UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
DELTA INTERNATIONAL MINING AND EXPLORATION, INC.
(Name of Small Business Issuer in its Charter)
NEVADA 86-0930439
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
11649 e. Cortez drive, scottsdale arizona, 85259
(Address of principal executive offices)
Issuer's Telephone Number: (1-480-451-5456)
Securities to be registered under Section 12(b) of the Act:
NONE
Securities to be registered under Section 12(g) of the Act:
COMMON STOCK, $.001 PAR VALUE
(Title of class)
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PART 1
ITEM 1. DESCRIPTION OF BUSINESS
Corporate History
As used herein, the term "Company" refers to Delta International Mining and
Exploration, Inc., a corporation incorporated under the laws of Nevada on
February 25, 1998 under the name Behmen Group, Ltd. On May 18, 1999 the Company
changed its name to Delta International Mining and Exploring, Inc. by filing of
its Certificate of Amendment of Articles of Incorporation. On June 30, 1999 the
Company changed its name to Delta International Mining and Exploration, Inc. by
filing of its Certificate of Amendment of Articles of Incorporation. The Company
is engaged in the exploration and development of precious mineral resource
properties through subsidiaries.
The Company has two wholly owned subsidiaries. These subsidiaries are Global
Gold Inc. ("Global"), all of the shares of which are owned directly by the
Company and Britt Minerals Inc. all of the shares of which are owned by the
Company. Global in turn owns all of the shares of Global Gold Inc., S.A.
("Global S.A."). Global S.A. is in the business of exploring for diamonds and
gold in Bolivia and Britt Minerals Inc. is in the business of exploring for
diamonds in Montana.
On February 25, 1998, the Company completed a private placement of 2,996,000
shares of its Common Stock, at a price of $0.01 per share resulting in gross
proceeds of $2,996. The proceeds were used for the incorporation and startup
costs of the Company. On March 8, 1999, an aggregate of 2,450,000 shares of
common stock were surrendered for cancellation pursuant to agreements in writing
made the same date.
On April 14, 1999, the Company completed the purchase of all of the issued and
outstanding shares of Global. The consideration was the issuance of 3,976,250
shares of Common Stock of the Company. The properties of Global S.A. are subject
to a 2% gross overriding royalty in favour of Front Range Exploration Corp. on
all diamonds produced from the properties in Bolivia. Subsequent to September
30, 1999, Front Range has also been issued 300,000 shares of Common Stock of the
Company in consideration for locating properties in Bolivia for the Company.
On April 22, 1999 the Company completed a private placement of 65,000 shares of
its Common Stock at a price of $0.60 per share for proceeds to the Company of
$39,000 and issued 62,000 shares at a deemed price of $0.60 for services. On
August 18, 1999, the Company completed a private placement of 15,000 shares of
its Common Stock at a price of $1.00 per share for proceeds to the Company of
$15,000. On September 30, 1999, the Company completed a private placement of
100,000 shares of its Common Stock at a price of $0.48 per share for proceeds to
the Company of $48,000.
On October 15, 1999, the Company entered into an agreement for the purchase of
all of the issued and outstanding shares of Britt Minerals, Inc. The purchase
was completed on November 15, 1999. The consideration for the purchase was the
issuance of 600,000 shares of Common Stock of the Company. The properties of
Britt Minerals Inc. are subject to a 1.5% gross overriding royalty in favour of
its original shareholders on all diamonds produced from the properties in
Montana.
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Mining Operations and Risks
The Company may conduct mining operations on its claims or leased properties, or
enter into joint ventures with mining companies with greater resources, or sell
the properties to other mining companies. Any mining to be done by the Company
will require substantial investment, for which funds will be needed and
obtained, possibly, by borrowing, or through public or private offering(s) of
securities, either debt or equity.
The mining properties are exploration properties and do not have any proven
mineral reserves. Should mineral reserves be discovered on the properties, it is
anticipated that the minerals would be predominantly gold in the case of the
Robert and Illimani Property and diamonds in the case of the Independencia and
Montana properties. See Part I - Item 3. Description of Property below.
Exploration for and the development of natural resources involve a high degree
of risk and few properties which are explored are ultimately developed into
producing properties. There is no assurance that the Company's exploration
activities will result in any discoveries of commercial bodies of ore or
diamonds. The long term profitability of the Company's operations will be in
part directly related to the cost and success, if any, of its exploration
programs, which may be affected by a number of factors. Substantial expenditures
are required to establish reserves through drilling, to develop processes to
extract the resources, and, in the case of new properties, to develop the
extraction and processing facilities and infrastructure at any site chosen for
extraction. Although substantial benefits may be derived from the discovery of a
major deposit, no assurance can be given that resources will be discovered in
sufficient quantifies to justify commercial operations or that the funds
required for development can be obtained on a timely basis.
Exploration for natural resources involves many risks, which even a combination
of experience, knowledge, and careful evaluation may not be able to overcome.
Operations in which the Company has a direct or indirect interest will be
subject to all the hazards and risks normally incident to exploration,
development, and production of resources, any of which could result in work
stoppages, damage to persons or property, and possible environmental damage.
Although the Company has or will obtain liability insurance in an amount which
it considers adequate, the nature of these risks is such that liabilities might
exceed policy limits, the liabilities and hazards might not be insurable risks,
or the Company might not elect to insure itself against such liabilities due to
the high premium costs or other reasons, in which event the Company could incur
significant costs that could have a material adverse effect upon its financial
condition.
All phases of the Company's operations are subject to environmental regulation.
Generally, environmental legislation is evolving in a manner which will require
stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed projects,
and a heightened degree of responsibility for companies and their officers,
directors, and employees. There is no assurance that future changes in
environmental regulation, if any, will not adversely affect the Company's
operations.
Although the Company has or intends to obtain title opinions for any concessions
in which it has or will acquire a material interest, there is no guarantee that
title to such concessions will not be challenged or impugned. In some countries,
the system for
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recording title to the rights to explore, develop, and mine natural resources is
such that a title opinion provides only minimal comfort that the holder has
title. Also, in many countries claims have been made and new claims are being
made by aboriginal peoples that call into question the rights granted by the
governments of these countries.
The Company's revenues, if any, are expected to be in large part derived from
the extraction and sale of diamonds and base and precious metals such as gold
and silver. The price of those commodities has fluctuated particularly in recent
years, and is affected by numerous factors beyond the Company's control
including international, economic, and political trends, expectations of
inflation, currency exchange fluctuations, interest rates, global or regional
consumptive patterns, speculative activities, and increased production due to
new extraction developments and improved extraction and production methods. The
effect of these factors on the price of diamonds and base and precious metals,
and therefore the economic viability of any of the Company's exploration
projects, cannot accurately be predicted.
There are many individuals and companies that are engaged in the mining
business. Some of which are very large, established mining companies with
substantial capabilities and long earning records. The Company may be at a
competitive disadvantage in acquiring mining properties or in purchasing,
leasing, or obtaining mining equipment since it must compete with these
individuals and companies, most of which have greater financial resources and
larger technical staffs than the Company. There can be no assurance that the
Company will be successful in prospecting for or acquiring additional mining
claims or leases, or in arranging for their exploration or development.
Water is essential in all phases of the exploration and development of mineral
properties and the milling of any ore obtained as a result. Water is available
in sufficient quantities on the properties of the Company and management does
not expect that water supply will present any significant difficulties.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Since inception, the Company's capital resources have been limited. The Company
does not have any current liabilities; however it will have to raise additional
funding for its operations over the next twelve months. The Company has had to
rely upon the sale of equity securities and for shareholders loans for cash
required to fund the administration and operations of the Company. For the
period from its inception to September 30, 1999, the Company has raised
$1,455,622 from the sale of its Common Stock and the shares of its subsidiaries.
Since the Company does not expect to generate any revenues in the near future,
it will have to continue to rely upon sales of equity and debt securities to
raise capital. It follows that there can be no assurance that financing, whether
debt or equity, will always be available to the Company in the amount required
at any particular time or for any particular period or, if available, that it
can be obtained on terms satisfactory to the Company.
Other than as described under "Properties of the Company", the Company does not
have any interest in any properties. The operations of the Company to date have
been the operations of Global and Global S.A. On October 15, 1999, the Company
entered into an agreement in writing to acquire all the shares of Britt
Minerals, Inc.
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and the activities of Britt Minerals, Inc. have not been included in the
operations of the Company to date.
The Company through Global S.A. owns two (2) exploration dredges, along with
related equipment including four (4) boats / motors, two (2) welders and welding
equipment, tools, suction pipe, radio system, spare parts and miscellaneous
equipment. The cost of the dredging equipment was $294,000.
The Company has granted options to purchase 475,000 shares of common stock to
its officers at a price of $0.10 per share. The options vested immediately and
have no expiration date. As of the fiscal year ended September 30, 1999, the
Company had not adopted a formal stock option plan for its directors, officers
and employees. The Company intends to adopt in the future a standard stock
option plan whereby directors, officers and employees of the Company will be
entitled to subscribe for up to 10% of the issued and outstanding shares of the
Company at prices to be fixed at the time of grant.
The Company's fiscal year end is September 30. The following is a summary of
certain selected audited financial information for the period from its date of
incorporation on February 25, 1998 to September 30, 1998 and audited for the
fiscal year ended September 30, 1999. Reference should be made to the financial
statements attached to this registration statement to put the following summary
in context. All dollar figures referred to in this section relating to the
Company are listed in US dollars unless otherwise noted.
<TABLE>
<CAPTION>
- ---------------------------------------- -------------------------------------- --------------------------------------
Inception (February 25, 1998) to
Year ended September 30, 1999 Year ended September 30, 1998
Audited Audited
- ---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Revenues -- --
- ---------------------------------------- -------------------------------------- --------------------------------------
(Loss) from continuing operations $ (320,122) $ (743,743)
- ---------------------------------------- -------------------------------------- --------------------------------------
(Loss) per common share $ (0.01) $ (0.20)
- ---------------------------------------- -------------------------------------- --------------------------------------
Working capital (deficiency) $ (140,798) $ (260,811)
- ---------------------------------------- -------------------------------------- --------------------------------------
Total assets $ 379,049 $ 310,563
- ---------------------------------------- -------------------------------------- --------------------------------------
Long-term obligations -- --
- ---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
Effective April 14, 1999, the Company completed the acquisition of all of the
outstanding common shares of Global in exchange for the issuance of 3,976,250
shares of common stock of the Company. Consequently, the consolidated statements
of loss and deficit and changes in cash flows reflect the results from
operations and changes in financial position of Global, the legal subsidiary,
for the year ended September 30, 1999 combined with those of the Company, the
legal parent, from the date of acquisition on April 14, 1999, in accordance with
generally accepted accounting principles for reverse acquisitions. In addition,
the comparative figures are those of Global, the legal subsidiary. The
operations of Britt Minerals, Inc. which consist mainly of staking and
acquisition costs do not appear in the historical information about the Company
since the acquisition of the shares of Britt Minerals, Inc. occurred after the
Company's fiscal year end.
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The Company plans to conduct a trenching program on the Illimani property at a
cost of $11,000. The work program on the Independencia property consisting of
ground magnetics, detailed geologic mapping and rock sampling is expected to
cost $35,000. The estimated budget for the year 2000 for the Montana properties
is $452,790. The Company does not presently have the funds available for any of
its proposed work programs and will have to raise additional funds by way of
debt or equity in order to finance same. It does not have any arrangements for
such funding at present. See Part I - Item 3. Description of Property, below,
for more detail on the proposed work programs of the Company.
As of January 31, 2000, the Company had $10,000 cash on hand which will only be
sufficient to meet nominal expenses for the next three months. The Company will
have to raise additional funds by way of debt or equity in order to finance its
administrative expenses for the next 12 months. The Company estimates that in
the event it is able to raise funds for its proposed work programs that it will
expend approximately $200,000 on exploration and associated costs over the next
12 months. In the event it is unable to raise the level of funding required to
complete the full proposed work programs, it will operate on a reduced level as
funding is raised.
The Company's operations are conducted by its executive officers, Gary Boyd and
Robert Mathews. The Company does not intend to hire any more full-time employees
over the next 12 months. Subject to the availability of funds the Company will
hire additional employees and consultants on a part-time basis in order to carry
out its proposed work programs. The Company does not intend to make any
purchases of plant or equipment over the next 12 months.
ITEM 3. DESCRIPTION OF PROPERTies
Mineral Properties of Global S.A.
Since November 16, 1996, Global's subsidiary, Global S.A., has conducted gold
exploration on its gold operation on the Madre de Dios River ("River") near
Sena, Bolivia. The River is a substantial tributary in the Amazon River drainage
basin. In this operation two dredges have been used for exploration. Global S.A.
does not have any property interest in the River but it has obtained a permit
from the Bolivian government for its dredging operations.
Illimani Property
Global S.A. owns a 100% interest in the Charles concessions (the "Illimani
Property") located approximately 65 kilometeres by gravel road east of La Paz,
Bolivia. The concessions are located in the high alpine at an elevation of 4,000
metres.
History and Previous Work
The Illimani area has a history of mining. Mining activity in the region of
Illimani predates the Spanish Conquistadors. Streambeds have been artisanaly
mined for alluvial gold for centuries. Two kilometres to the east of the
property is the Balsa Negra gold tungsten mine, circa 1920. Another three
kilometres further east along the
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Main Andean Thrust Fault is the Olla de Oro Gold Mine, circa 1900. Four
kilometres south across the Khanuma valley are a number of gold and tin mines.
The Illimani Property has had previous geological reconnaisance performed on it.
Global S.A. started a systematic exploration program of geological traverses,
mapping and soil grids in November 1997.
Proposed Work Program
The Company plans to build a tent camp on the property and use local labor to
trench the northern anticline. Limited hand trenching should determine if the
location would warrant the expensive road construction for further mechanized
trenching and drilling. Geological traverses will be made over the features on
the property believed to be causing the geochemical anomalies. The results of
the trenching program will determine whether a drill program is warranted. The
cost of the trenching program is estimated to be $10,000, and the cost of the
traverse is estimated to be $1,000. The work program will commence in the Fall
of 2000.
Independencia Concessions
The Company owns a 100% interest in the Independencia Concessions encompassing
an area of 3,275 hectares or 7,860 acres located approximately 100 kilometers
directly south east of La Paz in the department of Cochabamaba. The
Independencia Concessions consist of the Independencia II, V,VI, and VII
concessions. Global S.A. plans a work program consisting of ground magnetics,
detailed geologic mapping and rock sampling during the Fall of 2000, at a cost
of $35,000 to test the concessions for kimberlite.
Robert Property
The Company owns a 100% interest in the Robert Property. The Robert Property is
located 80 kilometres by paved highway south of La Paz, Bolivia. The property is
1550 hectares. The property is approximately 80% rocky outcrop or shallow soils.
Royalty Agreement
In consideration for the location of the above mineral properties in Bolivia,
Global S.A. has entered in an agreement in writing dated April 19, 1999 with
Front Range Exploration Corp. of the Turks and Caicos Islands for the grant of a
gross overriding royalty of 2% of the value of all diamonds produced from the
properties of Global S.A. located by Front Range Exploration Corp. In addition
the Company has issued 300,000 shares of Common Stock to Front Range Exploration
Corp.
Britt Minerals Inc.
Montana Diamond Exploration Properties
Pursuant to an agreement in writing dated October 15, 1999, Global has acquired
all of the shares of Britt Minerals, Inc. Britt Minerals, Inc. is the registered
owner of diamond exploration properties in Montana.
The consideration for the transfer was the issuance of 600,000 shares of Common
Stock of the Company. Further, the Vendors shall receive a gross overriding
royalty of 1.5% of the value of all diamonds produced from the properties.
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The properties in which Britt Minerals, Inc. has an interest are the Bearmouth
Lamproite Diamond Prospect, the Rattler Gulch Property, the Yellow Water Butte
Property, the Three Buttes Property, Teigen Butte, McMurtry Creek, Laird Creek,
Missouri River Breaks, Gold Butte claims, Homestead property and Gjerde Ranch
Lease for a total of 11 properties covering approximately 11,329 acres.
Diamond Exploration
Primary diamond deposits are mined from either kimberlite or lamproite rock,
which originate deep within the earth's crust. Diamonds exist at least 100km
depth, within the earth's mantle, and are transported to the earth's surface by
extremely rapid volcanic eruptions, which form rare kimberlite and lamproite
pipes. Diamond exploration focuses on these pipes, which are subsequently tested
for the presence of diamonds and diamond indicator minerals. Discovering
kimberlites and lamproites are the first steps to finding diamond deposits.
The diamond exploration properties owned by Britt Minerals Inc. are spread out
over 11 prospects in areas of kimberlites and lamproites. The areas are the
Garnet Range, Missouri River Breaks, Porcupine Dome and Grassrange diatreme
fields. Apart from these four (4) trends that have already been investigated,
there are other trends to be evaluated in Montana. There have been diamonds
found near one property the Company controls.
Work Programs
The exploration for diamonds in Montana is in its initial stages. The properties
owned by the Company in Montana will require detailed field investigations and
regional reconnaissance exploration is planned to locate additional kimberlite
or lamproite pipes. Further the Company intends to carry out ground magnetic
surveys, detailed geologic mapping, rock sampling and stream sediment sampling
to evaluate the potential for diamonds within properties owned by the Company.
Regional reconnaissance exploration will utilize an airborne geophysical survey.
Landsat satellite image analysis, aerial photographic interpretation, stream
sediment, geochemistry and follow-up field examinations. The estimated budget of
the year 2000 will be $452,790, consisting of: outside services $94,400,
regional reconnaissance exploration $164,750. Project evaluation and exploration
$53,500, land costs $62,140 and miscellaneous costs $78,000.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of January 31, 2000, the outstanding Common
Stock of the Company owned or of record or beneficially by each person who owned
of record, or was known by the Company to own beneficially, more than 5% of the
Company's Common Stock, and the name and shareholdings of each Officer and
Director and all Officers and Directors as a group.
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<TABLE>
<CAPTION>
---------------------------------------- ---------------------------------------------- ------------------------------
Name and Address of Beneficial Owner Number of Shares of Common Stock Owned Percentage of Common Stock
Owned
---------------------------------------- ---------------------------------------------- ------------------------------
<S> <C> <C>
Gary L. Boyd
11649 E. Cortez Drive 697,500 shares 15.84%
Scottsdale, AZ 85259 200,000 stock options
---------------------------------------- ---------------------------------------------- ------------------------------
Robert E. Mathews
242 Kings Road 275,000 stock options 29.48%
Lewisburg, KY 42256
1,395,000shares
(beneficially owned together with Jack Wells)
---------------------------------------- ---------------------------------------------- ------------------------------
W.C. McCaslin
30501 Green Valley Road 697,500 shares 12.31%
Gravois Mills, MO 65037
---------------------------------------- ---------------------------------------------- ------------------------------
Charles Wells
2445 happy Hollow Road 675,000 shares 11.91%
Hopkinsville, KY 42240
---------------------------------------- ---------------------------------------------- ------------------------------
Jack Wells
991 West 1st Street 65,000 shares and beneficial ownership of 1.14%
Owensboro, KY 42301 1,395,000 with Robert Mathews
---------------------------------------- ---------------------------------------------- ------------------------------
</TABLE>
(1) This table is based on 5,664,250 shares of Common Stock outstanding on
January 31, 2000. If a person listed on this table has the right to obtain
additional shares of Common Stock within sixty (60) days from January 31,
2000, the additional shares are deemed to be outstanding for the purpose of
computing the percentage of class owned by such person, but are not deemed
to be outstanding for the purpose of computing the percentage of any other
person.
(2) These individuals are the officers and directors of the Company and may be
deemed to be "parents" of the Company as that term is defined in the rules
and regulations promulgated under the federal securities laws.
(3) The above figures include options to purchase 475,000 shares of Common
Stock. The Company has not yet adopted a formal Stock Option Plan.
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. No director of the Company has been a director or
officer of a company registered under the 1934 Act. Further, no directors or
officers, promoters or control persons of the Company have in the past five
years been involved in any bankruptcy, criminal proceedings or securities
infractions.
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<TABLE>
<CAPTION>
- ---------------------------------------- ----------------------------- -------------------------------------------------
NAME AGE POSITION
- ---------------------------------------- ----------------------------- -------------------------------------------------
<S> <C> <C>
Gary L. Boyd 52 Co-chairman of Board of Directors, Director,
11649 E. Cortez Drive President and Secretary
Scottsdale, AZ 85259
Robert E. Mathews 53 Co-chairman of the Board of Directors,
242 Kings Road Director, Chief Financial Officer, Treasurer
Lewisburg, KY 42256
Peter C. Ellsworth 38 Director, Consulting Geologist
265 Benton Avenue
Missoula, MT 59801
</TABLE>
All directors of the Company have served since April 7, 1999. The officers were
elected on April 7, 1999, and will serve for one year or until their respective
successors are elected and qualified.
The principal occupation and business experience during the last five years for
each of the present directors or executive officers of the Issuer are as
follows:
GARY L. BOYD - PRESIDENT, DIRECTOR, CO-CHAIRMAN OF THE BOARD
Mr. Boyd has been the President and Secretary of the Company since its
inception. From 1992 to 1996 Mr. Boyd was employed by South American Mining &
Minerals LLC, a company engaged in gold exploration, as the manager of gold
recovery operations Venezuela and Bolivia. For the last three years, Mr. Boyd
has been assessing mining properties for their eventual sale or transfer to the
Company. From 1977 to 1992 Mr. Boyd was employed by Digital Equipment
Corporation in various positions, such as District Personnel Manager, Regional
Human Resource Manager, U.S. Area Employee Relations Manager. Mr. Boyd has a
Bachelor of Arts Degree from Western Kentucky University.
ROBERT E. MATHEWS - CHIEF FINANCIAL OFFICER, TREASURER, DIRECTOR, CO-CHAIRMAN OF
THE BOARD
From 1994 to 1996 Mr. Mathews of Owensboro, KY. was self-employed, working with
Mr. Boyd in locating and acquiring properties in Bolivia for transfer or sale to
the Company. From 1988 to 1995, Mr. Mathews was a stockbroker in Owensboro, KY.
with Advest Inc., a regional brokerage firm. Prior to 1988, Mr. Mathews was an
Account Executive with Merrill Lynch out of Owensboro, KY. Mr. Mathews has a
Bachelor of Science in Business from Western Kentucky University.
PETER C. ELLSWORTH - DIRECTOR, CONSULTING GEOLOGIST
Mr. Ellsworth has 15 years of experience in exploration and mining for precious
metals, base metals, industrial minerals and diamonds. Since 1992, Mr. Ellsworth
has been based out of Missoula Montana as a consulting geologist dedicated to
the mineral exploration industry, including work in the U.S., Mexico and South
America. Some of the projects that Mr. Ellsworth has consulted on are the Echo
Bay Mexico S.A. de C.V. gold exploration project in Baja California Sur, Mexico,
Echo Bay Exploration Inc. diamond and gold exploration projects in Montana and
Washington, base metal exploration in Idaho for Cominco American, establishing
and managing gold and silver exploration programs in Mexico for MK Gold Co., and
copper and gold project acquisition in Chile. Mr. Ellsworth holds a Bachelor of
Science degree
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in Geology from Montana State University and a Master of Science degree in
Economic Geology from the University of Montana.
ITEM 6. EXECUTIVE COMPENSATION
Messrs. Boyd and Mathews have received compensation from the Company and its
predecessor Global. That compensation has been $6,000 per month for the past 18
months for each if Messrs. Boyd and Mathews. The Company anticipates that it
will pay to Gary L. Boyd as President, compensation of $6,000 per month during
the current fiscal year, and to Robert E Mathews, Chief Financial Officer and
Treasurer, the sum of $6,000 per month during the current fiscal year.
The following table sets forth information for all persons who have served as
the chief executive officer of the Company since its inception in February,
1998:
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
-------------------------------- ------------
Annual Compensation Awards Payouts
---------------------------------- -------------------------------- ------------
Other
Annual Restrict Securities
Name and Compensation ed Stock Underlying LTIP All Other
Principal Salary ($) Bonus ($) Award(s) Options/ Payouts ($) Compensation
Position Year ($) ($) SARs (#) ($)
- ----------------- --------- ------------- ------- ------------ -------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary L. Boyd, 1999 $72,000 -0- -0- -0- -0- -0- -0-
President (1)
- ----------------- --------- ------------- ------- ------------ -------------- ----------------- ------------ ------------
1998 $36,000 -0- -0- -0- 200,000 -0- -0-
- ----------------- --------- ------------- ------- ------------ -------------- ----------------- ------------ ------------
</TABLE>
(1) Mr. Boyd has been the President of the Company since its incorporation in
February 25, 1998.
Options Granted During the Most Recently Completed Fiscal Year
In February of 1998, the Company granted options to purchase 475,000 shares of
common stock to its officers at a price of $0.10 per share. The options vested
immediately and have no expiration date. As of the fiscal year ended September
30, 1999, the Company had not adopted a formal stock option plan for its
directors, officers and employees. The Company intends to adopt in the future a
standard stock option plan whereby directors, officers and employees of the
Company will be entitled to subscribe for up to 10% of the issued and
outstanding shares of the Company at prices to be fixed at the time of grant.
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Plans and Other Compensation
No "Long Term Incentive Plan" has been instituted by the Company and none are
proposed at this time. Accordingly, there is no LTIP Awards Table set out in
this registration statement. The Company does not have a "Compensation
Committee".
No pension plans or retirement benefit plans have been instituted by the Company
and none are proposed at this time.
Compensation
The Company anticipates it will pay to Gary Boyd, its president, and Robert
Mathews, its Chief financial officer/treasurer each compensation of $6,000 per
month during the current fiscal year. Further, Mr. Ellsworth will be compensated
at industry standard rates for their professional services rendered to the
Company and its subsidiaries
In addition to the foregoing, officers and directors are also entitled to the
reimbursement of all reasonable business expenses.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's subsidiary, Global, has acquired pursuant to the agreement dated
October 15, 1999 the shares of Britt Minerals, Inc. from Garry Carlson, a former
director, and Peter C. Ellsworth, a director. Pursuant to the Agreement, Messrs.
Carlson and Ellsworth have each been issued 300,000 shares of Common Stock of
the Company. In addition, Messrs. Carlson and Ellsworth will each receive a
royalty of .75% (1.5% total) of the value of all diamonds produced from the
properties of Britt Minerals Inc.
ITEM 8. DESCRIPTION OF SECURITIES
The authorized share capital of the Company consists of 20,000,000 shares of
Common Stock at $0.001 par value. The Company also has authorized the issuance
of 5,000,000 shares of Preferred Stock US$0.001 par value. The Company does not
have any other classes of shares issued or outstanding. As of January 31, 2000,
the Company has a total of 5,664,250 shares of Common Stock issued and
outstanding. and no shares of Preferred Stock issued and outstanding.
Common Stock
Holders of Common Stock are entitled to one vote per share for each share held
of record on all matters submitted to a vote of stockholders except that
cumulative voting in the election of directors is required Subject to
preferences that may be applicable to the holders of outstanding shares of
Preferred Stock, if any, the holders of Common Stock are entitled to receive
such lawful dividends as may be declared by the Board of Directors. In the event
of a liquidation, dissolution or winding up of the affairs of the Company,
whether voluntary or involuntary, and subject to the rights of the holders of
outstanding shares of Preferred Stock, if any, the holders of shares of Common
Stock shall be entitled to receive pro rata all of the remaining assets of the
Company available for distribution to its stockholders. The Common Stock has no
preemptive, redemption, conversion or subscription rights. All outstanding
shares of Common Stock are fully paid and non-assessable. The issuance of Common
Stock or of rights to
12
<PAGE>
purchase Common Stock could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from attempting to
acquire, a majority of the outstanding voting stock of the Company
Preferred Stock
The Articles of Incorporation of the Company authorize the board of Directors to
issue, by resolution, 1,000,000 shares of Preferred Stock, in classes, having
such designations, preferences, rights and limitations and on such terms and
conditions as the Board of Directors may from time to time determine, including
the rights, if any, of the holders of such Preferred Stock with respect to
voting, dividends, redemptions, liquidation and conversion. As of January 31,
2000, no classes of Preferred Stock have been designated and no shares have been
issued.
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 not quoted on any exchange or quotation system.
The Company's Common Stock is issued in registered form and the following
information is taken from the records of Executive Registrar and Transfer
Agency, Ltd., 3145 W. Lewis, Suite 2, Phoenix, AZ, 85009, the registrar and
transfer agent for the Common Stock.
On September 30, 1999, the shareholders' list for the Company's Common Stock
showed 54 registered shareholders and 4,764,250 shares of Common Stock
outstanding.
On January 31, 2000 the shareholder's list for the Company's Common Stock showed
57 registered shareholders and 5,664,250 shares of Common Stock outstanding.
The Company has not paid dividends in the past and it does not expect to have
the ability to pay dividends in the near future. If the Company generates
earnings in the future, it expects that they will be retained to finance further
growth and, when appropriate, retire debt. The Directors of the Company will
determine if and when dividends should be declared and paid in the future based
on the Company's financial position at the relevant time. All of the Company's
shares are entitled to an equal share in any dividends declared and paid.
ITEM 2. LEGAL PROCEEDINGS
The officers and directors of the Company certify that to the best of their
knowledge, neither the Company nor any of its officers and directors are parties
to any legal proceeding or litigation. Further, the officers and directors know
of no threatened or contemplated legal proceedings or litigation. None of the
officers and directors has been convicted of a felony and none have been
convicted of any criminal offense, felony or misdemeanor relating to securities
or performance in corporate office. To the best knowledge of the officers and
directors, no investigations of felonies,
13
<PAGE>
misfeasance in office or securities investigations are either pending or
threatened at this time.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants on accounting
and financial disclosure.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Set forth below is information regarding the issuance and sales of securities of
the Company, without registration, since its inception in February 1998. No such
sales involved the use of an underwriter and no commissions were paid in
connection with the sale of any securities.
(a) During the period from the date of formation of the Company on February 25,
1998 to September 30, 1998, the Company issued 2,996,000 shares of Common Stock
at a price of $0.01 per share. This issuance was exempt from registration under
Section 144 of Regulation D of the Securities Act of 1933, as amended. On March
8, 1999, an aggregate of 2,450,000 shares of common stock were surrendered for
cancellation pursuant to agreements in writing made the same date.
(b) During the period from October 1, 1998 to September 30, 1999 the Company
issued 3,976,250 shares of Common Stock at a deemed price of $0.01 per share
pursuant to the share exchange with the shareholders of Global. On April 22,
1999 the Company completed a private placement of 65,000 shares of its Common
Stock at a price of $0.60 per share for proceeds to the Company of $39,000 and
issued 62,000 shares at a deemed price of $0.60 for services. The Company also
issued 15,000 shares of Common Stock at a deemed price of $1.00 per share by way
of private placement. The Company also issued a total of 100,000 shares of
Common Stock at a deemed price of $0.48 per share by way of private placement.
These issuances were exempt from registration under Rule 144 of Regulation D of
the Securities Act of 1933, as amended.
(a) During the period from October 1, 1999 to January 31, 2000, the Company
issued 900,000 shares of Common Stock at a deemed price of $0.01 per share for
property acquisitions. These issuances were exempt from registration under Rule
144 of Regulation D of the Securities Act of 1933, as amended.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.7502 of the General Corporation Law of Nevada and Article VII of the
Company's Articles of Incorporation permit the Company to indemnify its officers
and directors and certain other persons against expenses in defense of a suit to
which they are parties by reason of such office, so long as the persons
conducted themselves in good faith and the persons reasonably believed that
their conduct was in the Company's best interests or not opposed to the
Company's best interests, and with respect to any criminal action or proceeding,
had no reasonable cause to believe their conduct was unlawful. Indemnification
is not permitted in connection with a
14
<PAGE>
proceeding by or in the right of the corporation in which the officer or
director was adjudged liable to the corporation or in connection with any other
proceeding charging that the officer or director derived an improper personal
benefit, whether or not involving action in an official capacity.
PART F/S
Financial Statements
The audited financial statements of the Company for the fiscal year ended
September 30, 1999, with comparative figures to September 30, 1998 are attached
hereto as pages F-1 to F-18. Effective April 14, 1999, the Company completed the
acquisition of 100% of the outstanding common shares of Global in exchange for
the issuance of 3,976,250 shares of common stock of the Company. Consequently,
the consolidated statements of loss and deficit and changes in cash flows
reflect the results from operations and changes in financial position of Global,
the legal subsidiary, for the year ended September 30, 1999 combined with those
of the Company, the legal parent, from the date of acquisition on April 14,
1999, in accordance with generally accepted accounting principles. In addition,
the comparative figures are those of Global, the legal subsidiary. On October
15, 1999, the Company entered into an agreement to acquire all of the shares of
Britt Minerals, Inc. Consequently, attached hereto as pages F-19 to F-25 are the
audited financial statements for Britt Minerals, Inc. for the nine months ended
September 30, 1999 with comparative figures for the period from June 12, 1998
(inception) to September 30, 1999.
PART III
ITEM 1. INDEX TO EXHIBITS
(A) Exhibits. Exhibits required to be attached are listed in the Description of
Exhibits beginning on page 17 of this Form 10-SB under "Item 2. Description of
Exhibits".
[THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY]
15
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
DELTA INTERNATIONAL MINING AND EXPLORATION INC.
Date: March 1, 2000 By: "GARY L. BOYD"
-----------------------
Gary L. Boyd, President
By: "ROBERT E. MATHEWS
-----------------------------------
Robert E. Mathews, Chief Financial
Officer / Treasurer
16
<PAGE>
<TABLE>
<CAPTION>
ITEM 2. DESCRIPTION OF EXHIBITS
Exhibit Page
Number Number Document
------ ------ --------
<S> <C> <C> <C>
3.1 Articles of Incorporation of the Company
3.2 Bylaws of the Company
3.3 Amendment to Articles of Incorporation of the Company
4.1 See Exhibits 3.1 and 3.2
10.1 Share Exchange Agreement
10.2 Acquisition Agreement for the Bolivian properties
10.3 Acquisition agreement for all the shares of Britt Minerals, Inc.
21 Subsidiaries of the Registrant
27 Financial Data Schedule
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
DELTA INTERNATIONAL MINING & EXPLORATION, INC.
(A Development Stage Enterprise)
CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1999 AND 1998
CONTENTS
Page
<S> <C> <C>
1.1 Independent auditor's report F-1-2
1.2 Consolidated balance sheet F-3-4
1.3 Consolidated statement of operations F-5
1.4 Consolidated statement of stockholders' Equity F-6
1.5 Consolidated statement of cash flows F-7-8
1.6 Notes to the consolidated financial statements F-9-18
</TABLE>
<PAGE>
1.1 INDEPENDENTS AUDITOR'S REPORT
To the Board of Directors and Shareholders of
Delta International Mining & Exploration, Inc.
(A Development Stage Enterprise)
Nevada
We have audited the accompanying consolidated balance sheet of Delta
International Mining & Exploration, Inc. and subsidiary (A Development Stage
Enterprise) as of September 30, 1999 and 1998, and the related consolidated
statements of operations, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Delta International
Mining & Exploration, Inc. and subsidiary (A Development Stage Enterprise) as of
September 30, 1999 and 1998 and the results of their operations and their cash
flows for the years then ended in conformity with generally accepted accounting
principles in the United States of America.
F-1
<PAGE>
-----------------------
BERTHIN
AMENGUAL
& ASCOIADOS
-----------------------
pkf
worldwide
-----------------------
Pannell Kerr Forster
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As reflected in the
consolidated financial statements, the Company, has generated no revenues and
has accumulated losses since inception of $ 1,455,622. These factors, among
others, as discussed in Note 2, raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
BERTHIN AMENGUAL & ASOCIADOS
Member Firm
Pannell Kerr Forster - PKF International
(Partner)
Lic. Hugo Berthin Amengual
La Paz - Bolivia MAT. PROF. No. CAUB-0482
January 6, 2000 RUC 2190931
F-2
<PAGE>
<TABLE>
<CAPTION>
DELTA INTERNATIONAL MINING & EXPLORATION, INC.
(A Development Stage Enterprise)
1.2 CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999 AND 1998
ASSETS
1998
1999 as restated
$ $
- -
<S> <C> <C>
Current Assets
Cash 16,762 37,149
Accounts receivable 24,220 10,043
Advances receivable 143,700 30,000
Tax credit receivable 1,390 1,023
Prepaid expenses 2,661
---------- ----------
Total current assets 186,072 80,876
---------- ----------
Non current assets
Fixed assets
Fixed assets - at cost 294,040 294,000
Accumulated depreciation (101,063) (64,313)
---------- ----------
Total non current assets 192,977 229,687
---------- ----------
Total assets 379,049 310,563
========== ==========
F-3
<PAGE>
DELTA INTERNATIONAL MINING & EXPLORATION, INC.
(A Development Stage Enterprise)
1.2 CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999 AND 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
1998
1999 as restated
$ $
- -
Current liabilities
Shareholder loans 250,000 250,000
Interest payable 35,847 10,811
Accounts payable 41,023 -
---------- ----------
Total liabilities 326,870 260,811
---------- ----------
Minority interest 1
--
Stockholders' equity
Common stock, $ 0.001 par value; 20,000,000 shares
authorized; issued and outstanding at September 30,
1999 - 4,764,250 shares; 1998 - 4,059,250 shares 4,765 4,060
Additional paid -in capital 1,585,036 1,181,191
Receivable from stockholders' (82,000)
Deficit accumulated during the development stage (1,455,622) (1.135.500)
---------- ----------
Total stockholders' equity 52,179 49,751
---------- ----------
Total liabilities and stockholders' equity 379,049 310,563
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
DELTA INTERNATIONAL MINING & EXPLORATION, INC.
(A Development Stage Enterprise)
1.3 CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998 AND FOR THE PERIOD
FROM INCEPTION TO SEPTEMBER 30, 1999
From
Inception to
1998 September 30,1999
1999 as restated as restated
$ $ $
- - -
<S> <C> <C> <C>
INCOME
Financial income 69 660 1,928
---------- ---------- ------------
EXPENSES
Wages and salaries 170,282 459,000 643,782
Professional fees 22,521 71,440 93,961
Financial expenses 29,353 21,874 52,540
Exploration expenses 50,415 179,385 606,943
Administrative expenses 47,620 12,724 60,344
---------- ---------- ------------
320,191 744,423 1,457,570
---------- ---------- ------------
Loss before minority interest (320,122) (743,763) (1,455,642)
Minority Interest 20 20
---------- ---------- ------------
Net loss (320,122) (743,743) (1,455,622)
========== ========== ============
Basic and Diluted Net Loss per share (0.01) (0.20) (0.41)
=== === ===
Shares used calculating basic and diluted
Net loss per share 4,548,417 3,648,250 3,519,320
========== ========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
DELTA INTERNATIONAL MINING & EXPLORATION, INC.
(A Development Stage Enterprise)
1.4 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Deficit
Accumulated Total
Common Stock Additional During Receivable stockholders
------------ paid in Development from Equity Comprehensive
Shares Amount Capital Stage Stockholders' (deficit) income (loss)
------ ------ ------- ----- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock for cash 237,500 $ 238 $ 224,701 $ - $ - $ 224,939 $ -
Issuance of common stock for Dredging
Equipment 2,940,000 2,940 291,060 - - 294,000 -
Net loss - - - (391,757) - (391,757) (391,757)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balances, September 30, 1997 3,177,500 3,178 515,761 (391,757) - 127,182 -
Issuance of common stock for cash 824,750 825 287,387 - - 288,212
Issuance of common stock for services 57,000 57 45,543 - - 45,600 -
Options granted to officers - - 332,500 - - 332,500 -
Net loss - - - (743,743) - (743,743) (743,743)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balances, September 30, 1998 4,059,250 4,060 1,181,191 (1,135,500) - 49,751
Issuance of common stock for cash
and receivable from stockholders' 705,000 705 403,845 - (82,000) 322,550 -
Net loss - - - (320,122) - (320,122) (320,122)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balances, September 30, 1999 4,764,250 $ 4,765 $ 1,585,036 $(1,455,622) $ (82,000) $ 52,179
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
DELTA INTERNATIONAL MINING & EXPLORATION, INC.
(A Development Stage Enterprise)
1.5 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 1999 AND 1998 AND FOR THE PERIOD FROM
INCEPTION TO SEPTEMBER 30, 1999
From inception
to September, 30
1999 1998 1999
$ $ $
- - -
<S> <C> <C> <C>
Cash flows from operating activities
Net loss as restated (320,122) (743,743) (1,455,622)
Adjustments to reconcile net loss to net cash (used)
by operating activities:
Stock issued for services 45,600 45,600
Non cash stock compensation 332,500 332,500
Depreciation 36,750 24,938 101,063
Interest payable 25,036 10,811 35,847
Minority interest 1 (20)
Changes in certain other accounts:
Accounts receivable (14,178) (9,326) (24,220)
Tax credit receivable (368) (1,023) (1,390)
Prepaid expenses 2,661 (2,661)
Accounts payable 41,023 41,023
---------- --------- ---------
Net cash (used) by operating activities (229,197) (342,924) (925,199)
---------- --------- ---------
Cash flows from investing activities
Fixed assets (40) (40)
Advances receivable (113,700) (30,000) (143,700)
---------- ---------- -----------
Net cash (used) by investing activities (113,740) (30.000) (143,740)
---------- ---------- -----------
</TABLE>
F-7
<PAGE>
<TABLE>
<CAPTION>
DELTA INTERNATIONAL MINING & EXPLORATION, INC.
(A Development Stage Enterprise)
1.5 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 1999 AND 1998 AND FOR THE PERIOD FROM
INCEPTION TO SEPTEMBER 30, 1999
From inception
to September, 30
1999 1998 1999
$ $ $
- - -
<S> <C> <C> <C>
Cash flows from financing activities
Shareholder loans 250,000 250,000
Proceeds from the issuance of Common Stock 322,550 288,212 835,701
---------- ---------- ------------
Net cash provided by financing activities 322,550 538,212 1,085,701
---------- ---------- ------------
Net increase (decrease) in cash (20,387) 165,288 16,762
Cash at beginning of year and period 37,149 (128,139) -
---------- ---------- ------------
Cash at end of year and period 16,762 37,149 16,762
========== ========== ============
Supplemental disclosure of cash flow information
Interest paid - 10,908 10,908
== ===== ======
Supplemental disclosures of non cash activities:
Dredging equipment acquired in exchange for
Common Stock - - 294,000
== == =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-8
<PAGE>
DELTA INTERNATIONAL MINING & EXPLORATION, INC.
(A Development Stage Enterprise)
1.6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1999 AND 1998
NOTE 1 ORGANIZATION AND BUSINESS
Delta International Mining & Exploration Inc. ("Delta" or the
"Company") is incorporated under the laws of Nevada and its principal
business activity is mineral property exploration and development.
Effective April 19, 1999, Delta and Global Gold Inc. (a Bahamian
Corporation) executed their business combination agreement. Delta
issued 3,976,250 common shares to the shareholders of Global Gold in
consideration for all of the issued and outstanding common shares of
Global Gold on the basis of one common share of Delta for each common
share of Global Gold. As the former shareholders of Global Gold
obtained effective control of the Company through the share exchange,
this transaction has been accounted for in these financial statements
as a reverse acquisition and the purchase method of accounting has been
applied. Under reverse acquisition accounting, Global Gold is
considered to have acquired Delta with the results of Delta's
operations included in the consolidated financial statements from the
date of acquisition. Global Gold is considered the continuing entity
and consequently, the amounts prior to April 19, 1999 are those of
Global Gold. Global Gold has a wholly owned Bolivian subsidiary, Global
Gold Inc., S.A. Prior to the date of the business combination Delta had
no operations.
All share and per share information in these financial statements
reflect:
a) The Consummation of the business combination agreement whereby
shares and options issued by Global Gold Inc. were exchanged for
shares of the Company's Common stock and options to purchase shares
of the Company's Common stock, and
b) A change in the par value of Common stock from $0.10 per share to
$0.001 per share.
NOTE 2 FINANCIAL CONDITION
The financial statements have been prepared on the going concern
basis, which assumes the realization of assets and liquidation of
liabilities in the normal course of business.
F-9
<PAGE>
NOTE 2 FINANCIAL CONDITION (continued)
As shown in the consolidated financial statements, to date, the Company
has generated no revenues and has accumulated losses since inception of
$ 1,455,622. These factors, among others, raise substantial doubt about
the Company's ability to continue as a going concern. The Company's
ability to continue as a going concern is dependent on its ability to
generate future profitable operations and receive continued financial
support from its shareholders and other investors.
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and consolidation
The Consolidated financial statements of Delta International Mining &
Exploration, Inc. a development stage enterprise includes the accounts
of the Company and its wholly owned subsidiary and are prepared
according to generally accepted accounting principles in the United
States. All significant intercompany transactions and balances have
been eliminated in consolidation.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual amounts could differ
from those estimates.
Machinery and equipment and depreciation
Machinery and equipment are valued at cost.
Machinery and equipment depreciation is calculated by applying an
annual rate of 12.5% starting in the month of purchase using the
straight line method. This rate is intended to amortize the cost of
assets over their estimated useful life.
Fiscal Year
The Company ends its fiscal year on September 30.
F-10
<PAGE>
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign currency translation
Assets and liabilities of Global Gold Inc. S.A. are translated into
U.S. dollar equivalents at the rate of exchange in effect on the
balance sheet date; income and expenses are translated at the average
rates of exchange prevailing during the period. The related translation
adjustments are reflected in stockholder's equity. Foreign currency
gains or losses resulting from transactions are included in results of
operations.
Employee stock option plans
The Company adopted the disclosure provisions of Statement of Financial
Accounting Standards No. 123 ("SFAS 123"). Accounting for Stock Based
Compensation". As permitted by SFAS 123, the Company has elected to
continue to account for its employee stock option plan in accordance
with the provisions of Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees" (APB 25). Under APB 25, when
the exercise price of the Company's employee stock options is less than
the market price of the underlying shares of the date of grant,
compensation expense is recognized.
Accounting for income taxes
The Company uses the liability method in accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to
reverse.
Net loss per share
Basic net loss per share excludes dilution and is computed by dividing
net loss by the weighted average number of common shares outstanding
for the period. Diluted net loss per common share was the same as basic
net loss per common share for all periods presented since the effect of
any potentially dilutive securities is excluded as they are
anti-dilutive because of Delta's net losses.
Mineral properties
The Company owns interest in mineral properties (Note 4), is in the
process of exploring and developing mineral properties and has not yet
determined whether these properties contain mineral reserves that are
economically recoverable.
F-11
<PAGE>
NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (continued)
The recoverability of mineral properties is dependent upon the
discovery of economically recoverable mineral reserves, the ability of
the Company to obtain the necessary financing to complete the
exploration and development of the mineral properties, future
profitable production or proceeds from the disposition of the mineral
properties and the Company's ability to complete its obligations.
Title to mineral properties involves certain inherent risks due to the
difficulties of determining the validity of certain claims as well as
the potential for problems arising from the frequently ambiguous
conveyancing history characteristic of many mining properties. The
Company has investigated title to all the mineral properties to which
it has an option to acquire an interest and, to the best of its
knowledge, title to all of these properties is in good standing. The
properties in which the Company has committed to earn an interest are
located in Bolivia, South America and the Company is therefore relying
on title opinion by legal counsel who are basing such opinions on the
laws of Bolivia.
Exploration costs
In order to comply with directives from the Securities and Exchange
Commission (SEC) with respect to accounting for exploration
expenditures, the Company has expensed all costs associated with the
exploration of properties in which the Company holds options to acquire
an interest.
Financial instruments
The fair values of cash and accounts payable and accrued liabilities
approximate their carrying values due to the relatively short periods
to maturity of these instruments. It is not possible to determine the
fair value of amounts due to shareholders as a maturity date is not
determinable. The maximum credit risk exposure for all financial assets
is the carrying amount of that asset.
Recently issued accounting standards
In June 1997, the Financial Accounting Standards Board (FASB) adopted
SFAS No. 130 "Reporting Comprehensive Income", which requires an
enterprise to report by major components and as a single total, the
change in net assets during the period from non owner sources Delta
adopted this statement during the year ended September 30, 1998.
F-12
<PAGE>
In February 1998, the FASB adopted SFAS 132, "Employers" Disclosures
About Pensions and Other Postretirement Benefits, an Amendment of FASB
Statements No. 87, 88, and 106, which revises employers, disclosures
about pension and other postretirement benefit plans. This statement
does not change the measurement or recognition of those plans, but
standardizes the disclosure requirements for pensions and other
postretirement benefits to the extent practicable, requires additional
information on changes in the benefit obligations and fair values of
plan assets that will facilitate financial analysis, and eliminates
certain disclosures. Delta adopted this statement during the year ended
September 30, 1998 and such adoption did not affect the accompanying
financial statements.
In March 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants (AICPA) issued
Statement of Position (SOP) 98-1, "Accounting for Costs of Computer
Software Developed or Obtained for Internal Use. SOP 98-1 provides
guidance for an enterprise on accounting for the costs of computer
software developed or obtained for internal use. Delta adopted this
statement during the year ended September 30, 1998, and such adoption
did not affect the accompanying financial statements.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of
Start-up Activities", which requires companies to expense the costs of
start-up activities and organization costs as incurred. Delta adopted
this statement during the year ended September 30, 1998, and such
adoption did not affect the accompanying financial statements.
In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities" which defines derivatives, requires
that all derivatives be carried at fair value, and provides for hedge
accounting when certain conditions are met. Delta will adopt this
statement for its fiscal year ending September 30, 2001. Management has
not fully assessed the implications of adopting this new standard.
NOTE 4 MINERAL PROPERTIES
The Company has interests in the following properties:
Charles Concession
Delta's subsidiary Global Gold Inc., S.A., has acquired by staking a
100% interest in the Charles concessions (the "Illimani Property")
located approximately 65 kilometers by gravel road east of La Paz,
Bolivia.
F-13
<PAGE>
Independencia Concessions
Global Gold Inc. S.A. has acquired by staking a 100% interest in the
Independencia Concessions which encompass an area of 3,275 hectares or
7,860 acres and are located approximately 100 kilometers directly south
east of La Paz in the department of Cochabamba.
Robert Property
Global Gold Inc., S.A. has also acquired by staking a 100% interest in
the Robert Property located 80 kilometers south of La Paz, Bolivia. The
property is 1550 hectares.
The Company has expensed all costs of acquiring its interest in the
above properties.
NOTE 5 CASH
The composition of this account as of September 30, 1999 and 1998, are
as follows:
<TABLE>
<CAPTION>
1999 1998
$ $
- -
<S> <C> <C>
Delta International Mining & Exploration, Inc. 11,649 25,750
Global Gold Inc. S.A. 5,113 11,399
-------- ---------
16,762 37,149
======== =========
</TABLE>
NOTE 6 ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
The composition of this account, is as follows:
1999 1998
$ $
- -
<S> <C> <C>
Officers 4,089 4,690
Employees 20,131 5,353
-------- --------
24,220 10,043
======== ========
</TABLE>
F-14
<PAGE>
NOTE 7 ADVANCES RECEIVABLE
The balance of this account as of September 30, 1999 $ 143,700,
corresponds to advances from Delta International Mining & Exploration,
Inc. to Britt Minerals, a Montana Corporation (See Note 13).
NOTE 8 FIXED ASSETS
The composition of this account as of September 30, 1999 and 1998, is
as follows:
<TABLE>
<CAPTION>
As of September 30, 1999
Accumulated Net
Cost Depreciation Value
$ $ $
- - -
<S> <C> <C> <C>
Dredging equipment 294,000 101,063 192,937
Furniture 40 - 40
---------- ---------- ----------
294,040 101,063 192,977
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
As of September 30, 1998
Accumulated Net
Cost Depreciation Value
$ $ $
- - -
<S> <C> <C> <C>
Dredging equipment 294,000 64,313 229,687
======= ====== =======
</TABLE>
NOTE 9 SHAREHOLDER LOANS AND INTEREST PAYABLE
The composition of this account as of September 30, 1999 and 1998, is
as follows:
<TABLE>
<CAPTION>
Date Due Accrued Interest
issued date Loan 1999 1998
------ ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
02.02.98 02.02.02 $ 100,000 $ 11,611 $ 1,611
15.03.98 15.03.02 100,000 16,417 6,417
13.04.98 13.04.02 50,000 7,819 2,783
------------- ----------- -----------
250,000 35,847 10,811
============= =========== ===========
</TABLE>
F-15
<PAGE>
The amount due to shareholders is unsecured and with interest payable
at the rate of 12% per annum for the initial six months of the term of
the loan and thereafter at the rate of 10% per annum. The amount due to
shareholders is convertible into shares of the Company at the current
market price at the date of conversion.
NOTE 10 ACCOUNTS PAYABLE
<TABLE>
<CAPTION>
The composition of this account, is as follows:
September 30,
1999 1998
---- ----
<S> <C> <C>
Officers $ 13,723 $ -
Others 27,300 -
------------ -------
$ 41,023 $ -
============ =======
</TABLE>
NOTE 11 STOCK OPTIONS
In February 1998, the Company granted 475,000 options at an excercise
price of $0.10 per share to two officers for services performed. The
options vested immediately and have no expiration date. For the fiscal
year ended September 30, 1998 the Company recorded compensation expense
of $ 332,500 in connection with the options granted.
At September 30, 1999 no stock options have been excercised.
As discussed in Note 3, Delta accounts for its stock - based awards
using the intrinsic value method in accordance with APB 25.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation", (SFAS 123) requires the disclosure of pro
forma net income and earnings per share as if Delta had adopted the
fair value method as of the beginning of the period ended September 30,
1998. Delta calculations were made using the minimum value method with
the following weighted average assumptions: expected life 60 months
following the grant date; risk free interest rates of 6% in 1998; and
no dividends during the expected term. The pro-forma amounts are not
materially different from the amounts reported by Delta.
F-16
<PAGE>
NOTE 12 INCOME TAXES
Substantially all losses incurred by Delta has been incurred by its
subsidiary in Bolivia. At September 30, 1999 Delta has $ 732.064 in net
operating losses available to offset future taxable income in its
Bolivian subsidiary. The net operating losses may be carried forward
for an unlimited number of years until utilized to fully offset income.
A valuation allowance to the deferred tax asset for the benefit of
these net operating loss carry forward has been established due to lack
of operating history combined with risks and uncertainties surrounding
Delta's ability to generate future taxable income.
NOTE 13 SUBSEQUENT EVENT
- Issued 600,000 shares of Common Stock pursuant to an agreement
in writing dated October 15, 1999 with the shareholders of Britt
Minerals, Inc. Pursuant to the agreement, the Company acquired all
of the shares of Britt Minerals, Inc. The consideration for the
transfer was the issuance of 600,000 shares of Common Stock of the
Company. Further, the vendors shall receive a gross overriding
royalty of 1,5% of the value of all diamonds produced from the
properties. Britt Minerals, Inc. is the registered holder of 9
diamond exploration properties in Montana covering approximately
4.158 acres. The vendors of the shares of Britt Minerals, Inc. are
Peter Ellsworth and Gary Carlson.
- Issued 300,000 shares of Common Stock to Front Range Exploration
Corporation pursuant to an agreement that was formalized in
writing on October 15, 1999. Pursuant to this agreement, in
consideration of Front Range Exploration Corporation locating
mineral properties of merit in South America, the Company agreed
to issue 300,000 shares and has granted a gross overriding royalty
of 2% of the value of all diamonds produced from properties
located by Front Range Exploration Corporation.
F-17
<PAGE>
NOTE 14 THE YEAR 2000 ISSUE (unaudited)
The year 2000 issue arises because many computerized systems use two
digits rather than four to identify a year. Date sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors
when information using year 2000 dates processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000
issue may be experienced before, on, or after January 1, 2000, and, if
not addressed, the impact on operations and financial reporting may
range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations.
It is not possible to be certain that all aspects of the Year 2000
issue affecting the entity, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.
F-18
<PAGE>
BRITT MINERALS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
SEPTEMBER 30, 1999
F-19
<PAGE>
GALUSHA 127 East Front, Suite 301, Missoula, MT 59802
HIGGINS & P.O. Box 8867, Missoula, MT 59807
GALUSHA Phone (406) 728-1800
Fax (406) 542-8758
- --------------------------------------------------------------------------------
A PROFESSIONAL CORPORATION OF www.ghg-cpa.com
CERTIFIED PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Britt Minerals, Inc.
Missoula, Montana
We have audited the accompanying balance sheet of Britt Minerals, Inc. (a
development stage company) as of September 30, 1999 and the related
statements of operations, stockholders' equity and cash flows for the 9
months then ended and for the period from June 12, 1998 (inception) to
September 30, 1999. These financial statements are the responsibility of
the company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Britt Minerals, Inc.
as of September 30, 1999, and the results of its operations and its cash
flows for the 9 months then ended and from June 12, 1998 (inception) to
September 30, 1999, in conformity with generally accepted accounting
principles.
GALUSHA HIGGINS & GALUSHA, PC
Missoula, Montana
December 13, 1999
F-20
Billings o Bozeman o Havre o Helena o Missoula o Idaho Falls
<PAGE>
BRITT MINERALS, INC.
(A Development Stage Company)
BALANCE SHEET
SEPTEMBER 30, 1999
ASSETS
CURRENT ASSETS
Cash $ 1,329
Mineral properties
--
---------
$ 1,329
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Advances payable $ 143,700
---------
STOCKHOLDERS' EQUITY
Capital stock, 50,000 shares authorized, par value,
200 shares issued and outstanding 200
Deficit accumulated during
the development stage (142,571)
---------
(142,571)
---------
$ 1,329
=========
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE>
BRITT MINERALS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE 9 MONTHS ENDED SEPTEMBER 30, 1999 AND
FOR THE PERIOD FROM JUNE 12, 1998 (DA TE OF INCEPTION)
TO SEPTEMBER 30, 1999
From Inception
9 months Ended (June 12,1998)
September, 30,1999 September 30,1999
------------------ -----------------
REVENUES $ -- $ --
EXPENSES
Geological Exploration 27,022 41,221
Contract services 4,632 28,801
Field expense and supplies 729 13,305
General and administrative 285 333
Claim fees 25,983 53,482
Professional fees 746 746
Memberships 1,000 1,000
Travel and promotion 2,229 2,229
Publications 1,454 1,514
-------- --------
Total expenses 64,080 142,631
OTHER INCOME - Interest 60 60
-------- --------
NET LOSS $ 64,020 $142,571
======== ========
The accompanying notes are an integral part of these financial statements
F-22
<PAGE>
BRITT MINERALS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE 9 MONTHS ENDED SEPTEMBER 30, 1999 AND
FOR THE PERIOD FROM JUNE 12, 1998 (DATE OF INCEPTION)
TO SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
From Inception
9 months Ended (June 12, 1998) to
September 30, 1999 September 30,1999
------------------ -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash spent on mineral property exploration $ (53,005) $ (94,703)
Cash paid to suppliers and management (11,075) (47,928)
--------- ---------
Net cash flows used in operating activities (64,080) (142,631)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Interest earnings 60 60
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock -- 200
Note proceeds received 68,800 143,700
--------- ---------
Net cash flows from financing activities 68,800 143,900
--------- ---------
NET INCREASE IN CASH 4,780 1,329
CASH - Beginning of period (3,451) --
--------- ---------
CASH - End of period $ 1,329 $ 1,329
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-23
<PAGE>
BRITT MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations. Britt Minerals, Inc. (the company) is
incorporated under the laws of the State of Nevada and its principal
business activity is mineral property exploration and development.
The company, through mineral property option agreements is in the
process of exploring and developing mineral properties and has not yet
determined whether these properties contain mineral reserves that are
economically recoverable.
Title to mineral properties involves certain inherent risks due to the
difficulties of determining the validity of certain claims as well as
the potential for problems arising from the frequently ambiguous
conveyancing history characteristic of many mining properties. The
company has investigated title to all of the mineral properties to
which it has an option to acquire an interest and, to the best of its
knowledge, title to all of these properties is in good standing.
Going Concern. These financial statements have been prepared on the
going concern basis, which assumes the realization of assets and
liquidation of liabilities in the normal course of business. As shown
in the financial statements to date, the company has generated no
revenues and has cumulative losses since inception of $142,571. The
company's ability to continue as a going concern is dependent on its
ability to generate future profitable operations and receive continued
financial support from its shareholders and other investors.
Cash and Cash Eguivalents. For purposes of the statement of cash
flows, the company considers all-highly liquid debt
instruments-purchased with a maturity of three months or less when
purchased to be cash equivalents.
Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
Exploration Costs. In order to comply with directives from the
Securities and Exchange Commission ("SEC") with respect to accounting
for exploration expenditures, the company has expensed all costs
associated with the exploration of properties in which the company
holds options to acquire an interest.
s Corporation Income Tax Status. The company, with the consent of its
shareholders, has elected under the Internal Revenue Code to be an S
corporation. I n lieu of corporation income taxes, the shareholders of
an S corporation are taxed on their proportionate share of the
company's taxable income. Therefore, no provision or liability for
federal or state income taxes has been included in the financial
statements.
-Continued
F-24
<PAGE>
BRITT MINERALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE B ADVANCES PAYABLE
Britt Minerals received advances totaling $143,700 since inception
through September 30, 1999. These advances were received from Global
Gold, Inc., a subsidiary of Delta International Mining and
Exploration, Inc. (Delta), a Nevada Corporation.
Subsequent to September 30, 1999, Britt Minerals was acquired by
Delta. As a condition of this transaction, these notes have been
eliminated (see Note C).
NOTE C SUBSEQUENT EVENT -SALE OF BRITT MINERALS, INC,
On October 15, 1999,100% of the outstanding shares of Britt Minerals
were sold to Delta. As consideration for the sale both of Britt
Minerals' shareholders received 300,000 shares in Delta. In addition,
Delta granted the shareholders a mineral royalty of 2% of all diamonds
recovered from the properties.
As described in Note B, at the date of sale, Britt had outstanding
advances payable to Global Gold, Inc. of $143,700 which were eliminated
after the sale to Delta.
-Concluded
F-25
ARTICLES OF INCORPORATION
-------------------------
OF
--
INCORPORATION
-------------
The undersigned, a natural person, over the age of twenty-one (21) years, in
order to form a corporation for the purposes hereinafter stated, under and
pursuant to the provisions of the laws of the State of Nevada, does hereby
certify as follows:
ARTICLE I
---------
NAME
----
The name of the Corporation, hereinafter called the "Corporation" is
BEHMEN GROUP.LTD
----------------
ARTICLE II
----------
EXISTENCE
---------
The Corporation shall have perpetual existence
ARTICLE III
-----------
OBJECTS AND PURPOSES
--------------------
The purpose for [ILLEGIBLE] this Corporation is created is to
conduct any lawful business or businesses for [ILLEGIBLE]
corporations may be incorporated pursuant to the Nevada
Corporation Code.
<PAGE>
ARTICLE IV
----------
CAPITAL STOCK
-------------
1. Number of Shares. The aggregate number of capital stock shares which the
Corporation shall have authority to issue is Twenty-Five Million (25,000,000)
shares, of which Twenty Million (20,000,000) shares shall be common stock, $.001
par value, and Five Million (5,000,000) shares shall be preferred stock, $.001
par value.
2. Voting Rights of Shareholders. Each voting shareholder of record shall have
one vote for each share of stock standing in his name on the books of the
Corporation and entitled to vote. Cumulative voting shall not be allowed in the
election of directors or for any other purpose.
3. Quorum. At all meetings of shareholders, one-half of the shares entitled to
vote at such meeting, represented in person or by proxy, shall constitute a
quorum. Except as otherwise provided by these Articles of Incorporation or the
Nevada Corporation Code, if a quorum is present. the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders. When, with respect to any
action to be taken by shareholders of this Corporation. the laws of Nevada
require the vote or concurrence of the holders of two-thirds of the outstanding
shares, of the shares entitled to vote thereon, or of any class or series, such
action may be taken by the vote or concurrence of a majority of such shares or
class or series thereof.
4. No Preemptive Rights. No shareholder of the Corporation shall have any
preemptive or other rights to subscribe for any additional shares of stock, or
for other securities of any class, or for rights, warrants or options to
purchase stock or for scrip, or for securities of any kind convertible into
stock or carrying stock purchase warrants or privileges.
5. Shareholder Distributions. The Board of Directors may from time to time
distribute to the shareholders in partial liquidation, out of stated capital or
capital surplus of the Corporation, a portion of its assets, in cash or
property, subject to the limitations contained in the statutes of the State of
Nevada.
6. Preferred Stock Rights. The Board of Directors shall have the authority to
divide the preferred shares into series and to fix by resolution the voting
powers, designation, preference, and relative participating, option or other
special rights, and the qualifications, limitations or restrictions of the
shares of any series so established.
2 of 9
<PAGE>
ARTICLE V
---------
DIRECTORS AND OFFICERS
----------------------
1. Number of Directors. The Board of Directors shall consist of between one (1)
and thirteen (13) members as the By-Laws shall prescribe, but in no event shall
the number of directors be more than thirteen (13). and not less than one (1).
2. Initial Board of Directors. The Names of those persons who shall constitute
the Board of Directors of the Corporation for the first year of its existence or
until their successors are duly elected and qualified are:
Name Address
---- -------
Kelly J. Mueller 2102 E. Solano Dr.
Phoenix, AZ 85016
ARTICLE VI
----------
RESIDENT AGENT AND PRINCIPAL OFFICE
-----------------------------------
The address of the initial principal office of the Corporation is 3885 S.
Decatur, Suite 3010, Las Vegas, NV 89103. The name of its initial resident agent
at such address is Nevada Corporate Planners, Inc.
The Corporation may conduct all or part of its business in any other part of the
State of Nevada, or any other State in the United States.
3 of 9
<PAGE>
ARTICLE VII
-----------
INDEMNIFICATION OF DIRECTORS
----------------------------
1. Action. Suites or Proceedings Other than by or in the Right of the
Corporation. The Corporation shall indemnify any person who was or is party or
is threatened to be made a party to any threatened, pending or completed action,
suit, or proceeding, wether civil, criminal, administrative, or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a Director, Officer, employee or agent of the Corporation
or is or was serving at the request of the Corporation as a director, office,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and,
in the case of conduct in his official capacity with the Corporation, in a
manner he reasonably believed to be in the best interest of the Corporation, or,
in all other cases, that his conduct was at least not opposed to the
Corporation's best interests. In the case of any criminal proceeding, he must
have had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, or
itself, determine that the individual did not meet the standard of conduct set
forth in this paragraph.
2. Actions or Suits by or in the Right of the Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgement in its favor by reason of the fact that he is
or was a Director, Officer, employee or agent of the Corporation or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation, partnership joint venture, trust or other enterprise
against expenses (including attorney's fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and, in the case of conduct in his official capacity with
the Corporation, in a manner he reasonably believed to be in the best interests
of the Corporation and, in all other cases, that his conduct was at least not
opposed to the Corporation's best interests; but. no indemnification shall be
made in respect of any claim, issue or matter as I.
4 of 9
<PAGE>
to which such person has been adjudged to be liable for negligence or misconduct
in the performance of this duty to the Corporation or where such person was
adjudged liable on the basis that personal benefit was improperly received by
him, unless and only to the extent that the court in which such action or suit
was brought determines upon application that, despite the adjudication of
liability, but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnification for such expenses which such
court deems proper.
3. Indemnification of Successful Party. To the extent that a Director, Officer,
employee or agent of the Corporation has been successful on the merits or
otherwise (including, without limitation, dismissal without prejudice) in
defense of any action, suit, or proceeding referred to in this Article VII or in
defense of any claim, issue, or matter therein, he shall be indemnified against
all expenses (including attorneys' fees) actually and reasonably incurred by him
in connection therewith.
4. Determination of Right to Indemnification. Any indemnification under (1) or
(2) of the Article VII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the Director, Officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
paragraphs (1) or (2) of this Article VII. Such determination shall be made by
the Board of Directors by a majority vote of a quorum consisting of Directors
who were not parties to such action, suit or proceeding, or, if such a quorum is
not obtainable and a quorum of disinterested Directors so directs, by
independent legal counsel in a written opinion, or by the shareholders.
5. Advance of Costs. Charges and Expenses. Cost, charges and expenses (including
attorney's fees) incurred in defending a civil or criminal action, suit, or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors as
provided in paragraph (4) of this Article VII upon receipt of a written
affirmation by the Director, Officer, employee or agent of his good faith belief
that he has met the standard of conduct described in paragraphs (1) or (2) of
this Article VII, and an undertaking by or on behalf of the Director, Officer,
employee or agent to repay such amount unless it is ultimately determined that
he is entitled to be indemnified by the Corporation as authorized in this
Article VII. The Majority of the Directors may, in the manner set forth above,
and upon approval of such Director, Officer, employee or agent of the
Corporation, authorized the Corporation's counsel to represent such person in
any action, suit or proceeding, whether or not the Corporation is a party to
such action, suit or proceeding.
5 of 9
<PAGE>
6. Settlement. If in any action, suit or proceeding, including any appeal,
within the scope of (1) or (2) of this Article VII, the person to be indemnified
shall have unreasonably failed to enter into a settlement thereof, then,
notwithstanding any other provision hereof, the indemnification obligation of
the Corporation to such person in connection with such action, suit or
proceeding shall not exceed the total of the amount at which settlement could
have been made and the expenses by such person prior to the time such settlement
could reasonably have been effected.
7. Other Rights; Continuation of Right to Indemnification. The indemnification
provided by this Article VII shall not be deemed exclusive of any other rights
to which those indemnified may be entitled under these Articles of
Incorporation, any bylaw, agreement, vote of shareholders or disinterested
Directors, or otherwise, and any procedure provided for by any of the foregoing,
both as to action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to person who has ceased to be
a Director, Officer, employee or agent and shall inure to the benefit of heirs,
executors, and administrators of such a person. All rights to indemnification
under this Article VII shall be deemed to be a contract between the Corporation
and each director or officer of the Corporation who serves or served in such
capacity at any time while this Article VII is in effect. Any repeal or
modification of this Article VII or any repeal or modification of relevant
provisions of the Nevada Corporation Code or any other applicable laws shall not
in any way diminish any rights to indemnification of such Director, Office,
employee or agent or the obligations of the Corporation arising hereunder. This
Article VII shall be binding upon any successor corporation to this Corporation,
whether by way of acquisition, merger, consolidation or otherwise.
8. Insurance. The Corporation may purchase and maintain insurance on behalf of
any person who is or was a Director, Officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status as such
whether or not the Corporation would have the power to indemnify him against
such liability under the provision of this Article VII: provided, however, that
such insurance is available on acceptable terms, which determination shall be
made by a vote of the majority of the Directors.
6 of 9
<PAGE>
9. Saving Clause. If this Article VII or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each Director, Officer, employee and agent of the
Corporation as to any cost, charge and expense (including attorney's fees),
judgment fine and amount paid in settlement with respect to any action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
an action by or in the right of the Corporation-, to the full extent permitted
by an applicable portion of this Article VII that shall not have been
invalidated and to the full extent permitted by applicable law.
10. Amendment. The affirmative vote of at least two-thirds of the total votes
eligible to be cast shall be required to amend, repeal, or adopt any provision
inconsistent with, this Article VII. No amendment, termination or repeal of this
Article VII shall affect or impair in any way the rights of any Director,
officer, employee or agent of the. Corporation to indemnification under the
provisions hereof with respect to any action, suit or proceeding arising out of,
or relating to, any actions, transactions or facts occurring. prior to the final
adoption of such amendment, termination or appeal.
11. Subsequent Legislation. If the Nevada Corporation Code is amended after
adoption of these Articles to further expand the indemnification permitted to
Directors, Officers, employees or agents of the Corporation, then the
Corporation shall indemnify such persons to the fullest extent permitted by the
Nevada Corporation Code, as so amended.
ARTICLE VIII
------------
INCORPORATOR
------------
The name and address of the Incorporator is:
Name Address
---- -------
Robert E. Nicholson 10044 N. 58th Pl.
Scottsdale, AZ 85253
7 of 9
<PAGE>
CERTIFICATE OF CHANGE
OF RESIDENT AGENT AND/OR
LOCATION OF REGISTERED OFFICE
(Corporations only)
For
Behmen Group, Ltd.
------------------
The Change(s) below is (are) effective upon the filing of this document with the
Secretary of State.
Reason for Change: (check one) [X] Change of Resident Agent
[ ] Change Location of Registered Office
The former resident agent and/or location of the registered office was:
Resident Agent: Nevada Corporate Planners, Inc.
--------------------------------------------
Street No.: 3885 S. Decatur, Suite 3010
--------------------------------------------
City: Las Vegas, Nevada 89103
--------------------------------------------
The resident agent and/or location of the registered office is changed to
Resident Agent: Russert Services, Inc.
--------------------------------------------
Street No.: 4335 S. Industrial Rd., #430
--------------------------------------------
City: Las Vegas, Nevada 89103
--------------------------------------------
NOTE For a corporation to file this certificate, the signature of one
officer is required. The certificate does not need to be
notarized.
/s/ Earl P. Gilbrech
--------------------------------------------
Earl P. Gilbrech, Secretary/Treasurer
Certificate of Acceptance of Appointment by Resident Agent: I, Russert Services,
Inc. hereby accept the appointment as Resident Agent for the above-named
business entity.
[ILLEGIBLE] 9/17/98
- ------------------------------- --------------------
(Signature of Resident Agent) (Date)
NOTE: The fee is $15.00 for filing either a certificate of change of location
of the registered office or a new designation of resident agent.
File with the Secretary of State, Capitol Complex, Carson City, Nevada 89710
8 of 9
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this 6th day of February 1998.
/s/ Robert E. Nicholson
------------------------------
Robert E. Nicholson
VERIFICATION
------------
STATE OF ARIZONA )
)
COUNTRY OF MARICOPA )
I, BARBARA J. HAWKINS, a Notary Public, hereby certify that on the 6th day of
February, 1998, personally appeared before me William E. lane who, being by me
first duly sworn, declared that he was the person who signed the foregoing
document as incorporator and that the statements therein contained are true.
My commission expires Sept. 8, 2000
---------------
Witness my hand and official seal.
(SEAL)
/s/ BARBARA J. HAWKINS
----------------------
Notary Public
==============================================
OFFICIAL SEAL
[SEAL OMITTED] BARBARA J. HAWKINS
NOTARY PUBLIC ARIZONA
MARICOPA COUNTY
My Comm. Expires Sept 8, 2000
==============================================
9 of 9
<PAGE>
- --------------------------------------------------------------------------------
CERTIFICATE OF ACCEPTANCE OF APPOINTMENT
BY
RESIDENT AGENT
- --------------------------------------------------------------------------------
In the matter of BEHMEN GROUP, LTD.
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I, Nevada Corporate Planners, Inc., hereby state that on February 12, 1998
accept appointment as Resident Agent for the above named entity.
The street address of the resident agent in this state is as follows:
Resident Agent Address: 3885 S. Decatur Blvd. Suite 3010-
- ----------------------- Las Vegas, Nevada. 89103
Mailing Address: P.O. Box 28909
Las Vegas, Nevada 89126
[ILLEGIBLE] February 12, 1998
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(Signature of Resident Agent) (Dated)
BYLAWS OF Behmen Group, Ltd.
ARTICLE I
OFFICES
1.1. Registered Office and Agent. The principal office and resident agent of
Behmen Group, Ltd., (the "Corporation") in Nevada shall De as designated by the
Board of Directors from time to time.
1.2. Other Offices. The Corporation may establish and maintain such other
offices at such other places of business both within and without the State of
Nevada as the Board of Directors may from time to time determine.
ARTICLE II
STOCKHOLDERS
2.1. Annual Meetings. The annual stockholders' meeting for electing Directors
and transacting other business shall be held at such time and place within or
without the State of Nevada as may be designated by the Board of Directors In a
Resolution and set forth in the notice of the meeting. Failure to hold any
annual stockholders' meeting at the designated time shall not work a forfeiture
or dissolution of the Corporation.
2.2. Special Meetings. Special meetings of the stockholders may be called by the
Board of Directors or by the Chairman of the Board, If one be elected, or by the
President, and shall be called by the President or Secretary at the request in
writing of stockholders owning not less a majority of all the shares entitled to
vote at the proposed meeting. Such request shall state the purpose or purposes
of the proposed meeting. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice thereof.
2.3. Place of Meeting. All stockholders' meetings shall be held at such place,
within or without the State of Nevada as shall be fixed from time to time by
resolution of the Board of Directors.
2.4. Notice of Meetings. Written or printed notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than ten or more
than fifty days before the date of the meeting, either personally or by mail, by
or at the direction of the President, the Secretary or the officer or persons
calling the meeting, to each stockholder of record entitled to vote at such
meeting, except that if the authorized shares are to be increased, at least
thirty days notice shall be given. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the stockholder
at his address as it appears on the stock transfer books of the Corporation,
with postage thereon prepaid.
2.5. Waiver of Notice. Whenever any notice is required to be given to any
stockholder of the Corporation under the provisions of any statute or the
Articles of Incorporation or these Bylaws, a waiver thereof in writing signed by
the person or persons entitled to such notice, whether before, at or after the
time stated therein, shall be equivalent to the giving of such notice.
Attendance of a stockholder at a meeting shall constitute a waiver of notice of
such meeting, except when such stockholder attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting IS not lawfully called or convened.
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2.6. Organization. Meetings of the stockholders shall be presided over by the
Chairman of the Board, or if he is not present or one has not been elected, by
the President, or if nether the Chairman of the Board nor the President is
present, by a temporary chairman to be chosen by a majority of the stockholders
entitled to vote who are present in person or by proxy at the meeting. The
Secretary of the Corporation, or in his absence, an Assistant Secretary, shall
act as secretary of every meeting, or if neither the Secretary nor any Assistant
Secretary is present, by a temporary secretary to be chosen by a majority of the
stockholders entitled to vote who are present in person or by proxy at the
meeting.
2.7. Voting. Except as otherwise specifically provided by the Articles of
Incorporation or by these Bylaws or by statute, all matters coming before any
meeting of stockholders shall be decided by a vote of the majority of the votes
cast. The vote upon any question shall be by ballot whenever requested by any
person entitled to vote, but, unless such a request is made, voting may be
conducted in any way approved at the meeting.
2.8. Stockholders Entitled to Vote. Each stockholder of the Corporation shall be
entitled to vote, in person or by proxy, each share of stock standing in his
name on the books of the Corporation on the record date fixed or determined
pursuant to Section 6.06 hereof.
2.9. Proxies. The right to vote by proxy shall exist only if the instrument
authorizing such proxy to act shall have been executed in writing by the
stockholder himself or by his attorney-in-fact duly authorized in writing. Such
proxy shall be filed with the Secretary of the Corporation before or at the time
of the meeting. No proxy shall be valid after eleven months from the date of its
execution, unless otherwise provided in the proxy.
2.10. Quorum. The presence at any stockholders' meeting, in person or by proxy,
of the record holders of shares aggregating at least fifty one percent ( 51% )
the number of shares entitled to vote at the meeting as indicated in the
Articles of Incorporation shall be necessary and sufficient to constitute a
quorum for the transaction of business. The stockholders present at the
stockholders meeting, for which a quorum exists, may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
2.11. Absence of Quorum. In the absence of a quorum at any stockholders'
meeting, a majority of the total number of shares entitled to vote at the
meetipg and present there at, in person or by proxy, may adjourn the meeting for
a period not to exceed sixty days at anyone adjournment. Any business that might
have been transacted at the meeting originally called may be transacted at any
such adjourned meetings at which a quorum is present.
2.12. List of Stockholders. The officer or agent having charge of the stock
transfer books for shares of the Corporation shall make, at least ten days
before each meeting of stockholders, a complete current list of the stockholders
entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each,
which list, for a period of ten days prior to such meeting, shall be kept on
file at the principal office of the Corporation, whether within or without the
State of Nevada, and shall be subject to the inspection of any stockholder
during the whole time of the meeting. The original stock transfer books shall be
prima facie evidence as to who are the stockholders entitled to examine such
list or transfer books or to vote at any meeting of
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stockholders. Failure to comply with the requirements of this Section 2.12 shall
not affect the validity of any action taken at such meeting of stockholders.
2.13. Action by Stockholders Without a Meetinq. Any action required to be taken
at a meeting of the stockholders of the Corporation or any action which may be
taken at such a meeting, may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by a majority of the
stockholders entitled to vote with respect to the subject matter thereof, except
that if a different proportion of voting power is required for such action at a
meeting, then that proportion of written consents is required. Such consents
shall have the same force and effect as a vote in person of the stockholders of
the Corporation. A consent shall be sufficient for this Section 2.13 if it is
executed in counterparts, in which event all of such counterparts, when taken
together, shall constitute one and the same consent.
ARTICLE III
BOARD OF DIRECTORS
3.1. Number and Term of Office. The Board of Directors of the Corporation shall
consist of not less than one nor more than thirteen (13) Directors, as
determined by the Board of Directors of the Corporation. Each Director (whenever
elected) shall hold office until his successor shall have been elected and
qualified unless he shall resign or his office shall become vacant by his death
or removal. Directors need not be residents of the State of Nevada or
stockholders of the Corporation.
3.2. Election of Directors. Except as otherwise provided in Sections 3.03 and
3.04 hereof and except as otherwise provided in the Articles of Incorporation,
the Directors shall be elected annually at the annual stockholders' meeting for
the election 0(pound) Directors. The persons elected as Directors shall be those
nominees, equal to the number then constituting the Board of Directors, who
shall receive the largest number of affirmative votes. validly cast at such
election by the holders of shares entitled to vote therefor. Failure to annually
re-elect Directors of the Corporation shall not affect the validity of any
action taken by a Director who shall have been duly elected and qualified and
who shall not, at the time of such action., have resigned, died, or been removed
from his position as a Director of the Corporation.
3.3. Removal of Directors. At a meeting called expressly for that purpose, the
entire Board of Directors or any lesser number may be removed, with or without
cause, by a vote of the holders of the majority of the shares then entitled to
vote at an election of Directors.
3.4. Vacancies and Newly Created Directorships. Any vacancy occurring in the
Board of Directors may be filled by the affirmative vote of a majority of the
remaining Directors though less than a quorum of the Board of Directors. A
Director elected to fill a vacancy shall be elected for the unexpired term of
his predecessor in office and until his successor shall have been elected and
qualified. Any number o Directors shall be filled by the affirmative vote of a
majority of the Directors then in office or by an election at an annual meeting
of a special meeting of the stockholders called for that purpose. A Director
chosen to fill a position resulting from an increase in
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the number of directors shall hold such position until the next annual meeting
of stockholders and until his successor shall have been elected and qualified.
3.5. Resignations. Any Director may resign at any time by mailing or delivering
or by transmitting by telegram or cable written notice of his resignation to the
Board of Directors of the Corporation at the Corporation's principal office or
its registered office in the State of Nevada or to the President, the Secretary
, or any Assistant Secretary of the Corporation. Any such resignation shall take
effect at the time specified therein or if no time be specified, then at the
time of receipt thereof.
3.6. General Powers. The business of the Corporation shall be managed by the
Board of Directors, which may exercise all such powers of the Corporation and do
all such lawful acts and things that are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the stockholders.
3.7. Annual Meetings. The annual meeting of the Board of Directors for electing
officers and transacting other business shall be held immediately after the
annual stockholders' meeting at the place of such meeting. Failure to hold any
annual meeting of the Board of Directors of the Corporation at the designated
time shall not work a forfeiture or dissolution of the Corporation.
3.8. Regular Meetings. The Board of Directors from time to time may provide by
resolution for the holding of regular meetings and fix the time and place of
such meetings. Regular meetings may be held within or without the State of
Nevada. Notice of regular meetings need not be given, provided that notice of
any change in the time or place of such meetings shall be sent promptly to each
Director not present at the meeting at which such change was made.
3.9. Special Meetings. Special meetings of the Board of Directors may be called
by the Chairman of the Board if one be elected, or by the President on two days'
notice to each Director specifying the time and place (within or without the
State of Nevada) of the meeting, and shall be called by the President or
Secretary in like manner and on like notice on the written request of two or
more Directors.
3.10. Notice. All notices to a Director required by Sections 3.07 or 3.09 hereof
shall be addressed to him at his residence or usual place of business and may be
given by mail, telegram, radiogram, cable or by personal delivery.. No notice
need be given of any adjourned meeting.
3.11. Waiver of Notice. Whenever any notice is required to be given to any
Director of the Corporation under the provisions of any statute or under the
provisions of the Articles of Incorporation or these Bylaws, a waiver thereof in
writing signed by the person or persons entitled to such notice, whether before,
at or after the time stated therein, shall be equivalent to the giving of such
notice. Attendance of a Director at a meeting of the Board of Directors shall
constitute a waiver of notice of such meeting, except where a Director attends
such a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any annual, regular or special
meeting of the Board of Directors need be specified m the notice or waiver of
notice of such meeting.
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3.12. Quorum. At all meetings of the Board of Directors a majority of the whole
Board of Directors shall constitute a quorum for the transaction of business
and, except as may be otherwise specifically provided by statute or by the
Articles of Incorporation or these Bylaws, the act of a majority of the
Directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. In the absence of a quorum the Directors present there
may adjourn the meeting from time to time without notice other than announcement
at the meeting, until a quorum be present.
3.13. Action by Directors or Committee Without Meeting. Any action required to
be taken at a meeting of the Directors of the Corporation or any committee
thereof or any action which may be taken at such a meeting, may be taken without
a meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the Directors or members of the committee, as the case may be,
entitled to vote with respect to the subject matter thereof. Such consent shall
have the same force and effect as a unanimous vote of the Board of Directors or
of the committee, as the case may be, of the Corporation. A consent shall be
sufficient for this Section 3.13 if it is executed in counterparts, in which
event all of such counterparts, when taken together, shall constitute one and
the same consent.
3.14. Telephone / Electronic Meetings. Any Director or any member of a committee
may participate in a meeting of the Board of Directors or a committee, as the
case may be, by means of a conference telephone, e-mail or other communications
equipment by means of which all persons participating in such meeting can
communicate with each other on a real-time basis, and such participation shall
constitute the presence of such person at such meeting.
3.15. Compensation. By resolution of the Board of Directors, any Director may be
paid anyone or more of the following: his expenses, if any, of attendance at
meetings; a fixed sum for attendance at meetings; or a stated salary as
Director. Nothing herein contained shall be construed to preclude any Director
from serving the Corporation in any capacity as an officer employee, agent or
otherwise, and receiving compensation therefor.
3.16. Reliance on Accounts and Reports, etc. A Director, or a member of any
committee designated by the Board of Directors, in the performance of his
duties, shall be fully protected in relying in good faith upon the books of
account or reports made to the Corporation by any of its officers, or by an
independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by any such committee, or in
relying in good faith upon other records of the Corporation.
3.17. Presumption of Assent. A Director of the Corporation who is present at a
meeting of the Board of Directors at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof, or shall forward such dissent by
registered or certified mail to the Secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
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ARTICLE IV
COMMITTEES
4.1. How Constituted. By resolution adopted by a majority of the whole Board of
Directors, the Board may designate one or more committees, including an
Executive Committee, each consisting of two or more Directors. The Board of
Directors may designate one or more Directors as alternate members of any such
committee, who may replace any absent or disqualified member at any meeting of
such committee. Any such committee, to the extent provided in the resolution and
except as may otherwise be provided by statute, shall have and may exercise the
powers of the Board of Directors in the management of the business and affairs
of the Corporation and may authorize the seal of the Corporation to be affixed
to all papers which may require it; but the designation of such committee and
the delegation thereto of the authority shall not operate to relieve the Board
of Directors, or any member thereof, of any responsibility imposed upon it or
him by law. In the absence or disqualification of any member of any such
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
4.2. Proceedings, Quorum and Manner of Acting. Except as otherwise prescribed by
the Board of Directors, each committee may adopt such rules and regulations
governing its proceedings, quorum, and manner of acting as it shall deem proper
and desirable, provided that the quorum shall not be less than two members.
ARTICLE V
OFFICERS AND AGENTS
5.1. Officers. The officers of the Corporation shall consist of a President, one
or more Vice-Presidents, a Secretary and a Treasurer, each of whom shall be
elected by the Board of Directors. The Board of Directors may elect and appoint
a Chairman of the Board and may elect and appoint such other officers, assistant
officers, and agents as may be deemed necessary and may delegate to one or more
officers or agents the power to appoint such other officers, assistant officers
and agents and to prescribe their respective rights, terms of office,
authorities and duties. The same person may hold any two or more offices of the
Corporation. An officer of the Corporation need not be a Director of the
Corporation nor a resident of the State of Nevada.
5.2. Term of Office. Except as provided in Sections 5.03, 5.04 and 5.05 hereof,
each officer appointed by the Board of Directors shall hold office until his
successor shall have been appointed and qualified.
5.3. Resignation. Any officer or agent of the Corporation may resign at any time
by mailing or delivering or by transmitting by telegram or cable written notice
of his resignation to the Board of Directors of the Corporation at the
Corporation's principal office or its registered office in the State of Nevada
or to the President, the Secretary or any Assistant Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein or if no time be specified, then at the time of receipt thereof.
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5.4. Removal. Any officer or agent may be removed by the Board of Directors, or
by the Executive Committee, if any, either with or without cause, whenever in
its judgment, the best interests of the Corporation will be served thereby, but
such removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights. In addition, any other officer, assistant officer
or agent appointed in accordance with the delegation provisions of Section 5.01
hereof may be removed, either with or without cause, by any such officer or
agent upon whom such power of delegation shall have been conferred by the Board
of Directors.
5.5. Vacancies and Newly Created Offices. If any vacancy shall occur in any
office by reason of death, resignation, removal, disqualification or other
cause, or if any new office shall be created, such vacancies or newly created
offices may be filled by the Board of Directors at any regular or special
meeting or may be filled by any officer or agent to whom the power is delegated
in accordance with the delegation provisions of Section 5.01 hereof.
5.6. President. The President shall be the chief operating officer of the
Corporation and shall, in the absence of the Chairman of the Board, preside at
all stockholders' meetings and at all meetings of the Board of Directors.
Subject to the supervision of the Board of Directors and such direction and
control as the Chairman of the Board, If one be elected, may exercise on matters
of general policy, he shall have general supervision over its operating
officers, employees and agents. He shall sign (unless a Vice- President shall
have signed) certificates representing the stock of the Corporation authorized
for issuance by the Board of Directors, and except as the Board of Directors may
otherwise order, he may sign in the name and on behalf of the Corporation all
deeds, bonds, contracts or agreements. He shall exercise such other powers and
perform such other duties as from time to time may be assigned to him by the
Board of Directors.
5.7. Executive Vice-President and Vice-Presidents. The Executive Vice-
President, if one be elected, and any Vice-Presidents, if one or more be
elected, shall have such powers and perform such duties as may be assigned to
them by the Board of Directors or by the President. At the request of or in the
absence or disability of the President, the Executive Vice-President (or the
Vice-President, if there is no duly appointed Executive Vice-President, and if
there are two or more Vice-Presidents, then the senior of the Vice- Presidents
present are able to act) may perform all the duties of the President and, when
so acting, shall have the powers of and be subject to all the restrictions upon
the President. The Executive Vice-President or any Vice- President may sign
(unless the President or another Vice-President shall have signed) certificates
representing stock of the Corporation authorized for issuance by the Board of
Directors.
5.8. Treasurer and Assistant Treasurers. The Treasurer shall have general charge
of, and general responsibility for, all funds, securities and receipts of the
Corporation, and shall deposit, or cause to be deposited, in the. name of the
Corporation, all moneys or other valuable effects in such banks, trust
companies, or other depositories as shall from time to time be designed Qy the
Board of Directors. He shall have all powers and perform all duties incident to
the office of a treasurer of a corporation and as are provided for him in these
Bylaws, and shall exercise such other powers and perform such other duties as
may be assigned to him by the Board of Directors. Any Assistant Treasurer may
perform such duties of the Treasurer as the Treasurer
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or the Board of Directors may assign, and, in the absence of the Treasurer, any
Assistant Treasurer may perform all the duties of the Treasurer.
5.9. Secretary and Assistant Secretaries. The Secretary shall attend to the
giving and serving of all notice of the Corporation and shall record all the
proceedings of all meetings of the stockholders and of the Board of Directors in
a book to be kept for that purpose. He shall keep in safe custody the seal of
the Corporation, and shall have charge of the records of the Corporation,
including the stock books and such other books, reports, certificates and other
documents required by law to be kept, all of which shall at all reasonable times
be open to inspection by any Director. He shall sign { unless an Assistant
Secretary shall have signed) certificates representing stock of the Corporation
authorized for issuance by the Board of Directors. He shall perform such duties
as pertain to his office or as may be required by the Board of Directors. Any
Assistant Secretary may perform such duties of the Secretary as the Secretary or
the Board of Directors may assign, and, in the absence of the Secretary,
Assistant Secretary may perform all the duties of the Secretary.
5.10. Comptroller. The Comptroller, if one be elected, shall have general charge
and supervision of financial reports. He shall maintain adequate records of all
assets, liabilities and transactions of the Corporation and shall keep the books
and accounts and cause adequate audits thereof to be made regularly and shall
exercise a general check upon the disbursements of funds of the Corporation. In
general, he shall perform all duties incident to the office of a comptroller of
a corporation, and shall exercise such other powers and perform such other
duties as may be assigned to him by the Board of Directors.
5.11. Remuneration. The salaries or other compensation of the officers of the
Corporation shall be determined by the Board of Directors, except that the Board
of Directors may by resolution delegate to any officer or agent the power to fix
salaries or other compensation of any other officer, assistant officer or agent
appointed in accordance with the delegation provisions of Section 5. O 1 hereof.
5.12. Surety Bonds. The Board of Directors may require any officer or agent of
the Corporation to execute a bond to the Corporation in such sum and with such
surety or sureties as the Board of Directors may determine, conditioned upon the
faithful performance of his duties to the Corporation, including responsibility
for negligence and for the accounting of any of the Corporation's property,
funds or securities that may come into his hands.
ARTICLE VI
CAPITAL STOCK
6.1. Signatures. The shares of the Corporation's capital stock shall be
represented by certificates signed by the President or a Vice-President and the
Secretary or an Assistant Secretary of the Corporation; any may be sealed with
the seal of the Corporation, or a facsimile thereof. The signatures of the
President or a Vice-President and of the Secretary or an Assistant Secretary
upon certificates may be facsimiles if the certificate if countersigned by a
transfer agent, or registered by a registrar, other than the Corporation itself
or an employee of the Corporation. In case any officer who has signed or whose
facsimile signature has been placed upon such certificate shall have ceased to
be such officer before such certificate is
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issued, it may be issued by the Corporation with the same effect as if he were
such officer at the date of its issue.
6.2. Certificates. Each certificate representing shares of the Corporation shall
state upon the face thereof. (a) that the Corporation is organized under the
laws of the State of Nevada; (b) the name of the person to whom such certificate
is issue; ( c) the number and class of shares which such certificate represents;
and ( d) the par value of each share represented by such certificate, or a
statement that the shares are without par value. Each certificate shall also set
forth conspicuously on the face or back hereof such restrictions upon transfer,
or a reference thereto, as shall be adopted by the Board of Directors and
stockholders. No certificate shall be issued for any shares until such share is
fully paid.
6.3. Classes Of Stock. If the Corporation is or shall become authorized to issue
shares of more than one class, then, in addition to the provisions of Section
6.02 hereof, every certificate representing shares issued by the Corporation
shall also set forth upon the face or back of the certificate, or shall state
that the Corporation will furnish to any stockholder upon request and without
charge, a full statement of the designations, preferences, limitations, and
relative rights of the shares 0(pound) each class authorized to be issued and,
if the Corporation is or shall become authorized to issue any preferred or
special class in series, the variations in the relative rights and preferences
between the shares of each such series so far as the same have been fixed and
determined and the authority of the Board of Directors to fix and determine the
relative rights and preferences of subsequent series.
6.4. Consideration for Shares. Shares having a par value may be issued for such
consideration expressed in dollars, not less than the par value thereof, as
shall be fixed from time to time by the Board of Directors. Shares without par
value may be issued for such consideration expressed in dollars as may be fixed
from time to time by the Board of Directors. The Corporation may dispose of
treasury shares for such consideration expressed in dollars ~s may be fixed from
time to time by the Board of Directors. The consideration for the issuance of
shares may be paid, in whole or in part, in money, in other property, tangible
or intangible, or in labor or services actually performed for the Corporation.
Neither promissory notes nor future services shall constitute payment or part
payment for shares of the Corporation.
6.5. Transfer of Capital Stock. Transfers of shares of stock of the Corporation
shall be made on the books of the Corporation upon surrender of the certificate
or certificates, properly endorsed or accompanies by proper instruments of
transfer, representing such shares, subject to the terms. of any agreements
among the Corporation and shareholders.
6.6. Registered Stockholders. Prior to due presentment for registration of
transfer of shares of stock, the Corporation may treat the person registered on
its books as the absolute owner of such shares of stock for all purposes, and
accordingly shall not be bound to recognize any legal, equitable or other claim
or interest in such shares on the part of any other person, whether or not it
shall have the express or other notice thereof, except as otherwise expressly
provided by statute; provided, however, that whenever any transfer of shares
shall be made for collateral security and not absolute, it shall be so expressed
in the entry of the transfer if, when the certificates are presented to the
Corporation for transfer, both the transferor and the transferee request the
Corporation to do so.
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6.7. Transfer Agents and Registrars. The Board of Directors may, from time to
time, appoint or remove one or more transfer agents or one or more registrars of
transfers of shares of stock of the Corporation, and it may appoint the same
person as both transfer agent and registrar. Upon any such appointment being
made all certificates representing shares of capital stock thereafter issued
shall be countersigned by one of such transfer agents or one of such registrars
of transfers and shall not be valid unless so countersigned. If the same person
shall be both transfer agent and registrar, only one countersignature by such
person shall be required.
6.8. Fixing or Determination of Record Date. The Board of Directors may fix, in
advance, a date as a record date for the determination of the stockholders
entitled to notice of, and to vote at, any meeting of stockholders and any
adjournment thereof, or entitled to receive payment of any dividend or any other
distribution, allotment of rights, or entitled to exercise rights in respect of
any change, conversion, or exchange of capital stock, or entitled to give any
consent for any purpose, or in order to make a determination of stockholders for
any other proper purpose; provided, however, that such record date shall be a
date not more than fifty days nor less than ten days before the date of such
meeting of stockholders or the date of such other action. If no record date is
so fixed, the record date for determining stockholders entitled to notice of or
to vote at any stockholders' meeting shall be at the close of the business on
the date next preceding the day on which notice is given, or if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held. The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting) when no prior
action by the Board of Directors is necessary, shall be the day on which the
first written consent is expressed. The record date for determining stockholders
for any other purpose shall, unless otherwise specified by the Board of
Directors, be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of such meeting, provided, however
that the Board of Directors may fix a new record date for the adjourned meeting.
Only such stockholders as shall be stockholders of record on the record date so
fixed shall be entitled to such notice of, and to vote at, such meetings and any
adjournments thereof, or to receive payment of such dividend, or other
distribution, or to receive such consent, as the case may be, notwithstanding
any transfer of any shares on the books of the Corporation after any such record
date.
6.9. Lost or Destroyed Certificates. The Board of Directors may direct that a
new certificate or certificates of stock be issued in place of any certificate
or certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of the fact by the person
claiming the certificate or certificates to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, at its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate or certificates alleged to have been lost,
stolen or destroyed.
10
<PAGE>
ARTICLE VII
FINANCE
7.1. Checks, Drafts, etc. All checks drafts or order for the payment of money
shall be signed by one or more of officers or other persons as may be designated
by resolution of the Board of Directors.
7.2. Fiscal Year. The fiscal year of the Corporation shall be such as may from
time to time be established by the Board of Directors.
ARTICLE VIII
INDEMNIFICATION
8.1. Action, Suites or Proceedings Other than by or in the Right of the
Corporation. The Corporation shall indemnify any Directors, Officer, Employee or
Agent of the Corporation who was or is party or is threatened to be made a party
to any threatened, pending or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative ( other than an action by or
in the right of the Corporation} by reason of the fact that he is or was a
Director , Officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a Director, Officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees) , Judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and, in the case of conduct
in his official capacity with the Corporation, in a manner he reasonably
believed to be in the best interest of the Corporation, or, in all other cases,
that his conduct was at least not opposed to the Corporation's best interests.
In the case of any criminal proceeding, he must have had no reasonable cause to
believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, or
itself, determine that the individual did not meet the standard of conduct set
forth in this paragraph.
8.2. Actions or Suits by or in the Right of the Corporation. The Corporation
shall indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the Corporation to procure a judgement in its favor.by reason of the fact
that he is or was a Director, Officer, employee or agent of the Corporation or
is or was serving at the request of the Company as a Director, Officer, employee
or agent of another corporation, partnership joint venture1 trust or other
enterprise against expenses (including attorney's fees) actually and reasonably
Incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and, in the case of conduct in his official
capacity with the Corporation, in a manner he reasonably believed to be in the
best interests of the Corporation and, in all other cases, that his conduct was
at least not opposed to the Corporation's best interests; but no indemnification
shall be made in respect of any claim, issue or matter as to which such person
has been adjudged to be liable for negligence or misconduct in the performance
of this duty to the Corporation or where such person was adjudged liable on the
basis that personal benefit was improperly received by him, unless and only
11
<PAGE>
to the extent that the court in which such action or suit was brought determines
upon application that despite the adjudication of liability, but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnification for such expenses which such court deems proper.
8.3. Indemnification of Successful Party. To the extent that a Director,
Officer, employee or agent of the Corporation has been successful on the merits
or otherwise (including, without limitation, dismissal without prejudice) in
defense of any action, suit, or proceeding referred to in this Article VIII or
in defense of any claim, issue, or matter therein, he shall be indemnified
against all expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
8.4. Determination of Right to Indemnification. Any indemnification under (1) or
(2) of this Article VIII (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the Director, Officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
paragraphs (1) or (2) of this Article VII. Such determination shall be made by
the Board of Directors by a majority vote of a quorum consisting of Directors
who were not parties to such action, suit or proceeding, or, if such a quorum is
not obtainable and a quorum of disinterested Directors so directs, by
independent legal counsel in a written opinion, or by the shareholders.
8.5. Advance of Costs, Charges and Expenses. Cost, charges and expenses
(including attorney's fees) incurred in defending a civil or criminal action,
suit, or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board of
Directors as provided in paragraph (4) of this Article VIII upon receipt of a
written affirmation by the Director, Officer, employee or a8ent of his good
faith belief that he has met the standard of conduct described in paragraphs (1)
or (2) of this Article VIII, and an undertaking by or on behalf of the Director,
Officer, employee or agent to repay such amount unless it IS ultimately
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article VIII. The majority of the Directors may, in the
manner set forth above, and upon approval of such Director, Officer, employee or
agent of the Corporation, authorize the Corporation's counsel to represent such
person in any action, suit c- proceeding, whether or not the Corporation is a
party to such action, suit or proceeding.
8.6. Settlement. If in any action, suit or proceeding, including any appeal,
within the scope of (I) or (2) of this Article VIII, the person to be
indemnified shall have unreasonably failed to enter into a settlement thereof,
then, notwithstanding any other provision hereof, the indemnification obligation
of the Corporation to such person in connection with such action, suit or
proceeding shall not exceed the total of the amount at which settlement could
have been made and the expenses by such person prior to the time such settlement
could reasonably have been effected.
8.7. Other Rights; Continuation of Right to Indemnification. The indemnification
provided by this Article VIII shall not be deemed exclusive of any other rights
to which those indemnified may be entitled under these Articles of
Incorporation, any bylaw, agreement, vote of shareholders or disinterested
Directors, or otherwise, and any procedure provided for by any
12
<PAGE>
of the foregoing, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to person who
has ceased to be a Director, Officer, employee or agent and shall inure to the
benefit of heirs, executors, and administrators of such a person. All rights to
indemnification under this Article VIII shall be deemed to be a contract between
the Corporation and each director or officer of the Corporation who serves or
served in such capacity at any time while this Article VIII is in effect. Any
repeal or modification of this Article VIII or any repeal or modification of
relevant provisions of the Nevada Corporation Code or any other applicable laws
shall not in any way diminish any rights to indemnification of such Director,
Officer, employee or .agent or the obligations of the Corporation arising
hereunder. This Article VIII shall be binding upon any successor corporation to
this Corporation, whether by way of acquisition, merger, consolidation or
otherwise.
8.8. Insurance. The Corporation may purchase and maintain insurance on behalf of
any person who is or was a Director, Officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as Director,
Officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provision of this Article VIII: provided, however, ,
that such insurance is available on acceptable terms, which determination shall
be made by a vote of the majority of the Directors.
8.9. Saving Clause. If this Article VIII or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Director, Officer, employee and
agent of the Corporation as to any cost, charge and expense (including
attorney's fees), judgment fine and amount paid in settlement with respect to
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, to the
full extent permitted by an applicable portion of this Article VII that shall
not have been invalidated and to the full extent permitted by applicable law.
8.10. Amendment. The affirmative vote of at least two-thirds of the total votes
eligible: to be cast shall be required to amend, repeal, or adopt any provision
inconsistent with, this Article VIII. No amendment, termination or repeal of
this Article VIII shall affect or impair in any way the rights of any Director,
Officer, employee or agent of the Corporation .to Indemnification under the
provisions hereof with respect to any action, suit or proceeding arising out of,
or relating to, any actions, transactions or facts occurring prior to the final
adoption of such amendment, termination or appeal.
8.11. Subsequent Legislation. If the Nevada Corporation Code is amended after
adoption of these Articles to further expand the indemnification permitted to
Directors, Officers, employees or agents of the Corporation, then the
Corporation shall indemnify such persons to the fullest extent permitted by the
Nevada Revised Statutes, as so amended.
13
<PAGE>
ARTICLE IX
MISCELLANEOUS
9.1. Seal. The corporate seal of the Corporation shall be circular in form and
shall bear the name of the Corporation. The form of seal shall be subject to
alteration by the Board of Directors and the seal may be used by causing it or a
facsimile to be impressed or affixed or printed or otherwise reproduced. Any
Officer or Director of the Corporation shall have the authority to affix the
corporate seal of the Corporation to any document requiring the same.
9.2. Books and Records. The Board of Directors shall have power from time to
time to determine whether and to what extent, and at what times and places and
under what conditions and regulations, the accounts and books of the Corporation
(other than stock ledger), or any of them, shall be open to the inspection of
the stockholders. No stockholder shall have any right to inspect any account,
book or document of the Corporation except at a time conferred by statute,
unless authorized by a resolution of the stockholders or the Board of Directors.
9.3. Waivers of Notice. Whenever any notice is required to be given by law, or
under the provisions of the Articles of Incorporation or of these Bylaws, a
waiver thereof in writing, signed by the person or person entitled to such
notice, whether before, at or after the time stated therein, shall be deemed
equivalent of notice.
9.4. Amendments. The Board of Directors shall have the power to make, alter or
repeal these Bylaws, in whole or in part, at any time and from time to time.
These Bylaws may be altered or repealed, and new Bylaws made, by the
stockholders at any annual or special meeting if notice of the proposed
alteration or repeal or new Bylaws is included in the notice or waiver of notice
of such meeting.
APPROVED AND ADOPTED as of this 27th day of February, 1998.
/s/ Robert E. Nicholson
- ----------------------------------
Robert E. Nicholson, President
14
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C> <C>
SECTION 1 EXCHANGE OF SHARES.............................................................. 1
1.1 Exchange of Shares....................................................................... 1
(a) Wholly-Owned Subsidiary.................................................................. 1
SECTION 2 REPRESENTATION AND WARRANTIES................................................... 1
2.1 Representations and Warranties of Seller................................................. 1
(a) Due Incorporation, Good Standing, and Qualification...................................... 1
(b) Capital Stock............................................................................ 2
(c) Options, Warrants, and Rights............................................................ 2
(d) Subsidiaries............................................................................. 2
(e) Financial Statements..................................................................... 2
(f) Books and Records........................................................................ 2
(g) No Material Change....................................................................... 2
(h) Actions in the Ordinary Course of Business............................................... 3
(i) Asset Acquisition........................................................................ 3
(j) Title to Properties...................................................................... 3
(k) Litigation............................................................................... 4
(l) Licenses and Rights...................................................................... 4
(m) No Violation............................................................................. 4
(n) Taxes.................................................................................... 4
(o) Accounts Receivable...................................................................... 4
(p) Contracts................................................................................ 5
(q) Compliance with Law and Other Regulations................................................ 5
(r) Insurance................................................................................ 5
(t) Articles, Bylaws, and Minute Books....................................................... 5
(u) Employees................................................................................ 5
(v) No Payments to Directors, Officers, Shareholders or Others............................... 5
(v) Status of Global Gold Common Stock Being Acquired........................................ 6
(x) Accuracy of Statements................................................................... 6
2.2 Further Representations and Warranties of Sellers........................................ 6
(a) Ownership of Capital Stock of Global Gold................................................ 6
(b) Rights to Acquire Shares................................................................. 6
(c) Power to Execute Agreement............................................................... 6
(d) Agreement Not in Breach of Other Instruments............................................. 6
(e) Reliance Upon Seller's Advisors.......................................................... 6
(f) Intent and Access........................................................................ 7
2.3 Representations and Warranties of Buyer.................................................. 7
(a) Due Incorporation, Good Standing, and Qualification...................................... 7
(b) Corporate Authority...................................................................... 7
(c) Capital Stock............................................................................ 8
(d) Options, Warrants, and Rights............................................................ 8
(e) Shareholders............................................................................. 8
(f) Subsidiaries............................................................................. 8
(g) Financial Statements..................................................................... 8
(h) Books and Records........................................................................ 9
(i) No Material Change....................................................................... 9
(i) Actions in the Ordinary Course of Business............................................... 9
(k) Title to Assets and Properties........................................................... 9
(l) Litigation............................................................................... 9
(m) Rights and Licenses...................................................................... 10
(n) No Violation............................................................................. 10
(o) Taxes.................................................................................... 10
Page 1 of 36
<PAGE>
(p) Accounts Receivable...................................................................... 10
(q) Contracts................................................................................ 10
(r) Compliance with Law and Other Regulations................................................ 11
(s) Insurance................................................................................ 11
(t) Certificate, Bylaws, and Minute Books.................................................... 11
(u) Employees................................................................................ 11
(v) Regulatory Reports....................................................................... 11
(w) Accuracy of Statements................................................................... 11
2.4 Survival of Representations and Warranties............................................... 11
SECTION 3 COVENANTS OF BUYERS............................................................. 12
3.1 Covenants of Delta....................................................................... 12
(a) Operation of Global...................................................................... 12
(b) Board of Directors of Delta.............................................................. 12
(c) Employment / Consulting Contracts........................................................ 12
(d) Stockholders' Approval................................................................... 12
SECTION 4 FURTHER ASSURANCES.............................................................. 13
SECTION 5 GENERAL......................................................................... 13
5.1 Costs and Indemnity Against Finders...................................................... 13
5.2 Controlling Law.......................................................................... 13
5.3 Notices.................................................................................. 13
5.4 Conflict of Interest..................................................................... 14
5.5 Binding Nature of Agreement; No Assignment............................................... 14
5.6 Entire Agreement......................................................................... 14
5.7 Paragraph Headings....................................................................... 14
5.8 Counterparts............................................................................. 14
Schedule A-- Shares of New Common Stock of Delta to be Acquired................................... 29
Schedule B-- Interests of Global Gold, Inc........................................................ 31
Schedule C-- Global Gold, Inc. ................................................................... 32
Schedule D-- Delta International Mining & Exploration, Inc........................................ 33
Financial Statements Global Gold, Inc. (Bahamas).................................................. 34
</TABLE>
Page 2 of 36
<PAGE>
EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT ("Agreement") is entered into as of the 19th
day of April, 1999, among DELTA INTERNATIONAL MINING & EXPLORATION, LTD., a
Nevada corporation ("Delta" or "Buyer") (previously Behmen Group, Ltd.); and
GLOBAL GOLD, INC. a Bahamian corporation ("Seller" or "Global"), and the
shareholders of Global as shown on Schedule A hereto. Global and its selling
shareholders are referred to collectively as "Sellers".
Delta and Sellers desire that Delta acquire substantially all of Sellers'
shares of capital stock (the "Shares") of Global Gold, Inc., a Bahamian
corporation ("Global"), in exchange for shares of Delta's New Common Stock, all
on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
set forth herein, the parties agree as follows:
SECTION 1
EXCHANGE OF SHARES
1.1 Exchange of Shares. Based upon and subject to the representations,
warranties, covenants, agreements, and other terms and conditions set forth in
this Agreement, as of the date of this Agreement (the "Closing Date"), the
Sellers hereby convey, transfer, assign, and deliver their Shares of Global to
Delta in exchange for Delta's New Common Stock, par value $0.001 per share (the
"New Common Stock"). Each Seller hereby conveys, transfers, assigns, and
delivers to Delta the number of Shares set forth beside such Seller's name on
Schedule A hereto, in exchange for the number of shares of New Common Stock set
forth beside such Seller's name on Schedule A hereto. Delta and each of the
Sellers hereby acknowledges receipt of the Shares and the shares of New Common
Stock, respectively. Delta and each of the Sellers acknowledge and agree that
shares of a New Common Stock shall be issued to Sellers in accordance with
Section 2 of this Agreement.
(a) Wholly-Owned Subsidiary. As a result of the Exchange, Delta will own
substantially all the Common Stock of Global, which will be operated as a
subsidiary.
SECTION 2
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Sellers. Except as otherwise set forth
in the Sellers' Disclosure Schedule delivered herewith by Sellers to and
acknowledged as received by Delta, Sellers jointly and severally represent and
warrant to Delta as follows:
(a) Due Incorporation, Good Standing, and Qualification. Global is a
corporation duly organized, validly existing, and in good standing under the
laws of The Bahamas with all
Page 3 of 36
<PAGE>
requisite corporate power and authority to own, operate, and lease its
assets and properties and to carry on its business as now being conducted.
Global is not subject to any material disability by reason of the failure to
be duly qualified as a foreign corporation for the transaction of business
or to be in good standing under the laws of any jurisdiction. Sellers have
heretofore delivered to Delta a list setting forth, as of the date of this
Agreement, each jurisdiction in which (i) Global currently conducts its
business or has in the past conducted its business on any basis, (ii) Global
is qualified to do business, and (iii) Global is qualified for the purposes
of sales and income taxes.
(b) Capital Stock. As of the date hereof, Global has an authorized capital
stock consisting of 25,000,000 shares of Common Stock, $.0.10 par value, of
which such shares are issued and outstanding and all of which are owned by
Sellers, free and clear of all claims, liens, charges, and encumbrances. All
of the issued and outstanding shares of capital stock of Global have been
validly authorized and issued and are fully paid and non-assessable.
(c) Options, Warrants, and Rights. Other than as shown on Schedule D there
are no outstanding options, warrants, or other rights to purchase, or
securities or other obligations convertible into or exchangeable for, or-
contracts, commitments, agreements, arrangements, or understandings to
issue, any shares of its capital stock or other securities of Global.
(d) Subsidiaries. The outstanding shares of capital stock or other equity
interests of the subsidiaries of Global are owned free and clear of all
claims, liens, charges, and encumbrances.. Global has shown on Schedule B
hereto all such interest if any, that it owns, directly or indirectly, any
capital stock or other equity securities of any other corporation or have
any direct or indirect equity or ownership interest in any other corporation
or other business.
(e) Financial Statements. The Balance Sheet of Global as of September 30,
1998 and all related schedules and notes thereto, have been prepared in
accordance with generally accepted accounting principles, which were applied
on a consistent basis (except as described therein), are correct and
complete, and present fairly, in all material respects, the financial
position, Global as of September 30, 1998 does not have any material
liabilities or obligations of a type that would be included in a balance
sheet prepared in accordance with generally accepted accounting principles,
whether related to tax or non-tax matters, accrued or contingent, due or not
yet due, liquidated or unliquidated or otherwise, except as and to the
extent disclosed or reflected in the Balance Sheet of Global as of September
30, or incurred since September 30, in the ordinary course of business or as
contemplated by this Agreement.
(f) Books and Records. The books of account and other corporate records of
Global are complete and accurate, have been maintained in accordance with
good business practices, and the matters contained therein are appropriately
or satisfactorily reflected in Global's financial statements.
(g) No Material Change. Since September 30, 1998, there has not been and
there is not threatened (i) any material adverse change in the business,
assets, properties, financial condition, or operating results of Global,
(ii) any loss or damage (whether or not covered
Page 4 of 36
<PAGE>
by insurance) to any of the assets or properties of Global, which materially
affects or impairs its ability to conduct its business, or (iii) any
mortgage or pledge of any assets or properties of Global, or any
indebtedness incurred by Global other than indebtedness, not material in the
aggregate, incurred in the ordinary course of business.
(h) Actions in the Ordinary Course of Business. Since September 30, 1998,
Global has not (i) taken any action outside of the ordinary and usual course
of business; (ii) borrowed any money or become contingently liable for any
obligation or liability of another; (iii) failed to pay any of its debts and
obligations as they became due; (iv) incurred any debt, liability or
obligation of any nature to any party except for obligations arising from
the purchase of goods or the rendition of services in the ordinary course of
business, none of which aggregate more than $10,000 with respect to the same
supplier or customer; (v) knowingly waived any right of substantial value;
(vi) failed to use its best efforts to preserve its business organization
intact, to keep available the services of its employees, or to preserve its
relationships with its customers, suppliers and others with which it deals;
or (vii) increased or committed to increase the salary, fee or compensation
of any officer, employee, independent contractor, agent, firm or person
performing services for it.
(i) Asset Acquisition. It is understood that no mining properties are
presently held in the name of Global Gold, Inc. (Bahamas). Certain mining
properties in Bolivia and in the state of Montana, USA, are presently held
in the names of persons affiliated with Global including Gary L. Boyd,
Robert E. Mathews, Garry J. Carlson, Peter C. Ellsworth and Colin Little.
Under an "Agreement Concerning Shares", dated November 8, 1996, Gary L.
Boyd, Robert E. Mathews, W.C. McCaslin, Jack Wells and Charles Wells agreed
to transfer the assets of Global Gold, Inc., S.A., to Global Gold, Inc.
(Bahamas) in exchange for shares of common stock in Global Gold, Inc.
(Bahamas). The assets included equipment valued at $160,000 and a gold
mining prospect near Sena, Bolivia ("Sena Project"). Although the concession
for the Sena Project was initially in the names of Gary L. Boyd and Robert
E. Mathews, they agreed to cause the title to such concession to be
transferred to Global, S.A.
Garry J. Carlson, Colin Little (or nominee) and Peter C. Ellsworth have
agreed to transfer all the diamond mining claims held in their individual
names, for common stock in Delta.
It is understood that following the execution of this Agreement and related
transactions, all the assets of Global will be owned by Delta through its
subsidiary, Global Gold, Inc. (Bahamas).
(j) Title to Properties. Global has or will have by the closing date of this
agreement good and marketable title to all of its real and personal assets
and properties, including all assets and properties reflected in its
audited, 1998 Balance Sheet acquired subsequent to September 30, 1998,
except assets or properties disposed of subsequent to that date in the
ordinary course of business. Such assets and properties are subject to no
mortgage, indenture, pledge, lien, claim, encumbrance, charge, security
interest, or title retention or other security arrangement except for liens
for the payment of federal, state, and other taxes, the payment of which is
neither delinquent nor subject to penalties, and except for other liens and
encumbrances incidental to the conduct of the business of Global or the
ownership of its
Page 5 of 36
<PAGE>
assets or properties, which were not incurred in connection with the
borrowing of money or the obtaining of advances and which do not in the
aggregate materially detract from the value of the assets or properties of
Global or materially impair the use thereof in the operation of its
business, except in each case as disclosed in the September 30, 1998 Balance
Sheet. All leases pursuant to which Global leases any substantial amount of
real, mining or personal property are valid and effective in accordance with
their respective terms.
(k) Litigation. There are no actions, suits, proceedings, or other
litigation pending or, to the knowledge of Sellers, threatened against
Global, at law or in equity, or before or by any federal, state, municipal,
or other governmental department, commission, board, bureau, agency, or
instrumentality that, if determined adversely to Global, would individually
or in the aggregate have a material adverse effect on the business, assets,
properties, operating results, prospects, or condition, financial or
otherwise, of Global.
(l) Licenses and Rights. To the extent applicable, Global has provided Delta
with a list of all of its licenses, trademarks, trademark rights, trade
names, trade name rights.
(m) No Violation. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not violate or
result in a breach by Global of, or constitute a default under, or conflict
with, or cause any acceleration of any obligation with respect to, (i) any
provision or restriction of any charter, bylaw, loan, indenture, or mortgage
of Global, or (ii) any provision or restriction of any lien, lease
agreement, contract, instrument, order, judgment, award, decree, ordinance,
or regulation or any other restriction of any kind or character to which any
assets or properties of Global is subject or by which Global is bound.
(n) Taxes. Global has duly filed in correct form all Tax Returns (as defined
below) relating to the activities of Global required or due to be filed
(with regard to applicable extensions) on or prior to the Closing Date. All
such Tax Returns are accurate and complete in all material respects, and
Global has paid or made provision for the payment of all Taxes (as defined
below) that have been incurred or are due or claimed to be due from it by
federal, state, or local taxing authorities for all periods ending on or
before the Closing Date, other than Taxes or other charges that are not
delinquent or are being contested in good faith and have not been finally
determined and have been disclosed to Delta. No claims for taxes or
assessments are being asserted or threatened against Global. Sellers have
furnished to Delta copies of all Tax Returns filed for or by Global since
its inception. For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies, or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, transfer,
license, payroll, and franchise taxes, imposed by the United States, or any
state, local or foreign government or subdivision or agency thereof and any
interest, penalties or additions attributable thereto, and the term "Tax
Return" shall mean any report, return, or other information required to be
supplied to any taxing authority or required by any taxing authority to be
supplied to any other person.
Page 6 of 36
<PAGE>
(o) Accounts Receivable. The accounts receivable of Global have been
acquired in the ordinary course of business and, to the knowledge of
Sellers, are valid and enforceable, and are fully collectible, subject to no
known defenses, set-offs, or counterclaims.
(p) Contracts. Except as shown on Schedule C hereto, Global is not a party
to (i) any plan or contract providing for bonuses, pensions, options, stock
purchases, deferred compensation, retirement payments, or profit sharing,
(ii) any collective bargaining or other contract or agreement with any labor
union, (iii) any lease, installment purchase agreement, or other contract
with respect to any real or personal property used or proposed to be used in
its operations, excepting, in each case, items included within aggregate
amounts disclosed or reflected in the September 30, 1998 Balance Sheet, (iv)
any employment agreement or other similar arrangement not terminable by it
upon 30 days or less notice without penalty to it, (v) any contract or
agreement for the purchase of any commodity, material, fixed asset, or
equipment in excess of $10,000, (vi) any contract or agreement creating an
obligation of $10,000 or more, (vii) any contract or agreement that by its
terms does not terminate or is not terminable by it upon 30 days or less
notice without penalty to it, (viii) any loan agreement, indenture,
promissory note, conditional sales agreement, or other similar type of
arrangement, (ix) any material license agreement, or (x) any contract that
may result in a material loss or obligation to it. All material contracts,
agreements, and other arrangements to which Global is a party are valid and
enforceable in accordance with their terms; and, to Sellers' knowledge, all
other parties to each of the foregoing have performed in any material
respects all obligations required to be performed to date; and neither
Global nor, to Sellers' knowledge, any such other party is in default or in
arrears under the terms of any of the foregoing.
(q) Compliance with Law and Other Regulations. Global is not subject to nor
has Global been threatened with any material fine, penalty, liability, or
disability as the result of its failure to comply with any requirement of
federal, state, local, or foreign law or any regulation or any requirement
of any governmental body or agency having jurisdiction over it, the conduct
of its business, the use of its assets and properties, or any premises
occupied by it.
(r) Insurance. Global does not presently maintain any insurance coverage on
its assets, properties, premises, operations, and personnel.
(s) Articles, Bylaws, and Minute Books. Sellers have heretofore delivered to
Delta true and complete copies of the Articles of Incorporation and Bylaws
of Global as currently in effect. The minute books of Global contain
complete and accurate records of all meetings and other corporate actions
held or taken by the Board of Directors (or committees of the Board of
Directors) and shareholders of Global since its incorporation.
(t) Employees. Global has never maintained or contributed to any "employee
benefit plan," as such term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), including,
without limitation, any stock option plan, stock purchase plan, deferred
compensation plan, or other similar employee benefit plan. Global never
contributed to any "multi-employer pension plan," as such term is defined in
Section 3(37)(A) of ERISA.
Page 7 of 36
<PAGE>
(u) No Payments to Directors, Officers, Shareholders or Others. Except as
shown on Schedules C and D, there has not been any purchase or redemption of
any shares of capital stock of Global or any transfer, distribution or
payment by Global, directly or indirectly, of any money or other assets or
properties to any director, officer, shareholder or any of their affiliates
or other person other than the payment of compensation for services actually
rendered at rates not in excess of the rates prevailing on the September 30,
1998 balance sheet or payments in the ordinary course of business or for
goods or services in other than arm's length transactions.
(v) Status of Global Common Stock Being Acquired. The Shares being acquired
in exchange for the shares of New Common Stock were validly authorized and
issued, fully paid, and non-assessable.
(w) Accuracy of Statements. Neither this Agreement nor any statement, list,
certificate, or other information furnished by Global or Sellers to Delta in
connection with this Agreement or any of the transactions contemplated
hereby contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein,
in light of circumstances in which they are made, not misleading.
2.2 Further Representations and Warranties of Sellers. Each Seller makes the
following further representations and warranties as to himself-.
(a) Ownership of Capital Stock of Global. Each Seller owns the number of
Shares set forth beside such Seller's name on Schedule A hereto. Such Seller
has good, marketable and unencumbered title to such Shares, and there are no
restrictions on his right to transfer such Shares to Delta pursuant to this
Agreement.
(b) Rights to Acquire Shares. Certain Sellers shown on Schedule D have
outstanding options, warrants, or other rights to acquire shares of Global's
capital stock.
(c) Power to Execute Agreement. Each Seller has full power and authority to
execute, deliver, and perform this Agreement and this Agreement is the legal
and binding obligation of the Seller, enforceable against such Seller in
accordance with its items, except that (i) such enforcement may be subject
to bankruptcy, insolvency, reorganization, moratorium, or other similar laws
now or hereafter in effect relating to creditors' rights, and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefore may be brought.
(d) Agreement Not in Breach of Other Instruments. The execution and delivery
of this Agreement, the consummation of the transactions hereby contemplated,
and the fulfillment of the terms hereof, will not result in the breach of
any term or provision of, or constitute a default under, or conflict with,
or cause the acceleration of any obligation under, any agreement or other
instrument of any description to which such Seller is a party or by which
such Seller is bound, or any judgment, decree, order or award of any court,
governmental body or arbitrator, or any law, rule or regulation applicable
to such Seller.
Page 8 of 36
<PAGE>
(e) Reliance Upon Seller's Advisors. Each Seller acknowledges that he has
been encouraged to rely upon the advice of his legal counsel and accountants
or other financial advisers with respect to the financial, tax, and other
considerations relating to the acquisition of the shares of Common Stock of
Delta. Such Seller represents and warrants that he has reviewed with his own
tax advisors the federal, state, local, and international tax consequences
of the investment in shares of the Common Stock. Such Seller is relying
solely on such advisors and not on any statements or representations of
Delta or any of its officers, directors, employees, agents or attorneys and
understands that each Seller (and not Delta) shall be responsible for his
own tax liability, if any, that may arise as a result of the acquisition of
New Common Stock or the transactions contemplated by this Agreement.
(f) Intent and Access. Each Seller is acquiring the shares of New Common
Stock without a view to the public distribution or resale in violation of
any applicable federal or state securities laws. Seller acknowledges that
the shares of New Common Stock to be exchanged hereby are not registered
under the Securities Act of 1933, as amended, or any state securities laws
and cannot be sold publicly without registration thereunder or an exemption
from such registration. Seller understands that certificates for such New
Common Stock will contain a legend with respect to the restrictions on
transfer under federal and applicable state securities laws as well as the
fact that the shares are "restricted securities" under such federal and
state laws. Such Seller has been furnished with such information, both
financial and non-financial, with respect to the operations, business,
capital structure, and financial position of Delta and its subsidiaries as
he believes necessary and has been given the opportunity to ask questions of
any receive answers from Delta and its subsidiaries and their officers
concerning Delta and its subsidiaries.
2.3 Representation and Warranties of Delta. Except as otherwise set forth
herein, and except as disclosed in any document which may be filed by Delta with
the Securities and Exchange Commission ("SEC"), NASD Regulation, Inc. or other
regulatory agency, Delta represents and warrants to Sellers as follows:
(a) Due Incorporation, Good Standing, and Qualification. Delta, previously
named Behmen Group, Inc., is a corporation duly organized, validly existing,
and in good standing under the laws of Nevada with all requisite corporate
power and authority to own, operate, and lease its assets and properties and
to carry on their business and now being conducted. Delta is not subject to
any material disability by reason of the failure to be duly qualified as a
foreign corporation for the transaction of business or to be in good
standing under the laws of any jurisdiction.
(b) Corporate Authority. Delta has the corporate power and authority to
enter into this Agreement and carry out the transactions contemplated
hereby. The Board of Directors of Delta has duly authorized the execution,
delivery, and performance of this Agreement. No other corporate proceedings
on the part of Delta are necessary to authorize the execution and delivery
by Delta of this Agreement or the consummation by Delta of the transactions
contemplated hereby, except that a meeting of Delta's stockholders shall be
required to approve certain items set forth in this Agreement and the
related matters. This Agreement has
Page 9 of 36
<PAGE>
been duly executed and delivered by, and constitutes a legal, valid, and
binding agreement of, Delta, enforceable against it in accordance with its
terms, except that (i)Delta must obtain the approvals referred to in the
immediately preceding sentence, (ii) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
now or hereafter in effect relation to creditors' rights, and (iii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefore may be brought.
(c) Capital Stock. As of the date hereof, Delta has authorized capital stock
consisting of 25,000,000 shares of common stock, of which 2,996,000 shares
were previously issued and are outstanding. As of the date hereof, 475,000
shares of Common Stock were reserved for issuance upon the exercise of
Management Stock Options. All of the issued and outstanding shares of
capital stock of Delta have been, and when issued pursuant to this
Agreement, each share of Common Stock to be issued pursuant to this
Agreement will be, validly authorized and issued and fully paid and
non-assessable.
Delta has authorized 5,000,000 shares of Preferred Stock, the terms of which
may be decided upon by the Board of Directors. No Preferred Stock has been
issued.
(d) Options, Warrants, and Rights. Other than as provided in Schedule D
hereto, Delta has no outstanding options, warrants, or other rights to
purchase, or securities or other obligations convertible into or
exchangeable for, or contracts, commitments, agreements, arrangements or
understandings to issue, any shares of their capital stock or other
securities.
(e) Shareholders. Delta presently has 2,996,000 shares of common stock
outstanding, which are held by 35 shareholders (as of February 27, 1998).
all of the outstanding shares were issued upon formation of the corporation
under the name Behmen Group, Ltd. Of that amount, 546,000 shares which are
held by 32 shareholders now are not affiliates of the corporation will be
qualified for resale to the public when all the conditions of Rule 144 of
the Act are fulfilled, including, but not limited to, the filing of a Form
15c2-11 to meet the current public information requirements of Rule 144. The
balance of the shares are held by officers, directors and control persons of
Delta, all of which are "restricted" as defined under the Rule 144 of the
Act.
(f) Subsidiaries. Delta does not presently own, directly or indirectly, any
capital stock or other equity securities of any other corporation or have
any direct or indirect equity or ownership interest in any other corporation
or other business.
(g) Status of New Common Stock Being Issued. The shares of New Common Stock
issued in exchange for the Shares are validly authorized and when issued in
accordance with this Agreement shall be validly issued, fully paid,
non-assessable, restricted as to re-sales but intended to qualify for
eventual trading over-the-counter (OTC) and/or on the NASDAQ Bulletin Board,
and free of preemptive or other similar rights, but subject to the resale
restrictions required by Rule 144 promulgated pursuant to the Securities Act
of 1933, as amended ("Rule 144").
Page 10 of 36
<PAGE>
(h) Financial Statements. The Balance Sheets of Delta and all related
schedules and notes to the foregoing as of March 31, 1999, have been
reported on by Pannell, Kerr & Foster, CPA, 420 Lexington Avenue, New York,
NY 10170. The foregoing Balance Sheet has been prepared in accordance with
generally accepted accounting principles, which were applied on a consistent
basis, are correct and complete, and present fairly, in all material
respects, the financial position of Delta for the periods indicated. Delta
has no material liabilities or obligations of a type that would be included
in a balance sheet, whether related to tax or non-tax matters, accrued or
contingent, due or not yet due, liquidated or un-liquidated or otherwise.
(i) Books and Records. The books of account and other corporate records of
Delta are complete and accurate, have been maintained in accordance with
good business practices, and the matters contained therein are appropriately
reflected in Delta's financial statements.
(j) No Material Change. Since March 31, 1999, there has not been and there
is not threatened (i) any material adverse change in the business, assets,
properties, financial condition, or operating results of Delta or its
subsidiaries taken as a whole, (ii) any loss or damage (whether or not
covered by insurance) to any of the assets or properties of Delta or its
subsidiaries, which materially affects or impairs their ability to conduct
their business, or (iii) any mortgage or pledge of any material amount of
the assets or properties of Delta , or any indebtedness incurred by Delta ,
other than indebtedness, not material in the aggregate, incurred in the
ordinary course of business.
(k) Actions in the Ordinary Course of Business. Since May 31, 1998, Delta
has not (i) taken any action outside of the ordinary and usual course of
business; (ii) borrowed any money or become contingently liable for any
obligation or liability of another; (iii) failed to pay any of its debts and
obligations as they became due; (iv) incurred any debt, liability or
obligation of any nature to any party except for obligations arising from
the purchase of goods or the rendition of services in the ordinary course of
business, none of which aggregate more than $10,000 with respect to the same
supplier or customer; (v) knowingly waived any right of substantial value;
(vi) failed to use its best efforts to preserve its business organization
intact, to keep available the services of its employees, or to preserve its
relationships with its customers, suppliers and others with which it deals;
or (vii) increased or committed to increase the salary, fee or compensation
of any officer, employee, independent contractor, agent, firm or person
performing services for it.
(l) Title to Assets and Properties. Delta has good and marketable title to
all of its respective real and personal assets and properties, including all
assets and properties reflected in the Balance Sheet of Delta as of May 31,
1998, or acquired subsequent to that date, except assets or properties
disposed of subsequent to that date in the ordinary course of business. Such
assets are subject to no mortgage, indenture, pledge, lien, claim,
encumbrance, charge, security interest, or title retention or other security
arrangement. Delta owns or has the right to use all assets necessary to
conduct its business.
(m) Litigation. There are no actions, suits, proceedings, or other
litigation pending or, to the knowledge of Delta, threatened against Delta ,
at law or in equity, or before or by any
Page 11 of 36
<PAGE>
federal, state, municipal, or other governmental department, commission,
board, bureau, agency, or instrumentality that, if determined adversely to
Delta or its subsidiaries, would individually or in the aggregate have a
material adverse effect on the business, assets, properties, operating
results, prospects, or condition, financial or otherwise, of Delta taken as
a whole.
(n) Rights and Licenses. Delta is not subject to any material disability or
liability by reason of its failure to possess any trademark, trademark
right, trade name, trade name right, or license.
(o) No Violation. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not violate or
result in a breach by Delta of, or constitute a default under, or conflict
with, or cause any acceleration of any obligation with respect to, (i) any
provision or restriction of any charter, bylaw, loan, indenture, or mortgage
of Delta , or (ii) any provision or restriction of any lien, lease
agreement, contract, instrument, order, judgment, award, decree, ordinance,
or regulation or any other restriction of any kind or character to which any
assets or properties of Delta is subject or by which Delta is bound.
(p) Taxes. Delta has duly filed in correct form all Tax Returns relating to
the activities of Delta required or due to be filed (with regard to
applicable extensions) on or prior to the Closing Date. All such Tax Returns
are accurate and complete in all material respects, and Delta has paid or
made provision for the payment of all Taxes that have been incurred or are
due or claimed to be due from it by federal, state, or local taxing
authorities for all periods ending on or before the Closing Date, other than
Taxes or other charges that are not delinquent or are being contested in
good faith and have not been finally determined and have been disclosed to
Seller. The amounts set up as reserves for Taxes on the books of Delta are
sufficient in the aggregate for the payment of all unpaid Taxes (including
any interest or penalties thereon), whether or not disputed, accrued, or
applicable. No claims for taxes or assessments are being asserted or
threatened against Delta.
(q) Accounts Receivable. Delta has no accounts receivable.
(r) Contracts. Delta is not a party to (i) any plan or contract providing
for bonuses, pensions, options, stock purchases, deferred compensation,
retirement payments, or profit sharing, (ii) any collective bargaining or
other contract or agreement with any labor union, (iii) any lease,
installment purchase agreement, or other contract with respect to any real
or personal property used or proposed to be used in its operations
excepting, in each case, items included within aggregate amounts disclosed
or reflected in the Balance Sheet of Delta as of May 31, 1998, (iv) any
employment agreement or other similar arrangement not terminable by it upon
30 days or less notice without penalty to it, (v) any contract or agreement
for the purchase of any commodity, material, fixed asset, or equipment in
excess of $10,000, (vi) any contract or agreement creating an obligation of
$10,000 or more, (vii) any contract or agreement that by its terms does not
terminate or is not terminable by it upon 30 days or less notice without
penalty to it, (viii) any loan agreement, indenture, promissory note,
conditional sales agreement, or other similar type of arrangement, (ix) any
material license agreement, or (x) any contract that may result in a
material loss or obligation to it. All material contracts,
Page 12 of 36
<PAGE>
agreements, and other arrangements to which Delta is a party are valid and
enforceable in accordance with their terms; Delta, its subsidiaries, and all
other parties to each of the foregoing have performed all obligations
required to be performed to date; neither Delta, nor any such other party is
in default or in arrears under the terms of any of the foregoing; and no
condition exists or event has occurred that, with the giving of notice or
lapse of time or both, would constitute a default under any of them.
(s) Compliance with Law and Other Regulations. Delta is not subject to or
has been threatened with any material fine, penalty, liability, or
disability as the result of its failure to comply with any requirement of
federal, state, local, or foreign law or any regulation or any requirement
of any governmental body or agency having jurisdiction over it, the conduct
of its business, the use of its assets and properties, or any premises
occupied by it.
(u) Certificate, Bylaws, and Minute Books. Delta agrees to deliver to
Sellers true and complete copies of its Certificate of Incorporation and
Bylaws of Delta as currently in effect. The minute books of Delta which are
available for review at Delta's office, contain complete and accurate
records of all meetings and other corporate actions held or taken by the
Board of Directors and stockholders of Delta since its incorporation.
(v) Employees. Delta has never maintained or contributed to any "employee
benefit plan," as such term is defined in Section 3(3) of ERISA, including,
without limitation, any stock option plan, stock purchase plan, deferred
compensation plan, or other similar employee benefit plan, other than
Delta's Stock Option Plans. Neither Delta has ever contributed to any
"multi- employer pension plan," as such term is defined in Section 3(37)(A)
of ERISA.
(w) Regulatory Reports. The Form 15c 2-11 to be filed by a market maker
(and/or) other broker dealers) with the NASD will not intentionally contain
a misstatement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading as of the time the document was filed. No other report, proxy
statement, or document has been required to be filed by Delta pursuant to
the Securities Exchange Act of 1934.
(x) Accuracy of Statements. Neither this Agreement nor any statement, list,
certificate, or other information furnished by Delta to Sellers in
connection with this Agreement or any of the transactions contemplated
hereby contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein,
in light of the circumstances in which they are made, not misleading.
2.4 Survival of Representations and Warranties. Each of the representations
and warranties contained in this Agreement shall survive the consummation of the
transactions contemplated by this Agreement irrespective of any investigations
or inquiries made by any party or any knowledge that any party may possess, and
each party shall be entitled to rely upon such representations and warranties
irrespective of any investigations, inquiries, or knowledge. Notwithstanding the
foregoing, no claims for indemnity arising out of a false, misleading, or
otherwise incorrect representation or warranty may be made after one year from
the Closing Date, and neither Delta nor Sellers shall be responsible for any
indemnity claim for an amount
Page 13 of 36
<PAGE>
less than $25,000 or greater than $500,000 arising out of a false, misleading,
or otherwise incorrect representation or warranty relating to this Agreement.
SECTION 3
COVENANTS OF DELTA
3.1 Covenants of Delta. Delta further agrees, unless Sellers otherwise agree
in writing, subsequent to the Closing Date:
(a) Operation of Global. Unless otherwise determined by the Board of
Directors of Delta following the stockholder approval referred to in Section
4.1(e) hereof, Global shall be operated as a separate subsidiary of Delta
with its existing officers and management, except that the Board of
Directors of Global shall include a Chairman, who also shall serve as the
President and Chief Financial Officer of Global.
(b) Board of Directors of Delta. The Board of Directors of Delta shall
authorize to have seven (7) members following the date hereof (the
"Closing") and shall immediately following the Closing include the following
persons serving in the following capacities:
<TABLE>
<CAPTION>
Name Positions
---- ---------
<S> <C>
Robert E. Mathews........................... Chairman of the Board of Directors, Treasurer, Chief Financial
Gary L. Boyd................................ Co-Chairman of the Board of Directors; President and Secretary
Peter C. Ellsworth.......................... Consulting Geologist, Director
Garry J. Carlson............................ Geologist-Geophysicist, Director; Vice President of Exploration
</TABLE>
(c) Employment / Consulting Contracts. Delta shall execute employment or
consulting contracts with Peter C. Ellsworth, Garry J. Carlson, Dr. Anthony
J. Irving, all of whom have represented that they have substantial expertise
in the gold and diamond mining and exploration industry.
(d) Director's Approval. Pursuant to Nevada law, prior to the Closing, the
following actions will be approved by Delta:
(i) Approval of this Exchange Agreement and the transactions
contemplated herein.
(ii) Approval of "Delta International Mining & Exploration, Ltd."
as the new name of the corporation.
(iii) Authorization of a management stock option plan and approval
of initial grants thereunder.
Page 14 of 36
<PAGE>
(iv) The amendment of Delta's Articles of Incorporation as required
under Nevada law to accomplish the foregoing transactions.
(v) Such other matters as shall be mutually agreed upon by the
Board of Directors of Delta.
SECTION 4
FURTHER ASSURANCES
On and after the Closing Date, Sellers and Delta shall execute and deliver
all such deeds, bills of sale, assignments, and other instruments and shall take
or cause to be taken such further or other actions as any party may reasonably
request from time to time in order to effectuate the transactions provided for
herein. The parties shall cooperate with each other and with their respective
counsel and accountants in connection with any steps to be taken as a part of
their respective obligations under this Agreement.
SECTION 5
GENERAL
5.1 Costs and Indemnity Against Finders. Each party hereto shall be
responsible for its own costs and expenses in negotiating and performing this
Agreement and hereby indemnifies and holds the other parties harmless against
any claim for finders' fees based on alleged retention of a finder by it.
5.2 Controlling Law. This Agreement and all questions relating to its
validity, interpretation, performance, and enforcement shall be governed by and
construed in accordance with the laws of the state of Nevada, notwithstanding
any Nevada or other conflict-of-law provisions to the contrary.
5.3 Notices. All notices, requests, demands, and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received when delivered against receipt
or when deposited in the United States mails, first class postage prepaid,
addressed as set forth below:
<TABLE>
<CAPTION>
If to Delta: If to Sellers:
------------ --------------
<S> <C>
Delta International Mining & Exploration, Ltd. Global Gold, Inc. (a Bahamas corporation)
c/o Gary Boyd c/o Robert E. Mathews
11649 E. Cortez Drive 242 Kings Road
Scottsdale, AZ 85259 Lewisburg, KY 42256
(see also Schedule A hereto)
</TABLE>
Page 15 of 36
<PAGE>
With a Copy to:
A.F. Schaffer, P.C.
2700 N. Central Avenue
Suite 1500
Phoenix, AZ 85004-1112
Any party may alter the address to which communications or copies are to be
sent by giving notice to such other parties of change of address in conformity
with the provisions of this paragraph for the giving of notice.
5.4 Conflict of Interest. The parties hereto, recognizing that both
corporations have the same control shareholders, acknowledge that the law firm
of A.F. Schaffer, P.C., Phoenix, Arizona, has drafted this Agreement on behalf
of both corporations, which by their execution of this Agreement, agree to such
dual representation.
A.F. Schaffer, P.C. does not represent any individual shareholder of either
corporation, and such shareholders are encouraged to seek and obtain their own
legal and/or financial counsel.
5.5 Binding Nature of Agreement; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, successors, and assigns, except that no party may assign, delegate, or
transfer its rights or obligations under this Agreement without the prior
written consent of the other parties hereto. Any assignment, delegation, or
transfer made in violation of this Section 7.4 shall be null and void.
5.6 Entire Agreement. This Agreement contains the entire understanding among
the parties hereto with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, inducements, and
conditions, express or implied, oral or written, except as herein contained. The
express terms hereof control and supersede any course of performance and/or
usage of the trade inconsistent with any of the terms hereof. This Agreement may
not be modified or amended other than by an agreement in writing.
5.7 Paragraph Headings. The paragraph headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
5.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
(Remainder of this page intentionally left blank.)
Page 16 of 36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SELLING SHAREHOLDERS: DELTA:
------
(See Counterpart Signature Pages) DELTA INTERNATIONAL MINING
& EXPLORATION, LTD.
By:
---------------------------------
Name:
---------------------------------
Its:
---------------------------------
Date:
---------------------------------
Page 17 of 36
<PAGE>
COUNTERPART SIGNATURE PAGE
TO STOCK EXCHANGE AGREEMENT
Exchanging _____ shares of Global Gold, Inc. for _____ shares of Delta
Common Stock.
SELLING SHAREHOLDER:
--------------------
Robert E. Mathews
---------------------------------
Name (print or type)
---------------------------------
Signature
---------------------------------
Date
Page 18 of 36
<PAGE>
COUNTERPART SIGNATURE PAGE
TO STOCK EXCHANGE AGREEMENT
Exchanging _____ shares of Global Gold, Inc. for _____ shares of Delta
Common Stock.
SELLING SHAREHOLDER:
--------------------
Gary L. Boyd
------------------------------------------
Name (print or type)
------------------------------------------
Signature Date
Page 19 of 36
<PAGE>
COUNTERPART SIGNATURE PAGE
TO STOCK EXCHANGE AGREEMENT
Exchanging _____ shares of Global Gold, Inc. for _____ shares of Delta
Common Stock.
SELLING SHAREHOLDER:
--------------------
W.C. McCaslin
------------------------------------------
Name (print or type)
------------------------------------------
Signature Date
Page 20 of 36
<PAGE>
COUNTERPART SIGNATURE PAGE
TO STOCK EXCHANGE AGREEMENT
Exchanging _____ shares of Global Gold, Inc. for _____ shares of Delta
Common Stock.
SELLING SHAREHOLDER:
--------------------
Charles Wells
------------------------------------------
Name (print or type)
------------------------------------------
Signature Date
Page 21 of 36
<PAGE>
COUNTERPART SIGNATURE PAGE
TO STOCK EXCHANGE AGREEMENT
Exchanging _____ shares of Global Gold, Inc. for _____ shares of Delta
Common Stock.
SELLING SHAREHOLDER:
--------------------
Leland C. Jones
------------------------------------------
Name (print or type)
------------------------------------------
Signature Date
Page 22 of 36
<PAGE>
COUNTERPART SIGNATURE PAGE
TO STOCK EXCHANGE AGREEMENT
Exchanging _____ shares of Global Gold, Inc. for _____ shares of Delta
Common Stock.
SELLING SHAREHOLDER:
--------------------
Stephen Wood
------------------------------------------
Name (print or type)
------------------------------------------
Signature
Page 23 of 36
<PAGE>
COUNTERPART SIGNATURE PAGE
TO STOCK EXCHANGE AGREEMENT
Exchanging _____ shares of Global Gold, Inc. for _____ shares of Delta
Common Stock.
SELLING SHAREHOLDER:
--------------------
Thomas N. Thompson
------------------------------------------
Name (print or type)
------------------------------------------
Signature
Page 24 of 36
<PAGE>
COUNTERPART SIGNATURE PAGE
TO STOCK EXCHANGE AGREEMENT
Exchanging _____ shares of Global Gold, Inc. for _____ shares of Delta
Common Stock.
SELLING SHAREHOLDER:
--------------------
R. Craig Allen Sr.
------------------------------------------
Name (print or type)
------------------------------------------
Signature
Page 25 of 36
<PAGE>
COUNTERPART SIGNATURE PAGE
TO STOCK EXCHANGE AGREEMENT
Exchanging _____ shares of Global Gold, Inc. for _____ shares of Delta
Common Stock.
Date:
------------------------------------
SELLING SHAREHOLDER:
--------------------
Dattatraya Pajapati
------------------------------------------
Name (print or type)
------------------------------------------
Signature
Page 26 of 36
<PAGE>
COUNTERPART SIGNATURE PAGE
TO STOCK EXCHANGE AGREEMENT
Exchanging _____ shares of Global Gold, Inc. for _____ shares of Delta
Common Stock.
SELLING SHAREHOLDER:
--------------------
Ron Segebarth
------------------------------------------
Name (print or type)
------------------------------------------
Signature
Page 27 of 36
<PAGE>
COUNTERPART SIGNATURE PAGE
TO STOCK EXCHANGE AGREEMENT
Exchanging _____ shares of Global Gold, Inc. for _____ shares of Delta
Common Stock.
SELLING SHAREHOLDER:
--------------------
John P. Pace Jr.
------------------------------------------
Name (print or type)
------------------------------------------
Signature
Page 28 of 36
<PAGE>
COUNTERPART SIGNATURE PAGE
TO STOCK EXCHANGE AGREEMENT
Exchanging _____ shares of Global Gold, Inc. for _____ shares of Delta
Common Stock.
SELLING SHAREHOLDER:
--------------------
Henry Ramsey Morris, Jr.
------------------------------------------
Name (print or type)
------------------------------------------
Signature
Page 29 of 36
<PAGE>
COUNTERPART SIGNATURE PAGE
TO STOCK EXCHANGE AGREEMENT
Exchanging _____ shares of Global Gold, Inc. for _____ shares of Delta
Common Stock.
SELLING SHAREHOLDER:
--------------------
Katie Morris
------------------------------------------
Name (print or type)
------------------------------------------
Signature
Page 30 of 36
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
Number of Shares of Number of Initial
------------------- -----------------
Global Gold, Inc. Shares of New Common
----------------- --------------------
(Bahamas) to be Stock of Delta to be
SELLERS: --------------- --------------------
Name Class Transferred Acquired
---- ----- ----------- --------
<S> <C> <C> <C> <C>
Gary L. Boyd
11649 E. Cortez Drive
Scottsdale, AZ 85259........................ Common 697,500 697,500 (1)
W.C. McCaslin
30501 Green Valley Road
Gavois Mills, MO 65037...................... Common 697,500 697,500
Robert E. Mathews & Jack Wells
Partnership
2141 Bittel Road
Owensboro, KY 42301.........................
Common 1,395,000 1,395,000 (2)
Charles Wells
2445 Happy Hollow Road
Hopkinsville, KY 42240...................... Common 575,000 575,000
Leland C. Jones
1521 Copper Creek Drive
Owensboro, KY 42303......................... Common 75,000 100,000
Stephen Wood
P.O. Box 100
Powderly, KY 42367.......................... Common 22,500 28,750
Thomas N. Thompson
P.O. Box 458
Owensboro, KY 42302......................... Common 25,000 37,500
R. Craig Allen Sr.
314 Jonaquin Circle
Hopkinsville, KY 42240...................... Common 25,000 37,500
Dattatraya Prajapati
2415 N. Stratford Drive
Owensboro, KY 42301......................... Common 12,500 18,750
Page 31 of 36
<PAGE>
Ron Segebarth
1185 Otter Lake Coop
Hanson, KY 42413............................ Common 80,000 105,000
John P. Pace Jr.
1506 Dean Avenue
Owensboro, KY 42301......................... Common 12,500 18,750
Henry Ramsey Morris, Jr.
P.O. Box 4030
Hopkinsville, KY 42240...................... Common 150,000 150,000
Kahle W. Morris, Sr.
1907 Russellville Road
Hopkinsville, KY 42240...................... Common 100,000 100,000
Jack Wells Common 65,000
991 West 1st Street
Owensboro, KY 42301
Lorena Fernandez Common 3,000
Owen Peer Common 40,000
Abraham Camacho Common 7,000
Esteban Camacho Common 7,000
Ronald Roe Common 5,000
Earl Gilbrich Common 10,000
Robert Nicholson Common 5,000
TOTALS:..................................... 3,994,500 3,976,250
</TABLE>
(1) Mr. Boyd has an option to purchase 200,000 shares of Common Stock.
(2) Mr. Mathews has an option to purchase 275,000 shares of Common Stock.
<PAGE>
SCHEDULE B - (per Section 2.1(d))
Interest(s) of Global Gold, Inc. (Bahamas) in other business(es).
1. Global Gold, Inc. S.A. ("Global-Bolivia"). Global (Bahamas) owns
___________ shares of ____________________ outstanding shares of Global-Bolivia.
The remaining __________ shares are held by citizens of Bolivia in order to
qualify under Bolivian law.
Page 33 of 36
<PAGE>
SCHEDULE C
GLOBAL GOLD, INC. - (per Section 2.1 (d))
Payments to Directors, Officers, Shareholders or others.
Page 34 of 36
<PAGE>
SCHEDULE D
DELTA INTERNATIONAL MINING & EXPLORATION, INC.
The following obligations to issue common stock of Global Gold / Delta, are
as provided below:
Options: Options to purchase common stock have been granted to:
(a) Robert E. Mathews................................... 275,000 shares
(b) Gary Boyd........................................... 200,000 shares
These Options are exercisable at $___________ per share, at any time within
______ years.
Loans Convertible to Stock:
- ---------------------------
(a) Jack Wells.......................................... 100,000 shares
(b) W.C. McCaslin....................................... 100,000 shares
(c) Henry Ramsey Morris, Jr............................. 50,000 shares
Shares to Be Issued Pursuant to Asset Acquisitions:
- ---------------------------------------------------
(a) Garry J. Carlson
(b) Colin Little or nominee
(c) Peter C. Ellsworth
* An aggregate of 15.0% of the outstanding common stock of Delta after a
secondary offering, to be
Page 35 of 36
<PAGE>
FINANCIAL STATEMENTS-- GLOBAL GOLD, INC. (BAHAMAS)
ROYALTY AGREEMENT
THIS AGREEMENT dated as of the 15th day of October, 1999
BETWEEN:
front range exploration corporation, Turks and Caicos
Islands (hereinafter called "Front Range")
OF THE FIRST PART
AND:
DELTA INTERNATIONAL MINING AND EXPLORATION INC., a body
corporate duly incorporated pursuant to the laws of the
State of Nevada having its place of business at 11649 East
Cortez Drive, Scottsdale, Arizona, 85259, USA
(hereinafter called "Delta")
of the second part
WHEREAS:
A. Front Range has located mineral properties in Bolivia for Delta on the terms
of a verbal agreement between the parties and the parties now wish to enter into
this Agreement to formalise their prior verbal agreement;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the foregoing
and of the sum of $10.00 paid to the parties to the other, the receipt of which
is hereby acknowledged, the parties hereto agree each with the other as follows:
1. CONSIDERATION
-------------
1.1 As consideration for the locating by Front Range of mineral properties in
South America for Delta or its subsidiary and as consideration for the continued
efforts of Front Range in locating mineral properties in South America for
Delta, Delta hereby agrees to allot and issue 300,000 shares to Front Range and
to grant the Royalty in accordance with Schedule "A".
1.2 The Royalty shall be payable on all properties in South America presently
held by Delta which have been located by Front Range and on all properties
located by Front Range that are subsequently acquired by Delta.
<PAGE>
2. GENERAL PROVISIONS
------------------
2.1 Time shall be of the essence of this agreement.
2.2 This agreement contains the whole agreement between the parties hereto in
respect of the subject matter hereof and there are no warranties,
representations, terms, conditions or collateral agreements expressed, implied
or statutory, other than as expressly set forth in this agreement.
2.3 This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. No party may
assign its rights under this Agreement without the consent of the other parties.
2.4 Any notice to be given under this agreement shall be duly and properly given
if made in writing and by delivering or telecopying the same to the addressee at
the address as set out on page one of this Agreement. Any notice given as
aforesaid shall be deemed to have been given or made on, if delivered, the date
on which it was delivered or, if telecopied, on the next business day after it
was telecopied. Any party hereto may change its address for notice from time to
time by notice given to the other parties hereto in accordance with the
foregoing.
2.5 This Agreement may be executed in one or more counterparts, each of which so
executed shall constitute an original and all of which together shall constitute
one and the same agreement.
2.6 This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of Nevada, and
each of the parties hereto irrevocably attorns to the exclusive jurisdiction of
the Courts of the State of Nevada.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
-2-
<PAGE>
Delta international mining and exploration inc.
Per: /s/ Gary Boyd
------------------------------------
Gary Boyd, President
Per: /s/ Robert Mathews
------------------------------------
Robert Mathews, CFO
SIGNED, SEALED AND DELIVERED )
by Front Range Exploration )
Corporation in the presence of: )
)
)
)
)
- -------------------------- ) -----------------------------------
Witness Signature ) Front Range Exploration Corporation
)
)
- -------------------------- )
Name )
)
- -------------------------- )
Address )
-3-
<PAGE>
Schedule "A"
GROSS OVERRIDING ROYALTY
------------------------
Pursuant to the Agreement to which this Schedule is attached (the "Agreement"),
a party (the "Royalty Holder") may be entitled to a gross overriding royalty
(the "Gross Overriding Royalty") payable by the other party or parties (the
"Royalty Payor"), which shall be equal to 2% of the "Appraised Value" (as
hereinafter defined and reconciled as hereinafter provided) of all gem and
industrial diamonds ("Diamonds") recovered, sorted and graded from the Property
(as defined in the Agreement), free and clear of all costs of development and
operation, and subject only to taxes and royalties (except income taxes) and the
fees and expenses of graders as hereinafter provided.
"Appraised Value" means the valuation in American Dollars of the Diamonds at the
minesite determined by an independent grader appointed by the Royalty Payor.
Such independent grader shall be duly qualified and accredited, and shall sort,
grade and value the Diamonds in accordance with industry standards, having
regard to, but without limiting the generality of the foregoing, the commercial
demand for the Diamonds, the grades of the Diamonds (gem or industrial) and the
colors, sizes and clarity of the Diamonds. The independent valuator shall value
each particular classification of the Diamonds in accordance with the industry
pricebooks, standards and formulas.
The Gross Overriding Royalty will be calculated and paid within 30 days of the
end of each calendar quarter, based on all diamonds from the Property which were
graded in such calendar quarter.
Within 90 days after the Royalty Payor has received payment for all Diamonds
from the Property which were graded in a calendar year, it will reconcile the
Appraised Value (deducting only taxes, royalties and the fees and expenses of
graders as aforesaid) of all such Diamonds with the actual proceeds received by
the Royalty Payor from the sale of such Diamonds (deducting only taxes royalties
and the fees and expenses of graders as aforesaid) and provide to the Royalty
Holder, a statement showing all pertinent information in sufficient detail to
explain the calculation of the royalty payment. If the aggregate proceeds
(deducting only royalties and the fees and expenses of graders as aforesaid) are
greater than the said Appraised Value, the Royalty Payor will pay to the Royalty
Holder its proportionate share of the excess. If the Appraised Value is greater
than the said aggregate proceeds (deducting only taxes, royalties and the fees
and expenses of graders as aforesaid), then the Royalty Holder will pay to the
Royalty Payor its proportionate share of the excess.
All Gross Overriding Royalty payments shall be considered final and in full
satisfaction of all obligations of the Royalty Payor with respect thereto,
unless the Royalty Holder gives the Royalty Payor written notice describing and
setting forth a specific objection to the calculation thereof within 12 months
after receipt by the Royalty Holder of the statement herein provided for. If the
Royalty Holder objects to a particular statement as
-4-
<PAGE>
herein provided, the Royalty Holder shall, for a period of 30 days after the
Royalty Payor's receipt of notice of such objection, have the right upon
reasonable notice and at a reasonable time, to have the Royalty Payor's accounts
and records relating to the calculation of the Royalty in question audited by a
chartered accountant acceptable to the Royalty Holder and to the Royalty Payor.
If such audit determines that there has been a deficiency or any excess in the
payment made to the Royalty Holder such deficiency or excess shall be resolved
by adjusting the next quarterly Gross Overriding Royalty payment due hereunder.
The Royalty Holder shall pay all costs of such audit unless a deficiency or more
than ten percent (10%) of the amount due is determined to exist. All books and
records used by the Royalty Payor for adjustment in such 12 month period shall
establish the correctness and preclude the filing of exceptions or making of
claims for adjustment thereon.
In addition, if the Royalty Payor conducts an audit, either internally or by an
independent auditor, of the operations on or in respect of the Property, the
Royalty Holder will be notified and, at its request, will be provided with a
copy of the portion or portions of such audit which pertain to production
statistics.
-5-
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 15th day of October, 1999,
AMONG:
PETER C. ELLSWORTH of 265 Benton Avenue, Missoula, Montana,
59801, USA
AND:
GARRY J. CARLSON of 921 West Spruce, Missoula, Montana, 59802,
USA
(hereinafter collectively called the "Vendors")
OF THE FIRST PART
AND:
DELTA INTERNATIONAL MINING AND EXPLORATION INC., a body
corporate duly incorporated pursuant to the laws of the State
of Nevada, having its place of business at 11649 East Cortez
Drive, Scottsdale, Arizona,85259, USA
(hereinafter called the "Purchaser")
OF THE SECOND PART
AND:
BRITT MINERALS INC., a body corporate duly incorporated
pursuant to the laws of the State of Montana having its
registered office at 921 West Spruce, Missoula, Montana,
59802, USA
(hereinafter called the "Corporation")
OF THE THIRD PART
WHEREAS:
A. The Vendors have agreed to sell and the Purchaser has agreed
to purchase 100% of the issued and outstanding shares of the
Corporation, being a total of 200 shares of the common stock
of the Corporation;
B. In order to record the terms and conditions of the agreement
among them the parties wish to enter into this agreement;
SHARE PURCHASE AGREEMENT, PAGE 1
<PAGE>
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the foregoing
and of the sum of $10.00 paid by the Purchaser to each of the Vendors and to the
Corporation, the receipt of which is hereby acknowledged, the parties hereto
agree each with the other as follows:
1. INTERPRETATION
--------------
1.1 Where used herein or in any amendments or Schedules hereto, the following
terms shall have the following meanings:
(a) "Financial Statements" means those financial statements of the
Corporation as at September 30, 1999 and attached hereto as
Schedule "A";
(b) "Shares" means the 200 shares of common stock in the capital
of the Corporation being sold to the Purchaser, being 100% of
all of the issued and outstanding shares of the Corporation;
(c) "Purchaser Shares " means those 600,000 shares of common stock
of the Purchaser which will be issued to the Vendors as
consideration for the Shares;
(d) "Royalty" means the gross returns royalty of 1.5% granted to
the Vendors by the Corporation, in the form which is attached
to this agreement as Schedule D. The Vendors have granted .5%
of the gross returns royalty to Front Range Exploration
Corporation.
1.2 All dollar amounts referred to in this agreement are in American dollars,
unless expressly stated otherwise.
1.3 The following schedules are attached to and form part of this
agreement:
Schedule A - Financial Statements
Schedule B - List of Mineral Claims and Leases
Schedule C - Corporation Assets, Encumbrances, Litigation and
other material information
Schedule D - Form of the Royalty
2. PURCHASE OF SHARES
------------------
SHARE PURCHASE AGREEMENT, PAGE 2
<PAGE>
2.1 The Vendors each hereby covenant and agree to sell, assign and transfer to
the Purchaser, and the Purchaser covenants and agrees to purchase from each of
the Vendors the Shares held by each Vendor.
2.2 As consideration for the sale of the Shares, the Purchaser shall allot and
issue the Purchaser Shares to the Vendors;
2.3 The Purchaser Shares shall be allotted and issued to the Vendors and to
Front Range Exploration Corporation in the following proportions; Peter
Ellsworth 300,000 shares, and Garry Carlson 300,000 shares.
2.4 In addition, the Purchaser will grant the Vendors a mineral royalty in the
form which is attached to this agreement as Schedule D in the Exploration
License, Mineral Purchase Option and lease Agreement entered into between the
William W. Lewis Equity Trust and David W. Lewis, as owners, and the Purchaser.
This agreement was entered into by Delta rather than by the Vendors or the
Corporation, as was the case with the mineral claims and leases listed in
Schedule B.
2.5 As of the date of this agreement the Vendors are negotiating leases on
property in Fergus County known as Homestead Kimberlite with Russell and Betty
Ann Gjerde, Noel Newberg, and John Schultz. The Corporation will be the lessee
under those leases. The Purchaser agrees to grant the Vendors a mineral royalty
in the form which is attached to this agreement as Schedule D in those leases.
3. COVENANTS, REPRESENTATIONS AND WARRANTIES
OF THE VENDORS AND THE CORPORATION
----------------------------------
The Vendors and the Corporation jointly and severally covenant
with and represent and warrant to the Purchaser as follows, and acknowledge that
the Purchaser is relying upon such covenants, representations and warranties in
connection with the purchase by the Purchaser of the Shares:
3.1 The Corporation has been duly incorporated and organized, is validly
existing and is in good standing under the laws of the State of Montana; it has
the corporate power to own the claims and leases owned by it; it holds all
necessary prospectors or mineral exploration licenses required under the State
of Montana required to carry on the business of exploration for minerals in the
State of Montana; it is duly qualified as a corporation to do business and is in
good standing with respect thereto in each jurisdiction in which the nature of
the business conducted by the Corporation or the property owned or leased by it
makes such qualification necessary; and it has or will have on the Closing Date
all necessary licenses, permits, authorizations and consents to operate its
business.
SHARE PURCHASE AGREEMENT, PAGE 3
<PAGE>
3.2 The authorized capital of the Corporation consists of 50,000 shares of
common stock without par value, of which 200 shares have been duly issued and
are outstanding as fully paid and non-assessable.
3.3 The Shares owned by the Vendors are owned by them as the beneficial and
recorded owners with a good and marketable title thereto, free and clear of all
mortgages, liens, charges, security interests, adverse claims, pledges,
encumbrances and demands whatsoever as follows:
Percentage
Number of of Issued
Name of Shareholder Shares Corporation Shares
- ------------------- ------ ------------------
Garry J. Carlson 100 50%
Peter C. Ellsworth 100 50%
3.4 No person, firm or corporation has any agreement or option or any right or
privilege (whether by law, pre-emptive or contractual) capable of becoming an
agreement or option for the purchase from the Vendors of any of the Shares.
3.5 No person, firm or corporation has any agreement or option, including
convertible securities, warrants or convertible obligations of any nature, or
any right or privilege (whether by law, pre-emptive or contractual) capable of
becoming an agreement or option for the purchase, subscription, allotment or
issuance of any of the unissued shares in the capital of the Corporation or of
any securities of the Corporation.
3.6 The Corporation does not have any subsidiaries or agreements of any nature
to acquire any subsidiary or to acquire or lease any other business operations
and will not prior to the Closing Date acquire, or agree to acquire, any
subsidiary or business without the prior written consent of the Purchaser.
3.7 The Corporation will not, without the prior written consent of the
Purchaser, issue any additional shares from and after the date hereof to the
Closing Date or create any options, warrants or rights for any person to
subscribe for or acquire any unissued shares in the capital of the Corporation.
3.8 The Corporation is not a party to or bound by any agreement of guarantee,
warranty, indemnification, assumption or endorsement or any other like
commitment of the obligations, liabilities (contingent or otherwise) or
indebtedness of any other person, firm or corporation.
3.9 The books and records of the Corporation fairly and correctly set out and
disclose in all material respects, in accordance with generally accepted
accounting principles, the financial position of the Corporation as at the date
hereof, and all material
SHARE PURCHASE AGREEMENT, PAGE 4
<PAGE>
financial transactions of the Corporation have been accurately recorded in such
books and records.
3.10 The Financial Statements present fairly the assets, liabilities (whether
accrued, absolute, contingent or otherwise) and the financial condition of the
Corporation as at the date thereof and there will not be, prior to the Closing
Date, any material increase in such liabilities.
3.11 Except as disclosed in the Schedules hereto the Corporation does not have
any indebtedness or contract of any asset, contract, or indebtedness of any
nature whatsoever.
3.12 The business of the Corporation has been carried on in the ordinary and
normal course by the Corporation since the date of the Financial Statements and
will be carried on by the Corporation in the ordinary and normal course after
the date hereof and up to the Closing Date.
3.13 Except as disclosed in the Schedules hereto, the Corporation is not a party
to any written or oral employment, service or pension agreement, and the
Corporation does not have any employees who cannot be dismissed on not more than
one months notice without further liability.
3.14 Except as disclosed in the Schedules hereto, the Corporation does not have
outstanding any bonds, debentures, mortgages, notes or other indebtedness, and
the Corporation is not under any agreement to create or issue any bonds,
debentures, mortgages, notes or other indebtedness.
3.15 Except as disclosed in the Schedules hereto, the Corporation is not the
owner or lessee under any agreement to own or lease any real property.
3.16 Except as disclosed in the Schedules hereto and except for the Royalty, the
Corporation owns, possesses and has good and marketable title to its
undertaking, property and assets, and without restricting the generality of the
foregoing, all of those mineral claims or leases described in Schedule "B"
hereto, free and clear of any and all mortgages, liens, pledges, charges,
security interests, encumbrances, actions, claims or demands of any nature
whatsoever or howsoever arising, accept for statutory commitments which are
required to keep the claims or leases in good standing.
3.17 The Corporation has no loans or indebtedness outstanding which have been
made to directors, former directors, officers, shareholders and employees of the
Corporation or to any person or corporation not dealing at arm's length with any
of the foregoing.
SHARE PURCHASE AGREEMENT, PAGE 5
<PAGE>
3.18 The Corporation has made full disclosure to the Purchaser of all aspects of
its business and has made all of its books and records available to the
representatives of the Purchaser in order to assist the Purchaser in the
performance of its due diligence searches and no material facts in relation to
its business have been concealed by the Corporation or the Vendors.
3.19 There are no material liabilities of the Corporation of any kind
whatsoever, whether or not accrued and whether or not determined or
determinable, in respect of which the Corporation or the Purchaser may become
liable on or after the consummation of the transaction contemplated by this
agreement.
3.20 The Articles, bylaws and other constituting documents of the Corporation in
effect with the appropriate corporate authorities as at the date of this
agreement will remain in full force and effect without any changes thereto as at
the Closing Date.
3.21 The directors and officers of the Corporation are as follows:
Name Position
---- --------
Peter Ellsworth President & Director
Garry J. Carlson Secretary, Treasurer & Director
4. CLOSING ARRANGEMENTS
--------------------
4.1 The Closing shall take place within 30 days of the date of this Agreement at
the offices of A. F. Schaffer PC, 7537 East McDonald Drive, Scottsdale, Arizona,
85250-6062, USA. On the Closing Date upon fulfilment of all the conditions set
out in article 3 which have not been waived in writing by the Purchaser, then
(a) the Vendors, shall deliver to the Purchaser certificates
representing all the Shares duly endorsed in blank for
transfer or with a Stock Power of Attorney (in either case
with a signature guaranteed by the appropriate official).
(b) the Vendors and the Corporation shall cause the transfers of
the Shares into the name of the Purchaser or its subsidiary
Global Gold Inc., to be duly and regularly recorded in the
books and records of the Corporation;
(c) the Purchaser shall deliver to the Vendors share certificates
representing the Purchaser Shares in the names of the Vendors.
5. GENERAL PROVISIONS
------------------
5.1 Time shall be of the essence of this agreement.
SHARE PURCHASE AGREEMENT, PAGE 6
<PAGE>
5.2 This agreement contains the whole agreement between the parties hereto in
respect of the purchase and sale of the Shares and there are no warranties,
representations, terms, conditions or collateral agreements expressed, implied
or statutory, other than as expressly set forth in this agreement. All previous
statements, negotiations, preliminary instruments, and agreements between the
parties which relate to the Corporation and its assets are superseded by and
merged into this agreement.
5.3 This agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns. The Purchaser may
not assign this agreement without the consent of the Corporation which consent
may be unreasonably withheld.
5.4 Any notice to be given under this agreement shall be duly and properly given
if made in writing and by delivering or telecopying the same to the addressee at
the address as set out on page one of this agreement. Any notice given as
aforesaid shall be deemed to have been given or made on, if delivered, the date
on which it was delivered or, if telecopied, on the next business day after it
was telecopied. Any party hereto may change its address for notice from time to
time by notice given to the other parties hereto in accordance with the
foregoing.
5.5 This agreement may be executed in one or more counterparts, each of which so
executed shall constitute an original and all of which together shall constitute
one and the same agreement.
5.6 This agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of Nevada, and
each of the parties hereto irrevocably attorns to the exclusive jurisdiction of
the Courts of the State of Nevada.
IN WITNESS WHEREOF the parties hereto have executed this agreement as of the day
and year first above written.
DELTA INTERNATIONAL MINING AND EXPLORATION INC.
Per: /s/ Gary Boyd
----------------------------------
Gary Boyd, President
Per: /s/ Robert Mathews
----------------------------------
Robert Mathews, CFO
SHARE PURCHASE AGREEMENT, PAGE 7
<PAGE>
SIGNED, SEALED AND DELIVERED )
by Peter C. Ellsworth in )
the presence of: )
)
)
)
------------------------
Witness Signature ) Peter C. Ellsworth
)
)
Name )
)
)
Address )
SIGNED, SEALED AND DELIVERED )
by Garry J. Carlson in )
the presence of: )
)
)
)
------------------------
Witness Signature ) Garry J. Carlson
)
)
Name )
)
)
Address )
SHARE PURCHASE AGREEMENT, PAGE 8
<PAGE>
SCHEDULE "A"
to that Share Purchase Agreement dated as of October 15, 1999
FINANCIAL STATEMENTS
SHARE PURCHASE AGREEMENT, PAGE 9
<PAGE>
SCHEDULE "B"
to that Share Purchase Agreement dated as of October 15, 1999
LIST OF MINERAL CLAIMS AND LEASES
SHARE PURCHASE AGREEMENT, PAGE 10
<PAGE>
SCHEDULE "C"
to that Share Purchase Agreement dated as of October 15, 1999
CORPORATION ASSETS, ENCUMBRANCES, LITIGATION AND OTHER MATERIAL INFORMATION
THE ROYALTY
SHARE PURCHASE AGREEMENT, PAGE 11
DELTA INTERNATIONAL MINING AND EXPLORATION, INC.
LIST OF SUBSIDIARIES
Name of Subsidiary Jurisdiction of Incorporation
------------------ -----------------------------
Global Gold Inc. Commonwealth of the Bahamas
Global Gold Inc., S.A. Bolivia
Britt Minerals, Inc. Montana
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Sep-30-1999
<PERIOD-START> Oct-01-1998
<PERIOD-END> Sep-30-1999
<CASH> 16,762
<SECURITIES> 0
<RECEIVABLES> 169,310
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 186,072
<PP&E> 294,040
<DEPRECIATION> 101,063
<TOTAL-ASSETS> 379,049
<CURRENT-LIABILITIES> 326,870
<BONDS> 0
0
0
<COMMON> 4,765
<OTHER-SE> 47,414
<TOTAL-LIABILITY-AND-EQUITY> 379,049
<SALES> 0
<TOTAL-REVENUES> 69
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 320,191
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (320,122)
<INCOME-TAX> 0
<INCOME-CONTINUING> (320,122)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (320,122)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
