by law.
6. Bylaws of the Corporation. The initial Bylaws of the
Corporation shall be adopted by its Board of Directors;
thereafter, unless otherwise provided in the Act, Bylaws of the
Corporation may be adopted, amended or repealed, either by the
shareholders or by the Board of Directors, except that (a) no
Bylaws adopted or amended by the shareholders shall be altered or
repealed by the Board of Directors, and (b) no Bylaws shall be
adopted by the Directors which shall require more than a majority
of the shareholders for a quorum at a meeting of the shareholders
of the Corporation, or more than a majority of the votes cast to
constitute action by the shareholders, except where higher
percentages are required by law. The Bylaws may contain any
provisions for the regulation and management of the affairs of
the Corporation not inconsistent with the Act, other applicable
laws and these Articles of Incorporation.
7. Vacancy in the Board of Directors. Any vacancy occurring in
the Board of Directors may be filled by affirmative vote of a
majority of the remaining directors, though less than a quorum of
the Board of Directors. A Director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in
office. Any directorship to be filled by reason of an increase
in the number of directors shall also be filled by the Board of
Directors, such appointment to be until the next annual meeting
or a special meeting of the shareholders called for the purpose
of electing a directors to the office so created.
8. Shareholders of Record. The name and address of each
shareholder of record of the capital. stock of the Corporation as
they appear in the stock records of the Corporation shall be
conclusive evidence as to who are the shareholders who are
entitled to receive notice of any meetings of the shareholders,
to vote at such meetings, to examine a complete list of the
shareholders who may be entitled to vote at such meetings, to
own, enjoy and exercise any other rights and privileges which are
based upon the ownership of these shares of common stock of the
Corporation.
9. Books and Records. The Corporation shall keep complete and
correct books and records of account and shall keep minutes of
the proceedings of its shareholders'
<PAGE>
and Board of Directors' meetings and shall keep at its
registered office or principal place of business or at
the office of its transfer agent or registrar, a record
of its shareholders, giving names and addresses of all
shareholders and the number of shares of the
Corporation held by each. No shareholder shall have
the right to inspect any such books and records except
as conferred by the Act or other applicable law, unless
authorized to do so by resolution or resolutions of the
shareholders or the Board of Directors.
10. Working Capital. The Board of Directors of the Corporation
shall have the power from time to time to fix and determine and
to vary the amount which is to be reserved by the Corporation as
working capital; and before the payment of any dividends or the
making of any distribution of profits, it may set aside out of
net profits or earned surplus of the Corporation, such sums or
sum as it may from time to time in its absolute discretion deem
to be proper, whether as a reserve fund to meet contingencies or
for the equalizing of dividends, or the repairing or maintenance
of any property of the Corporation, or for an addition to stated
capital, capial surplus, earned surplus or for any corporate
purpose which the Board of Directors shall deem to be in the best
interests of the Corporation., subject only to such limitations
as the Bylaws of the Corporation may from time to time impose.
11. Compensation of Directors. The Board of Directors of the
Corporation may, provided the Bylaws of the Corporation Bo
provide, make provision for reasonable compensation to its
members for their services as directors and establish the basis
and conditions upon which such compensations shall be paid. Any
director of the Corporation may also serve the Corporation in any
other capacity and receive proper compensation therefor.
12. Qualification of Directors. The Directors of this
Corporation need not be stockholders.
13. Number of Directors. The exact number of directors may from
time to time be specified by the Bylaws at not less than three
(3) nor more than nine (9). When the Bylaws do not specify the
exact number of Directors, the number of Directors shall be three
(3).
14. Reliance Upon Others.. A Director shall be fully protected
in relying in good faith upon the books of account of the
Corporation or statements prepared by any of Its officials as to
the value and amount of assets, liabilities or net profits of the
Corporation, or any other accounts relevant to the existence and
amount of surplus or other funds from which dividends might be
declared and paid.
15. Reliance Upon Others - Prudent Conduct. No person shall be
liable to the Corporation for any loss or damage suffered by it
on account of any action taken or omitted to be taken by him as a
director or officer of tile Corporation in good faith if such
person (a) exercised or used the same degree of care and skill as
a
<PAGE>
prudent man would have exercised or used under the
circumstances in the conduct of his own affairs, or (b)
took or omitted to take such action in reliance upon
advice of counsel for the Corporation or upon
statements made or information furnished by officers or
employees of the Corporation which he had reasonable
grounds to believe, or upon a financial statement of
the Corporation prepared by an officer or employee of
the Corporation in charge of its accounts, or certified
by a public accountant or firm of public accountants.
16. Contracts with Interested Directors - Disclosure and Voting.
A director of the Corporation shall not in the absence of fraud
be disqualified by his office from dealing with or contracting of
the Corporation, either as a vendor, purchaser or otherwise, so
long as such transaction shall not conflict with his obligations
and duties to the Corporation as a corporate officer; nor in the
absence of fraud shall, insofar as permitted by the Act or any
other applicable statute, any transaction or contract of the
Corporation be void or voidable or affected by reason of the fact
that any director or any firm of which a director is a member, or
any corporation of which any director is an officer, director or
stockholder is in any way interested in such transaction or
contract; provided that at the meeting of the Board of Directors
or of a committee thereof, having authority in the premises to
authorize or confirm such contract or transaction, the interest
of such director, firm or corporation is disclosed or made known,
and there shall be present a quorum of the Board of Directors or
of the directors constituting such committee and the contract or
transaction shall be approved by a majority of such quorum which
majority shall consist of directors not so interested or
connected. Nor shall any director be liable to account to the
Corporation for any profit realized by him from or through any
such transaction or contract of the Corporation, ratified or
approved as herein provided, by reason of the fact that he or any
firm of which he is a member or any corporation of which he is a
stockholder, director or officer was interested in such
transaction or contract. Directors so interested may be counted
when present at meetings of the Board of Directors or of such
committee for the purpose of determining the existence of a
quorum. Each and every person who is or may become a director of
the Corporation is hereby relieved from any liability that might
otherwise exist from those contracting with the Corporation for
the benefit of himself or any firm, association or corporation in
which he may be in any way interested. Any contract, transaction
or act of the Corporation or of the Board of Directors or of any
committee which shall be ratified by a majority in interest of a
quorum of the shareholders having voting power shall be as valid
and binding as though ratified by each and every stockholder of
the Corporation; but this shall not be constituted as requiring
the submission of any contract to the shareholders for approval.
This section shall not be construed to abrogate duty of an
officer with the scope of his employment to present to the
Corporation all such reasonable opportunities which the
Corporation would be entitled to take advantage of within the
scope of its then current business purposes or within the scope
of these Articles of Incorporation as applied to its then
existing relevant situation; and no director or officer or
committee member of any committee established pursuant to these
Articles shall, while serving in such capacity,
<PAGE>
discover an opportunity which is reasonable within the
scope and framework of the activity of the Corporation
and take personal benefit or gain from that discovery
by hypothecating the opportunity to the Corporation in
exchange for stock or consideration above or beyond the
normal compensation to which he would be entitled
within the scope and framework of his employment
contract. The foregoing provision shall not be
construed to, prevent the Board of Directors at a duly
constituted meeting from declaring a bonus to any such
officer or director which is fairly and reasonably
related to the benefit initiating a transaction whereby
the Corporation shall directly take advantage of such
corporate opportunity.
17. Ratification of Act of Directors. The directors may submit
any contract or transaction for approval at any annual meeting of
the shareholders or at any special meeting of the stockholders
called for that purpose; and any contract or transaction so
approved by a majority vote of a quorum of the stockholders at
such meeting shall be binding upon the Corporation and all its
stockholders, whether or not the contract or transaction would
otherwise be subject to attack because of the interest of any of
the directors of the Corporation or for any other reason.
18. The Corporation may in its Bylaws make any other provisions
or requirements for the management of the business of the
Corporation provided the same are not inconsistent with the
provisions of these Articles of Incorporation or contrary to the
law of the State of Utah or of the United States.
19. The Corporation may issue and sell its authorized shares
without par value from time to time in the absence of fraud in
the transaction for such considerations as may from time to time
be fixed by the Board of Directors, and sell and dispose of any
stocks having a par value for such consideration permitted by
law, as the Board of Directors may from time to time determine
without other authority, consent or vote of the stockholders of
the Corporation or any class or classes.
20. Amendments to these Articles of Incorporation. The
Corporation reserves the right to amend, alter or repeal or to
add any provisions to these Articles of Incorporation in any
manner now or hereafter prescribed by law or to vote exceptions
thereto at a duly constituted shareholders meetings called for
that purpose.
21. Assistant Treasurer. The Assistant Treasurer of the
Corporation shall be corporate counsel whose sole responsibility,
other than legal duties, shall be to file the annual report.
ARTICLE IX
INITIAL REGISTERED OFFICE AND INITIAL REGISTERED AGENT
<PAGE>
1. The address of the initial principal office of the
Corporation is 230 West 400 South, #201, Salt Lake City, Utah
84101.
2. The name and address of the initial registered agent is
Edward T. Wells, 1220 Continental Bank Building, Salt Lake City,
Utah.
ARTICLE X
DIRECTORS
1. Initial Board of Directors. The initial Board of Directors
of the Corporation shall consist of three (3) members, and their
respective names and addresses are:
Name Address
George R. Jensen 2263 Cottonwood Circle
Salt Lake City, Utah 84117
Ronald D. Burnett 1420 Sandpiper Way
Salt Lake City, Utah 84117
Craig Carpenter 7412 Rosalind Circle
Salt Lake City, Utah 84121
which directors shall hold office until the first meeting of
the shareholders of the Corporation and until their
successors shall have been elected and qualified.
2. Subsequent Board of Directors. At the first meeting of the
stockholders of the Corporation and at each annual meeting
thereafter, the shareholders shall elect directors to hold office
until the next succeeding annual meeting of the shareholders.
Each director so elected shall hold office for the term of which
he is elected or until his successor shall have been elected and
qualified. Directors need not be residents of the State of Utah
or shareholders of the Corporation.
ARTICLE XI
INCORPORATORS
The name and address of each incorporator is:
Name Address
George R. Jensen 2263 Cottonwood Circle
Salt Lake City, Utah 84117
Ronald D. Burnett 1420 Sandpiper Way
Salt Lake City, Utah 84117
<PAGE>
Craig Carpenter 7412 Rosalind Circle
Salt Lake City, Utah 84121
ARTICLE XII
LIABILITY OF DIRECTORS, OFFICERS, COMMITTEEMEN
AND INCORPORATORS, RECORDS, BOOKS AND ACCOUNTS
It is the intention of the incorporators, present
shareholders and future shareholders and all present and
future officers of the Corporation that a full and
adequate set of records, books and accounts be kept with
respect to all phases of corporate activities and
particularly with respect to the economic activities of
the Corporation. Any directors, officers, committeemen,
present or future, and the incorporators of this
corporation shall by virtue of their agreement to act in
such capacity, become liable for a failure to keep proper
books, records and statements of account as heretofore
specified, and it shall be presumed that if such books and
accounts are not kept that any loss accruing to the
Corporation shall be as a direct failure to keep such
records and books of account. It is assumed and intended
that any person acquiring stock in this corporation shall
do so in reliance upon the representation and fact that
such books, accounts and records have been kept, are being
kept and shall in the future be kept with respect to all
phases of activity in this corporation. All officers,
directors, committeemen and incorporators agree that they
shall be jointly and severally liable for such failure to
keep books, records and accounts as heretofore specified
during the period of time which they are in office with
respect to incorporators, their liabilities shall flow for
a period of time consisting of the first four (4) months
of operation of the Corporation. This Article is included
in these Articles of Incorporation because it is the
intention of the incorporators, officers, directors and
stockholders that such books, records and accounts be kept
and it is their opinion that the failure to keep such
books will likely lead to a financial failure of the
Corporation and lead to other related liabilities and it
is also their opinion that the keeping of such records,
books and accounts shall materially enhance the
possibilities that the Corporation shall function on a
profitable basis. Adequate books, records and accounts
for the purpose of this Article shall be those books,
records and accounts which a reasonably prudent certified
public accountant would recommend for a corporation of
like size, purpose and function. In the event that anyone
shall claim liability in this regard, he shall first
submit his claim to the Board of Directors of the
Corporation in writing and allege such failure with
specificity. The person complaining under the terms of
this Article shall submit the name of a certified public
accountant whom he has chosen as an arbitrator for the
purpose of determining whether or not adequate books and
records of accounts have been kept according to the
foregoing definition. The Board of Directors shall
appoint a certified public accountant for such purpose
within ten (10) days after the submission in writing by
the complaining party, and. the certified public
accountant so chosen shall choose a third certified public
accountant and these three (3) shall expeditiously proceed
to arbitrate the questions as to whether or not adequate
books and records of accounts have been kept during the
period of time. If, for any
<PAGE>
reason, the foregoing procedure fails to reach a result or
conclusion wit-in a reasonable period of time after a good
faith attempt by the parties concerned, then the aggrieved
party (either the Board of Directors or the complaining
party) shall have the right to institute immediate action
in a court of appropriate jurisdiction to enforce his
rights under the provisions of this Article.
Dated this 28th day of January, 1981.
/S/ GEORGE R. JENSEN
/S/ RONALD D. BURNETT
/S/ CRAIG CARPENTER
STATE OF UTAH )
) Ss.
COUNTY OF SALT LAKE )
GEORGE R. JENSEN, RONALD D. BURNETT and CRAIG CARPENTER
being first duly sworn, deposed and declared b me, the
undersigned Notary Public, that they signed the foregoing
document as Incorporators and that the statements
contained therein are the truth to the best of their
knowledge.
IN WITNESS WHEREOF, I have hereunto set my seal this day
of 28 January, 1981.
/S/ NOTARY PUBLIC
My commission expires:
<PAGE>
13
Exhibit No. 3
Form 8-K
Source Energy Corporation
File No. 0-29129
BYLAWS FOR THE REGULATION,
EXCEPT AS OTHERWISE PROVIDED BY STATUTE
OR ITS ARTICLES OF INCORPORATION,
OF
SOURCE ENERGY CORPORATION
ARTICLE 1
Offices
Section 1.01 -- Principal And Registered Office.
The Corporation may have such other offices, either within
or without the State of Utah as the Corporation's board of
directors (the "Board) may designate or as the business of the
Corporation may require from time to time.
Section 1.02 -- Other Offices.
Branch or subordinate offices may at any time be established
by the Board at any place or places where the Corporation is
qualified to do business.
ARTICLE 2
Meetings of Shareholders
Section 2.01 -- Meeting Place.
All annual meetings of shareholders and all other meetings
of shareholders shall be held either at the principal office or
at any other place within or without the State of Utah which may
be designated either by the Board, pursuant to authority
hereinafter granted, or by the written consent of all
shareholders entitled to vote thereat, given either before or
after the meeting and filed with the secretary of the
Corporation.
Section 2.02 -- Annual Meetings.
A. The annual meetings of shareholders shall be held on
the third Monday of July each year, at the hour of 2:00 o' clock
p.m., commencing with the year 1970 , provided, however, that
should the day of the annual meeting fall upon a legal holiday,
then any such annual meeting of shareholders shall be held at the
same time and place on the next business day thereafter which is
not a legal
<PAGE>
holiday.
B. Written notice of each annual meeting signed by the
president or vice president, or the secretary, or an assistant
secretary, or by such other person or persons as the Board may
designate, shall be given to each shareholder entitled to vote
thereat, either personally or by mail or other means of written
communication, charges prepaid, addressed to such shareholder at
his address appearing on the books of the Corporation or given by
him to the Corporation for the purpose of notice. If a
shareholder gives no address, notice shall be deemed to have been
given to him if sent by mail or other means of written
communication addressed to the place where the principal office
of the Corporation is situated, or if published at least once in
some newspaper of general circulation in the county in which said
office is located. All such notices shall be sent to each
shareholder entitled thereto, or published, not less than ten
(10) nor more than sixty (60) days before each annual meeting,
and shall specify the place, the day and the hour of such
meeting, and shall also state the purpose or purposes for which
the meeting is called.
C. Failure to hold the annual meeting shall not constitute
dissolution or forfeiture of the Corporation, and a special
meeting of the shareholders may take the place thereof.
Section 2.03 -- Special Meetings.
Special meetings of the shareholders, for any purpose or
purposes whatsoever, may be called at any time by the president
or by the Board, or by one or more shareholders holding not less
that ten percent (10%) of the voting power of the Corporation.
Except in special cases where other express provision is made by
statute, notice of such special meetings shall be given in the
same manner as for annual meetings of shareholders. Notices of
any special meeting shall specify in addition to the place, day
and hour of such meeting, the purpose or purposes for which the
meeting is called.
Section 2.04 -- Adjourned Meetings And Notice Thereof.
A. Any shareholders' meeting, annual or special, whether or
not a quorum is present, may be adjourned from time to time by
the vote of a majority of the shares, the holders of which are
either present in person or represented by proxy thereat, but in
the absence of a quorum, no other business may be transacted at
any such meeting.
B. When any shareholders' meeting, either annual or
special, is adjourned for thirty (30) days or more, notice of the
adjourned meeting shall be given as in the case of an original
meeting. Otherwise, it shall not be necessary to give any notice
of an adjournment or of the business to be transacted at an
adjourned meeting, other than by announcement at the meeting at
which such adjournment is taken.
<PAGE>
Section 2.05 -- Entry Of Notice.
Whenever any shareholder entitled to vote has been absent
from any meeting of shareholders, whether annual or special, an
entry in the minutes to the effect that notice has been duly
given shall be conclusive and incontrovertible evidence that due
notice of such meeting was given to such shareholder, as required
by law and these bylaws.
Section 2.06 -- Voting.
At all annual and special meetings of shareholders, each
shareholder entitled to vote thereat shall have one vote for each
share of stock so held and represented at such meetings, either
in person or by written proxy, unless the Corporation's articles
of incorporation ("Articles") provide otherwise, in which event,
the voting rights, powers and privileges prescribed in the
Articles shall prevail. Voting for directors and, upon demand of
any shareholder, upon any question at any meeting, shall be by
ballot. If a quorum is present at a meeting of the shareholders,
the vote of a majority of the shares represented at such meeting
shall be sufficient to bind the corporation, unless otherwise
provided by law or the Articles.
Section 2.07 -- Quorum.
The presence in person or by proxy of the holders of a
majority of the shares entitled to vote at any meeting shall
constitute a quorum for the transaction of business. The
shareholders present at a duly called or held meeting at which a
quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave
less than a quorum.
Section 2.08 -- Consent Of Absentees.
The transactions of any meeting of shareholders, either
annual or special, however called and notice given thereof, shall
be as valid as though done at a meeting duly held after regular
call and notice, if a quorum be present either in person or by
proxy, and if, either before of after the meeting, each of the
shareholders entitled to vote, not present in person or by proxy,
sign a written Waiver of Notice, or a consent to the holding of
such meeting, or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate
records or made a part of the minutes of such meeting.
Section 2.09 -- Proxies.
Every person entitled to vote or execute consents shall have
the right to do so either in person or by an agent or agents
authorized by a written proxy executed by such person or his duly
authorized agent and filed with the secretary of the Corporation;
provided however, that no such proxy shall be valid after the
expiration of eleven (11) months from the date of its execution,
unless the shareholder executing it specifies therein the length
of time for which such proxy is to continue in force, which in no
case shall exceed seven (7) years from the date of its execution.
<PAGE>
Section 2.10 -- Shareholder Action Without A Meeting.
Any action required or permitted to be taken at a meeting of
the shareholders may be taken without a meeting if a written
consent thereto is signed by shareholders holding at least a
majority of the voting power, except that if a different
proportion of voting power is required for such an action at a
meeting, then that proportion of written consents is required.
In no instance where action is authorized by this written consent
need a meeting of shareholders be called or notice given. The
written consent must be filed with the proceedings of the
shareholders.
ARTICLE 3
Board of Directors
Section 3.01 -- Powers.
Subject to the limitations of the Articles, these bylaws,
and the provisions of the Utah corporate law as to action to be
authorized or approved by the shareholders, and subject to the
duties of directors as prescribed by these bylaws, all corporate
powers shall be exercised by or under the authority of, and the
business and affairs of the corporation shall be controlled by,
the Board. Without prejudice to such general powers, but subject
to the same limitations, it is hereby expressly declared that the
directors shall have the following powers:
A. To select and remove all the other officers, agents and
employees of the Corporation, prescribe such powers and duties
for them as are not inconsistent with law, with the Articles, or
these bylaws, fix their compensation, and require from them
security for faithful service.
B. To conduct, manage and control the affairs and business
of the Corporation, and to make such rules and regulations
therefore not inconsistent with the law, the Articles, or these
bylaws, as they may deem best.
C. To change the principal office for the transaction of
the business if such change becomes necessary or useful; to fix
and locate from time to time one or more subsidiary offices of
the Corporation within or without the State of Utah, as provided
in Section 1.02 of Article 1 hereof; to designate any place
within or without the State of Utah for the holding of any
shareholders' meeting or meetings; and to adopt, make and use a
corporate seal, and to prescribe the forms of certificates of
stock, and to alter the form of such seal and of such
certificates from time to time, as in their judgment they may
deem best, provided such seal and such certificates shall at all
times comply with the provisions of law.
D. To authorize the issuance of shares of stock of the
Corporation from time to time, upon such terms as may be lawful,
in consideration of money paid, labor done or services actually
rendered, debts or securities canceled, or tangible or intangible
property actually received, or in the case of shares issued as a
dividend, against amounts transferred from surplus to stated
capital.
E. To borrow money and incur indebtedness for the purposes
of the Corporation, and to
<PAGE>
cause to be executed and delivered therefore, in the corporate
name, promissory notes, bonds, debentures, deeds of trust,
mortgages, pledges, hypothecation or other evidences of debt and
securities therefore.
F. To appoint an executive committee and other committees
and to delegate to the executive committee any of the powers and
authority of the Board in management of the business and affairs
of the Corporation, except the power to declare dividends and to
adopt, amend or repeal bylaws. The executive committee shall be
composed of one or more directors.
Section 3.02 -- Number And Qualification Of Directors.
The authorized number of directors of the Corporation shall
not be less than three (3) nor more than nine (9); provided
however, that after shares are issued, (i) for so long as the
Corporation has fewer than seven (7) shareholders entitled to
vote for the election of directors, the Corporation's Board may
consist of a number of individuals equal to or greater than the
number of these shareholders (but no more than three); and (ii)
once the Corporation has three (3) or more shareholders entitled
to vote for the election of directors, the Board shall consist of
three directors, or such other number as may be required by law.
Section 3.03 -- Election And Term Of Office.
The directors shall be elected at each annual meeting of
shareholders, but if any such annual meeting is not held, or the
directors are not elected thereat, the directors may be elected
at any special meeting of shareholders. All directors shall hold
office until their respective successors are elected.
Section 3.04 -- Vacancies.
A. Vacancies in the Board may be filled by a majority of
the remaining directors, though less than a quorum, or by a sole
remaining director, and each director so elected or appointed
shall hold office until his successor is elected at an annual or
a special meeting of the shareholders.
B. A vacancy or vacancies in the Board shall be deemed to
exist in case of the death, resignation or removal of any
director, or if the authorized number of directors be increased,
or if the shareholders fail at any annual or special meeting of
shareholders at which any director or directors are elected to
elect the full authorized number of directors to be voted for at
that meeting.
C. The shareholders may elect a director or directors at
any time to fill any vacancy or vacancies not filled by the
directors.
D. No reduction of the authorized number of directors shall
have the effect of removing any director prior to the expiration
of his term of office.
ARTICLE 4
Meetings of the Board of Directors
<PAGE>
Section 4.01 -- Place Of Meetings.
Regular meetings of the Board shall be held at any place
within or without the State of Utah which has been designated
from time to time by resolution of the Board or by written
consent of all members of the Board. In the absence of such
designation, regular meetings shall be held at the principal
office of the Corporation. Special meetings of the Board may be
held either at a place so designated, or at the principal office.
Failure to hold an annual meeting of the Board shall not
constitute forfeiture or dissolution of the Corporation.
Section 4.02 -- Organization Meeting.
Immediately following each annual meeting of shareholders,
the Board shall hold a regular meeting for the purpose of
organization, election of officers, and the transaction of other
business. Notice of such meeting is hereby dispensed with.
Section 4.03 -- Other Regular Meetings.
Other regular meetings of the Board shall be held, without
call, unless the directors agree to not have this regular
meeting, on the first Monday of each month at the hour of 3:00 o'
clock p.m.; provided however, that should the day of the meeting
fall upon a legal holiday, then such meeting shall be held at the
same time on the next business day thereafter which is not a
legal holiday. Notice of all such regular meetings of the Board
are hereby dispensed with.
Section 4.04 -- Special Meetings.
A. Special meetings of the Board may be called at any time
for any purpose or purposes by the president, or, if he is absent
or unable or refuses to act, by any vice president or by any two
directors.
B. Written notice of the time and place of special meetings
shall be delivered personally to each director or sent to each
director by mail (including overnight delivery services such as
Federal Express) or telegraph, charges prepaid, addressed to him
at his address as it is shown upon the records of the
Corporation, or if it is not shown upon such records or is not
readily ascertainable, at the place in which the regular meetings
of the directors are normally held. No such notice is valid
unless delivered to the director to whom it was addressed at
least twenty-four (24) hours prior to the time of the holding of
the meeting. However, such mailing, telegraphing, or delivery as
above provided herein shall constitute prima facie evidence that
such director received proper and timely notice.
Section 4.05 -- Notice Of Adjournment.
Notice of the time and place of holding an adjourned meeting
need not be given to absent directors, if the time and place be
fixed at the meeting adjourned.
<PAGE>
Section 4.06 -- Waiver Of Notice.
The transactions of any meeting of the Board, however called
and noticed or wherever held, shall be as valid as though a
meeting had been duly held after regular call and notice, if a
quorum be present, and if, either before or after the meeting,
each of the directors not present sign a written waiver of notice
or a consent to holding such meeting or an approval of the
minutes thereof. All such waivers, consents or approvals shall
be filed with the corporate records or made a part of the minutes
of the meeting.
Section 4.07 -- Quorum.
If the Corporation has only one director, then the presence
of that one director constitutes a quorum. If the Corporation
has only two directors, then the presence of both such directors
is necessary to constitute a quorum. If the Corporation has
three or more directors, then a majority of those directors shall
be necessary to constitute a quorum for the transaction of
business, except to adjourn as hereinafter provided. A director
may be present at a meeting either in person or by telephone.
Every act or decision done or made by a majority of the directors
present at a meeting duly held at which quorum is present, shall
be regarded as the act of the Board, unless a greater number be
required by law or by the Articles.
Section 4.08 -- Adjournment.
A quorum of the directors may adjourn any directors' meeting
to meet again at a stated day and hour; provided however, that in
the absence of a quorum, a majority of the directors present at
any directors' meeting, either regular or special, may adjourn
such meeting only until the time fixed for the next regular
meeting of the Board.
Section 4.09 -- Fees And Compensation.
Directors shall not receive any stated salary for their
services as directors, but by resolution of the Board, a fixed
fee, with or without expenses of attendance, may be allowed for
attendance at each meeting. Nothing stated herein shall be
construed to preclude any director from serving the Corporation
in any other capacity as an officer, agent, employee, or
otherwise, and receiving compensation therefore.
Section 4.10 -- Action Without A Meeting.
Any action required or permitted to be taken at a meeting of
the Board, or a committee thereof, may be taken without a meeting
if, before or after the action, a written consent thereto is
signed by all the members of the Board or of the committee. The
written consent must be filed with the proceedings of the Board
or committee.
ARTICLE 5
Officers
<PAGE>
Section 5.01 -- Executive Officers.
The executive officers of the Corporation shall be a
president, a secretary, and a treasurer/chief financial officer.
The corporation may also have, at the direction of the Board, a
chairman of the Board, one or more vice presidents, one or more
assistant secretaries, one or more assistant treasurers, and such
other officers as may be appointed in accordance with the
provisions of Section 5.03 of this Article. Officers other than
the president and the chairman of the board need not be
directors. Any one person may hold two or more offices, unless
otherwise prohibited by the Articles or by law.
Section 5.02 -- Appointment.
The officers of the corporation, except such officers as may
be appointed in accordance with the provisions of Sections 5.03
and 5.05 of this Article, shall be appointed annually by the
Board, and each shall hold his office until he resigns or is
removed or otherwise disqualified to serve, or his successor is
appointed and qualified.
Section 5.03 -- Subordinate Officers.
The Board may appoint such other officers as the business of
the Corporation may require, each of whom shall hold office for
such period, have such authority, and perform such duties as are
provided in these bylaws or as the Board may from time to time
determine.
Section 5.04 -- Removal And Resignation.
A. Any officer may be removed, either with or without
cause, by a majority of the directors at the time in office, at
any regular or special meeting of the Board.
B. Any officer may resign at any time by giving written
notice to the Board or to the president or secretary. Any such
resignation shall take effect on the date such notice is received
or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5.05 -- Vacancies.
A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled in
the manner prescribed in these bylaws for regular appointments to
such office.
Section 5.06 -- Chairman Of The Board.
The Chairman of the Board, if there be such an officer,
shall, if present, preside at all meetings of the Board, and
exercise and perform such other powers and duties as may be from
time to time assigned to him by the Board or prescribed by these
bylaws.
<PAGE>
Section 5.07 -- President.
Subject to such supervisory powers, if any, as may be given
by the Board to the Chairman of the Board (if there be such an
officer), the president shall be the chief executive officer of
the Corporation and shall, subject to the control of the Board,
have general supervision, direction and control of the business
and officers of the Corporation. He shall preside at all
meetings of the shareholders and, in the absence of the Chairman
of the Board, or if there be none, at all meetings of the Board.
He shall be an ex-officio member of all the standing committees,
including the executive committee, if any, and shall have the
general powers and duties of management usually vested in the
office of president of a corporation, and shall have such other
powers and duties as may be prescribed by the Board or these
bylaws.
Section 5.08 -- Vice President.
In the absence or disability of the president, the vice
presidents, in order of their rank as fixed by the Board, or if
not ranked, the vice president designated by the Board, shall
perform all the duties of the president and when so acting shall
have all the powers of, and be subject to all the restrictions
upon, the president. The vice presidents shall have such other
powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board or these bylaws.
Section 5.09 -- Secretary.
A. The secretary shall keep, or cause to be kept, at the
principal office or such other place as the Board may direct, a
book of (i) minutes of all meetings of directors and
shareholders, with the time and place of holding, whether regular
or special, and if special, how authorized, the notice thereof
given, the names of those present and absent at directors'
meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings thereof; and (ii) any
waivers, consents, or approvals authorized to be given by law or
these bylaws.
B. The secretary shall keep, or cause to be kept, at the
principal office, a share register, or a duplicate share
register, showing (i) the name of each shareholder and his or her
address; (ii) the number and class or classes of shares held by
each, and the number and date of certificates issued for the
same; and (iii) the number and date of cancellation of every
certificate surrendered for cancellation.
C. The secretary shall give, or cause to be given, notice
of all the meetings of the shareholders and of the Board required
by these bylaws or by law to be given, and he shall keep the seal
of the Corporation, if any, in safe custody, and shall have such
other powers and perform such other duties as may be prescribed
by the Board or these bylaws.
Section 5.10 -- Treasurer/Chief Financial Officer.
A. The treasurer/chief financial officer shall keep and
maintain, or cause to be kept and maintained, adequate and
correct accounts of the properties and business transactions of
the Corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital,
<PAGE>
surplus and shares. Any surplus, including earned surplus, paid-
in surplus and surplus arising from a reduction of stated
capital, shall be classified according to source and shown in a
separate account. The books of account shall at all times be
open to inspection by any director.
B. The treasurer/chief financial officer shall deposit all
monies and other valuables in the name and to the credit of the
Corporation with such depositories as may be designated by the
Board. He shall disburse the funds of the Corporation as may be
ordered by the Board, shall render to the president and
directors, whenever they request it, an account of all of his
transactions as treasurer and of the financial condition of the
Corporation, and shall have such other powers and perform such
other duties as may be prescribed by the Board or these bylaws.
ARTICLE 6
Miscellaneous
Section 6.01 -- Record Date And Closing Stock Books.
The Board may fix a time in the future, not exceeding
fifteen (15) days preceding the date of any meetings of
shareholders, and not exceeding thirty (30) days preceding the
date fixed for the payment of any dividend or distribution, or
for the allotment of rights, or when any change or conversion or
exchange of shares shall go into effect, as a record date for the
determination of the shareholders entitled to notice of and to
vote at any such meeting, or entitled to receive any such
dividend or distribution, or any such allotment of rights, or to
exercise the rights in respect to any such change, conversion or
exchange of shares, and in such case only shareholders of record
on the date so fixed shall be entitled to notice of and to vote
at such meetings, or to receive such dividend, distribution or
allotment of rights, or to exercise such rights, as the case may
be, notwithstanding any transfer of any shares on the books of
the Corporation after any record date fixed as herein set forth.
The Board may close the books of the Corporation against
transfers of shares during the whole, or any part, of any such
period.
Section 6.02 -- Inspection Of Corporate Records.
The share register or duplicate share register, the books of
account, and records of proceedings of the shareholders and
directors shall be open to inspection upon the written demand of
any shareholder or the holder of a voting trust certificate, at
any reasonable time, and for a purpose reasonably related to his
interests as a shareholder or as the holder of a voting trust
certificate, and shall be exhibited at any time when required by
the demand of ten percent (10%) of the shares represented at any
shareholders' meeting. Such inspection may be made in person or
by an agent or attorney, and shall include the right to make
extracts. Demand of inspection other than at a shareholders'
meeting shall be made in writing upon the president, secretary,
or assistant secretary, and shall state the reason for which
inspection is requested.
Section 6.03 -- Checks, Drafts, Etc.
All checks, drafts or other orders for payment of money,
notes or other evidences of
<PAGE>
indebtedness, issued in the name of or payable to the
Corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be
determined by resolution of the Board.
Section 6.04 -- Annual Report.
The Board shall cause to be sent to the shareholders not
later than one hundred twenty (120) days after the close of the
fiscal or calendar year an annual report.
Section 6.05 -- Contracts: How Executed.
The Board, except as otherwise provided in these bylaws, may
authorize any officer, officers, agent, or agents, to enter into
any contract, deed or lease, or execute any instrument in the
name of and on behalf of the Corporation, and such authority may
be general or confined to specific instances; and unless so
authorized by the Board, no officer, agent, or employee shall
have any power or authority to bind the Corporation by any
contract or engagement or to pledge its credit or render it
liable for any purpose or for any amount.
Section 6.06 -- Certificates Of Stock.
A certificate or certificates for shares of the capital
stock of the Corporation shall be issued to each shareholder when
any such shares are fully paid up. All such certificates shall
be signed by the president or a vice president and the secretary
or an assistant secretary, or be authenticated
by facsimiles of the signature of the president and secretary or
by a facsimile of the signatures of the president and the written
signature of the secretary or an assistant secretary. Every
certificate authenticated by a facsimile of a signature must be
countersigned by a transfer agent or transfer clerk.
Section 6.07 -- Representations Of Shares Of Other Corporations.
The president or any vice president and the secretary or
assistant secretary of this Corporation are authorized to vote,
represent, and exercise on behalf of this Corporation, all rights
incident to any and all shares of any other corporation or
corporations standing in the name of this Corporation. The
authority herein granted to said officers to vote or represent on
behalf of this Corporation or corporations may be exercised
either by such officers in person or by any person authorized so
to do by proxy or power of attorney duly executed by said
officers.
Section 6.08 -- Inspection Of Bylaws.
The Corporation shall keep in its principal office for the
transaction of business the original or a copy of these bylaws,
as amended or otherwise altered to date, certified by the
secretary, which shall be open to inspection by the shareholders
at all reasonable times during office hours.
<PAGE>
Section 6.09 -- Indemnification.
A. The Corporation shall indemnify its officers and
directors for any liability including reasonable costs of defense
arising out of any act or omission of any officer or director on
behalf of the Corporation to the full extent allowed by the laws
of the State of Utah, if the officer or director acted in good
faith and in a manner the officer or director reasonably believed
to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the conduct was
unlawful.
B. Any indemnification under this section (unless ordered
by a court) shall be make by the corporation only as authorized
in the specific case upon a determination that indemnification of
the director or officer is proper in the circumstances because
the officer or director has met the applicable standard of
conduct. Such determination shall be made by the board of
directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceeding, or,
regardless of whether or not such a quorum is obtainable and a
quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or by the stockholders.
ARTICLE 7
Amendments
Section 7.01 -- Power Of Shareholders.
New bylaws may be adopted, or these bylaws may be amended or
repealed, by the affirmative vote of the shareholders
collectively having a majority of the voting power or by the
written assent of such shareholders.
Section 7.02 -- Power Of Directors.
Subject to the rights of the shareholders as provided in
Section 7.01 of this Article, bylaws other than a bylaw, or
amendment thereof, changing the authorized number of directors,
may also be adopted, amended, or repealed by the Board.
<PAGE>
10
Exhibit No. 4
Form 8-K
Source Energy Corporation
File No. 0-29129
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
CRAIG CARPENTER, on his own JUDGEMENT
Behalf and derivatively on behalf of
All other shareholders of Source Energy
Corporation, a Utah corporation
Plaintiff
vs. Civil No. 2:99CV 0332K
SOURCE ENERGY CORPORATION
a Utah corporation, T.R. KRAFT, an
individual, and POINT SOURCE
ENERGY CORPORATION, and Oregon Magistrate Judge
Alba
Corporation,
Defendants
This matter is before the court on motion of plaintiff,
Craig Carpenter, on his own behalf and derivatively on behalf of
Source Energy Corporation, a Utah Corporation, who appear through
counsel, seeking entry of judgment by defendants T.R. Kraft,
Source Energy Corporation, a Utah corporation, and Point Source
Energy Corporation, an Oregon corporation.
The Court having heretofore stricken the answer and
counterclaim filed herein on behalf of the three named defendants
and having reviewed the Verified Amended Complaint and affidavit
of Craig Carpenter filed herein by plaintiff and good cause
appearing, the Court hereby makes the following
<PAGE>
FINDINGS OF FACT
1. Craig Carpenter ("Carpenter"), the plaintiff herein, is a
citizen of the State of Utah residing in Salt Lake County and at
all material times was a shareholder of defendant Source Energy
Corporation ("Source").
2. Source is a Utah corporation which was formerly known as
Parker Energy Technology, Inc. ("Parker").
3. Point Source Energy Corporation ("Point Source") is an
Oregon corporation.
4. Defendants T.R. Kraft, Point Source, and Source were duly
served with process as shown by the files herein, and each of
said defendants personally appeared in this Court through
counsel. This Court has personal jurisdiction of each defendant.
5. This action was not a collusive action brought to confer
jurisdiction on this Court.
6. Carpenter properly brought this action derivatively as a
representative of Source.
7. Notice to the Board of Directors prior to bringing this
action was futile due to defendants Kraft's control of Source's
Board of Directors.
8. Carpenter is a proper plaintiff to represent the interests
of Source as a directive plaintiff.
9. Carpenter has advanced attorneys fees and costs in the sum
of $15,039.38 to prosecute this case on behalf of Source.
10. The parties hereto entered into a written purchase agreement
dated May 20, 1997.
11. On May 20, 1997, Carpenter was President of Parker, which
corporation became Source by terms of the May 20, 1997 agreement
and filings made with the State of Utah pursuant thereto.
<PAGE>
12. Pursuant to the May 20, 1997 agreement, Craig Carpenter,
Helen G. Carpenter and Kathy Morrison, the existing officers and
directors of Parker resigned and appointed defendant Kraft and
his nominees as directors of the corporation.
13. Pursuant to the May 20,1997 agreement, Kraft received
12,305,800 shares of Source common stock from Source following
closing of the May 20, 1997 transaction, which shares were
restricted and unregistered and carry a legend showing restricted
transferability.
14. Pursuant to the May 20, 1997 agreement, Kraft caused the
said shares, presently represented by certificates numbered 10208
through 10217,10373, and 10374
(1 million shares each totaling 12 million shares)
10219 (105,800 shares), 10220 (100,000 shares), and
10222 (100,000 shares) to be issued to himself and
nominee family members. Subsequently, certificates
10207 and 10218 were canceled and the shares
represented therein were reissued to Kraft nominees in
certificates 10373 and 10374.
15. Pursuant to the terms of the May 20, 1997 agreement,
Carpenter delivered to Kraft 9,142,600 shares of Parker which
were owned by him.
16. To induce the sale of shares by Carpenter which gave control
of Parker to defendant Kraft and to induce the resignation of
Parker's officers and directors including Carpenter, and to
induce the election of Kraft and his nominees as directors of
Parker, Kraft and Point Source represented the following facts to
be true:
A. That Kraft and Point Source owned and possessed a unique
technology which would be transferred to Source.
<PAGE>
B. That Kraft and Point Source, using the said technology, had
built at least 1 hydrocarbon process plant with a capacity to
refine between 1,000 and 10,000 barrels of oil per stream day
(BOPSD) and had sold such plant which was in actual operation.
C. That Kraft had orders for production of three (3) more such
plants.
D. That funds had been committed for a private placement of
Source stock which would produce the funds necessary to build the
three plants which had been ordered.
E. That the said plants were self operating and could be used
in third world countries
17. The factual representations set forth in the preceding
paragraph were in fact untrue, false, and fraudulent in that:
A. There was no unique technology owned or possessed by T.R.
Kraft or Point Source.
B. No unique hydrocarbon processing plant had ever been built
of sold by Kraft or Point Source.
C. There were no existing orders for hydrocarbon processing
plants; and
D. There was no committed money for a private placement of
Source stock.
18. The false and fraudulent misrepresentations of Kraft and
Point Source set forth above, were made to Carpenter and Parker
by T.R. Kraft and Point Source knowingly and with scienter to
induce Carpenter to sell shares of Parker stock to Kraft and to
induce the signing of May 20, 1997 agreement. The
misrepresentations were relevant to a decision to enter the
transaction.
<PAGE>
19. Defendant Kraft and Point Source used the United States
mails and interstate telephone lines to transmit false and
fraudulent statements to Carpenter and Parker to induce the May
20, 1997 agreement and the attendant sale of Carpenter's stock of
Parker to Kraft.
20. As part of the May 20, 1997 transaction, Carpenter delivered
9,142,600 shares of Parker stock to Kraft. Following the May 20,
1997 transaction, Kraft caused the stock of Parker/Source to
effect a 1 and 50 reverse split.
21. The 9,142,600 shares delivered to Kraft by Carpenter equal
182,852 current shares of Source stock.
22. Carpenter and Parker relied on the misrepresentations of
Kraft and Point Source in coming to a decision to enter into the
May 20, 1997 agreement.
23. Plaintiffs did not discover and could not reasonably have
discovered the misrepresentations of Kraft and Point Source prior
to entering into the May 20, 1997 agreement.
24. No assets of any value were ever transferred to Parker
(Source) by Kraft or Point Source.
25. Kraft employed a scheme or artifice to defraud in acquiring
the Parker shares by making untrue statements of material facts
and engaging in acts which operated as a fraud upon plaintiffs.
26. By virtue of his position as a director, officer and
majority shareholder of Source following the May 20, 1997
transaction, T.R. Kraft owed a fiduciary duty to Source.
<PAGE>
27. Kraft breached his fiduciary duty to Source to the injury of
Source.
28. The actions of plaintiff Carpenter in bringing this action
has conferred a benefit on the corporation in causing the
cancellation of shares which were issued to Kraft for no
consideration, which act increases the per share value of each
remaining share by approximately 400%.
29. That plaintiffs have suffered damage in the sum of $75,000.
(See Verified Amended Complaint 55, 59, 66, 73).
30. Plaintiff Carpenter has expended $15,039.38 in fees and
costs to prosecute this case on behalf of himself and Source.
Where, having made the foregoing findings of fact, the Court
herewith makes the following:
CONCLUSIONS OF LAW
1. This Court has personal jurisdiction of the parties.
2. This Court has subject matter jurisdiction pursuant to 28
U.S.C. Section 1331.
3. Venue is proper pursuant to 28 U.S.C. Sections 1391 (1) and
1402.
4. Carpenter meets the requirements of Rule 23.1, Federal Rules
of Civil Procedure for bringing a derivative action as a
representative shareholder of Source.
5. Defendants Kraft and Point Source Energy knowingly and
willfully, with scienter, made false representations to
plaintiffs for the purpose of inducing the sale of Parker common
stock in violation of 15 U.S.C. 78) and Rule 106>5 (17CRF
240.10b5) issued thereunder, and in violation of the provisions
of the Utah Securities Act, Utah Code Ann. 61-1-1 and
specifically, 61-1-22.
6. Plaintiffs are entitled in law to an order of this Court
rescinding the May 20, 1997 transaction and returning, as nearly
as possible, Source Energy Corporation
<PAGE>
(Parker Energy Technology, Inc.) and Craig Carpenter to
their status prior to the consummation of the May
20,1997 agreement.
7. Plaintiffs are entitled to an order of the Court that the
May 20, 1997 agreement, and the transactions carried our pursuant
thereto, are void, that the transaction is rescinded, and
returning them, as closely as possible, to their position prior
to the transaction.
8. Plaintiffs are entitled to an order of the Court requiring
Kraft and Point Source to return to plaintiffs the shares
represented by certificates 10208 through 10217, 10219, 10220,
10222, 10373 and 10374, for delivery to Carpenter of 182,852
shares and cancellation of the balance pursuant to a rescission
of the May 20, 1997 agreement
9. Plaintiffs are entitled to an order precluding defendants
from taking any action to transfer, sell, or hypothecate any of
said shares.
10. Plaintiff Carpenter is entitled to an order requiring
defendants to return to hime182,852 post-split shares of Source
stock representing the shares transferred to Kraft by him
pursuant to the May 20, 1997 agreement.
11. Plaintiff Source is entitled to an order of this Court
allowing its transfer agent to void the share certificates issued
pursuant to the May 20, 1997 agreement and shares issued to Kraft
and his nominees as may be necessary to carry out the orders of
this Court.
12. Carpenter is entitled to recover from defendants and each of
them for the benefit of his counsel, reasonable attorneys fees
expended in prosecuting this action in the sum of $15,039.38 and
to recover from Source the sum of $75,000 as an
<PAGE>
award for his efforts in providing the benefits he has
caused to be received by Source shareholders as a
result of his efforts in prosecuting this action.
13. That plaintiffs have suffered damages in the amount of
$75,000.
14. Plaintiffs are entitled to an accounting from defendant T.R.
Kraft for monies Kraft received from transactions involving sale
of Source Energy stock ad monies or benefits received from
Source.
15. Plaintiffs are entitled to recover treble damages and
attorneys fees pursuant to Utah Code Ann. 61-1-22.
Based upon the foregoing, it is hereby ORDERED, ADJUDGED and
DECREED as follows:
Judgement is hereby entered on behalf of plaintiffs and
against defendants as follows:
1. The transaction between plaintiffs and defendants herein,
represented by the agreement dated May 20, 1997 is hereby
adjudged to be rescinded and void. It is ordered that Source,
formerly Parker, be returned, as nearly as possible, to its
status prior to consummation of the said agreement and further,
that the resignations of the officers and directors of Parker
Energy Technology, Inc., executed pursuant to the May 20, 1997
agreement are declared to be void. The appointment of officers
and directors of Source subsequent to the May 20, 1997 agreement,
and any of their successors is declared to be void and of no
force or effect. It is ordered that the officers and directors
of Parker Energy Technology, Inc., existing prior to the May 20,
1997 agreement, to wit, Craig Carpenter, Helen G. Carpenter, and
Kathy Morrison, be, and hereby are, appointed and reinstated as
the Board of Directors of Source Energy Corporation.
<PAGE>
2. That the 12,305,800 shares represented by certificates 10208
through 10217, 10219, 10220, 10222, 10373 and 10374, presently in
the name of or control of T. R. Kraft, and all other shares, held
or owned by defendants, be returned to the plaintiffs with
182,852 of said shares being delivered to Craig Carpenter and the
balance of the certificates being canceled by Source. For the
purpose of placing as nearly as possible, the plaintiffs in the
position they occupied prior to consummating the May 20, 1997
agreement. It is further ordered that the corporation's transfer
agent, as agent of Source; take such steps as are necessary to
carry out the order of the Court.
3. That plaintiff Craig Carpenter, for the benefit of his
counsel, be granted judgment against defendants T. R. Kraft,
Point Source Energy and Source Energy for the sum of $15,039.38
as reasonable attorneys fees for prosecuting this action.
4. For an award to Craig Carpenter in the amount of $75,000
against defendant Source Energy Corporation to compensate him for
the benefit conferred on Source Energy Corporation shareholders
in prosecuting this action.
5. For an award to Source and against defendants T. R. Kraft
for the sum of $75,000 as damages.
6. For judgment in favor of plaintiff and against defendants
and each of them for reasonable attorneys fees of $15,039.38 and
for costs incurred in bringing this action.
7. For an order that the judgments in favor of plaintiffs and
T.R. Kraft in the sum of $75,000, be trebled pursuant to Utah
Code Ann. Section 61-1-22.
<PAGE>
It is further ordered that defendant T.R. Kraft account to
plaintiffs Source Energy Corporation and Craig Carpenter for all
monies received by him since May 20, 1997 from Source Energy
Corporation or resulting from proceeds of the sale of Source
Energy Corporation shares.
DATED this 10th day of March, 2000.
/s/
U.S. District Judge
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