U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
UNDER SECTION 12(b) or (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OREX CORPORATION
(Name of Small Business Issuer in its Charter)
DELAWARE 11-3358602
(State or other jurisdiction (IRS Employer
of incorporation or organization Identification No.)
255 Alhambra Circle, Suite 975
Coral Gables, Florida 33134
(address of principal executive offices) (Zip Code)
Issuer's Telephone Number (305) 444 5890
Securities to be registered under Section 12(b) of the Act
Title of each class Name of each exchange on which
to be so registered each class is to be registered
NONE NONE
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $0.0001 PER SHARE
(Title of Class)
SPECIAL NOTE - FORWARD LOOKING STATEMENTS
Certain statements contained in this Registration Statement, including,
without limitation, statements containing the words "believes," "anticipates,"
"expects" and words of similar import constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause actual results, performance or achievements of the
Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following:
international, national and local general economic and market conditions;
demographic changes; the regulatory framework of the mining industry; the
ability of the Company to sustain, manage or forecast its growth; the success
and then the acceptance of new mining techniques; adverse publicity;
competition; changes in business strategy or development plans; business
disruptions; the ability to attract and retain talented personnel; the ability
to protect technology; and other factors referenced in this Registration
Statement. Given these uncertainties, readers of this Registration Statement and
investors are cautioned not to place undue reliance on such forward-looking
statements. The Company disclaims any obligation to update any such factors or
to publicly announce the result of any revisions to any of the forward-looking
statements contained herein to reflect future events or developments. In
evaluating such statements and in making any investment decisions, prospective
investors should specifically consider the various factors identified in this
Prospectus, which could cause actual results to differ materially from those
indicated by such forward-looking statements. In addition, when used in this
Prospectus, the words "intends to," "believes," "anticipates," "expects" and
similar expressions are intended to identify forward-looking statements.
<PAGE>
EXHIBITS
The following is a list of Exhibits filed as part of the Registration
Statement:
2.1 Agreement and Plan of Reorganization Medalion Services, Inc.
Acquisition of Orex Gold Mines Corporation.
2.2 Merger Agreement and Plan of Reorganization By and Among Orex Gold
Mines Corporation and Santa Maria Mining Company.
2.3 Merger Agreement and Plan of Reorganization By and Among Orex Gold
Mines Corporation and Arch Mining Company.
3.1(i) Certificate of Incorporation of Medalion Services, Inc. filed January
8, 1997.
3.2(i) Certificate of Amendment of Certificate of Incorporation of Medalion
Services, Inc., filed February 28, 1997.
3.3(i) Certificate of Amendment of Certificate of Incorporation of Medalion
Services, Inc., filed February 23, 1999
3.4(i) Action in Writing By Directors/Officers and Amendment of the
Certificate of Incorporation of Orex Gold Mines Corporation, filed
November 8, 1999.
3.5(i) Articles of Incorporation of Orex Minerals Corporation.
3.1(ii) Bylaws of the Company.
4.1 Specimen stock certificate for Registrant's Common Stock.
5.1 Legal Opinion of Roland Sanchez Medina, Jr. dated April 13, 1999.
5.2 Legal Opinion of Roger Kimmel, Jr. & Associates dated October 20,
1999.
5.3 Legal Opinion of Roger Kimmel, Jr. & Associates dated October 1, 1999.
5.4 Legal Opinion of Roland Sanchez Medina, Jr. re: Barry Abrams'
consulting agreement.
5.5 Legal Opinion of Donald J. Shaw, re: Micron Mining.
10.1 Consulting agreement with Damask Holdings, Ltd.
10.2 Consulting agreement with Harry Tramp.
10.3 Consulting agreement with Kelly Johnston.
10.4 Consulting agreement with WebcastMedia.net.
10.5 Consulting agreement with Barry Abrams. ( Medalion )
10.6 Warren Hemedinger's employment agreement.
10.7 Gregory Finney's employment agreement.
10.8 Consulting agreement with Barry Abrams. ( Orex )
10.9 Consulting agreement with Micron Mining.
99.1 Board Resolution of Medalion Services, Inc., authorizing the exchange
and issuance of stock pursuant to the Agreement and Plan of
Reorganization.
99.2 Correspondence from Medalion to Orex, concerning a distribution of
4,400,000 unregistered free trading shares.
99.3 Board Resolutions and Treasury Orders re: Consulting agreements.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
OVERVIEW
The Company intends to make silica its primary product. Silica is the most
common mineral in the earth's crust. It has been estimated that silica and
silicate minerals in all of their forms make up 95% of the earth's crust.
Although normally clear or white, silica is found in a broad range of colors due
to impurities commonly found within it. Most deposits of silica possess little
economic importance. This is because of the impurities found in quartz. Quartz
is found in ranges from coarsely crystalline to cryptocrystalline. Many mineral
impurities cannot be separated from the silica matrix by conventional milling
and processing technology. As a consequence, most of the operating silica mines
in the world are currently exploiting a dwindling supply of high purity, defined
as 98% to 99% SiO2, silica sands.
Silicon materials can be divided into two groups - one that follows the
silica sand/sodium silicate route and the other that follows the lump
quartz/silicon metal route. The necessity of milling the type of silica quartz
found at the Company's Santa Maria location for the removal of precious metals
would preclude entering the lump quartz/silicon metal route due to physical
specifications. The process utilizes an electric arc furnace that cannot
tolerate fine material. The quartz produced from the Company's Santa Maria
deposit easily falls within the "flux" market for smelting operations, although
the market is considered "low end" and precious metals' value would not be
recovered. This market would not support mining operations due to shipping costs
and associated expenses due to the remote facility of the mine. The nearest
smelter, the Asarco Hayden Smelting Plant in Hayden, Arizona, is 140 miles from
the mine site. The current market for this grade or quartz material is $25 to
$30 ton. There is interest expressed by several groups to purchase Santa Maria
material for this purpose.
The sodium silicate group of products, which relates to Santa Maria
material, includes such items as sodium silicates, potassium silicates,
soda-alumina silicates, calcium silicates, silica gels, precipitated silicas,
and synthetic silicas. Though more restrictive in the quality of the quartz used
in these products, the assay values indicate that Santa Maria quartz vein
material can readily enter this market. From this route, it can enter the
"higher end" silica market that includes: detergents, including both domestic
and industrial washing powders; chemicals such as silica gels, desiccants,
matting agents, water treatment, welding rod coatings, and froth flotation
agents used in mineral beneficiation; fumed silica, used in paints, adhesives,
cosmetics, rubbers, pharmaceuticals and other industrial applications;
precipitated silicas, silicates for rubber reinforcement, functional fillers for
inks's adhesives, sealants, carriers for pesticides and extenders in emulsion
paints.
The "higher end" market represents a very small part of silica production
and markets. In this grade of silica, stringent specifications require 99.9%
silica, with contaminants of less than 0.006%. Prices for this "higher end"
market range from $250 to $750 ton. Management believes that the Santa Maria
quartz will be able to enter the "higher end" market with some additional
research and development of processing methods that are currently being
evaluated. The Santa Maria quartz is currently carrying 0.07, so it must be
further refined to bring it into this spec of 0.006%. The company believes two
impurities can be removed from the Santa Maria quartz for approximately $3.00
per ton and, with these removed, the finished product may qualify for this
"higher end" market.
There is still one market for silica above the "higher end" tier, which is
known and referred to as the "highest end." This market represents a very small
part of silica production and markets. To qualify for this grade, silica
specifications require 99.9% and less than a few parts per million of
contaminants. This grade of quartz is utilized as natural crystals, crushed
quartz, and quartzite, as fine ground silica, and as naturally occurring quartz
sand. The optical properties of the quartz crystal make it unusually suitable
for high quality lenses, lens components, wedges, plates and prisms. The
piezoelectric properties of quartz make it indispensable in communication (fiber
optics), time control, and other electronic devices (semiconductors, etc). These
uses require the best colorless and defect free crystals, which are usually
cultured. "Lascas" is the silicon fee stock material used to culture these
crystals. Lascas is quartz crystal and crystalline material of extremely high
chemical purity, where impurities are measured in parts per million. To produce
1 kilogram of as-grown quartz, you need between 1.3 and 1.4 kilograms of lascas.
Lascas is the most prominent of the products that enter the "highest end"
market. The Santa Maria quartz vein material has yet to be purified to a level
that would allow it to enter this market.
At the Santa Maria mine and other nearby mining operations, the recovery
of precious metals has always been the primary focus of mining endeavors. To
date, no operator has focused upon the Santa Maria quartz and the silica market.
Management believes that the Santa Maria mine should be operated as a silica
mine and not as a precious metal operation. The value of metals associated with
the silica, which includes gold and silver, will only make the project much more
attractive as a commercial venture.
BUSINESS DEVELOPMENT
The Company was formerly known as Medalion Services, Inc. ["Medalion"]. It
was formed on January 9, 1997 in Delaware. Medalion's business consisted of the
marketing, distribution and sale of industrial cleaning products. By late 1998,
Medalion, the Company, became dormant. On or about February 17, 1999, Medalion
entered into a business combination transaction with another Delaware
corporation called Orex Gold Mines Corporation [hereafter "Orex Gold Mines" or
just "Orex"]. Orex Gold Mines was known as The Lucky Seven Gold Mines
Corporation until January 14, 1999, when it changed its name to Orex Gold Mines.
The business combination transaction between Orex Gold Mines and Medalion was
called an "Agreement and Plan of Reorganization Medalion Services, Inc.
Acquisition of Orex Gold Mines Corporation" [hereafter the "Agreement and Plan
of Reorganization"]. Pursuant to this Agreement and Plan of Reorganization,
Medalion acquired all of the outstanding stock of Orex Gold Mines, thereby
making Orex Gold Mines a wholly owned subsidiary of Medalion (the
"Acquisition"), followed by an exchange of the capital stock of Orex for voting
common stock of Medalion (the "Reorganization"). On November 8, 1999, the
Company changed its name from Orex Gold Mines Corporation to Orex Corporation.
THE COMPANY
Orex Corporation (hereafter referenced as "Orex" or the "Company") is a
start-up business headquartered at 255 Alhambra Circle, Suite 975, Coral Gables,
Florida, Florida 33134. The Company's telephone number is (305) 444 5890. The
Company's field office is located at 521 1/2 West Wickenburg Way, Wickenburg,
Arizona 85390. The Company has had no revenue from operations since inception
and has no current customers. There has not been any bankruptcy filing,
receivership or any similar proceeding since the Company's inception. The
Company was organized under the laws of the State of Delaware and it is
authorized to issue fifty million shares of common stock with a par value of
$0.0001 per share.
On October 14, 1999, Orex Minerals Corporation was organized. This is a
Nevada corporation and, like Orex Corporation, Orex Minerals Corporation has
authorization to issue 50,000,000 [fifty million] shares of Common Stock with a
par value of $0.0001 per share. Although no stock has yet been issued for Orex
Minerals Corporation, it has been created to serve as a wholly owned subsidiary
of Orex Corporation. Its purpose is to separate the mining operations of
Vanadium and Uranium in Colorado and Utah from that of Orex Corporation in
Arizona and to raise capital to acquire new properties in the southern Colorado
plateau.
The business of the Company is the acquisition, exploration and if
warranted, development of mineral properties and the production of minerals
therefrom.
Glossary of Mining Terms
In this filing, there are technical terms relating to geology, mining or
related matters whose definition cannot readily be found in conventional
dictionaries. The following glossary of geological and mining terms is offered
to facilitate the reader's understanding of the material which follows.
Acid Mine Drainage Acidic run-off water from mine waste dumps and mill tailings
ponds containing sulfide minerals. Also refers to ground
water pumped to surface from mines.
Active Mining and milling of ore.
Adit An opening driven horizontally into the side of a mountain
or hill for providing access to a mineral deposit.
Alteration Any physical or chemical change in a rock or mineral
subsequent to its formation. Milder and more localized than
metamorphism.
Anticline An arch or fold in layers of rock shaped like the crest of a
wave.
Assay A chemical test performed on a sample of ores or minerals to
determine the amount of valuable metals contained.
Backfill Waste material used to fill the void created by mining an
orebody.
Ball Mill A steel cylinder filled with steel balls into which crushed
ore is fed. The ball mill is rotated, causing the balls to
cascade and grind the ore.
Basement Rocks The underlying or older rock mass. Often refers to rocks of
Precambrian age which may be covered by younger rocks.
Base Metal Any non-precious metal (e.g. copper, lead, zinc, nickel,
etc.).
Bedding The arrangement of sedimentary rocks in layers.
Block Caving An inexpensive method of mining in which large blocks of ore
are undercut, causing the ore to break or cave under its own
weight.
Breccia A rock in which angular fragments are surrounded by a mass
of fine-grained minerals.
Bulk Mining Any large-scale, mechanized method of mining involving many
thousands of tons of ore being brought to surface per day.
Cathode A rectangular plate of metal, produced by electrolytic
refining, which is melted into commercial shapes such as
wirebars, billets, ingots, etc.
Chalcocite A sulfide mineral of copper common in the zone of secondary
enrichment.
Channel Sample A sample composed of pieces of vein or mineral deposit that
have been cut out of a small trench or channel, usually
about ten cm wide and two cm deep.
Chute An opening, usually constructed of timber and equipped with
a gate, through which ore is drawn from a stope into mine
cars.
Complex Ore An ore containing a number of minerals of economic value.
The term often implies that there are metallurgical
difficulties in liberating and separating the valuable
metals.
Cone Crusher A machine which crushes ore between gyrating cone or
crushing head and an inverted, truncated cone known as a
bowl.
Concentrate A fine, powdery product of the milling process containing a
high percentage of valuable metal.
Conglomerate A sedimentary rock consisting of rounded, water-worn pebble
or boulders cemented into a solid mass.
Contact A geological term used to describe the line or plane along
which two different rock formations meet.
Core The long cylindrical piece of rock, about an inch in
diameter, brought to the surface by diamond drilling.
Crosscut A horizontal opening driven from a shaft and (or near) right
angles to the strike of a vein or other orebody.
Cut-and-fill A method of stopping in which ore is removed in slices, or
lifts, and then the excavation is filled with rock or other
waste material (backfill), before the subsequent slice is
extracted.
Cyanidation A method of extracting exposed gold or silver grains from
crushed or ground ore by dissolving it in a weak cyanide
solution. May be carried out in tanks inside a mill or in
heaps of ore out of doors.
Decline An underground passageway connecting one or more levels in a
mine, providing adequate traction for heavy, self-propelled
equipment. Such underground openings are often driven in an
upward or downward spiral, much the same as a spiral
staircase.
Development Work carried out for the purpose of opening up a mineral
deposit and making the actual ore extraction possible.
Development Drilling
Drilling to establish accurate estimates of mineral
reserves.
Diamond Drill A rotary type of rock drill that cuts a core of rock
that is recovered in long cylindrical sections, two
centimeters or more in diameter.
Dilution (mining) Rock that is, by necessity, removed along with the ore in
the mining process, subsequently lowering the grade of the
ore.
Dip The angle at which a vein, structure or rock bed is inclined
from the horizontal as measured at right angles to the
strike.
Disseminated Ore Ore carrying small particles of valuable minerals spread
more or less uniformly through the hose rock.
Dore Unparted gold and silver poured into a mold when molten to
form buttons or bars. Further refining is necessary to
separate the gold and silver.
Drift A horizontal underground opening that follows along the
length of a vein or rock formation as opposed to a cross-cut
which crosses the rock formation.
Drill-Indicated Reserves
The size and quality of a potential ore body as suggested by
widely spaced drill holes; ore work is required before
reserves can be classified as probable or proven.
Due Diligence The degree of care and caution required before making a
decision; loosely, a financial and technical investigation
to determine whether an investment is sound.
Electrolytic Refining
The process of purifying metal ingots that are suspended as
anodes in an electrolytic bath, alternated with refined
sheets of the same metal which act as starters or cathodes.
Environmental Impact Study
A written report, compiled prior to production decision,
that examines the effects proposed mining activities will
have on the natural surroundings.
Epithermal Deposit A mineral deposit consisting of veins and replacement
bodies, usually in volcanic or sedimentary rocks, containing
precious metals, or, more rarely, base metals.
Exploration Work involved in searching for ore, usually by drilling or
driving a drift.
Face The end of a drift, crosscut or stope in which work is
taking
Fissure An extensive crack, break or fracture in rocks.
Float Pieces of rock that have been broken off and moved from
their original location by natural forces such as frost or
glacial action.
Flotation A milling process in which valuable mineral particles are
induced to become attached to bubbles and float, and others
sink.
Footwall The rock on the underside of a vein or ore structure.
Fracture A break in the rock, the opening of which allows mineral
bearing solutions to enter. A "cross-fracture" is a minor
break extending at more-or-less right angles to the
direction of the principal fractures.
Free Milling Ores of gold or silver from which the precious metals can be
recovered by concentrating methods without resort to
pressure leaching or other chemical treatment.
Galena Lead sulfide, the most common ore mineral of lead.
Gossan The rust-colored capping or staining of a mineral deposit,
generally formed by the oxidation or alteration of iron
sulfides.
Grab Sample A sample from a rock outcrop that is assayed to determine if
valuable elements are contained in the rock. A grab sample
is not intended to be representative of the deposit, and
usually the best-looking material is selected.
Grade The average assay of a ton of ore, reflecting metal content.
Hangingwall The rock on the upper side of a vein or ore deposit.
Head Grade The average grade of ore fed into a mill.
Heap Leaching A process involving the percolation of a cyanide solution
through crushed ore heaped on an impervious pad or base to
dissolve minerals or metals out of the ore.
High Grade Rich ore
As a verb, it refers to selective mining of the best ore in
a deposit.
Host Rock The rock surrounding an ore deposit.
Hydrometallurgy The treatment of ore by wet processes (e.g., leaching)
resulting in the solution of a metal and its subsequent
recovery.
Intrusive A body of igneous rock formed by the consolidation of magma
intruded into other rocks, in contrast to lavas, which are
extruded upon the surface.
Lagging Planks or small timbers placed between steel ribs along the
roof of a stope or drift to prevent rocks from falling,
rather than to support the main weight of the overlying
rocks.
Lens Generally used to describe a body of ore that is thick in
the middle and tapers toward the ends.
Level The horizontal openings on a working horizon in a mine; it
is customary to work mines from a shaft, establishing levels
at regular intervals, generally about 50 meters or more
apart.
Limestone A bedded, sedimentary deposit consisting chiefly of calcium
carbonate.
Lode A mineral deposit in solid rock.
Metamorphic Rocks Rocks which have undergone a change in texture or
composition as the result of heat and/or pressure.
Mill A processing plant that produces a concentrate of the
valuable minerals or metals contained in an ore. The
concentrate must then be treated in some other type of
plant, such as a smelter, to effect recovery of the pure
metal.
Milling Ore Ore that contains a sufficient valuable mineral to be
treated by the milling process.
Mineable Reserve Ore reserves that are known to be extractable using a given
mining plan.
Mineral A naturally occurring homogeneous substance having definite
physical properties and chemical composition and, if formed
under favorable conditions, a definite crystal form.
Mineralized Material or Deposit
A mineralized body which has been delineated by appropriate
drilling and/or underground sampling to support a sufficient
tonnage and average grade of metal(s). Under SEC standards,
such a deposit does not qualify as a reserve until a
comprehensive evaluation, based upon unit cost, grade,
recoveries, and other factors, conclude economic
feasibility.
Muck Ore or rock that has been broken by blasting.
Native Metal A metal occurring in nature in pure form, uncombined with
other elements.
Net Profit Interest
A portion of the profit remaining after all charges,
including taxes and bookkeeping charges (such as
depreciation) have been deducted.
Net Smelter Return A share of the net revenues generated from the sale of metal
produced by a mine.
Open Pit A mine that is entirely on surface. Also referred to as
open-cut or open-cast mine.
Ore Material that can be mined and processed at a positive cash
flow.
Ore Pass Vertical or inclined passage for the downward transfer of
ore connecting a level with the hoisting shaft or a lower
level.
Ore body A natural concentration of valuable material that can be
extracted and sold at a profit.
Ore Reserves The calculated tonnage and grade of mineralization which can
be extracted profitably; classified as possible, probable
and proven according to the level of confidence that can be
placed in the data.
Oreshott The portion, or length, of a vein or other structure, that
carries sufficient valuable mineral to be extracted
profitably.
Oxidation A chemical reaction caused by exposure to oxygen that
results in a change in the chemical composition of a
mineral.
Participating Interest A company's interest in a mine, which entitles it
to a certain percentage of profits in return for putting up
an equal percentage of the capital cost of the project.
Patent The ultimate stage of holding a mineral claim in the United
States, after which no more assessment work is necessary
because all mineral rights have been earned.
Patented Mining Claim
A parcel of land originally located on federal lands as an
unpatented mining claim under the General Mining Law, the
title of which has been conveyed from the federal government
to a private party pursuant to the patenting requirements of
the General Mining Law.
Pillar A block of solid ore or other rock left in place to
structurally support the shaft, walls or roof of a mine.
Porphyry Any igneous rock in which relatively large crystals, called
phenocrysts, are set in a fine-grained groundness.
Precambrian Shield The oldest, most stable regions of the Earth's crust, the
largest of which is the Canadian Shield.
Prospect A mining property, the value of which has not been
determined by exploration.
Proven and Probable Mineral Reserves
Reserves that reflect estimates of the quantities and grades
of mineralized material at a mine which the Company believes
could be recovered and sold at prices in excess of the cash
cost of production. on current costs and on projected prices
and demand for such mineralized material. Mineral reserves
are stated separately for each such mine, based upon factors
relevant to each mine. Proven and probable mineral reserves
are based on calculations of reserves provided by the
operator of a property that have been reviewed but not
independently confirmed by the Company. Changes in reserves
represent general indicators of the results of efforts to
develop additional reserves as existing reserves are
depleted through production. Grades of ore fed to process
may be different from stated reserve grades because of
variation in grades in areas mined from time to time, mining
dilution and other factors. Reserves should not be
interpreted as assurances of mine life or of the
profitability of current or future operations.
Probable Reserves Resources for which tonnage and grade and/or quality are
computed primarily from information similar to that used for
proven reserves, but the sites for inspection, sampling and
measurement are farther apart or are otherwise less
adequately spaced. The degree of assurance, although lower
than that for proven reserves, is high enough to assume
continuity between points of observation.
Proven Reserves Resources for which tonnage is computed from dimensions
revealed in outcrops, trenches, workings or drill holes and
for which the grade and/or quality is computed from the
results of detailed sampling. The sites for inspection,
sampling and measurement are spaced so closely and the
geologic character is so well defined that size, shape,
depth and mineral content of reserves are well established.
The computed tonnage and grade are judged to be accurate,
within limits which are stated, and no such limit is judged
to be different from the computed tonnage or grade by more
than 20 percent.
Raise A vertical or inclined underground working that has been
excavated from the bottom upward.
Rake The trend of an orebody along the direction of its strike.
Reclamation The restoration of a site after mining or exploration
activity is completed.
Recovery The percentage of valuable metal in the ore that is
recovered by metallurgical treatment.
Replacement Ore Ore formed by a process during which certain minerals have
passed into solution and have been carried away, while
valuable minerals from the solution have been deposited in
the place of those removed.
Reserves That part of a mineral deposit which could be economically
and legally extracted or produced at the time of the reserve
determination. Reserves are customarily stated in terms of
"Ore" when dealing with metalliferous minerals.
Resources The calculated amount of material in a mineral deposit,
based on limited drill information.
Rib Samples Ore taken from rib pillars in a mine to determine metal
content.
Rockbolting The act of supporting openings in rock with steel bolts
anchored in holes drilled especially for this purpose.
Rockburst A violent release of energy resulting in the sudden failure
of walls or pillars in a mine, caused by the weight or
pressure of the surrounding rocks.
Rock Mechanics The study of the mechanical properties of rocks, which
includes stress conditions around mine openings and the
ability of rocks and underground structures to withstand
these stresses.
Room-and-Pillar Mining
A method of mining flat-lying ore deposits in which the
mined-out area, or rooms, are separated by pillars of
approximately the same size.
Rotary Drill A machine that drills holes by rotating a rigid, tubular
string of drill rods to which is attached a bit. Commonly
used for drilling large-diameter blastholes in open pit
mines.
Royalty An amount of money paid at regular intervals by the lessee
or operator of an exploration or mining property to the
owner of the ground. Generally based on a certain amount per
ton or a percentage of the total production or profits.
Also, the fee paid for the right to use a patented process.
Run-of-Mine A loose term used to describe ore of average grade.
Sample A small portion of rock or a mineral deposit, taken so that
the metal content can be determined by assaying.
Secondary Enrichment
Enrichment of a vein or mineral deposit by minerals that
have been taken into solution from one part of the vein or
adjacent rocks and redeposited in another.
Shaft A vertical or steeply inclined excavation for the purpose of
opening and servicing a mine. It is usually equipped with a
hoist at the top, which lowers and raises a conveyance for
handling personnel and materials.
Shear or Shearing The deformation of rocks by lateral movement along
innumerable parallel planes, generally resulting from
pressure and producing such metamorphic structures as
cleavage and schistosity.
Shrinkage Stopping A stopping method which uses part of the broken ore as a
working platform and as support for the walls of the stope.
Siderite Iron carbonate, which when pure, contains 48.2% iron; must
be roasted to drive off carbon dioxide before it can be used
in a blast furnace. (Roasted product is called sinter.)
Skarn Name for the metamorphic rocks surrounding an igneous
intrusive where it comes in contact with a limestone or
dolomite formation.
Solvent Extraction-Electrowinning,
G(SX/EW) A metallurgical technique, so far applied only to copper
ores, in which metal is dissolved from the rock by organic
solvents and recovered from solution by electrolysis.
Sphalerite A zinc sulfide mineral; the most common ore mineral of zinc.
Step-out Drilling Holes drilled to intersect a mineralization horizon or
structure along strike or down dip.
Stockpile Broken ore heaped on surface, pending treatment or shipment.
Stope Underground excavation from which ore has been extracted
either above or below mine level.
Stratigraphy Strictly, the description of bedded rock sequences; used
loosely, the sequence of bedded rocks in a particular area.
Strike The direction, or bearing from true north, of a vein or rock
formation measured on a horizontal surface.
Stringer A narrow vein or irregular filament of a mineral or minerals
traversing a rock mass.
Stripping Ratio The ratio of tons removed as waste relative to the number of
tons of ore removed from an open pit mine.
Sublevel A level or working horizon in a mine between main working
levels.
Sulfide A compound of sulfur and some other element.
Tailings Material rejected from a mill after more of the recoverable
valuable minerals have been extracted.
Tailings Pond A low-lying depression used to confine tailings, the prime
function of which is to allow enough time for heavy metals
to settle out or for cyanide to be destroyed before water is
discharged into the local watershed.
Trend The direction, in the horizontal plane, or a linear
geological feature (for example, an ore zone), measured from
true north.
Troy Ounce Unit of weight measurement used for all precious metals. The
familiar 16-ounce avoirdupois pound equals 14.583 Troy
Ounces.
Unpatented Mining Claim
A parcel of property located on federal lands pursuant to
the General Mining Law and the requirements of the state in
which the unpatented claim is located, the paramount title
of which remains with the federal government. The holder of
a valid, unpatented lode mining claim is granted certain
rights including the right to explore and mine such claim
under the General Mining Law.
Vein A mineralized zone having a more or less regular development
in length, width and depth which clearly separates it from
neighboring rock.
Volcanogenic A term used to describe the volcanic origin of
mineralization.
Vug A small cavity in a rock, frequently lined with well-formed
crystals. Amethyst commonly forms in these cavities.
Wall Rocks Rock units on either side of an ore body. The hanging-wall
and footwall rocks of an orebody.
Waste Barren rock in a mine, or mineralized material that is too
low in grade to be mined and milled at a profit.
Winze An internal shaft.
Zone of Oxidation The upper portion of an ore body that has been oxidized.
Property Location, Description and Access
A description of the Company's claims follows.
<TABLE>
<CAPTION>
Blue Chip Claims #1-#7
Claim Name BLM Serial Number Yavapai County Book / Page Status Refiling Date
<S> <C> <C> <C> <C>
Blue Chip #1 AMC353095 3719/320 Active 08/30/00
Blue Chip #2 AMC353096 3719/321 Active 08/30/00
Blue Chip #3 AMC353097 3719/322 Active 08/30/00
Blue Chip #4 AMC353098 3719/323 Active 08/30/00
Blue Chip #5 AMC353099 3719/324 Active 08/30/00
Blue Chip #6 AMC353100 3719/325 Active 08/30/00
Blue Chip #7 AMC353101 3719/326 Active 08/30/00
</TABLE>
<TABLE>
<CAPTION>
D & H Claims #1,2,5,6,8,9,10,12,13,14
Claim Name BLM Serial Number Yavapai County Book / Page Status Refiling Date
<S> <C> <C> <C> <C>
D & H #1 AMC351098 3721/207 Active 08/30/00
D & H #2 AMC351099 3721/208 Active 08/30/00
D & H #5 AMC351100 3721/209 Active 08/30/00
D & H #6 AMC351101 3721/210 Active 08/30/00
D & H #8 AMC351102 3721/211 Active 08/30/00
D & H #9 AMC351103 3721/212 Active 08/30/00
D & H #10 AMC351104 3721/213 Active 08/30/00
D & H #12 AMC351105 3721/214 Active 08/30/00
D & H #13 AMC351106 3721/215 Active 08/30/00
D & H #14 AMC351107 Active 08/30/00
</TABLE>
<TABLE>
<CAPTION>
Santa Maria Claims #1-#14
Claim Name BLM Serial Number Yavapai County Book / Page Status Refiling Date
<S> <C> <C> <C>
S M H #1 AMC336027 Active 08/30/00
S M H #2 AMC336028 Active 08/30/00
S M H #3 AMC336029 Active 08/30/00
S M R #1 AMC300253 Active 08/30/00
S M R #2 AMC300254 Active 08/30/00
S M R #3 AMC300255 Active 08/30/00
S M R #4 AMC300256 Active 08/30/00
S M R #5 AMC300257 Active 08/30/00
S M R #6 AMC300258 Active 08/30/00
S M R #7 AMC300259 Active 08/30/00
S M R #8 AMC300260 Active 08/30/00
S M H #4 AMC336030 Active 08/30/00
S M H #5 AMC336031 Active 08/30/00
S M H #6 AMC336032 Active 08/30/00
</TABLE>
The Blue Chip and D & H properties are unpermitted and in an exploratory
phase; there is no current testing on the properties. The Santa Maria is on
standby. The mill has both electricity and water, and it is permitted to process
20 tons per day with a maximum capacity of 50-75 tons per day. The Santa Maria
mill is ready to commence operations immediately following MSHA approval.
Blue Chip Claims
WATERS/SUNSET- BLUE CHIP PROPERTY
PROPERTY AND OWNERSHIP
The Waters/Sunset- Blue Chip property now consists of two patented claims,
the Waters and the Sunset, a patented millsite, and seven unpatented Blue Chip
claims which adjoin the Waters/Sunset patented claims to the north and east and
cover the northerly strike extension of the Waters Vein.
The original patented Waters/Sunset claims are held by Mr. and Mrs. Bobby
Westbrook of Waxahachie, Texas, and the Blue Chip claims are 100% owned by Orex
Corporation. These claims were staked in November 1999.
Total acreage involved in the Waters/Sunset Project properties is
approximately 256, as detailed below:
Waters/Sunset patents - 46.28 acres
Blue Chip Claims- 210.00 acres
TOTAL 256.28 acres
Location and Access
The Waters/Sunset patents are located in Section 29, T.12N, R.9W, Gila and
Salt River Meridian, Arizona; and the Blue Chip claims are located in Sections
20, 21, 28 and 29, T.12H, R-9W, G.&S.R. M., Arizona. The property is located on
the Santa Maria River at Latitude 34( 21'30" N and Longitude 113(12'13" W in the
Eureka Mining District, Prescott Land District, Yavapai County, Arizona. The
area is covered by U.S.G.S. 7-1/2 minute topographic map, Malpais Mesa SW
Quadrangle, Yavapai County, Arizona, on a scale of 1:24000.
The patented claims are located an the north bank of the Santa Maria River
about 2-1/2 miles below the Highway 93 bridge; the Blue Chip claims adjoin the
Waters/Sunset claims on the northeast, lying on the north side of the river.
Access to the property, at present, is by two miles of desert road from
Highway 93 at a point approximately 45 miles north of Wickenburg. The Santa
Maria River is crossed near the Highway 93 bridge and again at Black Canyon
Wash, near the Big Stick Mine, however the river crossing is impassable at both
locations during periods of rain due to flash floods.
The alternate route to the Santa Maria Mine site would still require
crossing the Santa Maria River at Black Canyon Wash, and would therefore still
present a problem with access during the winter months and summer monsoon
seasons when the Santa Maria River is in flood at irregular intervals. An
alternate route, situated on the north side of the river, has been located where
a road could be built relatively easily to alleviate the lack of access during
these periods.
Physiography
The property covers the Santa Maria River at about l700 feet elevation,
the terrain rises steeply to the north to about 2400 feet and more gently on the
south to around 2300 feet. The terrain is usually steep to precipitous near the
rivers and creeks with more level ground and gentler slopes away from the river
and washes.
The area lies within the Mountain Region in the northern Basin and Range
Physiographic Province, at the Transition Zone to the Plateau Province. The main
landform in the Basin and Range Province consists of ridges of more resistant
rocks aligned along the predominantly northwesterly trend of fault blocks.
The climate in east central Arizona is arid and classified as desert.
Rivers and creeks are intermittent, being dry for most of the year, but subject
to flash flooding and torrential high water levels during the summer rains and
in the winter months. Vegetation consists mostly of cacti and resistant bushes
such as palo verde, mesquite, and creosote.
There is a range of animal life with mule deer, cougar, and coyote among
the larger mammals reported with wild burros and smaller mammals common.
History and Previous Work
The earliest reports of gold on the Santa Maria River were by the early
Spanish and Mexican explorers who passed through the country in the seventeenth
and eighteenth centuries. A Spanish cannon from this era was found at Artillery
Peak about 20 miles west of the Waters/Sunset property.
There was no appreciable mining for gold in Arizona until the Territory
was acquired by the United States from Mexico in 1848 and 1853 after which time
prospectors were able to operate in areas not controlled by hostile Indians.
There was undoubtedly mining on the Waters claim prior to its earliest recorded
location in 1887 by T.C. Bowe, H.A. Owen and I.N. Owen. It is suspected that the
southern extension of the Waters Vein, on the south side of the river, was the
first to be worked as there are the remains of several arrastras on the
adjoining flats. The Sunset Mine was located in 1889 by T.C. Bowe with the
Waters Millsite located in 1890 by T.C- Bowe and D.C. Thorne. By 1897, the
property was owned by the Santa Maria Gold Company when a Patent Survey was
carried out, with Patent granted in 1898. At the time of the survey, there was a
20 stamp mill on the Waters Millsite supplied with ore from the Waters adit by a
ll00-foot long tramway.
The mine was in operation until the early 1900's, with a cyanide plant
built in 1899 to treat tailings from the earlier operations. The property was
involved in litigation around the turn of the century and operations ceased.
There apparently has been no active mining on the Waters Vein since that time,
although there may have been some sniping or illegal mining during the
Depression in the 1930's. Prospecting and small mining operations were
apparently carried out on quartz veins located on the present Blue Chip claims
until recently.
There are no records as to the production from the Waters Mine or the
amount of gold produced during the period the mine operated. The underground
mapping program carried out in 1983 on the property indicated at least two
different mining operations with the lower levels developed after the older
upper workings were mined out. Operations seem to have ceased before the ore
shoots developed from the lower levels were mined.
There was some exploration on the Waters/Sunset property in recent years,
with sampling and mapping carried out in 1982 by Laxton and Townsend for Mr.
Bobby Westbrook who had purchased the patented ground from the heirs of the
original owners. The workings were subsequently opened up and cleaned out in
preparation for a small mining and heap leaching operation, however operating
problems in the cyanide circuits hampered the successful treatment of these ores
leading to the suspension of the operation. Subsequently, the property became
available and Orex Corporation staked several claims adjoining the Waters/Sunset
patents and negotiated a lease option agreement with Mr. Westbrook for the
patented ground.
Regional Geology
The area of east-central Arizona occupied by Yavapai County and including
the Waters/Sunset property is underlain by Precambrian schists, granite gneisses
and pegmatites, which were affected by later tectonic and metamorphic events
including late Mesozoic intrusions and associated volcanism related to
subduction zones and tectonism of the Laramide orogeny.
The tectonic style changed in the early Tertiary to crustal extension
associated with rift related intermediate to acidic intrusions and volcanism in
the Miocene. Cessation of crustal extension in late Miocene times was followed
by outpourings of alkali plateau basalts.
The bedrock geology and outcrop pattern has been controlled by the
dominant northwest-southeast trend of Basin and Range tectonics resulting in
northwest trending ridges and mountain blocks separated by large areas of sand
and gravel of Tertiary and Recent age. The widespread ash and tuff of the acidic
to intermediate Miocene volcanism has mostly been eroded with subsequent rivers
and creeks superimposed over pre-volcanism river channels and terrain. Remnants
of the Miocene volcanism remain as mesas and buttes surrounding the old volcanic
centers and plugs.
Local Geology
Precambrian schists and gneisses cut by pegmatite dykes and younger
granitic to monzonitic intrusions, in a high-grade metamorphic terrain underlie
the Waters/Sunset property. The pegmatites and granites appear to be Precambrian
but some of the finer grained intrusions may be Mesozoic or Tertiary in age.
The older Precambrian rocks have a long history of metamorphism and
tectonism with extensive silicification associated with the granitic gneisses
and pegmatite intrusions. Some of the silicification zones around the pegmatites
approach granites or migmatites in appearance and composition.
The older rocks were affected by tectonism during the Laramide and Basin
and Range orogenies of Eocene through Miocene times when the overall "grain" of
the region was imposed. Calc-alkaline intrusions of the Laramide orogeny were
followed by the rift or extension related dacitic to rhyolitic volcanism of the
Basin and Range orogeny. Cessation of the rifting processes in the late Miocene
was followed by outpourings of plateau flood basalts.
The acidic volcanism of mid-Miocene age blanketed the area with volcanic
ash, tuff and subordinate lava flows, which have been largely removed by erosion
except for erosional remnants remaining as buttes or mesas surrounding the
volcanic centers or plugs, as observed at Violas Peak and Negro Ben Peak within
several miles of the property.
While there is no direct evidence that the Waters Vein and other quartz
veins in the area are related to the mid-Miocene volcanism at Violas Peak, a
volcanic neck or plug, it is believed that there is a relationship to the
hydrothermal fluids and tectonism associated with such volcanic activity.
The detailed geology of the underground workings on the Waters Vein was
described in the June 17th, 1983 report by Sawyer Consultants Inc. (House,
1983). The first stage drilling programs clarified some of the relationships
between the various lithological units and has confirmed the continuity and
strength of the Waters Vein. Faulting which has affected this structure has
occurred in several stages in a quite complex sequence of relative movements
resulting in a series of fault bounded blocks or panels containing extensions of
the Waters Vein. The fault system mapped underground with a westerly downthrow
was affected by later faulting in which the downthrow was to the east and by
larger scale movements, the surface effects of which were noted during the
surface mapping. The effects of this complicated faulting would, initially, have
been to raise the down dip portion of the Waters Vein relative to its projected
down dip position, but the later faulting, downthrown to the east, would have
lowered it. The amount of throw on these faults is not accurately known, but it
is believed to be in the order of 50 to 150 feet. The full size of the fault
bounded panels is not known at this time and a program of diamond drilling to
test the northerly extension of the Waters Vein would be needed to test for
these panels.
During the mapping program, it was apparent that the surface expression of
geological structures would only be seen in geomorphological features, due to
the effects of the desert weathering processes which mantle the bedrock surface
with rock debris and fragments. The larger structural elements such as faults
and shear zones do have a surface expression in that they are zones of weakness
and are eroded more rapidly, resulting in gullies and creeks along the strike of
these zones. The irregular course of the Santa Maria River on the southern
boundary of the Waters/Sunset claims appears to be controlled by block faulting
which can be seen in the canyon east of the Millsite. The course of Gallagher
Creek on the north side of the Blue Chip claims also reflects faulting as zones
of weakness now followed by the creek.
The earlier underground mapping had indicated that a series of faults
striking at 30o, with downthrow on the west, were breaking up the Waters Vein
and this was confirmed in the diamond drilling. Another series of faults,
striking roughly northwest (approximately 310o), was noted, with an apparent
downthrow to the east.
The overall effect of this faulting has been to break up the ground into a
series of fault bounded blocks or panels, with the Waters Vein contained in such
panels effectively raised on the east of the 30o faults. The throw on the 310o
faults is unknown but would effectively drop the Waters Vein in the panels on
the east of the faults. The Waters Vein extension north of the Waters/Sunset
claims is believed to have been broken up into a sequence of fault bounded
panels generally trending north-easterly under the Blue Chip ground. The
mineralized quartz veins on the Blue Chip claims may be related to the Waters
Vein in these panels due to remobilization caused by tectonism or associated
with the fine grained quartz monzonite intrusive in the Blue Chip adit area.
The southerly extension of the Waters Vein across the Santa Maria River
vas not traced beyond the two adits sampled in the earlier program in May 1983.
A higher adit on strike with the West Vein adit was noted during this later
program, but was not visited. It is believed that the trace of the main Waters
Vein south of the river would follow, up the gully noted during the May 1983
program as containing much vein quartz float.
The mineralized quartz veins located on the Blue Chip claims are believed
to be related to the main Waters Vein or the Waters Break and perhaps represent
a remobilization of Waters Vein material during tectonism and hydrothermal
activity associated with either the Violas Peak volcanic center or the fine
grained quartz monzonite intrusive in the area of the Blue Chip adit. While the
geology has become clearer as a result of the work completed to date on the
Waters/Sunset property, there still remains much work to be done to fully
unravel the complicated structural details.
D & H Claims
Location: The D&H Claims are located in Sections 11 and 14, T.12N, R.9W,
Gila and Salt River Meridian, in the Eureka Mining District, Prescott Land
District, Yavapai County, Arizona. The property is located near the Santa Maria
River and in close proximity to the Santa Maria and Waters/Sunset properties.
The area is covered by U.S.G.S. 7-1/2 minute topographic map, Malpais Mesa SW
Quadrangle, Yavapai County, Arizona, on a scale of 1:24000.
Access to the property, at present, is by two and one half miles of desert
road from Highway 93 at a point approximately 45 miles north of Wickenburg. To
get there, one should take US highway 93 to the bridge over the Santa Maria
River, 40 miles NE of Wickenburg, AZ. Then turn right (east)just before the
bridge, and generally follow the river about 2 1 miles north-east to the south
end of the claim block.
Geology
The Arizona Geologic Map shows the general area of the Turnbeaugh claim to
be Precambrian Granitic intrusive rocks. However, a recent study of Arizona
Geological Society, Western Arizona, Volume XII, dated May 1980 gives detailed
and up to date information with K-Ar Geochronology, Petrology, Historical
Geology, and discusses the Laramide alterations in which the writer concurs.
Thusly, the basic rocks at the Turnbeaugh are plutonic of the Yavapai series and
are primarily Precambrian quartz monzonites with some granodiorites and quartz
biotites, all age dated at approximately 1.6 billion years. The Hualapai
mountains to the NW are granitics of 1.3 billion years in age (Rb-Sr tests on
the biotites, therein).
The so called Turnbeaugh Ledge, which goes through the Turnbeaugh mine and
other adjoining mines in the area should be called the Turnbeaugh vein. This
contains the gold bearing ore that was mixed in the past. It is mostly a
siliceous (quartz) vein that also carries feldspars and some iron (hematite and
limonite), and, in places, mica. This vein is more than a mile in length, as can
be verified from outcrop occurrences in many localities. Also, coexistent with
this quartz formation is a parallel vein of mylonitic phyllite material
containing Au.
The Turnbeaugh vein was formed during the Laramide orogeny, about 70
million years ago, which included uplifts, volcanics, compressive deformation,
faulting, and plutonic emanations. It is probable that a fault line occurred in
the ancient granitics, where the Turnbeaugh vein is now present, and which later
became filled and mineralized from emanations from the depths (from gases and
solutions of a super heated highly siliceous content (includes the Au). The
fault line was originally vertical, and is now tilted to almost horizontal with
a few more million years. The Turnbeaugh inclined shaft No. 1 collar area where
the vein strikes North-South with a dip 38 degrees to the East.
In the adjoining region are also found thin Andesite and Rhyolite flows
(extrusives). These are from the mid-tertiary orogeny in the Oligocene and
Miocene (25-30 million years ago). This was a magmatic and tectonic transition
period, also. In the Eureka Mining District, there can be noted a period of
extreme surface erosion, which included tilting and metamorphism. This was
during the Eocene.
History
Reconnaissance Geology Investigation of the Turnbeaugh Mining Claim
(Patented), Eureka Mining District, Yavapai County, Arizona. On May 21, 1981,
Mr. Melvin Jones, Mining Geologist, accompanied by (and assisted by) Mr. Kenneth
A. Phillips, and Mr. Richard Beard, Field Engineers, Arizona Department of
Mineral Resources, Phoenix, AZ, examined and sampled the Turnbeaugh mining claim
(patented), as described above. More specifically, it is in Sections 2 and 11,
T-12-N, R-9-W, SR B&M.
The engineers from the Department of Mineral Resources have been examining
the many old mines in the Eureka Mining District for future mining
potentialities. The Turnbeaugh property was only examined on the surface, as it
was impractical (if not impossible) to go underground, as the old shaft collars
were badly caved in. All of the old mining headframes, buildings, tanks,
machinery, etc., were removed years ago. The last purported operations were in
1938. The last portion of the road to the property is now impassable for motor
vehicles.
Discussion
In order to determine the status quo of the Turnbeaugh property, it is
necessary to examine and study old records on the mining operations of the past,
as well as to make the surface investigation. The owner, Mr. Bark, presented
some of the records to the writer. Others were in the old files of the
Department of Mineral Resources. This information is not complete, as there are
certain gaps in the records. Completely missing are production records. Also,
current exploration activities on adjoining claims are taken into consideration
by the undersigned.
The Turnbeaugh mine was found in 1895 by Turnbeaugh and Beckman, who sold
it to other individuals in 1898. Throughout the years, a series of owners are on
the records. In the early days, an inclined shaft had a depth of 125 feet. The
surface is reported as lean, but at a depth of about 70 feet, there was a good
ore body. The Pocahontas, Goodenuff, and other claims were taken out on the
Turnbeaugh Ledge to the north, a short time later. To the south, in those early
days were five Anarchist claims on the same gold bearing vein and which now are
known as the D&H claims. The Turnbeaugh claim was patented in 1903.
The Turnbeaugh property, as mentioned previously, is located on the Santa
Maria river (which has a tiny flow most of the year). The river is at the bottom
of a steep, rugged, mountainous canyon. The mentioned inclined shafts and dumps
are on the west side of the canyon, about 200 feet up from the river bottom. As
one looks to the north, four large dumps (or tailing piles) can be seen on the
Pocahontas property.
At this point, I would like to emphasize a very serious problem. It is
impossible now to drive any kind of vehicle, even a 4-wheel drive vehicle. About
the last half mile down the mountainside, is now only a very steep pack trail.
At places the road passes over the side of rugged, cliff like rock formations
that are now impassable. Engineer Phillips walked down this now impassable road
in 1979. He found a newly constructed sluice box at the mine, hidden behind one
of the portals. Also, there were some ill-advised new claim posts scattered
around.
Sometime in 1938, a company calling itself the "Santa Maria Mining Corp.",
made a map of what they called the underground workings of the Turnbeaugh mine.
(See Exhibit 16) This shows three (3) inclined shafts with a maximum depth in
excess of 250 feet. Ore values are not indicated, but the map shows mined out
areas and the remaining ore pillars. It also shows remaining ore bodies. The
trouble with this map is that it shows the shafts heading to the West, which
could not be correct. The remains of the old shafts, as seen by the writer, go
down in an easterly direction. Perhaps all that is wrong with this map is that
the draftsman put the north direction on incorrectly. Then again, the writer saw
only two shafts on his visit. Perhaps there is another nearby shaft now covered
by debris or talus.
Now, to go into the matter of reported ore values on the Turnbeaugh
property from old reports. These values were put in writing in 1926 and/or 1927.
It is well to recollect that the value of gold in those days was $20.67 per
ounce. If the old timers were able to mine the Turnbeaugh in those days, and
make a profit, it is something to think about. Everyone is aware that in these
recent times gold has been in the $500.00 per ounce range, but currently trades
at near $275.00 per ounce.
In the old unsigned letter, dated July 7, 1927 there is a description of
the Turnbeaugh Ledge where it states the best gold showing are on the north side
of the Turnbeaugh claim. In another letter entitled Turnbeaugh Ledge, undated,
but assumed to be in 1926-1927, signed by Mr. Alex Lucy, he gives the values at
various depths (at the $20.67 price). It appears that Mr. Lucy owned or
controlled the Turnbeaugh property (plus other adjoining claims, at the time).
He states:
On the surface, the ore is 7 feet wide and low grade, but 15 inches on the
hanging wall runs $96.00. This would be 4.64 ounces per ton. The undersigned
comments on this (assuming it to be true assay) would be that the Lucy value
would have to be converted into a mining width (about 5 feet), and this would
bring the value down to a little less than 1.0 ounces per ton. This, of course,
would be excellent ore.
At 70 feet down the shaft the ore is 6 feet wide and runs 0.44 ounces of
Au per ton. Below 70 feet down the inclined shaft, the ore body continues to be
6 feet wide and is valued at 0.33 ounces per ton. At the bottom of the shaft,
125 feet, the ore is 7 feet wide and runs 0.07 ounces per ton. To the North of
the shaft if a pit near the surface, showing a 4 foot width of gold ore running
1.2 ounces Au per ton. Further north, on the surface from the shaft, the ore is
5 feet wide and runs 0.62 ounces per ton. Beyond the above sampling (to the
north), the vein is covered with talus.
Another old drawing of the Turnbeaugh Au vein apparently shows some
surface sampling values. This was in the old files of the Department of Mineral
Resources. These values have also been changed to Au ounces and placed on the
map by the undersigned. (based on the old $20.67 rate). At the different
indicated locations, they are:
1. 4 feet vein 1.21 ounces Au per ton
2 5 feet vein 0.24 ounces Au per ton
3. 2 feet vein 0.51 ounces Au per ton
4. 6 feet vein 0.95 ounces Au per ton
5. 1 foot vein 1.9 ounces Au per ton
6. 4 feet vein 1.2 ounces Au per ton
7. 6 inch vein 4.7 ounces Au per ton
Mine--NORMA
District--Eureka (Yavapai County)
Engineer--Ken A. Phillips
Date--January 20, l980
Mineral Commodities: 1 - Gold, 2 - Silver
Mine Name. Norma Group
Previous or Historical Names: Anarchist Claims
Alec Lucy's Gold Claims
Santa Maria Mining Company
Location: T12N, R9W, G&SR B&M, Sections 11 and 19
U.S. Geological Survey Topographic Map: Thorne Peak, Arizona 7 1'
Elevation: 2400'
Mining District: Eureka
County and State: Yavapai, Arizona
Directions: Approximately 45 miles northeast of Wickenburg, Arizona.
Property Description and Status
The claim group consists of 23 unpatented lode claims on Federal minerals.
The surface ownership is partially Bureau of Land Management and partially State
Trust Lands. The Norma Group consists of Norma Nos. 1, 2, 5, 6, 322-330, and
4Z6-435. (Although the claim numbers form a discontinuous series, they form a
contiguous block and consist of the total property position, i.e., there are
only 23 Norma claims.) A map showing the block of claims is attached. All claim
boundaries were established by Brunton and Tape survey and all monuments were in
place as of January 20, 1980. Monuments consist of wood 2 X 4's.
History
Arizona Department of Mineral Resources mine file information (Alec Lucy's
Gold Claims file indicates the early discoveries of the so called Turnbeaugh
ledge took place in the 1890's. Mineral patents were issued for some claims
along the northern boundary of the Norma Group in 1900-1910. The Turnbeaugh
Ledge received its name from its original locators, Turnbeaugh and Beckman in
1895. The vein, which outcrops on the patented Turnbeaugh, Pocahontas,
Goodenuff, River Bend, Golden Eagle, Silver Belt, Gold Standard, and Lucy,
appears as a noticeable ledge where it outcrops along the steep walls of the
Santa Maria River's canyon. The Norma Group of claims cover 6000 feet of exposed
strike of the same vein (Turnbeaugh Ledge) extending south-southeastward from
the Turnbeaugh patent. The Anarchist claims(5) once covered the southern
extension of the vein which is now held by the Norma Group of claims.
During the period 1895-1927, the entire exposed strike length of the vein,
in excess of 12000 feet was explored by shafts, drifts, and prospect pits.
A small fine grind cyanide plant was erected on the Anarchist and treated
ore from the Anarchist claims. The plant appears to have operated under the name
of Santa Maria Mining Company. An assay office, mine surface plant and houses
once existed on the property. All that remains are foundations, mine dumps, and
cyanide tailings.
Geology
The mineralization is contained in a quartz vein intermixed with a
fine-grained dike (andesite) in coarse-grained Precambrian granite. The granite
locally grades to pegmatite and rarely includes small inclusions of schists. The
pegmatites locally contain black tourmaline. The granite outcrops throughout the
claim group as spheroidal weathered boulders. Very little alteration can be seen
in the granite on the Norma Group. However, within a few miles of the group,
large areas of alteration are present. The quartz vein varies in width from 2 to
30 feet and has been traced along strike for over 12000 feet of which over 600
feet is exposed on the Norma Group. The vein dips eastwards at 30o to 45o. The
strike varies and is generally N-S but is locally controlled by topography.
Mineralization crops out as limonite stained, vuggy quartz and limonite stained
altered dike material.
Additional mineralization is evident in outcrops east of the strike of
major vein. These occur on the Norma 322 and 329.
Mineralogy
Native gold combined with silver, limonite, quartz, and calcite. Locally,
the vein quartz is well fractured with later mineralization. Wall rocks show
some sericite alteration. A very small amount of pyrite occurred in specimens on
the dump of the Turnbeaugh.
Santa Maria Claims: Two fault sets or more carry commercially significant
ore. Judging from mining history, two other consultant's reports and my spot
checks in the vicinity of the SM-H mine, this kind of environment extends two
miles westerly and a half mile vide. Vertical extent is not known, but the range
in surface occurrence together with mining and drilling data indicate at least a
thousand feet.
Mining has been confined to grades of about .4 to .8 opt. So far as we
know now, shoots of such tenor are measured in tens and (less often) hundreds of
feet in length along strike, widths of from a foot to a few feet and with
vertical dimension tested little. Because such vein deposits typically are
higher grade in shoots that rake at an angle down the fault plane, it is
important to learn about the zoning, vertical extent and periodicity as well as
the usual tenor of the shoots.
If these same mineralized fault systems are looked at with a criterion for
ore grade being set at 0.25 opt (or even as low as 0.05 opt for some widths)
because of milling or mining innovations and market fluctuations then the zones
of interest are considerably enlarged. How they would appear we do not know
because they have not been explored or developed with such grades in mind. Nor
have quite different systems, say stockworks, been sought.
Reserves in the immediate vicinity of the main shaft of the SM-H mine
above the 150 foot level and based on Sawyers Consultants samples are:
Assured 1850 tons with 580 oz (.31 opt) Probable 1850 tons with 300+ oz
(about .17 opt)
Results of sampling done by John Pierson for FMC Corporation in 1987 and
going to lower levels enlarge the picture. Apart from a sample of ore in the
chute which ran .256 opt, and three samples selected on the hanging wall which
assayed .188, 1.260 and .278 opt, the remaining 15 samples were across the vein
and averaged .41 opt Au. With these data we can extend the calculation to the
bottom level. They also have the effect of thickening the lower zone and raising
the grade. (One sample in the shaft about 30 feet above the back of the lowest
drift was l0.l feet of .996 opt). Recalculating using these data:
Block 8 goes from 460 tons with 138 oz to 831 tons with 482 oz. Block 9
goes from 548 tons with 164 oz to 839 tons with 355 oz. Block 11, not
calculated before has 1597 tons with 502 oz. Block: 12, 694 tons with 197
oz.
Block 4 would be somewhat higher in grade using Pierson's and my data.
Because these samples shift the "center of gravity" of mineralization to
the southwest - agreeing much better with my theory of a shoot of high- grade
raking down the fault plane - Block 10 is weakened and should be deleted in this
calculation. That removes 1000 tons (possible) with 150 ounces. Overall the
effect is an additional l953 tons with l084 oz, or a total of 5663 tons and 1977
oz (grade of .35 opt) about half of which may be considered proved and half
indicated.
Additional tonnage is indicated lower in the system and also to the
northeast and southwest. It is undeveloped.
Reserves in the Santa Maria Area: Using data developed by Sawyer
Consultants, Inc. and by John Pierson with FMC, I have made a first
approximation of reserves in the area controlled by Don Blackburn and P. M.
Mining/Goldridge, Inc. Claims cover about two square miles. The area considered
for this calculation is about two miles long and a half-mile wide.
Although it is reasonably well explored it is far from developed, and so
reserves are not well defined. Nevertheless, the hunter needs to decide whether
it is appropriate to go ready for bear or carrying a 410.
At the SM-H mine, over a length of 800 feet surface samples (10) averaged
2.2 feet at 0.189 opt. This is in an unfaulted part of the vein including the
main shaft. Near the shaft over 5000 tons at 0.35 opt is partially developed.
Possibly a like amount has been removed from a length measured along the fault
of about 150 feet. Because sampling has indicated that this fault is mineralized
generally and because high-grade mineral exists at each end we may assume two
more shoots similar to the one being mined, or 20,000 tons additional indicated
reserves to 200 feet below surface.
East about 1400 feet from the SM-H shaft, a hill top exhibits high- grade
(.5 opt) float vein material. Southwest on a strike like that of the SM-H vein
is an altered zone which assayed 0.095 opt over a width of 30 feet grab-sampled.
Because these two occurrences are about 600 feet apart and one is high grade and
presumably narrow while the other is of low grade and wide, it is difficult to
assess. I think 6000 tons at .25 opt indicated can be safely assigned to it.
There is the possibility here, as there is in two other known occurrences, for
open pit low-grade.
We may use the 2nd level of the Waters mine as a sample of that vein
because it is the largest test along that system. One continuous shoot sampled
over 150 feet averages 2.57 feet wide at .27 opt. A second, slightly offset by
faulting, is 90 feet long probably more when the faulting is understood
correctly - and averages 3.8 feet wide at .207 opt. Together, and taken 500 feet
down the vein, these would yield 27,954 tons with 6723 ounces (avg. .24 opt)
indicated.
Summing up proved and indicated ore:
Location Tons Ounces Au
Eastern SM-H 6000 1500
SM-H near shaft (P) 5663 l977
east and west of shaft (I) 20000 7000
South Big Stick 6000 3720
Waters (near river) 27954 6723
Totals 65617 20920 (.32 opt)
As can be seen on the Veins, Faults and Workings map, there is a
considerable length of' explored and partially developed vein system. It totals
about 18000 feet. About 10% of it has been developed to some extent. This
provides one measure of undeveloped potential.
On these vein systems significant gold mineralization has been seen in
surface shows, mine workings and drill holes over about 1000 feet vertically,
and so I assume that generally deposition of gold here occurs over that range.
It may be more. For the purpose of estimating inferred ore known mineralization
is projected over a total of 1000 feet measured along the dip of the system.
This would always be less than 1000 feet vertical.
Inferred Ore
Location Tons Ounces
Waters (near river) 28000 6700
Eastern SM-H 24000 6000
SM-H near shaft 22650 7900
E & W of SM-H near shaft 80000 28000
S. Big 24000 14880
Northern Waters 56000 13400
Southern Waters 50000 11600
SW of Big 25000 15000
Other mineralized systems 200000 40000
Totals 509650 143480
Drilling Reports
The drilling reports for gold are also applicable to silica. The
mineralization, the enrichment of gold relative to background values, for
instance, is contained within quartz (silica) veins. Gold reserves are
determined by using a grade for gold, generally in ounces per ton, and a mass of
reserves in tons. Since the gold values are in silica veins, and the drilling
data were used to determine the size and extent of the veins, these same data
are used to determine the amount of silica reserve.
In the data listed above, from a report written by Gene Enyart, for tons
of inferred and ounces of gold, the SM-H near shaft claims contain 7900 ounces
of gold, but the rock in which the gold is contained has a mass of 22650 tons.
That rock is silica. Since all of the Orex claims are on properties in which the
gold is contained in mineralized quartz veins, an inferred tonnage of silica
reserves can be obtained from the local drilling data.
All of these are in place estimates, and it is unknown at this time what
type of losses from mining, beneficiation, and preparation should be expected.
Orex performed a test with samples of high-grade silica as well as highly
mineralized silica which we obtained from the Santa Maria mine. A sample of
highly mineralized vein material and a sample of high-grade vein material along
with a sample purified by Orex were sent to Intertek Testing Services, Bondar
Clegg, in Vancouver, and we received the following results:
The highly mineralized vein material was 85.08% silica, and the high-grade
silica was 96.10% silica as it came from the vein. Following our purification
procedure, the material was found to be 99.94% silica.
Using the highly mineralized material as a worst case scenario, i.e., the
lowest percentage of silica, the vein is 85% silica by weight. Thus, 85% of the
inferred ore reserves determined by drilling are silica, but that does not
include mining and other losses which are yet to be determined. Further study is
necessary to determine what percentage of the material is actually recoverable,
but the Sawyer report on the Waters/Sunset claims states that ore recovery
should not be less than 80%. Using these figures, 68% of the silica vein
material would be recoverable silica, but even that amount may be an
overestimate.
History
In early 1987, PM Mining leased the Santa Maria Mine from Thomas O. Mills,
of Tucson, Arizona, which had acquired the claims through inheritance. PM
Mining, principal owner Lattimer W. MacMillan, of Tucson, Arizona, designed and
built the existing mill and obtained the necessary permits to operate the
facility in 1989. Thomas Mills continued ownership through the subsequent
transfer of the lease agreement to Santa Maria Mining Company, LLC in late 1992.
They operated both the mine and mill, developing the shaft and existing haulage
way and the lower levels of the mine as it is at present. Principal owners Don
Blackburn of Wickenburg, Arizona, and Hank Vosbein of New Orleans, Louisiana,
and Mr. MacMillan held the company. During the period 1992 through 1998, the
company examined several gravity and heap-leach extraction techniques to recover
the gold values from fresh mine run material that averaged 0.27 oz/ton gold.
Several consulting groups and individuals were retained for various feasibility
and flow sheet design purposes. The existing mill facility was determined to be
uneconomical and inefficient due to the size of the gold particles (app. -400
mesh) which required fine grinding for any gravity recovery after the heap
leach. An agreement was made to return the property after several negotiations
to Joint Venture the property failed. The property was returned to Thomas Mills
in 1998. In mid 1999, Mr. Blackburn, Mr. Mills and Mr. MacMillan as principal
owners, formed Santa Maria Mining Corporation, a California Corporation who
negotiated a tax free stock exchange agreement with Orex and which was included
in the acquisition agreement between Orex and SMMC that was completed in August
1999.
Condition of the Property
The properties owned by Orex Corporation are currently in an exploration
phase, and pre-feasibility studies are underway. Geological mapping and
geochemical sampling will be completed in an effort to determine an exploration
program which will include drilling to increase reserves and evaluate the
economic potential of each of the properties. The company is currently
developing a bulk test flow sheet to provide material to prospective market
clients and silica end users.
All of the historic mining operations on the claims have been underground
operations, and they will continue to be underground. The source of power for
all the properties is on-site generators, but a high-tension line passes midway
between the Santa Maria and Arch properties. The line may be tapped for a
substation if the expense can be justified. No negotiations are currently
underway with the power company.
The Santa Maria mine has been operated as recently as 1996 and will
require only an MSHA pre-inspection to recommence production. The mill site at
the Santa Maria has undergone major modifications to the grinding circuit and
can be operated as a test facility at this time; however, further modifications
may be required before production can commence. All roads and access have been
maintained and are usable at this time. 20 acre-feet per annum of beneficial use
water rights are currently permitted with the property.
The Waters/Sunset mine has not been operated since 1984 at which time all
the underground workings were cleaned out and a detailed underground sampling
program was completed. The condition of the underground workings is not known at
this time; however, the mine was in excellent condition at the time of the 1984
survey. 500 acre-feet per year of beneficial use water rights are included with
the property.
The D & H property has not been operated since the 1930's. The condition
of the underground workings is unknown. Water is readily available on the D & H
property but may have to be purchased if water rights from the other properties
are not transferable for use on this property.
Sources and Availability of Materials and Principal Suppliers
The properties are within 75 miles of Phoenix, Arizona, a mining hub for
the southwestern United States, which provides availability to all materials and
equipment which may be necessary in our mining efforts.
Insurance
The Company has acquired general liability coverage for up to one
million dollars for each occurrence and fire damage for $100,000. This coverage
also includes $25,000 of insurance for business personal property with a $250
deductible. The Company has not yet secured the extensive coverages that will be
required for a full scale operation. Before commencing full scale operations,
the Company will have to secure insurance typical of the mining industry,
including coverages for equipment owned by outside contractors that are utilized
at the mine site. Because of the nature of the mining business, even with
appropriate insurance limits in force, there can be no assurance that such
coverage will fully protect the Company against all losses which it might
sustain.
Acquisitions
On August 16, 1999, the Company entered into a Merger Agreement and Plan
of Reorganization with Santa Maria Mining Comoany. In this business combination
transaction, Santa Maria Mining Company was merged into Orex and its separate
existence ceased with this merger. The constituent company and its stockholders
agreed to surrender and transfer all deeds and claims which they held relative
to the mining claims known as the Santa Maria River Project to Orex, and Orex
agreed to transfer eight million shares of restricted stock.
On October 21, 1999, the Company entered into a Merger Agreement and Plan
of Reorganization with Arch Mining Company, a Nevada corporation. In this
business combination transaction, 100% of the stock of Arch Mining was exchanged
for 5,000,000 shares of restricted stock from Orex. The principals of Arch
Mining are Harry Nyce and Viki Blackburn.
Dependence on One or a Few Customers
This does not apply. The Company has no revenues or current customers.
Need for Government Approval
The Company will be dependent upon several different state or federal
agencies for various approvals relating to the environment, the ground water,
the clear air and the reclamation of the mining site. [See Government Regulation
and Environmental Controls]
Government Regulation and Environmental Controls
The Company is committed to complying with all governmental and
environmental regulations. The Company's activities are subject to extensive
federal, state and local laws and regulations controlling not only the mining of
and exploration for mineral properties, but also the possible effects of such
activities upon the environment. Permits from a variety of regulatory
authorities are required for many aspects of mine operation and reclamation. The
Company cannot predict the extent to which future legislation and regulation
could cause additional expense, capital expenditures, restrictions and delays in
the development of the Company's properties, including those with respect to
unpatented mining claims.
As used in this Registration Statement, the term "unpatented mining claim"
refers to a mining claim on federal lands which has not been converted into full
fee ownership in the name of a private person or entity. The process of
converting ownership was established under the United States General Mining Law
of 1872, as amended (the "General Mining Law"), and requires that the U.S.
Government transfer ownership of the underlying property (held to that point in
the public trust) to the private person or entity by granting fee simple and
conveying full private ownership of the subject mineral property, including
mineral rights, surface, subsurface and appurtenant rights, subject to any
vested and accrued water rights. The act of granting full fee ownership is
accomplished by a duly endorsed instrument referred to as a "patent." Until such
time as a mining claim on federal land may be "patented," the claim is deemed an
"unpatented mining claim" and ownership is held in the public trust by the U.S.
government subject to existing federal mining laws and other applicable
statutory or regulatory provisions as may be implemented by the federal
bureaucracy.
In 1992, the United States Congress passed a number of amendments to the
General Mining Law which governs mining claims and related activities on federal
lands. A holding fee of $100 and a filing assessment of $35 per claim was
imposed upon unpatented mining claims located on federal lands. In 1995,
legislation was introduced in both the U.S. House of Representatives and the
U.S. Senate to further amend the General Mining Law of 1872. None of the bills
was enacted into law. Also, mining law amendments were added to the 1996 budget
reconciliation bill, which was vetoed by the President. Among other things, the
amendments contained in the 1996 bill would have imposed a 5 percent net
proceeds royalty on minerals extracted from federal lands, required payment of
fair market value for patenting federal lands, and required that patented lands
used for non-mining purposes revert to the federal government. Several of these
same concepts likely will continue to be pursued legislatively in the future.
The Secretary of the Interior ordered the Bureau of Land Management to form a
task force to review the Bureau's hardrock mining surface management regulations
and propose revisions to expand environmental and reclamation requirements,
among other things. Passage of mining law amendments or revisions to the
hardrock mining surface management regulations could result in additional
expenses in the development and operation of new mines on federal lands. The
full potential impact of subsequent enactment of such proposals is not presently
known and, accordingly, cannot be predicted.
The Company's activities are not only subject to extensive and stringent
federal, state and local regulations controlling the mining of and exploration
for mineral properties, but also relating to improving or maintaining
environmental quality and the possible effects of such activities upon the
environment.
The federal Clean Air Act, as amended (the Clean Air Act), has had a
significant impact upon the mining industry, particularly upon smelters, which
are utilized in the process for recovering silica. Costs associated with
environmental compliance have increased over time, and the Company expects these
costs to continue to rise in the future. Improving environmental performance is
one of the Company's goals.
The "solid wastes" of our operations are subject to regulation under
the federal Resource Conservation and Recovery Act (RCRA) and related state
laws. To the extent these wastes affect surface waters, our operations are
regulated under the federal Clean Water Act and similar state water quality
laws. Historically, mining wastes have been exempted from the federal "hazardous
waste" regulations under RCRA. As a result of policies made by the Environmental
Protection Agency (EPA), all "extraction" and "beneficiation" wastes and 20
mineral "processing" wastes retain the exemption, and are to be regulated as
"solid waste," rather than as "hazardous waste," under RCRA Subtitle C. Because
of this EPA regulation, the generation and management of any other mineral
smelting or refining waste could be subject to "hazardous waste" regulation if
the waste exhibits a hazardous waste characteristic or if EPA specifically
designates it as a "listed hazardous waste." The Company has not taken steps to
address the potential regulation as "hazardous waste" of any of our wastes, if
and when such wastes no longer meet the definition of exempt mineral
"processing" wastes under RCRA Subtitle C.
RCRA Subtitle D rules regulating mineral "extraction" and
"beneficiation" wastes and "processing" wastes that are exempt from RCRA
Subtitle C have not yet been put into effect by EPA or Arizona. EPA recently
finalized its supplemental Land Disposal Restriction Phase IV (LDR) rules which
impose "hazardous waste" regulation on "processing" waste or secondary material
that is stored or treated before it is recycled. This final LDR rule also
subjects mineral processing materials that exhibit a hazardous waste
characteristic to stringent treatment standards if the materials are disposed on
land. The Company cannot now estimate the impact of any future "solid waste"
rules on its operations. In addition, while EPA's final LDR rule likely will
require mining companies to continue to make expenditures, it is not possible to
determine the full impact upon our operations of the new LDR requirements until
the requirements are fully adopted and implemented by Arizona.
The Company's mining operations are also subject to federal and state
laws and regulations protecting both surface water and groundwater quality. The
groundwater permit for the Santa Maria site that was acquired in 1989 is still
valid and this has been transferred to Orex Corporation.
In 1989, Arizona adopted regulations for its Aquifer Protection Permit
program, which replaced the then existing Arizona groundwater quality protection
permit regulations. The Aquifer Protection Permit regulations require permits
for new facilities, activities and structures for mining, concentrating and
smelting. The Aquifer Protection Permit may require mitigation and discharge
reduction or elimination. The Arizona Department of Environmental Quality has
stated that they accept the groundwater permit and that Orex Corporation can
operate under this permit provided that the site is operated according to the
requirements of that permit. The Company is fully compliant with the permit and
no aquifer protection permit is needed to resume operation of the existing
plant. The Company will submit all required Aquifer Protection Permit
applications for any new properties or facilities. We do not know what the
Aquifer Protection Permit requirements are going to be for these new properties
or facilities and, therefore, it is not possible for us to estimate such costs.
In the United States, the Emergency Planning and Community
Right-to-know Act was recently expanded to cover mining operations. This law
requires companies to report to the U.S. EPA the amount of certain materials
managed in or released from their operations each year. Because the Company is
not into full scale mining operations, this does not yet apply. If and when this
does become applicable, the Company will report the volume of naturally
occurring metals and other substances that it managed during the past year once
the usable minerals were extracted. These materials are very high in volume and
how they are managed is covered by existing regulations and permit requirements.
In 1993 and 1994, the Arizona legislature passed laws requiring the
reclamation of mined lands in its state. The Arizona State Mine Inspector
adopted rules for the Arizona program in January 1997. The Company is not
currently mining and resumption of mining will require notification to MSHA. The
Company plans to have a pre-startup inspection by MSHA before mining is resumed.
If and when these regulations become applicable, the Company fully intends to
begin submitting the required reclamation plans. The Company recognizes the fact
that reclamation is an ongoing activity and that these laws and regulations will
likely increase our regulatory obligations and compliance costs with respect to
mine closure and reclamation.
The 1990 Amendments to the federal Clean Air Act require EPA to develop
and implement many new requirements, and they allow states to establish new
programs to implement some of the new requirements, such as the requirements for
operating permits under Title V of the 1990 Amendments and hazardous air
pollutants under Title III of the 1990 Amendments. Because EPA has not yet
adopted or implemented all of the changes required by Congress, the air quality
laws will continue to expand and change in coming years as EPA develops new
requirements and then implements them or allows the states to implement them.
These programs will likely increase our regulatory obligations and compliance
costs. These costs could include implementation of maximum achievable control
technology for any of our facilities if any are determined to be a major source
of federal hazardous air pollutants. Until more of the implementing regulations
are adopted, and more experience with the new programs is gained, it is not
possible to determine the full impact of the new requirements.
The Company is also subject to federal and state laws and regulations
pertaining to plant and mine safety and health conditions. These laws include
the Occupational Safety and Health Act of 1970 and the Mine Safety and Health
Act of 1977. Present and proposed regulations govern worker exposure to a number
of substances and conditions present in work environments. These include dust,
mist, fumes, heat and noise. The Company intends to fully comply with health and
safety laws and regulations.
The Company does not expect that the additional capital and operating
costs associated with achieving compliance with the many environmental, health
and safety laws and regulations will materially adversely affect our competitive
position relative to other U.S. producers of comparable products. These domestic
producers are also subject to comparable requirements. However, because silica
is an internationally traded commodity, these costs could significantly affect
the Company in its efforts to compete globally with foreign producers not
subject to such stringent requirements.
Competition and Markets
Most of the Company's competitors have greater financial resources and
more extensive operating histories than that of the Company. There is no
assurance the Company will be able to begin exploration work which results in
the production of commercially producible quantities of silica or other precious
metals. In addition, there is no assurance that the Company's property interests
can be economically maintained.
The exploration and development of mineral properties and the marketing of
minerals are affected by a number of operational and marketing factors which are
beyond the Company's control. These factors include fluctuations in the market
price of silica and precious metals, availability of adequate transportation,
marketing of competitive minerals, price of fuels and fluctuating supply and
demand for minerals. For all of these reasons, an investment in the Company must
be regarded as extremely high risk.
In the mining of silica, the Company has enlisted the services of the
Arizona Department of Mines and Mineral Resources as well as its own researchers
to determine both markets and the competitors in those markets. Until the
company has determined which market may be available for silica, no
determination can be made. The Company believes there are no current silica
operations which can claim a gold byproduct, thus the Company has an inherent
advantage in any market it does eventually enter.
Despite this formidable competition, the Company believes it can
economically mine silica quartz from its claims because of advantages inherent
within the deposit.
Patents, Copyrights or Trade Secrets
The Company holds no patents, copyrights or trade secrets.
Field Properties
The Company's field office is located at 521 1/2 West Wickenburg Way,
Wickenburg, Arizona 85390. This office is located 45 miles from the mine, and
the Company will continue to direct field operations from this location. There
are no plans to set up an office at the mine until such time as the mine goes
into production. Don and Viki Blackburn hold a lease on the Wickenburg office
and they provide the furnished office, including utilities, to Orex for
approximately $600 dollars per month. The lease is an open-ended year-to-year
lease. The company believes that this lease agreement is adequate for the
company's needs for the next 6 to 12 months.
Employees
The Wickenburg office has 3 full-time employees who are largely executive
personnel, Jeffrey Blackburn, Troy Hunter and Arne Stenseth. There are no
part-time employees. Certain services are contracted on an interim as-needed
basis. At the Company's headquarters in Coral Gables, Florida, there are three
full time employees, Warren Hemedinger, Gregory Finney, and Carlese D'andrea.
There are no part time employees.
Year 2000 Risks
The Year 2000 compliance issue results from the inability of systems
that utilize computer programs to differentiate between the year 1900 and the
year 2000. This issue arises because many such programs were developed using two
digits rather than four digits to identify the applicable year. As a result,
programs that use time-sensitive calculations may not function correctly in the
year 2000. Those programs developed using four-digit years are probably Year
2000 compliant. All other programs will likely require modification and/or
replacement to be compliant. The Year 2000 issue not only affects computer
hardware and software, but also can affect equipment used in our operations, and
extends to the systems of outside suppliers and customers, upon which the
Company must rely.
The Company considers itself compliant with Year 2000 programs and does
not anticipate any system failures or miscalculations. This is because the
Company is utilizing PSINet, a national Internet company and INET Computer
Services, Inc., which provided technical support. The Corporation utilizes
Fix-It Utilities 99 for its Y2K continued operation and automatic virus check.
The Company has not performed any assessment of Year 2000 compliance on
its suppliers and upon its business partners. The Company relies on, and will
continue to rely on, these third parties to provide the following:
- equipment, goods, and services;
- marketing and distributing support.
There can be no assurance that these third parties will adequately address Year
2000 compliance issues or that contingency plans in certain areas are possible
or practical. The Company believes that minor power failures will occur in the
year 2000 but will not materially affect the operations of the Company.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION:
Introduction
Orex Corporation has been formed to acquire, explore and if warranted,
develop mineral properties located in Yavapai County, Arizona. The Company's
focus has been on its unpatented mining claims located on the north bank of the
Santa Maria River about 2-1/2 miles below the Highway 93 bridge. Preliminary
work to date shows this property contains substantial quantities of quartz veins
containing 92% to 99.9% silica. Although silica is a common mineral, vein
deposits of this grade or quality are quite rare. In addition to silica, the
vein material contains gold, silver and copper minerals as by-products. These
precious metals exist in quantities high enough to pay for a substantial portion
of the mining and processing operations. The silica value has largely been
ignored in the historic mining operations that have been conducted in this area.
This undeveloped resource is the focus of the Santa Maria Project operated by
Orex Corporation. There are very profitable silica markets in paints, cosmetics,
fiber optics, glass and construction materials, which collectively provide an
impetus for renewed mining operations in this vicinity.
Development Stage Activities
The company's claims are filed with the BLM and the county. The company
currently has an active groundwater permit applicable to the Santa Maria mine
and mill site. The company plans to operate the test facility under the current
groundwater permit. The Santa Maria mine is operating under small mine exclusion
rules and is fully compliant with all current state and federal regulations.
The company's silica testing is currently underway, and the sample
descriptions and results are as follows:
Sample 1--200 mesh, light brown quartz vein material with moderate to abundant
mineralization and limonite staining Sample 2--200 mesh, white to buff quartz
vein material with little visible mineralization and light to moderate limonite
staining Sample 3--200 mesh, light grey powder tailings after leaching
This preliminary testing indicates we can attain the high purity levels
needed to enter the high-grade silica market. The company is in the process of
conducting bulk tests to provide material to prospective market clients for
analysis.
The company considers all current testing to be pre-feasibility in nature,
and more detailed study will be needed to enter a feasibility stage of
development. Once sufficient data has been collected, the company will move on
to full-scale feasibility and engineering studies. The company has no current
exploration plans as adequate reserves have already been identified on the
properties by drilling and sampling as indicated in previous reports. The
company recognizes the obvious economic advantages of this venture, in that gold
is recovered as a saleable byproduct, the material is easily processed, the mine
is near a major market, Phoenix, and the operation, if successful, will
substantially reduce the cost of reclamation due to the lack of tailings
remaining on site.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
<PAGE>
Pertinent Financial Information
Orex Corporation
( A Development Stage Company)
INDEX TO FINANCIAL STATEMENTS
PAGE
FINANCIAL STATEMENTS
Balance Sheets 47
Statement of Operations 48
Statements of Stockholders' Equity 49
Statements of Cash Flows 50
Notes to Financial Statements 51
<PAGE>
Orex Corporation
( A Development Stage Company)
BALANCE SHEET
September 30, 1999
(Unaudited)
ASSETS September 30, 1999
(Unaudited)
Current Assets:
Cash ................................................. $ 10,161
Prepaid Expenses ..................................... 241
Total current assets .............................. 10,402
Proven Reserves ......................................... 17,025,212
Property, Plant and Equipment ........................... 1,182,057
-----------
Total assets ...................................... $18,217,671
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable & accrued liabilities .................... $ (57,865)
Total current liabilities .............................. (57,865)
Commitments and Contingencies
Stockholders' Equity:
Common Stock; 50,000,000 shares of .0001 par value
authorized; 23,842,500 shares issued and outstanding ...... (2,384)
Additional Paid-in capital ................................ (18,484,822)
Deficit accumulated during the development stage .......... 327,400
Total stockholders' equity ............................. (18,159,806)
Total liabilities and stockholders' equity ............. $ 18,217,671
<PAGE>
<PAGE>
Orex Corporation
( A Development Stage Company)
STATEMENTS OF OPERATIONS
Twelve Months Ended Nine Months Ended
December 31, 1998 September 30, 1999
(Unaudited) (Unaudited)
Revenues ...................... $ 0 $ 0
Costs and Expenses:
Consulting and Management Fees 0
General and Administrative ... 0 290,344
37,056
Loss during development stage . 0 327,400
Net Loss ...................... $ 0 $ 327,400
Net Loss Per Common Share ..... -- --
Weighted Average Number of .... -- 20,884,891
Common Shares Outstanding
<PAGE>
Orex Corporation
( A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL EQUITY TOTAL
SHARES AMOUNT PAID-IN ACCUMULATED
CAPITAL DURING THE
DEVELOPMENT
STAGE
<S> <C> <C> <C> <C> <C>
Balance Inception
6/30/99 .......................... 14,442,500 $ 1,444 $ 1,444
Credit for Cancelled
Transactions ..................... (500,000) (50) (50)
Credit for Estimate
Fair Value of Consultant Fees
9,400,000 940 $ 262,260 $ 263,200
Issuance of Common Stock
From Private Placement ........... 500,000 50 49,950 50,000
Credit for Historical
Cost of Mining Equipment
1,147,400 1,147,400
Credit for Cost of Mining Reserves
17,025,212 17,025,212
Loss During Development Stage
$ (327,400) (327,400)
------------ ------------ ------------ ------------ ------------
TOTALS: .......................... 23,842,500 $ 2,384 $ 18,484,822 $ (327,400) $(18,159,806)
------------ ------------ ------------ ------------ ------------
</TABLE>
<PAGE>
Orex Corporation
( A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Period Ending September 30, 1999
Net Loss $(327,400)
Adjustments to reconcile net loss to net cash flows from operating activities:
Prepaid expenses
Accounts payable (241)
Total Adjustments 4,880
4,639
NET CASH FLOWS USED IN OPERATING ACTIVITIES (322,761)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proven reserves (17,025,212)
Mining equipment (221,500)
Property - claims (6,300)
Mine/mill construction (849,982)
Mining permits (100,000)
Office equipment (2,896)
Leasehold improvements (1,380)
NET CASH USED BY INVESTING ACTIVITIES (18,207,269)
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from shareholders 22,885 Proceeds
from issuances of common stock 18,487,206 Advance proceeds from issuance of
common stock 30,100
NET CASH PROVIDED BY FINANCING ACTIVITIES 18,540,191
INCREASE IN CASH 10,161
CASH:
Beginning of year 0
End of third quarter 10,161
<PAGE>
Orex Corporation
( A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements as of September 30, 1999,
are unaudited, and have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB promulgated
by the Securities and Exchange Commission. In the opinion of
management, such financial statements contain all adjustments,
consisting only of normal recurring adjustments, necessary for a
fair presentation of financial position, results of operations
and cash flows for such period. Results of the interim period, is
not necessarily indicative of results to be expected for an
entire year.
NOTE 2. COMMITMENTS AND CONTINGENCIES
Government Regulation and Environmental Controls
The Company is committed to complying with all governmental and
environmental regulations. The Company's activities are subject
to extensive federal, state and local laws and regulations
controlling not only the mining of and exploration for mineral
properties, but also the possible effects of such activities upon
the environment. Permits from a variety of regulatory authorities
are required for many aspects of mine operation and reclamation.
The Company cannot predict the extent to which future legislation
and regulation could cause additional expense, capital
expenditures, restrictions and delays in the development of the
Company's properties, including those with respect to unpatented
mining claims. Management is not aware of any potential future
legislation that may have a negative impact on the operation of
the mine.
NOTE 3. GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles which
assume that the Company will continue as a going concern basis,
including the realization of assets and liquidation of liabilities
in the ordinary course of business. For the nine months ended
September 30, 1999 (unaudited), the Company incurred net losses
during the development stage in the amount of $327,400, reflects a
stockholders' equity of $18,159,806 and has minimal operating
activities. As more fully described below, uncertainties exist with
regard to the Company's ability to generate sufficient cash flows
from operations or other sources to meet and fund its commitments
with regard to existing liabilities and recurring expenses. These
factors raise doubt about the Company's ability to continue as a
going concern. The accompanying financial statements do not include
any adjustments that might result from the outcome of these
uncertainties.
As of September 30, 1999 (unaudited), the Company had cash of
$10,161. The Company's ability to meet its future obligations in
relation to the orderly payment of its recurring general and
administrative expenses on a current basis is dependent upon its
ability to raise capital through a secondary public offering or
other opportunities. Since the Company's sources of liquidity are
limited, the Company is unable to project how long it may be able to
survive without an infusion of capital from outside sources.
However, as of December 31, 1999, the Company has cash reserves of
$250,000 raised through a private placement transaction.
The Company is a start-up company and to date has no revenue from
operations. The primary activities to date have been limited to securing rights
to the mining claims. Management does not consider the historical results of
operations to be representative of future results of operation of the Company.
During the months ended December 31, 1999 the Company has been primarily selling
its stock to finance its activities. [See Part II, Item 4, Recent Sales of
Unregistered Securities]
Liquidity and Cash Resources as of September 30, 1999
The Company's cash balance reflected $10,161.00 on September 30, 1999, as
compared to $-0- on December 31, 1998. Revenues during the last 9 months to $-0-
September 30, 1999 as compared to $-0- on December 31, 1998. From Operating
Activities, the Company's balance sheet reflects a Net Loss of $327,400 at
September 30, 1999.
A primary source of funds came from the issuance of capital stock. The
Company completed one private placement during 1999. The first offering
consisted of one million shares offered for $1 per share, with a minimum
investment required of $1,000 for 1,000 shares of common stock. Pursuant to this
offering, the Company issued 1,000,000 shares. [See Part II, Item 4, Recent
Sales of Unregistered Securities]. Income from these sales of capital stock was
crucial for overcoming the Company's deficit from operations for 1999. The
Company believes its cash on-hand and its subsequent financing will be
sufficient to fund its anticipated operations through December 31, 2000.
<PAGE>
ITEM 3. DESCRIPTION OF PROPERTY
The Company is currently renting office space in Coral Gables, Florida,
pursuant to an Office Space Lease Agreement with Blumberg/Alhambra Partners, a
Florida General Partnership. This lease agreement is for five years. Under this
lease agreement, the Company has 1,210 square feet of space. Base rent is
$32,670 annually, payable in monthly installments of $2,722.30 per month. The
Company believes its facility is adequate to meet its anticipated office
requirements for the next five years. There are no related family transactions
involved with this lease agreement.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS & MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
principal stockholders, defined as parties that own five percent or more of the
Common Stock as of December 31, 1998.
Name and address Amount & Nature Percent
Of Beneficial Owner
Donald Blackburn ......................... 13,000,000 Shares 13%
521 1/2 West Wickenburg Way
Wickenburg, Arizona 85390
The following table sets forth the beneficial ownership of the
Common Stock by the Directors of the Company and by the executive officers and
scientific advisors.
Name and address Amount & Nature Percent of
Of Beneficial Owner Class
All directors, executive .................... 450,000 0.013%
officers as a group
Warren Hemedinger ........................... 250,000 0.007%
Jeffrey Blackburn ........................... 200,000 0.002%
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the name, age and position of each officer
and director of the Company.
Name Age Position Position
Held Since
Warren A. Hemedinger .......... 34 February, 1999 President
410 Catalonia Ave
Coral Gables, Fl. 33134
Gregory Finney ................ 37 March 15, 1999 Vice President
317 Bird Road & Secretary
Coral Gables, Fl. 33146
Jeffrey L. Blackburn .......... 45 August 15, 1999 Vice President
455 North Tegner #53
Wickenburg, AZ 85390
A brief biographical sketch of each officer and director follows.
Warren Hemedinger served as President of Medical Arts Training Center,
from 1983 to 1997. He managed and budgeted over $4 million in revenue per year
on behalf of Medical Arts Training Center and was responsible for all local,
state and federal regulations governing federal aid programs and strict
educational standards required by the Division of Emergency Medical Services.
Mr. Hemedinger managed a staff of 45 and the institution had over 900 students.
He was also in charge of public relations and marketing. In 1998, Mr. Hemedinger
founded and still serves as Director of the Traders Research Corporation.
Traders Research is a Licensed Introducing Broker for commodities. Mr.
Hemedinger's expertise in commodities will lend itself to Orex. Many junior
mining companies fail to hedge their physical product by selling the futures
contracts. Mr. Hemedinger will analyze the commodities market to assist the
Company in hedging.
Gregory Finney attended Syracuse University from 1980-1984 where he
received a bachelor's degree in Business Administration. He began working for
Drexel Burnham Lambert, Inc. in 1985 in the margin department and advanced to
the trading department. In 1991, he began working for TCI Cable of Westchester
as an auditor. In 1997, Mr. Finney moved to Florida and took a position with
J.W. Genesis Inc. as margin manager in its operations department where he was
responsible for maintaining and enforcing NYSE and SEC margin requirements.
Jeffrey Blackburn entered an oil field at the age of 18 as a driller for
major drilling companies for eight years. Joined Conoco Inc. in 1980 as a Rocky
Mountain Region Drilling Foreman. Operator of Water Flood and Special recovery
projects where he was Engineering Technician for D.O.E., Amoco, and Conoco joint
venture study for tertiary recovery using Xanthan Biopolymer technology. Began
college in 1988 at Montana College of Mineral Science and Technology studying
Geological Engineering; graduate Asc in Engineering Science in 1991, BSc ACS
professional degree in Chemistry in 1992. Attended graduate school at Montana
State University from 1992 - 1996 where he worked in the Montana State
University Plant Pathology Department while studying in the PhD Organic
Chemistry program. His special expertise includes Geochemical and Geotechnical
research and development, extraction and process design, separation science,
technical writing and a full range of computer skills.
Board members are serving without compensation. The Company has not
secured Director's Insurance. The Company has also not secured insurance
coverage for its officers, and this coverage includes professional liability.
DEPENDENCE ON MANAGEMENT
The Company's success is principally dependent upon its current management
personnel for the operation of its business. In particular, Warren Hemedinger,
its President, has played a crucial role in the development and management of
the Company. There is no assurance that additional managerial assistance will
not be required. If the Company should lose the services of an executive officer
or one or more key employees or its ability to attract and retain such
personnel, the Company's business, financial condition, results of operations
and cash flows will be materially and adversely affected. The Company has an
employment agreement with Warren Hemedinger and Gregory Finney [See Exhibits 22
& 23]. The Company does not have "key person" life insurance policies covering
these key officers.
ITEM 6. EXECUTIVE COMPENSATION
Summary Compensation Table, 1999
Name & Principal Salary Paid Salary to be Other
Position in Cash Paid in Stock Compensation
Warren Hemedinger $30,000 - 0 - - 0 -
President
Gregory Finney $20,000 - 0 - - 0 -
V. P. & Secretary
Jeffrey L. Blackburn $20,000 - 0 - - 0 -
Vice President
Mr. Hemedinger's employment agreement (see Exhibit 22) runs for a term of
three years, but it contains a provision which automatically extends this term
one year at each anniversary unless one of the parties provides notice that this
will not be extended. The base salary for Mr. Hemedinger is $150,000, and the
employment agreement stipulates that this shall be multiplied by 10% annually,
unless the Company's pre-tax consolidated income is equal to zero for the fiscal
year just lapsed, in which case the base salary will not be increased. The
contract further provides for an incentive bonus of 5% of the Company's pre-tax
consolidated net income. In addition to this salary and the incentive bonus, the
contract provides for major medical and hospitalization insurance coverages,
including dental for Mr. Hemedinger and his dependents. The contract provides
for options to one million shares of the Company's stock, at $.10 (ten cents)
per share. Two hundred and fifty thousand shares vested as of September 30, 1999
and another 250,000 shares vested on December 31, 1999. The final 500,000 shares
vest on March 30, 2000. The Company is also obligated to pay 100% of his
automotive expenses, which includes principal and interest on the car loan or,
if applicable, the lease, plus insurance, repairs and maintenance expenses
relating to this vehicle. There is also a provision for 5 million restricted
shares to be paid as a stock bonus if there is a future merger, acquisition or
stock exchange agreement.
Mr. Finney's employment agreement (Exhibit 23) runs for a term of two
years, but like Mr. Hemedinger's contract, it contains a provision which
automatically extends this term one year at each anniversary unless one of the
parties provides notice that this will not be extended. The base salary for the
Mr. Finney is $50,000, and the employment agreement stipulates that this shall
be multiplied by 10% annually, unless the Company's pre-tax consolidated income
is equal to zero for the fiscal year just lapsed, in which case the base salary
will not be increased. In addition to this salary, the contract provides for
major medical and hospitalization insurance coverages, including dental for Mr.
Finney and his dependents. There is also a provision for 1 million restricted
shares to be paid as a stock bonus if there is a future merger, acquisition or
stock exchange agreement.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Warren Hemedinger and Mr. Finney are both officers and directors of Orex
Corporation and they are also directors of Orex Minerals Corporation. The
Company is unaware of any other related party transactions.
ITEM 8. DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 50 million shares,
with a par value of $0.0001 per share. This is the only class of securities
authorized.
Common Stock
34,554,000 shares of Common Stock were issued and outstanding as of
December 31, 1999. Holders of the Common Stock do not have preemptive rights to
purchase additional shares of Common Stock or other subscription rights. The
Common Stock carries no conversion rights and is not subject to redemption or to
any sinking fund provisions. All shares of Common Stock are entitled to share
equally in dividends from sources legally available therefore when, as and if
declared by the Board of Directors and, upon liquidation or dissolution of the
Company, whether voluntary or involuntary, to share equally in the assets of the
Company available for distribution to stockholders. The Board of Directors is
authorized to issue additional shares of Common Stock on such terms and
conditions and for such consideration as the Board may deem appropriate without
further stockholder action.
Each holder of Common Stock is entitled to one vote per share, either in
person or by proxy, on all matters that may be voted on by the owners thereof at
meetings of the stockholders. Since the shares of Common Stock do not have
cumulative voting rights, the holders of more than 50% of the shares voting for
the election of directors can elect all the directors and, in such event, the
holders of the remaining shares will not be able to elect any person to the
Board of Directors.
Transfer Agent
The registrar and transfer agent for the Common Stock is Olde Monmouth
Stock Transfer Co., Inc. They are located at 77 Memorial Parkway, Suite 101,
Atlantic Highlands, New Jersey 07716.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND OTHER SHAREHOLDER MATTERS
The Company's Common Stock is traded over-the-counter ("OTC") on the
Electronic Bulletin Board (the "Bulletin Board") maintained by the National
Association of Securities Dealers ("NASD") under the Symbol "ORXX." Before
changing its name to Orex, the Company's stock traded as Medalion under the
symbol "MMDL".
As of December 31, 1999, 34,554,000 shares of Common Stock were issued and
outstanding.
The following table sets forth the range of the high and low sales prices
for the Common Stock on the OTC Bulletin Board for each quarter for the fiscal
year 1998 and 1999.
Quarter Ending High Low
12/31/99 .28 .089
9/30/99 2.87 .061
6/30/99 7.81 2.06
3/31/99 5 1.53
12/31/98 7 2
9/30/98 7 2
6/30/98 7 2
3/31/98 5 5_
The source of this information is Bloomberg Professional and NASD
quotation services. These prices reflect inter-dealer prices, without retail
markup, mark-down or commission and may not represent actual transactions.
Restricted Securities
A portion of the Company's Common Stock is held by insiders and persons
who acquired shares in private offerings. These are "restricted securities" as
that term is defined in Rule 144 promulgated under the Securities Act. In
general, Rule 144 provides that, during any three month period, each person
holding restricted securities can sell an amount of such securities equal to the
greater of (a) 1% of the number of outstanding shares or (b) the average weekly
reported trading volume of those securities during the preceding four calendar
week period, provided that certain conditions are met. One of these conditions
is that the stock must be purchased for investment purposes and held for a
minimum period of one year and, in some instances at least two years. Sales of
these restricted securities under Rule 144 or otherwise by current stockholders
of the Company, when these legends are eligible to be lifted, could have a
depressive effect on any trading market for Common Stock. No predictions can be
made of the effect, if any, that market sales of shares or the availability of
shares for sale will have on the market price prevailing from time to time.
Nevertheless, sales by insiders of significant amounts of the Common Stock of
the Company in the public market may adversely affect market prices and may
impair the Company's ability to raise capital at that time through additional
sale of its equity securities.
No Dividends
The Company has not declared or paid any dividends on its Common Stock and
there is no assurance that the Company will pay dividends in the future. The
Company currently intends to retain future earnings to fund the development and
growth of its business, to repay indebtedness and for the general corporate
purposes; and therefore, does not anticipate paying any cash dividends in the
forseeable future. Any future determination to declare and pay dividends will be
made by the Board of Directors of the Company in light of the Company's
earnings, financial position, capital requirements, credit agreements and such
other factors as the Board of Directors deems relevant.
Secondary Trading Restrictions
The Company's Common Stock is governed by the Securities and Exchange
Commission rule for "penny stocks" (defined as stocks that cost $5.00 or less
per share) that imposes additional sales practice burdens and requirements upon
broker-dealers which sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse). For
transactions covered by the Penny Stock rule, the broker-dealer must make a
special suitability determination for the unaccredited purchaser and receive the
purchaser's written agreement to the transaction prior to the sale.
Consequently, the penny stock rule may affect the ability of broker-dealers to
sell the Company's securities and also may affect the ability of persons now
owning or subsequently acquiring the Company's securities to resell such
securities in any trading market that may develop. Although the Company's goal
is to have its securities included in the National Association of Securities
Dealers Automated Quotation System ('NASDAQ'), which would exempt such
securities from the above rule, there is no assurance that the Company will meet
the stringent NASDAQ listing requirements.
Price Volatility of the Company's Shares
The Common Stock is traded on the NASD OTC Electronic Bulletin Board.
Because of the limited market for Bulletin Board stocks, even mild expressions
of interest may have a profound impact upon the stock's price on any given day.
Accordingly, Bulletin Board stock customarily experiences above average price
fluctuations and volatility. Accordingly, the Company's common shares should be
expected to experience substantial price changes in short periods of time, owing
to the vagaries of the Bulletin Board exchange for stocks. Even if the Company
is performing according to its plan and there is no legitimate financial
component for this volatility, it must still be expected that substantial
percentage price swings will occur in these securities for the foreseeable
future, and percentage changes in stock indices (such as the Dow Jones
Industrial Average) could be magnified, particularly in downward movements of
the markets.
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings and it is not
aware of any claims that exist but have not yet been asserted.
ITEM 3. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS
The Company has had no material disagreements with its accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Private Placement Memorandums
In late February, 1997, Medalion issued a Private Placement Memorandum.
This offering expired on April 30, 1997.
On February 18, 1999, the Orex Board authorized a second offering of its
stock through a private placement memorandum, in which up to 1,000,000 was to be
raised.
On October 20, 1999, pursuant to this Private Placement Offer, 350,000
free trading shares were issued to Manoj Associates. In issuing these shares,
the Board relied upon the legal opinion of Roger Kimmel, Jr. & Associates. [See
Exhibit 5.2]
On October 1, 1999, pursuant to this Private Placement Offer, 430,000 free
trading shares were issued to Manoj Associates, LLC. In issuing these shares,
the Board relied upon the legal opinion of Roger Kimmel, Jr. & Associates. [See
Exhibit 5.3]
Agreement and Plan of Reorganization
On or about February 17, 1999, Medalion and Orex entered into a business
combination transaction. Pursuant to this transaction, the following stock
transfers occurred. All of the 5,347,426 issued and outstanding shares of Orex
were transferred to Medalion. Thereafter, in a one-for-one exchange, 5,347,426
shares of Medalion, some of which were restricted and some of which were free
trading, were transferred to the following parties:
Warren Hemedinger 250,000 Shares, restricted, bearing legend
George Levy 250,000 Shares, restricted, bearing legend
Dr.Henry Rosenberg 250,000 Shares, restricted, bearing legend
Harry Beninhof 250,000 Shares, restricted, bearing legend,
rescinded and returned to Company treasury
Jerome & Marilyn 1,050,000 Shares, restricted, bearing legend,
Stein cancelled and returned to Company treasury
Donald Hawksworth 943,000 Shares, restricted, bearing legend,
rescinded and returned to Company treasury
Evelyn Rivas 1,193,000 Shares, unrestricted, free trading
Richard Hoffman 250,000 Shares, unrestricted, free trading
In issuing the 1,193,000 free trading shares to Evelyn Rivas and 250,000
free trading shares to Richard Hoffman, the Company relied upon Rule 504 of
Regulation D and the legal opinion of Roland Sanchez Medina Jr. [See Exhibit
5.1]
In a letter dated March 2, 1999 (see Exhibit 2.1), Doreen Rush of Medalion
confirmed to Warren Hemedinger of Orex that in accord with the plan of
reorganization of Medalion, that Medalion would deliver the following to Orex
Gold Mines, to further consummate the Agreement and Plan of Reorganization:
Damask Holdings, Ltd. 1,300,000 Shares, free trading
Harry Tramp 1,300,000 Shares, free trading
Kelly Johnston 1,300,000 Shares, free trading
WebcastMedia.net 250,000 Shares, free trading
Barry Abrams 250,000 Shares, free trading
On March 1, 1999, Medalion proceeded to enter into five consulting
agreements (see Exhibit 8, the Medalion Consulting Agreements) with all of the
above named parties. Pursuant to these consulting agreements, the above named
parties received the shares noted above. In all of the above cases, the Company
relied upon Rule 504 of Regulation D. Copies of consulting agreements, Board
Resolutions and treasury orders for the stock are attached as Exhibits 10.1 for
Damask Holdings Ltd., 10.2 for Harry Tramp, 10.3 for Kelly Johnston, 10.4 for
WebcastMedia.net and 10.5 for Barry Abrams. On March 3, 1999, Medalion's Board
issued a Written Consent in Lieu of Special Meeting of the Board and, in this
written consent, consummated the reorganization and issued the above free
trading stock, as well as some restricted stock. [See Exibit 99.1]
Orex Consulting Agreements
On March 3, 1999, Orex entered into a consulting agreement that stipulated
payment of 8,000,000 free trading shares of stock. Before going forward with
these certificates, the stock transfer agent apparently requested and received
correspondence from the law firm of McDermott, Will and Emery, dated July 16 and
July 22, 1999. The Board also relied upon the opinion of McDermott, Will and
Emery. [See Exhibit 5.4]
On February 6, 1999, Orex entered into a consulting agreement with Micron
Mining Company. Pursuant to this agreement, Orex was to issue 1,400,000 free
trading shares with pre-emptive rights, after a completion date of August 6,
1999. In issuing these shares as free trading, the Company relied upon the
consulting agreement with Micron Mining Company and the legal opinion of Donald
J. Shaw. [Exhibit5.5]
On August 16, 1999, the Company entered into a business combination
transaction with Santa Maria Mining Corporation, a California corporation, and
four individuals. Pursuant to this agreement, the individuals received eight
million shares of restricted stock. [See Exhibit 2.2]
On October 21, 1999, the Company entered into a business combination
transaction with Arch Mining Company, a Nevada corporation. Pursuant to this
agreement, the principals of Arch Mining, Viki Blackburn and Harry Nyce,
received five million shares of restricted stock. [See Exhibit 2.3]
Indemnification of Directors and Officers
On February 28, 1999, Orex filed a Certificate of Amendment of Certificate
of Incorporation of Medalion Services, Inc. Paragraph 2 of this Amendment stated
that "To the fullest extent permitted by the General Corporation Law of
Delaware, ... no director of the corporation shall be personally liable for
monetary damages for breach of his/her fiduciary duty as a director. The
Corporation shall indemnify each officer and director of the corporation to the
fullest extent permitted by Section 145 of the General Corporation Law of the
State of Delaware..." As a result of the Company's Certificate of Amendment and
Delaware law, stockholders may have more limited rights to recover against
directors for breach of fiduciary duty than as compared to the standard of care
imposed upon a director in the state where the investor resides. In addition, to
the fullest extent permitted by Delaware law, the Company shall indemnify its
corporate officers.
Stockholders may have rights for indemnification for liabilities arising
under the Securities Act against directors, officers and controlling persons of
the Registrant, notwithstanding the explicit language in Section 145 of the
Delaware Corporation Law, because the Registrant has been advised that in the
opinion of the Securities and Exchange Commission (the "Commission") such
indemnification is against public policy as expressed in the Delaware
Corporation Law and is, therefore, unenforceable. In the event of a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
OREX CORPORATION
By /s/ Warren Hemedinger
President
AGREEMENT AND PLAN OF REORGANIZATION
MEDALION SERVICES, INC.
ACQUISITION OF
OREX GOLD MINES CORPORATION
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OR REORGANIZATION ("Agreement") is made and entered
into as of this 17th day of February, 1999, by and among Medalion Services, Inc.
("Medalion") , a Delaware corporation with its executive offices located at 7
Rock Hollow Road, Plandome Manor, New York 10030, Orex Gold Mines Corporation
("Orex"), a Delaware corporation, with its executive offices at 2121 Ponce de
Leon Boulevard, Suite 510, Coral Gables, Florida 33134 and all the Shareholders
("Shareholders" as defined and all of whom are listed in Schedule A) of Orex.
PREMISES
All the outstanding capital stock of Orex, Medalion desires to acquire, so
as to make Orex a wholly-owned subsidiary of Medallion and the Shareholders
desire to make a tax-free exchange of their Orex shares for shares of Medalion's
common stock, to be exchanged as set out herein with the said Medalion.
PLAN OF DISTRIBUTION
The Reorganization will comprise the acquisition by Medalion of all the
outstanding capital stock of Orex in exchange solely for a part of Medalion's
voting stock. The Shareholders, as of the Closing (as hereinafter defined), are
the owners of all of the issued and outstanding capital stock of Orex. The
exchange by the Shareholders of the capital stock of Orex for voting common
stock of Medalion shall be made upon and subject to the terms and conditions of
this Agreement hereinafter set forth as is intended to qualify as a tax free
reorganization pursuant to the provisions of Section 3 68(a) (1) (B) of the
Internal Revenue Code of 1954, as amended.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
of the parties hereinafter expressed, it is hereby agreed as follows:
ARTICLE I
RECITALS, EXHIBITS, SCHEDULES
The foregoing recitals are true and correct and, together with the
schedules and exhibits referred to hereafter, are hereby incorporated into this
Agreement by this reference.
2
ARTICLE II
EXCHANGE OF SHARES
The Shareholders agree that all of the issued and outstanding shares of
common stock of Orex ("the Orex Stock") shall be exchanged with Medalion for the
issuance by Medalion to the Shareholders, on the basis of a one for one (1:1)
exchange of shares of the common stock of Medalion, U001 par value, per share
for Orex Shares.
ARTICLE III
CLOSING
3.1 Time and Place
The closing of the transactions contemplated by Section 1 hereof shall take
place at the offices of Orex, or such other time and place as the parties hereto
shall agree, no later than February 2 5, 19 99.
3.2 Actions To Be Taken
At the Closing the Shareholders shall assign, transfer, deliver and set
over to Medalion all issued and outstanding Orex Stock duly endorsed and with
any required documentary or stamp taxes affixed at Orex's expense so as to make
Medalion the sole owner thereof, free and clear of all liens, claims and
encumbrances. At the closing, Medalion shall issue and deliver to the
Shareholders, on a one for one (1:1) exchange, New Medalion Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ALL
THE SHAREHOLDERS AND OREX
Orex hereby represents and warrants to Medalion that, with respect to the
Orex Stock and with respect to Orex, effective this date, the representations
listed below are true and correct, and further covenant and agree that, as of
the Closing Date, the following representations will be true and correct. 4.1
Organization and Standing
Orex is a corporation duly organized and validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own its property, to carry out its business as now being
conducted and to enter into and carry out the provisions of this Agreement. Orex
is duly licensed and qualified to do business with all Federal, State and other
governmental agencies as required, to own its properties and to conduct its
business.
4.2 Capitalization
The duly authorized capital stock of Orex consists of 50,000,000 shares of
Common Stock, par value $0.01 per share, of which 5,3 47,42 6 shares are
outstanding, validly issued, fully paid and nonassessable and owned of record by
Orex and its predecessors. Orex is also in the process of a Private Placement
Offering of 1,000,000 Shares of Common Stock, par value $0.01 per share, as of
February 3, 1999. Thus, at the Closing date, there will be an aggregate of 6,3 4
7,426 Orex shares outstanding. There are no other securities of Orex now
outstanding or securities on which it is or may be liable, or securities that
are or may become required to be issued by reason of any statutory requirements
(including, without limitation, preemptive rights), or warrants, rights,
options, calls, commitments or other agreements presently outstanding.
4.3 Corporate Records
A copy of Orex's predecessor corporation: Lucky Seven Gold Mines
Corporation's certificate of incorporation, the amendments thereto, and the
By-Laws, all of which are certified by the Secretary of Orex as of a recent
date, are attached as Schedule 4.3 hereto and each of the foregoing will be
complete, true and correct on the Closing Date. -The minute books of Orex's
predecessor corporation contain complete and accurate records of all corporate
actions. The stock book of Orex's predecessor corporation reflects accurately
the foregoing or, in the event that there have in the past been shareholders of
Orex's predecessor corporation other than Orex, the names of all persons who at
any time in the past were record shareholders of Orex, the number of shares of
capital stock held by each such shareholders and the circumstances of any past
transfers or redemptions of any shares of Orex held prior to the date hereof by
any person otherthan Orex.
4.4 Subsidiaries
Orex owns no securities of any other entity.
4.5 Default Under Loans
Orex is not in default in the payment of principal or interest and has
fully complied with all other covenants, obligations and conditions of all
indebtedness outstanding. Orex
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has no outstanding mortgages, loan agreements or indebtedness of any kind,
nature or description except as set forth on Schedule 4.5 hereto.
4.6 No Agreement or Court Orders
Orex is not a party or subject to or bound by any agreement or any
judgment, order, writ, injunction or decree of any court or governmental body
which contained any provisions which could operate to impair the carrying out of
this Agreement or any of the transactions contemplated hereby.
4.7 Authority
The execution, delivery and performance of this Agreement by Orex has been
duly and effectively authorized by all requisite corporate action and will not
violate any provision of the Certificate of Incorporation or By-Laws of Orex or
any provision of, or result in the acceleration of any obligation under, any
agreement, indenture, instrument, lease, contract or other undertaking to which
Orex is a party or by which it is bound.
4.8 Recent Financial Statements
Orex's predecessor corporation, Lucky Seven Gold Mines Corporation ("Lucky
Seven") and Orex have delivered to Medalion a Balance Sheet of the Company as of
December 31, 1998, (the "Recent Balance Sheet") and the related Statement of
Earnings for the fiscal year then ended (the "Recent Income Statement"). Such
Recent Balance Sheet and Recent Income Statement being hereinafter sometimes
collectively called the "Recent Financial Statement" are unaudited. The Recent
Financial Statements are true, correct and complete and accurately and truly
present the financial condition of Orex as at the date thereof and the results
of its operations for the period therein specified and have been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with that of the preceding period and consistently maintained
throughout the periods involved. without limiting the generality of the
foregoing, the Recent Financial Statements, either on the face thereof or in the
notes thereto, include, reflect or disclose all periods involved. Without
limiting the generality of the foregoing, the Recent Financial Statements
disclose all debts, liabilities, commitments and obligations of every nature,
whether absolute, accrued, contingent or otherwise of Orex's predecessor
corporation. Lucky Seven as at the date thereof, including all appropriate
reserves for taxes and there are no other debts of Orex's predecessor
corporation Lucky Seven, or claims or demands with respect thereof, relating to
or arising out of any act, transaction or circumstances which occurred or
existed on or before the date of the Recent Balance Sheet, due or payable,
except as included, reflected or disclosed on the Recent Balance Sheet. The
Recent Income Statement does not contain any item of special or nonrecurring
income or other income not earned in the ordinary course of business except as
expressly specified therein. 4.9 Other Financial Statements
Orex will deliver to Medalion copies of all other financial statements of
Orex, prepared by or for Orex as of a date subsequent to the date of the Recent
Financial Statements, all of which will be true, complete and correct and will
have been prepared in accordance with sound generally accepted accounting
principles consistently followed throughout the period indicated.
4.10 Liabilities and Obligations
All liabilities of Orex and all obligations of Orex with respect to
contracts and commitments which arose or arise after the date of Orex's Recent
Financial Statements and prior to the Closing were or will be incurred only in
the ordinary course of business All liabilities for taxes with respect to the
period after the date of Orex's Recent Financial Statements and prior to the
Closing were or will be incurred in the ordinary course of business. Except to
the extent reflected, included, disclosed or reserved against in Orex's recent
Balance Sheet, or specifically otherwise set forth or on Schedule 4.10, Orex has
no present knowledge of, or present reason to believe in the existence of, any
liability of any kind or nature whether accrued, absolute, contingent or
otherwise, including without limitation, tax liabilities due to or to become
due, with respect to any period after the date of Orex's Recent Balance Sheet
and prior to the date of this Agreement.
4.11 Absence of Changes
Since the date of the Recent Financial Statements, the business of Orex has
been operated and as of the Closing will be operated only in the ordinary course
of business, and without limiting the generality of the foregoing, Orex has not:
(a) Suffered any materially adverse change in its financial condition,
prospects, operations or business.
(b) Increased the rate of compensation payable to any officer, employee or
agent, or granted or accrued any bonus, payment or other benefit due under any
pension, incentive, deferred compensation or similar plan to any such person.
(c) Incurred any labor dispute, work stoppage, sabotage, formal or informal
complaint of unfair labor practices, or had any representational proceedings
initiated, demand made for the recognition of any union as bargaining agent or
any other similar event or condition which has materially and adversely affected
its business.
(d) Incurred any obligation or liability (absolute or contingent) except
current liabilities under contracts entered into in the ordinary course of
business, none or which materially adversely affects the business or prospects
of Orex.
6
(e) Discharged or satisfied any lien, encumbrance, obligation or liability
(absolute or contingent) other than current liabilities and obligations shown on
the Recent Financial Statements or incurred since the date of the Recent
Financial statements in the ordinary course of business.
(f) Mortgaged, pledged, or subjected to lien, charge or other encumbrances
any of its assets
(g) Sold, transferred, mortgaged, pledged, or subjected to lien, charge or
other encumbrances any of its assets.
(h) Suffered any extraordinary losses or waived any rights of substantial
value.
(i) Made or declared any distribution or divided to its shareholders with
respect to its capital stock, or otherwise.
(j) Entered into any transaction not in the ordinary course of business
other than this Agreement.
4.12 Taxes
All required federal, states, municipal and local tax returns of Orex have
been accurately prepared and duly and timely filed, and all federal, state and
local taxes required to be paid with respect to the periods covered by such
returns have been paid. All federal, state, municipal and local taxes required
to be paid with respect to any period prior to the date of Orex's Recent Balance
Sheet have been reflected and fully reserved for on Orex's Recent Financial
Statements. Orex has no tax deficiency outstanding, proposed or assessed against
it and has not executed any waiver of any statute of limitations on the
assessment or collection of any tax. Orex's federal income tax returns have not
been audited by the Internal Revenue Service.
4.13 Title to Properties
Schedule 4.13 provides a list of all the properties and assets of Orex.
Orex has good and marketable title to all the properties and assets its purports
to own, including, without limitation, those reflected in its books and records
and in its Recent Financial statements (except assets thereafter sold in the
ordinary course of business). Such properties and assets are not subject to any
mortgage, pledge, lien, charge, security interest, encumbrance, restriction,
lease, license, easement, charge, liability or claim of any nature whatsoever,
direct or indirect, whether accrued, absolute, contingent or otherwise, except
those which are included, reflected or expressly set forth in its Recent
Financial Statements. All of such properties and assets are in good operating
condition and repair and conform to all applicable ordinances, regulations and
other laws or requirements. All of Orex's fixtures and improvements to real
property, and its use of real property, conform in all material respdcts with
all applicable building, zoning and other laws, ordinances, orders and
regulations and applicable public and private covenants or restrictions.
4.14 Title to Stock
The Shareholders, the owners of Orex Stock, whose stock constitutes all of
the capital stock of Orex, issued and outstanding, and all whose stock will be
delivered by the Shareholders hereunder, free and clear of all liens, pledges,
encumbrances, charges, agreements or claims by or on the part of any persons,
firm or corporation, and the Shareholders have good and marketable title thereto
with full right and unrestricted power to assign ,transfer and deliver such
stock to Medalion as provided in this Agreement. No right or option to purchase
any of the Orex Stock or any other securities of Orex exists in favor of any
person, firm or corporation.
4.15 Agreements
Orex entered into a non-exclusive License Agreement with Haber, Inc., a
Delaware corporation, on March 13, 1997 for the licensed use of the Haber Gold
Process. Orex also entered into a Consulting Agreement with WebcastMedia.net, a
Delaware corporation, on October 2 8,199 8 for the contracting and retaining of
Webcastmedia.net in a financial public relations consulting and servicing
capacity.
Orex is not in default under any contract, agreement or commitment. No
consent of third parties to any contract, agreement or commitment of Orex is
required for the execution or consummation of this Agreement.
4.16 Indebtedness of Officers and Directors
Orex is not indebted to any other person who is or has been an officer,
director, or stockholder of Orex, or to any member of the immediate family of
any such person.
4.17 Litigation
There are no claims, legal actions, suits, arbitrations, governmental
investigations or other legal or administrative proceedings in progress or
pending or to the knowledge of Orex threatened against or relating to Orex, its
properties, assets or business and Orex does not know or have reason to be aware
of any facts which might result in any such claim, action, suit, arbitration or
other proceeding.
4.18 Pension or Benefit Plans
Orex has no formal or informal written or unwritten pension,
profit-sharing, stock option, bonus plan or employee benefit or welfare plans of
any kind whatsoever, or agreements with any persons for the making or granting
of any pension, profit sharing or bonus payments or benefits or any stock
options.
8
4.19 Relations and Labor
Orex is not a party to any collective bargaining agreements and there is no
union or collective bargaining agent for Orex's employees. Orex has no
employment grievances, disputes, or controversies and there are no threats of
strikes or work stoppage or demand for the recognition of any union or
bargaining agent for any employees.
4.20 Patents
Orex has no patents or patents pending. To the best of Orex's knowledge,
Orex is not infringing upon or otherwise acting adversely to any copyrights,
trademarks, trademark rights, patents, patent rights or licenses owned by any
person or persons, and there is no such claim or action pending or threatened,
with respect thereto.
4.21 Good Standing
Each License, permit, franchise and authorization of Orex from any federal,
state or local governmental or other regulatory authority is in good standing
and in full force and effect. Orex does not know of any reason which could cause
any of the above to be terminated. There shall not be any termination or
suspension after the Closing date of any or all of the above arising out of,
relating to, or caused by (i) any failure to file, or any inadequacy in filing
of, any documents, reports and disclosures required under applicable rules and
regulations of any federal, state or local law or agency to be filed by Orex
prior to the Closing Date, (u) activities of Orex or its personnel prior to the
Closing date, (iii) any other failure to comply with applicable rules and
regulations prior to the Closing date, or (iv) this Agreement or the
transactions contemplated by this Agreement.
4.22 Compliance with Law
To the best of Orex's knowledge, Orex has complied with all federal, state
and local applicable laws, rules, regulations, ordinances and orders applicable
to its business or properties including, without limitation, those of any agency
or subdivision thereof Orex has duly filed all returns, reports, registration
statements and other documents and furnished all information required or
requested by any federal, state or local governmental agency having jurisdiction
with respect to Orex or its business or properties and all of the foregoing are
true and complete in all respects and all payments, fees and charges reflected
therein as due, or upon any deficiency notice with respect thereto, have been
paid. No act of-Orex, including without limitations the issuance and transfers
of the capital stock of Orex, required registration under the Securities Act of
193 3, as amended.
4.23 Continuance of Business
The businesses now conducted by Orex are substantially the same as the
respective businesses conducted by it throughout the periods covered by its
respective financial
9
statements referred to in Section 4.8 and 4.9 hereof, and there has been no
material change during any of such periods in the type or nature of its
respective services, products, customers, suppliers or methods of operation.
Orex has not received any notification and has no reason to believe that any
persons or businesses with whom Orex does business will cease doing business, or
any portion of any business, with Orex.
4.24 Adverse Facts
No facts are known to Orex which would materially and adversely affect
future operations of Orex.
4.25 Brokers
Orex's negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by Orex directly with Medalion in such
manner, without the intervention of any third parties so as not to give rise to
any valid claims against any of the parties hereto for a brokerage commission or
other like payment.
4.26 No Misrepresentation or warranty by Orex in this Agreement or any
statement or certification furnished or to be furnished to Medalion pursuant to
this Agreement or in connection with the transaction contemplated hereby,
contains or will contain any untrue statement of material facts or omits or will
omit a materiel fact necessary to make the statements contained herein true and
correct.
4.27 Exemption from Registration; Investment Intent.
The Shareholders acknowledge that the Medalion Shares have not been
registered under the Securities Act of 1933, as amended (the "Act(degree)) in
reliance on an exemption for transactions by an issuer not involving a public
offering. The Shareholders understand that they may not dispose of all or any
part of the Medalion Shares except in compliance with the provisions of the Act
and applicable state securities laws, and understands that the Medalion Shares
are being issued pursuant to a specific exemption under the provisions of the
Act, which exemption(s) depends, among other things, upon the compliance with
the provisions of the Act. Each Shareholder represents that the Medalion Shares
to be issued to them pursuant to this Agreement are being acquired solely for
the account of the Shareholder for personal investment and not with a view to,
or for resale in connection with, any distribution in any jurisdiction where
such sale or distribution would be precluded. By such representation, the
undersigned means that no other person has a beneficial interest in the Medalion
Shares. The Shareholders understand that the sale of the Medalion Shares is
subject to the restrictions as imposed under state and federal securities laws.
The Shareholders further represent and agree
10
that they will not sell, transfer, pledge or otherwise dispose of or encumber
the Medalion Shares except pursuant to the applicable rules and regulations
under applicable state securities laws and the Act, and prior to any such sale,
transfer, pledge, disposition or encumbrance, each will, if requested, furnish
Medalion and its transfer agent with an opinion of counsel, satisfactory in form
and substance, that registration under applicable state securities laws and the
Act is not required. The Shareholders hereby understands that the following or
similar legend will appear on the face of the certificates evidencing the
Medalion Shares in compliance with the Act and applicable state securities laws:
"These securities have not been
registered under the Securities Act of 1933,
as amended (the "Act") or any state
securities laws and may not be sold or
otherwise transferred or disposed of except
pursuant to an effective registration
statement under the Act and any applicable
state securities laws, or the Company
receives an opinion of counsel satisfactory
to counsel to the Company that an exemption
from registration under the Act and any
applicable state securities laws is
available."
Until December 31, 1999, the Orex Shareholders will not authorize, approve or
consent to a reverse split or other dilutive event effecting Medalion's
outstanding common stock as of the date hereof,
ARTICLE V
REPRESENTATION AND WARRANTIES BY MEDALION
Medalion hereby represents and warrants as follows:
5.1 Organization and Standing
Medalion is a corporation duly organized and validly existing and in good
standing under the laws of the State of Delaware, and has all requisite
corporate power and authority to own its property, to carry out its business as
now being conducted and to enter into and carry out the provisions of this
Agreement. Medalion is duly licensed and qualified to do business with all
Federal, State and other governmental agencies as required to own its properties
and to conduct its business. Medalion owns no property and neither conducts, nor
caries on any new business.
5.2 Capitalization
The duly authorized capital stock of Medalion consists of Five Million
(5,000,000) shares, par value $.0001 per share of Common Stock. However,
Medalion is in the process of an increase and will have, on the Closing date,
Fifty Million (50,000,000)
11
shares, par value $.0001 per share of Common Stock, of which 8,075,000 are
currently outstanding. There are no other securities of Medalion now outstanding
or securities on which it is or may be liable, or securities that are or may
become required to be issued by reason of any statutory requirements (including,
without limitation, preemptive rights), or warrants, rights, options, calls,
commitments or other agreements presently outstanding.
5.3 Corporate Records
A copy of Medalion's certificate of incorporation, all amendments thereto,
and the By-Laws, all of which are certified by the Secretary of Medalion as of a
recent date are attached as Schedule 5.3 hereto and each of the foregoing will
be complete, true and correct on the Closing date. The minute books of Medalion
contain complete and accurate records of all meetings of its stockholders and
directors and of all corporate action taken by them to the extent available as
at the present date. The shareholder records of Medalion reflect accurately the
names of the record shareholders of Medalion and the number of shares of capital
stock held by each stockholder.
5.4 Subsidiaries
Medalion owns no security of any other entity.
5.5 Default Under Loans
Medalion has no pre or post bankruptcy liabilities and federal tax
liabilities not exceeding $-0-in the aggregate.
5.6 Title to Properties
Schedule 5.6 provides a list of all the properties and assets of Medalion.
Medalion has good and marketable title to all the properties and assets its
purports to own, including, without limitation, those reflected in its books and
records and in its Recent Financial statements (except assets thereafter sold in
the ordinary course of business). Such properties and assets are not subject to
any mortgage, pledge, lien, charge, security interest, encumbrance, restriction,
lease, license, easement, charge, liability or claim of any nature whatsoever,
direct or indirect, whether accrued, absolute, contingent or otherwise, except
those which are included, reflected or expressly set forth in its Recent
Financial Statements. All of such properties and assets are in good operating
condition and repair and conform to all applicable ordinances, regulations and
other laws or requirements. All of Medalion's fixtures and improvements to real
property, and its use of real property, conform in all material respects with
all applicable building, zoning and other laws, ordinances, orders and
regulations and applicable public and private covenants or restrictions.
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5.7 Tradable Stock
All or some of Medalion's Common Stock is approved for quotation and
currently quoted and traded publicly on the Over the Counter Bulletin Board
(OTCBB) in accordance with applicable SEC rules and regulations.
5.8 Information Furnished
Management of Medalion has been furnished and has reviewed Orex's
Confidential Private Placement Memorandum dated February 3,1999 in connection
with the then proposed sale of up to 1,000,000 shares of the Orex's Common
Stock.
5.9 Proposed Rule 504 Offering Medalion, under the control of the Orex's
shareholders agrees to undertake to complete, immediately following the Closing
Date, a private offering of its shares of Common Stock pursuant to Rule 504 of
the Act to raise up to an aggregate of $1,000,000.
5.10 Default Under Loans
Medalion is not in default in the payment of principal or interest and has
fully complied with all other covenants, obligations and conditions of all
indebtedness outstanding. Medalion has no outstanding mortgages, loan agreements
or indebtedness of any kind, nature or description except as set forth on
Exhibit 5.10 hereto.
5.11 No Agreements or Court Orders
Medalion is not a party to or subject to or bound by any agreement or any
judgment, order, writ, injunction or decree of any court or governmental body
which contains any provisions which could operate to impair the carrying out of
this Agreement or any of the transactions contemplated hereby.
5.12 Authority
The execution, delivery and performance of this Agreement by Medalion has
been duly and effectively authorized by all requisite corporate action and will
not violate any provision of the Certificate of Incorporation or By-Laws of
Medalion or any provision of, or result in the acceleration of any obligation
under, any agreement, indenture, instrument, lease, contract or other
undertaking to which Medalion is a party or by which it is bound.
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5.13 Financial Statements
Prior to the Closing Date, Medalion will deliver to Orex financial
statements (the "Medalion Financial Statements") through to December 31, 199 8
which will show that Medalion has no assets and has post bankruptcy liabilities
and federal tax liabilities not exceeding $-0-in the aggregate.
Financial Statements will be true, correct and complete and will accurately
and truly present the financial condition of Medalion as at the date thereof and
the results of its operations for the period therein specified and will be
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with that of the preceding period and consistently maintained
throughout the periods involved. Without limiting the generality of the
foregoing, the Medalion Financial Statements will disclose all debts,
liabilities, commitments and obligations of every nature, whether absolute,
accrued, contingent or otherwise of Medalion as at the date thereof, and there
will be no other debts, claims, or demands relating to or arising out of any
act, transaction or circumstances which will have occurred or existed on or
before the date of the Medalion Financial Statements.
5.14 Agreements
Medalion is not in default under any contract, agreement or commitment and
is not a party to any contract, agreement or commitment. No consent of third
parties to any contract, agreement or commitment of Medalion is required for the
execution or consummation of this Agreement.
5.15 Competing Interests
None of Medalion's principal shareholders (owning 5 % or more of its issued
and outstanding common stock), officers or directors, own, directly or
indirectly, a material interest in any corporation, partnership, firm or
association which is a competitor or potential competitor of Orex.
5.16 Indebtedness of Officers and Directors
Medalion is not indebted to any person who is or has been an officer,
director or stockholder of Medalion, or to any member of the immediate family of
any such person.
5.17 Litigation
There are no claims, legal actions, suits, arbitrations, governmental
investigations or other legal or administrative proceedings in progress or
pending or to the knowledge of Medalion threatened against or relating to
Medalion, its assets of activities and Medalion
14
knows nothing nor has any reason to be aware of any facts which might result in
any such claim, action, suit, arbitration or other proceeding.
5.18 Adverse Facts
No facts are known to Medalion which would materially and adversely affect
future activities of Medalion.
No Misrepresentation or warranty by Medalion in this Agreement or any
statement or certification furnished or to be famished to Orex pursuant to this
Agreement or in connection with the transaction contemplated hereby, contains or
will contain any untrue statement of material facts or omits or will omit a
materiel fact necessary to make the statements contained herein true and
correct.
5.19 Brokers
Medalion's negotiations relative to this Agreement and the transaction
contemplated hereby have been carried on by Medalion directly with Orex in such
manner, without the intervention of any third parties, as not to give rise to
any valid claims against any of the parties hereto for a brokerage commission or
other like payments.
5.20 Confidential Information
Medalion shall not, prior to or after the Closing divulge to third parties
any confidential information received from Orex.
ARTICLE VI
CONDUCT OF OREX'S BUSINESS PRIOR TO THE CLOSING
6.1 Negative Covenants
Orex agrees that between the date hereof and the Closing, and except as
permitted by the prior written consent of Medalion, Orex will not take, or
permit to betaken, any of the following actions:
(a) Alter or amend its Certificate of Incorporation or By-Laws.
(b) Issue or become obligated to issue any securities of any kind including
without limitation any notes or capital stock.
(c) Enter into any option, call or commitment with respect to its stock.
15
(d) Declare or pay any dividend or other distribution with respect to its
capital stock.
(e) Incur any liability or obligation, except current liabilities in the
ordinary course of business and obligations under contracts entered into in the
ordinary course of business.
(f) Pay or accrue any salaries, fees, commissions or other compensation to
its officers or directors at a rate in excess of the rate of compensation in
effect as to such individual, respectively, on the date hereof
(g) Enter into any contract or commitment which is not the ordinary course
of business of Orex or which does, or could be expected to, materially adversely
affect Orex's business.
(h) Borrow funds or incur any indebtedness of any nature except in the
ordinary court of business.
(i) Change its banking and safe deposit arrangements
(j) Accept, amend or grant any license, patent or trademark, or settle the
infringement of any trademark or patent.
(k) Compromise or settle any litigation, proceeding or governmental
investigation against it or its properties or business, except settlements made
by insurers.
6.2 Affirmative Covenants
Orex agrees that between the date hereof and the Closing, Orex will:
(a) Conduct its business only in the ordinary course and at the place or
places said business is conducted.
(b) Maintain in force the insurance policies presently in force or
insurance policies providing substantially the same coverage, under which Orex
is the insured or the beneficiary.
(c) Preserve its business organization taken as a whole substantially
intact, keep available the services of its present officers and employees and
preserve the good will of its suppliers, customers and others having business
relations with any of them.
(d) Afford to Medalion and its counsel, accountants, and other
representatives full access during normal business hours throughout the period
prior to the Closing to all of Orex's properties, books, contracts, commitments
and records, and during said period furnish all information which Medalion may
reasonably request.
16
ARTICLE VII
CONDUCT OF MEDALION'S CORPORATE AFFAIRS PRIOR TO THE
CLOSING
7.1 Negative Covenants
Medalion agrees that between the date hereof and the Closing, and except as
permitted by the prior written consent of Orex, Medalion will not take, or
permit to be taken, any of the following actions:
(a) Initiate or engage in any new business activities of any kind
whatsoever.
(b) Alter or amend its Certificate of Incorporation or By-Laws.
(c) Issue or become obligated to issue and securities of any kind including
without limitation any notes or capital stock.
(d) Enter into any option, call or commitment with respect to its capital
stock.
(e) Declare or pay any dividend or other distribution with respect to its
capital stock.
(f) Incur any liability or obligation, except current liabilities in the
ordinary course of its activities.
(g) Pay or accrue any salaries, fees, commissions or other compensation to
its officers or directors.
(h) Make any profit sharing, incentive, pension or retirement payment.
(i) Enter into any contract of commitment.
(j) Borrow funds or incur any indebtedness.
(k) Compromise or settle any litigation, proceeding or governmental
investigation against it or its properties or business.
17
7.2 Affirmative Covenants
Medalion agrees that between the date hereof and the Closing, Medalion
will:
(a) Preserve its organizations taken as a whole substantially intact, keep
available the services of its present officers and personnel.
(b) Afford to Orex and its counsel, accountants, and other representatives
full access during normal business hours throughout the period prior to the
Closing to all of Medalion's properties, books, contracts, commitments and
records, and during said period furnish all information which Orex may
reasonably request.
ARTICLE VIII
CONDITIONS PRECEDENT TO MEDALION'S OBLIGATIONS
Medalion's obligations under this Agreement are subject to the fulfillment
prior to the Closing of each of the following conditions:
8.1 Orex's representations and warranties contained in this Agreement and
in any certificate or document delivered to Medalion pursuant hereto shall be
deemed to have been made again at and as of the time of the Closing and shall
then be true in all materiel respect; Orex shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by them prior to or at the Closing.
8.2 Orex shall not be a defendant in any suit or proceeding or governmental
investigation pending or threatened against Orex which would materially affect
the business of Orex or the carrying out of this Agreement.
8.3 Orex has not incurred any material adverse change in its assets,
liabilities, financial condition, business, prospects or operations since the
execution of this Agreement.
8.4 Orex shall deliver to Medalion a certified copy of the resolution of
its Board of Directors approving this Agreement and the transaction contemplated
hereby.
8.5 All documents required to be delivered to Medalion at or prior to the
Closing shall have been so delivered.
18
ARTICLE IX
CONDITIONS PRECEDENT TO OREX
AND OREX'S OBLIGATIONS
Orex's obligations under this Agreement are subject to the fulfillment
prior to the Closing of the following conditions:
9.1 Medalion's representation and warranties contained in this Agreement
and in any certificate of document delivered to Orex pursuant hereto shall be
deemed to have been made again at and as of the time of the Closing and shall
then be true in all material respects; Medalion shall have performed and
complied with all agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing; and Orex shall have
been furnished with a certificate of Medalion dated the Closing date, certifying
in such detail as Orex may reasonably request to the fulfillment of the
foregoing conditions.
9.2 Medalion shall not be a defendant in any suit or proceeding or
governmental investigation pending or threatened against Medalion which would
materially affect the carrying out of this Agreement.
9.3 Medalion shall not have incurred any adverse change in its assets,
liabilities, financial condition, activities, prospects or operations.
9.4 Medalion shall deliver to Orex a certified copy of the resolutions of
its Board of Directors approving this Agreement and the transactions
contemplated hereby.
9.5 All documents required to be delivered to Orex at or prior to the
Closing shall have been so delivered.
ARTICLE X
MISCELLANEOUS
10.1 Survival
All representations, warranties, covenants and agreements made by any of
the parties hereto in this Agreement or in any certificate or instrument
delivered by or on behalf of any of them pursuant hereto shall survive the
execution and delivery of this
19
Agreement, any investigation that may have been made or may be made at any time
by or on behalf of any party hereto, and the consummation of this Agreement.
10.2 Parties in Interest
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by each corporate party hereto and its successors and each
individual party hereto and his heirs, personal representatives and successors.
This Agreement shall not be assigned by any party hereto (except by operation of
law) and any such prohibited assignment shall be null and void.
10.3 Expenses and Reorganization
Each of the parties to this Agreement shall bear their respective expenses
relating to this Agreement.
10.4 Governing Law
This Agreement shall be governed by and construed and enforced under the
laws of the State of Delaware.
10.5 Entire Agreement
This Agreement contains the entire understanding of the parties hereto with
respect to the subject mater herein contained and no amendment, modification or
termination of this Agreement shall be valid unless expressed in a written
instrument executed by the parties hereto or their respective successors.
10.6 Exhibits
All Exhibits and Schedules to this Agreement or other certificates or
documents delivered pursuant to this Agreement shall be deemed to be a part of
this Agreement, whether or not required to be annexed hereto, and shall be
initialed by the party required to deliver such Exhibit, certificate or
document.
10.7 Waiver
No waiver or any provision of, or any breach or default of this Agreement,
shall be considered valid unless in writing and signed by the party giving such
waiver and no waiver shall be deemed a waiver of any other provisions or any
subsequent breach or default of a similar nature.
20
10.8 Further Assurances
Each party to this Agreement will, at the request of the other, execute and
deliver to such other party all further endorsements and documents as such other
party may reasonably request in order to consummate and perfect the transactions
contemplated by this Agreement.
10.9 Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, and all of which taken together shall constitute
one and the same instrument.
10.10 Headings
Section headings are contained on this Agreement only for purposes of
convenience of reference and shall not affect the interpretation of this
Agreement or modify any of its terms or provisions.
10.11 Notices
Any notice or other communication permitted or required to be given
hereunder shall be in writing and shall be deemed to have been given upon
receipt by first class registered mail, certified mail, recognized over-night
courier, in all class and written confirmation of receipt required, addresses to
the parties as set forth below:
ARTICLE X1
CONFIDENTIALITY AND COMPETITION
11.1 Confidential Information and Competition as to the Orex HGP.
(a) Confidential Information. Orex and the Shareholders (collectively, the
"Covenantor") hereby acknowledges that they possess a Licensing Agreement to
confidential information of a special and unique nature and value affecting and
relating to the Business, the Assets, the Orex operations all of which
information is included in the Assets including, but not limited to, the
identity of Orex's customers and suppliers, prices paid by Orex for inventory,
its business practices, marketing strategies, expansion plans, Orex Contracts,
business records and other records, trade secrets, inventions, techniques used
in Orex's business, know-how and technologies, whether or not patentable, and
other similar information relating to the Business (all the foregoing regardless
of whether same is or becomes known to third parties is hereinafter referred to
collectively as "Confidential Information"). The Covenantor further
21
recognizes and acknowledges that, upon Closing, and except as provided in the
License Agreement between Orex and Elbe, Inc, all Confidential Information is
the exclusive property of Medalion, is material and confidential, and greatly
affects the legitimate business interests, goodwill and effective and successful
conduct of the Business and Medalion. Accordingly, the Covenantor hereby
covenants and agrees that it will use the Confidential Information only for the
benefit of the Business and shall not at any time, directly or indirectly,
divulge, reveal or communicate any Confidential Information to any person, firm,
corporation or entity whatsoever other than Medalion or as otherwise
contemplated herein, or use any Confidential Information for its own benefit or
for the benefit of others.
(b) Non-Competition. The parties hereto hereby acknowledge and agree that
Medalion would suffer irreparable injury if the Covenantor competes with
Medalion. As a material inducement to Medalion to enter into this Agreement, the
Covenantor hereby covenants and agrees that the Covenantor shall not:
(i) during the period beginning on the Closing Date and
continuing unto two (2) years following the termination of
employment of covenants with Medalion or its affiliates, for any
reason, directly or indirectly, operate, organize, maintain,
establish, manage, own, participate in, or in any manner
whatsoever, individually or through any corporation, firm or
organization of which the Covenantor shall be affiliated in any
manner whatsoever, have any interest in, whether as owner,
operator, partner, stockholder, director, trustee, offcer,
lender, employee, principal, agent, consultant or otherwise, any
business or venture other than Medalion in any county or city
anywhere in the world where Medalion does business, which engages
in the business or is otherwise in competition with Medalion or
any assigns of Medalion, unless such activity shall have been
previously agreed to in writing by Medalion and its successors
and assigns;
(ii) during the period beginning on the Closing Date and
continuing until two (2) years Allowing the termination of
employment convenants with Medalion or its affliates, for any
reason, directly or indirectly, divert business from Medalion or
its successors or assigns, or solicit business from, divert the
business of, or attempt to convert to other methods of using the
same or similar services as are provided by Medalion, any client
or account of Medalion; or
(iii) during the period beginning on the Closing Date hereof
and continuing until two (2) years following the termination of
employment convenants with Medalion or its affiliates, for any
reason, directly or indirectly, solicit for employment, employ or
otherwise engage the services of, any employees or consultants of
Medalion or its successors or assigns.
The covenants set forth in this Section 11.1 are in addition to and not in
lieu of any other noncompetition agreement to which Medalion and the Covenantor
are parties.
11.2 Injunction and Attorneys' Fees. In view of the irreparable injury to
Medalion that would result from a breach or threatened breach by the Covenantor
of the covenants or
22
agreements under Section 11.1 hereof, and because there is not an adequate
remedy at law to protect Medalion from the ongoing breach of those covenants,
Medalion shall have the right to receive, and the Covenantor hereby consents to
the issuance of, a permanent injunction enjoining the Covenantor from any
violation of the covenants set forth in Section 11.1 hereof The Covenantor
acknowledges that a permanent injunction is an appropriate remedy for such a
breach or threatened breach. These remedies shall be in addition to and not in
limitation of any other rights or remedies to which Medalion is or may be
entitled at law or in equity under this Agreement. The Covenantor further agrees
that in the event Medalion incurs any fees or costs in order to enforce the
provisions of Section 11.1 hereof and Medalion prevails in such enforcement, the
Covenantor shall pay all fees and costs so incurred by Medalion including, but
not limited to, reasonable attorneys' and paralegals' fees.
11.3 Reasonableness of Restrictions. The Covenantor has carefully read and
considered the provisions of Sections 11.1 and 11.2 hereof and, having done so,
agrees that the covenants set forth in those sections are fair and reasonable
and are reasonably required to protect the legitimate business interests of
Medalion, including, but not limited to, protection of the goodwill included in
the Assets. The Covenantor agrees that the covenants set forth in Sections 1 1.1
and 1 1.2 hereof do not unreasonably impair the ability of the Covenantor to
conduct any unrelated business or to find gainful work in their respective
fields. The parties hereto agree that if a court of competent jurisdiction holds
any of the covenants set forth in Section 11.1 unenforceable, the court shall
substitute an enforceable covenant that preserves, to the maximum lawful extent,
the scope, duration and all other aspects of the covenant deemed unenforceable,
and that the covenant substituted by the court shall be immediately enforceable
against the Covenantor. The foregoing shall not be deemed to affect the right of
the parties hereto to appeal any decision by a court concerning this Agreement.
The provisions of Sections 11.1, 11.2 and 11.3 hereof shall survive the
execution of this Agreement and the consummation of the transactions
contemplated hereby.
23
To: MEDALION SERVICES, INC.
7 Rock Hollow Road
Plandome Manor, NY 10030
To: OREX GOLD MINES CORPORATION
2121 Ponce de Leon Boulevard, Suite 510
Coral Gables, Florida 33134
Each of the foregoing shall be entitled to specify a different address by giving
notice as aforesaid to the other parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first written above.
MEDALION SERVICES INC.
BY: /s/
------------------------
OREX GOLD MINES CORPORATION
BY:
------------------------
OREX SHAREHOLDERS
BY:
------------------------
Warren Hemedinger
BY:
------------------------
George Levy
25
To: MEDALION SERVICES, INC.
7 Rock Hollow Road
Plandome Manor, NY 10030
To: OREX GOLD MINES CORPORATION
2121 Ponce de Leon Boulevard, Suite 510
Coral Gables, Florida 33134
Each of the foregoing shall be entitled to specify a different address by giving
notice as aforesaid to the other parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first written above.
MEDALION SERVICES INC.
BY:
------------------------
OREX GOLD MINES CORPORATION
BY:
------------------------
OREX SHAREHOLDERS
BY: /s/
------------------------
Warren Hemedinger
BY:
------------------------
George Levy
26
BY:
----------------------
Dr. Henry Rosenberg
BY:
----------------------
Steve J. Gannuscio
HABER, INC.
BY:
TITLE:
WEBCASTMEDIA.NET
BY:
TITLE:
BY:
Harry Beninghof
BY:
Jerome and Marilyn Stein
BY:
Donald Hawksworth
BY:
Evelyn Rivas
BY:
Richard Hoffman
27
BY: /s/ Henry Rosenberg
Dr. Henry Rosenberg
BY: /s/ Steve Gannuscio
Steve J. Gannuscio
HABER, INC.
BY: /s/ Norman Haber
TITLE: CEO, Haber Inc.
WEBCASTMEDIA.NET
BY:
TITLE:
BY: /s/ Harry Beninghof
Harry Beninghof
BY: /s/ Marilvn Stein
Jerome and Marilyn Stein
BY /s/Donald Hawksworth
Donald Hawksworth
BY: /s/ Evelvn Rivas
Evelyn Rivas
BY: /s/ Richard Hoffman
Richard Hoffman
25
BY: /s/ Henry Rosenberg
Dr. Henry Rosenberg
BY: /s/ Steve Gannuscio
Steve J. Gannuscio
HABER, INC.
BY: /s/ Norman Haber
TITLE: CEO, Haber Inc.
WEBCASTMEDIA.NET
BY:
TITLE:
BY:/s/ Harry Beninghof
Harry Beninghof
BY:/s/ Marilvn Stein
Jerome and Marilyn Stein
BY /s/Donald Hawksworth
Donald Hawksworth
BY: /s/ Evelyn Rivas
Evelyn Rivas
BY: /s/ Richard Hoffman
Richard Hoffman
25
BY: /s/ Henry Rosenberg
Dr. Henry Rosenberg
BY: /s/Steve Gannuscio
Steve J. Gannuscio
HABER, INC.
BY: /s/ Norman Haber
TITLE: CEO, Haber Inc.
WEBCASTMEDIA.NET
BY:
TITLE:
BY: /s/ Harry Beninghof
Harry Beninghof
BY: /s/ Marilyn Stein
Jerome and Marilyn Stein
BY /s/Donald Hawksworth
Donald Hawksworth
BY: /s/ Evelyn vas
Evelyn Rivas
BY: /s/ Richard Hoffman
Richard Hoffman
25
BY: /s/ Henry Rosenberg
Dr. Henry Rosenberg
BY: /s/ Steve Gannuscio
Steve J. Gannuscio
HABER, INC.
BY: /s/ Norman Haber
TITLE: CEO, Haber Inc.
WEBCASTMEDIA.NET
BY:
TITLE:
BY: /s/ Harry Beninghof
Harry Beninghof
BY: /s/ Marilyn Stein
Jerome and Marilyn Stein
BY /s/ Donald Hawksworth
Donald Hawksworth
BY: /s/ Evelyn Rivas
Evelyn Rivas
BY: /s/ Richard Hoffman
Richard Hoffman
25
BY: /s/ Henry Rosenberg
Dr. Henry Rosenberg
BY: /s/ Steve Gannuscio
Steve J. Gannuscio
HABER, INC.
BY:/s/ Norman Haber
TITLE: CEO, Haber Inc.
WEBCASTMEDIA.NET
BY:
TITLE:
BY: /s/ Harry Beninghof
Harry Beninghof
BY: /s/ Marilyn Stein
Jerome and Marilyn Stein
BY /s/ Donald Hawksworth
Donald Hawksworth
BY: /s/ Evelyn Rivas
Evelyn Rivas
BY: /s/Richard Hoffman
Richard Hoffman
25
MERGER AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
OREX GOLD MINES CORPORATION,
SANTA MARIA MINING CORPORATION,
GORDON LEE, DON BLACKBURN, TOM MILLS,
AND LARRY MCMILLIAN,
DATED AS OF
AUGUST 16, 1999.
<PAGE>
TABLE OF CONTENTS
Page
1. DEFINITIONS............................................................1
2. TRANSACTION; TRANSACTION CONSIDERATION; CLOSING........................1
2.1 Transaction......................................................1
2.2 Effect of the Merger.............................................2
2.3 Effective Time; Filing of Certificates of Merger.................2
2.4 Articles of Incorporation........................................2
2.5 Bylaws...........................................................2
2.6 Directors and Officers...........................................2
2.7 Tax Consequences.................................................2
2.8 Additional Actions...............................................2
2.9 The Closing......................................................3
2.10 Actions at the Closing...........................................3
2.11 No Dissenters' Rights............................................3
2.12 Surrender of Certificates........................................3
2.12.1 Company's Shares..........................................3
2.12.2 Dividends.................................................3
2.13 Transaction Consideration........................................3
2.13.1 OREX Shares...............................................4
2.13.2 Conversion of Shares......................................4
2.14 Shareholder Consent and Release..................................6
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS.....................6
3.1 Organization, Qualification, and Corporate Power.................6
3.2 Capitalization...................................................6
3.3 Authorization....................................................7
3.4 Noncontravention.................................................7
3.5 Broker's Fees....................................................7
3.6 Title to Assets..................................................7
i
3.7 No Subsidiaries..................................................8
3.8 Financial Statements.............................................8
3.9 Events Subsequent to Most Recent Fiscal Year End.................8
3.9.1 Sale or Lease of Assets....................................8
3.9.2 Contracts..................................................8
3.9.3 Change in Contracts........................................8
3.9.4 Security Interests.........................................8
3.9.5 Investments................................................9
3.9.6 Debts......................................................9
3.9.7 Liabilities Unaffected.....................................9
3.9.8 Claims Unaffected..........................................9
3.9.9 Articles and Bylaws........................................9
3.9.10 Changes in Equity.........................................9
3.9.11 Distribution..............................................9
3.9.12 Property Damage...........................................9
3.9.13 Transactions with Affiliates..............................9
3.9.14 Collective Bargaining Agreements..........................9
3.9.15 Compensation Changes......................................9
3.9.16 Employee Benefit Plans....................................9
3.9.17 Officers; Directors; Employees............................9
3.9.18 Charitable or Capital Contributions......................10
3.9.19 Ordinary Course of Business..............................10
3.9.20 Accounting Practices.....................................10
3.9.21 Accounts Receivable......................................10
3.9.22 In ......................................................10
3.10 Undisclosed Liabilities.........................................10
3.11 Legal Compliance................................................10
3.12 Tax Matters.....................................................10
3.12.1 Tax Returns..............................................11
3.12.2 Withholding..............................................11
3.12.3 No Disputes of Claims....................................11
3.12.4 No Waivers...............................................11
3.12.5 No Special Circumstances.................................11
3.12.6 Subchapter "S"...........................................11
3.12.7 Audits of Tax Returns....................................12
3.12.8 Period of Assessment.....................................12
3.12.9 Tax Agreements...........................................12
3.12.10 Inclusions in Taxable Periods...........................12
3.12.11 Consents................................................12
3.12.12 Personal Holding Company................................12
3.12.13 Consolidated Tax Returns................................12
3.13 Real Property...................................................12
3.13.1 Binding..................................................12
3.13.2 Continued Validity.......................................13
3.13.3 No Defaults..............................................13
3.13.4 Repudiation..............................................13
3.13.5 No Disputes..............................................13
3.13.6 Subleases................................................13
3.13.7 Encumbrances.............................................13
3.13.8 Approvals................................................13
3.13.9 Utilities................................................13
3.14 Intellectual Property...........................................13
3.15 Condition of Tangible Assets....................................13
3.16 Contracts.......................................................13
3.16.1 Personal Property Leases.................................14
3.16.2 Services.................................................14
3.16.3 Partnership; Joint Venture...............................14
3.16.4 Indebtedness.............................................14
3.16.5 Confidentiality; Non-Competition.........................14
3.16.6 Shareholders' Agreements.................................14
3.16.7 Plans....................................................14
3.16.8 Employment or Consulting Agreements......................14
3.16.9 Advances; Loans..........................................14
3.16.10 Adverse Effects.........................................14
3.16.11 Other Agreements........................................14
3.17 Powers of Attorney..............................................15
3.18 Insurance; Malpractice..........................................15
3.19 Litigation......................................................16
3.20 [Open]..........................................................16
3.21 [Open]..........................................................16
3.22 Company Compliance..............................................17
3.23 [Open]..........................................................17
3.24 Employees.......................................................17
3.25 Employee Benefits...............................................17
3.25.1 Plans....................................................17
3.25.2 Compliance...............................................18
3.25.3 Reports and Descriptions.................................18
3.25.4 Contributions............................................18
3.25.5 Qualified Plan...........................................18
3.25.6 Market Value.............................................18
3.25.7 Copies...................................................18
3.25.8 Maintenance of Plans.....................................18
3.25.8.1 Reportable Events................................18
3.25.8.2 Prohibited Transactions..........................18
3.26 [Open]..........................................................19
3.27 Guaranties......................................................20
3.28 Environment, Health, and Safety.................................20
3.28.1 Compliance...............................................20
3.28.2 Permits and Licenses.....................................20
3.28.3 Notices..................................................20
3.28.4 Hazardous Substances.....................................20
3.29 Certain Business Relationships with the Company and its
Affiliates......................................................20
3.30 [Open]..........................................................20
3.31 Bank Accounts...................................................21
3.32 Tax Status......................................................21
3.33 Binding Obligation..............................................21
3.34 [Open]..........................................................21
3.35 [Open]..........................................................21
3.36 [Open]..........................................................21
3.37 Securities Representation.......................................21
3.37.1 No Registration of OREX Shares; Investment Intent........21
3.37.2 Resale Restrictions......................................21
3.37.3 Ability to Bear Economic Risk............................22
3.37.4 Accredited Investor......................................22
3.37.5 Residency................................................22
3.37.6 No Registration..........................................23
3.38 Disclosure......................................................23
4. REPRESENTATIONS AND WARRANTIES OF OREX................................23
4.1 Organization of OREX............................................23
4.1.1 Authorization of Transaction..............................23
5. DELIVERIES AT CLOSING; Termination....................................23
5.1 Deliveries of the Shareholders..................................23
5.1.1 Consents and Approvals....................................23
5.1.2 Termination of Agreements.................................23
5.1.3 Company Stock.............................................24
5.1.4 Corporate Authorization...................................24
5.1.5 Good Standing Certificate.................................24
5.1.6 Secretary's Certificate...................................24
5.1.7 Other documents...........................................25
5.2 Deliveries of OREX..............................................25
5.2.1 Transaction Consideration.................................25
5.2.2 Resolutions...............................................25
5.2.3 Certificate of Incumbency.................................25
5.3 Termination.....................................................25
6. FILING REGISTRATION STATEMENT.........................................25
6.1 Initial Public Offering.........................................25
6.2 Information.....................................................25
7. POST-CLOSING COVENANTS................................................25
7.1 General.........................................................25
7.2 Tax Returns.....................................................26
7.3 Transition......................................................26
7.4 Litigation Support..............................................26
7.5 Consents........................................................26
8. SURVIVAL AND INDEMNIFICATION.........................................27
8.1 Survival of Representations and Warranties......................27
8.2 Indemnification Provisions for the Benefit of OREX..............27
8.3 Indemnification Provisions for the Benefit of the
Shareholders....................................................27
8.4 Matters Involving Third Parties.................................27
8.4.1 Notification..............................................27
8.4.2 Defense by Indemnifying Party.............................27
8.4.3 Satisfactory Defense......................................28
8.4.4 Conditions................................................28
9. MISCELLANEOUS.........................................................29
9.1 Confidentiality, Press Releases, and Public Announcements.......29
9.2 Shareholders Restrictive Covenants..............................29
9.2.1 Restricted Period.........................................29
9.2.2 Not Applicable............................................30
9.2.3 Consideration.............................................30
9.2.4 Third-Party Beneficiaries.................................30
9.2.5 Defenses..................................................31
9.2.6 Severability..............................................31
9.3 Confidentiality.................................................31
9.4 No Third-Party Beneficiaries....................................31
9.5 Entire Agreement................................................32
9.6 Succession and Assignment.......................................32
9.7 Counterparts....................................................32
9.8 Headings........................................................32
9.9 Notices.........................................................32
9.10 Governing Law; Jurisdiction; Attorney's Fees....................33
9.11 Amendments and Waivers..........................................33
9.12 Severability....................................................33
9.13 Expenses........................................................34
9.14 Further Assurances..............................................34
9.15 Construction....................................................34
9.16 Incorporation of Exhibits and Schedules.........................34
<PAGE>
MERGER AGREEMENT AND PLAN OF REORGANIZATION
THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
and entered into as of the 16th day of August, 1999, by and among OREX GOLD
MINES CORPORATION, a Delaware corporation ("OREX"), SANTA MARIA MINING
CORPORATION, a California corporation (the "Company"), GORDON LEE ("Lee"), DON
BLACKBURN ("Blackburn"), TOM MILLS ("Mills"), and LARRY MCMILLIAN ("McMillan")
(Lee, Blackburn, Mills and McMillan are also referred to herein individually as
the "Shareholder" and collectively, the "Shareholders"). OREX, the Company and
the Shareholders are sometimes referred to herein individually as a "Party" and
collectively as the "Parties."
Preliminary Statements
A.....OREX is a gold mining company that has a license to use an
environmentally safe gold extract process;
B.....The Company is a mining company that owns and operates several
mining operations in the State of Arizona. The Shareholders own all of the
issued and outstanding Company Shares, as hereinafter defined;
C.....All of the Parties hereto desire to enter into this Agreement to
effectuate the Merger, as hereinafter defined, of the Company with and into OREX
pursuant to the terms and conditions of this Agreement;
D.....It is the intention of the Parties for the Merger, contemplated
herein to qualify as a tax-free reorganization pursuant to Sections 368(a)(1)(A)
of the Code, as hereinafter defined; and
E.....Each Party will derive significant benefits from the consummation of
the transactions contemplated by this Agreement and wishes to induce the other
Parties to enter into this Agreement by entering into certain covenants and
agreements.
NOW, THEREFORE, in consideration of the premises and the actual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the receipt and adequacy of which are hereby
conclusively acknowledged, the Parties, intending to become legally bound,
hereby agree as follows:
Terms And Conditions
1. DEFINITIONS. All capitalized words that are not capitalized for purposes of
grammar and which are not defined in the text of this Agreement are defined
terms with their definitions set forth on Exhibit I.
2. TRANSACTION; TRANSACTION CONSIDERATION; CLOSING.
2.1 Transaction. Upon the terms and subject to the conditions hereof and in
accordance with the provisions of the California Business Corporation Act (the
"California Act") and the Delaware Business Corporation Act (the "Delaware
Act"), the Company shall be merged with and into OREX (the "Merger") and the
separate existence of the Company shall thereupon cease, and OREX, as the
surviving corporation (the "Surviving Corporation"), shall continue to exist
under and be governed by the Delaware Act (the "Transaction").
2.2 Effect of the Merger. At and after the Effective Time, the effect of the
Merger shall, in all respects, be as provided in the California Act and the
Delaware Act. From and after the Effective Time, OREX shall continue to be a
Delaware corporation.
2.3 Effective Time; Filing of Certificates of Merger. The Merger shall be
effected by the filing at the time of the Closing or as soon as practicable
thereafter, of the Articles of Merger (the "Articles of Merger"), substantially
in the form of Exhibit 2.3 attached hereto, with the Secretary of the State of
Delaware and Secretary of State of California in accordance with the provisions
of the Delaware Act and the California Act, respectively. The Merger shall
become effective as of 11:59 p.m. on the date of such filing (the "Effective
Time") and the parties shall take any and all other lawful actions and do any
and all other lawful things necessary to cause the Merger to become effective.
2.4 Articles of Incorporation. As of the Effective Time, the certificate of
incorporation of OREX, as in effect immediately prior to the Effective Time,
shall be the certificate of incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable law.
2.5 Bylaws. As of the Effective Time, the bylaws of OREX, as in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving
Corporation until thereafter amended in accordance with its terms and applicable
law.
2.6 Directors and Officers. As of the Effective Time, the directors and officers
of OREX immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation. Each director and officer of the
Surviving Corporation shall hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation. At the Closing, the
Company shall cause to be delivered to OREX the written resignations of all of
the directors and officers of the Company, which resignations shall be
unconditional and effective as of the Closing Date.
2.7 Tax Consequences. It is intended by the parties hereto that the Merger shall
constitute a tax-free reorganization within the meaning of Sections 368(a)(1)(A)
of the Code.
2.8 Additional Actions. If, at any time after the Closing, the Surviving
Corporation shall consider or be advised that any further acts are necessary or
desirable: (a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, title to and possession of any property or right of the
Company acquired or to be acquired by reason of, or as a result of, the Merger;
or (b) otherwise to carry out the purposes of this Agreement, then the
Shareholders shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such deeds, assignments
and assurances in law and to do all other acts necessary or proper to vest,
perfect or confirm title to and possession of such property or rights in the
Surviving Corporation and otherwise to carry out the purposes of this Agreement;
and the officers and directors of the Surviving Corporation are fully authorized
in the name of the Shareholders and the Company to take any and all such
actions.
2.9 The Closing. The closing of the Transaction (the "Closing") shall take place
at the offices of OREX, commencing at 7:00 a.m. local time on August 16th, 1999,
or such other date or time as the Parties may mutually agree (the "Closing
Date").
2.10 Actions at the Closing. At the Closing: (a) the Shareholders shall convey
the Company Shares to OREX and deliver to OREX the various certificates,
instruments and documents referred to in Section 5.1 and elsewhere in this
Agreement; and (b) OREX shall deliver to the Shareholders the Transaction
Consideration required to be delivered hereunder and the various certificates,
instruments, and documents referred to in Section 5.2 and elsewhere in this
Agreement.
2.11 No Dissenters' Rights. Constituting all of the shareholders of the Company,
the Shareholders' approval and execution of this Agreement constitutes unanimous
approval of the transactions contemplated herein; therefore, neither the
Shareholders, nor any other party, is entitled to dissenters' rights under the
laws of the State of California.
2.12 Surrender of Certificates.
2.12.1......Company's Shares. At the Closing, the Shareholders shall be required
to surrender to OREX the original stock certificate(s) which immediately prior
to the Effective Time represented all of the Company Shares (the "Certificates")
(together with all stock powers duly endorsed to OREX). Until so surrendered,
each Certificate which immediately prior to the Effective Time represented the
Company Shares (other than Company Shares held in the treasury) shall upon and
after the Effective Time by virtue of the Merger be deemed for all purposes to
represent and evidence only the right to receive the OREX Shares determined in
accordance with Section 2.13.1.3 of this Agreement. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of the
Company Shares shall be made at any time thereafter.
2.12.2......Dividends. No dividends or other distributions declared or made
after the date of this Agreement with respect to the OREX Shares with a record
date after the Closing will be paid to the holder of any unsurrendered
Certificate with respect to the OREX Shares represented thereby until the holder
of record of such Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Certificate, there shall be paid
to the record holder of the Certificate representing whole OREX Shares issued in
exchange therefor, without interest, at the time of such surrender, the amount
of dividends or other distributions with a record date after the Closing payable
with respect to such whole OREX Shares.
2.13 Transaction Consideration. The aggregate transaction consideration (the
"Transaction Consideration") shall be transferred to the Shareholders as
follows:
2.13.1......OREX Shares. Eight Million (8,000,000) OREX Shares shall be issued
at or within fifteen (15) business days after the Closing Date, to the
Shareholders, in the number of shares to each Shareholder as indicated in
Exhibit 2.13.1. The OREX Shares received by the Shareholders shall not be
transferable by the Shareholders other than: (a) by will or the laws of
intestate succession; (b) in accordance with applicable state and federal
securities laws including, without limitation, Rule 144 of the Securities Act;
and (c) subject to the term and conditions of any applicable lock-up letter.
2.13.2......Conversion of Shares. Each share of capital stock of OREX issued and
outstanding immediately prior to the Closing shall continue to represent (1.6)
validly issued, fully paid and non-assessable share of capital stock of the
Surviving Corporation after the Merger. By virtue of the Merger and without any
action on the part of the Shareholders thereof, the Company Shares shall be
converted into eight million (8,000,000) OREX Shares.
2.14 Shareholder Consent and Release. The Shareholders hereby consent to the
Transaction and approves the execution and delivery of this Agreement and the
transactions contemplated hereby. Effective on the Effective Time, the
Shareholders hereby release the Company from any and all claims any one of them
may, could or will have, whether arising before or after the Effective Time,
against the Company as a result of any of the Shareholders having served as a
stockholder, director, officer, employee or agent of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. The Shareholders, jointly
and severally, represent and warrant to OREX that the statements contained in
this Section 3 are correct and complete as of the Closing Date, except as set
forth in the disclosure schedule accompanying this Agreement (the "Disclosure
Schedule"). The Disclosure Schedule will be arranged in paragraphs corresponding
to the numbered paragraphs contained in this Section 3 to the Agreement
3.1 Organization, Qualification, and Corporate Power. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of California. The Company has full power and authority and
all licenses, permits and authorizations necessary to carry on the businesses in
which it is currently engaged and to own and use the properties owned and used
by it. Section 3.1 of the Disclosure Schedule lists the all of the officers and
members of the Board of Directors of the Company, as of the date immediately
preceding the Closing Date. The Company has made available to OREX correct and
complete copies of the minute book, articles of incorporation and bylaws of the
Company, as amended to date. The minute book (containing the records of meetings
of the stockholders, the board of directors and any committees of the board of
directors), the stock certificate books and stock record books of the Company
are correct and complete in all material respects and will be delivered to OREX
at the Closing. The Company is not in default under or in violation of any
provision of its articles of incorporation or bylaws.
3.2 Capitalization. The entire authorized capital stock of the Company consists
of shares, of which five million are issued and outstanding. All of the issued
and outstanding Company Shares have been duly authorized, are validly issued,
fully paid, and nonassessable and are held of record by the Shareholders as set
forth in Section 3.2 of the Disclosure Schedule. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
the Company to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Company. There are no stockholders' agreements, voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
the Company.
3.3 Authorization. The Company has full power and authority (including full
corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement by the Company has been duly authorized and approved by its Board
of Directors and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the transactions contemplated hereby.
The Company has given to the Shareholders any and all notice required to be
given to the Shareholders under applicable law. This Agreement constitutes the
valid and legally binding obligation of the Company, enforceable in accordance
with its terms and conditions.
3.4 Noncontravention. Except as set forth in Section 3.4 of the Disclosure
Schedule, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby will: (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, or other restriction of any government, governmental agency or any other
third party whatsoever, or court to which the Company is subject, or any
provision of the articles of incorporation or bylaws of the Company; or (b)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which the Company is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets). Except as set forth in Section
3.4 of the Disclosure Schedule, the Shareholders and the Company need not give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency or any other third party
whatsoever in order for the Parties to consummate the transactions contemplated
by this Agreement. The Parties agree that Section 3.4 of the Disclosure Schedule
shall be divided into two (2) sections, consisting of: (i) Section 3.4(a) which
shall list all such authorizations, consents and approvals which must be
obtained prior to the Closing, as a condition to Closing; and (ii) Section
3.4(b) which shall list all such authorizations, consents and approvals which
will not be obtained prior to Closing which shall be obtained within a
reasonable period of time after Closing.
3.5 Broker's Fees. Neither the Company nor the Shareholders have any Liability
or obligation to pay any fees, expenses, or commissions to any consultant,
broker, finder, or agent with respect to the transactions contemplated by this
Agreement.
3.6 Title to Assets. Section 3.6 of the Disclosure Schedule contains a complete,
true and correct list of all of the assets of the Company. The Company has good
and marketable title to, or a valid leasehold interest in, the properties and
assets used by it, located on its premises, or shown on the Most Recent
Financial Statement or acquired after the date thereof, free and clear of all
Security Interests. The assets set forth in Section 3.6 in conjunction with any
assets which the Company leases, constitute all of the assets used by the
Company in connection with its businesses as presently conducted.
3.7 No Subsidiaries. The Company has no Subsidiaries and does not control,
directly or indirectly, or have any direct or indirect equity participation in
any corporation, partnership, limited liability company, trust or other business
association.
3.8 Financial Statements. Attached as Section 3.8 of the Disclosure Schedule are
the following financial statements (collectively, the "Financial Statements"):
(a) audited balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal years ended 1999 (the "Most
Recent Fiscal Year End") for the Company; and (ii) unaudited compiled balance
sheet and statements of income, changes in stockholders' equity, and cash flow
(the "Most Recent Financial Statements") as of and for the month ended, July,
1999 (the "Most Recent Fiscal Month End") for the Company. The Financial
Statements (including the notes thereto) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of the Company as of such dates and the
results of operations of the Company for such periods, are correct and complete,
and are consistent with the books and records of the Company (which books and
records are correct and complete); provided, however, that the Most Recent
Financial Statements are subject to normal year-end adjustments which will not
be material. Except as provided in the Most Recent Financial Statements, or as
fully disclosed in Section 3.8 of the Disclosure Schedule, the Company does not
have any Liabilities or obligations (whether accrued, absolute, contingent,
whether due or to become due or otherwise) which might be or become a charge
against the Company, including any "loss contingencies" considered "probable" or
"reasonably possible" within the meaning of the Financial Accounting Standard
Board's Statement of Financial Accounting Standards No. 5, except trade payables
and similar liabilities and obligations incurred in the ordinary and regular
course of business since the date of the Most Recent Financial Statements.
3.9 Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent
Fiscal Year End, there has not been any material adverse change in the business,
financial condition, operations, results of operations, or future prospects of
the Company. Without limiting the generality of the foregoing, since the Most
Recent Fiscal Year End:
3.9.1 Sale or Lease of Assets. The Company has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for fair market
value in the ordinary course of its business;
3.9.2 Contracts. The Company has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases, and
licenses) outside the ordinary course of business;
3.9.3 Change in Contracts. No Party (including the Company) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) to which the
Company is a party or by which it is bound and neither the Shareholders nor the
Company has any intent to do any of the foregoing or have received a verbal or
written indication of any third party's intent to do any of the foregoing;
3.9.4 Security Interests. The Company has not imposed any Security Interest
upon any of its assets, tangible or intangible;
3.9.5 Investments. The Company has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions);
3.9.6 Debts. The Company has not issued any note, bond, or other debt security
or created, incurred, assumed, or guaranteed any indebtedness for borrowed money
or capitalized lease obligation;
3.9.7 Liabilities Unaffected. The Company has not delayed or postponed the
payment of accounts payable and other Liabilities or accelerated the
collection of accounts, notes or other receivables;
3.9.8 Claims Unaffected. The Company has not canceled, compromised, waived,
or released any right or claim (or series of related rights and claims)
outside the ordinary course of its business;
3.9.9 Articles and Bylaws. There has been no change made or authorized in
the articles of incorporation or bylaws of the Company;
3.9.10......Changes in Equity. The Company has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
3.9.11......Distribution. The Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
3.9.12......Property Damage. The Company has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its property;
3.9.13......Transactions with Affiliates. The Company has not made any loan
to, or entered into any other transaction with, any of its directors,
officers and employees;
3.9.14......Collective Bargaining Agreements. The Company has not entered
into any collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
3.9.15......Compensation Changes. The Company has not granted any increase
in the base compensation of any of its directors, officers, and employees;
3.9.16......Employee Benefit Plans. The Company has not adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any other
Employee Benefit Plan);
3.9.17......Officers; Directors; Employees. The Company has not made any
change in the employment terms for any of its directors, officers and
employees, other than to terminate such agreements as required herein;
3.9.18......Charitable or Capital Contributions. The Company has not made or
pledged to make any charitable or other capital contribution;
3.9.19......Ordinary Course of Business. There has not been any other
occurrence, event, incident, action, failure to act, or transaction outside
the ordinary course of business involving the Company;
3.9.20......Accounting Practices. There has not been any change in any
method of accounting or accounting principle, estimate or practice of the
Company;
3.9.21......Accounts Receivable. The Company has not accelerated the
collection of any Accounts Receivable or any other amounts owed to it; and
3.9.22......In General. Neither the Company nor the Shareholders have
committed to do any of the foregoing.
3.10 Undisclosed Liabilities. The Company has no Liability and there is no basis
for any present or future action, suit, proceeding, hearing, investigation,
complaint, claim, or demand against it giving rise to any Liability, except for:
(a) Liabilities set forth on the Most Recent Financial Statements; (b)
Liabilities disclosed in the Disclosures Schedule; and (c) Liabilities which
have arisen after the Most Recent Fiscal Month End in the ordinary course of
business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law). As of the Closing, other than the current
trade accounts payable, the Company shall not have any unpaid liabilities,
including, but not limited to, any bank debt, capital leases or any general or
professional liability claims, or be obliged in any other way to provide funds
in respect of, or to guarantee or assume, any debt, obligation or dividend of
any person, except endorsements in the ordinary course of business in connection
with the deposit, in banks or other financial institutions, of items for
collection. Except as provided in the Most Recent Financial Statements, or as
disclosed in detail in Section 3.8 of the Disclosure Schedule, the Company does
not have any Liabilities or obligations which might be or become a charge
against the Company.
3.11 Legal Compliance. The Company and its predecessors and Affiliates have
complied with all applicable laws (including rules, regulations, codes,
injunctions, judgments, orders, decrees, and rulings of federal, state, local,
and foreign governments (and all agencies thereof)), and no action, suit,
proceeding, hearing, complaint, claim, demand, notice or investigation has been
filed or commenced, or to the Knowledge of the Shareholders and the Company,
threatened against the Company alleging any failure so to comply.
3.12 Tax Matters.
3.12.1......Tax Returns. The Company has filed all Tax Returns it was required
to file. All such Tax Returns were correct and complete in all respects and were
filed on a timely basis. All Taxes owed by the Company (whether or not shown on
any Tax Return) have been paid. The Company currently is not the beneficiary of
any extension of time within which to file any Tax Return. No claim is currently
pending by an authority in a jurisdiction where the Company is or may be subject
to taxation by that jurisdiction. There are no Security Interests on any of the
assets of the Company that arose in connection with any failure (or alleged
failure) to pay any Tax.
3.12.2......Withholding. The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
3.12.3......No Disputes of Claims. No shareholder or director or officer (or
employee responsible for Tax matters) of the Company expects any authority to
assess any additional Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax Liability of the Company
either: (a) claimed or raised by any authority in writing; or (b) as to which
any of the shareholders, directors and officers (and employees responsible for
Tax matters) of the Company has Knowledge based upon personal contact with any
agent of such authority. Section 3.12 of the Disclosure Schedule lists all
federal, state, local, and foreign income Tax Returns filed with respect to the
Company for taxable periods ended on or after December 31,1999, indicates those
Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. The Shareholders have made available to OREX
correct and complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by any of
the Company and its Affiliates since December 31, 1999.
3.12.4......No Waivers. The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
3.12.5......No Special Circumstances. The Company has not made any payments, is
not obligated to make any payments, nor is a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. The Company has not been a United States
real property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii). The
Company has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
Tax within the meaning of Code Section 6662.
3.12.6......Subchapter "S". The Company has elected, by the unanimous consent of
the Shareholders and in compliance with all applicable legal requirements, to be
taxed under Subchapter "S" of the Code and corresponding provisions under any
applicable state and local laws, and such elections are currently in full force
and effect for the Company. No action has been taken by the Company or the
Shareholders that may result in the revocation of any such elections. The
Company has no "Subchapter C earnings and profits," as defined in Code Section
1362(d). The Company has no "net unrealized built-in gain," as such term is
defined in Code Sections 1374(d)(1) and 1374(d)(8). The Company has no
Liability, absolute or contingent, for the payment of any income Taxes under the
Code or under Subchapter "S" of the Code.
3.12.7......Audits of Tax Returns. No Tax Return of the Company is currently
under audit or examination by any taxing authority, and the Company has not
received a written notice stating the intention of any taxing authority to
conduct such an audit or examination. Each deficiency resulting from any audit
or examination relating to Taxes by any taxing authority has been paid, except
for deficiencies being contested in good faith. The revenue agents' reports
related to any prior audits and examinations are attached as part of Section
3.12 of the Disclosure Schedule.
3.12.8......Period of Assessment. There is no agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any Taxes.
3.12.9......Tax Agreements. The Company is not a party to or bound by any tax
sharing agreement, tax indemnity obligation or similar agreement with respect to
Taxes (including any advance pricing agreement, closing agreement or other
agreement relating to Taxes with any taxing authority).
3.12.10.....Inclusions in Taxable Periods. The Company will be required to
include in a taxable period ending after the Closing Date taxable income
attributable to income that accrued in a prior taxable period but was not
recognized in any prior taxable period as a result of the installment method of
accounting, the completed contract method of accounting, the long-term contract
method of accounting, the cash method of accounting or Code Section 481 with
respect to a change in method of accounting occurring before the Closing Date or
comparable provisions of state, local or foreign tax law. As of the Closing
Date, the Shareholders will place funds in a separate bank account in the name
of the Company in an amount sufficient to pay all such liabilities and such
funds shall be used to pay such liabilities as they become due.
3.12.11.....Consents. The Company has not filed a consent pursuant to or
agreed to the application of Code Section 341(f).
3.12.12.....Personal Holding Company. The Company has not, during the five (5)
year period ending on the Closing Date, been a personal holding company within
the meaning of Code Section 541.
3.12.13.....Consolidated Tax Returns. The Company has never filed or been
included in any combined or consolidated Tax Return with any other person or
been a member of an Affiliated Group filing a consolidated federal income Tax
Return.
3.13 Real Property. The Company has various mining claims and equipment. Section
3.13 of the Disclosure Schedule lists and describes briefly all real property
leased or subleased by the Company. The Shareholders have made available to OREX
correct and complete copies of the leases and subleases listed in Section 3.13
of the Disclosure Schedule (as amended to date). With respect to each lease and
sublease listed in Section 3.13 of the Disclosure Schedule:
3.13.1......Binding. The lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
3.13.2......Continued Validity. The lease or sublease will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby;
3.13.3......No Defaults. The Company is not in breach or default under the lease
or sublease and no third party is in breach or default under the lease or
sublease, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification or
acceleration thereunder;
3.13.4......Repudiation. Neither the Company nor any other party to the
lease has repudiated any provision of the lease or sublease;
3.13.5......No Disputes. There are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
3.13.6......Subleases. With respect to each sublease, the representations
and warranties set forth in subsections 3.13.1 through 3.13.5 above are true
and correct with respect to the underlying lease;
3.13.7......Encumbrances. None of the Company or its Affiliates has
assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered
any interest in the leasehold or subleasehold;
3.13.8......Approvals. All facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules, and
regulations; and
3.13.9......Utilities. All facilities leased or subleased thereunder are
supplied with utilities and other services reasonably necessary for the
operation of said facilities.
3.14 Intellectual Property. The Company owns or has the right to use pursuant to
a valid license, sublicense, agreement, or permission all Intellectual Property
necessary or desirable for the operation of the businesses of the Company as
presently conducted and as presently proposed to be conducted. No claim or
demand of any person has been made, nor is there any proceeding that is pending,
or to any of the Shareholders' Knowledge, threatened, which challenges the
rights of the Company with respect to any Intellectual Property or asserts that
the Company is infringing or otherwise in conflict with or is required to pay
any royalty or license fee with respect to any Intellectual Property.
3.15 Condition of Tangible Assets. Each tangible asset of the Company is free
from defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to normal
wear and tear), and is suitable, designed and intended for the purposes for
which it presently is used by the Shareholders and the Company and is not
outdated in comparison with the assets used for similar purposes by similar
businesses.
3.16 Contracts. Section 3.16 of the Disclosure Schedule lists the following
contracts and other agreements, written or oral, to which the Company was a
party immediately preceding the Closing:
3.16.1......Personal Property Leases. Any agreement (or group of related
agreements) for the lease of personal property to or from any Person
providing for lease payments;
3.16.2......Services. Any agreement (or group of related agreements) for the
furnishing or receipt of services, the performance of which will extend over
a period of more than one (1) year;
3.16.3......Partnership; Joint Venture. Any agreement constituting a
partnership or joint venture;
3.16.4......Indebtedness. Any agreement (or group of related agreements)
under which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation;
3.16.5......Confidentiality; Non-Competition. Any agreement concerning
confidentiality or non-competition;
3.16.6......Shareholders' Agreements. Any agreement by and between any of
the Shareholders and any Affiliates of the Company;
3.16.7......Plans. Any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of its current or former directors, officers, and employees;
3.16.8......Employment or Consulting Agreements. Any agreement for the
employment of any individual on a full-time or part-time or the engagement of
any individual as a consultant or independent contractor, or otherwise
compensating an individual for services rendered or to be rendered to the
Company;
3.16.9......Advances; Loans. Any agreement under which the Company has
advanced or loaned any amount to any of its directors, officers and employees
outside the ordinary course of business;
3.16.10.....Adverse Effects. Any agreement under which the consequences of a
default or termination could have a material adverse effect on the business,
financial condition, operations, results of operations or future prospects of
the Company; and
3.16.11.....Other Agreements. Any other agreement (or group of related
agreements) the performance of which involves consideration in excess of Five
Thousand and No/100 Dollars ($5,000.00).
The Shareholders have made available to OREX a correct and complete copy of each
written agreement listed in Section 3.16 of the Disclosure Schedule (as amended
to date) and a written summary setting forth the terms and conditions of each
oral agreement referred to in Section 3.16 of the Disclosure Schedule. With
respect to each such agreement: (a) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (b) there shall be no breach or other
violation resulting from the consummation of the transactions contemplated
hereby; (c) the Company is not in default or breach and no other party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (d) the Company and no other party has
repudiated any provision of the agreement. None of the agreements listed in
Section 3.16 of the Disclosure Schedule requires the consent or approval of any
Person, or any compensation or payment to be made to any such Person by reason
of the transactions contemplated by this Agreement, or the merger of the Company
with and into another Person.
3.17 Powers of Attorney. There are no outstanding powers of attorney executed on
behalf of the Company.
3.18 Insurance; Malpractice. Section 3.18 of the Disclosure Schedule contains a
list and brief description of all policies or binders of fire, liability,
product liability, workers compensation, health and other forms of insurance
policies or binders currently in force insuring against risks to which the
Company has been a party, a named insured or otherwise the beneficiary of
coverage at any time during the five (5) years immediately preceding the Closing
Date. Except as set forth on Section 3.18 of the Disclosure Schedule, neither
the Company, nor its employees, nor the Shareholders have, during the five (5)
years immediately preceding the Closing Date, filed a written application for
any insurance coverage relating to the Company's business or property which has
been denied by an insurance agency or carrier. Section 3.18 of the Disclosure
Schedule also sets forth a list of all claims for any insured loss in excess of
Five Thousand Dollars and No/100 Dollars ($5,000.00) per occurrence filed by the
Company, the Company's employees or the Shareholders during the five (5) years
immediately preceding the Closing Date, including workers compensation, general
liability, environmental liability and professional liability claims. With
respect to each insurance policy listed in Section 3.18 of the Disclosure
Schedule: (i) the policy is legal, valid, binding, enforceable, and in full
force and effect; (ii) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (iii) neither the Company,
the Shareholders, other health care professionals nor any other party to the
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; (iv) the Company
has not repudiated any provision thereof and no other party to the policy has
repudiated any provision thereof; (v) there is no claim pending under any of
such policies as to which coverage has been questioned, denied or disputed by
the underwriters of such policies or any notice that a defense will be afforded
with reservation of rights; (vi) the Company has not received: (A) any notice
that any issuer of any such policy has filed for protection under applicable
bankruptcy laws or is otherwise in the process of liquidating or has been
liquidated; or (B) any other indication that such policies are no longer in full
force and effect or that the issuer of any such policy is no longer willing or
able to perform its obligations thereunder; and (vii) neither the Shareholders
nor the Company has received any written notice from or on behalf of any
insurance carrier issuing such policies, that there will hereafter be a
cancellation, or an increase in a deductible or non-renewal of existing
policies. The Company has been covered during the past five (5) years by
insurance in scope and amount customary and reasonable for the business in which
it has engaged during the aforementioned period.
3.19 Litigation. Section 3.19 of the Disclosure Schedule sets forth each
instance in which any of the Company or any individual engaged or employed by
the Company, including, but not limited to the Shareholders, with respect to the
products or services rendered on behalf of the Company: (a) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge; or (b) is a
party or is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator and contains a summary thereof. None of the actions,
suits, proceedings, hearings, and investigations set forth in Section 3.19 of
the Disclosure Schedule is likely after the Closing to result in any Adverse
Consequences change in the business, financial condition, operations, results of
operations, or future prospects of OREX and the Surviving Corporation. Neither
the Company nor the Shareholders have any reason to believe that any reason
exists upon which such action, suit, proceeding, hearing, or investigation may
be brought or threatened against any of the Company or any individual engaged or
employed by the Company.
3.20 Company Compliance. The Company is lawfully operated in accordance with the
requirements of all applicable laws and has in full force and effect all
authorizations and permits necessary to operate a mining company in the
jurisdictions where it is currently operating. There are no outstanding notices
of deficiencies relating to the Company issued by any governmental authority
requiring conformity or compliance with any applicable law or condition for
participation with such governmental authority or third-party condition for
participation with such governmental authority. The Company has not received
notice and the Company and Shareholders have no Knowledge or reason to believe
that, such necessary authorizations may be revoked or not renewed in the
ordinary course of business.
3.21 Employees. Except as set forth on Section 3.24 of the Disclosure Schedule:
(a) there is no unfair labor practice charge or complaint pending or threatened
relating to the business of the Company; and (b) payment in full to all of the
employees of the Company of all wages, salaries, commissions, bonuses, benefits,
and other compensation lawfully due and owing to such employees or otherwise
arising under any policy, practice, agreement, plan, program, statute, or other
law as of the Closing Date has been made.
3.22 Employee Benefits.
3.22.1......Plans. Section 3.25 of the Disclosure Schedule lists each Employee
Benefit or health and welfare plan that the Company maintains or to which the
Company contributes.
3.22.2......Compliance. Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all material
respects with its terms and with the applicable requirements of ERISA, the Code
and other applicable laws.
3.22.3......Reports and Descriptions. All required reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's, and
Summary Plan Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Code Section 4980B have been met with
respect to each such Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
3.22.4......Contributions. All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any pay period ending on or before the
Closing Date which are not yet due have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the past custom and practice of the
Company. All premiums or other payments due for all periods ending on or before
the Closing Date have been paid with respect to each such Employee Benefit Plan
which is an Employee Welfare Benefit Plan.
3.22.5......Qualified Plan. Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan and is intended to meet the requirements of a "qualified
plan" under Code Section 401(a) meets such requirements and has received, within
the last two (2) years, a favorable determination letter from the IRS.
3.22.6......Market Value. The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested and
nonvested Liabilities thereunder determined in accordance with PBGC methods,
factors, and assumptions applicable to an Employee Pension Benefit Plan
terminating on the date for determination.
3.22.7......Copies. The Shareholders have delivered to OREX correct and complete
copies of the plan documents and summary plan descriptions, the most recent
determination letter received from the IRS, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance contracts, and other funding
agreements which implement each such Employee Benefit Plan.
3.22.8......Maintenance of Plans. With respect to each Employee Benefit Plan
that the Company maintains, ever has maintained, or to which it contributes,
ever has contributed, or ever has been required to contribute:
3.22.8.1....Reportable Events. No such Employee Benefit Plan which is an
Employee Pension Benefit Plan has been completely or partially terminated or
been the subject of a Reportable Event as to which notices would be required to
be filed with the PBGC. No proceeding by the PBGC to terminate any such Employee
Pension Benefit Plan has been instituted or threatened; and
3.22.8.2....Prohibited Transactions. There have been no Prohibited Transactions
with respect to any such Employee Benefit Plan. No Fiduciary has any Liability
for breach of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any such Employee Benefit
Plan. No action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee Benefit Plan
(other than any Multiemployer Plan), other than routine claims for benefits, is
pending or threatened. The Shareholders and the Company have no Knowledge of any
basis for any such action, suit, proceeding, hearing, or investigation.
3.23 Guaranties. The Company is not a guarantor or otherwise liable for any
Liability or obligation (including indebtedness) of any other Person.
3.24 Environment, Health, and Safety.
3.24.1......Compliance. Each of the Company and its predecessors and
Affiliates has complied and is in compliance with all Environmental, Health,
and Safety Requirements.
3.24.2......Permits and Licenses. Without limiting the generality of the
foregoing, each of the Company and its Affiliates has obtained and complied
with, and is in compliance with, all permits, licenses and other authorizations
that are required pursuant to Environmental, Health, and Safety Requirements for
the occupation of its facilities and the operation of its business; a list of
all such permits, licenses and other authorizations is set forth on Section 3.28
of the Disclosure Schedule.
3.24.3......Notices. Neither the Company nor its predecessors or Affiliates has
received any written or oral notice, report or other information regarding any
actual or alleged violation of Environmental, Health, and Safety Requirements,
or any Liabilities or potential Liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory, remedial or
corrective obligations, relating to any of them or its facilities arising under
Environmental, Health, and Safety Requirements.
3.24.4......Hazardous Substances. None of the Company or its predecessors or
Affiliates has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to liabilities,
including any Liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Solid Waste Disposal Act, as amended or any other
Environmental, Health, and Safety Requirements.
3.25 Certain Business Relationships with the Company and its Affiliates. Neither
the Shareholders nor any of their Affiliates have been involved in any business
arrangement or relationship with the Company and its Affiliates within the past
twelve (12) months, and none of the Shareholders nor any their Affiliates own
any asset, tangible or intangible, which is material to the business of any of
the Company and its Affiliates.
3.26 Bank Accounts. Section 3.31 of the Disclosure Schedule sets forth all of
the bank and security accounts and all safe deposit boxes maintained by the
Company and all lines of credit owned or used by the Company, and the names of
all persons with authority to withdraw funds from, or execute drafts or checks
on, each such account.
3.27 Tax Status. None of the Shareholders is not a "nonresident alien
individual" or "foreign corporation" for purposes of Code Section 897(a)(1).
3.28 Binding Obligation. This Agreement constitutes the valid and legally
binding obligation of the Shareholders, enforceable in accordance with its terms
and conditions.
3.29 Securities Representation.
3.29.1......No Registration of OREX Shares; Investment Intent. The Shareholders
acknowledge that the OREX Shares to be delivered pursuant to this Agreement have
not been and will not be registered under the Securities Act and may not be
resold without compliance with the Securities Act. The OREX Shares to be
acquired by the Shareholders pursuant to this Agreement are being acquired
solely for his own account, for investment purposes only and with no present
intention of distributing, selling or otherwise disposing of them in connection
with a distribution other than in compliance with the Securities Act.
3.29.2......Resale Restrictions. The Shareholders covenant, warrant and
represent that none of the OREX Shares issued to the Shareholders will be
offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the applicable provisions
of the Securities Act and the rules of regulations of the Commission and
applicable state securities laws and this Agreement.
3.29.3......Ability to Bear Economic Risk. Each of the Shareholders covenant,
warrant and represent that he is able to bear the economic risk of an investment
in OREX Shares acquired pursuant to this Agreement and can afford to sustain a
total loss of such investment and have such Knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of the proposed investment and therefore has the capacity to protect his
own interests in connection with the acquisition of the OREX Shares. Each of the
Shareholders, and each of their Shareholders' purchaser representative, if any,
has had an adequate opportunity to ask questions and receive answers from the
officers of OREX concerning the background and experience of the officers and
directors of OREX, the plans for the operations of the business of OREX, and any
plans for additional acquisitions and the like. Each of the Shareholders, and
each of the Shareholders' purchaser representative, if any, has asked any and
all questions in the nature described in the preceding sentence and all
questions have been answered to such individual's satisfaction.
3.29.4......Accredited Investor. The Shareholders covenant, represent and
warrant that he is an: (a) individual with a net worth (either individually or
jointly with his respective spouse) in excess of One Million and No/100 Dollars
($1,000,000.00) (for the purpose of determining net worth, the Shareholders'
principal residence is valued at cost, including the cost of improvements, net
of current encumbrances upon the property); or (b) individual who had an income
in excess of Two Hundred Thousand and No/100 Dollars ($200,000.00) in each of
1997 and 1998, or had a joint income with his respective spouse in excess of
Three Hundred Thousand and No/100 Dollars ($300,000.00) in each of 1997 and
1998, and has a reasonable expectation of reaching the same income level in
1999.
3.29.5......Residency. Each of the Shareholders covenant, warrant and represent
that he is a resident of the State of Nevada, and received this Agreement and
first learned of the transactions contemplated hereby in the State of
California. He executed and will execute all documents contemplated hereby in
the State of California, and intends that the laws of the State of California
govern this transaction.
3.29.6......No Registration. Each of the Shareholders understand, agree and
acknowledge that the OREX Shares have not been registered under the Delaware
Securities Act, California Securities Act or the Securities Act in reliance upon
exemption provisions contained therein which OREX believes are available.
3.30 Disclosure. The representations and warranties contained in this Section 3
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Section 3 not misleading.
4. REPRESENTATIONS AND WARRANTIES OF OREX. OREX represents and warrants to the
Shareholders that the statements contained in this Section 4 are correct and
complete as of the Closing Date.
4.1 Organization of OREX. OREX is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
4.2 Authorization of Transaction. OREX has full power and authority (including
full corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of OREX, enforceable in accordance with its terms and
conditions.
5. DELIVERIES AT CLOSING; TERMINATION.
5.1 Deliveries of the Shareholders. At or prior to the Closing, the Shareholders
shall deliver to OREX the following:
5.1.1 Consents and Approvals. Copies of all authorizations, consents, and
approvals of governments, governmental agencies and third parties referred to in
Section 3.4(a) of the Disclosure Schedule;
5.1.2 Termination of Agreements. Copies of documents effectuating the
termination of any and all written employment and independent contractor
agreements, compensation agreements, buy-sell agreements and other similar
agreements entered into by the Company and which are in effect immediately
preceding the Closing, which terminations shall each include a complete release
of the Company from all known or unknown obligations or liabilities;
5.1.3 Company Stock. The Certificates and stock powers, duly endorsed,
transferring the Company Stock to OREX and the officer and director
resignations required in Section 2.6;
5.1.4 Corporate Authorization. A resolution of the Shareholders and board of
directors of the Company which authorizes the transaction in accordance with:
(a) applicable law; (b) the Company's articles of incorporation and bylaws; and
(c) all other requirements for proper corporate authorization;
5.1.5 Good Standing Certificate. A certificate issued by the appropriate state
governmental authority no more than ten (10) days prior to the Closing Date
evidencing the good standing of the Company;
5.1.6 Secretary's Certificate. A certificate of the secretary of the Company
certifying that the minute books, articles of incorporation and bylaws of the
Company, attached as exhibits to such certificate, are true, correct, and
complete;
5.1.7 Representations and Warranties; Performance. The representations and
warranties of the Company contained in Section 3 and elsewhere in this Agreement
and all information contained in any exhibit, schedule or attachment hereto,
delivered by or on behalf of the Company, shall be true and correct in all
material respects when made and shall be true and correct in all material
respects on the Closing Date as though then made, except as expressly provided
herein. An officer of the Company shall have delivered to OREX a certificate,
dated the Closing Date, certifying to the foregoing; and
5.1.8 Other documents. Such other instruments or documents as may be necessary
or appropriate to carry out the Transactions.
5.2 Deliveries of OREX. At or within five (5) business days after the Closing
Date, OREX shall deliver to the Shareholders the following:
5.2.1 Transaction Consideration. The Transaction Consideration;
5.2.2 Resolutions. A resolution of the board of directors of OREX
authorizing the Transaction;
5.2.3 Representations and Warranties; Performance. The representations and
warranties of OREX contained in Section 4 and elsewhere in this Agreement and
all information contained in any exhibit, schedule or attachment hereto,
delivered by or on behalf of the Company, shall be true and correct in all
material respects when made and shall be true and correct in all material
respects on the Closing Date as though then made, except as expressly provided
herein. An officer of the Company shall have delivered to the Company a
certificate, dated the Closing Date, certifying to the foregoing; and
5.2.4 Certificate of Incumbency. A certificate of incumbency of OREX.
5.3 Termination. This Agreement may be terminated and the transactions herein
contemplated may be abandoned at any time prior to Closing:
5.3.1 By unanimous consent of OREX and the Company;
5.3.2 By OREX, the Company, or the Shareholders (acting unanimously) if this
Agreement is not consummated on or before August 15th, 1999; or
5.3.3 By OREX or the Company if as of the Closing Date (including any
extensions) any of the conditions specified in Section 5.1 or 5.2 hereof shall
not have been satisfied.
5.4 Procedure Upon Termination. In the event of termination and abandonment
pursuant to Section 5.3 hereof, this Agreement shall terminate and shall be
abandoned, without further action by any of the parties hereto.
If this Agreement is terminated as provided herein:
5.4.1 Each party shall redeliver all documents and other material of any other
party relating to the transactions contemplated hereby, whether obtained before
or after the execution hereof, to the party furnishing the same;
5.4.2 All information received by any party hereto with respect to the business
of any other party (other than information which is a matter of public knowledge
or which has heretofore been or is hereafter published in any publication for
public distribution or filed as public information with any governmental
authority) shall not at any time be used for the advantage of, or disclosed to
third parties by, such party to the detriment of the party furnishing such
information; and
5.4.3 No party hereto shall have any further liability or obligation to any
other party under or in connection with this Agreement; provided, however, the
non-breaching or non-defaulting party shall not be foreclosed from bringing a
claim or cause of action or otherwise recovering from the breaching or
defaulting party.
6. FILING REGISTRATION STATEMENT.
6.1 Initial Public Offering. If OREX shall decide, in its sole and absolute
discretion, to sell OREX Shares to the public through an Initial Public
Offering, at such time as OREX considers it desirable and appropriate in its
sole and absolute discretion, the Shareholders shall cooperate to prepare and
file with the Commission the Registration Statement on Form S-1 (or such other
form as OREX determines at its sole discretion) to be filed by OREX in
connection with an Initial Public Offering (the "Registration Statement"). As
part of the Initial Public Offering, if requested by the underwriter, the
Shareholders will execute a lock-up letter for the period applicable to other
stockholders of OREX. Nothing in this Agreement shall be construed as an
obligation or commitment of OREX to effectuate an Initial Public Offering at any
time.
6.2 Information. The Shareholders shall, upon request, furnish OREX with all
information concerning the Shareholders, the Company and the Company's
directors, officers and partners and such other matters as may be reasonably
requested by OREX in connection with the preparation of the Registration
Statement and each amendment or supplement thereto, or any other statement,
filing, notice or application made by or on behalf of each such party or any of
its Subsidiaries to any governmental entity in connection with the transactions
contemplated by this Agreement, and shall properly execute all such documents
deemed necessary and appropriate by OREX in its sole and absolute discretion in
connection with the preparation of the Registration Statement including, without
limitation, the Registration Statement and each amendment and supplement
thereto. None of the information or documents supplied or to be supplied by the
Shareholders specifically for inclusion in the Registration Statement, by
exhibit or otherwise, will, at the time the Registration Statement and each
amendment and supplement thereto, if any, becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
7. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the
period following the Closing:
7.1 General. In the event that at any time after the Closing any further action
is necessary to carry out the purposes of this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other Party may reasonably request,
all at the sole cost and expense of the requesting Party; provided, however,
that the taking of any action necessary to execute or deliver to OREX any stock
powers and such other instruments of transfer as may be necessary to transfer
ownership of the Company's Stock by the Shareholders shall be borne by the
Shareholders.
7.2 Tax Returns. The Shareholders shall be responsible for preparing and filing
all income or franchise Tax Returns of the Company relating to periods of time
prior to the Closing Date. OREX will be responsible for preparing and filing all
income and franchise Tax Returns of the Company, if any, relating to periods
after the Closing. The Shareholders will provide OREX with an opportunity to
review and comment on such Tax Returns (including any amended returns). The
Shareholders will take no positions on the Tax Returns of the Company that
relate to the tax period prior to the Closing Date that could adversely affect
the Company after the Closing. The income of the Company will be apportioned to
the period up to the Closing Date and the period from and after the Closing Date
in accordance with the provisions of Code Section 1362(e)(6)(D) by closing the
books of the Company as of the close of business on the last calendar day
immediately preceding the Closing Date.
7.3 Transition. Neither the Shareholders nor the Company will take any action
that is designed, intended or likely to have the effect of discouraging any
lessor, licensor, customer, supplier or other business associate of the Company
from maintaining the same business relationships with the Company after the
Closing as he, she or it maintained with the Company prior to the Closing.
7.4 Litigation Support. In the event and for so long as any Party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand in connection with: (a) any
transaction contemplated under this Agreement; or (b) any fact, situation,
circumstances, status, condition, activity, practice, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the Parties will cooperate with the contesting or
defending Party and its or his counsel in the contest or defense, at the sole
cost and expense of the contesting or defending Party except to the extent that
the contesting or defending party is entitled to indemnification therefor under
this Agreement
7.5 Consents. The Shareholders hereby covenant and agree that, after the
Closing, he shall use his best efforts to obtain all authorizations, consents,
and approvals set forth in Section 3.4(b) of the Disclosure Schedule. Anything
to the contrary notwithstanding, this Agreement shall not constitute an
assignment of, or an agreement to assign, any contract if an attempted
assignment thereof, without the consent, approval or agreement of a third party
thereto, would constitute a breach thereof or in any way adversely affect the
rights of the parties thereunder. If such consent, approval or agreement is not
obtained, or if an attempted assignment thereof would affect the rights of the
parties thereunder so that such parties would not in fact receive all such
rights, the Parties will cooperate in any arrangement designed to provide for
the Parties to receive the benefits under any such contract, including
enforcement for the benefit of OREX of any and all rights of the Shareholders
against a third party thereto arising out of the breach or cancellation by such
third party or otherwise.
8. SURVIVAL AND INDEMNIFICATION.
8.1 Survival of Representations and Warranties. All of the representations,
warranties, covenants, and agreements contained in this Agreement are material
and have been relied upon by the Parties hereto and shall survive the Closing
for their applicable statute of limitations. The representations and warranties
contained herein shall not be affected by any investigation, verification or
examination by any Party or by anyone on behalf of such Party.
8.2 Indemnification Provisions for the Benefit of OREX. In the event of: (a) a
misrepresentation (or in the event any third party alleges facts that, if true,
would mean a misrepresentation) of any of the Company's or the Shareholders'
representations and/or warranties contained in this Agreement; (b) a breach (or
in the event any third party alleges facts that, if true, would mean a breach)
of any of the Company's or the Shareholders' covenants contained in this
Agreement; or (c) any Liability of the Company of any nature whatsoever accrued
or existing as of the Closing Date or related to actions of the Company which
occurred prior to the Closing Date, which is not reflected on the Financial
Statements or the Closing Date Balance Sheet, then the Shareholders agree to
indemnify OREX from and against any Adverse Consequences OREX may suffer through
and after the date of the claim for indemnification resulting from, arising out
of, relating to, in the nature of, or caused by the misrepresentation or breach
(or alleged breach) or non-disclosed Liability. No provision of this Agreement,
including but not in any way limited to, any "Knowledge" qualifiers or
materiality standards in the Representations and Warranties of the Shareholders,
shall have any effect on the Shareholders' indemnity for any Liability arising
prior to the Closing Date.
8.3 Indemnification Provisions for the Benefit of the Shareholders. In the event
of a misrepresentation or breach (or in the event any third party alleges facts
that, if true, would mean a misrepresentation or breach) of any of OREX's
representations, warranties, and covenants contained in this Agreement, then
OREX agrees to indemnify the Shareholders from and against any Adverse
Consequences the Shareholders may suffer through and after the date of the claim
for indemnification resulting from, arising out of, relating to, in the nature
of, or caused by the breach (or the alleged breach).
8.4 Matters Involving Third Parties.
8.4.1 Notification. If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against the other Party (the "Indemnifying
Party") under this Section 8, then the Indemnified Party shall promptly notify
the Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying the Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless the
Indemnifying Party thereby is prejudiced and then only to the extent that the
Indemnified Party is actually prejudiced.
8.4.2 Defense by Indemnifying Party. The Indemnifying Party will have the right
to defend the Indemnified Party against the Third Party Claim with counsel of
its choice satisfactory to the Indemnified Party so long as: (a) the
Indemnifying Party notifies the Indemnified Party in writing within ten (10)
business days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party from and
against any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim; (b) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill the Indemnifying Party's indemnification obligations hereunder; (c)
the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief; (d) settlement of, or an adverse judgment
with respect to, the Third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or practice adverse
to the continuing business interests of the Indemnified Party; and (e) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.
8.4.3 Satisfactory Defense. So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 8.4.2 above: (a) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim; (b) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld or delayed unreasonably); and (c) the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (not to be withheld or delayed unreasonably)
and any such settlement must include a complete release of the Indemnified
Party.
8.5 Conditions. In the event any of the conditions in Section 8.4.2 above is or
becomes unsatisfied, however: (a) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, the
Indemnifying Party in connection therewith); (b) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses); and (c) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 8.
9. MISCELLANEOUS.
9.1 Confidentiality, Press Releases, and Public Announcements. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the other
Parties.
9.2 Shareholders' Restrictive Covenants.
9.2.1 Restricted Period. The Shareholders hereby agree that during the time
period commencing as of the Closing Date and continuing for a period of two (2)
years thereafter, neither the Shareholders nor any of their Affiliates, shall,
other than on behalf of OREX, directly or indirectly, for himself, or on behalf
of any other corporation, person, firm, partnership, association, or any other
entity whatsoever (whether as an individual, agent, servant, employee, employer,
officer, director, shareholder, investor, principal, consultant or in any other
capacity whatsoever):
9.2.1.1.....Establish in, operate, or engage or participate in or finance any
business which engages in direct competition with the business being conducted
by OREX at such time;
9.2.1.2.....Solicit or engage in the solicitation of, or serve or accept any
business from client, suppliers, or other customers of the business conducted by
OREX for services competitive with those of OREX, OREX's successors and assigns,
or OREX's Affiliates;
9.2.1.3.....Request, induce or advise any clients, suppliers, vendors, employers
or other customers of the business conducted by OREX or OREX's Affiliates to
withdraw, curtail or cancel their business or other relationships with OREX or
assist, induce, help or join any other person or entity in doing any of the
above activities; or
9.2.1.4.....Induce or attempt to influence any employee of OREX to terminate his
or her employment with OREX or to hire, recruit or solicit any such employee,
whether or not so induced or influenced.
9.2.2 Not Applicable. The restrictions set forth in Section 9.2 shall not be
deemed to prevent the Shareholders from acquiring through market purchases and
owning, solely as an investment, less than five percent (5%) in the aggregate of
the equity securities of any class of any issuer whose shares are listed or
admitted for trading on any United States national securities exchange or are
quoted on the National Association of Securities Dealers Automated Quotations
Systems, or any similar system of automated dissemination of quotations of
securities prices in common use, so long as neither of them is a member of any
"control group" (within the meaning of the rules and regulations of the
Commissions) of any such issuer.
9.2.3 Consideration. OREX and the Shareholders have carefully considered the
nature and extent of the restrictions imposed by this Section 9.2 and the rights
and remedies conferred upon OREX hereunder and hereby expressly acknowledge and
agree that: (a) the restricted territory, period, and activities are reasonable
and are designed to eliminate competition which would otherwise be unfair to
OREX; (b) are necessary and fully required to protect the legitimate business
interest of OREX; (c) any violation of the terms of these restrictive covenants
would have a substantial detrimental effect on OREX's businesses; (d) the
restrictive covenants do not stifle any of the Shareholders' inherent skill and
experience; and (e) would not operate as a bar to any of the Shareholders' means
of support. Because of the difficulty of measuring economic losses to OREX as a
result of the breach of the foregoing covenants, and because of the immediate
and irreparable damage that would be caused to OREX for which it would have no
other adequate remedy, the Shareholders agree that, in the event of a breach by
any of them of the foregoing covenants, the covenants set forth in this Section
9.2 may be enforced by OREX by injunctions and restraining orders in addition to
all other available legal remedies.
9.2.4 Third-Party Beneficiaries. All successors and assigns of OREX, all
Affiliates of OREX, and all successors and assigns of such Affiliates are
third-party beneficiaries of the restrictive covenants contained in this Section
9.2 and the provisions of this Section 9.2 are intended for the benefit of, and
may be enforced by, OREX's and successors and assigns and OREX's Affiliates and
such Affiliates' successors and assigns.
9.2.5 Defenses. The existence of any claim or cause of action by the
Shareholders against OREX, whether predicated upon this Agreement or otherwise,
shall not constitute a defense to the enforcement by OREX, or any of OREX's
successors and assigns or Affiliates and such Affiliates' successors and
assigns, but shall be litigated separately. The provisions of this Section 9.2
shall survive the termination of this Agreement.
9.2.6 Severability. The covenants in this subsection are severable and separate,
and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems reasonable,
and the Agreement shall thereby be reformed.
9.3 Confidentiality. In order to induce OREX to enter into this Agreement, the
Shareholders covenant and agree that from and after the Closing Date, the
Shareholders nor any of their Affiliates (to the extent any such Affiliate has
received Confidential Information as defined below or trade secrets, as defined
below) shall disclose, divulge, furnish or make accessible to anyone any
Confidential Information or Trade Secrets, or in any way use any Confidential
Information or Trade Secrets in the conduct of any business; provided, however,
that nothing in this Section 9.3 will prohibit the disclosure of any
Confidential Information or Trade Secrets: (a) which is required to be disclosed
by the Shareholders or any of their Affiliates in connection with any court
action or any proceeding before any authority; (b) in connection with the
enforcement of any of the respective rights of the Shareholders hereunder; or
(c) in connection with the defense by the Shareholders of any claim asserted
against them hereunder; provided, however, that in the case of a disclosure
contemplated by Section 9.3(a) above, no disclosure shall be made until the
Shareholders shall give notice to OREX of the intention to disclose such
Confidential Information or Trade Secrets so that OREX may contest the need for
disclosure, and the Shareholders will cooperate (and will cause their Affiliates
and their respective representatives to cooperate) with OREX in connection with
any such proceeding. Notwithstanding any provision of this Agreement which may
be to the contrary, the foregoing provisions restricting the use of Confidential
Information and Trade Secrets shall survive the Closing for the time period
equal to five (5) years from the date of this Agreement. For the purpose of this
Agreement, the term "Confidential Information" shall mean all records, files,
reports, protocols, policies, manuals, databases, processes (including, but not
limited to, the Haber Gold Process), procedures, computer systems, materials and
other documents pertaining to the operations of OREX and the term "Trade
Secrets" shall mean information, including a formula, pattern, compilation,
program, device, method, technique, or process that: (i) derives independent
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use; and (ii) is the subject of efforts
that are reasonable under the circumstances to maintain its secrecy.
9.4 No Third-Party Beneficiaries. Other than with respect to the restrictive
covenants set forth in Section 9.2 above, this Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
9.5 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
9.6 Succession and Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties named herein and their respective successors,
assigns, distributees, heirs, and grantors of any revocable trusts of a Party
hereto. No Party may assign either this Agreement or any of its or his rights,
interests, or obligations hereunder without the prior written approval of the
other Parties; provided, however, OREX may assign this Agreement to their
Affiliates as part of a corporate restructuring.
9.7 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
9.8 Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
9.9 Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given: (a) upon receipt if it is
sent by facsimile, (b) the next business day if sent by reputable overnight
courier, or (c) three (3) days after mailing if by certified mail return receipt
requested, postage prepaid, and addressed or otherwise sent to the intended
recipient as set forth below:
If to OREX: Orex Gold Mines Corporation
2121 Ponce de Leon Boulevard
Coral Gables, Florida 33134
Attention: President
Facsimile: (305) 475-9118
With a copy to: McDermott, Will & Emery
201 S. Biscayne Boulevard, Suite 2200
Miami, Florida 33131
Attention: Roland Sanchez-Medina Jr.
Facsimile: (305) 347-6500
If to the Shareholders: Mr. Gordon Lee
------------------------
California
Facsimile: 310-823-7864
Mr. Don Blackburn
------------------------
Wickenburg, AZ
Facsimile: 520-684-5065
Mr. Tom Mills
------------------------
Facsimile:
--------------
Mr. Larry McMillian
------------------------
------------------------
Facsimile:
--------------
With a copy to:
Attn:
Facsimile:
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address or facsimile number set forth
above using any other means (including personal delivery, messenger service,
ordinary mail, or electronic mail), but no such notice, request, demand, claim,
or other communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any party may change the
address or facsimile number to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
9.10 Governing Law; Jurisdiction; Attorney's Fees. This Agreement, and all
proceedings hereunder, shall be governed by and construed in accordance with the
domestic laws of the State of Florida without giving effect to any choice or
conflict of law provision or rule (either of the State of Florida or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Florida. In the event of any suit under this Agreement
or otherwise between the parties hereto, the prevailing Party shall be entitled
to all reasonable attorney's fees and costs, including allocated costs of
in-house counsel, to be included in any judgment recovered. In addition, the
prevailing Party shall be entitled to recover reasonable attorney's fees and
costs, including allocated costs of in-house counsel, incurred in enforcing any
judgment arising from a suit under this Agreement. This post-judgment attorney's
fees and costs provision shall be severable from the other provisions of this
Agreement and shall survive any judgment on such suit and is not to be deemed
merged into the judgment. Venue for any such dispute or suit between the
parties, venue shall be in Miami-Dade County, Florida.
9.11 Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Parties. No
waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence and all waivers must be in writing, signed
by the waiving Party, to be effective.
9.12 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
9.13 Expenses. Except as set forth herein, each of the Parties will bear its or
his own costs and expenses (including, but not limited to, legal and accounting
fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
9.14 Further Assurances. Each Party shall, at the reasonable request of any
other Party hereto, execute and deliver to such other Party all such further
instruments, assignments, assurances and other documents, and take such actions
as such other Party may reasonably request in connection with the carrying out
the terms and provisions of this Agreement.
9.15 Construction. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. Nothing in the Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein, unless the Disclosure Schedule identifies the exception
with reasonable particularity. The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from nor mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
9.16 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
(including the Disclosure Schedule) identified in this Agreement and the
recitals first set forth above are incorporated herein by reference and made a
part hereof.
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
OREX:
OREX GOLD MINES CORPORATION, a Delaware
corporation
By:
---------------------------------------
Warren Hemedinger, President
COMPANY:
SANTA MARIA MINING CORPORATION, a
California corporation
By:
---------------------------------------
Gordon Lee, President
SHAREHOLDERS:
...... ------------------------------------
............ Gordon Lee
------------------------------------
Don Blackburn
...... ------------------------------------
............ Tom Mills
------------------------------------
...... Larry McMillian
<PAGE>
-iv-
EXHIBITS
2.3... Articles of Merger
2.13.1 Allocation of OREX Shares
DISCLOSURE SCHEDULES
3.1... Officers and Directors
3.2... Capitalization
3.4(a) Consents to be Obtained Prior to Closing
3.4(b) Consents to be Obtained After Closing
3.6... Assets
3.8... Financial Statements
3.12.. Tax Returns
3.13.. Real Property
3.16.. Material Contracts
3.18.. Insurance
3.19.. Litigation
3.24.. Employment Matters
3.25.. Employment Benefits
3.28.. Environmental Permits, Licenses and Approvals
3.31.. Bank Accounts
<PAGE>
EXHIBIT I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
1.1 "Accounts Receivable" means the accounts receivable of the Company
determined in accordance with GAAP with respect to the operations of the Company
prior to the Closing Date arising from the rendering of services to patients
through the Closing Date, including, without limitation, those from private pay
patients, private insurance payors, third party payors and governmental
programs.
1.2 "Accounts Receivable Collection Period" has the meaning set forth in Section
2.13.2.1.
1.3 "Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, complaints, claims, demands, injunctions, judgments, orders,
decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses.
1.4 "Affiliate" shall mean, with respect to any Person: (a) any corporation,
proprietorship, partnership, limited liability company, or any other business
entity whatsoever that, directly or indirectly, owns or controls, is under
common ownership or control with, or is owned or controlled by, such Person; and
(b) if the Person is an individual, any other individual who is related to such
Person. For the purposes of this definition, the terms "controls," "is
controlled by" and "is under common control with" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise. OREX is not an Affiliate of the Company
or the Shareholders for purposes of this Agreement and neither the Shareholders
nor the Company is an Affiliate of OREX for purposes of this Agreement.
1.5 "Agreement" has the meaning set forth in the Preamble.
1.6 "Articles of Merger" has the meaning set forth in Section 2.3.
1.7 "Certificate(s)" has the meaning set forth in Section 2.12.1.
1.8 "Closing" has the meaning set forth in Section 2.9.
1.9 "Closing Date" has the meaning set forth in Section 2.9.
1.10 "Code" means the Internal Revenue Code of 1986, as amended.
1.11 "Collected Accounts Receivable" has the meaning set forth in Section
2.13.2.1.
1.12 "Commission" means the U.S. Securities and Exchange Commission.
1.13 "Company" has the meaning set forth in the Preamble.
1.14 "Company Shares" means any share of common stock, $_____ par value per
share, of the Company.
1.15 "Delaware Act" and "California Act" have the meanings set forth in Section
2.1.
1.16 "Disclosure Schedule" has the meaning set forth in Section 3.
1.17 "Effective Time" has the meaning set forth in Section 2.3.
1.18 "Employee Benefit Plan" means any: (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan; (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan; (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan); (d) Employee Welfare Benefit Plan; or (e) any bonus,
incentive, severance, stock option, stock purchase, short-term disability plan
or other material fringe benefit plan, program or arrangement, including
policies concerning holidays, vacations and salary continuation during short
absences for illness or otherwise.
1.19 "Employee Pension Benefit Plan" has the meaning set forth in ERISA Section
3(2).
1.20 "Employee Welfare Benefit Plan" has the meaning set forth in ERISA Section
3(1).
1.21 "Environmental, Health, and Safety Requirements" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Clean Air Act, the Federal Water
Pollution Control Act, the Safe Drinking Water Act, the Toxic Substance Control
Act, the Emergency Planning and Community Right-to-Know Act of 1986, the
Hazardous Material Transportation Act, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, injunctions, judgments, orders, decrees, and rulings) of
federal, state, local, and foreign governments (and all agencies thereof)
concerning pollution or protection of the environment, public health and safety,
or employee health and safety, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials (including petroleum products and
asbestos) or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
1.22 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.23 "Fiduciary" has the meaning set forth in ERISA Section 3(21).
1.24 "Financial Statements" has the meaning set forth in Section 3.8.
1.25 "GAAP" means the United States generally accepted accounting principles in
effect from time to time.
1.26 "Indemnified Party" has the meaning set forth in Section 8.4.1.
1.27 "Indemnifying Party" has the meaning set forth in Section 8.4.1.
1.28 "Initial Public Offering" means the initial underwritten public offering of
OREX Shares contemplated by the Registration Statement.
1.29 "Intellectual Property" means: (a) all trade secrets and confidential
business information (including customer and supplier lists, ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
pricing and cost information, and business and marketing plans and proposals);
(b) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith; (c) all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof; (d)
all copyrightable works, all copyrights, and all applications, registrations,
and renewals in connection therewith; (e) all computer software (including data
and related documentation); (f) all other proprietary rights; and (g) all copies
and tangible embodiments thereof (in whatever form or medium).
1.30 "IRS" means the U.S. Internal Revenue Service.
1.31 "Knowledge" shall be deemed to include the assurance that such Knowledge is
based upon reasonable investigation and "Knowledge," as it applies to the
Shareholders, means the Knowledge of the Shareholders, and "Knowledge," as it
applies to the Company, means the Knowledge of the Shareholders and the
officers, directors and employees of the Company.
1.32 "Liability" means any liability, whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due, including,
but not in any way limited to, any liability for Taxes.
1.33 "Merger" has the meaning set forth in Section 2.1.
1.34 "Most Recent Financial Statements" has the meaning set forth in Section
3.8.
1.35 "Most Recent Fiscal Month End" has the meaning set forth in Section 3.8.
1.36 "Most Recent Fiscal Year End" has the meaning set forth in Section 3.8.
1.37 "Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
1.38 "OREX" has the meaning set forth in the Preamble.
1.39 "OREX Shares" means any share of common stock, $.0001 par value per share,
of OREX.
1.40 "Party(ies)" has the meaning set forth in the Preamble.
1.41 "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
1.42 "Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a limited liability company or partnership, a trust, a
joint venture, an unincorporated organization, any other form of entity
whatsoever, or a governmental entity (or any department, agency, or political
subdivision thereof).
1.43 "Prohibited Transaction" has the meaning set forth in ERISA Section 406 and
Code Section 4975.
1.44 "Registration Statement" has the meaning set forth in Section 6.1.
1.45 "Reportable Event" has the meaning set forth in ERISA Section 4043.
1.46 "Securities Act" means the Securities Act of 1933, as amended.
1.47 "Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.48 "Security Interest" means any lien, claim, encumbrance, mortgage,
hypothecation, pledge, or other security interest, excluding purchase money
security interests arising in the ordinary course of business and liens arising
by operation of law for Taxes not yet due and payable.
1.49 "Shareholder" and "Shareholders" have the meaning set forth in the
Preamble.
1.50 "Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
members of the board of directors.
1.51 "Tax" or "Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, production, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including interest, penalty, or additions thereto, whether disputed or not, and
whether or not accrued on the Financial Statements.
1.52 "Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
1.53 "Third Party Claim" has the meaning set forth in Section 8.4.1.
1.54 "Trade Secrets" has the meaning set forth in Section 9.3.
1.55 "Transaction" has the meaning set forth in Section 2.1.
1.56 "Transaction Consideration" has the meaning set forth in Section 2.13.
MERGER AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
OREX GOLD MINES CORPORATION AND
ARCH MINING COMPANY
DATED AS OF
OCTOBER 21st , 1999.
<PAGE>
TABLE OF CONTENTS
Page
================================================================================
v
================================================================================
1. DEFINITIONS............................................................1
2. TRANSACTION; TRANSACTION CONSIDERATION; CLOSING........................1
2.1 Transaction......................................................1
2.2 Effect of the Merger.............................................2
2.3 Effective Time; Filing of Certificates of Merger.................2
2.4 Articles of Incorporation........................................2
2.5 Bylaws...........................................................2
2.6 Directors and Officers...........................................2
2.7 Tax Consequences.................................................2
2.8 Additional Actions...............................................2
2.9 The Closing......................................................3
2.10 Actions at the Closing...........................................3
2.11 No Dissenters' Rights............................................3
2.12 Surrender of Certificates........................................3
2.12.1 Company's Shares..........................................3
2.12.2 Dividends...........................................3
2.13 Transaction Consideration........................................3
2.13.1 OREX Shares...............................................4
2.13.2 Conversion of Shares......................................4
2.14 Shareholder Consent and Release..................................6
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER......................6
3.1 Organization, Qualification, and Corporate Power.................6
3.2 Capitalization...................................................6
3.3 Authorization....................................................7
3.4 Noncontravention.................................................7
3.5 Broker's Fees....................................................7
3.6 Title to Assets..................................................7
3.7 No Subsidiaries..................................................8
3.8 Financial Statements.............................................8
3.9 Events Subsequent to Most Recent Fiscal Year End.................8
3.9.1 Sale or Lease of Assets....................................8
3.9.2 Contracts..................................................8
3.9.3 Change in Contracts........................................8
3.9.4 Security Interests.........................................8
3.9.5 Investments................................................9
3.9.6 Debts......................................................9
3.9.7 Liabilities Unaffected.....................................9
3.9.8 Claims Unaffected..........................................9
3.9.9 Articles and Bylaws........................................9
3.9.10 Changes in Equity.........................................9
3.9.11 Distribution..............................................9
3.9.12 Property Damage...........................................9
3.9.13 Transactions with Affiliates..............................9
3.9.14 Collective Bargaining Agreements..........................9
3.9.15 Compensation Changes......................................9
3.9.16 Employee Benefit Plans....................................9
3.9.17 Officers; Directors; Employees............................9
3.9.18 Charitable or Capital Contributions......................10
3.9.19 Ordinary Course of Business..............................10
3.9.20 Accounting Practices.....................................10
3.9.21 Accounts Receivable......................................10
3.9.22 In General...............................................10
3.10 Undisclosed Liabilities.........................................10
3.11 Legal Compliance................................................10
3.12 Tax Matters.....................................................10
3.12.1 Tax Returns..............................................11
3.12.2 Withholding..............................................11
3.12.3 No Disputes of Claims....................................11
3.12.4 No Waivers...............................................11
3.12.5 No Special Circumstances.................................11
3.12.6 Subchapter "S"...........................................11
3.12.7 Audits of Tax Returns....................................12
3.12.8 Period of Assessment.....................................12
3.12.9 Tax Agreements...........................................12
3.12.10 Inclusions in Taxable Periods...........................12
3.12.11 Consents................................................12
3.12.12 Personal Holding Company................................12
3.12.13 Consolidated Tax Returns................................12
3.13 Real Property...................................................12
3.13.1 Binding..................................................12
3.13.2 Continued Validity.......................................13
3.13.3 No Defaults..............................................13
3.13.4 Repudiation..............................................13
3.13.5 No Disputes..............................................13
3.13.6 Subleases................................................13
3.13.7 Encumbrances.............................................13
3.13.8 Approvals................................................13
3.13.9 Utilities................................................13
3.14 Intellectual Property...........................................13
3.15 Condition of Tangible Assets....................................13
3.16 Contracts.......................................................13
3.16.1 Personal Property Leases.................................14
3.16.2 Services.................................................14
3.16.3 Partnership; Joint Venture...............................14
3.16.4 Indebtedness.............................................14
3.16.5 Confidentiality; Non-Competition.........................14
3.16.6 Shareholders' Agreements.................................14
3.16.7 Plans....................................................14
3.16.8 Employment or Consulting Agreements......................14
3.16.9 Advances; Loans..........................................14
3.16.10 Adverse Effects.........................................14
3.16.11 Other Agreements........................................14
3.17 Powers of Attorney..............................................15
3.18 Insurance; Malpractice..........................................15
3.19 Litigation......................................................16
3.20 [Open]..........................................................16
3.21 [Open]..........................................................16
3.22 Company Compliance..............................................17
3.23 [Open]..........................................................17
3.24 Employees.......................................................17
3.25 Employee Benefits...............................................17
3.25.1 .........................................................17
3.25.2 Compliance...............................................18
3.25.3 Reports and Descriptions.................................18
3.25.4 Contributions............................................18
3.25.5 Qualified Plan...........................................18
3.25.6 Market Value.............................................18
3.25.7 Copies...................................................18
3.25.8 Maintenance of Plans.....................................18
3.25.8.1 Reportable Events................................18
3.25.8.2 Prohibited Transactions..........................18
3.26 [Open]..........................................................19
3.27 Guaranties......................................................20
3.28 Environment, Health, and Safety.................................20
3.28.1 Compliance...............................................20
3.28.2 Permits and Licenses.....................................20
3.28.3 Notices..................................................20
3.28.4 Hazardous Substances.....................................20
3.29 Certain Business Relationships with the Company and its
Affiliates......................................................20
3.30 [Open]..........................................................20
3.31 Bank Accounts...................................................21
3.32 Tax Status......................................................21
3.33 Binding Obligation..............................................21
3.34 [Open]..........................................................21
3.35 [Open]..........................................................21
3.36 [Open]..........................................................21
3.37 Securities Representation.......................................21
3.37.1 No Registration of OREX Shares; Investment Intent........21
3.37.2 Resale Restrictions......................................21
3.37.3 Ability to Bear Economic Risk............................22
3.37.4 Accredited Investor......................................22
3.37.5 Residency................................................22
3.37.6 No Registration..........................................23
3.38 Disclosure......................................................23
4. REPRESENTATIONS AND WARRANTIES OF OREX................................23
4.1 Organization of OREX............................................23
4.1.1 Authorization of Transaction..............................23
5. DELIVERIES AT CLOSING.................................................23
5.1 Deliveries of the Shareholder...................................23
5.1.1 Consents and Approvals....................................23
5.1.2 Termination of Agreements.................................23
5.1.3 Company Stock.............................................24
5.1.4 Corporate Authorization...................................24
5.1.5 Good Standing Certificate.................................24
5.1.6 Secretary's Certificate...................................24
5.1.7 Other documents...........................................25
5.2 Deliveries of OREX..............................................25
5.2.1 Transaction Consideration.................................25
5.2.2 Resolutions...............................................25
5.2.3 Certificate of Incumbency.................................25
6. FILING REGISTRATION STATEMENT.........................................25
6.1 Initial Public Offering.........................................25
6.2 Information.....................................................25
7. POST-CLOSING COVENANTS................................................25
7.1 General.........................................................25
7.2 Tax Returns.....................................................26
7.3 Transition......................................................26
7.4 Litigation Support..............................................26
7.5 Consents........................................................26
8. SURVIVAL AND INDEMNIFICATION.........................................27
8.1 Survival of Representations and Warranties......................27
8.2 Indemnification Provisions for the Benefit of OREX..............27
8.3 Indemnification Provisions for the Benefit of the
Shareholder.....................................................27
8.4 Matters Involving Third Parties.................................27
8.4.1 Notification..............................................27
8.4.2 Defense by Indemnifying Party.............................27
8.4.3 Satisfactory Defense......................................28
8.4.4 Conditions................................................28
9. MISCELLANEOUS.........................................................29
9.1 Confidentiality, Press Releases, and Public Announcements.......29
9.2 Shareholders Restrictive Covenants..............................29
9.2.1 Restricted Period.........................................29
9.2.2 Not Applicable............................................30
9.2.3 Consideration.............................................30
9.2.4 Third-Party Beneficiaries.................................30
9.2.5 Defenses..................................................31
9.2.6 Severability..............................................31
9.3 Confidentiality.................................................31
9.4 No Third-Party Beneficiaries....................................31
9.5 Entire Agreement................................................32
9.6 Succession and Assignment.......................................32
9.7 Counterparts....................................................32
9.8 Headings........................................................32
9.9 Notices.........................................................32
9.10 Governing Law; Jurisdiction; Attorney's Fees....................33
9.11 Amendments and Waivers..........................................33
9.12 Severability....................................................33
9.13 Expenses........................................................34
9.14 Further Assurances..............................................34
9.15 Construction....................................................34
9.16 Incorporation of Exhibits and Schedules.........................34
<PAGE>
20
MERGER AGREEMENT AND PLAN OF REORGANIZATION
THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made
and entered into as of the 21th day of October, 1999, by and among OREX GOLD
MINES CORPORATION, a Delaware corporation ("OREX"), ARCH MINING COMPANY, a
Nevada corporation (the "Company").
Preliminary Statements
A.....OREX is a gold mining company that has a license to use an
environmentally safe gold extraction process;
B.....The Company is a mining company that owns and operates several
mining operations in the State of Arizona. The Shareholders own all of the
issued and outstanding Company Shares, as hereinafter defined;
C. ... The Parties hereto desire to enter into this Agreement to
effectuate the Merger, as hereinafter defined, of the Company with and into
OREX pursuant to the terms and conditions of this Agreement;
D.....It is the intention of the Parties for the Merger, contemplated
herein to qualify as a tax-free reorganization pursuant to Sections 368(a)(1)(A)
of the Code, as hereinafter defined; and
E.....Each Party will derive significant benefits from the consummation of
the transactions contemplated by this Agreement and wishes to induce the other
Parties to enter into this Agreement by entering into certain covenants and
agreements.
NOW, THEREFORE, in consideration of the premises and the actual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the receipt and adequacy of which are hereby
conclusively acknowledged, the Parties, intending to become legally bound,
hereby agree as follows:
Terms And Conditions
1. DEFINITIONS. All capitalized words that are not capitalized for purposes of
grammar and which are not defined in the text of this Agreement are defined
terms with their definitions set forth on Exhibit I.
2. TRANSACTION; TRANSACTION CONSIDERATION; CLOSING.
2.1 Transaction. Upon the terms and subject to the conditions hereof and in
accordance with the provisions of the Nevada Business Corporation Act (the
"Nevada Act") and the Delaware Business Corporation Act (the "Delaware Act"),
the Company shall be merged with and into OREX (the "Merger") and the separate
existence of the Company shall thereupon cease, and OREX, as the surviving
corporation (the "Surviving Corporation"), shall continue to exist under and be
governed by the Delaware Act (the "Transaction").
2.2 Effect of the Merger. At and after the Effective Time, the effect of the
Merger shall, in all respects, be as provided in the Nevada Act and the Delaware
Act. From and after the Effective Time, OREX shall continue to be a Delaware
corporation.
2.3 Effective Time; Filing of Certificates of Merger. The Merger shall be
effected by the filing at the time of the Closing or as soon as practicable
thereafter, of the Articles of Merger (the "Articles of Merger"), substantially
in the form of Exhibit 2.3 attached hereto, with the Secretary of the State of
Delaware and Secretary of State of Nevada in accordance with the provisions of
the Delaware Act and the Nevada Act, respectively. The Merger shall become
effective as of 11:59 p.m. on the date of such filing (the "Effective Time") and
the parties shall take any and all other lawful actions and do any and all other
lawful things necessary to cause the Merger to become effective.
2.4 Articles of Incorporation. As of the Effective Time, the certificate of
incorporation of OREX, as in effect immediately prior to the Effective Time,
shall be the certificate of incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable law.
2.5 Bylaws. As of the Effective Time, the bylaws of OREX, as in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving
Corporation until thereafter amended in accordance with its terms and applicable
law.
2.6 Directors and Officers. As of the Effective Time, the directors and officers
of OREX immediately prior to the Effective Time shall be the directors and
officers of the Surviving Corporation. Each director and officer of the
Surviving Corporation shall hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation. At the Closing, the
Company shall cause to be delivered to OREX the written resignations of all of
the directors and officers of the Company, which resignations shall be
unconditional and effective as of the Closing Date.
2.7 Tax Consequences. It is intended by the parties hereto that the Merger shall
constitute a tax-free reorganization within the meaning of Sections 368(a)(1)(A)
of the Code.
2.8 Additional Actions. If, at any time after the Closing, the Surviving
Corporation shall consider or be advised that any further acts are necessary or
desirable: (a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation, title to and possession of any property or right of the
Company acquired or to be acquired by reason of, or as a result of, the Merger;
or (b) otherwise to carry out the purposes of this Agreement, then the
Shareholders shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such deeds, assignments
and assurances in law and to do all other acts necessary or proper to vest,
perfect or confirm title to and possession of such property or rights in the
Surviving Corporation and otherwise to carry out the purposes of this Agreement;
and the officers and directors of the Surviving Corporation are fully authorized
in the name of the Shareholder and the Company to take any and all such actions.
2.9 The Closing. The closing of the Transaction (the "Closing") shall take place
at the offices of OREX, commencing at 10:00 a.m. local time on October 21st,
1999, or such other date or time as the Parties may mutually agree (the "Closing
Date").
2.10 Actions at the Closing. At the Closing: (a) the Shareholders shall convey
the Company Shares to OREX and deliver to OREX the various certificates,
instruments and documents referred to in Section 5.1 and elsewhere in this
Agreement; and (b) OREX shall deliver to the Shareholders the Transaction
Consideration required to be delivered hereunder and the various certificates,
instruments, and documents referred to in Section 5.2 and elsewhere in this
Agreement.
2.11 No Dissenters' Rights. Constituting the sole shareholder of the Company,
the Shareholders' approval and execution of this Agreement constitutes unanimous
approval of the transactions contemplated herein; therefore, neither the
Shareholder, nor any other party, is entitled to dissenters' rights under the
laws of the State of Nevada.
2.12 Surrender of Certificates.
2.12.1......Company's Shares. At the Closing, the Shareholders shall be required
to surrender to OREX the original stock certificate(s) which immediately prior
to the Effective Time represented all of the Company Shares (the "Certificates")
(together with all stock powers duly endorsed to OREX). Until so surrendered,
each Certificate which immediately prior to the Effective Time represented the
Company Shares (other than Company Shares held in the treasury) shall upon and
after the Effective Time by virtue of the Merger be deemed for all purposes to
represent and evidence only the right to receive the OREX Shares determined in
accordance with Section 2.13.1.3 of this Agreement. At the Effective Time, the
stock transfer books of the Company shall be closed and no transfer of the
Company Shares shall be made at any time thereafter.
2.12.2......Dividends. No dividends or other distributions declared or made
after the date of this Agreement with respect to the OREX Shares with a record
date after the Closing will be paid to the holder of any unsurrendered
Certificate with respect to the OREX Shares represented thereby until the holder
of record of such Certificate shall surrender such Certificate. Subject to
applicable law, following surrender of any such Certificate, there shall be paid
to the record holder of the Certificate representing whole OREX Shares issued in
exchange therefor, without interest, at the time of such surrender, the amount
of dividends or other distributions with a record date after the Closing payable
with respect to such whole OREX Shares.
2.13 Transaction Consideration. The aggregate transaction consideration (the
"Transaction Consideration") shall be transferred to the Shareholders as
follows:
2.13.1......OREX Shares. Five Million (5,000,000) OREX Shares shall be issued at
or within five (5) business days after the Closing Date, to the Shareholders.
The OREX Shares received by the Shareholders shall not be transferable by the
Shareholders other than: (a) by will or the laws of intestate succession; (b) in
accordance with applicable state and federal securities laws including, without
limitation, Rule 144 of the Securities Act; and (c) subject to the term and
conditions of any applicable lock-up letter.
2.13.2......Conversion of Shares. Each share of capital stock of OREX issued and
outstanding immediately prior to the Closing shall continue to represent one (1)
validly issued, fully paid and non-assessable share of capital stock of the
Surviving Corporation after the Merger. By virtue of the Merger and without any
action on the part of the Shareholder thereof, the Company Shares shall be
converted into Five Million (5,000,000) OREX Shares.
2.14 Shareholders Consent and Release. The Shareholders hereby consent to the
Transaction and approves the execution and delivery of this Agreement and the
transactions contemplated hereby. Effective on the Effective Time, the
Shareholders hereby release the Company from any and all claims any one of them
may, could or will have, whether arising before or after the Effective Time,
against the Company as a result of the Shareholders having served as a
stockholder, director, officer, employee or agent of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. The Shareholders
represent and warrant to OREX that the statements contained in this Section 3
are correct and complete as of the Closing Date, except as set forth in the
disclosure schedule accompanying this Agreement (the "Disclosure Schedule"). The
Disclosure Schedule will be arranged in paragraphs corresponding to the numbered
paragraphs contained in this Section 3 to the Agreement
3.1 Organization, Qualification, and Corporate Power. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Nevada. The Company has full power and authority and all
licenses, permits and authorizations necessary to carry on the businesses in
which it is currently engaged and to own and use the properties owned and used
by it. Section 3.1 of the Disclosure Schedule lists the all of the officers and
members of the Board of Directors of the Company, as of the date immediately
preceding the Closing Date. The Company has made available to OREX correct and
complete copies of the minute book, articles of incorporation and bylaws of the
Company, as amended to date. The minute book (containing the records of meetings
of the stockholders, the board of directors and any committees of the board of
directors), the stock certificate books and stock record books of the Company
are correct and complete in all material respects and will be delivered to OREX
at the Closing. The Company is not in default under or in violation of any
provision of its articles of incorporation or bylaws.
3.2 Capitalization. The entire authorized capital stock of the Company consists
of shares, of which one million (1,000,000) are issued and outstanding. All of
the issued and outstanding Company Shares have been duly authorized, are validly
issued, fully paid, and nonassessable and are held of record by the Shareholders
as set forth in Section 3.2 of the Disclosure Schedule. There are no outstanding
or authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments that could
require the Company to issue, sell, or otherwise cause to become outstanding any
of its capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Company. There are no stockholders' agreements, voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
the Company.
3.3 Authorization. The Company has full power and authority (including full
corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement by the Company has been duly authorized and approved by its Board
of Directors and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the transactions contemplated hereby.
The Company has given to the Shareholders any and all notice required to be
given to the Shareholders under applicable law. This Agreement constitutes the
valid and legally binding obligation of the Company, enforceable in accordance
with its terms and conditions.
3.4 Noncontravention. Except as set forth in Section 3.4 of the Disclosure
Schedule, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby will: (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, or other restriction of any government, governmental agency or any other
third party whatsoever, or court to which the Company is subject, or any
provision of the articles of incorporation or bylaws of the Company; or (b)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which the Company is a party or by which it
is bound or to which any of its assets is subject (or result in the imposition
of any Security Interest upon any of its assets). Except as set forth in Section
3.4 of the Disclosure Schedule, the Shareholders and the Company need not give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency or any other third party
whatsoever in order for the Parties to consummate the transactions contemplated
by this Agreement. The Parties agree that Section 3.4 of the Disclosure Schedule
shall be divided into two (2) sections, consisting of: (i) Section 3.4(a) which
shall list all such authorizations, consents and approvals which must be
obtained prior to the Closing, as a condition to Closing; and (ii) Section
3.4(b) which shall list all such authorizations, consents and approvals which
will not be obtained prior to Closing which shall be obtained within a
reasonable period of time after Closing.
3.5 Broker's Fees. The Company and the Shareholders have a obligation to pay a
10% commission associated with this agreement.
3.6 Title to Assets. Section 3.6 of the Disclosure Schedule contains a complete,
true and correct list of all of the assets of the Company. The Company has good
and marketable title to, or a valid leasehold interest in, the properties and
assets used by it, located on its premises, or shown on the Most Recent
Financial Statement or acquired after the date thereof, free and clear of all
Security Interests. The assets set forth in Section 3.6 in conjunction with any
assets which the Company leases, constitute all of the assets used by the
Company in connection with its businesses as presently conducted.
3.7 No Subsidiaries. The Company has no Subsidiaries and does not control,
directly or indirectly, or have any direct or indirect equity participation in
any corporation, partnership, limited liability company, trust or other business
association.
3.8 Financial Statements. Attached as Section 3.8 of the Disclosure Schedule are
the following financial statements (collectively, the "Financial Statements"):
(a) audited balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal years ended 1999 (the "Most
Recent Fiscal Year End") for the Company; and (ii) unaudited compiled balance
sheet and statements of income, changes in stockholders' equity, and cash flow
(the "Most Recent Financial Statements") as of and for the month ended,
September 1999 (the "Most Recent Fiscal Month End") for the Company. The
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of the Company as of
such dates and the results of operations of the Company for such periods, are
correct and complete, and are consistent with the books and records of the
Company (which books and records are correct and complete); provided, however,
that the Most Recent Financial Statements are subject to normal year-end
adjustments which will not be material. Except as provided in the Most Recent
Financial Statements, or as fully disclosed in Section 3.8 of the Disclosure
Schedule, the Company does not have any Liabilities or obligations (whether
accrued, absolute, contingent, whether due or to become due or otherwise) which
might be or become a charge against the Company, including any "loss
contingencies" considered "probable" or "reasonably possible" within the meaning
of the Financial Accounting Standard Board's Statement of Financial Accounting
Standards No. 5, except trade payables and similar liabilities and obligations
incurred in the ordinary and regular course of business since the date of the
Most Recent Financial Statements.
3.9 Events Subsequent to Most Recent Fiscal Year End. Since the Most Recent
Fiscal Year End, there has not been any material adverse change in the business,
financial condition, operations, results of operations, or future prospects of
the Company. Without limiting the generality of the foregoing, since the Most
Recent Fiscal Year End:
3.9.1 Sale or Lease of Assets. The Company has not sold, leased, transferred, or
assigned any of its assets, tangible or intangible, other than for fair market
value in the ordinary course of its business;
3.9.2 Contracts. The Company has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases, and
licenses) outside the ordinary course of business;
3.9.3 Change in Contracts. No Party (including the Company) has accelerated,
terminated, modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) to which the
Company is a party or by which it is bound and neither the Shareholders nor the
Company has any intent to do any of the foregoing or have received a verbal or
written indication of any third party's intent to do any of the foregoing;
3.9.4 Security Interests. The Company has not imposed any Security Interest
upon any of its assets, tangible or intangible;
3.9.5 Investments. The Company has not made any capital investment in, any loan
to, or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions);
3.9.6 Debts. The Company has not issued any note, bond, or other debt security
or created, incurred, assumed, or guaranteed any indebtedness for borrowed money
or capitalized lease obligation;
3.9.7 Liabilities Unaffected. The Company has not delayed or postponed the
payment of accounts payable and other Liabilities or accelerated the
collection of accounts, notes or other receivables;
3.9.8 Claims Unaffected. The Company has not canceled, compromised, waived,
or released any right or claim (or series of related rights and claims)
outside the ordinary course of its business;
3.9.9 Articles and Bylaws. There has been no change made or authorized in
the articles of incorporation or bylaws of the Company;
3.9.10......Changes in Equity. The Company has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
3.9.11......Distribution. The Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
3.9.12......Property Damage. The Company has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its property;
3.9.13......Transactions with Affiliates. The Company has not made any loan
to, or entered into any other transaction with, any of its directors,
officers and employees;
3.9.14......Collective Bargaining Agreements. The Company has not entered
into any collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
3.9.15......Compensation Changes. The Company has not granted any increase
in the base compensation of any of its directors, officers, and employees;
3.9.16......Employee Benefit Plans. The Company has not adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any other
Employee Benefit Plan);
3.9.17......Officers; Directors; Employees. The Company has not made any
change in the employment terms for any of its directors, officers and
employees, other than to terminate such agreements as required herein;
3.9.18......Charitable or Capital Contributions. The Company has not made or
pledged to make any charitable or other capital contribution;
3.9.19......Ordinary Course of Business. There has not been any other
occurrence, event, incident, action, failure to act, or transaction outside
the ordinary course of business involving the Company;
3.9.20......Accounting Practices. There has not been any change in any
method of accounting or accounting principle, estimate or practice of the
Company;
3.9.21......Accounts Receivable. The Company has not accelerated the
collection of any Accounts Receivable or any other amounts owed to it; and
3.9.22......In General. Neither the Company nor the Shareholders have
committed to do any of the foregoing.
3.10 Undisclosed Liabilities. The Company has no Liability and there is no basis
for any present or future action, suit, proceeding, hearing, investigation,
complaint, claim, or demand against it giving rise to any Liability, except for:
(a) Liabilities set forth on the Most Recent Financial Statements; (b)
Liabilities disclosed in the Disclosures Schedule; and (c) Liabilities which
have arisen after the Most Recent Fiscal Month End in the ordinary course of
business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law). As of the Closing, other than the current
trade accounts payable, the Company shall not have any unpaid liabilities,
including, but not limited to, any bank debt, capital leases or any general or
professional liability claims, or be obliged in any other way to provide funds
in respect of, or to guarantee or assume, any debt, obligation or dividend of
any person, except endorsements in the ordinary course of business in connection
with the deposit, in banks or other financial institutions, of items for
collection. Except as provided in the Most Recent Financial Statements, or as
disclosed in detail in Section 3.8 of the Disclosure Schedule, the Company does
not have any Liabilities or obligations which might be or become a charge
against the Company.
3.11 Legal Compliance. The Company and its predecessors and Affiliates have
complied with all applicable laws (including rules, regulations, codes,
injunctions, judgments, orders, decrees, and rulings of federal, state, local,
and foreign governments (and all agencies thereof)), and no action, suit,
proceeding, hearing, complaint, claim, demand, notice or investigation has been
filed or commenced, or to the Knowledge of the Shareholders and the Company,
threatened against the Company alleging any failure so to comply.
3.12 Tax Matters.
3.12.1......Tax Returns. The Company has filed all Tax Returns it was required
to file. All such Tax Returns were correct and complete in all respects and were
filed on a timely basis. All Taxes owed by the Company (whether or not shown on
any Tax Return) have been paid. The Company currently is not the beneficiary of
any extension of time within which to file any Tax Return. No claim is currently
pending by an authority in a jurisdiction where the Company is or may be subject
to taxation by that jurisdiction. There are no Security Interests on any of the
assets of the Company that arose in connection with any failure (or alleged
failure) to pay any Tax.
3.12.2......Withholding. The Company has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
3.12.3......No Disputes of Claims. No shareholder or director or officer (or
employee responsible for Tax matters) of the Company expects any authority to
assess any additional Taxes for any period for which Tax Returns have been
filed. There is no dispute or claim concerning any Tax Liability of the Company
either: (a) claimed or raised by any authority in writing; or (b) as to which
any of the shareholders, directors and officers (and employees responsible for
Tax matters) of the Company has Knowledge based upon personal contact with any
agent of such authority. Section 3.12 of the Disclosure Schedule lists all
federal, state, local, and foreign income Tax Returns filed with respect to the
Company for taxable periods ended on or after September 30,1999, indicates those
Tax Returns that have been un-audited, and indicates those Tax Returns that
currently are the subject of audit. The Shareholder has made available to OREX
correct and complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by any of
the Company and its Affiliates since September 30, 1999.
3.12.4......No Waivers. The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
3.12.5......No Special Circumstances. The Company has not made any payments, is
not obligated to make any payments, nor is a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G. The Company has not been a United States
real property holding corporation within the meaning of Code Section 897(c)(2)
during the applicable period specified in Code Section 897(c)(1)(A)(ii). The
Company has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
Tax within the meaning of Code Section 6662.
3.12.6......Subchapter "S". The Company has elected, by the unanimous consent of
the Shareholder and in compliance with all applicable legal requirements, to be
taxed under Subchapter "S" of the Code and corresponding provisions under any
applicable state and local laws, and such elections are currently in full force
and effect for the Company. No action has been taken by the Company or the
Shareholder that may result in the revocation of any such elections. The Company
has no "Subchapter C earnings and profits," as defined in Code Section 1362(d).
The Company has no "net unrealized built-in gain," as such term is defined in
Code Sections 1374(d)(1) and 1374(d)(8). The Company has no Liability, absolute
or contingent, for the payment of any income Taxes under the Code or under
Subchapter "S" of the Code.
3.12.7......Audits of Tax Returns. No Tax Return of the Company is currently
under audit or examination by any taxing authority, and the Company has not
received a written notice stating the intention of any taxing authority to
conduct such an audit or examination. Each deficiency resulting from any audit
or examination relating to Taxes by any taxing authority has been paid, except
for deficiencies being contested in good faith. The revenue agents' reports
related to any prior audits and examinations are attached as part of Section
3.12 of the Disclosure Schedule.
3.12.8......Period of Assessment. There is no agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any Taxes.
3.12.9......Tax Agreements. The Company is not a party to or bound by any tax
sharing agreement, tax indemnity obligation or similar agreement with respect to
Taxes (including any advance pricing agreement, closing agreement or other
agreement relating to Taxes with any taxing authority).
3.12.10.....Inclusions in Taxable Periods. The Company will be required to
include in a taxable period ending after the Closing Date taxable income
attributable to income that accrued in a prior taxable period but was not
recognized in any prior taxable period as a result of the installment method of
accounting, the completed contract method of accounting, the long-term contract
method of accounting, the cash method of accounting or Code Section 481 with
respect to a change in method of accounting occurring before the Closing Date or
comparable provisions of state, local or foreign tax law. As of the Closing
Date, the Shareholder will place funds in a separate bank account in the name of
the Company in an amount sufficient to pay all such liabilities and such funds
shall be used to pay such liabilities as they become due.
3.12.11.....Consents. The Company has not filed a consent pursuant to or
agreed to the application of Code Section 341(f).
3.12.12.....Personal Holding Company. The Company has not, during the five (5)
year period ending on the Closing Date, been a personal holding company within
the meaning of Code Section 541.
3.12.13.....Consolidated Tax Returns. The Company has never filed or been
included in any combined or consolidated Tax Return with any other person or
been a member of an Affiliated Group filing a consolidated federal income Tax
Return.
3.13 Real Property. The Company has 10 unpatended claims (D&H). Section 3.13 of
the Disclosure Schedule lists and describes briefly all real property leased or
subleased by the Company. The Shareholders have made available to OREX correct
and complete copies of the leases and subleases listed in Section 3.13 of the
Disclosure Schedule (as amended to date). With respect to each lease and
sublease listed in Section 3.13 of the Disclosure Schedule:
3.13.1......Binding. The lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
3.13.2......Continued Validity. The lease or sublease will continue to be
legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby;
3.13.3......No Defaults. The Company is not in breach or default under the lease
or sublease and no third party is in breach or default under the lease or
sublease, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification or
acceleration thereunder;
3.13.4......Repudiation. Neither the Company nor any other party to the
lease has repudiated any provision of the lease or sublease;
3.13.5......No Disputes. There are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
3.13.6......Subleases. With respect to each sublease, the representations
and warranties set forth in subsections 3.13.1 through 3.13.5 above are true
and correct with respect to the underlying lease;
3.13.7......Encumbrances. None of the Company or its Affiliates has
assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered
any interest in the leasehold or subleasehold;
3.13.8......Approvals. All facilities leased or subleased thereunder have
received all approvals of governmental authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in accordance with applicable laws, rules, and
regulations; and
3.13.9......Utilities. All facilities leased or subleased thereunder are
supplied with utilities and other services reasonably necessary for the
operation of said facilities.
3.14 Intellectual Property. The Company owns or has the right to use pursuant to
a valid license, sublicense, agreement, or permission all Intellectual Property
necessary or desirable for the operation of the businesses of the Company as
presently conducted and as presently proposed to be conducted. No claim or
demand of any person has been made, nor is there any proceeding that is pending,
or to any of the Shareholders' Knowledge, threatened, which challenges the
rights of the Company with respect to any Intellectual Property or asserts that
the Company is infringing or otherwise in conflict with or is required to pay
any royalty or license fee with respect to any Intellectual Property.
3.15 Condition of Tangible Assets. Each tangible asset of the Company is free
from defects (patent and latent), has been maintained in accordance with normal
industry practice, is in good operating condition and repair (subject to normal
wear and tear), and is suitable, designed and intended for the purposes for
which it presently is used by the Shareholder and the Company and is not
outdated in comparison with the assets used for similar purposes by similar
businesses.
3.16 Contracts. Section 3.16 of the Disclosure Schedule lists the following
contracts and other agreements, written or oral, to which the Company was a
party immediately preceding the Closing:
3.16.1......Personal Property Leases. Any agreement (or group of related
agreements) for the lease of personal property to or from any Person
providing for lease payments;
3.16.2......Services. Any agreement (or group of related agreements) for the
furnishing or receipt of services, the performance of which will extend over
a period of more than one (1) year;
3.16.3......Partnership; Joint Venture. Any agreement constituting a
partnership or joint venture;
3.16.4......Indebtedness. Any agreement (or group of related agreements)
under which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation;
3.16.5......Confidentiality; Non-Competition. Any agreement concerning
confidentiality or non-competition;
3.16.6......Shareholders' Agreements. Any agreement by and between the
Shareholder and any Affiliates of the Company;
3.16.7......Plans. Any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of its current or former directors, officers, and employees;
3.16.8......Employment or Consulting Agreements. Any agreement for the
employment of any individual on a full-time or part-time or the engagement of
any individual as a consultant or independent contractor, or otherwise
compensating an individual for services rendered or to be rendered to the
Company;
3.16.9......Advances; Loans. Any agreement under which the Company has
advanced or loaned any amount to any of its directors, officers and employees
outside the ordinary course of business;
3.16.10.....Adverse Effects. Any agreement under which the consequences of a
default or termination could have a material adverse effect on the business,
financial condition, operations, results of operations or future prospects of
the Company; and
3.16.11.....Other Agreements. Any other agreement (or group of related
agreements) the performance of which involves consideration in excess of Five
Thousand and No/100 Dollars ($5,000.00).
The Shareholder has made available to OREX a correct and complete copy of each
written agreement listed in Section 3.16 of the Disclosure Schedule (as amended
to date) and a written summary setting forth the terms and conditions of each
oral agreement referred to in Section 3.16 of the Disclosure Schedule. With
respect to each such agreement: (a) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (b) there shall be no breach or other
violation resulting from the consummation of the transactions contemplated
hereby; (c) the Company is not in default or breach and no other party is in
breach or default, and no event has occurred which with notice or lapse of time
would constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (d) the Company and no other party has
repudiated any provision of the agreement. None of the agreements listed in
Section 3.16 of the Disclosure Schedule requires the consent or approval of any
Person, or any compensation or payment to be made to any such Person by reason
of the transactions contemplated by this Agreement, or the merger of the Company
with and into another Person.
3.17 Powers of Attorney. There are no outstanding powers of attorney executed on
behalf of the Company.
3.18 Insurance; Malpractice. Section 3.18 of the Disclosure Schedule contains a
list and brief description of all policies or binders of fire, liability,
product liability, workers compensation, health and other forms of insurance
policies or binders currently in force insuring against risks to which the
Company has been a party, a named insured or otherwise the beneficiary of
coverage at any time during the five (5) years immediately preceding the Closing
Date. Except as set forth on Section 3.18 of the Disclosure Schedule, neither
the Company, nor its employees, nor the Shareholder have, during the five (5)
years immediately preceding the Closing Date, filed a written application for
any insurance coverage relating to the Company's business or property which has
been denied by an insurance agency or carrier. Section 3.18 of the Disclosure
Schedule also sets forth a list of all claims for any insured loss in excess of
Five Thousand Dollars and No/100 Dollars ($5,000.00) per occurrence filed by the
Company, the Company's employees or the Shareholder during the five (5) years
immediately preceding the Closing Date, including workers compensation, general
liability, environmental liability and professional liability claims. With
respect to each insurance policy listed in Section 3.18 of the Disclosure
Schedule: (i) the policy is legal, valid, binding, enforceable, and in full
force and effect; (ii) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (iii) neither the Company,
the Shareholder, other health care professionals nor any other party to the
policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; (iv) the Company
has not repudiated any provision thereof and no other party to the policy has
repudiated any provision thereof; (v) there is no claim pending under any of
such policies as to which coverage has been questioned, denied or disputed by
the underwriters of such policies or any notice that a defense will be afforded
with reservation of rights; (vi) the Company has not received: (A) any notice
that any issuer of any such policy has filed for protection under applicable
bankruptcy laws or is otherwise in the process of liquidating or has been
liquidated; or (B) any other indication that such policies are no longer in full
force and effect or that the issuer of any such policy is no longer willing or
able to perform its obligations thereunder; and (vii) neither the Shareholder
nor the Company has received any written notice from or on behalf of any
insurance carrier issuing such policies, that there will hereafter be a
cancellation, or an increase in a deductible or non-renewal of existing
policies. The Company has been covered during the past five (5) years by
insurance in scope and amount customary and reasonable for the business in which
it has engaged during the aforementioned period.
3.19 Litigation. Section 3.19 of the Disclosure Schedule sets forth each
instance in which any of the Company or any individual engaged or employed by
the Company, including, but not limited to the Shareholder, with respect to the
products or services rendered on behalf of the Company: (a) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge; or (b) is a
party or is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator and contains a summary thereof. None of the actions,
suits, proceedings, hearings, and investigations set forth in Section 3.19 of
the Disclosure Schedule is likely after the Closing to result in any Adverse
Consequences change in the business, financial condition, operations, results of
operations, or future prospects of OREX and the Surviving Corporation. Neither
the Company nor the Shareholder has any reason to believe that any reason exists
upon which such action, suit, proceeding, hearing, or investigation may be
brought or threatened against any of the Company or any individual engaged or
employed by the Company.
3.20 Company Compliance. The Company is lawfully operated in accordance with the
requirements of all applicable laws and has in full force and effect all
authorizations and permits necessary to operate a mining company in the
jurisdictions where it is currently operating. There are no outstanding notices
of deficiencies relating to the Company issued by any governmental authority
requiring conformity or compliance with any applicable law or condition for
participation with such governmental authority or third-party condition for
participation with such governmental authority. The Company has not received
notice and the Company and Shareholder has no Knowledge or reason to believe
that, such necessary authorizations may be revoked or not renewed in the
ordinary course of business.
3.21 Employees. Except as set forth on Section 3.24 of the Disclosure Schedule:
(a) there is no unfair labor practice charge or complaint pending or threatened
relating to the business of the Company; and (b) payment in full to all of the
employees of the Company of all wages, salaries, commissions, bonuses, benefits,
and other compensation lawfully due and owing to such employees or otherwise
arising under any policy, practice, agreement, plan, program, statute, or other
law as of the Closing Date has been made.
3.22 Employee Benefits.
3.22.1......Plans. Section 3.25 of the Disclosure Schedule lists each Employee
Benefit or health and welfare plan that the Company maintains or to which the
Company contributes.
3.22.2......Compliance. Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all material
respects with its terms and with the applicable requirements of ERISA, the Code
and other applicable laws.
3.22.3......Reports and Descriptions. All required reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's, and
Summary Plan Descriptions) have been filed or distributed appropriately with
respect to each such Employee Benefit Plan. The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Code Section 4980B have been met with
respect to each such Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
3.22.4......Contributions. All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan and all contributions for any pay period ending on or before the
Closing Date which are not yet due have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the past custom and practice of the
Company. All premiums or other payments due for all periods ending on or before
the Closing Date have been paid with respect to each such Employee Benefit Plan
which is an Employee Welfare Benefit Plan.
3.22.5......Qualified Plan. Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan and is intended to meet the requirements of a "qualified
plan" under Code Section 401(a) meets such requirements and has received, within
the last two (2) years, a favorable determination letter from the IRS.
3.22.6......Market Value. The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested and
nonvested Liabilities thereunder determined in accordance with PBGC methods,
factors, and assumptions applicable to an Employee Pension Benefit Plan
terminating on the date for determination.
3.22.7......Copies. The Shareholder has delivered to OREX correct and complete
copies of the plan documents and summary plan descriptions, the most recent
determination letter received from the IRS, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance contracts, and other funding
agreements which implement each such Employee Benefit Plan.
3.22.8......Maintenance of Plans. With respect to each Employee Benefit Plan
that the Company maintains, ever has maintained, or to which it contributes,
ever has contributed, or ever has been required to contribute:
3.22.8.1....Reportable Events. No such Employee Benefit Plan which is an
Employee Pension Benefit Plan has been completely or partially terminated or
been the subject of a Reportable Event as to which notices would be required to
be filed with the PBGC. No proceeding by the PBGC to terminate any such Employee
Pension Benefit Plan has been instituted or threatened; and
3.22.8.2....Prohibited Transactions. There have been no Prohibited Transactions
with respect to any such Employee Benefit Plan. No Fiduciary has any Liability
for breach of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any such Employee Benefit
Plan. No action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such Employee Benefit Plan
(other than any Multiemployer Plan), other than routine claims for benefits, is
pending or threatened. The Shareholder and the Company have no Knowledge of any
basis for any such action, suit, proceeding, hearing, or investigation.
3.23 Guaranties. The Company is not a guarantor or otherwise liable for any
Liability or obligation (including indebtedness) of any other Person.
3.24 Environment, Health, and Safety.
3.24.1......Compliance. Each of the Company and its predecessors and
Affiliates has complied and is in compliance with all Environmental, Health,
and Safety Requirements.
3.24.2......Permits and Licenses. Without limiting the generality of the
foregoing, each of the Company and its Affiliates has obtained and complied
with, and is in compliance with, all permits, licenses and other authorizations
that are required pursuant to Environmental, Health, and Safety Requirements for
the occupation of its facilities and the operation of its business; a list of
all such permits, licenses and other authorizations is set forth on Section 3.28
of the Disclosure Schedule.
3.24.3......Notices. Neither the Company nor its predecessors or Affiliates has
received any written or oral notice, report or other information regarding any
actual or alleged violation of Environmental, Health, and Safety Requirements,
or any Liabilities or potential Liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise), including any investigatory, remedial or
corrective obligations, relating to any of them or its facilities arising under
Environmental, Health, and Safety Requirements.
3.24.4......Hazardous Substances. None of the Company or its predecessors or
Affiliates has treated, stored, disposed of, arranged for or permitted the
disposal of, transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to liabilities,
including any Liability for response costs, corrective action costs, personal
injury, property damage, natural resources damages or attorney fees, pursuant to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, the Solid Waste Disposal Act, as amended or any other
Environmental, Health, and Safety Requirements.
3.25 Certain Business Relationships with the Company and its Affiliates. Neither
the Shareholders nor any of his Affiliates have been involved in any business
arrangement or relationship with the Company and its Affiliates within the past
twelve (12) months, and none of the Shareholder and his Affiliates owns any
asset, tangible or intangible, which is material to the business of any of the
Company and its Affiliates.
3.26 Bank Accounts. Section 3.31 of the Disclosure Schedule sets forth all of
the bank and security accounts and all safe deposit boxes maintained by the
Company and all lines of credit owned or used by the Company, and the names of
all persons with authority to withdraw funds from, or execute drafts or checks
on, each such account.
3.27 Tax Status. The Shareholder is not a "nonresident alien individual" or
"foreign corporation" for purposes of Code Section 897(a)(1).
3.28 Binding Obligation. This Agreement constitutes the valid and legally
binding obligation of the Shareholder, enforceable in accordance with its terms
and conditions.
3.29 Securities Representation.
3.29.1......No Registration of OREX Shares; Investment Intent. The Shareholders
acknowledge that the OREX Shares to be delivered pursuant to this Agreement have
not been and will not be registered under the Securities Act and may not be
resold without compliance with the Securities Act. The OREX Shares to be
acquired by the Shareholders pursuant to this Agreement are being acquired
solely for his own account, for investment purposes only and with no present
intention of distributing, selling or otherwise disposing of them in connection
with a distribution other than in compliance with the Securities Act.
3.29.2......Resale Restrictions. The Shareholders covenant, warrant and
represent that none of the OREX Shares issued to the Shareholders will be
offered, sold, assigned, pledged, hypothecated, transferred or otherwise
disposed of except after full compliance with all of the applicable provisions
of the Securities Act and the rules of regulations of the Commission and
applicable state securities laws and this Agreement.
3.29.3......Ability to Bear Economic Risk. The Shareholders covenants, warrants
and represents that he is able to bear the economic risk of an investment in
OREX Shares acquired pursuant to this Agreement and can afford to sustain a
total loss of such investment and have such Knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of the proposed investment and therefore has the capacity to protect his
own interests in connection with the acquisition of the OREX Shares. The
Shareholders, and the Shareholders' purchaser representatives, if any, have had
an adequate opportunity to ask questions and receive answers from the officers
of OREX concerning the background and experience of the officers and directors
of OREX, the plans for the operations of the business of OREX, and any plans for
additional acquisitions and the like. The Shareholders, and the Shareholders'
purchaser representative, if any, has asked any and all questions in the nature
described in the preceding sentence and all questions have been answered to such
individual's satisfaction.
3.29.4......Accredited Investor. The Shareholder covenants, represents and
warrants that he is an: (a) individual with a net worth (either individually or
jointly with his respective spouse) in excess of One Million and No/100 Dollars
($1,000,000.00) (for the purpose of determining net worth, the Shareholders'
principal residence is valued at cost, including the cost of improvements, net
of current encumbrances upon the property); or (b) individual who had an income
in excess of Two Hundred Thousand and No/100 Dollars ($200,000.00) in each of
1997 and 1998, or had a joint income with his respective spouse in excess of
Three Hundred Thousand and No/100 Dollars ($300,000.00) in each of 1997 and
1998, and has a reasonable expectation of reaching the same income level in
1999.
3.29.5......Residency. The Shareholder covenants, warrants and represents that
he is a resident of the State of Nevada, and received this Agreement and first
learned of the transactions contemplated hereby in the State of Nevada. He
executed and will execute all documents contemplated hereby in the State of
Nevada, and intends that the laws of the State of Nevada govern this
transaction.
3.29.6......No Registration. The Shareholder understands, agrees and
acknowledges that the OREX Shares have not been registered under the Delaware
Securities Act, Nevada Securities Act or the Securities Act in reliance upon
exemption provisions contained therein which OREX believes are available.
3.30 Disclosure. The representations and warranties contained in this Section 3
do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained in this Section 3 not misleading.
4. REPRESENTATIONS AND WARRANTIES OF OREX. OREX represents and warrants to the
Shareholder that the statements contained in this Section 4 are correct and
complete as of the Closing Date.
4.1 Organization of OREX. OREX is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware.
4.2 Authorization of Transaction. OREX has full power and authority (including
full corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of OREX, enforceable in accordance with its terms and
conditions.
5. DELIVERIES AT CLOSING.
5.1 Deliveries of the Shareholder. At or prior to the Closing, the Shareholder
shall deliver to OREX the following:
5.1.1 Consents and Approvals. Copies of all authorizations, consents, and
approvals of governments, governmental agencies and third parties referred to in
Section 3.4(a) of the Disclosure Schedule;
5.1.2 Termination of Agreements. Copies of documents effectuating the
termination of any and all written employment and independent contractor
agreements, compensation agreements, buy-sell agreements and other similar
agreements entered into by the Company and which are in effect immediately
preceding the Closing, which terminations shall each include a complete release
of the Company from all known or unknown obligations or liabilities;
5.1.3 Company Stock. The Certificates and stock powers, duly endorsed,
transferring the Company Stock to OREX and the officer and director
resignations required in Section 2.6;
5.1.4 Corporate Authorization. A resolution of the Shareholders and board of
directors of the Company which authorizes the transaction in accordance with:
(a) applicable law; (b) the Company's articles of incorporation and bylaws; and
(c) all other requirements for proper corporate authorization;
5.1.5 Good Standing Certificate. A certificate issued by the appropriate state
governmental authority no more than ten (10) days prior to the Closing Date
evidencing the good standing of the Company;
5.1.6 Secretary's Certificate. A certificate of the secretary of the Company
certifying that the minute books, articles of incorporation and bylaws of the
Company, attached as exhibits to such certificate, are true, correct, and
complete; and
5.1.7 Other documents. Such other instruments or documents as may be necessary
or appropriate to carry out the Transactions.
5.2 Deliveries of OREX. At or within five (5) business days after the Closing
Date, OREX shall deliver to the Shareholder the following:
5.2.1 Transaction Consideration. The Transaction Consideration ;
5.2.2 Resolutions. A resolution of the board of directors of OREX
authorizing the Transaction; and
5.2.3 Certificate of Incumbency. A certificate of incumbency of OREX.
6. FILING REGISTRATION STATEMENT.
6.1 Initial Public Offering. If OREX shall decide, in its sole and absolute
discretion, to sell OREX Shares to the public through an Initial Public
Offering, at such time as OREX considers it desirable and appropriate in its
sole and absolute discretion, the Shareholder shall cooperate to prepare and
file with the Commission the Registration Statement on Form S-1 (or such other
form as OREX determines at its sole discretion) to be filed by OREX in
connection with an Initial Public Offering (the "Registration Statement"). As
part of the Initial Public Offering, if requested by the underwriter, the
Shareholder will execute a lock-up letter for the period applicable to other
stockholders of OREX. Nothing in this Agreement shall be construed as an
obligation or commitment of OREX to effectuate an Initial Public Offering at any
time.
6.2 Information. The Shareholders shall, upon request, furnish OREX with all
information concerning the Shareholders, the Company and the Company's
directors, officers and partners and such other matters as may be reasonably
requested by OREX in connection with the preparation of the Registration
Statement and each amendment or supplement thereto, or any other statement,
filing, notice or application made by or on behalf of each such party or any of
its Subsidiaries to any governmental entity in connection with the transactions
contemplated by this Agreement, and shall properly execute all such documents
deemed necessary and appropriate by OREX in its sole and absolute discretion in
connection with the preparation of the Registration Statement including, without
limitation, the Registration Statement and each amendment and supplement
thereto. None of the information or documents supplied or to be supplied by the
Shareholders specifically for inclusion in the Registration Statement, by
exhibit or otherwise, will, at the time the Registration Statement and each
amendment and supplement thereto, if any, becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
7. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the
period following the Closing:
7.1 General. In the event that at any time after the Closing any further action
is necessary to carry out the purposes of this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other Party may reasonably request,
all at the sole cost and expense of the requesting Party; provided, however,
that the taking of any action necessary to execute or deliver to OREX any stock
powers and such other instruments of transfer as may be necessary to transfer
ownership of the Company's Stock by the Shareholder shall be borne by the
Shareholders.
7.2 Tax Returns. The Shareholders shall be responsible for preparing and filing
all income or franchise Tax Returns of the Company relating to periods of time
prior to the Closing Date. OREX will be responsible for preparing and filing all
income and franchise Tax Returns of the Company, if any, relating to periods
after the Closing. The Shareholders will provide OREX with an opportunity to
review and comment on such Tax Returns (including any amended returns). The
Shareholders will take no positions on the Tax Returns of the Company that
relate to the tax period prior to the Closing Date that could adversely affect
the Company after the Closing. The income of the Company will be apportioned to
the period up to the Closing Date and the period from and after the Closing Date
in accordance with the provisions of Code Section 1362(e)(6)(D) by closing the
books of the Company as of the close of business on the last calendar day
immediately preceding the Closing Date.
7.3 Transition. Neither the Shareholders nor the Company will take any action
that is designed, intended or likely to have the effect of discouraging any
lessor, licensor, customer, supplier or other business associate of the Company
from maintaining the same business relationships with the Company after the
Closing as he, she or it maintained with the Company prior to the Closing.
7.4 Litigation Support. In the event and for so long as any Party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand in connection with: (a) any
transaction contemplated under this Agreement; or (b) any fact, situation,
circumstances, status, condition, activity, practice, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the Parties will cooperate with the contesting or
defending Party and its or his counsel in the contest or defense, at the sole
cost and expense of the contesting or defending Party except to the extent that
the contesting or defending party is entitled to indemnification therefor under
this Agreement
7.5 Consents. The Shareholders hereby covenants and agrees that, after the
Closing, he shall use his best efforts to obtain all authorizations, consents,
and approvals set forth in Section 3.4(b) of the Disclosure Schedule. Anything
to the contrary notwithstanding, this Agreement shall not constitute an
assignment of, or an agreement to assign, any contract if an attempted
assignment thereof, without the consent, approval or agreement of a third party
thereto, would constitute a breach thereof or in any way adversely affect the
rights of the parties thereunder. If such consent, approval or agreement is not
obtained, or if an attempted assignment thereof would affect the rights of the
parties thereunder so that such parties would not in fact receive all such
rights, the Parties will cooperate in any arrangement designed to provide for
the Parties to receive the benefits under any such contract, including
enforcement for the benefit of OREX of any and all rights of the Shareholder
against a third party thereto arising out of the breach or cancellation by such
third party or otherwise.
8. SURVIVAL AND INDEMNIFICATION.
8.1 Survival of Representations and Warranties. All of the representations,
warranties, covenants, and agreements contained in this Agreement are material
and have been relied upon by the Parties hereto and shall survive the Closing
for their applicable statute of limitations. The representations and warranties
contained herein shall not be affected by any investigation, verification or
examination by any Party or by anyone on behalf of such Party.
8.2 Indemnification Provisions for the Benefit of OREX. In the event of: (a) a
misrepresentation (or in the event any third party alleges facts that, if true,
would mean a misrepresentation) of any of the Company's or the Shareholders'
representations and/or warranties contained in this Agreement; (b) a breach (or
in the event any third party alleges facts that, if true, would mean a breach)
of any of the Company's or the Shareholders' covenants contained in this
Agreement; or (c) any Liability of the Company of any nature whatsoever accrued
or existing as of the Closing Date or related to actions of the Company which
occurred prior to the Closing Date, which is not reflected on the Financial
Statements or the Closing Date Balance Sheet, then the Shareholders agree to
indemnify OREX from and against any Adverse Consequences OREX may suffer through
and after the date of the claim for indemnification resulting from, arising out
of, relating to, in the nature of, or caused by the misrepresentation or breach
(or alleged breach) or non-disclosed Liability. No provision of this Agreement,
including but not in any way limited to, any "Knowledge" qualifiers or
materiality standards in the Representations and Warranties of the Shareholder,
shall have any effect on the Shareholders' indemnity for any Liability arising
prior to the Closing Date.
8.3 Indemnification Provisions for the Benefit of the Shareholder. In the event
of a misrepresentation or breach (or in the event any third party alleges facts
that, if true, would mean a misrepresentation or breach) of any of OREX's
representations, warranties, and covenants contained in this Agreement, then
OREX agrees to indemnify the Shareholder from and against any Adverse
Consequences the Shareholder may suffer through and after the date of the claim
for indemnification resulting from, arising out of, relating to, in the nature
of, or caused by the breach (or the alleged breach).
8.4 Matters Involving Third Parties.
8.4.1 Notification. If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against the other Party (the "Indemnifying
Party") under this Section 8, then the Indemnified Party shall promptly notify
the Indemnifying Party thereof in writing; provided, however, that no delay on
the part of the Indemnified Party in notifying the Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder unless the
Indemnifying Party thereby is prejudiced and then only to the extent that the
Indemnified Party is actually prejudiced.
8.4.2 Defense by Indemnifying Party. The Indemnifying Party will have the right
to defend the Indemnified Party against the Third Party Claim with counsel of
its choice satisfactory to the Indemnified Party so long as: (a) the
Indemnifying Party notifies the Indemnified Party in writing within ten (10)
business days after the Indemnified Party has given notice of the Third Party
Claim that the Indemnifying Party will indemnify the Indemnified Party from and
against any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim; (b) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third Party Claim
and fulfill the Indemnifying Party's indemnification obligations hereunder; (c)
the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief; (d) settlement of, or an adverse judgment
with respect to, the Third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or practice adverse
to the continuing business interests of the Indemnified Party; and (e) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.
8.4.3 Satisfactory Defense. So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 8.4.2 above: (a) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim; (b) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld or delayed unreasonably); and (c) the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (not to be withheld or delayed unreasonably)
and any such settlement must include a complete release of the Indemnified
Party.
8.5 Conditions. In the event any of the conditions in Section 8.4.2 above is or
becomes unsatisfied, however: (a) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, the
Indemnifying Party in connection therewith); (b) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses); and (c) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Section 8.
9. MISCELLANEOUS.
9.1 Confidentiality, Press Releases, and Public Announcements. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of the other
Parties.
9.2 Shareholders' Restrictive Covenants.
9.2.1 Restricted Period. The Shareholders hereby agrees that during the time
period commencing as of the Closing Date and continuing for a period of two (2)
years thereafter, neither the Shareholders nor any of his Affiliates, shall,
other than on behalf of OREX, directly or indirectly, for himself, or on behalf
of any other corporation, person, firm, partnership, association, or any other
entity whatsoever (whether as an individual, agent, servant, employee, employer,
officer, director, shareholder, investor, principal, consultant or in any other
capacity whatsoever):
9.2.1.1.....Establish in, operate, or engage or participate in or finance any
business which engages in direct competition with the business being conducted
by OREX at such time;
9.2.1.2.....Solicit or engage in the solicitation of, or serve or accept any
business from client, suppliers, or other customers of the business conducted by
OREX for services competitive with those of OREX, OREX's successors and assigns,
or OREX's Affiliates;
9.2.1.3.....Request, induce or advise any clients, suppliers, vendors, employers
or other customers of the business conducted by OREX or OREX's Affiliates to
withdraw, curtail or cancel their business or other relationships with OREX or
assist, induce, help or join any other person or entity in doing any of the
above activities; or
9.2.1.4.....Induce or attempt to influence any employee of OREX to terminate his
or her employment with OREX or to hire, recruit or solicit any such employee,
whether or not so induced or influenced.
9.2.2 Not Applicable. The restrictions set forth in Section 9.2 shall not be
deemed to prevent the Shareholder from acquiring through market purchases and
owning, solely as an investment, less than five percent (5%) in the aggregate of
the equity securities of any class of any issuer whose shares are listed or
admitted for trading on any United States national securities exchange or are
quoted on the National Association of Securities Dealers Automated Quotations
Systems, or any similar system of automated dissemination of quotations of
securities prices in common use, so long as neither of them is a member of any
"control group" (within the meaning of the rules and regulations of the
Commissions) of any such issuer.
9.2.3 Consideration. OREX and the Shareholders have carefully considered the
nature and extent of the restrictions imposed by this Section 9.2 and the rights
and remedies conferred upon OREX hereunder and hereby expressly acknowledge and
agree that: (a) the restricted territory, period, and activities are reasonable
and are designed to eliminate competition which would otherwise be unfair to
OREX; (b) are necessary and fully required to protect the legitimate business
interest of OREX; (c) any violation of the terms of these restrictive covenants
would have a substantial detrimental effect on OREX's businesses; (d) the
restrictive covenants do not stifle any of the Shareholders' inherent skill and
experience; and (e) would not operate as a bar to any of the Shareholders' means
of support. Because of the difficulty of measuring economic losses to OREX as a
result of the breach of the foregoing covenants, and because of the immediate
and irreparable damage that would be caused to OREX for which it would have no
other adequate remedy, the Shareholder agrees that, in the event of a breach by
any of them of the foregoing covenants, the covenants set forth in this Section
9.2 may be enforced by OREX by injunctions and restraining orders in addition to
all other available legal remedies.
9.2.4 Third-Party Beneficiaries. All successors and assigns of OREX, all
Affiliates of OREX, and all successors and assigns of such Affiliates are
third-party beneficiaries of the restrictive covenants contained in this Section
9.2 and the provisions of this Section 9.2 are intended for the benefit of, and
may be enforced by, OREX's and successors and assigns and OREX's Affiliates and
such Affiliates' successors and assigns.
9.2.5 Defenses. The existence of any claim or cause of action by the
Shareholders against OREX, whether predicated upon this Agreement or otherwise,
shall not constitute a defense to the enforcement by OREX, or any of OREX's
successors and assigns or Affiliates and such Affiliates' successors and
assigns, but shall be litigated separately. The provisions of this Section 9.2
shall survive the termination of this Agreement.
9.2.6 Severability. The covenants in this subsection are severable and separate,
and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial restrictions
set forth are unreasonable, then it is the intention of the parties that such
restrictions be enforced to the fullest extent which the court deems reasonable,
and the Agreement shall thereby be reformed.
9.3 Confidentiality. In order to induce OREX to enter into this Agreement, the
Shareholders covenants and agrees that from and after the Closing Date, the
Shareholders nor any of his Affiliates (to the extent any such Affiliate has
received Confidential Information as defined below or trade secrets, as defined
below) shall disclose, divulge, furnish or make accessible to anyone any
Confidential Information or Trade Secrets, or in any way use any Confidential
Information or Trade Secrets in the conduct of any business; provided, however,
that nothing in this Section 9.3 will prohibit the disclosure of any
Confidential Information or Trade Secrets: (a) which is required to be disclosed
by the Shareholders or any of his Affiliates in connection with any court action
or any proceeding before any authority; (b) in connection with the enforcement
of any of the respective rights of the Shareholders hereunder; or (c) in
connection with the defense by the Shareholder of any claim asserted against
them hereunder; provided, however, that in the case of a disclosure contemplated
by Section 9.3(a) above, no disclosure shall be made until the Shareholders
shall give notice to OREX of the intention to disclose such Confidential
Information or Trade Secrets so that OREX may contest the need for disclosure,
and the Shareholders will cooperate (and will cause their Affiliates and their
respective representatives to cooperate) with OREX in connection with any such
proceeding. Notwithstanding any provision of this Agreement which may be to the
contrary, the foregoing provisions restricting the use of Confidential
Information and Trade Secrets shall survive the Closing for the time period
equal to five (5) years from the date of this Agreement. For the purpose of this
Agreement, the term "Confidential Information" shall mean all records, files,
reports, protocols, policies, manuals, databases, processes (including, but not
limited to, the Haber Gold Process), procedures, computer systems, materials and
other documents pertaining to the operations of OREX and the term "Trade
Secrets" shall mean information, including a formula, pattern, compilation,
program, device, method, technique, or process that: (i) derives independent
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons who can obtain
economic value from its disclosure or use; and (ii) is the subject of efforts
that are reasonable under the circumstances to maintain its secrecy.
9.4 No Third-Party Beneficiaries. Other than with respect to the restrictive
covenants set forth in Section 9.2 above, this Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
9.5 Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and supersedes any
prior understandings, agreements, or representations by or between the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
9.6 Succession and Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties named herein and their respective successors,
assigns, distributees, heirs, and grantors of any revocable trusts of a Party
hereto. No Party may assign either this Agreement or any of its or his rights,
interests, or obligations hereunder without the prior written approval of the
other Parties; provided, however, OREX may assign this Agreement to their
Affiliates as part of a corporate restructuring.
9.7 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
9.8 Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
9.9 Notices. All notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given: (a) upon receipt if it is
sent by facsimile, (b) the next business day if sent by reputable overnight
courier, or (c) three (3) days after mailing if by certified mail return receipt
requested, postage prepaid, and addressed or otherwise sent to the intended
recipient as set forth below:
If to OREX: Orex Gold Mines Corporation
...... 2121 Ponce de Leon Boulevard
Coral Gables, Florida 33134
...... Attention: President
Facsimile: (305) 476-9118
With a copy to: McDermott, Will & Emery
201 S. Biscayne Boulevard, Suite 2200
Miami, Florida 33131
............ Attention: Roland Sanchez-Medina Jr.
............ Facsimile: (305) 347-6500
With a copy to:
Attn:
Facsimile:
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address or facsimile number set forth
above using any other means (including personal delivery, messenger service,
ordinary mail, or electronic mail), but no such notice, request, demand, claim,
or other communication shall be deemed to have been duly given unless and until
it actually is received by the intended recipient. Any party may change the
address or facsimile number to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
9.10 Governing Law; Jurisdiction; Attorney's Fees. This Agreement, and all
proceedings hereunder, shall be governed by and construed in accordance with the
domestic laws of the State of Florida without giving effect to any choice or
conflict of law provision or rule (either of the State of Florida or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Florida. In the event of any suit under this Agreement
or otherwise between the parties hereto, the prevailing Party shall be entitled
to all reasonable attorney's fees and costs, including allocated costs of
in-house counsel, to be included in any judgment recovered. In addition, the
prevailing Party shall be entitled to recover reasonable attorney's fees and
costs, including allocated costs of in-house counsel, incurred in enforcing any
judgment arising from a suit under this Agreement. This post-judgment attorney's
fees and costs provision shall be severable from the other provisions of this
Agreement and shall survive any judgment on such suit and is not to be deemed
merged into the judgment. Venue for any such dispute or suit between the
parties, venue shall be in Miami-Dade County, Florida.
9.11 Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Parties. No
waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence and all waivers must be in writing, signed
by the waiving Party, to be effective.
9.12 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
9.13 Expenses. Except as set forth herein, each of the Parties will bear its or
his own costs and expenses (including, but not limited to, legal and accounting
fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.
9.14 Further Assurances. Each Party shall, at the reasonable request of any
other Party hereto, execute and deliver to such other Party all such further
instruments, assignments, assurances and other documents, and take such actions
as such other Party may reasonably request in connection with the carrying out
the terms and provisions of this Agreement.
9.15 Construction. Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. Nothing in the Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein, unless the Disclosure Schedule identifies the exception
with reasonable particularity. The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from nor mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
9.16 Incorporation of Exhibits and Schedules. The Exhibits and Schedules
(including the Disclosure Schedule) identified in this Agreement and the
recitals first set forth above are incorporated herein by reference and made a
part hereof.
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
...... OREX:
OREX GOLD MINES CORPORATION, a Delaware
corporation
...... By:
---------------------------------------
Warren Hemedinger, President
COMPANY:
ARCH MINING COMPANY, a Nevada corporation
By:
...... Harry Nyce, President
......
...... By:_______________________________________
...... Viki Blackburn, Secretary
......
............
<PAGE>
-vi-
EXHIBITS
2.3... Articles of Merger
DISCLOSURE SCHEDULES
3.1... Officers and Directors
3.2... Capitalization
3.4(a) Consents to be Obtained Prior to Closing
3.4(b) Consents to be Obtained After Closing
3.6... Assets
3.8... Financial Statements
3.12.. Tax Returns
3.13.. Real Property
3.16.. Material Contracts
3.18.. Insurance
3.19.. Litigation
3.24.. Employment Matters
3.25.. Employment Benefits
3.28.. Environmental Permits, Licenses and Approvals
3.31.. Bank Accounts
<PAGE>
EXHIBIT I
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
1.1 "Accounts Receivable" means the accounts receivable of the Company
determined in accordance with GAAP with respect to the operations of the Company
prior to the Closing Date arising from the rendering of services to patients
through the Closing Date, including, without limitation, those from private pay
patients, private insurance payors, third party payors and governmental
programs.
1.2 "Accounts Receivable Collection Period" has the meaning set forth in Section
2.13.2.1.
1.3 "Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, complaints, claims, demands, injunctions, judgments, orders,
decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in
settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and fees,
including court costs and reasonable attorneys' fees and expenses.
1.4 "Affiliate" shall mean, with respect to any Person: (a) any corporation,
proprietorship, partnership, limited liability company, or any other business
entity whatsoever that, directly or indirectly, owns or controls, is under
common ownership or control with, or is owned or controlled by, such Person; and
(b) if the Person is an individual, any other individual who is related to such
Person. For the purposes of this definition, the terms "controls," "is
controlled by" and "is under common control with" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise. OREX is not an Affiliate of the Company
or the Shareholder for purposes of this Agreement and neither the Shareholder
nor the Company is an Affiliate of OREX for purposes of this Agreement.
1.5 "Agreement" has the meaning set forth in the Preamble.
1.6 "Articles of Merger" has the meaning set forth in Section 2.3.
1.7 "Certificate(s)" has the meaning set forth in Section 2.12.1.
1.8 "Closing" has the meaning set forth in Section 2.9.
1.9 "Closing Date" has the meaning set forth in Section 2.9.
1.10 "Code" means the Internal Revenue Code of 1986, as amended.
1.11 "Collected Accounts Receivable" has the meaning set forth in Section
2.13.2.1.
1.12 "Commission" means the U.S. Securities and Exchange Commission.
1.13 "Company" has the meaning set forth in the Preamble.
1.14 "Company Shares" means any share of common stock, $.01 par value per share,
of the Company.
1.15 "Delaware Act" and "Nevada Act" have the meanings set forth in Section 2.1.
1.16 "Disclosure Schedule" has the meaning set forth in Section 3.
1.17 "Effective Time" has the meaning set forth in Section 2.3.
1.18 "Employee Benefit Plan" means any: (a) nonqualified deferred compensation
or retirement plan or arrangement which is an Employee Pension Benefit Plan; (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan; (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan); (d) Employee Welfare Benefit Plan; or (e) any bonus,
incentive, severance, stock option, stock purchase, short-term disability plan
or other material fringe benefit plan, program or arrangement, including
policies concerning holidays, vacations and salary continuation during short
absences for illness or otherwise.
1.19 "Employee Pension Benefit Plan" has the meaning set forth in ERISA Section
3(2).
1.20 "Employee Welfare Benefit Plan" has the meaning set forth in ERISA Section
3(1).
1.21 "Environmental, Health, and Safety Requirements" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, the Clean Air Act, the Federal Water
Pollution Control Act, the Safe Drinking Water Act, the Toxic Substance Control
Act, the Emergency Planning and Community Right-to-Know Act of 1986, the
Hazardous Material Transportation Act, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, injunctions, judgments, orders, decrees, and rulings) of
federal, state, local, and foreign governments (and all agencies thereof)
concerning pollution or protection of the environment, public health and safety,
or employee health and safety, including laws relating to emissions, discharges,
releases, or threatened releases of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials (including petroleum products and
asbestos) or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes.
1.22 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.23 "Fiduciary" has the meaning set forth in ERISA Section 3(21).
1.24 "Financial Statements" has the meaning set forth in Section 3.8.
1.25 "GAAP" means the United States generally accepted accounting principles in
effect from time to time.
1.26 "Indemnified Party" has the meaning set forth in Section 8.4.1.
1.27 "Indemnifying Party" has the meaning set forth in Section 8.4.1.
1.28 "Initial Public Offering" means the initial underwritten public offering of
OREX Shares contemplated by the Registration Statement.
1.29 "Intellectual Property" means: (a) all trade secrets and confidential
business information (including customer and supplier lists, ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
pricing and cost information, and business and marketing plans and proposals);
(b) all trademarks, service marks, trade dress, logos, trade names, and
corporate names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith; (c) all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof; (d)
all copyrightable works, all copyrights, and all applications, registrations,
and renewals in connection therewith; (e) all computer software (including data
and related documentation); (f) all other proprietary rights; and (g) all copies
and tangible embodiments thereof (in whatever form or medium).
1.30 "IRS" means the U.S. Internal Revenue Service.
1.31 "Knowledge" shall be deemed to include the assurance that such Knowledge is
based upon reasonable investigation and "Knowledge," as it applies to the
Shareholders, means the Knowledge of the Shareholders, and "Knowledge," as it
applies to the Company, means the Knowledge of the Shareholder and the officers,
directors and employees of the Company.
1.32 "Liability" means any liability, whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due, including,
but not in any way limited to, any liability for Taxes.
1.33 "Merger" has the meaning set forth in Section 2.1.
1.34 "Most Recent Financial Statements" has the meaning set forth in Section
3.8.
1.35 "Most Recent Fiscal Month End" has the meaning set forth in Section 3.8.
1.36 "Most Recent Fiscal Year End" has the meaning set forth in Section 3.8.
1.37 "Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
1.38 "OREX" has the meaning set forth in the Preamble.
1.39 "OREX Shares" means any share of common stock, $.001 par value per share,
of OREX.
1.40 "Party(ies)" has the meaning set forth in the Preamble.
1.41 "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
1.42 "Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a limited liability company or partnership, a trust, a
joint venture, an unincorporated organization, any other form of entity
whatsoever, or a governmental entity (or any department, agency, or political
subdivision thereof).
1.43 "Prohibited Transaction" has the meaning set forth in ERISA Section 406 and
Code Section 4975.
1.44 "Registration Statement" has the meaning set forth in Section 6.1.
1.45 "Reportable Event" has the meaning set forth in ERISA Section 4043.
1.46 "Securities Act" means the Securities Act of 1933, as amended.
1.47 "Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.48 "Security Interest" means any lien, claim, encumbrance, mortgage,
hypothecation, pledge, or other security interest, excluding purchase money
security interests arising in the ordinary course of business and liens arising
by operation of law for Taxes not yet due and payable.
1.49 "Shareholder" has the meaning set forth in the Preamble.
1.50 "Subsidiary" means any corporation with respect to which a specified Person
(or a Subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
members of the board of directors.
1.51 "Tax" or "Taxes" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, production, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever,
including interest, penalty, or additions thereto, whether disputed or not, and
whether or not accrued on the Financial Statements.
1.52 "Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
1.53 "Third Party Claim" has the meaning set forth in Section 8.4.1.
1.54 "Trade Secrets" has the meaning set forth in Section 9.3.
1.55 "Transaction" has the meaning set forth in Section 2.1.
1.56 "Transaction Consideration" has the meaning set forth in Section 2.13.
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 01/08/1997
971006595 - 2703684
CERTIFICATE OF INCORPORATION
OF
MEDALION SERVICES, INC.
FIRST. The name of this corporation shall be:
MEDALION SERVICES, INC.
SECOND. Its registered office in the State of Delaware is to be located at
1013 Centre Road, in the City of Wilmington, County of New Castle, 19805, and
its registered agent at such address is CORPORATE AGENTS, INC.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation is
authorized to issue is:
One Thousand Five Hundred (1,500) Shares Without Par Value.
FIFTH. The name and mailing address of the incorporator is as follows:
Cheryl A. Lewis
Corporate Agents, Inc.
1013 Centre Road
Wilmington, DE 19805
SIXTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
IN WITNESS WHEREOF, The undersigned, being the incorporator hereinbefore
named, has executed, signed and acknowledged this certificate of incorporation
this eighth day of January, A.D. 1997.
/s/
Cheryl A. Lewis
Incorporator
State of Delaware
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT
OF "MEDALION SERVICES, INC.", FILED IN THIS OFFICE ON THE TWENTY-EIGHTH DAY OF
FEBRUARY, A.D. 1997, AT 9 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY REORDER OF DEEDS FOR RECORDING.
/state seal/
Edward J. Freel, Secretary of State
2703684 8100 AUTHENTICATION: 8354026
971067987 DATE: 02-28-97
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
MEDALION SERVICES, INC.
The undersigned being the President of Medalion Services, Inc., (the
"Corporation"), in order to amend the Corporation's Certificate of
Incorporation, hereby certifies as follows:
FIRST: The name of the corporation is MEDALION SERVICES, INC.
SECOND: The Corporation hereby amends its Certificate of Incorporation as
follows:
1. Paragraph "FOURTH" relating to the Corporation's authorized shares of capital
stock is amended to increase the numb-or of authorized shares from 1,500 shares
of common stock without par value to Five Million (5,000,000) shares of common
stock having a per share par value of $.0001.
2. The following paragraph is hereby added to the corporation's Certificate of
Incorporation as Article "SEVENTH" thereof:
"To the fullest extent permitted by the General Corporation Law of
Delaware, as the same exists or as it may hereafter by amended, no
director of the corporation shall be personally liable for monetary
damages for breach of his/her fiduciary duty as a director. The
Corporation shall indemnify each officer and director of the
Corporation to the fullest extent permitted by Section 145 of the
General Corporation Law of the State of Delaware, as the same may be
amended from time to time.
THIRD: The amendment affected herein was authorized and adopted by the
Corporation in accordance with Section 242 of the General Corporation Law of the
State of Delaware. IN WITNESS WHEREOF, I hereunto sign my name and affirm that
the statements made herein are true under the penalties of perjury, this let
day of February 1997.
/s/ Doreen Rush
Doreen Rush, President
TOTAL P.02
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 02/25/1999
991074801 - 2703684
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
MEDALION SERVICES, INC.
(under section 242 of the General Corporation Law)
The undersigned corporation, in order to amend its Certificate of Incorporation,
hereby certifies as follows:
FIRST: The name of the corporation is: MEDALION SERVICES, INC.
SECOND: The corporation's Certificate of Incorporation was originally filed with
the secretary of State on January 6, 1997.
THIRD: The corporation hereby amends its Certificate of Incorporation by
deleting in its entirety paragraphs FIRST and FOURTH and inserting in lien
thereof the following:
"FIRST: The name of the corporation is OREX COLD MINE CORPORATION."
"FOURTH; The total number of shares of stock which this Corporation is
author12ed to issue is. Fifty million (50,000,000) shares of Common
Stock with a par value of $.0001."
FOURTH: The amendment effected herein was authorized by written consent of the
holders of a majority of the outstanding shares entitled to vote thereon,
written notice of this corporate action has been given to all shareholders
entitled to vote thereon who did not consent in writing to such action pursuant
to Sections 228 and 242 of the General Corporation Law of the State of Delaware.
FIFTH: The amendments effected herein shall be effective at the opening of
business an March 3, 1999.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the statements made
herein are true under the penalties of perjury, this 23rd day of February, 1999.
/s/ Doreen Rush
Doreen Rush, President
OREX GOLD MINES CORPORATION
ACTION IN WRITING BY DIRECTORS
AND
AMENDMENT OF THE CERTIFICATE
OF
INCORPORATION OF OREX GOLD MINES CORPORATION
(a Delaware Corporation)
The undersigned being all the Directors of OREX Gold Mines Corporation, hereby
adopt the following resolution without a meeting pursuant to Section 141 (f) of
the Delaware General Corporation Law, to-wit:
RESOLVED, that Article One of the Certificate Of Incorporation of this
corporation be, and hereby is, amended to read as follows:
"The name of the corporation is OREX CORPORATION."
BE IT FURTHER RESOLVED, that by the inclusion of this Resolution and Amendment
with the Certificate Of Incorporation of this corporation in the corporation's
record book, the Certificate Of Incorporation will be considered to reflect the
wording contained herein.
Dated: November 8, 1999
DIRECTORS
/s/
- -----------------------------
Warren Hemedinger
/s/
- -----------------------------
Gregory Finney
FILED# C25566-99
OCT 14 1999
IN THE OFFICE OF
/s/
DEAN HELLER SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
OREX MINERALS CORPORATION
FIRST: The name of this corporation is:
OREX MINERALS CORPORATION
SECOND: Its principal office in the State of Nevada is located at 502 East
John Street, Carson City, Nevada, 89706. The name and address of its resident
agent is CSC Services of Nevada, Inc., at the above address.
THIRD: The nature of the business or objects or purposes proposed may be
organized under the General Corporation Law of the State of Nevada;
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of -the State of Nevada.
FOURTH: The total authorized capital stock of the corporation is 50,000,000
shares of common stock with a par value of $.0001.
FIFTH: The governing board of this corporation shall be known as directors,
and the number of directors may from time to time be increased or decreased. in
such manner as shall be provided in the by-laws of this corporation, provided
that the number of directors shall not be reduced less than one unless there is
less than one stockholder.
The name and post office address of the .first board of directors, which
shall be one in number, is as follows:
NAME POST OFFICE ADDRESS
Gregory Finney 2121 Ponce De Leon Blvd. Suite 510
Coral Gables, FL 33134
SIXTH: The capital stock, after the amount of the subscription price, or
par value, has been paid in, shall not be subject to assessment to pay the debts
of the corporation.
SEVENTH: The name and post office address of the incorporator signing the
articles of incorporation is as follows:
NAME POST OFFICE ADDRESS
Lamont W. Jones 1013 Centre Road
Wilmington, DE 19805
EIGHTH: The corporation is to have perpetual existence.
NINTH: In furtherance and not in limitation of the powers` conferred by
statute, the board of directors is expressly authorized, subject to the by-laws,
if any, adopted by the shareholders, to make, alter or amend the by-laws of the
corporation.
TENTH: Meetings of stockholders may be held outside of the State of Nevada
at such place or places as may be designated from time to time by the board of
directors or in the by-laws of the corporation.
ELEVENTH: This corporation reserves the right to amend, alter, change or
repeal any provision contained in the articles of incorporation, in the manner
now or hereafter prescribed, and all rights conferred upon stockholders herein
are granted subject to this reservation.
I, THE UNDERSIGNED, being the sole incorporator herein before named for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Nevada, do make and file these articles of incorporation, hereby
declaring and certifying that the facts herein stated are true, and accordingly
have hereunto set my hand this thirteenth day of October, A.D. 1999.
/s/
Lamont W. Jones, Incorporator
<PAGE>
STATE OF DELAWARE )
SS
COUNTY OF NEW CASTLE )
On this thirteenth day of October, A.D., 1999, before me a Notary Public,
personally appeared, Lamont W. Jones, who severally acknowledged that he/she
executed the above instrument.
/s/
Notary Public
Elizabeth A Dawson
My Commission Expires May 17, 2001
CERTIFICATE OF ACCEPTANCE
OF
APPOINTMENT OF RESIDENT AGENT
I, Lamont W. Jones, Authorized Representative, on behalf of CSC Services of
Nevada, Inc. hereby accepts appointment as Resident Agent of the above-named
corporation.
/s/ October 13, 1999
Authorized Representative
<PAGE>
SECRETARY OF STATE
/seal/
OF THE STATE OF NEVADA
CORPORATE CHARTER
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State, do
hereby certify that OREX MINERALS CORPORATION did on October 14,1999 file in
this office the original Articles of Incorporation; that said Articles are now o
n file and of record in the office of the Secretary of State of the State of
Nevada, and further, that said Articles contain all the provisions required b y
the law of said State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the Great Seal of State, at my office, in Carson City,
Nevada, on October 15, 1999.
/s/
Secretary of State
/seal/ By /s/
Certification Clerk
BY-LAWS
OF
OREX CORPORATION
ARTICLE I
Offices
The registered office of the Company shall be in the City of Lewes, County
of Sussex, State of Delaware, and the name of its registered agent at such
address is Harvard Business Services, Inc.
The Company may have offices at such places as the Board of Directors from
time to time may determine.
ARTICLE II.
Shareholders
Section 1. Certificates Representing Stock. Every holder of stock in the
Company shall be entitled to have a certificate signed by, or in the name of,
the Company by the Chairman or Vice Chairman of the Board of Directors, if any,
or by the President or a Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company certifying
the number of shares owned by him/her in the corporation. Any and all signatures
on any such certificate may be facsimiles. In case any officer, transfer agent,
or registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued by the Company with the same
effect as if he/she/it were such officer, transfer agent, or registrar at the
date of issue.
Whenever the Company shall be authorized to issue more than one class of
stock or more than one series of any class of stock, and whenever the Company
shall issue any share of Is stock as partly paid stock, the certificates
representing shares of any such class or series or of any such partly paid stock
shall set forth thereon the statements prescribed by the Delaware General
Corporation Law. Any restrictions on the transfer or registration of transfer of
any shares of sock of any class or series shall be noted conspicuously on the
certificate representing such shares. The Company may issue a new certificate of
stock in place of any certificate theretofore issued by it, alleged to have been
lost, stolen, or destroyed, and the Board of Directors may require the owner of
any lost, stolen, or destroyed certificate, or his/her legal representative, to
give the Company a bond sufficient to indemnify the Company against any claim
that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new certificate.
Section 2. Stock Transfers. Upon compliance with provisions restricting the
transfer or registration of transfers of shares of stock, if any, transfers or
registration of transfers of shares of stock of the Company shall be made only
on the stock ledger of the Company by the registered holder thereof, or by
his/her attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the Company or with a transfer agent or a registrar,
if any, and on the surrender of the certificate or certificates for such shares
of stock properly endorsed and the payment of all taxes due thereon.
ARTICLE III
Meeting of Shareholders
Section 1. Place of Meeting. All meetings of shareholders for the election
of directors or for any other purpose whatsoever shall be held at such place
within or without the United States as may be decided upon from time to time by
the Board of Directors and indicated in the notice of meeting.
Section 2. Annual Meeting. An annual meeting of the shareholders shall be
held on such day of each year and at such time on said day as shall be decided
by the Board of Directors and indicated in the notice of the meeting. The Board
of Directors shall be elected thereat and such other business transacted as may
be specified in the notice of the meeting, or as may be properly brought before
the meeting. In the event that the annual meeting is not held or if directors
are not elected thereat, a special meeting may be called and held for that
purpose.
Section 3. Special Meetings. Special meetings of the shareholders may be
held on any business day when called by the Board of Directors, a majority of
the Directors acting without a meeting, the holders of a majority of the
outstanding voting Common Stock, or the holders of the specified percentage of
any series of preferred stock entitled under a resolution of the Board of
Directors to call such meetings.
Section 4. Notice of Meetings. A written or printed notice of every annual
or special meeting of the shareholders stating the time and place and, in the
case of a special meeting, the purposes thereof shall be given to each
shareholder entitled to vote thereat and to each shareholder entitled to notice
as provided bylaw, which notice unless served upon a shareholder in person shall
be mailed to his/her last address appearing on the books of the company pt less
than ten days nor more than sixty days prior to the date of the
2
meeting. It shall be the duty of the Secretary to give written notice of the
annual meeting, and of each special meeting when requested so to do by the
directors or shareholders calling such meeting. Any shareholder may waive in
writing any notice required to be given bylaw or under these By-laws and by
attendance or voting at any meeting without protesting the lack of proper notice
shall be deemed to have waived notice thereof
Section 5. Closing of Transfer Books or Fixing of the Record Date. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other purpose, the Board of Directors of the Corporation
may provide that the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting on the
date on which the resolution of the Board of Directors declaring such dividend,
as the case may be, and this date shall b e the record date for such
determination of shareholders. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this Section,
such determination shall apply to" any adjournment thereof
Section 6. Voting Lists. The officer or agent having charge of the stock
transfer books for shares of the Corporation shall make available a complete
list of the shareholders entitled to vote at any meeting of shareholders or any
adjournment thereof, with the address of and the number of shares held by each,
at least ten (10) days before such meeting or adjournment thereof Such list
shall also be produced and kept open at the time and place of the meeting and
shall be subject to the inspection of any shareholder during the meeting.
Section 7. Quorum. The majority of the outstanding shares voting of the
Corporation that are entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. At such meeting at which a
quorum shall be present or represented, any business may be transacted at the
meeting as originally noticed. The majority of shareholders present at the
meeting may continue to transact business until adjournment.
Section 8. Proxies. At all meetings of shareholders, a shareholder may vote
in person or by proxy executed in writing by the shareholder or by his or her
duly authorized attorney in fact. Such proxy shall be filed with the Secretary
of the Corporation before or at the time of the meeting, subscribed by such
shareholder and bear a date not more than one (1) year prior to said meeting.
Section 9. Voting of Shares. Subject to the provisions, each outstanding
share eligible to vote shall be entitled to one (1) vote upon each matter
submitted to a vote at a meeting of the shareholders. Upon demand of any
stockholder, the vote for directors or upon any question before the Meeting
shall be by ballot. In the election of directors, a plurality of the votes cast
shall elect. Any other action shall be authorized by a minimum of the holders of
shares entitling them to exercise a majority of the voting power of the Company.
3
Section 10. Voting of Shares by Certain Shareholders. Shares outstanding in
the name of another corporation may be voted by such officer, agent, or proxy as
the by-laws of such corporation may prescribe, or, in the absence of such
provision, as the board of directors of such corporation shall determine.
Shares held by an administrator, executor, guardian, or server may be voted
by him or her, either in person or by proxy, without transfer of shares into his
or her name: Shares outstanding in the name of a trustee may the voted by him or
by her, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him or her without a transfer of such shares into the name of the
trustee.
Shares outstanding in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by the same
without the transfer thereof into his or her name if authority to do so is
contained in an appropriate order of the court by which such receiver was
appointed; such court order shall be presented to the Secretary of the
Corporation before the shares are voted.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred from the name of the shareholder
to another.
Shares of its own stock belonging to the Corporation shall not be voted,
directly or indirectly, at any meeting, and shall not b e counted in determining
the total number of outstanding shares at any given time.
Section 11. Informal Action by Shareholders. Unless otherwise provided by
law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof
Section 12. Non-cumulative Voting. Unless otherwise provided by law, at
each election of Directors, every shareholder entitled to vote in such election
shall have the right to vote, in person or by proxy, the number of shares owned
by him or her for as many persons as there are Directors to be elected and for
whose election he or she has a right to vote.
Section 13. Order of Business. The order of business at all meetings of
stockholders shall be as follows: 1) Roll Call; 2) Proof of notice of meeting or
waiver of notice; 3) Reading of minutes of previous meeting; 4) Reports of
Officers; 5) Reports of Committees; 6) Election of Directors; 7) Unfinished
Business; 8) New Business.
ARTICLE IV.
Board of Directors
Section 1. Functions and Definitions. The business and affairs of the
Company shall be managed by or under the direction of the Board of Directors of
the Company. The Board of Directors shall have the authority to fix the
compensation of the members thereof The use of the phrase "whole board" herein
refers to the total number of directors that the Company would have if there
were no vacancies.
Section 2. Number. The number of directors shall be not less than two or
more than ten as may be determined by the vote of the holders of a majority of
the shares entitled to vote thereon at any annual meeting or special meeting
called for the purpose of electing directors, and when so fixed such number
shall continue to be the authorized number of directors until changed by the
shareholders by vote as aforesaid.
Section 3. Election. At each meeting of the shareholders called for the
purpose of electing directors, the persons receiving the greatest number of
votes shall be the directors. Such election shall be by ballot.
Section 4. Tenure. Directors shall hold office until the annual meeting
next following their election or until their respective successors are elected
and qualified; subject, however, to prior resignation, death or removal as
provided bylaw. Any director may resign at any time upon written notice to that
effect delivered to the Secretary, to be effective upon its acceptance or at the
time specified in such writing.
Section 5. Organizational Meeting, Immediately after each annual meeting of
the shareholders or special meeting held in lieu thereof, the newly elected
Board of Directors, if a quorum is present, shall hold an organizational meeting
at the same place for the purpose of electing officers and transacting any other
business. If, for any reason, said organizational meeting is not held at such
time, a special meeting for such purpose shall be held as soon thereafter as
practicable.
Section 6. Notice. Notice of any special meeting of the Board of Directors
shall be given at least ten (10) days previous thereto by written notice
delivered personally or by certified mail, return receipt requested, which
notice shall be deemed to be delivered when deposited in the United States mail.
Any Director may waive notice of any meeting. The attendance of a Director at a
meeting shall constitute a waiver of notice for such meeting, except where a
Director attends a meeting for the express purpose of objecting to the
transaction of business because the meeting was not lawfully called or convened.
Section 7. Regular Meetings. A regular meeting of the Board of Directors
shall be held, without other notice than this By-law, immediately after, and at
the same place as, each Annual Meeting of the Shareholders. The Board of
Directors shall hold a regular meeting on the First day of each month, without
notice of meeting other than this Article and Section of these By-laws.
Section 8. Special Meetings. Special meetings of the Board of Directors may
be held at any time and place upon call by the President or any two directors.
Notice of each such meeting shall be given to each director, by air mail letter,
telegram, E-mail, facsimile or equivalent, or telephone or in person not less
than two (2) days prior to such meeting; provided, however, that such notice
shall be deemed to have been waived by the directors attending or voting at any
such meeting, without protesting the lack of proper notice, and
5
may be waived in writing or by telegram, facsimile or equivalent, by any
director either before or after such meeting.
Section 9. Quorum. At all meetings of the Board of Directors a majority of
the directors then in office shall constitute a quorum for the transaction of
business; provided that any meeting duly called, whether a quorum is present or
otherwise, may, by vote of a majority of the directors present, adjourn from
time to time and place to place within or without the United States, in which
case no further notice of the adjourned meeting need be given. At any meeting at
which a quorum is present, all questions and business shall be determined by the
vote of not less than a majority of the directors present.
Section 10. Use of Common and Preferred Stock Without Shareholder Approval
The Board of Directors may, by resolution or resolutions, use authorized
but unissued shares of Common Stock and Preferred Stock without shareholder
approval in order to acquire businesses, to obtain additional financing or for
other corporate purposes Purchases of convertible preferred stock shall be
treated in all respects as equivalent to purchases of common stock, such that,
upon acquisition, the requisite holding period for Rule 144 purposes shall begin
when the Convertible Preferred Stock is acquired, and not when it is converted
from Preferred to Common Stock. Accordingly, if Preferred Stock has been held
for longer than two years and the holder is not an affiliate, it shall be
eligible for the safe harbor afforded by Rule 144 immediately upon conversion
from Preferred to Common, as tacking shall be explicitly permitted between the
Preferred Stock Certificate and its equivalent Common Certificate (or
Certificates).
Section 11. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
Section 12. Action Without Meeting. Any action that may b e taken by the
Board of Directors at a meeting may be taken without a meeting if written
consent setting forth the action to betaken shall be signed before such action
by a majority of the Directors.
Section 13. Vacancies. Any vacancy occurring in the Board of Directors may
be filled by the affirmative vote of the majority of the remaining Directors,
though possibly less than a quorum of the Board of Directors, unless otherwise
prohibited by law. A Director elected to fill a vacancy shall be elected for the
unexpired term of his or her predecessor in office. Any directorship to be
filled by reason of an increase in the number of Directors may be filled by the
Board of Directors for a term of office continuing only until the next election
of Directors by the shareholders.
Section 14. Compensation. By resolution of the Board of Directors, each
Director may be reimbursed for expenses of attending any meeting and may be paid
a stated salary as a Director, or a fixed sum for attendance at each meeting of
the Board of Directors, or both. No such payment shall preclude any Director
from serving the Corporation in any other capacity and receiving compensation
therefrom.
Section 15. Presumption of Assent. A Director who is present at a meeting
of the Board of Directors at which any action or corporate matter is taken shall
be presumed to
6
have assented to the action taken unless his or her dissent shall be entered
into the minutes of the meeting or unless he or she shall file his or her
dissent with the person acting as the Secretary of the meeting before the
adjournment of the meeting or within three (3) days thereafter. Such right of
dissent shall not apply to any Director who voted in favor of such action.
Section 16. Special Powers. The Board of Directors shall have the right to
re incorporate the Company, to declare splits or reverse splits of the stock of
the Company, or otherwise act on matters concerning the corporate status and
capital structure of the Company.
ARTICLE IV.
Committees
The Board of Directors may, by resolution or resolutions passed by a
majority of the Board, designate one or more committees, each committee to
consist of two or more of the directors of the Company, which to the extent
provided in said resolution or resolutions or in these By-laws of the Company
shall have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Company and may have the power to
authorize the seal of the Company to be affixed to all papers which may require
it. Such committee or committees shall have such name or names as may be stated
in these By-laws of the Company or as may be determined from time to time by
resolution adopted by the Board of Directors.
ARTICLE V.
Officers
Section 1. Officers Designated. The officers of the Company shall be
elected by the Board of Directors at their organizational meeting or any special
meeting, The chief executive officer of the Company shall be the President. In
addition thereto the officers shall include an Executive Vice President, such
number of Vice Presidents as the Board may choose to elect, the Secretary, the
Treasurer, and such other officers as the Board may see fit. The President shall
be, and the other officers may, but need not be, chosen from among the
directors. Any two offices may be held by the same person, but in any case where
the action of more than one officer is required no one person shall acting more
than one capacity.
Section 2. Tenure of Office. The officers of the Company shall hold office
until the next organizational meeting of the Board of Directors and until their
respective successors are chosen and qualified, except in case of resignation,
death or removal. The Board of Directors may remove any officer at any time with
or without cause by the vote of a majority of the directors in office at the
time. A vacancy, however created, in any office may be filled by election by the
directors.
Section 3. Powers and Duties of Officers in General. The powers and duties
of the officers shall be exercised in all cases subject to such directions as
the Board of Directors may see fit to give. The respective powers and duties
hereinafter set forth are subject to alteration by the Board of Directors. The
Board of Directors is also authorized to delegate the duties of any officer to
any other officer, employee or committee and to require the performance of
duties in addition to those provided for herein.
Section 4. Chairman of the Board of Directors. The Chairman of the Board of
Directors shall preside at all meetings of the Corporation or adjournments
thereof The Chairman of the Board shall be elected by, and serve exclusively at
the discretion of, the Board of Directors, and shall serve a term co-incident
with that of all other Board members. The Chairman of the Board of Directors
shall be the spokesperson for the. Board of Directors, unless he or she assigns
this duty to another Director. The Chairman of the Board of Directors shall have
no special powers other than those explicitly described in this Article.
Section 5. President. The President shall preside at meetings of
shareholders and at meetings of the Board of Directors and shall have such other
powers and duties as may be prescribed by the Board of Directors.
Section 6. Vice President. In the absence of the President, the Vice
Presidents, in the order designated by the Board of Directors, shall perform the
President's duties.
Section 7. Chief Executive Officer. The President shall be the chief
executive officer of the Company and as such shall have general supervision over
its property, business and affairs and perform all the duties usually incident
to such office, subject to the directions of the directors. Unless otherwise
determined by the directors, he/she shall have authority to represent the
Company at meetings of the stockholders of other corporations in which the
Company holds shares, and to execute on behalf of the Company discretionary or
restricted proxies. He/she may execute all authorized deeds, mortgages, bonds,
contracts and other obligations, in the name of the Company, and shall have such
other powers and duties as may be prescribed by the directors.
Section 8. Secretary. The Secretary shall attend and keep the minutes of
all meetings of the shareholders and of the directors. He/she shall keep such
records as may be required by the directors, shall give all notices of
shareholders and directors meetings required by law or these By laws, or
otherwise, and shall have such other powers and duties as may be prescribed by
the directors.
Section 9. Treasurer. The Treasurer shall receive and have in his/her
charge all money, bills, notes, bonds, stocks in other corporations and similar
property belonging to the Company, and shall do with the same as shall be
ordered by the directors. He/she shall keep accurate financial accounts, and
hold the same open for the inspection and
8
examination of the directors. On the expiration of his term of office, he/she
shall turn over to his/her successor, or the directors, all property, books,
papers and money of the Company in his/her hands. He/she shall have such other
powers and duties as may be prescribed by the directors.
Section 10. Other Officers. All other officers shall have such power and
duties as may be prescribed by the Board of Directors, or, in the absence of
their action, by the chief executive officer of the Company or by the respective
officers having supervision over them.
Section 11. Compensation. The Board of Directors is authorized to
determine, or to provide the method of determining, or to empower a special
committee of its members to determine, the compensation of all officers.
Section 12. Bond. Any officer, if so required by the Board of Directors,
shall furnish a fidelity bond in such sum and with such security as the Board of
Directors may require.
ARTICLE VI
Contracts, Loans, Checks, and Deposits
Section 1. Contracts. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or limited to specific events.
Section 2. Loans. No loans shall be contracted on behalf of the Corporation
and no evidence of indebtedness shall be issued in its name unless authorized by
a resolution of the Board of Directors. Such authority may be general or limited
to specific areas or events.
Section 3. Checks, Drafts, et Cetera. All checks, drafts, or other orders
for payment of money, notes, or other evidence of indebtedness issued in the
name of the Corporation shall be signed by the President, acting in his capacity
as the chief executive officer of the Corporation, and the Treasurer, or such
officer or officers or agent or agents of the Corporation and in such manner as
from time to time shall be determined by resolution of the Board of Directors.
Section 4. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in such
bank or other depositories as the Board of Directors shall designate.
9
ARTICLE VII.
Officers and Directors May Contract With The Company
A director or officer of the Company shall not be disqualified by his/her
office from dealing or contracting with the Company as vendor, purchaser,
employee, agent or otherwise. No transaction or contract or act of the Company
shall be void or voidable or in any way affected or invalidated by reason of the
fact that any director or officer, or any firm of which any director or officer
is a member, or any corporation of which any director or officer is a
shareholder, director, or trustee, or any trust of which any director or officer
is a trustee or beneficiary, is in any way interested in such transaction or
contract or act. No director or officer shall be accountable or responsible to
the Company for or in respect to any transaction or contract or act of the
Company or for any gains or profits directly or indirectly realized by him/her
by reason of the fact that he/she or any firm of which he/she is a member or any
corporation of which he/she is a shareholder, director, or trustee, or any trust
of which he/she is a trustee or beneficiary, is interested in said transaction,
contract or act; provided the fact that such director or officer or such firm or
such corporation or trust so interested shall have been disclosed or shall have
been known to the Board of Directors or such members thereof as shall be present
at any meeting of the Board of Directors at which action upon such contract or
transaction or act shall have been taken. Any director may be counted in
determining the existence of a quorum at any meeting of the Board of Directors
which shall authorize or take action in respect to any such contract or
transaction or act, and may vote thereat to authorize, ratify, or approve any
such contract or transaction or act, and any officer of the Company may take any
action within the scope of his/her authority respecting such contract or
transaction or act with like force and effect as if he/she or any firm of which
he/she is a member, or any corporation of which he/she is a shareholder,
director, or trustee, or any trust of which he/she is a trustee or beneficiary,
were not interested in such transaction or contract or act. Without limiting or
qualifying the foregoing, if in any judicial or other inquiry, suit, cause or
proceeding, the question of whether a director or officer of the Company has
acted in .good faith is material, then notwithstanding any statue or rule of law
or of equity to the contrary (if any there be), his/her good faith shall be
presumed, in the absence of proof to the contrary by clear and convincing
evidence.
ARTICLE VIII.
Indemnification
Section 1. Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any pending,
threatened, or completed civil, criminal, administrative, or arbitration action,
suit, or proceeding, or any appeal therein or any inquiry or investigation which
could lead to such action, suit, or proceeding (a "proceeding"), by reason of
his or her being or having been a director, officer, employee, or agent of the
Corporation or of any constituent corporation absorbed by the
10
Corporation in a consolidation or merger, or by reason of his or her being or
having been a director, officer, trustee, employee, or agent of any other
corporation (domestic or foreign) or of any partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise (whether or
not for profit), serving as such at the request of the Corporation or of any
such constituent corporation, or the legal representative of any such director,
officer, trustee, employee, or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent permitted by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said Act permitted
prior to such amendment), from and against any and all reasonable costs,
disbursements and attorneys' fees, and any and all amounts paid or incurred in
satisfaction of settlements, judgments, fines and penalties, incurrred or
suffered in connection with any such proceeding, and such indemnification shall
continue as to a person who has ceased to be a director, officer, trustee,
employee, or agent and shall inure to the benefit of his or her heirs,
executors, administrators, and assigns; provided, however, that except as
provided in Paragraph 2 of this Article, the Corporation shall indemnify any
such person seeking indemnification in connection with a proceeding (or part
thereof initiated by such person only if such proceeding (or part thereof) was
specifically authorized by the Board of Directors of the Corporation. The right
to indemnification conferred in this Article shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
connection with any proceeding in advance of the final disposition of such
proceeding as authorized by the Board of Directors; provided, however, that, if
the Delaware General Corporation Law so requires, the payment of such expenses
in advance of the final disposition of a proceeding shall be made only upon
receipt by the Corporation of an undertaking, by or on behalf of such director,
officer, employee, or agent, to repay all amounts so advanced unless it shall
ultimately b e determined that such person is entitled to b e indemnified under
this Article or otherwise.
Section 2. Right of Claimant to Bring Suit. If a claim under Paragraph 1 of
this Article is not paid in fill by the Corporation within thirty (3 0) days
after a written request has been received by the Corporation, the claimant may,
at any time thereafter, apply to a court for an award of indemnification by the
Corporation for the unpaid amount of the claim, and, if successful on the merits
or otherwise in connection with any proceeding, or in the defense of any claim,
issue, or matter therein, the claimant shall be entitled also to be paid by the
Corporation any and all expenses incurred or suffered in connection with such
proceeding. It shall be a defense to any such action (other than an action
brought to enforce a claim for the advancement of expenses incurred in
connection with any proceeding where the required undertaking, if any, has been
tendered to the Corporation) that the claimant has not met the standard of
conduct which makes it permissible under the Delaware General Corporation Law
for the Corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors, its independent legal
counsel, or its shareholders) to have made a determination prior to the
commencement of such proceeding that indemnification of the claimant is proper
in the
11
circumstances because he or she has met the applicable standard of conduct set
forth in the Delaware General Corporation Law, nor an actual determination by
the Corporation (including its Board of Directors, its independent legal
counsel, or its shareholders) that the claimant has not met such applicable
standard of conduct, nor the termination of any proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its equivalent,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
Section 3. Non-Exclusivity of Rights. The right to indemnification and
advancement of expenses provided by or granted pursuant to this Article shall
not exclude or be exclusive of any other rights to which any person may be
entitled under a certificate of incorporation, bylaw, agreement, vote of
shareholders, or otherwise; provided, that no indemnification shall be made to
or on behalf of such person if a judgment or other final adjudication adverse to
such person establishes that such person has not met the applicable standard of
conduct required to be met under the Delaware General Corporation Law.
Section 4. Insurance. The Corporation may purchase and maintain insurance
on behalf of any director, officer, employee, or agent of the Corporation, or of
another corporation, partnership, joint venture, trust, employee benefit plan,
or other enterprise, against any expenses incurred in any proceeding and against
any liabilities asserted against him or her by reason of such person's being or
having been such a director, officer, employee, or agent, whether or not the
Corporation would have the power to indemnify such person against such expenses
and liabilities under provisions of this Article or otherwise.
ARTICLE IX.
Corporate Seal
The corporate seal, circular in form, shall have inscribed thereon the name
of the Company and the words "Corporate Seal".
ARTICLE X
Dividends
The Board of Directors may from time to time declare, and the Corporation
may pay, dividends on its outstanding shares in the manner and upon the terms
and conditions provided bylaw and the Certificate of Incorporation, except that
no such dividend shall be paid except from accrued profits.
ARTICLE XI.
Fiscal Year
The fiscal year of the Corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE XII.
Waiver of Notice
Unless otherwise provided by law, whenever any notice is required to be
given to any shareholder or Director of the Corporation, a waiver thereof in
writing, signed by the person entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice.
ARTICLE XIII.
Amendments
These By-laws may be altered, repealed, or amended in any respect or
superseded by new By laws in whole or in part by the resolution of the Board of
Directors.
------------------------------------------------
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of
the By-laws of OREX Corporation, a Delaware corporation, as in effect on the
date hereof
Dated: Nov 8th 1999 OREX CORPORATION
/s/
Warren Hemedinger, President
Attest:
By: /s/
Gregory Finney, Secretary
13
NUMBER Shares
0x
Orex Gold Mines Corporation
INCORPORATED UNDER THE LAWS OF THE STATE OF DELWARE
SEE REVERSE FOR
CERTAIN DEFINITIONS
COMMON STOCK CUSIP 686162 10 8
This Certifies That:
is owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK of $.0001 PAR VALUE EACH OF
OREX GOLD MINES CORPORATION
transferable on the books of the Corporation in person or by attorney upon
surrender of this certificate duly endorsed or assigned. This certificate and
the shares represented hereby are subject to the laws of the State of Delaware,
and to the Certificate of Incorporation and By-laws of the Corporation, as now
or hereafter amended. This certificate is not valid until countersigned by the
Transfer Agent.
WITNESS the facimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
DATED: COUNTERSIGNED:
OLDE MONMOUTH STOCK TRANSFER
77 MEMORIAL PARKWAY, ATLANTIC HIGHLANDS, NJ 07716
TRANSFER AGENT
/CORPORATE SEAL/
/S/ /S/
SECRETARY PRESIDENT
McDermott, Will & Emery
April 13, 1999
Via Facsimile
(702) 293-3558
James H. Gottfredsen
Intercontinental Registrar & Transfer Agency, Inc.
900 Buchanon Boulevard
Boulder City, Nevada 89006
Re: Stock Certificates
Dear Mr. Gottfredsen:
In accordance with instructions provided to me by Orex Gold Mines
Corporation ("Orex"), on behalf of Orex, please issue Orex stock certificates in
the name of the individuals set forth below in the number of Orex common stock
shares set forth below:
Richard Hoffman 1 certificate in the amount of 250,000
139 Shaw St. Unrestricted Shares
Garfield, New Jersey 07026
SSN# ###-##-####
Warren Hemedinger Trust 1 certificate in the amount of 250,000
410 Catalonia Avenue Restricted Shares
Coral Gables, Florida 33134
SSN# ###-##-####
George Levy 1 certificate in the amount of 250,000
Box 234 Restricted Shares
Saddle River, New Jersey 07458-0234
SSN# ###-##-####
Harry Beninhof 1 certificate in the amount of 250.000
117 South 2nd Avenue Restricted Shares
Sandpoint, Idaho 86409
SSN# ###-##-####
Henry Rosenberg 1 certificate in the amount of 250,000
93 Little City Road Restricted Shares
Killingsworth, Connecticut 06419
SSN# ###-##-####
Steve J. Gannuscio 1 certificate in the amount of 850,000
10 Laton Road Restricted Shares
Apt #7
Sussex, New Hampshire 07461
SSN# ###-##-####
Evelyn Rivas 1 certificate in the amount of 1,193,000
95 6th Avenue Unrestricted Shares
2nd Floor
Clifton, New Jersey 07011
SSN# ###-##-####
Donald Hawksworth 6 certificates in the amount of 100,000
526 N. Schiefferin 6 certificates in the amount of 50,000
Tombstone, Arizona 85638 6 certificates in the amount of 33,000
SSN# ###-##-#### 1 certificate in the amount of 10,000
Restricted Shares
Marilyn Stien 4 certificates in the amount of 250,000
2 Hamilton Road 1 certificate in the amount of 35,000
Apt. #4N 1 certificate in the amount of 15,000
Morristown, New Jersey 07960 Restricted Shares
SSN# ###-##-####
Haber Inc. 3 certificates in the amount of 100,000
470 Main Road 5 certificates in the amount of 50,000
Towaco, New Jersey 07082 5 certificates in the amount of 10,000
Tax ID# 22-230-5613 Restricted Shares
David M. Morgenstein 1 certificate in the amount of 1,500
11170 S.W/ 71st Lane Unrestricted shares
Miami, Florida 33173
SSN# ###-##-####
It is my understanding from Orex that the Orex shares to be issued to
Evelyn Rivas, Richard Hoffman and David M. Morgenstein are to be issued in
reliance on the exemption from registration provided by Rule 504 of Regulation
D, as promulgated under the Securities Act of 1933, as amended (the "Act").
Accordingly, the certificates for such shares should not bear any restrictive
legend and should not be subject to any stop order. Furthermore, it is our
understanding that the remaining Orex shares are to be issued to the above-named
individuals in reliance on the exemption from registration pursuant to Section
4(2) under the Act. Such certificates should bear a restrictive legend and
should be subject to stop transfer instructions as required under the Act.
Please send all stock certificates to the attention of Orex Gold Mines
Corporation, 2121 Ponce de Leon Boulevard, Suite 510, Coral Gables Florida 33134
If you have any comments or questions regarding the foregoing, please do
not hesitate to contact me.
Sincerely
Roland Sanchez-Medina Jr.
ROGER A. KIMMEL, JR. & ASSOCIATES
COUNSELLORS AT LAW
761 PARKVIEW DRIVE
AURORA, OHIO 44202
FAX: (419) 831-6057
TELEPHONE: (330) 995-0051 E-Mail:
[email protected]
Practice Limited to Matters Involving Corporate Securities
October 20, 1999
VIA E-MAIL
Olde Monmouth Stock Transfer Co. Inc.
77 Memorial Parkway, Suite 101
Atlantic Highlands, New Jersey 07716
Attn. : Mr. Matthew J. Troster
Re : OREX Gold Mines Corporation
Subj.: Tradability of Regulation D, Rule 504 Shares to be issued to
Manoj Associates, LLC
Dear Mr. Troster:
I refer to the issuance by OREX Gold Mines Corporation, a Delaware
corporation (the "Company"), of 350,000 shares (the "Shares") of its common
stock, par value $0.001 per share, to Manoj Associates, LLC ("Purchaser"), for a
sum of money which when added to the aggregate purchase price previously paid by
other shareholders, will not exceed $1,000,000.
I have been asked by the Company to provide you with an opinion as to the
applicability of selected provisions of federal and state securities laws to the
issuance and subsequent transferability of the Shares. This letter is written in
response to such request. My knowledge of the issuance is derived from my review
of the documents listed below. In connection with the opinions expressed in this
letter, I have examined originals, certified copies or copies otherwise
identified to my satisfaction as true copies of originals of the following
documents, to-wit:
(a) a Private Placement Memorandum;
(b) a Notice of a Sale of Securities Pursuant to Regulation D, Section
4(6) and/or Uniform Limited Offering Exemption on Form D, executed on behalf of
the Company relative to the Shares (the "Form D");
(c) Proof of submission of the original and four copies of the above
described Form D to the Securities and Exchange Commission;
(d) Engagement of the exemption from registration pursuant to Section
11-51-308(1)(p) of the Colorado Securities Act for an offering made by OREX Gold
Mines Corporation under Rule 504 and Regulation D of the Securities Act of 1933;
and
(e) Executed Subscription Agreement and Accredited Investor Questionnaire
from Manoj Associates, LLC.
I have not examined the minute books or other documents of the Company,
and I have further assumed that none of the documents listed above have been
modified or superseded.
The opinions expressed below are subject to the qualifications and
assumptions set forth in paragraphs 1 through 10 below, and to any matters not
disclosed to me. In making these assumptions, I have not undertaken any
independent examination of the facts upon which the assumptions are based.
(1) The prescribed number of originals and copies of Form D, together with
applicable filing fees, were duly and timely filed with the Securities and
Exchange Commission and the Colorado Securities Commission.
(2) Within the twelve-month period commencing February 18, 1999 (the
"Exemption Window"), the Company shall not have made any offers or sales of
securities in the United States unless such offers and sales have been
registered under the Securities Act of 1933, as amended (the "Act"), and under
any applicable state securities law; provided, however, that the Company may
make additional sales of securities within the Exemption Window pursuant to Rule
504 of Regulation D under the Act (and under corresponding state exemptions from
registration, if available) to the extent that the aggregate offering price of
later sales as reflected in, or contemplated by, the Form D, shall not exceed
$1,000,000. Should the Company make any registered offering of securities within
the Exemption Window, such offering shall be on terms that shall not cause it to
be subject to "integration," within the meaning of Rule 502 of Regulation D
under the Act, with any prior offering of the Company.
(3) General solicitation or advertising, if any, was conducted by the
Company in accordance with Subsections 2 and 3 of Section 51-3.13B of the
Colorado Securities Act.
(4) The Company relied upon Regulation D in connection with the offering
and sale of the Shares. The Company's reliance upon Regulation D in connection
with such offerings and sales was for purposes only of such offerings and sales.
Such reliance and such offerings and sales were not a part of any plan to evade
any otherwise applicable registration provisions of the Act.
(5) The Company is, and at all times has been, aware that reliance upon
Regulation D does not obviate the need to comply with any applicable state law
relating to the offer and sale of securities.
(6) The Company is not subject to the reporting requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended.
(7) At no time has the Company been an "investment company" within the
meaning of the federal securities laws.
(8) The Company is in good standing as a corporation under the laws of the
State of Delaware.
(9) The shares are validly issued, are fully paid and are non-assessable.
(10) The Company is and at all relevant times has been aware (i) that
compliance with Regulation D does not constitute compliance with anti-fraud
provisions of state or federal securities laws, (ii) that this firm has not
reviewed, or acted as counsel to the Company in connection with such disclosure,
and (iii) that this firm has not determined, or issued any opinion with respect
to, the residency of Manoj Associates, LLC, or have been asked to determine, the
applicability of the offering or sale of the Shares of the laws of any
jurisdiction other than the United States and the State of Colorado.
Solely upon the basis of the examination described above, and subject to
each of the qualifications and assumptions listed above, I am of the opinion
that:
A. By virtue of Rule 504 of Regulation D under the Act and of Section 3(b)
of the Act, the offering and sale of the Shares were exempt from the
registration requirements imposed by Section 5 of the Act.
B. By virtue of Rule 504 of Regulation D under the Act and of Section
51-3.13B of the Colorado Securities Act, resale of the Shares is not subject to
Section 5 of the Act or Rule 144 of the rules and regulations promulgated under
the Act.
C. Certificates representing the Shares (i) are not required by the Act or
any regulation under the Act to bear a legend that the securities have not been
registered under the Act and (ii) are not required by the Act or any regulation
under the Act to bear a legend that the securities cannot be resold unless they
are registered under the Act or unless an exemption from registration is
available.
D. Certificates representing the Shares (i) are not required by the laws
of the State of Colorado ("Colorado Law") to bear a legend that the securities
have not been registered under Colorado Law, and (ii) are not required by
Colorado Law to bear a legend that the securities cannot be resold unless they
are registered under Colorado Law or unless an exemption from registration is
available.
Accordingly, please utilize a certificate(s) presently in your possession
to effectuate the delivery of one free trading certificate(s) representing
350,000 shares of OREX common stock to Manoj Associates, LLC.
The opinions expressed in this letter are based exclusively upon the laws
of the United States and of the State of Colorado. I have not been asked to
express and do not express any opinion under the laws of any other jurisdiction.
This opinion letter is delivered solely for the benefit of the Company and
of its stock transfer agent, Olde Monmouth Stock Transfer Co., Inc., and is not
for the use and benefit of any other person.
Very truly yours,
Electronically Transmitted
Without Signature
Roger A. Kimmel, Jr.
Reg. No.: 0028988
ROGER A. KIMMEL, JR. & ASSOCIATES
COUNSELLORS AT LAW
761 PARKVIEW DRIVE
AURORA, OHIO 44202
FAX: (419) 831-6057
TELEPHONE: (330) 995-0051 E-Mail:
[email protected]
Practice Limited to Matters Involving Corporate Securities
October 1, 1999
VIA E-MAIL
Olde Monmouth Stock Transfer Co. Inc.
77 Memorial Parkway, Suite 101
Atlantic Highlands, New Jersey 07716
Attn. : Mr. Matthew J. Troster
Re : OREX Gold Mines Corporation
Subj.: Tradability of Regulation D, Rule 504 Shares to be issued to
Manoj Associates, LLC
Dear Mr. Troster:
I refer to the issuance by OREX Gold Mines Corporation, a Delaware
corporation (the "Company"), of 430,000 shares (the "Shares") of its common
stock, par value $0.001 per share, to Manoj Associates, LLC ("Purchaser"), for a
sum of money which when added to the aggregate purchase price previously paid by
other shareholders, will not exceed $1,000,000.
I have been asked by the Company to provide you with an opinion as to the
applicability of selected provisions of federal and state securities laws to the
issuance and subsequent transferability of the Shares. This letter is written in
response to such request. My knowledge of the issuance is derived from my review
of the documents listed below. In connection with the opinions expressed in this
letter, I have examined originals, certified copies or copies otherwise
identified to my satisfaction as true copies of originals of the following
documents, to-wit:
(a) a Private Placement Memorandum;
(b) a Notice of a Sale of Securities Pursuant to Regulation D, Section
4(6) and/or Uniform Limited Offering Exemption on Form D, executed on behalf of
the Company relative to the Shares (the "Form D");
(c) Proof of submission of the original and four copies of the above
described Form D to the Securities and Exchange Commission;
(d) Engagement of the exemption from registration pursuant to Section
11-51-308(1)(p) of the Colorado Securities Act for an offering made by OREX Gold
Mines Corporation under Rule 504 and Regulation D of the Securities Act of 1933;
and
(e) Executed Subscription Agreement and Accredited Investor Questionnaire
from Manoj Associates, LLC.
I have not examined the minute books or other documents of the Company,
and I have further assumed that none of the documents listed above have been
modified or superseded.
The opinions expressed below are subject to the qualifications and
assumptions set forth in paragraphs 1 through 10 below, and to any matters not
disclosed to me. In making these assumptions, I have not undertaken any
independent examination of the facts upon which the assumptions are based.
(1) The prescribed number of originals and copies of Form D, together with
applicable filing fees, were duly and timely filed with the Securities and
Exchange Commission and the Colorado Securities Commission.
(2) Within the twelve-month period commencing February 18, 1999 (the
"Exemption Window"), the Company shall not have made any offers or sales of
securities in the United States unless such offers and sales have been
registered under the Securities Act of 1933, as amended (the "Act"), and under
any applicable state securities law; provided, however, that the Company may
make additional sales of securities within the Exemption Window pursuant to Rule
504 of Regulation D under the Act (and under corresponding state exemptions from
registration, if available) to the extent that the aggregate offering price of
later sales as reflected in, or contemplated by, the Form D, shall not exceed
$1,000,000. Should the Company make any registered offering of securities within
the Exemption Window, such offering shall be on terms that shall not cause it to
be subject to "integration," within the meaning of Rule 502 of Regulation D
under the Act, with any prior offering of the Company.
(3) General solicitation or advertising, if any, was conducted by the
Company in accordance with Subsections 2 and 3 of Section 51-3.13B of the
Colorado Securities Act.
(4) The Company relied upon Regulation D in connection with the offering
and sale of the Shares. The Company's reliance upon Regulation D in connection
with such offerings and sales was for purposes only of such offerings and sales.
Such reliance and such offerings and sales were not a part of any plan to evade
any otherwise applicable registration provisions of the Act.
(5) The Company is, and at all times has been, aware that reliance upon
Regulation D does not obviate the need to comply with any applicable state law
relating to the offer and sale of securities.
(6) The Company is not subject to the reporting requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended.
(7) At no time has the Company been an "investment company" within the
meaning of the federal securities laws.
(8) The Company is in good standing as a corporation under the laws of the
State of Delaware.
(9) The shares are validly issued, are fully paid and are non-assessable.
(10) The Company is and at all relevant times has been aware (i) that
compliance with Regulation D does not constitute compliance with anti-fraud
provisions of state or federal securities laws, (ii) that this firm has not
reviewed, or acted as counsel to the Company in connection with such disclosure,
and (iii) that this firm has not determined, or issued any opinion with respect
to, the residency of Manoj Associates, LLC, or have been asked to determine, the
applicability of the offering or sale of the Shares of the laws of any
jurisdiction other than the United States and the State of Colorado.
Solely upon the basis of the examination described above, and subject to
each of the qualifications and assumptions listed above, I am of the opinion
that:
A. By virtue of Rule 504 of Regulation D under the Act and of Section 3(b)
of the Act, the offering and sale of the Shares were exempt from the
registration requirements imposed by Section 5 of the Act.
B. By virtue of Rule 504 of Regulation D under the Act and of Section
51-3.13B of the Colorado Securities Act, resale of the Shares is not subject to
Section 5 of the Act or Rule 144 of the rules and regulations promulgated under
the Act.
C. Certificates representing the Shares (i) are not required by the Act or
any regulation under the Act to bear a legend that the securities have not been
registered under the Act and (ii) are not required by the Act or any regulation
under the Act to bear a legend that the securities cannot be resold unless they
are registered under the Act or unless an exemption from registration is
available.
D. Certificates representing the Shares (i) are not required by the laws
of the State of Colorado ("Colorado Law") to bear a legend that the securities
have not been registered under Colorado Law, and (ii) are not required by
Colorado Law to bear a legend that the securities cannot be resold unless they
are registered under Colorado Law or unless an exemption from registration is
available.
Accordingly, please utilize a certificate(s) presently in your possession
to effectuate the delivery of one free trading certificate(s) representing
430,000 shares of OREX common stock to Manoj Associates, LLC.
The opinions expressed in this letter are based exclusively upon the laws
of the United States and of the State of Colorado. I have not been asked to
express and do not express any opinion under the laws of any other jurisdiction.
This opinion letter is delivered solely for the benefit of the Company and
of its stock transfer agent, Olde Monmouth Stock Transfer Co., Inc., and is not
for the use and benefit of any other person.
Very truly yours,
Electronically Transmitted
Without Signature
Roger A. Kimmel, Jr.
Reg. No.: 0028988
MC DERMOTT, WILL & EMERY
July 22,1999
Via Facsimile
Mr. Matt Troster
Olde Monmouth Stock Transfer Co., Inc.
77 Memorial Parkway - Suite 101
Atlantic Highlands, New Jersey 07716
RE: Orex Gold Mines Corporation ("Orex")
Dear Matt:
Orex has indicated that the Orex stock certificates to be issued in the
name of Herald Trust Investments and Warwick Nominees are freely tradeable
shares. Such shares are to be issued in reliance on exemption from registration
provided by Rule 504 of Regulation D, promulgated under the Securities Act of
1933, as amended.
If you have any comments or question regarding the foregoing, please do not
hesitate to contact me.
Sincerely,
Roland Sanchez-Medina Jr
Telefacsimile:
MATHEW TROSTER
OLDE MONMOUTH STOCK TRANSFER
77 Memorial Parkway, Suite 101
Atlantic Highlands, New Jersey
RE: Issuance of Shares
Dear Mr. Troster:
Request is hereby made for issuance of a certificate representing one million
four hundred thousand (1,400,000) shares of unrestricted common stock of OREX
GOLD MINES CORPORATION to:
MICORN MINING COMPANY
# 507, 837 West Hastings Street
Vancouver, British Columbia V6C 3N6
These shares are to be issued in reliance on the exemption in accordance with
Rule 504 of Regulation D promulgated under the Securities Act of 1933, as
amended. Accordingly, the certificate for such shares should not hear any
restrictive legend and should not be subject to any stop order.
Please forward the certificate overnight mail to Micron Mining Company.
Sincerely,
DONALD J. SHAW, ESQ
This Consulting Agreement, (the "Agreement") is made and entered into
effective the 22nd day of February, 1999, by, and between Medalion Services,
Inc. (the "Company"), a Delaware Corporation with offices at 7 Rock Hollow Road,
Plandome Manor, New York 11030, and Damask Holdings, Ltd. (the "Consultant").
WHEREAS, the Company desires to retain Damask, as a consultant, and Damask
wishes to consult for the Company, on the terms set forth below.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Company will deliver to Consultant simultaneously with the signing of
the Agreement, 1,300,000 shares of its Common stock, freely tradeable, fully
paid and nonassessable and without restrictive legend.
2. Consultant agrees upon receipt of said stock to provide the following
services on a best efforts basis:
a) Seek to find a suitable acquisition for the Company.
b) Seek to provide the necessary funding for the acquisition, as well as
for the future business operations of the Company.
c) Seek to provide marketing and sales assistance for the beneficial growth
and exposure to the marketplace of the Company.
3. Term. The term of the Agreement shall commence on the date hereof and
shall continue for a period of one (1) year.
4. Governing Laws. This Agreement is and shall be governed by the laws of
the State of New York.
This Agreement constitutes and embodies the entire understanding and
agreement of the parties and supersedes and replaces all prior understanding,
agrrements and negotiations between the parties.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement, effective as of the date set forth above.
CONSULTANT CLIENT
DAMASK HOLDINGS, LTD MEDALION SERVICES INC.
By: /s/ By: /s/
Date: 2/22/99 Date: 2/22/99
This Consulting Agreement, (the "Agreement") is made and entered into
effective the 18th day of February, 1999, by, and between Medalion Services,
Inc. (the "Company"), a Delaware Corporation with offices at 7 Rock Hollow Road,
Plandome Manor, New York 11030, and Harry Tramp (the "Consultant") with offices
at Rokin 46 1021 KV, Amsterdam, Netherlands.
WHEREAS, the Company desires to retain Tramp, as a consultant, and Tramp
wishes to consult for the Company, on the terms set forth below.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Company will deliver to Consultant simultaneously with the signing of
the Agreement, 1,3 00,000 shares of its Common stock, freely tradeable, fully
paid and nonassessable and without restrictive legend.
2. Consultant agrees upon receipt of said stock to provide the following
services on a best efforts basis:
a) Seek to find investors within the financial community residing in Europe
and the Netherlands.
b) Seek to provide the necessary funding for the future business operations
of the Company.
c) Seek to provide marketing and sales assistance for the beneficial growth
and exposure to the marketplace of the Company.
3. Term. The term of the Agreement shall commence on the date hereof and
shall continue for a period of one (1) year.
4. Governing Laws. This Agreement is and shall be governed by the laws of
the State of New York.
This Agreement constitutes and embodies the entire understanding and
agreement of the parties and supersedes and replaces all prior understanding,
agrrements and negotiations between the parties.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement, effective as of the date set forth above.
CONSULTANT CLIENT
HARRY TRAMP MEDALION SERVICES INC.
By: /s/ By: /s/
Date: 2/18/99 Date: 2.22.99
This Consulting Agreement, (the "Agreement") is made and entered into
effective the 26th day of February, 1999, by, and between Medalion Services,
Inc. (the "Company"), a Delaware Corporation with offices at 7 Rock Hollow Road,
Plandome Manor, New York 11030, and Kelly Johnston (the "Consultant") with
offices at 3557 Waugh road, Springfield, Manitoba Canada R2E 1E5.
WHEREAS, the Company desires to retain Johnston, as a consultant, and
Johnston wishes to consult for the Company, on the terms set forth below.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Company will deliver to Consultant simultaneously with the signing of
the Agreement, 1,300,000 shares of its Common stock, freely tradeable, fully
paid and nonassessable and without restrictive legend.
2. Consultant agrees upon receipt of said stock to provide the following
services on a best efforts basis:
a) Seek to find investors within the financial community residing in
Canada.
b) Seek to provide the necessary funding for the fixture business
operations of the Company.
c) Seek to provide marketing and sales assistance for the beneficial growth
and exposure to the marketplace of the Company.
3. Term. The term of the Agreement shall commence on the date hereof and
shall continue for a period of six (6) months.
4. Governing Laws. This Agreement is and shall be governed by the laws of
the State of New York.
This Agreement constitutes and embodies the entire understanding and
agreement of the parties and supersedes and replaces all prior understanding,
agrrements and negotiations between the parties.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement, effective as of the date set forth above.
CONSULTANT CLIENT
KELLY JOHNSTON MEDALION SERVICES INC.
By: /s/ By /s/
Date: 02/26/99 Date: 02-22-99
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CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into effective
the 1st day of March ______ 1999 by and between WebcastMedia.net Corporation,
(the "Consultant"); whose principal place of business is 2 Alhambra Plaza,
Penthouse 1C, Coral Gables, Florida and Medalion Services Inc. (the "Client")
whose principal place of business is 7 Rock Hollow Road, Plandome Manor. New
York, 11030.
WHEREAS, Consultants is in the business of providing services for internet based
public relations; and
WHEREAS, the Client deems it to be in its best interest to retain Consultant to
render to (the "Client"), such services as may be needed; and
WHEREAS, Consultant is ready, willing and able to render such consulting and
advisory services to the Client as hereinafter described an the terms and
conditions more fully set forth below
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
in this Agreement, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows.
1. Consulting Services- The Client hereby retains the Consultant as an
independent consultant to the Client and the Consultant hereby accepts and
agrees to such retention. The Consultant shall render to the Client such
services as set forth on Exhibit A, attached hereto and by reference
incorporated herein.
It is acknowledged and agreed by the Client that consultant carries no
professional licenses, other than any that may be listed on Exhibit A; and
it is not rendering legal advice or performing accounting services, no
acting as an investment advisor or broker/dealer within the meaning of the
applicable state and federal securities laws. It is further acknowledged
and agreed by the Client that the services to be provided to the Client
hereunder are presentl not contemplated to be rendered in connection with
the offer and sale of Securities in a capital raising transaction;
althought Client may request services of Consultant therefor and have
reached a basis for compensation if such additional services are rendered.
The services of consultant shall not be Exclusive nor shall be required to
render any specific number of hours or assign specific personnel to the
Client or its projects.
2. Independent Contractor. Consultant agrees to perform its consulting duties
hereto as an independent contractor. Nothing contained herein shall be
considered to as creating an employer-employee relationship between the
parties to this Agreement
The Client shall not be liable to third parties for the acts of Consultant
or its servants or agents, in performing the consulting duties hereunder,
except in the case of damages or injuries acting on behalf of the Client.
The Client shall not make social security, workers' compensation or
unemployment insurance payments on behalf of
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Consultant The parties hereto acknowledge and agree that Consultant cannot
guarantee the results or effectiveness of any of the services rendered or
to be rendered by Consultant hereunder- Rather, Consultant shall conduct
its operations and provide its services in a professional manner and in
accordance with good industry practice. Consultant will use its best
efforts and does not promise results.
3. Time, Place and Manner of Performance. The Consultant shall be available
for advice and counsel to the officers and directors of the Client as such
reasonable and convenient times and places as may be mutually agreed upon.
Except as aforesaid, the time, place and manner of performance of the
services hereunder, including the amount of time to be allocated by the
Consultant to any specific service, shall be determined at the sole
discretion of the Consultant
4. Term of Agreement. The term of this Agreement shall be six (6) months,
commencing on the date of this Agreement, both subject to prior termination
as hereinafter provided.
5. Compensation. In full consideration of the services to be provided for the
Client by the Consultant as fully set forth in Exhibit A, the Client agrees
to compensate Consultant in the manner set forth in Exhibit B.
6. Expenses. The Client shall reimburse the Consultant for all pre-approved
expense$ and distributions incurred by the Consultant on behalf of the
Client in connection with the performance of consulting services pursuant
to this Agreement Consultant shall be solely responsible for all expenses
and disbursement anticipated to be made in connection with its performance
under this Agreement
7. Termination,
(a) Consultants relationship with the client hereunder may be terminated
at any time by mutual written agreement of the parties hereto.
(b) This Agreement shall terminate upon the dissolution, bankruptcy or
insolvency of the Client.
(c) This Agreement may be terminated by either party upon giving written
notice to the other party if the other party is in default hereunder
and such default is not cured within fifteen (15) days of written
notice of such default.
(d) Without excusing the Clients obligations under Section 5 herein above.
Consultant shall have the right and discretion to terminate this Agreement
should the Client violate any law, ordinance, permit or regulation of any
governmental entity, except for violations which either singularly or in the
aggregate do not have or will not have a material adverse effect on the
operations of this Client.
(e) This Agreement may be terminated after specific written notice, the
continuation or doing of
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(i) Any willful breach of duty by Consultant;
(ii) Any material breach by Consultant of the obligations in Section 9;
(iii)Any material acts or events which inhibit Consultant from fully
performing its responsibilities under this Agreement in good faith
8. Work Product. It is agreed that all information and materials produced for
the Client shall be the property of the Consultant, free and clear of all
claims thereto by the Client, -and the Client shall retain no claim of
authorship therein.
9. Confidentiality. The consultant recognizes and acknowledges that it has and
will have access to certain confidential information of the Client and its
affiliates that are valuable, special and unique assets and property of the
Client and such affiliates. The Consultant will not, during the term of
this Agreement disclose, without the prior written consent or authorization
of the Client, any of such information to any person, for any reason or
purpose whatsoever. In this regard, the Client agrees that such
authorization or consent to disclose may be conditioned upon the disclosure
being made pursuant to the secrecy agreement, protection order, provision
of statute, rule, regulation or procedure under which the confidentiality
of the information is maintained in the hands of the person to whom the
information is to be disclosed or in compliance with the terms of a
judicial order or administration process.
10. Disclaimer of Warranty. Consultant is proud of its record in providing
state-of-the-art reliable services, but Consultant MAKES ABSOLUTELY NO
WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF NOW
INFRINGEMENT,MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE.
CONSULTANT CANNOT GUARANTEE CONTINUOUS SERVICE, SERVICE AT ANY PARTICULAR
TIME, INTEGRITY OF DATA STORED OR TRANSMITTED VIA ITS SYSTEM. NEITHER
CONSULTANT NOR ANYONE ELSE INVOLVED IN PROVIDING SERVICES PURSUANT TO THIS
AGREEMENT WILL BE LIABLE TO CUSTOMER OR ANY THIRD PARTY FOR ANY CLAIMS OR
DAMAGES OF ANY KIND (DIRECT, CONSEQUENTIAL, SPECIAL, OR ANY OTHER) THAT
ARISE OUT OF THE USE OR INABILITY TO USE SUCH SERVICES, whether or not
resulting from fault or negligence on Consultant's part, even if Consultant
has been advised as to the possibility of such damages- Some Jurisdictions
may prohibit certain disclaimers, so the above disclaimers may not apply.
Client's local jurisdiction's laws will apply only to the extent they
override this agreement.
11. Conflict of Interest. The Consultant shall be free to perform services for
other clients and/or persons. The consultant will notify the Client of its
performance of consultant services for any other client and/or person,
which could conflict with its obligations under the Agreement Upon
receiving such notice, the Client may terminate this Agreement or consent
to the Consultants outside consulting activities; failure to terminate this
Agreement, within seven (7) days of receipt of written notice of conflict,
shall constitute the Clients ratification and ongoing consent to the
consultant's outside consulting services.
12. Disclaimer of Responsibility for Act of the Client. The obligations of
Consultant described in this Agreement consist solely of the furnishing of
information and advice
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to the Client in the form of services. In no event shall Consultant be
required by this Agreement to represent or make management decisions for
the Orient. All final decisions with respect to acts and omissions of the
Client or any affiliates and subsidiaries, shall be those of the Client or
such affiliates and subsidiaries, and Consultant shall under no
circumstances be liable for any expense incurred or loss suffered by the
Client as a consequence of such acts or omissions.
13. Indemnity by the Client The Client shall protect, defend, indemnify and
hold Consultant and Its, assigns and attorneys, accountants, employees,
officers and directors harmless from and against all losses, liabilities
damages, judgments, claims, counterclaims, demands, actions, proceedings,
costs and expenses (including reasonable attorneys' fees) of every kind and
character resulting from, relating to or arising out of (a) the inaccuracy,
non-fulfillment or breach of any representation, warranty, covenant or
agreement made by the Client herein; or (b) any legal action, including any
counterclaim, representation, warranty, covenant or agreement made by or
against the Client herein; or (e) negligent or willful misconduct,
occurring during the term thereof with respect to any of the decisions made
by the Client.
14. Notices. Any notices required or permitted to be given under this Agreement
shall be sufficient if in writing and delivered or sent by registered or
certified mail to the principal office of each party.
15. Waiver of Breach. Any waiver by either party of a breach of any provision
of this Agreement by the other party shall not operate or be construed as a
waiver of any subsequent breach by any party.
16. Assignment. This Agreement and the right and obligations of the consultant
hereunder shall not be assignable without the written consent of the
Client.
17. Applicable Law. It is the intention of the parties hereto that this
Agreement and the performance hereunder and all sub and special proceedings
hereunder be construed in accordance with and under and pursuant to the
laws of the State of Florida and that in any action, special proceeding or
other proceeding that may be brought arising out of, in connection with or
by reason of this Agreement, the law of the State of Florida shall be
applicable and shall govern to the exclusion of the law of any other forum,
without regard to the jurisdiction on which any action or special
proceeding may be instituted.
18. Severability. All agreements and covenants contained herein are severable,
and in the event any of them shall be held to be invalid by any competent
court, the Agreement shall be interpreted as if such invalid agreements or
covenants were not contained herein,
19. Entire Agreement. This Agreement constitutes and embodies the entire
understanding and agreement of the parties and supersedes and replaces all
prior understanding, agreements and negotiations between the parties.
20. Waiver and Modification. Any waiver, alteration, or modification of any of
the provisions of this Agreement shall be valid only if made in writing and
signed by the
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parties hereto. Each party hereto, may waive any of its rights hereunder
without affecting a waiver with respect to any subsequent occurrences or
transactions hereof.
21. Binding Arbitration. As concluded by the parties hereto upon the advice of
counsel, and as evidenced by the signatures of the parties hereto and the
signatures of their respective attorneys, any controversy between the
parties hereto involving the construction or application of any of the
terms, covenants, or conditions of this agreement, shall on the written
request of one party served upon the other, be submitted to arbitration,
and such arbitration shall comply with and be governed by the provisions of
the Federal Arbitration Act as it may be amended; provided, that
Arbitration shall be conducted in Coral Gables, Florida and be conducted by
the American Arbitration Association ("AAA')- The FAA rules shall apply,
and the AAA rules shall apply if not in conflict with the FAA rules. All
evidence shall be subject to the Federal Rules of Civil Evidence (FRCE). In
the event of a conflict between the FAA rules and the FRCE rules, the
arbitrators will defer to the FRCE rules as superceding rules.
22. Counterparts and Facsimile Signature. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed
an original, but a of which taken together shall constitute one and the
same instrument. Execution and delivery of this Agreement by exchange of
facsimile copies bearing the facsimile signature of a party hereto shall
constitute a valid and binding execution and delivery of this Agreement by
such party. Such facsimile copies shall constitute enforceable original
documents.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement, effective as of the date set forth above.
CONSULTANT
WebcastMedia.net Corporation
BY /s/
DATE 3/1/99
CLIENT
Medalion Services Inc.
By /s/
DATE 3/1/99
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EXHIBIT "A"
Consultant agrees to provide the following services to clients
Consultant shall provide services to Client as an independent management
consultant. Consultant shall make itself available to consult with the board of
directors, officers, employees and representatives and agents of the Client at
reasonable times, concerning matters pertaining to internet based public
relations. Consultant may, at the request of the Client assist in the
preparation of written reports on such matters.
Consultant does not undertake as part of this Agreement to provide loans,
investments or financing for the Client, although such financial benefits may be
made available to Client during the course of consultant's engagement, and which
Will be compensated as additional compensation.
Consultant will not perform any activities that could subject Consultant or
Client to any abnegation, of violations of Federal or applicable state
securities law.
Consultant will also provide the following optional services:
Produce & Manage Effective Internet Media Relations Campaign:
Consultant, WebcastMedia.net, produces two financial Web sites designed to
provide clone stop shopping' for the online investor's financial information
needs: WallStreetTicker.com and WallStSmallCap.com. (the "Consultant's Web
Sites") Wall Street Ticker and Wall St Small Cap offer access to quotes, online
brokers, financial charts, corporate profiles and press releases while
furnishing pertinent corporate information to the public. Roth sites are
provided to help companies gain exposure, increase volume and lower their cost
of capital
Consultant will create and produce an in-depth corporate profile along with key
management biographies, press releases, and banner ads that will be featured
throughout Consultant's Web Sites. The profile will also be distributed to Wall
St-Small Cap's and Wall Street Ticker's online subscribers via e-mail
broadcasting. Each profile can be updated on a monthly or quarterly basis as
deemed necessary.
Produce & Manage Corporate World Wide Web Site:
Consultant will design, construct and service Client's World Wide Web Site.
Consultant will host the site on its Silicon Graphics Origin 200 Web Server.
Consultants systems are hosted and maintained in a Unix operating environment
and connectivity to the Internet is provided by a "T1" line.
At Client's request, Consultant will acquire an Internet Second-Level Domain
Name ("SLD"), from the US InterNIC or successor registar only, on behalf of
Customer. Such a request by Client and/or Client's acceptance or use of the SLD
obtained by Consultant shall in all cases constitute Client's waiver of any and
all claims which it may have, or which may later arise, against Consultant for
any loss, damage, claim or expense arising out of, or related to, the
acquisition, registration, and/or use of such SLD.
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Media Management:
Consultant will coordinate and manage the buying & placing of print media in
various segments of the financial media including the New York Tunes and the
Wall Street Journal.
Press & News Releases:
Consultant will help produce and distribute new press releases and corporate
profiles via e-mail broadcasting to Wall Street Ticker's and Wall St. Small
Cap's online subscriber base and to over 50,000 media sources across the U.S.
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DUTIES OF THE COMPANY
a. Provide Executive Summary
b. Provide Mission statement
c. Need:
1. Why location chosen?
2. Type of facility
3. Work Flow Chart
4. Press Releases issued during the last three years
5. Product brochures and other marketing materials
6. Any recent analysis of the Company prepared by the Company, investment
bankers. consultants, accountants or others.
d. Competition (Who they are) (Where they are located)
e. Operating table of organization 1. Services to be provided 2. Marketing
strategy 3. Target Market
f. Key Management (Resumes on all principals of company to include: name,
address, telephone number, and title. Social Security number, date of
birth, place of birth, address for last five (5) years, education, business
experience)
g. Equipment
h. Financial information needed, prepared by an accountant 1. Years 1-3 Cash
Flow forecast 2. Years 1-3 Income Statements 3. Use of Proceeds
i. Potential customer list
j. Documentation
1. Accountant
2. Corporate Books and Information
3. Any existing contracts
4. Articles of Incorporation and By-laws
5. Confidential Structure review
k. Pay Consultant according to the schedule provided herein.
l. Hold the Consultant harmless for all actions it makes in good faith based on
information provided by the Company.
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**TO BE FILED BY AMENDMENT**
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 7th day of July, 1999 by and between OREX GOLD MINES CORPORATION, a Delaware
corporation (the "Company"), and WARREN HEMEDINGER, an individual (the
"Executive").
Preliminary Statements
A. The Company is presently engaged in the business of owning and
operating within the state of Florida and other businesses (the "Businesses");
B. The Executive has had many years of experience in the affairs of
business organizations; and is currently the President of the Company; and
C. The Company is desirous of continuing the employment of the Executive
and benefiting from his contributions to the Company.
Agreement
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:
1. Employment.
1.1 Employment and Term. The Company hereby agrees to continue to employ the
Executive and the Executive hereby agrees to continue to serve the Company, on
the terms and conditions set forth herein, for a period of three (3) years
commencing on the date hereof and expiring on the first anniversary hereof (the
"Initial Term") unless sooner terminated as hereinafter set forth; provided,
however, that commencing on the first and each anniversary of the date of this
Agreement, the Initial Term of this Agreement shall automatically be extended
for one additional year unless at least ninety (90) days prior to such date, the
Company shall have delivered to the Executive or the Executive shall have
delivered to the Company written notice that the term of the Executive's
employment hereunder will not be extended. (The Initial Term and any extensions
shall be hereinafter referred to as the "Employment Period").
1.2 Duties of the Executive. During the Employment Period, the Executive shall
serve as President of the Company and shall have powers and authority superior
to any other officer or employee of the Company or of any subsidiary of the
Company. The Executive shall be required to report solely to, and shall be
subject solely to the supervision and direction of, the Board at duly called
meetings thereof and no other person or group shall be given authority to
supervise or direct the Executive in the performance of his duties. During the
Employment Period, and excluding any periods of vacation and sick leave to which
the Executive is entitled, the Executive agrees to devote substantially all of
his attention and business time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder as a senior executive
officer involved with the general management of the Company, to use the
Executive's reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (i) serve on corporate, civic or charitable
boards or committees; (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions; or (iii) manage personal investments and
engage in other business activities, so long as such activities do not
significantly interfere with the performance of the Executive's responsibilities
as an employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the date hereof, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the date hereof shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the
Company.
1.3 Place of Performance. The Executive shall be based at the Company's
principal executive offices located in Miami-Dade, Florida, except for required
travel relating to the Company's Businesses to an extent substantially
consistent with the Executive's present travel obligations.
2. Base Compensation & Incentive Bonus.
2.1 Base Salary. Commencing on the date hereof, the Executive shall receive a
base salary at the annual rate of not less than One Hundred Fifty Thousand and
No/100 Dollars ($150,000.00) (the "Base Salary") during the term of this
Agreement, with such Base Salary payable in installments consistent with the
Company's normal payroll schedule, subject to required applicable withholding
for taxes. On January 1st of each calendar year during the Employment Period
(the "Salary Adjustment Date") commencing on January 1, 2000, the Executive's
then Base Salary shall be increased by an amount equal to the previous year's
Base Salary multiplied by ten percent (10%), except that in the event that
Pre-Tax Consolidated Net Income (defined in Section 2.4(c) below) is equal to
zero for the Company's fiscal year immediately preceding the Salary Adjustment
Date, then the Base Salary shall not be increased pursuant to this sentence on
such Salary Adjustment Date. The Base Salary shall also be reviewed, at least
annually, for merit increases and may, by action and in the discretion of the
Board, be increased at any time or from time to time. The Base Salary, if so
increased, shall not thereafter be decreased for any reason.
2.2 Incentive Bonus. Subject to Section 2.3 below, the Executive shall be
entitled to an incentive bonus for each of the Company's fiscal years during the
Employment Period (the "Incentive Bonus"), commencing with an Incentive Bonus
for the Company's fiscal year ending 1999. The Incentive Bonus shall be equal to
five (5%) percent of the Company's Pre-Tax Consolidated Net Income (defined in
Section 2.4(c) below); provided, however, that the Executive's Incentive Bonus
for any fiscal year shall not exceed ninety (90%) percent of the Executive's
Base Salary for such fiscal year. The Company shall pay the Executive the
Incentive Bonuses due hereunder as soon as reasonably possible after the end of
the Company's fiscal year, but in no event later than the 91st day after the
last day of the Company's fiscal year for which the Incentive Bonus is due to
the Executive. Except as otherwise provided in Section 4. 1, if the Executive's
employment is terminated for cause pursuant to Section 4. 1 or by notice of
non-renewal as provided in Section 1. 1, then the Executive shall be entitled to
an Incentive Bonus equal to the total Incentive Bonus that would have been
payable to the Executive for the fiscal year if the Executive's employment had
not been terminated, multiplied by the number of days in the fiscal prior to and
including the date of termination and divided by 365.
2.3 Approval of Remuneration. In the event that the Company shall be a publicly
held within the meaning of Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code") and the Executive is a covered employee with
remuneration (within the meaning of such Code section) for the fiscal year of
the Company expected to exceed $1,000,000, then, to the extent that the
incentive bonus anticipated for such fiscal year payable to the Executive
pursuant to Section 2.2 or any additional performance based compensation payable
to the Executive pursuant to Section 2.1 (other than Base Salary and increases
to Base Salary as provided in Section 2.1) (collectively "Performance
Compensation") when added together with the Executive's other remuneration from
the Company for such fiscal year is expected to cause the total remuneration to
the Executive for such fiscal year to exceed $1,000,000 ("Excess Remuneration"),
the Company shall timely cause the procedures set forth below to be observed
with respect to such Performance Compensation under Section 2.1 first and then
with respect to such Performance Compensation under Section 2.2 for such fiscal
year in an amount not to exceed to the lesser of (i) the Excess Remuneration for
such fiscal year or (ii) the aggregate Performance Compensation for such fiscal
year ("Excess Performance Compensation").
(a) The performance goals for such Excess Performance Compensation shall be
determined and approved by a compensation committee of the Board of Directors of
the Company which shall be compromised solely of two or more outside directors.
(b) The material terms under which the Excess Performance Compensation is paid,
including the performance goals, shall be disclosed to shareholders and approved
by a majority of the vote in a separate shareholder vote before payment of such
Excess Performance Compensation.
(c) Before any payment of such Excess Performance Compensation, the compensation
committee of the Board referred to in the preceding Section 2.3(a) certifies
that the performance goals and any other material terms were in fact satisfied.
The provisions of this Section 2.3 are intended to comply with and shall be
interpreted in accordance with the requirements of Section 162(m) of the Code,
and accordingly, if the Board and the Company follow the foregoing requirements
and the Excess Performance Compensation shall be disapproved by the Board or the
shareholders in accordance with said requirements, the Executive shall not be
paid the Excess Performance Compensation for the fiscal year at issue. The
compensation committee of the Board and the shareholders may elect to approve
(but not to disapprove) as a plan all Excess Performance Compensation which may
become payable to the Executive under this Agreement in the manner provided in
Sections 2.3(a) and 2.3(b), respectively, for the entire term of this Agreement
in the initial vote of the compensation committee approving this Agreement and
in the next shareholders' meeting following such vote of the compensation
committee. In the event that the Executive's remuneration for such fiscal year
shall not exceed $1,000,000 or the Company and/or the Board fails to observe,
take or cause to take any of the foregoing actions required under this Section
2.3 in a timely manner, then the Executive shall be paid the full amount of
remuneration anticipated to be or actually subject to this Section 2.3,
notwithstanding that all or a portion of such remuneration may not be deductible
by the Company under the Code.
2.4 Definitions. For purpose of this Section 2 the following definitions shall
apply:
(a) "Gross Revenue" shall mean the annual consolidated gross revenues of the
Company as reflected on the Company's audited financial statements, increased by
the gross revenue of any subsidiary, partnership, joint-venture or other
investment in which the Company owns fifty percent (50%) or greater capital,
equity and/or income interest and the gross revenue of which is not reflected in
the Company's gross revenues as shown on the Company's audited financial
statements. The Gross Revenue of the Company hereunder shall be determined by
the Company's independent Auditors in accordance with generally accepted
accounting principles and auditing standards, both applied on a consistent basis
with prior periods, except that, for purposes of this Section 2.4 only, the
amount of Gross Revenues for any fiscal year of the Company consisting of less
than twelve (12) full and consecutive calendar months shall be annualized on the
basis of a twelve (12) month year.
(b) "Percentage Increase in Gross Revenue" shall mean the percentage increase in
Gross Revenues for the Company's fiscal year ending on or immediately preceding
the Salary Adjustment Date (defined in Section 2. 1) as compared to the Gross
Revenues for the Company's second (2nd) fiscal year immediately preceding the
Salary Adjustment Date.
(c) "Pre-Tax Consolidated Net Income" shall mean the Company's annual net income
before extraordinary items and income taxes as reflected in the Company's
audited financial statements for the relevant fiscal period. For purposes of
this Agreement, the Company's Pre-Tax Consolidated Net Income for any complete
fiscal year shall not be less than zero. The Pre-Tax Consolidated Net Income of
the Company hereunder shall be as determined by the Company's independent
auditors in accordance with generally accepted accounting principles and
auditing standards, both applied on a consistent basis with prior periods,
except that, for purposes of this Section 2.4 only, the amount of Pre-Tax
Consolidated Net Income for any fiscal year of the Company consisting of less
than twelve (12) full and consecutive calendar months shall be annualized on the
basis of a twelve (12) month year.
3. Other Benefits.
3.1 Expense Reimbursement. The Company shall promptly reimburse the Executive
for all reasonable expenses actually paid or incurred by the Executive in the
course of and pursuant to the Businesses of the Company, including expenses for
travel and entertainment. The Executive shall account and submit reasonably
supporting documentation to the Company in connection with any expense
reimbursement hereunder in accordance with the Company's policies.
3.2 Other Benefits. During the Employment Period, the Company shall continue in
force all existing comprehensive major medical and hospitalization insurance
coverages, including dental coverages, either group or individual for the
Executive and his dependents; shall continue in force all existing life
insurance for the Executive; and shall continue in force all existing disability
insurance for the Executive (collectively, the "Policies"), which Policies the
Company shall keep in effect at its sole expense throughout the term of this
Agreement. The Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all benefits under all
welfare benefit plans, practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
senior executive officers or other peer executives of the Company. The Executive
shall also be entitled to participate in all incentive, savings and retirement
plans, practices, policies and programs and such other perquisites as applicable
generally to senior executive officers or other peer executives of the Company.
Nothing paid to the Executive under any plan or arrangement presently in effect
or made available in the future shall be deemed to be in lieu of the Base Salary
payable to the Executive pursuant to this Agreement.
3.3 Working Facilities. The Company shall furnish the Executive with an office,
a secretary and such other facilities and services suitable to his position and
adequate for the performance of his duties hereunder.
3.4 Vacation. The Executive shall be entitled to such number of paid vacation
days in each calendar year as determined by the Board from time to time for its
senior executive officers, but in no event less than six (6) weeks of paid
vacation during each calendar year. Unused vacation days may be carried forward
from year to year at the option of the Executive.
3.5 Stock Options. On the date this Agreement is signed by the Executive, the
Executive's trust ( Warren Hemedinger Trust) shall receive from the Company
options, dated September 1, 1999, to purchase One Million (1,000,000) shares of
common stock of the Company at an option exercise price equal to Ten cents
($.10) per share. The foregoing options shall vest as follows: (a) Two-Hundred
Fifty Thousand (250,000) shares shall vest as of September 30th, 1999, (b) an
Two-Hundred Fifty Thousand (250,000) shares shall vest on December 31st, 1999,
and (c) the final Five-Hundred Thousand (500,000) shares shall vest on March
30th, 2000; provided, however, that upon the occurrence of a Change in Control
of the Company (as defined in Section 4.5), all options shall immediately vest.
The foregoing accelerated vesting shall be in addition to all other compensation
and benefits provided to the Executive in the event of a Change in Control of
the Company or otherwise provided under this Agreement.
3.6 Automobile. The Company shall pay the Executive, on a monthly basis, one
hundred (100%) percent of the Executive's monthly Automobile Expenses.
"Automobile Expenses" shall mean all automobile loan (including principal and
interest), automobile lease or similar payments for an automobile designated by
the Executive and all fuel, insurance, repairs and maintenance expenses with
respect to such automobile.
3.7 Stock Bonus. The company shall issue to the executive's trust (Warren
Hemedinger Trust) a bonus of Five Million (5,000,000) Shares of Preferred Stock,
restricted under rule 144, upon any future merger, acquisition or stock exchange
agreement.
4. Termination.
4.1 Termination for Cause.
(a) The Company may terminate this Agreement for Cause (as defined below) in
strict accordance with the following procedure: Upon a determination by not less
than three-quarters (3/4) of the entire membership of the Board that Cause may
exist under Section 4.1(b)(i) or 4.1(b)(ii) below, the Company shall cause a
special meeting of the Board (the "Special Board Meeting") to be called and held
at a time mutually convenient to the Board and the Executive, but in no event
later than ten (10) business days after the Executive's receipt of a copy of the
resolution of the Board stating that (i) in the Board's good faith opinion,
Cause may exist to terminate the Executive's employment with the Company in
accordance with this Agreement; and (ii) specifying the particulars of the
alleged conduct giving rise to such Cause in detail. The Executive shall have
the right to appear before the Special Board Meeting with legal counsel of his
choosing to refute any determination of Cause specified in such notice. The
Executive shall also have the right to have a recorded or stenographic
transcription made of the Special Board Meeting. Any termination of the
Executive's employment by reason of such Cause determination shall not be
effective unless and until (i) the Executive is afforded such opportunity to
appear before the Board as provided herein and (ii) there shall have been
delivered to the Executive a copy of a resolution, duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board, adopting the Board's final determination, after the appearance of
the Executive as provided herein, stating that in the good faith opinion of the
Board, the Board finds Cause for the termination of this Agreement and the
Executive's employment with the Company and specifying the particulars of acts
or omissions upon which the Company is relying for such termination.
(b) As used in this Agreement, the term "Cause" shall only mean:
(i) A material breach by the Executive of the Executive's obligations under
Section 1.2 hereof (other than as a result of incapacity due to physical or
mental illness) which is (a) demonstrably willful and deliberate on the
Executive's part; and (b) which is committed in bad faith and without reasonable
belief that such breach is in the best interests of the Company; and (c) which
is not remedied in a reasonable period of time after receipt of written notice
from the Company specifying such breach; or
(ii) The conviction of the Executive of a felony based upon a violent crime or a
sexual crime involving baseness, vileness or depravity.
(iii) The Termination Date for a termination of this Agreement pursuant to this
Section 4.1 shall be the date specified by the Board in the resolution finding
Cause, which date shall not be earlier than 30 days after the date of the
Special Board Meeting.
(c) Upon any termination of this Agreement pursuant to this Section 4.1, the
Executive shall be entitled to the compensation specified in Section 5.1 hereof.
4.2 Disability. The Company may terminate this Agreement upon the Disability (as
defined below) of the Employee in strict accordance with the following
procedure: Upon a good faith determination by not less than three-quarters (3/4)
of the entire membership of the Board that the Executive has suffered a
Disability, the Company shall give the Executive written notice of its intention
to terminate this Agreement due to such Disability. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 120
consecutive calendar days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably). The Termination Date for a termination of this Agreement pursuant
to this Section 4.2 shall be the date specified by the Board in the resolution
finding that the Executive has suffered a Disability, which date may not be any
earlier than 30 days after the date of Board's finding. Upon any termination of
this Agreement pursuant to this Section 4.2, the Executive shall be entitled to
the compensation specified in Section 5.2 hereof.
4.3 Death. This Agreement shall terminate automatically upon the death of the
Executive, without any requirement of notice by the Company to the Executive's
estate. The date of the Executive's death shall be the Termination Date for a
termination of this Agreement pursuant to this Section 4.3. Upon any termination
of this Agreement pursuant to this Section 4.3, the Executive shall be entitled
to the compensation specified in Section 5.3 hereof.
4.4 Termination by the Executive for Good Reason or by the Company, Without
Cause. The Executive may terminate his employment under this Agreement for Good
Reason (defined below), or the Company may terminate such employment, without
cause, as provided in this Section 4.4. "Good Reason" shall mean that the
Company (through its Board or otherwise) has (i) assigned the Executive duties
other than those contemplated by Section 1.2 above without the Executive's
consent; (ii) limited the powers of the Executive in any manner not contemplated
by Section 1.2 above; or (iii) materially breached any of its other covenants
and obligations hereunder. A purported termination of this Agreement by the
Company pursuant to any provision of this Section 4 which is disputed and which
is finally determined not to have been proper shall be deemed a material breach
by the Company of this Agreement. To terminate his employment under this
Agreement for Good Reason, the Executive shall give the Company written notice
of the Executive's intent to terminate his employment with the Company pursuant
to this Section 4.4, which notice shall specify the Executive's reasons therefor
in detail. The Company shall have 30 days from its receipt of such notice to
attempt to cure any such condition giving rise to Good Reason hereunder. If such
cure is acceptable to the Executive, the Executive may accept such cure and
continue this Agreement in full force and effect as if the initial notice of
termination under this Section 4.4 had not been given by the Executive;
provided, however, that acceptance of such cure and the continuation of the
Executive's employment shall not act as a waiver of any rights of the Executive
with respect to such actions or inactions of the Company and/or limit the
Executive's right to terminate this Agreement for the same or similar action or
inaction by the Company following such cure. If the Executive does not accept
such cure, the Termination Date of this Agreement shall be the 30th day after
the Company's receipt of the Executive's termination notice. To terminate the
Executive's employment without cause in accordance with this Section 4.4, the
Company shall give the Executive written notice of such termination. The
Termination Date shall be the date specified by the Company in such notice. Upon
any termination of this Agreement pursuant to this Section 4.4, the Executive
shall be entitled to the compensation specified in Section 5.4 hereof, except
that if such termination by the Company occurs within a period beginning six (6)
months before and ending one (1) year after a Change in Control of the Company
(defined in Section 4.5 below), then such termination shall be deemed to be due
to a Change in Control of the Company and the Executive shall be entitled to the
compensation specified in Section 5.5 hereof and any other compensation and
benefits provided in this Agreement in connection with a Change in Control of
the Company.
4.5 Termination by the Executive Upon a Change in Control of the Company. The
Executive may terminate his employment under this Agreement upon a Change in
Control of the Company. For purposes of this Section 4.5, "Change in Control of
the Company" shall mean (i) the acquisition by a person or an entity or a group
of persons and entities, directly or indirectly, of more than thirty (30%)
percent of the Company's common stock in a single transaction or a series of
transactions (hereinafter referred to as a "30% Change in Control"); (ii) a
merger or other form of corporate reorganization resulting in an actual or de
facto 30 % Change in Control; or (iii) the failure of Applicable Directors
(defined below) to constitute a majority of the Board during any two (2)
consecutive year period after the date of this Agreement (the "Two-Year
Period"). "Applicable Directors" shall mean those individuals who are members of
the Board at the inception of a Two-Year Period and any new director whose
election to the Board or nomination for election to the Board was approved
(prior to any vote thereon by the shareholders) by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the Two-Year Period at issue or whose election or nomination for
election during such Two-Year Period was previously approved as provided in this
sentence. To terminate his employment under this Agreement upon a Change in
Control of the Company, the Executive shall give the Company written termination
notice. The Termination Date shall be the date specified in such notice, which
date may not be earlier than 30 days nor later than 90 day from the Company's
receipt of such notice. Upon any termination of this Agreement pursuant to this
Section 4.5, the Executive shall be entitled to the compensation specified in
Section 5.5 hereof and any other compensation and benefits provided in this
Agreement in connection with a Change in Control of the Company.
4.6 Termination by the Executive Due to Poor Health. The Executive may terminate
his employment under this Agreement upon written notice to the Company if the
Executive's health should become impaired to any extent that makes the continued
performance of the Executive's duties under this Agreement hazardous to the
Executive's physical or mental health or his life (regardless of whether such
condition would be deemed a Disability under any other section of this
Agreement), provided that the Executive shall have furnished the Company with a
written statement from a qualified doctor to that effect and provided further
that, at the Company's written request and expense, the Executive shall submit
to a medical examination by a qualified doctor selected by the Company and
acceptable to the Executive (which acceptance shall not be unreasonably
withheld) which doctor shall substantially concur with the conclusions of the
Executive's doctor. The Termination Date shall the date specified in the
Executive's notice to the Company, which date may not be earlier than 30 days
nor later than 90 day from the Company's receipt of such notice. Upon any
termination of this Agreement pursuant to this Section 4.6, the Executive shall
be entitled to the compensation specified in Section 5.6 hereof.
4.7 Non-renewal. In the event that either party to this Agreement shall give
notice to the other party that this Agreement will not be renewed as provided in
Section 1.1 hereof, then this Agreement shall terminate at the end of such final
term of this Agreement. The last day of such final term shall be the Termination
Date for a termination pursuant to this Section 4.7. Upon any termination of
this Agreement pursuant to this Section 4.7, the Executive shall be entitled to
the compensation specified in Section 5.7.
4.8 Termination by the Executive. The Executive may terminate his employment
under this Agreement for any reason whatsoever upon not less than 30 days prior
written notice to the Company. In the event that reference to the applicable
termination section of this Agreement is not made in the Executive's notice of
termination to the Company and the reason for the Executive's termination can be
construed to occur under this Section 4.8 or any of Sections 4.2, 4.4, 4.5, 4.6
or 4.7 above, then the Executive shall have the right to specify which section
of this Section 4 shall control. The Termination Date under this Section 4.8
shall be the date specified in the Executive's notice to the Company, which date
may not be earlier than 30 days from the Company's receipt of such notice. Upon
any termination of this Agreement pursuant to this Section 4.8, the Executive
shall be entitled to the compensation specified in Section 5.7 hereof.
5. Compensation and Benefits Upon Termination.
5.1 Cause. If the Executive's employment is terminated for Cause, the Company
shall pay the Executive his full Base Salary through the Termination Date
specified in Section 4.1 at the rate in effect at the Termination Date, and the
Company shall have no further obligation to the Executive under this Agreement.
5.2 Disability. During any period that the Executive is unable to perform his
duties under this Agreement as a result of incapacity due to physical or mental
illness, the Executive shall continue to receive his full Base Salary until the
Termination Date specified in Section 4.2. After such termination, the Executive
shall receive in equal monthly installments 100% of his Base Salary at the rate
in effect at the Termination Date for one year and thereafter for two additional
years at an annual rate equal to 50% of the Base Salary which would have been in
effect under this Agreement reduced, in each case, for any disability payments
otherwise payable by or pursuant to plans provided by the Company.
5.3 Death. Upon the Executive's death, the Company shall pay to the person
designated by the Executive in a notice filed with the Company or, if no person
is designated, to his estate (i) any unpaid amounts of his Base Salary and
accrued vacation to the date of the Executive's death; and (ii) any payments the
Executive's spouse, beneficiaries or estate may be entitled to receive pursuant
to any pension or employee benefit plan or life insurance policy or similar plan
or policy then maintained by the Company. Upon full payment of all amounts
required to be paid under this Section 5.3, the Company shall have no further
obligation under this Agreement.
5.4 Termination by the Executive for Good Reason. If the Executive terminates
this Agreement for Good Reason or the Company terminates the Executive's
employment without cause in accordance with and subject to Section 4.4, then (i)
the Company shall pay the Executive his full Base Salary through the Termination
Date specified in Section 4.4 at the rate in effect at such Termination Date;
and (ii) in lieu of any further salary payments to the Executive for periods
subsequent to the Termination Date and in consideration of the rights of the
Company under Section 8, the Company shall pay as severance pay to the Executive
on the fifth day following the Termination Date, a lump sum amount equal to two
hundred (200%) percent of the sum of (a) the annual Base Salary at the highest
rate in effect during the 12 months immediately preceding the Termination Date;
plus (b) the average of the three annual bonus payments paid with respect to the
preceding three years under this Agreement (or the number of years the Executive
has been employed with the Company under this Agreement or otherwise if less
than three years). In addition, the Company shall pay, upon demand by the
Executive, all other damages to which the Executive may be entitled as a result
of the Company's termination of his employment under this Agreement, including
all reasonable legal fees and expenses incurred by him in contesting or
disputing any such termination or in seeking to obtain or enforce any right or
benefit under this Agreement; provided, however, that the Executive shall only
be entitled to such legal fees and expenses if the Executive prevails in any
arbitration or other proceeding contesting or disputing any such termination or
seeking to obtain or enforce any right or benefit under this Agreement or enters
into a settlement of any of the foregoing with the Company.
5.5 Termination by the Executive Upon a Change in Control. If the Executive
terminates this Agreement upon a Change in Control of the Company pursuant to
Section 4.5 or the Company terminates the Executive's employment in accordance
with Section 4.4 during a period beginning six (6) months before and ending one
(1) year after a Change in Control of the Company (defined in Section 4.5), then
(i) the Company shall pay the Executive his full Base Salary through the
Termination Date specified in Section 4.5 or Section 4.4 , as the case may be,
at the rate in effect at such Termination Date; (ii) the Executive shall receive
all other compensation and benefits provided in this Agreement in connection
with a termination of employment due to a Change in Control of the Company; and
(iii) in lieu of any further salary payments to the Executive for periods
subsequent to such Termination Date (but without affecting compensation or
benefits to the Executive in accordance with the preceding clauses 5.50) and
5.500) and in consideration of the rights of the Company under Section 8, the
Company shall pay as severance pay to the Executive on the fifth day following
the Termination Date, a lump sum amount equal to two hundred and ninety nine and
99/100 (299.99%) percent of the average taxable compensation of the Executive
for the 5 taxable years prior to such termination (all as determined to compute
the "base amount" for purposes of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code")), reduced, but not below zero, by the amount of
compensation or benefits from the Company to the Executive which would cause the
severance pay payable pursuant to this Section 5.5 to exceed the excess
parachute payment limitation imposed under Section 280G of the Code.
5.6 Termination by the Executive Due to Poor Health. If the Executive terminates
this Agreement pursuant to Section 4.6 hereof, the Company shall pay to the
Executive any unpaid amounts of his Base Salary and accrued vacation to the
Termination Date specified in Section 4.6 plus any disability payments otherwise
payable by or pursuant to plans provided by the Company.
5.7 Non-renewal or other termination. If this Agreement terminates pursuant to
Section 4.7 or Section 4.8 hereof, the Company shall pay to the Executive any
unpaid amounts of his Base Salary and accrued vacation to the Termination Date
specified in Section 4.7 or Section 4.8, as the case may be.
5.8 Health and Medical Plans. The Executive shall be entitled to all
continuation of health, medical, hospitalization and other programs as provided
by any applicable law and such additional benefits as are provided by the
Company to its employees upon termination of employment with the Company.
5.9 Mitigation. The Executive shall not be required to mitigate the amount of
any payment provided for in this Section 5 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Section 5 be
reduced by any compensation earned by the Executive as the result of employment
by another employer after the Termination Date.
5.10 Incentive Bonus and Expense Reimbursement. If the Executive's employment
with the Company is terminated for any reason, other than Cause (defined in
Section 4.l(b) above), the Executive shall be paid, solely in consideration for
services rendered by the Executive prior to such termination, an incentive bonus
with respect to the Company's fiscal year in which the Termination Date occurs,
in accordance with Section 2.2 hereof. The Executive shall be entitled to
reimbursement for reasonable business expenses incurred prior to the Termination
Date, subject, however to the provisions of Section 3.1.
5.11 Loans. Except as otherwise provided in this Agreement, the outstanding
balance as of the Termination Date of any demand loan or advance from the
Company to the Executive which has no set term or maturity shall be paid by the
Executive to the Company, with interest at the lowest rate permissible for
federal income tax purposes, in sixty equal and successive monthly installments
of principal and interest beginning on the first day of the month following the
Termination Date.
6. Successors; Binding Agreement.
6.1 Successors. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) acquiring a majority
of the Company's voting common stock or any other successor to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Such agreement shall be confirmed in a writing in form and
substance satisfactory to the Executive. Failure of the Company to obtain an
assumption of this Agreement prior to or simultaneously with the effectiveness
of any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as he would be entitled to under this Agreement if the Executive had
terminated his employment for Good Reason, except for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Termination Date. As used in this Agreement, "Company" shall mean the
Company as previously defined and any successor to its business and/or assets
which executes and delivers the agreement provided for in this Section 6 or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
6.2 Benefit. This Agreement and all rights of the Executive under this Agreement
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would still be payable to him under this Agreement, including all
payments payable under Section 5, if he had continued to live, all such amounts
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there is no such designee, the
Executive's estate.
7. Conflicts With Prior Employment Contract. Except as otherwise provided in
this Agreement, this Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof, and supersedes and revokes any
and all prior or existing agreements, written or oral, relating to the subject
matter hereof, and this Agreement shall be solely determinative of the subject
matter hereof.
8. Noncompetition; Unauthorized Disclosure; Injunctive Relief.
8.1 No Material Competition. Except with respect to services performed under
this Agreement on behalf of the Company, and subject to the obligations of the
Executive as an officer of the Company and the employment obligations of the
Executive under this Agreement, the Executive agrees that at no time during the
Employment Period or, for a period of one year immediately following any
termination of this Agreement for any reason, for himself or on behalf of any
other person, persons, firm, partnership, corporation or company:
(a) Solicit or accept business from any customers of the Company or its
affiliates, from any prospective customers whose business the Company or any
affiliate of the Company is in the process of soliciting at the time of the
Executive's termination, or from any former customer which had been doing
business with the Company within one year prior to the Executive's termination;
(b) Solicit any employee of the Company or its affiliates to terminate such
employee's employment with the Company; or
(c) Engage in any business of the type performed by the Company in the
geographical are where the Company is actively doing business or soliciting
business if, within 30 days of the Executive advising the Company in writing of
his proposed business activity, the Board determines in good faith that such
proposed business activity is directly competitive with a material part of the
business of the Company and its subsidiaries (in the aggregate) and such
competitive business activity is reasonably likely to materially affect in an
adverse manner the consolidated sales, profits or financial condition of the
Company. If the Board fails to advise the Executive within said thirty (30) day
period, then the Board shall be deemed to have consented to the Executive's
engaging in such activity.
8.2 Unauthorized Disclosure. During the Employment Period and for two years
following the termination of this Agreement for any reason, the Executive shall
not, without the written consent of the Board or a person authorized by the
Board or as may otherwise be required by law or court order, disclose to any
person, other than an employee of the Company or person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of his duties as an executive of the Company, any material
confidential information obtained by him while in the employ of the Company with
respect to any of the company's customer, suppliers, creditors, lenders,
investments bankers or methods of marketing, the disclosure of which the
Executive knows will materially damage the Company; provided, however, that
confidential information shall not include any information generally known to
the public (other than as a result of unauthorized disclosure by the Executive)
or any information of a type not otherwise considered confidential by persons
engaged in the same business or a business similar to that conducted by the
Company. For the period ending one year following the termination of employment
under this Agreement for any reason, the Executive shall not disclosure any
confidential information of the type described above except as determined by him
to be reasonably necessary in connection with any business or activity in which
he is then engaged or as otherwise required by law or court order.
8.3 Injunction. The Company and the Executive acknowledge that a breach by the
Executive of any of the covenants contained in this Section 8 may cause
irreparable harm or damage to the Company or its subsidiaries, the monetary
amount of which may be virtually impossible to ascertain. As a result, the
Executive agrees that the Company shall be entitled to an injunction issued by
any court of competent jurisdiction enjoining and restraining all violations of
this Section 8 by the Executive or his associates, affiliates, partners or
agents, and that the right to an injunction shall be cumulative and in addition
to all other remedies the Company may possess.
8.4 Certain Provisions. The limitations of this Section 8 shall terminate
immediately upon termination of this Agreement if for any reason the Company
does not fulfill its obligations as required by Sections 4 and 5 of this
Agreement; provided, however, such termination shall not affect the rights of
the Executive to receive all payments he is entitled to receive under Section 5.
The provisions of this Section 8 shall apply during the time the Executive is
receiving Disability payments from the Company as a result of a termination of
this Agreement pursuant to Section 4.2 hereof.
9. Arbitration. Any dispute or controversy (except for disputes arising under
Section 8) arising under or in connection with this Agreement shall be settled
exclusively by arbitration in accordance with the rules of the American
Arbitration Association then in effect (except to the extent that the procedures
outlined below differ from such rules). Within 7 days after receipt of written
notice from either party that a dispute exists and that arbitration is required,
both parties must within 7 business days agree on an acceptable arbitrator. If
the parties cannot agree on an arbitrator, then the parties shall list the "Big
Six" accounting firms (other than the Company's auditors) in alphabetical order
and the first firm that does not have a conflict of interest and is willing to
serve will be selected as the arbitrator. The parties agree to act as
expeditiously as possible to select an arbitrator and conclude the dispute. The
arbitrator must render his decision in writing within 30 days of his or its
appointment. The cost and expenses of the arbitration and of legal counsel to
the prevailing party shall be borne by the non-prevailing party, except as
otherwise provided in Sections 3.7 and 5.4 hereof. Each party will advance
one-half of the estimated fees and expenses of the arbitrator. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided
that the Company shall be entitled to seek a restraining order or injunction in
any court of competent jurisdiction to prevent any continuation of any violation
of Section 8 hereof.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to its conflict
of laws principles to the extent that such principles would require the
application of laws other than the laws of the State of Florida.
11. Notices. Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been given when delivered by
hand or when deposited in the United States mail by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company: If to the Executive:
Orex Gold Mines Corp. Warren Hemedinger
2121 Ponce de Leon Blvd. #510 410 Catalonia Ave
Coral Gables, Florida 33134 Coral Gables, Florida 33134
or to such other addresses as either party hereto may from time to time give
notice of to the other in the aforesaid manner.
12. Benefits: Binding Effect. This Agreement shall be for the benefit of and
binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns. Notwithstanding the foregoing, neither party may assign its rights or
benefits hereunder without the prior written consent of the other party hereto.
13. Severability. The invalidity of any one or more of the words, phrases,
sentences, clauses or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and, in the
event that any one or more of the words, phrases, sentences, clauses or sections
contained in this Agreement shall be declared invalid, this Agreement shall be
construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, or section or sections had not been inserted. If
such invalidity is caused by length of time or size of area, or both, the
otherwise invalid provision will be considered to be reduced to a period or area
which would cure such invalidity.
14. Waivers. The waiver by either party hereto of a breach or violation of any
term or provision of this Agreement shall not operate nor be construed as a
waiver of any subsequent breach or violation.
15. Damages. Nothing contained herein shall be construed to prevent the Company
or the Executive from seeking and recovering from the other damages sustained by
either or both of them as a result of its or his breach of any term or provision
of this Agreement. In the event that either party hereto brings suit for the
collection of any damages resulting from, or the injunction of any action
constituting, a breach of any of the terms or provisions of this Agreement, then
the party found to be at fault shall pay all reasonable court costs and
attorneys' fees of the other, whether such costs and fees are incurred in a
court of original jurisdiction or one or more courts of appellate jurisdiction.
16. No Third Party Beneficiary. Nothing expressed or implied in this Agreement
is intended, or shall be construed, to confer upon or give any person (other
than the parties hereto and, in the case of the Executive, his heirs, personal
representative(s) and/or legal representative) any rights or remedies under or
by reason of this Agreement. No agreements or representations, oral or
otherwise, express or implied, have been made by either party with respect to
the subject matter of this agreement which agreements or representations are not
set forth expressly in this Agreement, and this Agreement supersedes any other
employment agreement between the Company and the Executive.
17. Board Approval; Agreement. The Company warrants and represents to the
Executive that this Agreement has been approved and authorized by the Board. No
provisions of this Agreement may be modified, waived or discharged unless such
waiver modification or discharge is agreed to in a writing signed by the
Executive and the officer of the Company which is specifically designated by the
Board.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
OREX GOLD MINES CORPORATION, a
Delaware corporation
By:
Name: Greg Finney
Title: Vice-President/Secretary
WARREN HEMEDINGER
\53683\010\80EMPAGT.001
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 7th day of July, 1999 by and between OREX GOLD MINES CORPORATION, a Delaware
corporation (the "Company"), and GREGORY FINNEY, an individual (the
"Executive").
Preliminary Statements
A. The Company is presently engaged in the business of owning and
operating within the state of Florida and other businesses (the "Businesses");
B. The Executive has had many years of experience in the affairs of
business organizations; and is currently Vice-President/Secretary of the
Company; and
C. The Company is desirous of continuing the employment of the Executive
and benefiting from his contributions to the Company.
Agreement
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:
1. Employment.
1.1 Employment and Term. The Company hereby agrees to continue to employ the
Executive and the Executive hereby agrees to continue to serve the Company, on
the terms and conditions set forth herein, for a period of two (2) years
commencing on the date hereof and expiring on the first anniversary hereof (the
"Initial Term") unless sooner terminated as hereinafter set forth; provided,
however, that commencing on the first and each anniversary of the date of this
Agreement, the Initial Term of this Agreement shall automatically be extended
for one additional year unless at least ninety (90) days prior to such date, the
Company shall have delivered to the Executive or the Executive shall have
delivered to the Company written notice that the term of the Executive's
employment hereunder will not be extended. (The Initial Term and any extensions
shall be hereinafter referred to as the "Employment Period").
1.2 Duties of the Executive. During the Employment Period, the Executive shall
serve as Vice-President/Secretary of the Company and shall have powers and
authority deemed appropriate for that position. The Executive shall be required
to report solely to the President and shall be subject solely to the supervision
and direction of, the Board at duly called meetings thereof and no other person
or group shall be given authority to supervise or direct the Executive in the
performance of his duties. During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote substantially all of his attention and business time
during normal business hours to the business and affairs of the Company and, to
the extent necessary to discharge the responsibilities assigned to the Executive
hereunder as a senior executive officer involved with the general management of
the Company, to use the Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the Employment Period
it shall not be a violation of this Agreement for the Executive to (i) serve on
corporate, civic or charitable boards or committees; (ii) deliver lectures,
fulfill speaking engagements or teach at educational institutions; or (iii)
manage personal investments and engage in other business activities, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the date
hereof, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the date hereof shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
1.3 Place of Performance. The Executive shall be based at the Company's
principal executive offices located in Miami-Dade, Florida, except for required
travel relating to the Company's Businesses to an extent substantially
consistent with the Executive's present travel obligations.
2. Base Compensation .
2.1 Base Salary. Commencing on the date hereof, the Executive shall receive a
base salary at the annual rate of not less than Fifty Thousand and No/100
Dollars ($50,000.00) (the "Base Salary") during the term of this Agreement, with
such Base Salary payable in installments consistent with the Company's normal
payroll schedule, subject to required applicable withholding for taxes. On
January 1st of each calendar year during the Employment Period (the "Salary
Adjustment Date") commencing on January 1, 2000, the Executive's then Base
Salary shall be increased by an amount equal to the previous year's Base Salary
multiplied by ten percent (10%), except that in the event that Pre-Tax
Consolidated Net Income (defined in Section 2.4(c) below) is equal to zero for
the Company's fiscal year immediately preceding the Salary Adjustment Date, then
the Base Salary shall not be increased pursuant to this sentence on such Salary
Adjustment Date. The Base Salary shall also be reviewed, at least annually, for
merit increases and may, by action and in the discretion of the Board, be
increased at any time or from time to time. The Base Salary, if so increased,
shall not thereafter be decreased for any reason.
3. Other Benefits.
3.1 Expense Reimbursement. The Company shall promptly reimburse the Executive
for all reasonable expenses actually paid or incurred by the Executive in the
course of and pursuant to the Businesses of the Company, including expenses for
travel and entertainment. The Executive shall account and submit reasonably
supporting documentation to the Company in connection with any expense
reimbursement hereunder in accordance with the Company's policies.
3.2 Other Benefits. During the Employment Period, the Company shall continue in
force all existing comprehensive major medical and hospitalization insurance
coverages, including dental coverages, either group or individual for the
Executive and his dependents; shall continue in force all existing life
insurance for the Executive; and shall continue in force all existing disability
insurance for the Executive (collectively, the "Policies"), which Policies the
Company shall keep in effect at its sole expense throughout the term of this
Agreement. The Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all benefits under all
welfare benefit plans, practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
senior executive officers or other peer executives of the Company. The Executive
shall also be entitled to participate in all incentive, savings and retirement
plans, practices, policies and programs and such other perquisites as applicable
generally to senior executive officers or other peer executives of the Company.
Nothing paid to the Executive under any plan or arrangement presently in effect
or made available in the future shall be deemed to be in lieu of the Base Salary
payable to the Executive pursuant to this Agreement.
3.3 Working Facilities. The Company shall furnish the Executive with an office,
a secretary and such other facilities and services suitable to his position and
adequate for the performance of his duties hereunder.
3.4 Vacation. The Executive shall be entitled to such number of paid vacation
days in each calendar year as determined by the Board from time to time for its
senior executive officers, but in no event less than four (4) weeks of paid
vacation during each calendar year. Unused vacation days may be carried forward
from year to year at the option of the Executive.
3.5 Stock Bonus. The company shall issue to the executive a bonus of One Million
(1,000,000) Shares of Common Stock, restricted under rule 144, upon any future
merger, acquisition or stock exchange agreement.
4. Termination.
4.1 Termination for Cause.
(a) The Company may terminate this Agreement for Cause (as defined below) in
strict accordance with the following procedure: Upon a determination by not less
than three-quarters (3/4) of the entire membership of the Board that Cause may
exist under Section 4.1(b)(i) or 4.1(b)(ii) below, the Company shall cause a
special meeting of the Board (the "Special Board Meeting") to be called and held
at a time mutually convenient to the Board and the Executive, but in no event
later than ten (10) business days after the Executive's receipt of a copy of the
resolution of the Board stating that (i) in the Board's good faith opinion,
Cause may exist to terminate the Executive's employment with the Company in
accordance with this Agreement; and (ii) specifying the particulars of the
alleged conduct giving rise to such Cause in detail. The Executive shall have
the right to appear before the Special Board Meeting with legal counsel of his
choosing to refute any determination of Cause specified in such notice. The
Executive shall also have the right to have a recorded or stenographic
transcription made of the Special Board Meeting. Any termination of the
Executive's employment by reason of such Cause determination shall not be
effective unless and until (i) the Executive is afforded such opportunity to
appear before the Board as provided herein and (ii) there shall have been
delivered to the Executive a copy of a resolution, duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire membership
of the Board, adopting the Board's final determination, after the appearance of
the Executive as provided herein, stating that in the good faith opinion of the
Board, the Board finds Cause for the termination of this Agreement and the
Executive's employment with the Company and specifying the particulars of acts
or omissions upon which the Company is relying for such termination.
(b) As used in this Agreement, the term "Cause" shall only mean:
(i) A material breach by the Executive of the Executive's obligations under
Section 1.2 hereof (other than as a result of incapacity due to physical or
mental illness) which is (a) demonstrably willful and deliberate on the
Executive's part; and (b) which is committed in bad faith and without reasonable
belief that such breach is in the best interests of the Company; and (c) which
is not remedied in a reasonable period of time after receipt of written notice
from the Company specifying such breach; or
(ii) The conviction of the Executive of a felony based upon a violent crime or a
sexual crime involving baseness, vileness or depravity.
(iii) The Termination Date for a termination of this Agreement pursuant to this
Section 4.1 shall be the date specified by the Board in the resolution finding
Cause, which date shall not be earlier than 30 days after the date of the
Special Board Meeting.
(c) Upon any termination of this Agreement pursuant to this Section 4.1, the
Executive shall be entitled to the compensation specified in Section 5.1 hereof.
4.2 Disability. The Company may terminate this Agreement upon the Disability (as
defined below) of the Employee in strict accordance with the following
procedure: Upon a good faith determination by not less than three-quarters (3/4)
of the entire membership of the Board that the Executive has suffered a
Disability, the Company shall give the Executive written notice of its intention
to terminate this Agreement due to such Disability. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 120
consecutive calendar days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by
the Company or its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be withheld
unreasonably). The Termination Date for a termination of this Agreement pursuant
to this Section 4.2 shall be the date specified by the Board in the resolution
finding that the Executive has suffered a Disability, which date may not be any
earlier than 30 days after the date of Board's finding. Upon any termination of
this Agreement pursuant to this Section 4.2, the Executive shall be entitled to
the compensation specified in Section 5.2 hereof.
4.3 Death. This Agreement shall terminate automatically upon the death of the
Executive, without any requirement of notice by the Company to the Executive's
estate. The date of the Executive's death shall be the Termination Date for a
termination of this Agreement pursuant to this Section 4.3. Upon any termination
of this Agreement pursuant to this Section 4.3, the Executive shall be entitled
to the compensation specified in Section 5.3 hereof.
4.4 Termination by the Executive for Good Reason or by the Company, Without
Cause. The Executive may terminate his employment under this Agreement for Good
Reason (defined below), or the Company may terminate such employment, without
cause, as provided in this Section 4.4. "Good Reason" shall mean that the
Company (through its Board or otherwise) has (i) assigned the Executive duties
other than those contemplated by Section 1.2 above without the Executive's
consent; (ii) limited the powers of the Executive in any manner not contemplated
by Section 1.2 above; or (iii) materially breached any of its other covenants
and obligations hereunder. A purported termination of this Agreement by the
Company pursuant to any provision of this Section 4 which is disputed and which
is finally determined not to have been proper shall be deemed a material breach
by the Company of this Agreement. To terminate his employment under this
Agreement for Good Reason, the Executive shall give the Company written notice
of the Executive's intent to terminate his employment with the Company pursuant
to this Section 4.4, which notice shall specify the Executive's reasons therefor
in detail. The Company shall have 30 days from its receipt of such notice to
attempt to cure any such condition giving rise to Good Reason hereunder. If such
cure is acceptable to the Executive, the Executive may accept such cure and
continue this Agreement in full force and effect as if the initial notice of
termination under this Section 4.4 had not been given by the Executive;
provided, however, that acceptance of such cure and the continuation of the
Executive's employment shall not act as a waiver of any rights of the Executive
with respect to such actions or inactions of the Company and/or limit the
Executive's right to terminate this Agreement for the same or similar action or
inaction by the Company following such cure. If the Executive does not accept
such cure, the Termination Date of this Agreement shall be the 30th day after
the Company's receipt of the Executive's termination notice. To terminate the
Executive's employment without cause in accordance with this Section 4.4, the
Company shall give the Executive written notice of such termination. The
Termination Date shall be the date specified by the Company in such notice. Upon
any termination of this Agreement pursuant to this Section 4.4, the Executive
shall be entitled to the compensation specified in Section 5.4 hereof, except
that if such termination by the Company occurs within a period beginning six (6)
months before and ending one (1) year after a Change in Control of the Company
(defined in Section 4.5 below), then such termination shall be deemed to be due
to a Change in Control of the Company and the Executive shall be entitled to the
compensation specified in Section 5.5 hereof and any other compensation and
benefits provided in this Agreement in connection with a Change in Control of
the Company.
4.5 Termination by the Executive Upon a Change in Control of the Company. The
Executive may terminate his employment under this Agreement upon a Change in
Control of the Company. For purposes of this Section 4.5, "Change in Control of
the Company" shall mean (i) the acquisition by a person or an entity or a group
of persons and entities, directly or indirectly, of more than thirty (30%)
percent of the Company's common stock in a single transaction or a series of
transactions (hereinafter referred to as a "30% Change in Control"); (ii) a
merger or other form of corporate reorganization resulting in an actual or de
facto 30 % Change in Control; or (iii) the failure of Applicable Directors
(defined below) to constitute a majority of the Board during any two (2)
consecutive year period after the date of this Agreement (the "Two-Year
Period"). "Applicable Directors" shall mean those individuals who are members of
the Board at the inception of a Two-Year Period and any new director whose
election to the Board or nomination for election to the Board was approved
(prior to any vote thereon by the shareholders) by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the Two-Year Period at issue or whose election or nomination for
election during such Two-Year Period was previously approved as provided in this
sentence. To terminate his employment under this Agreement upon a Change in
Control of the Company, the Executive shall give the Company written termination
notice. The Termination Date shall be the date specified in such notice, which
date may not be earlier than 30 days nor later than 90 day from the Company's
receipt of such notice. Upon any termination of this Agreement pursuant to this
Section 4.5, the Executive shall be entitled to the compensation specified in
Section 5.5 hereof and any other compensation and benefits provided in this
Agreement in connection with a Change in Control of the Company.
4.6 Termination by the Executive Due to Poor Health. The Executive may terminate
his employment under this Agreement upon written notice to the Company if the
Executive's health should become impaired to any extent that makes the continued
performance of the Executive's duties under this Agreement hazardous to the
Executive's physical or mental health or his life (regardless of whether such
condition would be deemed a Disability under any other section of this
Agreement), provided that the Executive shall have furnished the Company with a
written statement from a qualified doctor to that effect and provided further
that, at the Company's written request and expense, the Executive shall submit
to a medical examination by a qualified doctor selected by the Company and
acceptable to the Executive (which acceptance shall not be unreasonably
withheld) which doctor shall substantially concur with the conclusions of the
Executive's doctor. The Termination Date shall the date specified in the
Executive's notice to the Company, which date may not be earlier than 30 days
nor later than 90 day from the Company's receipt of such notice. Upon any
termination of this Agreement pursuant to this Section 4.6, the Executive shall
be entitled to the compensation specified in Section 5.6 hereof.
4.7 Non-renewal. In the event that either party to this Agreement shall give
notice to the other party that this Agreement will not be renewed as provided in
Section 1.1 hereof, then this Agreement shall terminate at the end of such final
term of this Agreement. The last day of such final term shall be the Termination
Date for a termination pursuant to this Section 4.7. Upon any termination of
this Agreement pursuant to this Section 4.7, the Executive shall be entitled to
the compensation specified in Section 5.7.
4.8 Termination by the Executive. The Executive may terminate his employment
under this Agreement for any reason whatsoever upon not less than 30 days prior
written notice to the Company. In the event that reference to the applicable
termination section of this Agreement is not made in the Executive's notice of
termination to the Company and the reason for the Executive's termination can be
construed to occur under this Section 4.8 or any of Sections 4.2, 4.4, 4.5, 4.6
or 4.7 above, then the Executive shall have the right to specify which section
of this Section 4 shall control. The Termination Date under this Section 4.8
shall be the date specified in the Executive's notice to the Company, which date
may not be earlier than 30 days from the Company's receipt of such notice. Upon
any termination of this Agreement pursuant to this Section 4.8, the Executive
shall be entitled to the compensation specified in Section 5.7 hereof.
5. Compensation and Benefits Upon Termination.
5.1 Cause. If the Executive's employment is terminated for Cause, the Company
shall pay the Executive his full Base Salary through the Termination Date
specified in Section 4.1 at the rate in effect at the Termination Date, and the
Company shall have no further obligation to the Executive under this Agreement.
5.2 Disability. During any period that the Executive is unable to perform his
duties under this Agreement as a result of incapacity due to physical or mental
illness, the Executive shall continue to receive his full Base Salary until the
Termination Date specified in Section 4.2. After such termination, the Executive
shall receive in equal monthly installments 50% of his Base Salary at the rate
in effect at the Termination Date for one year and thereafter for two additional
years at an annual rate equal to 10% of the Base Salary which would have been in
effect under this Agreement reduced, in each case, for any disability payments
otherwise payable by or pursuant to plans provided by the Company.
5.3 Death. Upon the Executive's death, the Company shall pay to the person
designated by the Executive in a notice filed with the Company or, if no person
is designated, to his estate (i) any unpaid amounts of his Base Salary and
accrued vacation to the date of the Executive's death; and (ii) any payments the
Executive's spouse, beneficiaries or estate may be entitled to receive pursuant
to any pension or employee benefit plan or life insurance policy or similar plan
or policy then maintained by the Company. Upon full payment of all amounts
required to be paid under this Section 5.3, the Company shall have no further
obligation under this Agreement.
5.4 Termination by the Executive for Good Reason. If the Executive terminates
this Agreement for Good Reason or the Company terminates the Executive's
employment without cause in accordance with and subject to Section 4.4, then (i)
the Company shall pay the Executive his full Base Salary through the Termination
Date specified in Section 4.4 at the rate in effect at such Termination Date;
and (ii) in lieu of any further salary payments to the Executive for periods
subsequent to the Termination Date and in consideration of the rights of the
Company under Section 8, the Company shall pay as severance pay to the Executive
on the fifth day following the Termination Date, two months salary.
5.5 Termination by the Executive Due to Poor Health. If the Executive terminates
this Agreement pursuant to Section 4.6 hereof, the Company shall pay to the
Executive any unpaid amounts of his Base Salary and accrued vacation to the
Termination Date specified in Section 4.6 plus any disability payments otherwise
payable by or pursuant to plans provided by the Company.
5.6 Non-renewal or other termination. If this Agreement terminates pursuant to
Section 4.7 or Section 4.8 hereof, the Company shall pay to the Executive any
unpaid amounts of his Base Salary and accrued vacation to the Termination Date
specified in Section 4.7 or Section 4.8, as the case may be.
5.7 Health and Medical Plans. The Executive shall be entitled to all
continuation of health, medical, hospitalization and other programs as provided
by any applicable law and such additional benefits as are provided by the
Company to its employees upon termination of employment with the Company.
5.8 Mitigation. The Executive shall not be required to mitigate the amount of
any payment provided for in this Section 5 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Section 5 be
reduced by any compensation earned by the Executive as the result of employment
by another employer after the Termination Date.
5.9 Incentive Bonus and Expense Reimbursement. If the Executive's employment
with the Company is terminated for any reason, other than Cause (defined in
Section 4.l(b) above), the Executive shall be paid, solely in consideration for
services rendered by the Executive prior to such termination, an incentive bonus
with respect to the Company's fiscal year in which the Termination Date occurs,
in accordance with Section 2.2 hereof. The Executive shall be entitled to
reimbursement for reasonable business expenses incurred prior to the Termination
Date, subject, however to the provisions of Section 3.1.
5.10 Loans. Except as otherwise provided in this Agreement, the outstanding
balance as of the Termination Date of any demand loan or advance from the
Company to the Executive which has no set term or maturity shall be paid by the
Executive to the Company, with interest at the lowest rate permissible for
federal income tax purposes, in sixty equal and successive monthly installments
of principal and interest beginning on the first day of the month following the
Termination Date.
6. Successors; Binding Agreement.
6.1 Successors. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) acquiring a majority
of the Company's voting common stock or any other successor to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Such agreement shall be confirmed in a writing in form and
substance satisfactory to the Executive. Failure of the Company to obtain an
assumption of this Agreement prior to or simultaneously with the effectiveness
of any such succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the same
terms as he would be entitled to under this Agreement if the Executive had
terminated his employment for Good Reason, except for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Termination Date. As used in this Agreement, "Company" shall mean the
Company as previously defined and any successor to its business and/or assets
which executes and delivers the agreement provided for in this Section 6 or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law.
6.2 Benefit. This Agreement and all rights of the Executive under this Agreement
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would still be payable to him under this Agreement, including all
payments payable under Section 5, if he had continued to live, all such amounts
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there is no such designee, the
Executive's estate.
7. Conflicts With Prior Employment Contract. Except as otherwise provided in
this Agreement, this Agreement constitutes the entire agreement among the
parties pertaining to the subject matter hereof, and supersedes and revokes any
and all prior or existing agreements, written or oral, relating to the subject
matter hereof, and this Agreement shall be solely determinative of the subject
matter hereof.
8. Noncompetition; Unauthorized Disclosure; Injunctive Relief.
8.1 No Material Competition. Except with respect to services performed under
this Agreement on behalf of the Company, and subject to the obligations of the
Executive as an officer of the Company and the employment obligations of the
Executive under this Agreement, the Executive agrees that at no time during the
Employment Period or, for a period of one year immediately following any
termination of this Agreement for any reason, for himself or on behalf of any
other person, persons, firm, partnership, corporation or company:
(a) Solicit or accept business from any customers of the Company or its
affiliates, from any prospective customers whose business the Company or any
affiliate of the Company is in the process of soliciting at the time of the
Executive's termination, or from any former customer which had been doing
business with the Company within one year prior to the Executive's termination;
(b) Solicit any employee of the Company or its affiliates to terminate such
employee's employment with the Company; or
(c) Engage in any business of the type performed by the Company in the
geographical are where the Company is actively doing business or soliciting
business if, within 30 days of the Executive advising the Company in writing of
his proposed business activity, the Board determines in good faith that such
proposed business activity is directly competitive with a material part of the
business of the Company and its subsidiaries (in the aggregate) and such
competitive business activity is reasonably likely to materially affect in an
adverse manner the consolidated sales, profits or financial condition of the
Company. If the Board fails to advise the Executive within said thirty (30) day
period, then the Board shall be deemed to have consented to the Executive's
engaging in such activity.
8.2 Unauthorized Disclosure. During the Employment Period and for two years
following the termination of this Agreement for any reason, the Executive shall
not, without the written consent of the Board or a person authorized by the
Board or as may otherwise be required by law or court order, disclose to any
person, other than an employee of the Company or person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of his duties as an executive of the Company, any material
confidential information obtained by him while in the employ of the Company with
respect to any of the company's customer, suppliers, creditors, lenders,
investments bankers or methods of marketing, the disclosure of which the
Executive knows will materially damage the Company; provided, however, that
confidential information shall not include any information generally known to
the public (other than as a result of unauthorized disclosure by the Executive)
or any information of a type not otherwise considered confidential by persons
engaged in the same business or a business similar to that conducted by the
Company. For the period ending one year following the termination of employment
under this Agreement for any reason, the Executive shall not disclosure any
confidential information of the type described above except as determined by him
to be reasonably necessary in connection with any business or activity in which
he is then engaged or as otherwise required by law or court order.
8.3 Injunction. The Company and the Executive acknowledge that a breach by the
Executive of any of the covenants contained in this Section 8 may cause
irreparable harm or damage to the Company or its subsidiaries, the monetary
amount of which may be virtually impossible to ascertain. As a result, the
Executive agrees that the Company shall be entitled to an injunction issued by
any court of competent jurisdiction enjoining and restraining all violations of
this Section 8 by the Executive or his associates, affiliates, partners or
agents, and that the right to an injunction shall be cumulative and in addition
to all other remedies the Company may possess.
8.4 Certain Provisions. The limitations of this Section 8 shall terminate
immediately upon termination of this Agreement if for any reason the Company
does not fulfill its obligations as required by Sections 4 and 5 of this
Agreement; provided, however, such termination shall not affect the rights of
the Executive to receive all payments he is entitled to receive under Section 5.
The provisions of this Section 8 shall apply during the time the Executive is
receiving Disability payments from the Company as a result of a termination of
this Agreement pursuant to Section 4.2 hereof. 9. Arbitration. Any dispute or
controversy (except for disputes arising under Section 8) arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
accordance with the rules of the American Arbitration Association then in effect
(except to the extent that the procedures outlined below differ from such
rules). Within 7 days after receipt of written notice from either party that a
dispute exists and that arbitration is required, both parties must within 7
business days agree on an acceptable arbitrator. If the parties cannot agree on
an arbitrator, then the parties shall list the "Big Six" accounting firms (other
than the Company's auditors) in alphabetical order and the first firm that does
not have a conflict of interest and is willing to serve will be selected as the
arbitrator. The parties agree to act as expeditiously as possible to select an
arbitrator and conclude the dispute. The arbitrator must render his decision in
writing within 30 days of his or its appointment. The cost and expenses of the
arbitration and of legal counsel to the prevailing party shall be borne by the
non-prevailing party, except as otherwise provided in Sections 3.7 and 5.4
hereof. Each party will advance one-half of the estimated fees and expenses of
the arbitrator. Judgment may be entered on the arbitrator's award in any court
having jurisdiction; provided that the Company shall be entitled to seek a
restraining order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of Section 8 hereof.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without regard to its conflict
of laws principles to the extent that such principles would require the
application of laws other than the laws of the State of Florida.
11. Notices. Any notice required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been given when delivered by
hand or when deposited in the United States mail by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to the Company: If to the Executive:
Orex Gold Mines Corp. Gregory Finney
2121 Ponce de Leon Blvd. #510 317 Bird Road
Coral Gables, Florida 33134 Coral Gables, Florida 33146
or to such other addresses as either party hereto may from time to time give
notice of to the other in the aforesaid manner.
12. Benefits: Binding Effect. This Agreement shall be for the benefit of and
binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns. Notwithstanding the foregoing, neither party may assign its rights or
benefits hereunder without the prior written consent of the other party hereto.
13. Severability. The invalidity of any one or more of the words, phrases,
sentences, clauses or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and, in the
event that any one or more of the words, phrases, sentences, clauses or sections
contained in this Agreement shall be declared invalid, this Agreement shall be
construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, or section or sections had not been inserted. If
such invalidity is caused by length of time or size of area, or both, the
otherwise invalid provision will be considered to be reduced to a period or area
which would cure such invalidity.
14. Waivers. The waiver by either party hereto of a breach or violation of any
term or provision of this Agreement shall not operate nor be construed as a
waiver of any subsequent breach or violation.
15. Damages. Nothing contained herein shall be construed to prevent the Company
or the Executive from seeking and recovering from the other damages sustained by
either or both of them as a result of its or his breach of any term or provision
of this Agreement. In the event that either party hereto brings suit for the
collection of any damages resulting from, or the injunction of any action
constituting, a breach of any of the terms or provisions of this Agreement, then
the party found to be at fault shall pay all reasonable court costs and
attorneys' fees of the other, whether such costs and fees are incurred in a
court of original jurisdiction or one or more courts of appellate jurisdiction.
16. No Third Party Beneficiary. Nothing expressed or implied in this Agreement
is intended, or shall be construed, to confer upon or give any person (other
than the parties hereto and, in the case of the Executive, his heirs, personal
representative(s) and/or legal representative) any rights or remedies under or
by reason of this Agreement. No agreements or representations, oral or
otherwise, express or implied, have been made by either party with respect to
the subject matter of this agreement which agreements or representations are not
set forth expressly in this Agreement, and this Agreement supersedes any other
employment agreement between the Company and the Executive.
17. Board Approval; Agreement. The Company warrants and represents to the
Executive that this Agreement has been approved and authorized by the Board. No
provisions of this Agreement may be modified, waived or discharged unless such
waiver modification or discharge is agreed to in a writing signed by the
Executive and the officer of the Company which is specifically designated by the
Board.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
OREX GOLD MINES CORPORATION, a
Delaware corporation
By:
Name: Warren Hemedinger
Title: PRESIDENT
GREGORY FINNEY
\53683\010\80EMPAGT.001
CONSULTING AGREEMENT
This AGREEMENT is entered into ad of this 3`d day of March 1 999 by and
between
OREX GOLD MINES, IN C. (the 'Company"), a Delaware corporation, whose
address is 2121 Ponce de Leon Boulevard, Suite 510, Coral Gables, Florida 33134;
and
BARRY ABRAMS (the "Consultant'), whose address is P. O. Box 149,_
Huntingdon Valley, PA 19006.
WITNESSETH
WHEREAS, the Consultant provides management consulting services to private
and publicly traded companies; and
WHEREAS, the Company, a Delaware corporation, distributes environmentally
safe cleaning products in the domestic and international markets; and
WHEREAS, the Company desires to engage the services of Consultant to aid
and assist the Company in the planning and development of its business and
future plans; and
WHEREAS, the Consultant has certain technical and managerial expertise in
the evaluation of potential business opportunities, implementation of various
projects of the nature and type contemplated by the Company in its future
expansion.
NOW THEREFORE, the Company and the Consultant agree as follows:
1. Consulting Services: The Company hereby retains and hires Consultant
and Consultant hereby agrees to render at the request of the Company,
independent advisory and consulting services to assist the Company's
management in finding and evaluating business projects and negotiating
and implementing its proposed business and financial plans in
accordance with the goals, aims and restrictions of the Company.
Consultants services shall include but not be limited to: (a) a review
and evaluation of the Company's present operations; (b) the
preparation of a corporate business and marketing plan for the Company
which would include short and long term strategies, sales and
marketing plans, financial cash flow analyses and recommendations; (c)
providing advise to the Company regarding the organization and
presentation of information pertaining to the Company. Consultant
agrees to assist the Company in all such matters, act on behalf of the
Company when so requested and otherwise render such advice and
assistance to the Board of Directors. As part of such services,
Consultant shall, upon request of the Company, recommend such
additional professionals as may be reasonably required to adequately
perform such assignments to the satisfaction of the Company.
2. Term: The term of this Agreement shall commence on the date hereof and
shall continue for a one (1) year term, and thereafter, until
terminated by either party on thirty (30) days written notice to the
other party for any reason.
3. Compensation: The Company shall compensate Consultant with 8,000,000
trading shares of its common stock for services rendered by Consultant
to Company. Upon execution of this Agreement, delivery of the stock
shall be made to Consultant. All additional payments shall be deemed
to have been issued as an additional consulting fee earned by
Consultant in connection with the services provided and to be provided
hereunder.
4. Non-Disclosure: The Consultant shall not discuss or appropriate for
its own use, or for the use of any third party, at any time dung the
term of the Agreement, any secret or confidential information of the
Company or any of the Company's affiliates or subsidiaries of which
Consultant becomes informed during such period, whether or not
developed by Consultant, including but not limited to, information
pertaining to customer lists services, methods, processes and
operating procedures, except as required in connection with
Consultant's performance of the Agreement or as required by a
governmental entity.
5. Indemnification: The Company shall hold Consultant harmless from all
matters, claims, liabilities, costs and expenses (including reasonable
attorney's fees) arising from the Consultant's acts or omissions under
this Agreement.
6. Notices: All notices or other communications provided for by this
Agreement shall be made in writing and shall be deemed properly
delivered when (a) delivered personally, or (b) by the mailing of such
notice to the parties entitled thereto, registered or certified mail,
postage prepaid to the parties as the addresses set forth above.
7. Entire Agreement: This Agreement contains the entire agreement between
the parties hereto and supersedes all prior contemporaneous
agreements, arrangements, negotiations and understandings between the
parties hereto, relating to the subject matter hereof. There are no
other understandings, statements, promises or inducements, oral or
otherwise, contrary to the terms of this Agreement. No
representations, warranties, covenants or conditions expressed or
implied, whether by statute or otherwise, other then set forth herein
have been made by any party hereto. No waiver of any item, provision
or condition of this Agreement, whether by conduct or otherwise, in
any one or more instances, shall be deemed to be, or shall constitute,
a waiver of any other provision hereof, whether or not similar, not
shall such waiver constitute a continuing waiver, and no waiver shall
be binding unless executed in writing by the party making the waiver.
8. Governing Law, Forum, Attorney Fees: The validity of this Agreement
and the interpretation and performance of all its terms shall be
governed by the substantive laws of the State of New York. The parties
hereto agree that any suit, action or proceeding arising out of or
relating to this Agreement shall be submitted to the New York State
Supreme Court, Nassau County for determination pursuant to the New
York Simplified Procedure for Court Determination of Disputes and each
party waives any objection to the laying of the venue of such suit and
irrevocably submits to the jurisdiction of such Court. If any legal
action or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach or default in
connection with any of the provisions of this Agreement, the
successful or prevailing party shall be entitled to recover reasonable
attorney fees incurred in this action or proceeding in addition to any
other relief to which it may be entitled.
9. Termination: In the event that either party violates any of the
provisions of this Agreement, the other party may, in its sole and
absolute discretion, terminate this Agreement upon thirty (30) days
prior written notice of such breach and this Agreement shall terminate
thirty t30) days following the giving of such notice if the breach of
the terms of this Agreement is not cured within such time.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its corporate officer thereunto duly authorized, and the consultant has signed
this Agreement, all as of the date first written a bone.
OREX GOLD MINES, INC.
/s/
Warren Hemedinger, President
CONSULTANT
/s/
Barry Abrams
/fax header/
CONSULTING AGREEMENT
THIS Agreement is made, and is effective on, the date subscribed below, by
and between OREX GOLD MINES COPORATION, 2121 Ponce de Leon Boulevard, Suite 510,
Coral Gables, Florida, (hereinafter referred to as "OREX) a Delaware
corporation, and
MICRON MINING COMPANY
#507, $37 West Hastings Street
Vancouver, British Columbia V6C 3N6
Its agents and affiliates (hereinafter referred to as "CONSULTANT") and is
entered Into in respect to the following facts:
R-E-C-I-T-A-L-S
WHEREAS, OREX and CONSULTANT desire to enter an Agreement for the
performance by CONSULTANT of professional services in connection with acquiring
mining property and equipment, but not limited to review of all permits and ELM
claims, etc.
WHEREAS, CONSULTANT has considerable knowledge and experience related to
the mining industry.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
convenants and Agreements hereinafter set forth, the Parties hereto intending to
be legally bound do hereby agree as follows:
1. EFFECTIVE DATE/TERM:
This Agreement shall become effective on the execution hereof and
shall remain in full force and effect for six (6) months from the date
subscribed hereon, unless terminated as provided herein.
2. INDEPENDENT CONTRACTOR:
In performing these Services, CONSULTANT shall act as an Independent
Contractor and not as an agent or employee of OREX, CONSULTANT shall
also comply, at its own expense, with all applicable provisions of
Worker's Compensation laws, federal social security law, the Fair
Labor Standards Act, and all other applicable federal, state and local
laws and regulations relating to terms and conditions of employment
required to be fulfilled by employers.
Page l of 4
<PAGE>
/fax header/
3. WORK PRODUCT TO BE PROPERTY OF OREX:
All proposals, research, records, repods, recommendations, prospectus,
graphs, evaluations, forms, reviews, information, data, and written
material originated or prepared by CONSULTANT shall be the exclusive
property of OREX and CONSULTANT shall relinquish all rights, title and
interest in and to such material.
4. COMPENSATION:
Orex Gold Mines Corporation shall deliver to CONSULTANT One Million
Four Hundred Thousand (1,400,000) Capital Shares of OREX-free-trading
with preemptive rights, after completion date (August 6, 1 999) set
herein, no later than ten business days thereafter.
5. PROPRIETARY INFORMATION:
Any prospectus, specifications, drawings, sketches, models, samples,
tools, computer programs, technical information, confidential
business, customer or personnel information or data, written, oral or
otherwise (all hereinafter referred to as "Information"), obtained by
CONSULTANT from . OREX or developed by CONSULTANT hereunder or in
contemplation hereof shall remain OREX property, Further, no financial
information shall be released without written consent from OREX, All
copies of such information in written, graphic or other tangible form
shall be returned to OREX upon request, unless such information was
previously known to CONSULTANT free of any obligation to keep it
confidential or has been or is subsequently made public by OREX or a
third party, it shall be kept confidential by CONSULTANT, shall be
used only in performing hereunder, and may be used for other purposes
only upon such terms as may be agreed upon in writing.
6. BUSINESS PURPOSE AND NON CIRCUMVENTION:
The Parties hereto acknowledge and agree that the provision of
Confidential Information tendered by both Parties hereunder and any
discussions held in connection with OREX Business Purpose shall not
prevent OR EX from pursuing similar discussions with third Parties;
provided, however, such discussions shall not include Confidential
Information provided by CONSULTANT in any form whatsoever. OREX agrees
not to have discussions regarding the Business Purpose with any third
party which would circumvent CONSULTANT's involvement with OREX. Any
estimates to forecasts provided by either Party to the other are not
and shall not be deemed to constitute commitments of any kind or
nature.
7. NON-EXCLUSIVE RIGHTS:
It is expressly understood that the Agreement does not grant
CONSULTANT an exclusive privilege to furnish to OREX any or all of the
services which are subject of this Agreement, which OREX may require.
Page 2 of 4
<PAGE>
/fax header/
OREX expressly reserves the right to contract with others for services
comparable or identical to the services which are subject of this
Agreement.
8. COMPLIANCE WITH LAWS:
CONSULTANT agrees that they will comply with all applicable federal,
state and local laws, regulations and codes in the performance of
this Agreement. CONSULTANT further agrees to indemnify OREX for any
loss or damage that may be sustained by reason of CONSULTANT'S failure
to comply with such federal, state and local laws, regulations and
codes in the performance of this Agreement.
9. GOVERNING LAW:
This Agreement shall be construed in accordance with the domestic laws
of the Sate of Florida.
10. WAIVERS OF DEFAULT:
Waiver by either Party of any default by the other Party shall not be
deemed a waiver by such Party of any other default.
11. NOTICES:
All notices and other communications shall be in writing and shall be
addressed to the Parties as set forth below:
If to OREX:
OREX GOLD MINES CORPORATION
2121 Ponce de Leon Boulevard, Suite 510
Coral Gables, Florida 33134
If to CONSULTANT:
MICRON MINING COMPANY
#507, 837 West Hastings Street
Vancouver, British Columbia V6C 3NB
ATTN: Amess Cordick
12. ENTIRE AGREEMENT;
This Agreement constitutes the entire Agreement between the Parties
with respect to the subject matter herein. No provision of this
Agreement shall be deemed waived, amended or modified by either Party,
unless such waiver, amendment or modification, is in writing and
signed by the authorized representative of the Party against whom it
is sought to enforce such waiver, amendment or modification.
Page 3 of 4
<PAGE>
/fax header/
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their respective duly authorized representatives.
DATED: February 8, 1999
COMPANY: CONSULTANT:
OREX GOLD MINES CORPORATION MICRON MINING COMPANY
By: /s/ BY: /s/
WARREN HEMEDINGER, President ARNESS CORDICK
Page 4 of 4
MEDALION SERVICES, INC.
March 3, 1999
WRITTEN CONSENT IN LIEU OF SPECIAL MEETING OF THE BOARD OF DIRECTORS
The undersigned, being all of the Directors of MEDALION SERVICES, INC. (The
"Corporation"), a Delaware corporation, in lieu of noticing and holding a
special meeting of the Corporation's Board of Directors, hereby consent,
pursuant to Section 141 (f) of the General Corporation Law of the State of
Delaware, to the adoption of the following resolutions taking or authorizing the
actions specified therein:
Agreement and Plan of Reorganization by the Corporation's Acquisition of
Orex Gold Mines Corporation.
RESOLVED, that the Corporation's execution of the 1999 Agreement and Plan
of Reorganization by the Corporation's Acquisition of Orex Gold Mines
Corporation ("Orex") attached hereto as Exhibit A is ratified and approved in
all respects; and the officers of the of the Corporation be, and they hereby
are, authorized and directed to consummate and perform such agreement and take
all such actions and do all such things as they, in their judgment, shall deem
necessary, proper or advisable in order fully to carry out the intent and
accomplish the purposes of these resolutions;
RESOLVED, that the Corporation, at the Closing date, and in return for the
Orex Shareholders assigning, transferring, delivering and setting over to
Medalion all issued and outstanding Orex Stock, 5,347,426 shares, duly endorsed
and with any required documentary or stamp taxes affixed, so as to make Medalion
the sole owner thereof free and clear of all liens, claims and encumberances,
shall issue and deliver to the Orex Shareholders, on a one for one (1:1)
exchange, New Medalion Sham.
RESOLVED, that the Corporation's issuance of said 5,347,526 shares to the
Orex Shareholders on a one for one (1, 1) exchange shall be issued according to
the following schedule:
Warren Hemedinger: 250,000 Shares, restricted, bearing legend
George Levy: 250,000 Shares, restricted, bearing legend
Dr. Henry Rosenberg: 250,000 Shares, restricted, bearing legend
Steve J. Gannuscio: 850,000 Shares, restricted, bearing legend
Haber, Inc.: 600,000 Shares, restricted, bearing legend
WebcastMedia.net: 261,426 Shares, unrestricted, freely trading
Harry Beninghof: 250,000 Shares, restricted, bearing legend
Jerome and Marilyn
Stein (JTROS): 250,000 Shares, restricted, bearing legend
Donald Hawksworth: 943,000 Shares, restricted, bearing legend
Evelyn Rivas: 1,193,000 Shares, unrestricted, freely trading
Richard Hoffman: 250,000 Shares, unrestricted, freely trading
/s/
Doreen Rush
/s/
Roberta Diamond
/s/
Larry Rush
MEDALION SERVICES, INC.
2 March 1999
Dear Mr. Hemedinger,
As per our conversation this morning in regard to the plan of reorganization of
Medalion Services, Inc. ("Medalion"), Medalion will deliver the following to
Orex Gold Mines Inc. ("Orex"): Resignation letters from Doreen Rush, Roberta
Diamond, Larry Rush.
1,300,000 Medalion Shares of stock freely trading and without restrictive legend
to Damask Holdings Ltd.
1,300,000 Medalion Shares of stock, freely trading and without restrictive
legend to Harry Tramp.
1,300,000 Medalion Shares of stock, freely trading and without restrictive
legend to Kelly Johnston
250,000 Medalion Shares of stock, freely trading and without restrictive legend
to WebcastMedia.net.
250,000 Medalion Shares of stock, freely trading and without restrictive legend
to Barry Abrams.
Said Shares to be delivered, with a valuation of $0.125 per Share, have an
aggregate total value of $550,000 at the time of such delivery All of the above
has been agreed and approved by Medalion.
/s/
Very Truly Yours,
Doreen Rush
MEDALION SERVICES, INC.
FEBRUARY 20,1999
WRITTEN CONSENT IN LIEU OF SPECIAL
MEETING OF THE BOARD OF DIRECTORS
The undersigned, being all of the directors of MEDALION SERVICES, INC. (the
"Corporation"), a Delaware corporation, in lieu of noticing and holding a
special meeting of the Corporation's Board of Directors, hereby consent,
pursuant to Section 141(f) of the General Corporation Law of the State of
Delaware, to the adoption of the following resolution taking or authorizing the
actions specified therein:
Consulting Agreement with Damask Holdings, Ltd.
RESOLVED, that the corporation be, and it hereby is, authorized to enter
into a Consulting Agreement with Damask Holdings, Ltd., on the terms and
conditions contained in the form of agreement attached hereto as Exhibit A, and
the. President of the Corporation be, and she hereby is, authorized to execute
and deliver such agreement; and subject to the execution and delivery by the
parties of said consulting agreement, the officers of the Corporation be, and
they hereby are, authorized and directed to consummate and perform such
agreement and take all such actions and do all such things as they, in their
judgement, shall deem necessary, proper or advisable in order to carry out the
intent and accomplish the purposes of this resolution; and the shares of the
Corporation's Common Stock issued pursuant to the terms of such consulting
agreement shall be fully paid and nonassessable.
/s/
Doreen Rush
/s/
Roberta Diamond
/s/
Larry Rush
<PAGE>
MEDALION SERVICES, INC.
7 Rock Hollow Road
Plandome Manor, NY 11030
(516)627-6900
March 1, 1999
VIA FAX -(702)293-3558
AND REGULAR MAIL
Mr. Jim Gottfredson
Intercontinental Registrar
and Transfer Agency
P. O. Box 1405 Boulder City, NV 89005
Dear Mr. Gottfredson:
Request is made hereby for the issuance of a certificate representing 1,300,000
shares of common stock of Medalion Services, Inc. to:
Damask Holdings, Ltd
These shares are to be issued in reliance on the exemption from registration
provided by Rule 504 of Regulation D, promulgated under the Securities Act of
193 3, as amended. Accordingly, the certificate for such shares should not bear
any restrictive legend and should not be subject to any stop order.
Please send the certificate via overnight mail to Medalion Services, Inc., 7
Rock Hollow Road, Plandome Manor, NY 11030.
Very truly yours,
/s/
Doreen Rush,
President
<PAGE>
MEDALION SERVICES, INC.
MARCH 1,1999
WRITTEN CONSENT IN LIEU OF SPECIAL
MEETING OF THE BOARD OF DIRECTORS
The undersigned, being all of the directors of MEDALION SERVICES, INC. (the
"Corporation"), a Delaware corporation, in lieu of noticing and holding a
special meeting of the Corporation's Board of Directors, hereby consent,
pursuant to Section 141(t) of the General Corporation Law of the State of
Delaware, to the adoption of the following resolution taking or authorizing the
actions specified therein:
Consulting Agreement with Harry Tramp
RESOLVED, that the corporation be, and it hereby is, authorized to enter
into a Consulting Agreement with Harry Tramp, on the terms and conditions
contained in the form of agreement attached hereto as Exhibit A, and the
President of the Corporation be, and she hereby is, authorized to execute and
deliver such agreement; and subject to the execution and delivery by the parties
of said consulting agreement, the officers of the Corporation be, and they
hereby are, authorized and directed to consummate and perform such agreement and
take all such actions and do all such things as they, in their judgement, shall
deem necessary, proper or advisable in order to carry out the intent and
accomplish the purposes of this resolution; and the shares of the Corporation's
Common Stock issued pursuant to the terms of such consulting agreement shall be
fully paid and nonassessable.
/s/
Doreen Rush
/s/
Roberta Diamond
/s/
Larry Rush
<PAGE>
MEDALION SERVICES,INC.
7 Rock Hollow Road
Plandome Manor, NY 11030
(516)627-6900
March 1,1999
VIA FAX -(702)293-3558
AND REGULAR MAIL
Mr. Jim Gottfredson
Intercontinental Registrar
and Transfer Agency P. O.Box1405 Boulder City, NV 89005
Dear Mr. Gottfredson:
Request is made hereby for the issuance of a certificate representing 1,3 00,000
shares of common stock of Medalion Services, Inc. to:
Harry Tramp
Rokin 46 1021 KV
Amsterdam Netherlands
These shares are to be issued in reliance on the exemption from registration
provided by Rule 504 of Regulation D, promulgated under the Securities Act
of 1933,asamended. Accordingly, the certificate for such shares should not bear
any restrictive legend and should not be subject to any stop order.
Please send the certificate via overnight mail to Medalion Services, Inc., 7
Rock Hollow Road, Plandome Manor, NY 11030.
Very truly yours,
/s/
Doreen Rush,
President
<PAGE>
MEDALION SERVICES, INC.
MARCH 1,1999
WRITTEN CONSENT IN LIEU OF SPECIAL
MEETING OF THE BOARD OF DIRECTORS
The undersigned, being all of the directors of MEDALION SERVICES, INC. (the
"Corporation"), a Delaware corporation, in lieu of noticing and holding a
special meeting of the Corporation's Board of Directors, hereby consent,
pursuant to Section 141 (f) of the General Corporation Law of the State of
Delaware, to the adoption of the following resolution taking or authorizing the
actions specified therein:
Consulting Agreement with Kelly Johnston
RESOLVED, that the corporation be, and it hereby is, authorized to enter
into a Consulting Agreement with Kelly Johnston, on the terms and conditions
contained in the form of agreement attached hereto as Exhibit A, and the
President of the Corporation be, and she hereby is, authorized to execute and
deliver such agreement; and subject to the execution and delivery by the parties
of said consulting agreement, the officers of the Corporation be, and they
hereby are, authorized and directed to consummate and perform such agreement and
take all such actions and do all such things as they, in their judgement, shall
deem necessary, proper or advisable in order to carry out the intent and
accomplish the purposes of this resolution; and the shares of the Corporation's
Common Stock issued pursuant to the terms of such consulting agreement shall be
fully paid and nonassessable.
/s/
Doreen Rush
/s/
Roberta Diamond
/s/
Larry Rush
<PAGE>
MEDALION SERVICES, INC.
7 Rock Hollow Road
Plandome Manor, NY 11030
(516)627-6900
March 1,1999
VIA FAX -(702)293-3558
AND REGULAR MAIL
Mr. Jim Gottfredson
Intercontinental Registrar
and Transfer Agency
P. O. Box 1405
Boulder City, NV 89005
Dear Mr. Gottfredson:
Request is made hereby for the issuance of a certificate representing 1,300,000
shares of common stock of Medalion Services, Inc. to:
Kelly Johnston
3557 Waugh Road
Springfield, Manitoba, Canada, R 2E IE 5
These shares are to be issued in reliance on the exemption from registration
provided by Rule 504 of Regulation D, promulgated under the Securities Act of
1933, as amended. Accordingly, the certificate for such shares should not bear
any restrictive legend and should not be subject to any stop order.
Please send the certificate via overnight mail to Medalion Services, Inc., 7
Rock Hollow Road, Plandome Manor, NY 11030.
Very truly yours,
/s/
Doreen Rush,
President
<PAGE>
MEDALION SERVICES, INC.
MARCH 1,1999
WRITTEN CONSENT IN LIEU OF SPECIAL
MEETING OF THE BOARD OF DIRECTORS
The undersigned, being all of the directors of MEDALION SERVICES, INC. (the
"Corporation"), a Delaware corporation, in lieu of noticing and holding a
special meeting of the Corporation's Board of Directors, hereby consent,
pursuant to Section 141 (f) of the General Corporation Law of the State of
Delaware, to the adoption of the following resolution taking or authorizing the
actions specified therein:
Consulting Agreement with WebcastMedia.Net, Corp
RESOLVED, that the corporation be, and it hereby is, authorized to enter
into a Consulting Agreement with WebcastMedia.Net, Corp, on the terms and
conditions contained in the form of agreement attached hereto as Exhibit A, and
the President of the Corporation be, and she hereby is, authorized to execute
and deliver such agreement; and subject to the execution and delivery by the
parties of said consulting agreement, the officers of the Corporation be, and
they hereby are, authorized and directed to consummate and perform such
agreement and take all such actions and do all such things as they, in their
judgement, shall deem necessary, proper or advisable in order to carry out the
intent and accomplish the purposes of this resolution; and the shares of the
Corporation's Common Stock issued pursuant to the terms of such consulting
agreement shall be fully paid and nonassessable.
/s/
Doreen Rush
/s/
Roberta Diamond
/s/
Larry Rush
<PAGE>
MEDALION SERVICES, INC.
7 Rock Hollow Road
Plandome Manor, NY 11030
(516)627-6900
March 1,1999
VIA FAX -(702)293-3558
AND REGULAR MAIL
Mr. Jim Gottfredson
Intercontinental Registrar
and Transfer Agency
P. O. Box 1405
Boulder City, NV 89005
Dear Mr. Gottfredson:
Request is made hereby for the issuance of a certificate representing 250,000
shares of common stock of Medalion Services, Inc. to:
WebcastMedia.Net Corp.
2121 Ponce De Leon Blvd 2 Alhambra Plaza
Suite 510 /address manually Penthouse 1C
Coral Gables. FL 33331 changed to:/ Coral Gables FL 33134
These shares are to be issued in reliance on the exemption from registration
provided by Rule 504 of Regulation D, promulgated under the Securities Act
of1933, as amended. Accordingly, the certificate for such shares should not bear
any restrictive legend and should not be subject to any stop order.
Please send the certificate via overnight mail to Medalion Services, Inc., 7
Rock Hollow Road, Plandome Manor, NY 11030.
Very truly yours,
/s/
Doreen Rush,
President
<PAGE>
MEDALION SERVICES, INC.
FEBRUARY 27, 1999
WRITTEN CONSENT IN LIEU OF SPECIAL
MEETING OF THE BOARD OF DIRECTORS
The undersigned, being all of the directors of MEDALION SERVICES, INC. (the
"Corporation"), a Delaware corporation, in lieu of noticing and holding a
special meeting of the Corporation's Board of Directors, hereby consent,
pursuant to Section 141 (f) of the General Corporation Law of the State of
Delaware, to the adoption of the following resolution taking or authorizing the
actions specified therein:
Consulting Agreement with Barry Abrams
RESOLVED, that the corporation be, and it hereby is, authorized to enter
into a Consulting Agreement with Barry Abrams, on the terms and conditions
contained in the form of agreement attached hereto as Exhibit A, and the
President of the Corporation be, and she hereby is, authorized to execute and
deliver such agreement; and subject to the execution and delivery by the parties
of said consulting agreement, the officers of the Corporation be, and they
hereby are, authorized and directed to consummate and perform such agreement and
take all such actions and do all such things as they, in their judgement, shall
deem necessary, proper or advisable in order to carry out the intent and
accomplish the purposes of this resolution; and the shares of the Corporation's
Common Stock issued pursuant to the terms of such consulting agreement shall be
fully paid and nonassessable.
/s/
Doreen Rush
/s/
Roberta Diamond
/s/
Larry Rush
<PAGE>
MEDALION SERVICES, INC.
7 Rock Hollow Road
Plandome Manor, NY 11030
(516)627-6900
March 1, 1999
VIA FAX -(702)293-3558
AND REGULAR MAIL
Mr. Jim Gottfredson
Intercontinental Registrar
and Transfer Agency
P. O. Box 1405
Boulder City, NV 89005
Dear Mr. Gottfredson:
Request is made hereby for the issuance of a certificate representing
250,000 shares of common stock of Medalion Services, Inc. to:
Barry Abrams
43 83 SW 10th Place, Suite 304
Deerfield Beach, Florida 33442
These shares are to be issued in reliance on the exemption from registration
provided by Rule 504 of Regulation D, promulgated under the Securities Act of
1933, as amended. Accordingly, the certificate for such shares should not bear
any restrictive legend and should not be subject to any stop order.
Please send the certificate via overnight mail to Medalion Services, Inc., 7
Rock Hollow Road, Plandome Manor, NY 11030.
Very truly yours,
/s/
Doreen Rush,
President
