UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
SOLAR GROUP, INC.
(Name of Small Business Issuer in its Charter)
Nevada 85-0290243
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5135 Golf Road Skokie, Illinois 60077
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (847) 853-1000
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class to be registered
___________________ _______________________________
___________________ _______________________________
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
______________________________________
(Title of class)
<PAGE>
PART I.
1. DESCRIPTION OF BUSINESS.
Solar Group, Inc. (the "Company") was incorporated under the laws of the State
of Nevada on February 8, 1984 under the name Solar Age Industries, Inc. The
Company's principal business activity was the manufacture and sale of solar air
and water heating devices. As of January, 1986, the federal energy credits and
most state energy credits expired which severely impacted on the Company's
ability to market its products, resulting in a substantial loss to the Company
for the first two calendar quarters of 1986. The Company attempted to diversify
its operation, but because of the continuing substantial financial loses
sustained by the Company, it was forced to file a Chapter 11 petition under the
Bankruptcy Code District of New Mexico. In late 1987, the Company filed its plan
of reorganization, which was approved by the Bankruptcy Court. Following
distribution to its creditors under the terms of the plan and consummation of
the plan, the bankruptcy case was subsequently closed. Although the Company
continued to market its products, the Company did not attain the commercial
success for its products and, subsequently, ceased operations. The Company has
been dormant. In July 1998, pursuant to an Agreement and Plan of Reorganization
and, as a result of a reverse merger, the Company has acquired through its
wholly owned subsidiary SGI Capital, Inc. an Illinois corporation, a majority
ownership of ninety percent of JSC NBM Stroyservice ("NBM"), Russian limited
liability company, which is a real estate development and construction company
based in Moscow, Russia. New management has assumed control of the Company's
business activities. Shortly after the merger, the Company was unable to develop
its operation, due to deteriorating economic conditions in Russia and the
inability of NBM to provide audited financial statements for the fiscal year
ended as of June 30, 1999 in accordance with the U.S. General Accepted
Accounting Principals, the Company was forced to rescind the Agreement and Plan
of Reorganization. Pursuant to an Agreement to Rescind the Agreement and Plan of
Reorganization dated September 27, 1999, the Company has returned to the status
quo ante just immediately prior to the effectuation of the Agreement and Plan of
Reorganization. The Company currently has no operation but is seeking to acquire
an ongoing business. No assurance can be given that any new business will ever
occur.
2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION.
The Company has had no revenues from operations in each of the last two fiscal
years. During the last fiscal year ended June 30, 1999 the Company incurred net
losses of $622,054. As of June 30, 1999, the Company's loses accumulated from
inception totaled $1,677,873. These factors, among others, raise substantial
doubt that the Company may be able to continue as a going concern for a
reasonable period of time unless the Company's management will be able to raise
additional equity capital so that the Company can purchase an ongoing business.
The Company plans to look for business opportunities. In the last two years, the
Company has financed its operations primarily with the proceeds it borrowed form
the investors and the Company's management. The Company intends to continue its
borrowings to fund expenditures. The Company intends to raise additional equity
capital to be able to fund its future growth. There can be no assurance that the
Company will be in a position to borrow funds from the investors and/or the
Company's management at such times, as they are required. Additionally, there
can be no assurance that the Company will be able to raise additional equity
capital to purchase an ongoing business. The Company's management
1
<PAGE>
believes the Company has historically been able to cover its expenses, however
no assurance can be given that the Company will continue to be able to meet the
Company's cash requirements over the next twelve months. The Company believes
that this form contains forward-looking statements, including statements
regarding among other items, the Company's future plans and growth strategies.
These forward-looking statements are based largely on the Company's expectations
and are subject to a number of risks and uncertainties, many of which are beyond
the Company's control. Actual results could differ materially form these
forward-looking statements as a result of certain factors, including, among
others, regulatory or economic influences. In light of these risks and
uncertainties, there can be no assurance that the forward-looking information
contained in this form will in fact transpire or prove to be accurate.
3. DESCRIPTION OF PROPERTY.
There is no property owned by the Company.
4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
<TABLE>
<CAPTION>
Title of class Name and address of beneficial Amount and nature of Percent of
owner beneficial owner class
(1) (2) (3) (4)
<S> <C> <C> <C>
Common Stock Leon Leibovich, 6,000,000 shares, 85.3%
276 Park Avenue, Director & Chief
Highland Park, IL 60035 Executive Officer
</TABLE>
5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
Leon Leibovich, 50, is the Company's Chief Executive Officer and Chairman of the
Board. Mr. Leibovich business experience includes corporate management,
marketing, strategic planning and business development. He has also been the
Chairman and CEO of privately held Illinois corporations Lerox Productions, Inc.
and Palcan Group, Inc., since 1981 and 1988 respectively. He maintains a 100%
ownership of each of these corporations. Mr. Leibovich has experience in such
diverse industries as technology, communications, media, information and others.
He holds Master Degrees in Management Science and Applied Mathematics from the
University of St. Petersburg, he is a member of a number of Professional
Associations, including Chicago Chamber of Commerce, "Who's Who for
Professionals and Executives", Chicago Sister Cities International Committee,
etc.
The Company intends to fill the vacancies on the Board of Directors at the next
shareholders meeting scheduled in June 2000, although no assurance can be given
that such meeting will take place.
6. EXECUTIVE COMPENSATION.
There was no executive compensation awarded to any executive officers and/or any
director of the Company. A liability was accrued for the operations of the
Company by Mr. Leibovich, the Company's Chief Executive Officer.
2
<PAGE>
7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company as of August 1998 borrowed $128,000 and $6,000 at an annual interest
rate of 9.5% from investors and its Chief Executive Officer, respectively. The
amounts were due on February 1, 2000. On February 3, 2000, the notes were
converted to the 6,000,000 shares of common stock. The Company has an accrued
liability for the amount of $420,000 for management services of Leon Leibovich,
the Company's Chief Executive Officer in fiscal year ended June 30, 1999.
8. DESCRIPTION OF SECURITIES.
The Company's authorized capital consists of 50,000,000 shares of Common Stock,
par value $.01 per share, and 1,000,000 shares of preferred stock, par value
$.01 per share. None of the preferred stock is outstanding. The Company has
50,000,000 shares of authorized common stock par value $.01 share, of which
7,027,647 shares are issued and outstanding. Each outstanding share of common
stock is entitled to one vote, either in person or by proxy, on all matters that
may be voted upon the owners thereof at meeting of the shareholders. The holders
of Common Stock (i) have equal ratable rights to dividends form funds legally
available therefor, when, as and if declared by the Board of Directors of the
Company, (ii) are entitled to share ratably in all of the assets of the Company
available for distribution to holders of Common Stock upon liquidation,
dissolution or winding up of the affairs of the Company, (iii) do not have
preemptive, subscription or conversion rights, or redemption or sinking fund
provisions applicable thereto, and (iv) are entitled to one non-cumulative vote
per share on all matters on which shareholders may vote at all meetings of
shareholders. The rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the right of the holders of any series of
preferred stock that may be issued in the future, including voting, dividend,
and liquidation rights. The holders of shares of Common Stock of the Company do
not have cumulative voting rights, which means that the holders of more than 50%
of such outstanding shares, voting for the election of directors, can elect all
of the directors of the Company if they so choose and, in such event, the
holders of the remaining shares will not be able to elect any of the Company's
directors. As a result Mr. Leibovich, the Company's CEO will be able to
effectively control the Company to the exclusion of all shareholders.
The Company's Board of Directors has the authority to issue 1,000,000 shares of
Preferred Stock, $.01 par value, none of which is issued and outstanding, in one
or more series and to fix, by resolution, conditional, full, limited or no
voting powers, and such designations, preferences and relative, participating,
optional or other special rights, if any, and qualifications, limitations or
restrictions thereof, if any including the number of shares in such series
(which the Board may increase or decrease as permitted by Nevada law),
liquidation preferences, dividend rates, conversion or exchange rights,
redemption provisions of the shares constituting any series, and such other
special rights and protective provisions with respect to any class or series as
the Board may deem advisable without any further vote or action by the
shareholders. Any shares of Preferred Stock so issued would have priority over
the Common Stock with respect to dividend or liquidation rights or both and
could have voting and other rights of shareholders. The issuance of Preferred
Stock with voting or conversion rights may adversely affect the voting rights of
the holders of Common Stock. The Company has no present plans to issue shares of
Preferred Stock.
3
<PAGE>
PART II.
1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTER.
The Company's Common Stock has been quoted on the OTC Bulletin Board since
January 1999. Prior to that for several years there was no quotations for the
company's common stock. Quotes may not be deemed to be accurate due to the fact
that there has never been an active market. Even after January 1999 no active
market was generated and there may have been sporadic quotes of bid and ask
prices by a relatively few market makers. In addition, the price of the shares
of Common Stock may trigger the necessity for broker to comply with the "penny
stock" rules, which will further impact on any active trading of the shares of
the Company. The following is a schedule of some of the quotes for the Company's
shares:
First Quarter of 1999
- ---------------------
52wk High 3.25 Low 0.625 Bid 2.75 Ask 3.25
Second Quarter of 1999
- ----------------------
52wk High 5.25 Low 0.125 Bid 2.5 Ask 3.75
Third Quarter of 1999
- ---------------------
52wk High 5.25 Low 0.125 Bid 0.875 Ask 1.125
Fourth Quarter of 1999
- ----------------------
52wk High 5.25 Low 0.125 Bid 0.125 Ask 0.875
The Company has never declared any dividends and may never do so. In addition
the Company has not held any shareholders meeting for several years. The Company
is anticipating having shareholders meeting in the year 2000, but there is no
assurance that such meeting will take place. Any action taken since July 1998
has been done by written consent of the shareholders holding a majority of the
shares of stock of the Company. There are approximately 525 shareholders of the
shares of the Company's common stock.
2. LEGAL PROCEEDINGS.
The Company is not a party to any legal proceeding. The Company is not aware of
any legal matters threatened or otherwise against it.
3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
The Company retained the accounting firm of Hansen, Barnett & Maxwell ("HBM").
HBM has conducted an audit of the Company and has prepared certified financial
statements, which are incorporated herein. There is no disagreement with the
Accountants and the Company.
4. RECENT SALES OF UNREGISTERED SECURITIES.
In July 1998 the Company issued 20,000 shares of stock to Reva Enterprises in
settlement of an obligation owed by the Company. These shares were issued
pursuant to an exemption under Section 4(2) of the Securities Act of 1933, as
amended (the "1933 Act") as well as other provisions for exemptions thereunder.
The shares issued provide for a restrictive legend on any stock certified issued
for said shares. In January 1999 the Company issued 30,000 shares of stock to
Cary Grant in part payment of certain services rendered to the Company. The
shares also were issued to under the same exemptions above and also bear a
restrictive legend.
4
<PAGE>
In February 2000, the Company issued 6,000,000 shares of stock to Leon Leibovich
in lieu of payment due for the promissory note. The shares also were issued to
under the same exemptions above and also bear a restrictive legend.
5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Incorporation of the Company provide for indemnification for the
Directors and Officers of the Company as follows:
To indemnify any person made a party to any action, suit, or proceeding, whether
civil or criminal, by reason of the fact that he, his testator or intestate, is
or was a director, officer, or employee of the Company, or of any corporation
which he served in such capacity at the request of the Company, against the
reasonable expenses, including attorneys' fees, actually and reasonably incurred
by him in connection with the defense of the action, suit, or proceeding, or in
connection with any appeal of it, and to reimburse any such person any amount
paid upon any such action, suit, or proceeding; but to make no indemnification
or reimbursement in relation to matters as to which shall be finally adjudged in
this action, suit, or proceeding that the director, officer, or employee is
liable for gross negligence or willful misconduct in the performance of duly to
the Company.
Right to Indemnification. The Company shall indemnify and person made a party to
any action, suit or proceeding, whether civil or criminal, by reason of the fact
that he, his testator, or intestate, is or was a director, officer, or employee
of the Company, or any corporation which he served in such capacity at the
request of the Company, against the reasonable expenses, including attorney's
fees, actually and reasonably incurred by him in connection with the defense of
the action, suit or proceeding or in connection with any appeal. The right to
indemnification conferred by this section shall not restrict the power of the
Company to make any indemnification permitted by law.
In addition the Nevada Revised Status also make provision for indemnification of
Directors and Officers.
PART III.
ITEM 1. INDEX TO EXHIBITS
(a) Index
(2) i. Agreement and Plan of Reorganization
ii. Agreement to Rescind Agreement and Plan of Reorganization
(3) i. Articles of Incorporation, with Amendments
ii. By-laws
(27) Financial Data Schedule, Certified Financial Statements for the fiscal year
ended June 30, 1999 and for the fiscal years ended June 30, 1998 and 1997,
respectively.
5
<PAGE>
SANFORD H. FEIBUSCH
CERTIFIED PUBLIC ACCOUNTANT
9 CARPENTER COURT
MONSEY, NEW YORK 10952
914-368-2397
FAX 914-368-4110
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Solar Age Industries, Inc.
I have audited the accompanying balance sheet of Solar Age Industries,
Inc., as of June 30, 1998 and 1997, and the related statements of operations,
stockholders' equity, and cash flows for each of the three years ended June 30,
1998. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Solar Age Industries, Inc.
at June 30, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years ended June 30, 1998, in conformity with generally
accepted accounting principles.
The accompanying Financial Statements have been prepared assuming the
Company will continue as a going concern. As discussed in Notes 1 and 4, the
Company ceased its prior operations and needs additional equity in order to
acquire a new business or start up operations. As a result, there is substantial
doubt about the Company's ability to continue as a going concern. Management's
plan with regard to these matters are described in Note 4. These Financial
Statements do not include any adjustments that might result.
/s/ Sanford H. Feibusch
Monsey, New York
July 7, 1998
<PAGE>
SOLAR AGE INDUSTRIES, INC.
BALANCE SHEET
JUNE 30, 1998 AND 1997
ASSETS
<TABLE>
<CAPTION>
1997 1998
----------- -----------
ASSETS:
<S> <C> <C>
Investments $ 1 $ --
----------- -----------
Total Assets $ 1 $ --
----------- ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable 15,075 16,875
Note Payable 162,706 --
----------- -----------
Total Current Liabilities 177,781 16,875
----------- -----------
STOCKHOLDERS' DEFICIT:
Preferred Stock, $.01 par value
authorized 1,000,000 shares;
none issued
Common Stock, $,01 par value
authorized 9,000,000 shares;
issued and outstanding 5,375,000 53,750 53,750
Additional Paid-In Capital 974,094 974,094
Retained Deficit (1,205,624) (1,044,719)
----------- -----------
Total Stockholders' Deficit (177,780) (16,875)
----------- -----------
Total Liabilities & Stockholders' Deficit $ 1 $ --
=========== ===========
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
<PAGE>
SOLAR AGE INDUSTRIES, INC.
INCOME STATEMENT FOR THE
YEARS ENDED JUNE 30, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE:
Settlement of Indebtedness $ -- $ -- $ 162,075
----------- ----------- -----------
Expenses 1,800 1,800 1,800
----------- ----------- -----------
Net Income (Loss) (1,800) (1,800) 160,275
=========== =========== ===========
Earning Per Share $ -- $ -- $ .03
=========== =========== ===========
Weight Average Shares Outstanding 5,375,000 5,375,000 5,375,000
----------- ----------- -----------
</TABLE>
SOLAR AGE INDUSTRIES, INC.
STATEMENT OF CASH FLOWS FOR THE
YEARS ENDED JUNE 30, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1996 1997 1998
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (1,800) (1,800) 160,275
Adjustments to reconcile Net Income
(Loss) to Net Cash Flow used in
Operating Activities:
Gain, Settlement of Debt -- -- (162,706)
Change in Operating Assets
and Liabilities 1,800 1,800 1,800
----------- ----------- -----------
Net Cash Flows from Operating Activities $ -- $ -- $ --
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
<PAGE>
SOLAR AGE INDUSTRIES, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
FOR THE YEARS ENDED JUNE 30, 1998, 1997, AND 1996
<TABLE>
<CAPTION>
Common Stock
------------ Additional Retained Stockholders'
Shares Amount Paid-In Deficit Deficit
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance-July 1, 1995 5,375,000 $ 53,750 974,094 $(1,202,024) $ (174,180)
Net Income -
June 30, 1996 -- -- -- (1,800) (1,800)
----------- ----------- ----------- ----------- -----------
Balance-July 30, 1996 5,375,000 53,750 974,094 (1,203,824) (175,980)
Net Income -
June 30, 1997 -- -- -- (1,800) (1,800)
----------- ----------- ----------- ----------- -----------
Balance-June 30, 1997 5,375,000 53,750 974,094 (1,205,624) (177,780)
Net Income -
June 30, 1998 -- -- -- 162,075 160,275
----------- ----------- ----------- ----------- -----------
Balance-June 30, 1998 5,375,000 $ 53,750 $ 974,094 $(1,044,719) $ (16,875)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these Financial Statements.
<PAGE>
SOLAR AGE INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - INCOME TAXES
There were no provisions for income taxes in 1998, 1997, and 1996, due to the
Company's net utilization of a loss carryforward in 1998, as well as a deferred
tax asset valuation allowance. As of June 30, 1998, the Company had a deferred
tax assets of approximately $350,000 generated from net operating loss
carryforwards of $1,028,000. Such carryforwards expire in 2002 and 2003, and are
subject to limitation under the Internal Revenue Code of 1986, as amended. A
valuation allowance equal to the deferred tax asset recognized has been
recorded, as it was determined that more likely than not, the deferred tax asset
will not be realized. During the year ended June 30, 1998, the valuation
allowance decreased by approximately $55,300.
NOTE 3 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Non Cash Investing and Financial Activities: 1998 1997 1996
---- ---- ----
Reduction of Note Payable in Settlement
of Outstanding Debt $162,706 - -
NOTE 4 - GOING CONCERN
Management of the Company is seeking additional equity capital so that they can
either purchase an ongoing business for cash, or acquire an ongoing business
with common stock. If they are unable to accomplish this, there is substantial
doubt about the Company's ability to continue as a going concern.
<PAGE>
HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
(801) 532-2200
MEMBER OF AICPA DIVISION OF FIRMS Fax (801) 532-7944
MEMBER OF SECPS 345 East 300 South, Suite 200
MEMBER OF SUMMIT INTERNATIONAL ASSOCIATES Salt Lake City, Utah 84111-2693
January 12, 2000
To the Board of Directors and Management
Solar Group, Inc.
We have audited the financial statements of Solar Group, Inc for the year ended
June 30, 1999 and have issued our report thereon dated January 3, 2000
Professional standards require that we provide you with the following
information related to our audit.
OUR RESPONSIBILITY UNDER GENERALLY ACCEPTED AUDITING STANDARDS
As stated in our engagement letter dated December 2, 1999, our responsibility,
as described by professional standards, is to plan and perform our audit to
obtain reasonable, but not absolute, assurance that the financial statements are
free of material misstatement and are fairly presented in accordance with
generally accepted accounting principles. Because of the concept of reasonable
assurance and because we did not perform a detailed examination of all
transactions, there is a risk that material errors, irregularities, or illegal
acts, including fraud and defalcations, may exist and not be detected by us.
As part of our audit, we considered the internal control structure of Solar
Group, Inc. Such considerations were solely for the purpose of determining our
audit procedures and not to provide any assurance concerning such internal
control structure.
SIGNIFICANT ACCOUNTING POLICIES
Management has the responsibility for selection and use of appropriate
accounting policies. In accordance with the terms of our engagement letter, we
will advise management about the appropriateness of accounting policies and
their application. The significant accounting policies used by Solar Group, Inc.
are described in Note 1 to the financial statements.
ACCOUNTING ESTIMATES
Accounting estimates are an integral part of the financial statements prepared
by management and are based on management's knowledge and experience about past
and current events and assumptions about future events. Certain accounting
estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting
them may differ significantly from those expected. The most sensitive estimates
affecting the financial statements were estimated useful lives of property and
equipment and depreciation methods used.
SIGNIFICANT AUDIT ADJUSTMENTS
For purposes of this letter, professional standards define a significant audit
adjustment as a proposed correction of the financial statements that, in
our judgment, may not have been detected except through our auditing procedures.
<PAGE>
HANSEN, BARNETT & MAXWELL
- --------------------------------------------------------------------------------
Page 2
Significant audit adjustments for 1999 included the following:
1. Reclassification of $16,875 which was recorded as an extraordinary gain on
extinguishment of debt. Our audit procedures indicated that this debt had
been satisfied with cash and stock issued to the vendor. We reclassified
$7,500 that had been recorded as consulting expense as a payment against
this liability and we recorded the issuance of 20,000 shares of common
stock to satisfy the remaining $9,375.
2. We also recorded the issuance of 30,000 shares of stock issued to satisfy a
$15,000 liability for consulting services. We recorded an increase in
common stock of $300, and increase in paid in capital of $14,700 and a
corresponding increase in expense of $15,000.
3. We recorded a prior period adjustment for $11,100 of expenses relating to
legal and consulting fees that should have been accrued in the prior
period.
4. Reclassification of $128,000 from common stock and paid in capital to Notes
Payable. Our audit procedures indicated that these amounts were loans
rather then capital contributions as evidenced by the Board Consent dated
July 17, 1998 and the promissory notes relating to these amounts dated the
same day. In addition, we recorded accrued interest in the amount of
$11,756 on these notes as per the stated interest rate in the promissory
note.
DISAGREEMENTS WITH MANAGEMENT
For purposes of this letter, professional standards define a disagreement with
management as a matter, whether or not resolved to our satisfaction, concerning
a financial accounting, reporting, or auditing matter that could be significant
to the financial statements or the auditor's report. We are pleased to report
that no such disagreements arose during the course of our audit.
DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT
We encountered no significant difficulties in dealing with management in
performing the audit.
USE OF FINANCIAL STATEMENTS
Please be aware that if the Company desires to submit registration statements
with the SEC, the financial statement presentation will need to be modified to
include the activities of prior years. If this is the case either the prior
years' activities will need to be reaudited by us or the predecessor auditor
will be required to reissue his audit report in which case we will need to
revise our report to make reference to the predecessor auditor's report.
In addition, if the Company is deemed to be in the development stage, the SEC
will require the income statement, cash flow statement, and statement of
stockholder's equity to be presented from inception of the development stage
through the most current balance sheet date.
This information is intended solely for the use of the Board of Directors and
management of International Automated Systems, Inc. and should not be used for
any other purpose.
Sincerely,
HANSEN, BARNETT & MAXWELL
/s/ Robert K. Bowen
Robert K. Bowen, CPA
<PAGE>
SOLAR GROUP, INC.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
AND
FINANCIAL STATEMENTS
JUNE 30, 1999
HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
<PAGE>
SOLAR GROUP, INC.
TABLE OF CONTENTS
PAGE
Report of Independent Certified Public Accountants 1
Financial Statements
Balance Sheet - June 30, 1999 2
Statement of Operations for the Year Ended June 30, 1999 3
Statement of Stockholders' Equity (Deficit) for the Year
Ended June 30, 1999 4
Statement of Cash Flows for the Year Ended June 30, 1999 5
Notes to the Financial Statements 6
<PAGE>
HANSEN, BARNETT & MAXWELL
A Professional Corporation
CERTIFIED PUBLIC ACCOUNTANTS
(801) 532-2200
MEMBER OF AICPA DIVISION OF FIRMS Fax (801) 532-7944
MEMBER OF SECPS 345 East 300 South, Suite 200
MEMBER OF SUMMIT INTERNATIONAL ASSOCIATES Salt Lake City, Utah 84111-2693
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
Solar Group, Inc.
We have audited the accompanying balance sheet of Solar Group, Inc. as of June
30, 1999, and the related statements of operations, stockholders' equity
(deficit), and cash flows for the year 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform our 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, based on our audit, the financial statements referred to above
present fairly, in all material respects, the financial position of Solar Group,
Inc. as of June 30, 1999, and the results of its operations and its cash flows
for the year then ended.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company currently has ceased
operations and is seeking additional equity capital. As discussed in Note 1 to
the financial statements, the Company's current operating loss and its total
accumulated deficit raise substantial doubt about its ability to continue as a
going concern. Management's plans concerning these matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ HANSEN, BARNETT & MAXWELL
HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
January 3, 2000
1
<PAGE>
SOLAR GROUP, INC.
BALANCE SHEET
JUNE 30, 1999
ASSETS
CURRENT ASSETS
Related Party Receivable $ 267
-----------
TOTAL CURRENT ASSETS $ 267
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 60,165
Accrued liabilities 431,756
Short term notes payable 128,000
Related party payable 6,000
-----------
TOTAL CURRENT LIABILITIES 625,921
-----------
STOCKHOLDERS' EQUITY
Common stock - par value $0.01 per share;
50 million shares authorized; 1,027,647 shares
issued and outstanding 10,276
Additional paid in capital 1,041,943
Accumulated deficit (1,677,873)
-----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (625,654)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 267
===========
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
SOLAR GROUP, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30,1999
REVENUES $ --
GENERAL AND ADMINISTRATIVE EXPENSES 610,298
-----------
LOSS FROM OPERATIONS (610,298)
OTHER INCOME (EXPENSE)
Interest expense (11,756)
-----------
NET LOSS $ (622,054)
===========
BASIC AND DILUTED LOSS PER SHARE $ (0.62)
===========
WEIGHTED AVERAGE SHARES 1,009,894
===========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
SOLAR GROUP, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEAR ENDED JUNE 30,1999
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
--------------------------- PAID-IN ACCUMULATED TOTAL
SHARES AMOUNT CAPITAL DEFICIT EQUITY
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE - JUNE 30, 1998
AS PREVIOUSLY STATED 977,636 $ 9,776 $ 1,018,068 $(1,044,719) $ (16,875)
Prior period adjustment -- -- -- (11,100) (11,100)
----------- ----------- ----------- ----------- -----------
BALANCE - JUNE 30, 1998 977,636 9,776 1,018,068 (1,055,819) (27,975)
July 9, 1998 shares issued
for debt; $0.47 per share 20,000 200 9,175 9,375
January 26, 1999 shares
issued for services; $0.50
per share 30,000 300 14,700 -- 15,000
Net loss for the year
ended June 30, 1999 -- -- -- (622,054) (622,054)
----------- ----------- ----------- ----------- -----------
BALANCE - JUNE 30, 1999 1,027,636 $ 10,276 $ 1,041,943 $(1,677,873) $ (625,654)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying, notes are an integral part of these financial statements.
4
<PAGE>
SOLAR GROUP, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30,1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(622,054)
Stock issued for services 15,000
Changes in current assets and liabilities:
Accounts payable 41,565
Accrued liabilities 431,756
---------
NET CASH FROM OPERATING ACTIVITIES (133,733)
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in receivable from related party (267)
---------
NET CASH FROM INVESTING ACTIVITIES (267)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable 128,000
Proceeds from issuance of related party notes 6,000
---------
NET CASH FROM FINANCING ACTIVITIES 134,000
---------
NET INCREASE (DECREASE) IN CASH --
CASH - JUNE 30, 1998 --
---------
CASH - JUNE 30, 1999 $ --
=========
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
SOLAR GROUP, INC
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - SOLAR Group, Inc was incorporated under the laws of the State of
Nevada in February 1984, as a subsidiary of Solar Age Manufacturing Corp. In
August 1984, Solar Age Manufacturing Corp. and its subsidiaries were merged into
Solar Age Industries, Inc. The companies principle business activity was the
manufacture and sale of solar air and water heating devices. As of January
1,1986, the federal energy credits and most state credits expired which severely
impacted on the company's ability to market its solar products, resulting in a
substantial loss to the company for the first two calender quarters of 1986. The
Company attempted to diversify into the manufacture of greenhouses, but because
of the continuing, substantial financial losses sustained by the Company, it was
forced to file a Chapter 11 petition under the Bankruptcy Code in the United
States Bankruptcy Court, District of New Mexico. In late 1987, the company filed
its plan of reorganization which was approved by the Bankruptcy Court. Following
distribution to the creditors under the terms of the plan and consummation of
the plan, the bankruptcy case was subsequently closed. Although the Company
continued to market its greenhouse products while in bankruptcy and thereafter,
the Company never attained commercial success for its products and,
subsequently, ceased operations.
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, liabilities,
revenues and expenses during the reporting period. Estimates also affect the
disclosure of contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
BASIS OF PRESENTATION - The accompanying financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. During the year
ended June 30, 1999 the Company incurred net losses of $622,054. As of June 30,
1999, the Company's losses accumulated from inception totaled $1,677,873. These
factors, among others, raise substantial doubt that the Company may be unable to
continue as a going concern for a reasonable period of time. The financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amount and classification
of liabilities that might be necessary should the Company be unable to continue
as a going concern. The Company's ability to continue as a going concern is
dependent upon its ability to generate sufficient cash flow to meet its
obligations on a timely basis.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The estimated fair value of financial
instruments is not presented because, in Management's opinion, there is no
material difference between carrying amounts and estimated fair values of
financial instruments as presented in the accompanying balance sheet.
CASH AND CASH EQUIVALENTS - All highly-liquid debt instruments purchased with
maturities of three months or less have been considered cash equivalents.
INCOME TAXES - The Company recognizes the amount of income taxes payable or
refundable for the current year and recognizes deferred tax assets and
liabilities for the future tax consequences
6
<PAGE>
attributable to differences between the financial statement amounts of certain
assets and liabilities and their respective tax bases. Deferred tax assets and
deferred liabilities are measured using enacted tax rates expected to apply to
taxable income in the years those temporary differences are expected to be
recovered or settled. Deferred tax assets are reduced by a valuation allowance
to the extent that uncertainty exists as to whether the deferred tax assets will
ultimately be realized.
BASIC LOSS PER COMMON SHARE - Loss per common share is computed by dividing net
loss available to common stockholders by the weighted-average number of common
shares outstanding during the period.
NOTE 2--PRIOR PERIOD ADJUSTMENT
In its financial statements for the year ended June 30, 1998 the Company did not
record $11,100 in Accounts Payable attributable to legal and consulting fees.
Consequently, the Company has restated its 1998 financial statements to record
additional Accounts Payable of $11,100 and general and administrative expenses
of $11,100 net of tax effect of $0. The effect of this adjustment resulted in an
$11,100 increase in accumulated deficit as of June 30, 1999.
NOTE 3--INCOME TAXES
The Company did not have a current or deferred provision for income taxes for
the year ended June 30, 1999. The following presents the components of the net
deferred tax asset at June 30, 1999:
BENEFIT OF OPERATING LOSS CARRYFORWARDS $ 564,792
LESS: VALUATION ALLOWANCE (564,792)
---------
NET DEFERRED TAX ASSET $ --
=========
The valuation allowance increased $211,498 during the year ended June 30, 1999.
The Company has net operating loss carryforwards of $1,661,154 that expire, if
unused, in years 2002 through 2019.
The following is a reconciliation of the income tax benefit computed at the
federal statutory tax rate with the provision for income taxes for the year
ended June 30, 1999.
JUNE 30,
1999
----------
Income tax benefit at statutory rate (34%) $ (211,498)
----------
Deferred tax valuation allowance change 211,498
PROVISION FOR INCOME TAXES $ --
==========
7
<PAGE>
NOTE 4--NOTES PAYABLE
Notes payable at June 30, 1999, consisted of the following:
Notes payable to investors, bearing interest
at 9.5%; unsecured; due February 2000 $ 128,000
Note payable to officer bearing interest at
9.5%; unsecured; due February 2000 6,000
---------
TOTAL $ 134,000
=========
NOTE 5--SUPPLEMENTAL CASH FLOW INFORMATION
During the year ended June 30, 1999, the Company issued 30,000 shares of Common
stock and $10,000 of cash in exchange for consulting services valued at $25,000.
The company also transferred 20,000 shares of common stock and $7,500 in cash to
extinguish accounts payable owing to the transfer agent in the amount of
$16,875.
During the year ended June 30, 1999, the Company accrued interest expense of
$11,756 and paid $0 in interest.
NOTE 6--RELATED PARTY TRANSACTIONS
As described in Note 4, the company borrowed $128,000 from investors during the
year ended June 30, 1999 at an annual interest rate of 9.5%. The amounts are due
February 2000. As of June 30, 1999, the Company had not made any payments.
The Company also borrowed $6,000 from its chief executive officer at an annual
interest rate of 9.5%. This amount is also due February 2000.
The Company maintained no bank accounts during the year ended June 30, 1999.
Deposits were made into and expenses disbursed from an account controlled by a
related party. As of June 30, 1999, this related party held $267 belonging to
the Company.
8
<PAGE>
SOLAR GROUP, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Related Party Receivable 101
TOTAL CURRENT ASSETS 101
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 60,165
Accrued liabilities 438,121
Short term notes payable 128,000
Related party payable 6,000
TOTAL CURRENT LIABILITIES 632,286
STOCKHOLDERS' EQUITY
Common stock - par value $0.01 per share;
50 million shares authorized; 1,027,647 shares
issued and outstanding 10,276
Additional paid in capital 1,041,943
Accumulated deficit (1,684,404)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (632,185)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 101
</TABLE>
Page 1 of 8
<PAGE>
SOLAR GROUP, INC.
STATEMENT OF OPERATION
FOR SIX MONTHS ENDED DECEMBER 31, 1999
REVENUES $ --
GENERAL AND ADMINISTRATIVE EXPENSES 166
LOSS FROM OPERATION (166)
OTHER INCOME (EXPENSE)
Interest expense (6,365)
NET LOSS (6,531)
BASIC AND DILUTED LOSS PER SHARE (0)
WEIGHTED AVERAGE SHARES 1,009,894
Page 2 of 8
<PAGE>
SOLAR GROUP, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR SIX MONTHS ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
COMMON STOCK
------------------- ADDITIONAL ACCUMULATED TOTAL
Shares Amount PAID IN CAPITAL DEFICIT EQUITY
<S> <C> <C> <C> <C> <C>
BALANCE JUNE 30, 1999 1,027,636 10,276 1,041,943 (1,677,873) (625,654)
Net loss for six months
ended December 31, 1999 (6,531) (6,531)
BALANCE DECEMBER 31, 1999 1,027,636 10,276 1,041,943 (1,684,404) (632,185)
</TABLE>
Page 3 of 8
<PAGE>
SOLAR GROUP, INC.
STATEMENT OF CASH FLOWS
FOR SIX MONTHS ENDED DECEMBER 31, 1999
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (6,531)
Stock issued for services
Changes in current assets and liabilities:
Accounts payable
Accrued liabilities 6,365
NET CASH FROM OPERATING ACTIVITIES (166)
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in receivable from related party 101
NET CASH FROM INVESTING ACTIVITIES 101
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable
Proceeds from issuance of related party notes
NET CASH FROM FINANCING ACTIVITIES
NET INCREASE (DECREASE) IN CASH
CASH - JUNE 30, 1999
CASH - DECEMBER 31, 1999
</TABLE>
Page 4 of 8
<PAGE>
SOLAR GROUP, INC.
BALANCE SHEET
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS
Related Party Receivable 2,734
TOTAL CURRENT ASSETS 2,734
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 60,165
Accrued libilities 216,365
Short term notes payable 128,000
Related party payable 6,000
TOTAL CURRENT LIABILITIES 410,530
STOCKHOLDERS' EQUITY
Common stock - par value $0.01 per share;
50 million shares authorized; 997,647 shares
issued and outstanding 9,976
Additional paid in capital 1,027,243
Accumulated deficit (1,445,015)
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (407,796)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 2,734
</TABLE>
Page 5 of 8
<PAGE>
SOLAR GROUP, INC.
STATEMENT OF OPERATION
FOR SIX MONTHS ENDED DECEMBER 31, 1998
REVENUES $ --
GENERAL AND ADMINISTRATIVE EXPENSES 376,300
LOSS FROM OPERATION (376,300)
OTHER INCOME (EXPENSE)
Interest expense (6,365)
NET LOSS (389,196)
BASIC AND DILUTED LOSS PER SHARE (0)
WEIGHTED AVERAGE SHARES 996,800
Page 6 of 8
<PAGE>
SOLAR GROUP, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR SIX MONTHS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
COMMON STOCK
------------------ ADDITIONAL ACCUMULATED TOTAL
Shares Amount PAID IN CAPITAL DEFICIT EQUITY
<S> <C> <C> <C> <C> <C>
BALANCE JUNE 30, 1998 977,636 9,776 1,018,068 (1,055,819) (27,975)
July 9, 1998 shares issued for
debt; $0.47 per share 20,000 200 9,175 9,375
Net loss for six months
ended December 31, 1998 (389,196) (389,196)
BALANCE DECEMBER 31, 1998 997,636 9,976 1,027,243 (1,445,015) (407,796)
</TABLE>
Page 7 of 8
<PAGE>
SOLAR GROUP, INC.
STATEMENT OF CASH FLOWS
FOR SIX MONTHS ENDED DECEMBER 31, 1998
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (389,196)
Stock issued for services
Changes in current assets and liabilities:
Accounts payable 41,565
Accrued liabilities 216,365
NET CASH FROM OPERATING ACTIVITIES (131,266)
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in receivable from related party (2,734)
NET CASH FROM INVESTING ACTIVITIES (2,734)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable 128,000
Proceeds from issuance of related party notes 6,000
NET CASH FROM FINANCING ACTIVITIES 134,000
NET INCREASE (DECREASE) IN CASH
CASH - JUNE 30, 1998
CASH - DECEMBER 31, 1998
</TABLE>
Page 8 of 8
<PAGE>
SOLAR GROUP, INC. NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED) FOR SIX MONTHS ENDED DECEMBER 31, 1999
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - SOLAR Group, Inc was incorporated under the laws of the State of
Nevada in February 1984, as a subsidiary of Solar Age Manufacturing Corp. In
August 1984, Solar Age Manufacturing Corp. and its subsidiaries were merged into
Solar Age Industries, Inc. The companies principle business activity was the
manufacture and sale of solar air and water heating devices. As of January
1,1986, the federal energy credits and most state credits expired which severely
impacted on the company's ability to market its solar products, resulting in a
substantial loss to the company for the first two calender quarters of 1986. The
Company attempted to diversify into the manufacture of greenhouses, but because
of the continuing, substantial financial losses sustained by the Company, it was
forced to file a Chapter 11 petition under the Bankruptcy Code in the United
States Bankruptcy Court, District of New Mexico. In late 1987, the company filed
its plan of reorganization which was approved by the Bankruptcy Court. Following
distribution to the creditors under the terms of the plan and consummation of
the plan, the bankruptcy case was subsequently closed. Although the Company
continued to market its greenhouse products while in bankruptcy and thereafter,
the Company never attained commercial success for its products and,
subsequently, ceased operations.
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, liabilities,
revenues and expenses during the reporting period. Estimates also affect the
disclosure of contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
BASIS OF PRESENTATION - The accompanying financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. During six monts
ended December 31, 1999 the Company incurred net losses of $6,531. As of
December 31, 1999 , the Company's losses accumulated from inception totaled
$1,684,404. These factors, among others, raise substantial doubt that the
Company may be unable to continue as a going concern for a reasonable period of
time. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amount and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's
<PAGE>
ability to continue as a going concern is dependent upon its ability to generate
sufficient cash flow to meet its obligations on a timely basis.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The estimated fair value of financial
instruments is not presented because, in Management's opinion, there is no
material difference between carrying amounts and estimated fair values of
financial instruments as presented in the accompanying balance sheet.
CASH AND CASH EQUIVALENTS - All highly-liquid debt instruments purchased with
maturities of three months or less have been considered cash equivalents.
INCOME TAXES - The Company recognizes the amount of income taxes payable or
refundable for the current year and recognizes deferred tax assets and
liabilities for the future tax consequences attributable to differences between
the financial statement amounts of certain assets and liabilities and their
respective tax bases. Deferred tax assets and deferred liabilities are measured
using enacted tax rates expected to apply to taxable income in the years those
temporary differences are expected to be recovered or settled. Deferred tax
assets are reduced by a valuation allowance to the extent that uncertainty
exists as to whether the deferred tax assets will ultimately be realized.
BASIC LOSS PER COMMON SHARE - Loss per common share is computed by dividing net
loss available to common stockholders by the weighted-average number of common
shares outstanding during the period.
NOTE 2 NOTES PAYABLE
Notes payable at December 31, 1999, consisted of the following:
Notes payable to investors, bearing interest at 9.5%; unsecured;
due February, 2000 $ 128,000
Note payable to officer bearing interest at 9.5%; unsecured;
due February, 2000 $ 6,000
TOTAL $ 134,000
NOTE 3 RELATED PARTY TRANSACTIONS
As described in Note 2, the company borrowed $128,000 from investors during the
year ended June 30, 1999 at an annual interest rate of 9.5%. The amounts are due
February 2000. As of December 31, 1999, the Company had not made any payments.
The Company also borrowed $6,000 from its chief executive officer at an annual
interest rate of 9.5%. This amount is also due February 2000.
The Company maintained no bank accounts during six months ended December 31,
1999. Deposits were made into and expenses disbursed from an account controlled
by a related party. As of December 31, 1999, this related party held $101
belonging to the Company.
<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.
Date: May 22, 2000
Solar Group, Inc.
(Registrant)
By /s/ Leon M. Leibovich
--------------------------
(Signature)
Leon M. Leibovich, President, Chief Executive Officer and Director
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF JUNE 30, 1998
BY AND AMONG
SOLAR AGE INDUSTRIES. INC.,
HITK CORPORATION,
AND
SGI CAPITAL, INC.,
PALCAN GROUP, INC.,
ROCHESTER PROPERTY HOLDINGS LIMITED
1. Plan of Reorganization
2. Exchange of Shares
3. Delivery of Shares
4. Other Terms and Conditions
5. Representations of the Target
6. Representations of the Acquiror and the Principal
7. Closing and Closing Date
8. Conditions Precedent to the Obligations of the Target
9. Conditions Precedent to the Obligations of Acquiror and the Principal
10. Indemnification
11. Nature and Survival of Representations
12. Documents at Closing
13. Miscellaneous
EXHIBITS
Investment Letter.............................................................A
Copies of Restated Articles of Incorporation and By-Laws of the Acquiror......B
Material Contracts of the Acquiror............................................C
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (hereinafter the "Agreement"), is
entered into effective as of the 30th day of June 1998, by and among Solar Age
Industries, Inc., a Nevada corporation (hereinafter the "Acquiror"), HITK
Corporation, a Delaware corporation ("HITK"), the majority principal shareholder
of the Acquiror (hereinafter, the "Principal") and SGI Capital, Inc., an
Illinois corporation (hereinafter "SGI" or the "Target"), Palcan Group Inc., an
Illinois corporation and Rochester Property Holdings Limited, a British Virgin
Islands corporation (hereinafter collectively the "Target Stockholders");
A. WHEREAS, the Target Stockholders own in the aggregate all of the issued
and outstanding capital stock of SGI, and
B. WHEREAS, SGI owns all of the issued and outstanding capital stock of
Mirtas Limited, a Russian holding corporation, (hereinafter "Mirtas"),
and Mirtas owns ninety (90%) percent of the issued and outstanding
capital stock of NBM Stroiservice Investment and Construction Company, a
Russian Corporation which owns and operates a real estate development and
construction company in Russia (hereinafter "NBM"), with the remaining
ten (10%) percent of the issued and outstanding capital stock of NBM
owned by non-affiliated third parties. NBM shall sometimes hereinafter be
referred to as the "Asset Entity", and
C. WHEREAS, the Acquiror desires to acquire all of the issued and
outstanding capital stock of the Target from the Target Stockholders,
resulting in the Target becoming a wholly owned subsidiary of the
Acquiror, and the Target Stockholders each desire to exchange all of
their respective capital stock of the Target solely for shares of
Acquiror's common stock par value $.01 per share (the "Common Stock"), on
the terms and conditions as set forth herein (the "Exchange").
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
1. PLAN OF REORGANIZATION. The Target Stockholders are the sole owners of all of
the issued and outstanding capital stock of the Target (the "Target Shares"). It
is the intention of the parties hereto that all of the issued and outstanding
Target Shares shall be acquired by the Acquiror in a tax free exchange for
8,000,000 shares of Common Stock (on a post-reverse stock-split basis) of the
Acquiror (the "8,000,000 Acquiror Shares"). The Exchange shall qualify as a tax
free reorganization under Section 368 (a) (1) (B) of the Internal Revenue Code
of 1986, as amended, and related sections thereunder. The Exchange shall qualify
as a transaction in securities exempt from registration or qualification under
the Securities Act of 1933, as amended, and under the applicable securities laws
of each state or jurisdiction where the Target Stockholders reside.
2. EXCHANGE OF SHARES. The Acquiror and the Target Stockholders agree that all
of the issued and outstanding Target Shares shall be exchanged at the Closing
(as defined in Section 7 below) with Acquiror for the 8,000,000 Acquiror Shares,
after giving effect to, among other actions, a 1 for 5.5 reverse stock split of
all shares of Common Stock of Acquiror issued and outstanding immediately prior
to the Closing, as follows:
(a) The 8,000,000 Acquiror Shares will, at the Closing, be delivered to the
Target Stockholders in exchange for the Target Shares, in the ratio of the 8,000
Acquiror Shares to one Target Share. The Target Stockholders agree that they
will acquire the 8,000,000 Acquiror Shares for investment purposes only and not
for further public distribution and agree that the 8,000,000 Acquiror Shares
shall bear an appropriate restrictive legend. Each Target Stockholder shall
enter into an Investment Letter on the Closing Date, the form of which is
annexed hereto as Exhibit A.
(b) The Acquiror presently has 5,375,000 shares of Common Stock issued and
outstanding which immediately prior to the Closing, will represent 977,273
shares of Common Stock issued and outstanding after giving effect to 1 for 5.5
reverse stock split. Other than the 8,000,000 Acquiror Shares to be issued
pursuant to this Agreement and
2
<PAGE>
the 977,273 shares to be issued and outstanding immediately prior to the Closing
(on a post-reverse stock-split basis), the Company shall not have any other
shares of Common Stock, preferred stock, warrants, options, rights, convertible
securities or other securities outstanding, or direct and/or indirect
agreements, oral or otherwise to issue any such securities.
(c) The Principal presently has majority number of shares of Common
Stock issued and outstanding.
(d) All references herein to shares of Acquiror's Common Stock shall
reflect the l for 5.5 reverse stock split.
3. DELIVERY OF SHARES. At the Closing, the Target Stockholders will deliver
stock certificates to the Acquiror representing all of the Target Shares duly
endorsed for transfer so as to make the Acquiror the sole owner thereof, and
simultaneously at the Closing the Acquiror shall deliver stock certificates to
the Target Stockholders representing the 8,000,000 Acquiror Shares.
4. OTHER TERMS AND CONDITIONS.
(a) As of the Closing Date, the Acquiror shall continue its corporate
existence as a Nevada corporation.
(b) The Principal hereby irrevocably agrees to vote all of the respective
shares of Common Stock in favor of all of the terms and conditions contained in
and transactions contemplated by this Agreement.
(c) The current officers and directors of Acquiror shall resign their
respective positions with Acquiror effective as of the Closing immediately after
having appointed a Board of Directors of Acquiror as designated to the Acquiror
in writing by the Target.
(d) On or before the Closing Date, Acquiror shall demonstrate to the
reasonable satisfaction of the Target and its legal counsel, that the Acquiror
has no less than 300 beneficial stockholders.
(e) The Acquiror shall have no liabilities incurred or accrued as of the
Closing Date and the Principal shall guarantee as of the Closing Date that the
Acquiror has no liability incurred or accrued.
(f) Each of the parties hereto shall make all of its corporate records
fully available to the other parties hereto and shall allow full access to their
books, records and properties during regular business hours on a reasonable
basis. If the transactions contemplated by this Agreement are not consummated,
all parties shall keep confidential any information (unless it is public
knowledge) obtained from the other parties.
(g) Each of the parties hereto shall continue to conduct their business
in accordance with the ordinary, usual and normal course of business heretofore
conducted by them, it being agreed that the Acquiror has no, and shall conduct
no, business.
5. REPRESENTATIONS OF THE TARGET. The Target hereby represents, warrants and
covenants effective as of the date hereof and as of the Closing Date, as
follows:
(a) The Target Shares are validly authorized and issued, fully paid and
non-assessable and are free from any and all claims, liens, or other
encumbrances, and the Target Stockholders have good title and the unqualified
right to transfer the Target Shares as provided herein; and when the Target
Shares are delivered to the Acquiror in exchange for the 8,000,000 Acquiror
Shares as provided herein, the Acquiror shall receive all right and title to the
Target Shares free from any and all claims, liens or other encumbrances on
title.
(b) The Target Stockholders are the sole owners of all of the Target Shares
and the Target Shares constitute all of the issued and outstanding capital stock
of the Target.
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(c) The Target through a wholly owned subsidiary Mirtas, owns ninety (90%)
percent of the issued and outstanding capital stock of the Asset Entity, and the
remaining ten (10%) percent is owned by non-affiliated third parties.
(d) Neither the Target nor Mirtas nor the Asset Entity is a defendant in
any material pending litigation or governmental investigation or proceeding
disclosed in writing to the Acquiror and, to the best knowledge of the Target,
no litigation, claims, assessments, or governmental investigations or
proceedings are threatened against the Target or the Asset Entity.
(e) As of the Closing Date, the Target, Mirtas and the Asset Entity will be
in good standing in each of their respective jurisdictions of incorporation, and
each will be qualified to do business in each jurisdiction where required to be
so qualified, except where the failure to so qualify would not have a material
adverse effect on the business.
(f) The Target, Mirtas and the Asset Entity have filed all governmental,
tax or related returns and reports due or required to be filed and have paid or
accrued all taxes or assessments which have become due or will be due as of the
Closing Date.
(g) Complete corporate financial records, contracts, minute books, and
other corporate documents and records of the Target, Mirtas and the Asset Entity
have been made reasonably available to present management of the Acquiror prior
to the Closing Date, including the Asset Entity's financial statement for the
fiscal years as at December 31, 1996 and December 31, 1997.
(h) The execution of this Agreement and the performance of the actions
contemplated hereby will not, to the best knowledge of the Target materially
violate or breach any material agreement, contract, or commitment to which the
Target, Mirtas or the Asset Entity are a party and this Agreement has been duly
authorized by all appropriate and necessary action by the Target and the Target
Stockholders.
(i) There are no outstanding convertible securities, warrants or options
which may cause authorized but unissued shares of the Target and/or Mirtas
and/or the Asset Entity to be issued to any person.
6. REPRESENTATIONS OF THE ACQUIROR AND THE PRINCIPAL. The Acquiror and the
Principal hereby jointly and severally represent, warrant and covenant,
effective as of the date hereof and the Closing Date, as follows:
(a) The 8,000,000 Acquiror Shares to be delivered to the Target will, when
issued in accordance with this Agreement, be duly authorized and validly issued
and will be fully paid and non-assessable and free and clear of any and all
direct and/or indirect liens, claims and encumbrances and will vest in the
Target Stockholders, good and unencumbered title and right to such shares.
(b) The officers and directors of the Acquiror are duly authorized to
execute this Agreement and have taken all action necessary and required by law
to properly and legally execute this Agreement. The shareholders of the Acquiror
have approved this Agreement and all actions required to be taken hereunder in
accordance with Nevada law. The execution of this Agreement by the Acquiror and
the Principal and the performance of all actions hereunder by the Acquiror and
the Principal will not violate any provision of the Acquiror's Articles of
Incorporation or By-Laws, each as amended, and will not constitute a breach of
any contract and/or agreement to which any such person is a party. The copies of
the Acquiror's Restated Articles of Incorporation and Amended By-Laws through
the Closing Date are annexed hereto as Exhibit B and are true and complete
copies of such documents and have not been amended or otherwise changed.
(c) The Acquiror's financial statements have been audited and certified by
a duly qualified certified public accountant(s) meeting all standards imposed by
the SEC with respect to the preparation of financial statements of the Acquiror
for the fiscal years as at June 30, 1996, June 30, 1997 and June 30, 1998, and
the related statements of operations for the periods then ended (collectively
"Financial Statements"). The Financial Statements present
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fairly the consolidated financial position of the Acquiror as at such dates and
the results of the operations for the periods then ended. The Financial
Statements were prepared in accordance with generally accepted accounting
principles applied on a consistent basis with prior periods except as otherwise
stated herein. The books of account and other financial records of the acquiror
are in all respects complete and correct in all material respects and are
maintained in accordance with good business and accounting practices. Since the
date of the Acquiror Financial Statements there has not been, and as of the
Closing Date there shall not be, any material adverse changes in the financial
condition and/or position of the Acquiror, other than has been disclosed in
writing to the Target. As of the date hereof and as of the Closing Date, the
Acquiror shall have no judgments, liens, liabilities or debts, fixed or
contingent, and as of the Closing Date shall have paid all of its costs relating
to this transaction.
(d) Neither the Acquiror nor the Principal is involved in any pending
action, litigation, claims, or governmental investigations or proceedings, and
there are no lawsuits, claims, assessments, investigations, or similar matters,
to the best knowledge of the Acquiror and the Principal, threatened or
contemplated by or against the Acquiror and/or the Principal, except as
disclosed in Exhibit C attached hereto.
(e) As of the date hereof and the Closing Date, the Acquiror and the
Principal are duly organized, validly existing and in good standing under the
laws of the State of Nevada as to the Acquiror and under the laws of the State
of Delaware as to the Principal; both have the corporate power to own their
assets and to carry on their business as now being conducted and are duly
qualified to do business in any jurisdiction where so required except where the
failure to so qualify would not have a material adverse effect on the Acquiror.
(f) The Acquiror has filed all federal, state, county and local income,
excise, property and other tax returns, forms, or reports, which are due or
required to be filed by it prior to the date hereof and has paid or made
adequate provision for the payment of any and all taxes, fees, or assessments
which have or may become due pursuant to such returns or pursuant to any
assessments received. Prior to the Closing, the Acquiror will deliver to new
management all prior tax returns.
(g) The Acquiror has not breached, nor is there any pending or threatened
claims that Acquiror has breached, any of the terms or conditions of any
agreements, contracts or commitments to which it is a party or is bound, and the
execution and performance of this Agreement by the Acquiror and the Principal
will not violate any provisions of any law or any agreement to which the
Acquiror and/or the Principal is subject or a party. All material contracts,
commitments and agreements to which the Acquiror is a party, including all
contracts, commitments and agreements dealings or relationships with related
parties or affiliates, are listed on Exhibit C attached hereto.
(h) As of the Closing Date, after giving effect to 1 for 5.5 reverse stock
split, but prior to the issuance of the 8,000,000 Acquiror Shares, the
outstanding capitalization of the Acquiror will consist of 977,273 shares of
Common Stock, all of which will be "free trading", except the 674,832 shares
held by the Principal. The Principal has held and paid for 190,909 shares of
Common Stock for a period of over 3 years from the date of purchase of the
190,909 shares.
(i) As of the Closing Date, other than (i) the 8,000,000 Acquiror Shares to
be issued pursuant hereto, and (ii) the 977,273 shares of post-split Common
Stock then issued and outstanding there will not be (direct and/or indirect) any
other securities of the Acquiror outstanding, including, but not limited to, any
other shares of Common Stock or preferred stock, or any warrants, options, or
other derivative securities or pre-emptive rights, rights of first refusal,
registration rights, or related commitments of the Acquiror or any contracts,
commitments or rights (oral or otherwise) to issue any of such securities and/or
rights.
(j) The Acquiror has no subsidiary corporations. Any prior subsidiaries
being dissolved by the state of incorporation by operation of law.
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(k) The 8,000,000 Acquiror Shares to be issued to the Target Stockholders
on the Closing Date will be issued in full compliance with all applicable
corporate and other laws and will be issued in a non-public offering and
isolated transaction in compliance with all federal and state securities laws.
(1) As of the date hereof and on the Closing Date, the Acquiror has and
will have disclosed to the Target all events, conditions and facts materially
affecting the business, finances and legal status of Acquiror.
(m) The corporate financial records, minute books, and other books and
records of Acquiror in its possession, custody or control will be made available
to the Target and its representatives prior to the Closing Date and delivered on
the Closing Date to newly appointed management of the Acquiror at the Closing.
(n) This Agreement constitutes a legal, valid and binding obligation of the
Acquiror and the Principal, enforceable against the Acquiror and the Principal
in accordance with its terms.
(o) The Acquiror is and on the Closing Date shall be in full compliance
with all applicable federal and state securities laws.
(p) On the Closing Date, the Acquiror will have no less than 300 beneficial
owners of shares of its Common Stock as determined by the applicable provisions
of the National Association of Securities Dealers Manual, referring to
qualification requirements for NASDAQ securities listings. The shareholders list
submitted by the Acquiror and the Acquiror's transfer agent and dated June 29,
1998 is, to the best of the Acquiror's knowledge, true, complete and accurate in
all material respects.
(q) The Acquiror is not subject to the reporting requirements of the
Securities Act of 1933, as amended (the "Act") and the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
(r) Neither the Principal nor the Acquiror is the subject of any current or
prior actions, lawsuits, judgments, orders, decrees, activities, violations or
other proceedings or activities of any nature which will, or could, prevent the
shares of Common Stock of the Acquiror from being listed on the NASDAQ or the
NASDAQ SmallCap Market System and knows of no reason why such listing cannot be
obtained.
(s) The Acquiror and the Principal have completed their due diligence of
the Target and the Asset Entity to their full satisfaction (including, but not
limited to, having received copies of and reviewed the Asset Entity's Financial
Statements) and have had a full and complete opportunity to discuss and ask
questions of officers and directors, their representatives and legal counsel.
(t) Other than as disclosed in this Agreement, neither the Principal nor
any of their respective affiliates have any direct or indirect beneficial or
other ownership interest in or any other right, title, or interest to any other
shares of Common Stock of the Acquiror including, but not limited to, any
arrangements to receive or share in the proceeds from the sale of any shares of
Common Stock of the Acquiror.
7. CLOSING AND CLOSING DATE. The closing date as referred to herein ("Closing
Date") shall be as of June 30, 1998 subject to an extension of up to thirty (30)
days if required at the discretion of the Target, or such other time and place
as agreed to by the parties. The closing (the "Closing") of the transactions
contemplated herein shall occur at 10:00 a.m. on the Closing Date at the offices
of John J. Gitlin, Esq., 10 Hillburn Road, Scarsdale, New York 10583, or at such
other places as the parties mutually agree.
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE TARGET. All obligations of the
Target under this Agreement are subject to the fulfillment, prior to or on the
Closing Date of each of the following conditions, unless expressly waived in
writing by the Target:
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(a) The representations and warranties of the Acquiror and the Principal
contained in this Agreement or in any exhibit, certificate or document delivered
to the Target pursuant to this Agreement shall be true, correct, complete and
accurate in all material respects at and as of the Closing Date as though such
representations and warranties were made at and as of such time.
(b) The Acquiror and the Principal shall have performed and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with or by them prior to or on the Closing Date and shall
have delivered all documents required to be delivered by them hereunder.
(c) The present officers and directors of the Acquiror (consisting of Robert
N. Schuck, President and Director, John J. Gitlin, Secretary, Treasurer and
Director and Herbert Maslo, Vice President and Director) shall cause the
appointment on the Closing Date, of all nominees of the Target to the Board of
Directors of the Acquiror as directed by the Target and all such present
officers and directors (and any other person who may be officers and/or
directors of the Acquiror) shall provide to the Acquiror their written
resignations.
(d) The directors and shareholders of the Acquiror shall have approved in
accordance with Nevada law and the applicable provisions of the Acquiror's
Restated Articles of Incorporation and By-Laws, the following matters, which
matters shall have occurred prior to or simultaneously with the Closing:
(i) The 1 for 5.5 reverse stock split of all of the issued and
outstanding Common Stock of the Company.
(ii) The issuance of the 8,000,000 Acquiror Shares to the
Target in exchange for the Target Shares.
(iii) The election of the new directors to the Board of
Directors of the Acquiror as specified by the Target.
(iv) All other matters contemplated herein.
(e) The Acquiror and the Principal shall have delivered certified copies of
resolutions of the Board of Directors and shareholders of each approving and
authorizing the execution, delivery and performance of this Agreement and all of
the actions contemplated hereby, including all of the matters in subparagraph
(d) above.
(f) All instruments and documents delivered to the Target pursuant to the
provisions hereof shall be satisfactory to legal counsel for the Target.
(g) The Acquiror and the Principal shall deliver such other documents to the
Target as requested by its representatives and their legal counsel including,
but not limited to, an opinion of the Acquiror's legal counsel dated as of the
Closing Date to the effect that:
(i) The Acquiror and the Principal are corporations duly organized,
validly exiting and in good standing under the laws of the State of Nevada and
the State of Delaware, respectively, and are authorized to do business in such
jurisdictions where its business requires it to be so authorized under the laws.
(ii) This Agreement has been duly authorized, executed and delivered
by the Acquiror and the Principal and constitutes a legal, valid and binding
obligation of the Acquiror and the Principal enforceable against such persons in
accordance with its terms.
(iii) The Acquiror, through its Board of Directors and shareholders,
has taken all corporate action necessary for performance of all transactions
contemplated hereby and the execution of this Agreement.
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<PAGE>
(iv) The documents executed and delivered to the Target by the
Acquiror and the Principal hereunder are legal, valid and binding obligations of
such persons, enforceable against such entities and persons in accordance with
their respective terms.
(v) To the best knowledge of counsel to the Acquiror and the
Principal, the Acquiror is not a party to any action, proceeding or
investigation and there is no order, lien, decree or judgment against them or
any of their respective assets.
(vi) The Acquiror has no less than three hundred (300) shareholders of
record of its Common Stock so as to meet the NASDAQ listing requirements of
having three hundred (300) shareholders.
(vii) The 1 for 5.5 reverse stock split of the Common Stock of the
Acquiror has been approved by all requisite director and shareholder action in
accordance with the laws of the State of Nevada and the Acquiror's Restated
Articles of Incorporation and By-Laws and has become effective.
(viii) The 8,000,000 Acquiror Shares to be delivered to the Target
will, when issued in accordance with this Agreement, be duly authorized and
validly issued and will be fully paid and non-assessable and free and clear of
any and all direct and/or indirect liens, claims and encumbrances and will vest
in the Target Stockholders, good and unencumbered title and right to such
shares.
(h) The capital structure and stock ownership of the Acquiror shall be as
set forth in Section 2(b) of this
(i) The Target has completed its due diligence of the Acquiror and the
Principal to the extent it deems necessary or advisable with the results
satisfactory to the Target and its representatives.
(j) The Acquiror shall have delivered to the new management of the Acquiror
certified copies of all charter documents and by-laws and amendments hereto and
all shareholders and Board of Directors resolutions.
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE ACQUIROR AND THE PRINCIPAL.
All obligations of the Acquiror and the Principal under this Agreement are
subject to the fulfillment, prior to or on the Closing Date of each of the
following conditions, unless expressly waived in writing by the Acquiror and the
Principal:
(a) The representations and warranties of the Target contained in this
Agreement or in any certificate or document delivered to the Acquiror by the
Target pursuant to the provisions hereof shall be true, correct, complete and
accurate in all material respects at and as of the Closing Date as though such
representations and warranties were made at and as of such time.
(b) The Target shall have performed and complied with all covenants,
agreements, and conditions required by this Agreement to be performed or
complied with by them prior to or on the Closing Date.
(c) Each Target Stockholder shall deliver to the Acquiror an "Investment
Letter" acknowledging that the 8,000,000 Acquiror Shares are being acquired for
investment purposes. The form of said letter is attached hereto as Exhibit A.
(d) The Target shall have delivered to Acquiror an opinion of their legal
counsel dated as of the Closing Date substantially to the effect that:
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(i) The Target and the Asset Entity are corporations duly
organized, validly existing and in good standing under the
laws of the place of their incorporation.
(ii) The Target Stockholders own all of the issued and
outstanding capital stock of the Target, and the Target
owns the percentage of capital stock of the Asset Entity
as set forth elsewhere in this Agreement; and
(iii) All of the issued and outstanding capital stock of the
Target and the Asset Entity has been duly authorized and
has been validly and legally issued.
(e) The Target shall prior to the Closing release the Acquiror of the two
obligations: (i) payment to the stock transfer agent and (ii) payment to the
certified public accountant(s) for preparation of the Financial Statements,
which payments shall be negotiated and settled at the sole discretion of the
Target and in no event shall exceed (i) $17,000 and (ii) $3,000 respectfully.
10. INDEMNIFICATION. For a period of two (2) years from the Closing Date, the
Acquiror and the Principal agree jointly and severally, to defend, indemnify and
hold harmless the Target and the Target Stockholders from, against and in
respect of any loss, liability, damage or deficiency, and all actions, suits,
proceedings, demands, assessments, judgments, costs and expenses (including
attorneys' fees as such are incurred) (collectively, "Losses"), resulting
directly and/or indirectly from the conduct of the Acquiror prior to the Closing
Date, and the Target agrees to defend, indemnify and hold harmless the Acquiror
and the Principal against, from and in respect of all Losses resulting directly
and/or indirectly from the conduct of Acquiror's business following the Closing
Date. In addition, the Acquirors and the Principal agree to indemnify and hold
harmless the Target and the Target Stockholders, and the Target agrees to
indemnify and hold harmless the Principal and the Acquiror from, against and in
respect of any Losses resulting directly and/or indirectly from any breach of
any term of this Agreement including, but not limited to, any representation,
warranty, covenant or any other term hereof made by any such party.
11. NATURE AND SURVIVAL OF REPRESENTATIONS. All representations, warranties and
covenants made by any party in this Agreement shall survive the Closing Date
hereunder and the consummation of the transactions contemplated hereby for two
(2) years from the Closing Date. All of the parties hereto are executing and
carrying out the provisions of this Agreement in reliance solely on the
representations, warranties and covenants and agreements contained in this
Agreement and not upon any investigation upon which it might have made or on any
representations, warranty, agreement, promise or information, written or oral,
made by the other party or any other person other than as specifically set forth
herein.
12. DOCUMENTS AT THE CLOSING. At the Closing, the following transactions shall
occur, all of such transactions being deemed to occur simultaneously:
(a) The Target will deliver, or cause to be delivered to the Acquiror
the following:
(i) Stock certificates representing the Target Shares being issued
to the Acquiror hereunder, duly endorsed for transfer.
(ii) A certificate of the President of the Target to the effect that
all representations and warranties made by the Target under or pursuant to this
Agreement are true, correct and reaffirmed as of the Closing Date, the same as
though originally given to the Acquiror on said date.
(iii) A good standing certificate from the Secretary of State of the
State of Illinois dated on or about the Closing Date that the Target is in good
standing under the laws of said State.
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(iv) A certificate from the jurisdiction (or local legal counsel
opinion if such certificate is not available) of the place of incorporation of
the Asset Entity dated on or about the Closing Date to the effect that the Asset
Entity is in good standing under the laws of said jurisdiction,
(v) A duly executed Investment Letter from each Target Stockholder.
(vi) The Asset Entity's financial statements compiled for the fiscal
years as at December 31, 1996 and December 31, 1997, which statements shall
include accompanying balance sheets of the Asset Entity and the related
statements of income for each of the two (2) years then ended.
(vii) Such other instruments, documents and certificates, if any, as
are reasonably required by the Acquiror and the Principal, including the legal
opinion set forth in Section 9(d) hereof, to be delivered pursuant to the
provisions of this Agreement.
(b) The Acquiror and the Principal will deliver or cause to be delivered:
(i) Stock certificates in the names of the Target Stockholders
representing the 8,000,000 Acquiror Shares to be issued by the Acquiror to the
Target Stockholders in full consideration for the Target Shares as set forth in
Section 2 hereof.
(ii) A certificates of the President of the Acquiror and the
President of the Principal to the effect that all representations and warranties
of the Acquiror and the Principal made under or pursuant to this Agreement are
true, correct and reaffirmed as of the Closing Date, the same as though
originally made and given to the Target on said date.
(iii) Certified copies of resolutions by the Acquiror's and the
Principal's Board of Directors and shareholders authorizing all of the
transactions described herein including those set forth in Section 8(d) of this
Agreement.
(iv) A good standing certificate from the Secretary of State of the
State of Nevada dated on or about the Closing Date that the Acquiror is in good
standing under the laws of said State and a good standing certificate from the
Secretary of State of the State of Delaware dated on or about the Closing Date
that the Principal is good standing under the laws of said State.
(v) Copies of the duly executed, certified By-Laws, the Amendment,
the Articles of Incorporation of the Acquiror as well as all amendments thereto.
(vi) A guarantee by the Principal that the Acquiror has no liability
incurred and accrued.
(vii) The legal opinion of the Acquiror's counsel as set forth in
Section 8 hereof.
(viii) All corporate, tax and other books and records of the Acquiror
in its possession, custody or control, including, but not limited to, all Board
of Directors and shareholders minutes and resolutions and other interested
corporate documents of the Acquiror.
(ix) The Financial Statements of the Acquiror for the fiscal years as
at June 30, 1996, June 30, 1997 and June 30, 1998, respectfully and the related
statements of operations for the periods then ended audited and certified by a
duly certified public accountant(s) meeting all standards imposed by the SEC.
(x) A receipt of the Acquiror of all of the issued and outstanding
capital stock of the Target.
(xi) Resignations of all current officers and directors of the
Acquiror after appointment of new directors and officers nominated by the Target
Stockholders.
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(xii) Such other instruments and documents as are required to be
delivered (or requested by the Target's legal counsel) pursuant to the
provisions of this Agreement.
13. MISCELLANEOUS.
(a) FURTHER ASSURANCES. At any time, and from time to time, after the date
of this Agreement, each party will execute such additional instruments and take
such action as may be reasonably required by the other party to confirm the
provisions of this Agreement or otherwise to carry out the intent and purposes
of this Agreement. In addition, the Principal hereby covenant and agree to fully
cooperate with the Acquiror in any future NASDAQ listing application the
Acquiror may submit to NASD.
(b) WAIVER. Any failure on the party of any party hereto to comply with any
of its obligations, agreements or conditions hereunder may be waived only in
writing by the party to whom such compliance is owed.
(c) BROKERS. Neither party has employed any brokers or finders with regard
to this Agreement and the transactions contemplated hereby.
(d) NOTICES. All notices, consents, requests, demands and other
communications required or permitted to be given under this Agreement shall be
in writing and delivered personally, receipt acknowledged, or by
nationally-recognized overnight courier service, next-day delivery guaranteed
with receipt acknowledged, or mailed by registered or certified mail, postage
prepaid, return receipt requested, addressed to the parties hereto as follows
(or to such other addresses as any of the parties hereto shall specify by notice
given in accordance with this provision):
If to the Acquiror: Solar Age Industries, Inc.
68 Schraalenburg Road, (P.0. Box 233)
Harrington Park, New Jersey 07640
If to the Principal: HITK Corporation
68 Schraalenburg Road, (P.0. Box 233)
Harrington Park, New Jersey 07640
With a copy to: John J. Gitlin, Esq.
10 Hillburn Road
Scarsdale, New York 10583
Attention: John J. Gitlin
If to the Target/Stockholders: SGI Capital, Inc.
1000 Skokie Boulevard (525)
Wilmette, Illinois 60091
With a copy to: Stuart D. Perlman, Esq.
30 North LaSalle, Suite 2040
Chicago, Illinois 60602
Attention: Stuart D. Perlman
All such notices, consents, requests, demands and other communications shall
be deemed given when personally delivered as aforesaid, or, if mailed as
aforesaid, on the third business day after the mailing thereof or on the day
actually received, if earlier, except for a notice of a change of address which
shall be effective only upon receipt.
(e) HEADINGS. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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(g) BINDING EFFECT. This Agreement shall be binding upon the parties hereto
and inure to the benefit of the parties, their respective heirs, administrators,
executors, successors and permitted assigns. The parties hereto agree that
neither this Agreement nor any right hereunder shall be assignable without the
prior express written consent of all of the parties hereto.
(h) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof. There are no oral
promises, conditions, representations, understandings, interpretations or terms
of any kind as conditions or inducements to the execution hereof. This Agreement
can only be amended or supplemented by a written instrument signed by the party
to be bound hereby.
(i) SEVERABILITY. If any part of this Agreement is deemed to be
unenforceable, the balance of the Agreement shall remain in full force and
effect.
(j) TERMINATION. All obligations hereunder may be terminated at the
discretion of the Board of Directors of the Acquiror or the Target if (i) the
closing conditions specified in Sections 10 and 11 hereof are not satisfied or
waived by the Closing Date, unless extended as set forth in Section 7 hereof,
(ii) any of the representations and warranties made herein have been materially
breached, or (iii) at any time if the Target is not satisfied, for any reason,
with the due diligence investigation. If this Agreement is terminated in
accordance herewith, following such termination, the parties shall have no
obligations to each other.
(k) EXPENSES. Each party shall pay any and all of its expenses relating to
this Agreement and the related transactions contemplated hereby, including, but
not limited to, its own legal fees and costs.
(1) GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois with respect to contracts made
and to be fully performed therein, without regard to the conflicts of laws
principles thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first above written.
SOLAR AGE INDUSTRIES, INC. (ACQUIROR)
By:/s/ R.N. Schuck
- -----------------------
Name: R.N. Schuck
Title: President
HITK CORPORATION (PRINCIPAL)
By: /s/ R.N. Schuck
- -----------------------
Name: R.N. Schuck
Title: President
SGI CAPITAL, INC. (TARGET)
By:/s/ Leon Leibovich
- -----------------------
Name: Leon Leibovich
Title: President
PALCAN GROUP INC.(TARGET STOCKHOLDER)
By:/s/ Leon Leibovich
- -----------------------
Name: Leon Leibovich
Title: Director and Secretary
ROCHESTER PROPERTY HOLDINGS LIMITED
(TARGET STOCKHOLDER)
By:/s/ Alex Troyanovsky
- -----------------------
Name: Alex Troyanovsky
Title: Director and Secretary
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EXIBIT A
<PAGE>
INVESTMENT LETTER # 1
---------------------
Target Stockholder (the "Target Stockholder") represents and warrants pursuant
to the Agreement and Plan of Reorganization (the "Agreement") the following:
(a) Target Stockholder is acquiring Solar Age Industries, Inc. ("Solar")
Common Stock for its own account in exchange for SGI Capital, Inc.'s ("SGI")
Common Stock in the ratio set forth in the Agreement for the purpose of
investment, and not with a view to, or for sale in connection with, any
distribution thereof; and
(b) Target Stockholder (i) has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
its proposed investment in Solar's Common Stock; or (ii) has been advised by
attorneys, accountants or other representatives having such knowledge and
experience. Target Stockholder acknowledges that its attorneys, accountants or
other representatives, had, prior to its actions as Target Stockholder in voting
upon or otherwise consenting to the Agreement, the opportunity to ask questions
of, and to receive answers from the officers concerning Solar and its business
and financial condition; and
(c) Target Stockholder understands and acknowledges that shares of the
Solar Common Stock to be delivered to it pursuant to the provisions of Section I
of the Agreement will be "restricted securities" within the meaning of the
Securities Act of 1933, as amended (the "1933 Act"), and agrees that the
certificates therefore shall bear the following legend or substantially similar
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN PURCHASED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY OTHER
APPLICABLE STATE SECURITIES LAWS. THE SHARES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR PURSUANT TO AN EXEMPTION UNDER SAID ACT
AND/OR UNDER SAID STATE SECURITIES.
The Target Stockholder further understands and acknowledges that stop transfer
instructions will be issued by Solar to its transfer agent with respect to all
of Solar Common Stock to be delivered to it pursuant to the provisions of the
Agreement; and
(d) Target Stockholder understands and acknowledges that the shares of the
Solar Common Stock to be delivered pursuant to the provisions of the Agreement
will not be registered under the 1933 Act and, accordingly, Target Stockholder
recognizes that it may be required to bear the economic risk of its investment
until such shares are registered. Target Stockholder agrees on behalf of itself,
and its heirs, executors, successors and assigns, that it will only sell,
transfer, pledge or hypothecate any of the Solar Common Stock to be acquired by
it pursuant to the provisions of the Agreement pursuant to an effective
registration statement under the 1933 Act or in a transaction wherein
registration under the 1933 Act is not required. Target Stockholder understands
that Solar has no obligation to register such Solar Common Stock under the 1933
Act.
PALCAN GROUP INC. (TARGET STOCKHOLDER)
By: /s/ Leon Leibovich
--------------------------
Name: Leon Leibovich
Title: Director and Secretary
<PAGE>
INVESTMENT LETTER # 2
---------------------
Target Stockholder (the "Target Stockholder") represents and warrants pursuant
to the Agreement and Plan of Reorganization (the "Agreement") the following:
(a) Target Stockholder is acquiring Solar Age Industries, Inc. ("Solar")
Common Stock for its own account in exchange for SGI Capital, Inc.'s ("SGI")
Common Stock in the ratio set forth in the Agreement for the purpose of
investment, and not with a view to, or for sale in connection with, any
distribution thereof; and
(b) Target Stockholder (i) has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
its proposed investment in Solar's Common Stock; or (ii) has been advised by
attorneys, accountants or other representatives having such knowledge and
experience. Target Stockholder acknowledges that its attorneys, accountants or
other representatives, had, prior to its actions as Target Stockholder in voting
upon or otherwise consenting to the Agreement, the opportunity to ask questions
of, and to receive answers from the officers concerning Solar and its business
and financial condition; and
(c) Target Stockholder understands and acknowledges that shares of the
Solar Common Stock to be delivered to it pursuant to the provisions of Section I
of the Agreement will be "restricted securities" within the meaning of the
Securities Act of 1933, as amended (the "1933 Act"), and agrees that the
certificates therefore shall bear the following legend or substantially similar
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN PURCHASED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY OTHER
APPLICABLE STATE SECURITIES LAWS. THE SHARES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR PURSUANT TO AN EXEMPTION UNDER SAID ACT
AND/OR UNDER SAID STATE SECURITIES.
The Target Stockholder further understands and acknowledges that stop transfer
instructions will be issued by Solar to its transfer agent with respect to all
of Solar Common Stock to be delivered to it pursuant to the provisions of the
Agreement; and
(d) Target Stockholder understands and acknowledges that the shares of the
Solar Common Stock to be delivered pursuant to the provisions of the Agreement
will not be registered under the 1933 Act and, accordingly, Target Stockholder
recognizes that it may be required to bear the economic risk of its investment
until such shares are registered. Target Stockholder agrees on behalf of itself,
and its heirs, executors, successors and assigns, that it will only sell,
transfer, pledge or hypothecate any of the Solar Common Stock to be acquired by
it pursuant to the provisions of the Agreement pursuant to an effective
registration statement under the 1933 Act or in a transaction wherein
registration under the 1933 Act is not required. Target Stockholder understands
that Solar has no obligation to register such Solar Common Stock under the 1933
Act.
ROCHESTER PROPERTY HOLDINGS LIMITED (TARGET STOCKHOLDER)
By: /s/ Alex Troyanovsky
----------------------------
Name: Alex Troyanovsky
Title: Director and Secretary
AGREEMENT TO RESCIND
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement to Rescind is made and entered into as of this 27th day of
September, 1999, primarily between SGI Capital, Inc., an Illinois corporation
("SGI-IL"), and its two shareholders, Rochester Property Holdings, Limited, a
British Virgin Islands corporation ("Rochester") and Palcan Group, Inc., an
Illinois corporation ("Palcan"), and Solar Group, Inc. (f/k/a Solar Age
Industries, Inc.), a Nevada corporation ("SGI-NV").
RECITALS
Whereas, SGI-IL and its two shareholders Rochester and Palcan, entered into an
Agreement and Plan of Reorganization (the "Plan") with SGI-NV on or about the
30th day of June, 1998 and thereafter said Plan was fully performed between said
parties;
Whereas, prior to the effective date of the Plan, Rochester through ownership of
Mirtas Limited, a Russian corporation ("Mirtas") owned a majority interest of
ninety percent of NBM Stroyservice Investment and Construction Company, a
Russian corporation ("NBM").
Whereas, NBM was and still is prior to the effective date of this Agreement to
Rescind the sole operational company of SGI-IL and thereby of SGI-NV, due to the
fact that SGI-IL is presently the only wholly owned subsidiary of SGI-NV and
SGI-NV presently has no other business or operations as of this date;
Whereas, the Russian auditors of NBM has provided financial statements of NBM
through the fiscal ended December 31, 1998, but said Russian auditors have
refused to turn over any of its working papers to the U.S. auditors of SGI-NV;
Whereas, SGI-NV or its U.S. auditors are unable to prepare any consolidated
financial statements for its business and operations without duly qualified
audited and certified financial statements of NBM in accordance with GAAP
accounting pursuant to American accounting standards, except at a great and
enormous expense;
Whereas, SGI-NV must have duly audited and certified financial statements in
order for it to become a "reporting company" to the Securities and Exchange
Commission ("SEC") which SGI-NV must now do;
Whereas, SGI-NV is presently a publicly held corporation and its shares are
presently being quoted on the OTC Bulleting Board;
Whereas, in order for SGI-NV to maintain such quotations on the OTC Bulletin
Board pursuant to new rules passed by the National Association of Securities
Dealers, Inc. ("NASD"), which were recently approved by the SEC, SGI-NV must
promptly file a duly qualified registration statement with the SEC in order for
SGI-NV to become a "reporting company" with the SEC;
Whereas, SGI-NV cannot meet such standards of being a "reporting company"
without a duly audited and certified financial statement pursuant to GAAP
accounting under American standards so long as NBM is a part of SGI-NV;
<PAGE>
Whereas, SGI-NV cannot meet such standards of being a "reporting company"
without a duly audited and certified financial statement pursuant to GAAP
accounting under American standards so long as NBM is part of SGI-NV;
Whereas, due to the deterioration of economic and financial conditions in Russia
over the past year or so, it became very difficult for SGI-NV and its management
to maintain NBM, its subsidiary in that region; and
Whereas, the Parties hereto now desire to rescind the Plan as hereinafter
provided.
NOW THEREFORE, pursuant to the mutual covenants of the Parties hereto, the
Parties hereto agree as follows:
1. The recitals appearing above are expressly made a part of this
Agreement of Rescind.
2. The Plan and the agreement entered into to effectuate the Plan back are
hereby deemed null and void.
3. The Parties agree to return everything transferred pursuant to the Plan
back to the original owner as if no Plan had been entered into.
4. NBM, Mirtas and SGI-IL are hereby eliminated from SGI-NV, as if they
never were a part of SGI-NV.
5. Rochester and Palcan agree to return all of the shares they received
from SGI-NV to SGI-NV, to wit: an aggregate of 8,000,000 shares of
Common Stock of SGI-NV.
6. The Parties hereto agree that as a result of this Agreement to Rescind
the parties should be returned to the status quo ante just immediately
prior to the effectuation of the Plan.
7. SGI-IL, Rochester and Palcan agree that NBM and Mirtas can be returned
to them without any cost or expense by SGI-NV as if the Plan had never
been effected.
8. The parties hereto agree to mutually release each other when and at the
time the Agreement to Rescind is fully effected and completed by the
parties hereto.
Signed by duly authorized officers:
SGI CAPITAL, INC. PALCAN GROUP INC.
By: /s/ Leon M. Leibovich By: /s/ Leon M. Leibovich
Name: Leon M. Leibovich Name: Leon M. Leibovich
Title: President Title: Chairman
SOLAR GROUP, INC. ROCHESTER PROPERTY HOLDINGS
LIMITED
By: /s/ Leon M. Leibovich By: /s/ Michael Babel
Name: Leon M. Leibovich Name: Michael Babel
Title: President Title: President
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
Solar Age Industries, Inc.
We the undersigned Leon Leibovich and Stuart D. Perlman of Solar Age
Industries, Inc. do hereby certify:
That the Board of Directors of said corporation at a meeting duly convened
and held on the 13th day of July, 1998, adopted a resolution to amend the
restated articles as follows:
Article I is hereby amended to read as follows:
"ARTICLE I
The name of the corporation shall be Solar Group, Inc."
Section 3.01 of Article 3 is hereby amended to read as follows:
"Section 3.01 The purposes which the Corporation is organized are
limited as follows:
Transaction of any or all lawful purposes for which a corporation may
be incorporated under the general corporation law of the State of Nevada.
(Chapter 78 of the Nevada Revised Statutes)."
<PAGE>
Article 4 is hereby amended to read as follows:
"ARTICLE 4
AUTHORIZED SHARES
The capital of the Corporation shall consist of 51,000,000 shares, all
of which have a par value of $0.01 per share, and of which 1,000,000 shares
shall be Preferred Stock, having such preferences and rights as may be fixed by
the Board of Directors at the time of issuance, and 50,000,000 shares of Common
Capital Stock.
The designations and the powers, preferences and rights, and the
qualifications or restrictions thereof are, as follows:
Except as otherwise required by statutes or provided for by resolution
or resolutions of the Board of Directors, as hereinafter set forth,
the holders of the Common Shares of the Corporation shall possess the
exclusive right to vote for the election of directors and for all
other corporate purposes.
The Preferred Shares shall be issued from time to time in one or more
series, with such distinctive serial designations as shall be stated
and expressed serial designations as shall be stated and expressed in
the resolution or resolutions providing for the issue of such shares
from time to time adopted by the Board of Directors; and in such
resolution or resolutions providing for the issue o f shares of each
particular series the Board of Directors is expressly authorized to
fix the annual rate or rates of dividends for the particular series;
the dividend payment dates for the particular series and the date from
which dividends on all shares of such series issued prior to the
record date for the first dividend payment date shall be cumulative;
the redemption price or prices for the particular series;, the voting
powers for the particular series, the rights, if any, of holders of
the shares of the particular series to convert the same into shares of
any other series or class or other securities of the corporation or of
any other corporation, with any provisions for the subsequent
adjustment of such conversion rights;, and to classify or reclassify
any unissued Preferred shares by fixing or altering from time to time
any of the foregoing rights, privileges and qualifications.
All the Preferred Shares of any one series shall be identical with
each other in all respects, except as to the dates from which
dividends theron shall be cumulative, and all Preferred Shares shall
be of equal rank, regardless of series, and shall be identical in all
respects except as to the particulars fixed by the Board as
hereinabove provided or as fixed herein."
<PAGE>
The number of shares of the corporation outstanding and entitled to vote on an
amendment to the Articles of Incorporation are 8,997,636; that the said changes
and amendment have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote thereon.
/s/ Leon Leibovich
---------------------
President or Vice President
/s/ Stuart D. Perlman
---------------------
Secretary or Assistant Secretary
State of Illinois )
) ss.
County of Cook )
On July 13th, 1998, personally appeared before me, a Notary Public,
Leon Leibovich and Stuart D. Perlman who acknowledged that they executed the
above instrument.
/s/ Elena Natinsky
------------------
Signature of Notary
OFFICIAL SEAL
ELENA NATINSKY
N0TARY PUBLIC, STATE OF ILLINOIS.
MY COMMISSION EXPIRES: 02/07/01
<PAGE>
RESTATED ARTICLES OF INCORPORATION
OF
SOLAR AGE INDUSTRIES, INC.
(A Nevada Corporation)
I, the undersigned, for the purpose of forming a corporation under the
general corporation law (Chapter ?? of Nevada Revised Statues) of the State of
Nevada, do hereby restate the Articles of Incorporation and certify:
ARTICLE I
The name of the Corporation is:
SOLAR AGE INDUSTRIES, INC.
ARTICLE 2
PERIOD OF DURATION
The period of duration of the Corporation is perpetual.
ARTICLE 3
PURPOSE AND POWERS
Section 3.01. Purpose. The purposes for which the Corporation is organized
are limited as follows:
Clause (a). Primary Purpose.
To engage in the business of the manufacture and sale of all types of
devices or instruments to convert solar energy into heat and devices or
instruments to measure and control such heat;
<PAGE>
Clause (b).
To engage either directly or through agents or subsidiary corporations, in
the business of lending money to dealers or customers with which to
purchase products and manufactured or sold by the Corporation, including
the acquisition by purchase, subscription or other of stocks of or interest
in any corporation which makes such loans or provides insurance on the
lives or property of others:
Clause (c). Ancillary Purposes.
To do everything necessary, proper, advisable or convenient for
accomplishment of the foregoing purposes, and to do all other things
incidental to them or connected with them that are not forbidden by the
Act, by other law, or by these Articles of Incorporation, and to do and
engage in all lawful businesses and transactions.
Section 3.02. Powers. The Corporation, subject to any specific written
limitations or restrictions imposed by the Act or by these Articles of
Incorporation, and solely in furtherance of, but not in addition to, the limited
purposes set forth in section 3.01 of this Article, shall have and exercise the
following powers:
Clause (a). Statutory Powers.
To have and exercise all the powers specified in the Act;
Clause (b). Capacity to Act.
To have the capacity to act possessed by natural persons;
Clause (c). Officers, Agents, and Employees and Their Compensation.
To elect or appoint officers and agents and to hire employees; to define
their duties; to fix their compensation; and to pay pensions and establish
pension plans, profit-sharing plans, stock bonus plans, stock option plans,
and other incentive plans for any or all of the directors, officers,
agents, and employees;
-2-
<PAGE>
Clause (d). Agency.
to act as agent or representative for any domestic or foreign corporations,
associations, partnerships, individuals, or other entities;
Clause (e). Dealing in Real Property.
To acquire by purchase, exchange, lease, hire, or otherwise, hold, own,
improve, manage, operate, let as lessor, sell, convey or mortgage, either
alone or in conjunction with others real estate of every kind, character,
and description whatsoever or any interest therein;
Clause (f). Dealing in Personal Property, Generally.
To acquire (by purchase, exchange, lease, hire, or otherwise), hold, own,
manage, operate, mortgage, pledge, give as security, exchange, sell, deal
in and dispose of, either alone or in conjunction with others, personal
property, tangible or intangible, and commodities of every kind, character,
and description whatsoever or any interest in them;
Clause (g). Dealing in Securities, Generally.
To purchase take, receive, subscribe for, or otherwise acquire, own, hold,
vote, use, employ, sell, mortgage, lend, pledge, or otherwise deal in and
dispose of shares or other interests in, or obligations of, other domestic
or foreign corporations, associations, partnerships, individuals, or other
entities, including direct or indirect obligations or other securities of
the United States or any other government, state, territory, governmental
district, municipality or any instrumentality of them;
Clause (h). Dealing in Its Own Shares.
To purchase, take, receive or otherwise acquire, hold, own, pledge,
transfer, or otherwise dispose of the shares of the Corporation, but not to
purchase or make payment which would render it unable to pay its debts as
they become due in the usual course of its business;
-3-
<PAGE>
Clause (i). Dealing in Charters, Licenses, and Memberships.
To acquire (by application, assignment, purchase, exchange, lease, hire, or
otherwise), hold, own, use, license, lease, sell, convey or mortgage,
either alone or in conjunction with others, the absolute or any partial or
qualified interest in and to charters, franchises, licenses, permits,
(whether indeterminate or otherwise) certificates of authority,
memberships, seats on commodity and other exchanges, and other
authorizations and licenses to conduct public warehouses for commodities,
or other personal property of all kinds, under the provisions of the
Federal Warehouse Act;
Clause (j). Dealing in Inventions, Copyrights, and Trademarks.
To acquire (by application, assignment, purchase, exchange, lease, hire, or
otherwise) hold, own, use, license, lease and sell, either alone or in
conjunction with others, the absolute or any partial or qualified interest
in and to inventions, improvements, letters patent and applications for
them, licenses, formulas, priviledges, processes, copyrights and
applications therefor, trademarks and applications for them, and trade
names and applications for them;
Clause (k). Dealing in Good Will.
To acquire (by purchase, exchange, lease, hire, or otherwise) hold, own,
use, assign, lease, sell, convey or mortgage, either alone or in
conjunction with others, the rights, property, and business of any domestic
or foreign corporations, associations, partnerships, individuals, or other
entities;
Clause (l). Entry Into Profit-Sharing Arrangements and Partnerships.
To enter into any lawful arrangement for sharing profits, union of
interest, reciprocal association, or cooperative associations,
partnerships, individuals, or other entities, and to enter into any general
or limited partnership;
-4-
<PAGE>
Clause (m). Contracts.
To enter into, perform, terminate, and rescind contracts and other
agreements;
Clause (n). Guaranties.
To make any guaranty respecting stocks, dividends, securities,
indebtedness, interest, contracts or other obligations created by any
domestic or foreign corporations, associations, partnerships, individuals,
or other entities:
Clause (o). Borrowing Funds.
To borrow or raise moneys from time to time, without limit as to amount; to
execute, accept, endure, and deliver, as evidence of such borrowing, all
kinds of securities, including, but without limiting the generality
thereof, promissory notes, drafts, bills of exchange, bonds, debentures,
and other negotiable instruments and evidences of indebtedness; and to
secure the payment and performance of the obligations thereunder by
mortgage on, pledge of, or other security interest in the whole or any part
of the assets of the Corporation, whether at the time owned or afterward
acquired;
Clause (p). Loans of Funds, Generally.
To lend money for its corporate purposes, invest and reinvest its funds
from time to time, and take and hold any property as security for the
payments of funds so loaned or invested; but to make no loans secured by
the shares of the Corporation;
Clause (q). Loans to Employees.
To lend money to its employees, and otherwise assist its employees,
officers, and directors;
Clause (r). Donations.
To make donations for the public welfare or for charitable, scientific, or
educational purposes; and in time of war to make donations in aid of war
activities;
-5-
<PAGE>
Clause (s). Indemnification of Directors, Officers and Employees.
To indemnify any person made a party to any action, suit, or proceeding,
whether civil or criminal, by reason of the fact that he, his testator or
intestate, is or was a director, officer, or employee of the Corporation,
or of any corporation which he served in such capacity at the request of
the Corporation, against the reasonable expenses, including attorneys'
fees, actually and reasonably incurred by him in connection with the
defense of the action, suit, or proceeding, or in connection with any
appeal of it, and to reimburse any such person any amount paid upon any
such action, suit, or proceeding; but to make no indemnification or
reimbursement in relation to matters as to which shall be finally adjudged
in this action, suit, or proceeding that the director, officer, or employee
is liable for gross negligence or willful misconduct in the performance of
duty to the Corporation; and
clause (t). Ancillary Powers.
to have and exercise all powers necessary or convenient to effect any or
all of the purposes for which the Corporation is organized.
Section 3.03 Construction of Powers. Each of the foregoing clauses of
section 3.02 of this Article shall not be construed as purposes, but shall be
construed as independent powers and the matters expressed in each clause shall
not, unless otherwise expressly provided, be limited by reference to, or
inference from, the terms of any other clause of section 3.02. The enumeration
of specific powers shall not be construed as limiting or restricting in any
manner either the meaning of general terms used in any of these clauses, or the
scope of the general powers of the Corporation created by them; nor shall the
expression on one
-6-
<PAGE>
thing in any of these clauses be deemed to exclude another not expressed,
although it be of like nature.
Section 3.04. Carrying Out Purposes and Exercise of Powers in Any
Jurisdiction. The corporation may carry out its purposes and exercise its powers
in any state, territory, district, or possesion of the United States, or in any
foreign country, to the extent that these purposes and powers are not forbidden
by the law of the state, territory, district, or possession of the United
States, or by the foreign country; and it may limit the purpose or purposes to
carry out or the powers it proposes to exercise in any application to do
business in any state, territory, district, or possession of the United States,
or foreign country.
Section 3.05. Direction of Purposes and Exercise of Powers of Directors.
The Board of Directors, subject to any specific written limitations or
restrictions imposed by the Act or by these Articles of Incorporation, shall
direct the carrying out of the purposes and exercise the powers of the
Corporation without previous authorization or subsequent approval by the
Shareholders of the Corporation.
Section 3.06. Limiting Provision. Nothing contained in this Article shall
be construed to authorize the Corporation to engage in the business of banking
or insurance.
-7-
<PAGE>
ARTICLE 4
AUTHORIZED SHARES
The capital of the Corporation shall consist of 10,000,000 shares, all of
which have a par value of $0.01 per share, and of which 1,000,000 shares shall
be Preferred Stock, having such preferences and rights as may be fixed by the
Board of Directors at the time of issuance, and 9,000,000 shares of Common
Capital Stock.
The designations and the powers, preferences and rights, and the
qualifications or restrictions thereof are, as follows:
Except as otherwise required by statutes or provided for by resolution or
resolutions of the Board of Directors, as hereinafter set forth, the
holders of the Common Shares of the Corporation shall possess the exclusive
right to vote for the election of directors and for all other corporate
purposes.
The Preferred Shares shall be issued from time to time in one or more
series, with such distinctive serial designations as shall be stated and
expressed serial designations as shall be stated and expressed in the
resolution or resolutions providing for the issue of such shares from time
to time adopted by the Board of Directors; and in such resolution or
resolutions providing for the issue of shares of each particular series the
Board of Directors is expressly authorized to fix the annual rate or rates
of dividends for the particular series; the dividend payment dates for the
particular series and the date from which dividends on all shares of such
series issued prior to the record date for the first dividend payment date
shall be cumulative; the redemption price or prices for the particular
series; the voting powers for the particular series; the rights, if any, of
holders of the shares of the particular series to convert the same into
shares of any other series or class or other securities of the coporation
or of any other corporation, with any provisions for the subsequent
adjustment of such conversion rights;
-8-
<PAGE>
and to classify or reclassify any unissued Preferred Shares by fixing or
altering from time to time any of the foregoing rights, privileges and
qualifications.
All the Preferred Shares of any one series shall be identical with each
other in all respects, except as to the dates from which dividends thereon
shall be cumulative; and all Preferred Shares shall be of equal rank,
regardless of series, and shall be identical in all respects except as to
the particulars fixed by the Board as hereinabove provided or as fixed
herein.
ARTICLE 5
RECEIPT OF MINIMUM CAPITAL
The Corporation will not commence business until consideration of the value
of at least $1,000.00 has been received for the issuance of shares.
ARTICLE 6
PROVISIONS FOR REGULATION OF THE INTERNAL
AFFAIRS OF THE CORPORATION
Section 6.01. Code of Bylaws. The initial Code of Bylaws shall be adopted
by the Board of Directors. The power to alter, amend, or repeal the Code of
Bylaws or to adopt a new Code of bylaws shall be vested in the Board of
Directors and in the Shareholders who may, at any regular or special meeting, by
a vote of the majority of the issued and outstanding shares, adopt or amend such
bylaws. The Code of Bylaws may contain any provisions for the regulation and
management of the affairs of the Corporation not inconsistent with the Act or
these Articles of Corporation.
-9-
<PAGE>
Section 6.02. Transactions in Which Directors Have an Interest. Any
contract or other transaction between the Corporation and any firm of which one
or more of its directors are members or employees, or in which they are
interested, or between the Corporation and any corporation or association of
which one or more of its directors, officers, or employees, or in which they are
interested, shall be valid for all purposes, notwithstanding the presence of the
director or directors at the meeting of the Board of Directors of the
Corporation that acts upon, or in reference to, the contract or transaction and
notwithstanding his or their participation in the action, if the fact of such
interest shall be disclosed or known to the Board of Directors and the Board of
Directors shall, nevertheless, authorize or ratify the contract or transaction,
the interested director or directors to be counted in determining whether a
quorum is present and to be entitled to vote on such authorization or
ratification. This section shall not be construed to invalidate any contract or
other transaction that would otherwise be valid under the common and statuatory
law applicable to it.
Section 6.03. Compensation of Directors. The Board of Directors is
authorized to make provisions for reasonable compensation to its members for
their services as Directors and to fix the basis and conditions upon which this
compensation shall be paid. Any Director may also serve the Corporation in any
other capacity and receive compensation therefor in any form.
-10-
<PAGE>
Section 6.04. Right to Indemnification. The Corporation shall indemnify any
person made a party to any action, suit or proceeding, whether civil or
criminal, by reason of the fact that he, his testator, or intestate, is or was a
director, officer, or employee of the Corporation, or any corporation which he
served in such capacity at the request of the Corporation, against the
reasonable expenses, including attorneys' fees, actually and reasonably incurred
by him in connection with the defense of the action, suit or proceeding or in
connection with any appeal. The right to indemnification conferred by this
section shall not restrict the power of the Corporation to make any
indemnification permitted by law.
Section 6.05. Limitation of Liability. No person shall be liable to the
Corporation for any loss or damage suffered by it on account of any action taken
or omitted to be taken by him as a director, officer or employee of the
Corporation in good faith, if this person:
Clause (a). Reliance Upon Financial Information.
Relied upon financial statements of the Corporation represented to him to
be correct by the President or the officer of the Corporation having charge
of its books of account or stated in a written report by an independent
public or certified public accountant or firm of such accountants fairly
to reflect the financial condition of the Corporation; or considered the
assets to be of their book value; or
Clause (b). Reliance Upon Counsel.
Relied upon the advice of legal counsel for the Corporation.
-11-
<PAGE>
Section 6.06. Removal of Directors. At a special meeting of the
Shareholders called expressly for that purpose, Directors may be removed in the
manner provided in this section. The entire Board of Directors may be removed,
with or without cause, by a vote of the holders of a majority of the shares and
then entitle to vote at an election of Directors. If less than the entire Board
is to be removed, no one of the Directors may be removed if the votes cast
against his removal would be sufficient to elect him if then cumulatively voted
at an election of the entire Board of Directors. Wherever the holders of the
shares of any class are entitled to elect one or more Directors, the provisions
of this section shall apply, in respect of the removal of a Director or
Directors so elected, to the vote of the holders of the outstanding of the class
and not to the vote of the outstanding shares as a whole. No director shall be
entitled to receive notice of or a hearing with respect to his removal.
Section 6.07. Amendments of Articles of Incorporation. The Corporation
reserves the right from time to time to amend, alter, or repeat any provision in
its Articles of Incorporation in any manner now or hereafter permitted by the
Act of any other application statue, but only upon compliance with the
provisions of the Act and these Articles of Incorporation.
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ARTICLE 7
ADDRESS OF INITIAL REGISTERED OFFICE AND NAME OF
INITIAL REGISTERED AGENT
Section 7.01. Registered Office. The address of the initial registered
office of the Corporation is 407 North Carson Street, Carson City, Nevada, in
Carson City County, Nevada.
Section 7.02. Registered Agent. The name of the initial registered agent of
the Corporation, an individual resident in Nevada whose business office at the
above address is Crowell, Crowell, Crowell, Baker and Susich, Ltd.
ARTICLE 8
DATA ABOUT DIRECTORS
Section 8.01. Initial Board of Directors. The initial Board of Directors
shall consist of 3 members who need not be residents of the state of Nevada or
Shareholders of the Corporation.
Section 8.02. Names and Addresses. The names and addresses of the persons
who are to serve as Directors until the first annual meeting of Shareholders, or
until their successors shall have been elected and qualified, follow:
Allen D. Schwanke
117 General Stillwell Drive, Northeast
Albuquerque, New Mexico 87123
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Ronald L. Wilder
117 General Stillwell Drive, Northeast
Albuquerque, New Mexico 87123
Louis J. Vener
Post Office Box 25623
Albuquerque, New Mexico 87125
Section 8.03. Increase or Decrease of Directors. The number of Directors of
the Corporation shall not be less than three. Subject to this limitation, the
number of Directors may be increased or decreased from time to time by amendment
of the Code of Bylaws; but no decrease shall have the effect of shortening the
term of any incumbent Director. In the absence of a provision in the Code of
Bylaws fixing the number of Directors, the number shall be three.
ARTICLE 9
DATA ABOUT INCORPORATOR
The name and address of the incorporator of the Corporation, a natural
person, is Louis J. Vener, Post Office Box 25623, Albuquerque, New Mexico 87125.
EXECUTED this 30th day of April, 1984.
/s/ Louis J. Vener
------------------
Louis J. Vener
STATE OF NEW MEXICO )
) ss. A C K N O W L E D G E M E N T
COUNTY OF BERNALILLO )
The foregoing instrument was acknowledged before me this 18th day of April, 1984
by Louis J. Vener.
/s/ Theresa A. Quick
--------------------
Notary Public
My Commission expires: 2/11/87
[OFFICIAL SEAL]
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<PAGE>
WITNESS its hand at Albuquerque, New Mexico, this 20th day of July 1984.
SOLAR AGE INDUSTRIES, INC.
By: /s/ Allen D. Schwanke
-------------------------
Its President
(Seal) And /s/ Louis J. Vener
-------------------------
Its Secretary
STATE OF NEW MEXICO )
) ss. V E R I F I C A T I O N
COUNTY OF BERNALILLO )
ALLEN D. SCHWANKE, first being on his oath duly sworn, states that he is
the president of Solar Age Industries, Inc., and makes this Affidavit on behalf
of said corporation, and that he has been authorized by the board of directors
of said corporation to execute the foregoing Restated Articles of Incorporation,
and that the said certificate correctly sets forth the text of the Articles of
Incorporation as amended to July 20, 1984.
/s/ Allen D. Schwanke
---------------------
Allen D. Schwanke
SUBSCRIBED and SWORN to before me this 20th day of July, 1984.
/s/ Louis J. Vener
--------------
Notary Public
[OFFICIAL SEAL]
My Commission Expires: 05-11-87
AMENDED BY-LAWS
OF
SOLAR AGE INDUSTRIES, INC.
ARTICLE I. MEETINGS OF STOCKHOLDERS
Section 1.1. Time and Place. All meetings of stockholders shall be held
at such time and place, whether within or without the State of Nevada, as shall
be stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
Section 1.2. Annual Meetings. An annual meeting of stockholders,
commencing with the year 1995, shall be held on the second Tuesday in July of
each year, or, if such day be a legal holiday, on the next business day
following; provided, that if advisable or convenient to hold the meeting on such
day, then in such year the annual meeting shall instead be held on such other
day as the board shall prescribe.
Section 1.3. Special Meetings. Special meetings of stockholders, unless
otherwise prescribed by statute, may be called by the Chairman of the Board, the
President or the Board of Directors, and shall be called by the Chairman of the
Board, the President or the Secretary at the request in writing of any one or
more stockholders owning at least a majority of the shares of the Corporation
issued and outstanding and entitled to vote. Any such request shall state the
purpose or purposes of the proposed meeting. Special meetings may also be called
as provided in Section 2.4 of these Bylaws.
Section 1.4. Notice of Meetings. Written notice of each meeting of
stockholders stating the time and place thereof, and, in the case of a special
meeting, specifying the purpose or purposes thereof shall be given, in the
manner prescribed by Section 5.1 of these Bylaws, to each stockholder entitled
to vote thereat, not less than ten (10) nor more than sixty (60) days prior to
the meeting except that where the matter to be acted on is a merger or
consolidation of the Corporation or a sale, lease or exchange of all or
substantially all of its assets, such notice shall be given not less than twenty
(20) nor more than sixty (60) days prior to such meeting.
Section 1.5. Quorum. Except as otherwise provided by statute, the holders
of a majority of the shares of the Corporation issued and outstanding and
entitled to vote thereat, present in person or by proxy, shall be necessary and
sufficient to constitute a quorum for the transaction of business at each
meeting of stockholders.
Section 1.6. Vote Required. At any meeting of stockholders at which a
quorum is present, directors shall be elected by a plurality of the votes cast
and any other corporate action shall be authorized by a majority of the votes
cast, unless the action is one on which, by express provision of a statute, a
different vote is required, in which case such express provision shall govern
the determination of such action.
Section 1.7. Voting. At any meeting of stockholders, each stockholder
having the right to vote shall be entitled to vote in person or by proxy; and
each stockholder of record shall be entitled to one vote for each outstanding
share standing in his name on the books of the Corporation as of the record date
for determining the stockholders entitled to notice of and to vote at such
meeting. The order of business at all meetings of stockholders shall be
determined by the presiding officer.
Section 1.8. Proxies. Each proxy shall be in writing executed by the
stockholder giving
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the proxy or his duly authorized attorney. No proxy shall be valid after the
expiration of three (3) years from its date, unless a longer period is provided
for in the proxy. Unless voted, every proxy shall be revocable at the pleasure
of the person who executed it or of his legal representatives or assigns, except
in those cases where an irrevocable proxy permitted by statute has been given.
Section 1.9 Notice of Stockholder Business & Nominations
a) Annual Meetings of Stockholders
1) Nominations of persons for election to the Board of Directors of
the Corporation and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (I) pursuant to
the Corporation's notice of meeting, (ii) by or at the direction of the Board of
Directors or (iii) by a stockholder of the Corporation who was a stockholder of
record at the time of giving of notice provided for in this Bylaw, who is
entitled to vote at the meeting and who complies with the notice procedures set
forth in this By-law.
2) For nominations or other business to be properly brought before
an annual meeting by a stockholder pursuant to clause (iii) of paragraph a) 1)
of this By-law, the stockholder must have given timely notice thereof in writing
to the Secretary of the Corporation and such other business must otherwise be a
proper matter for stockholder action. To be timely, a stockholder's notice shall
be delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the 60th day nor earlier
than the close of business of the 90th day prior to the first anniversary of the
preceding year's annual meeting' provided, however, that in the event that the
date of the annual meeting is more than 30 days before or more than 60 days
after such anniversary date, notice by the stockholder, to be timely, must be so
delivered not earlier than the close of business of the 90th day prior to such
annual meeting and not later than the close of business of the later of the 60th
day prior to such annual meeting or the close of business on the 10th day
following the day on which public announcement of the date of such meeting is
first made by the Corporation. Such stockholder's notice shall set forth (i) as
to each person whom the stockholder proposes to nominate for election or
reelection as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors
or is otherwise required, in each case, pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (including
such person's written consent to being named in the proxy statement as a nominee
and to serving as a director if elected); (ii) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such
stockholder and the beneficial owner, if any, on whose behalf the nomination or
proposal is made, the name and address of such stockholder, as they appear on
the Corporation's books, and of such beneficial owner and the class and number
of shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
Notwithstanding anything in the second sentence of paragraph a) 2) of this
By-law to the contrary, in the event that the number of directors to be elected
to the Board of Directors of the Corporation is increased and there is no public
announcement by the Corporation naming all of the nominees for director or
specifying the size of the increased Board of Directors at least 70 days prior
to the first anniversary of the preceding year's annual meeting, a stockholder's
notice required by the By-law shall also be considered timely but only with
respect to the nominees for any new positions created by such increase, if it
shall be delivered to the Secretary
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<PAGE>
at the principal executive offices of the Corporation not later than the close
of business of the 10th day following the date on which such public
announcement is first made by the Corporation.
b) Special Meetings of Stockholders. Only such business shall be
conducted at a special meeting of stockholders as shall have been brought before
the meeting pursuant to the Corporation's notice of meeting. Nominations of
persons for election to the Board of Directors may be made at a special meeting
of stockholders at which directors are to be elected pursuant to the
Corporation's notice of meeting (i) by or at the direction of the Board of
Directors, or (ii) provided that the Board of Directors has determined that
directors shall be elected at such meeting, by any stockholder of the
Corporation who is a stockholder of record at the time of giving of notice
provided for in this By-law, who shall be entitled to vote at the meeting and
who complies with the notice procedures set forth in this By-law. In the event
the Corporation calls a special meeting of stockholders for the purpose of
electing one or more directors to the Board, any such stockholder may nominate a
person or persons (as the case may be), for election to such position(s) as
specified in the Corporation's notice of meeting, if the stockholder's notice
required by paragraph a) 2) of this By-law shall be delivered to the Secretary
at the principal executive offices of the Corporation not earlier than the 90th
day prior to such special meeting and not later than the close of business on
the later of the 60th day prior to such special meeting or the 10th day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting.
c) General
1) Notwithstanding any provision of these By-laws to the contrary,
only such persons who are nominated in accordance with the procedures set forth
in this By-law shall be eligible to serve as directors and only such business
shall be conducted at a meeting of stockholders as shall have been brought
before the meeting in accordance with the procedures set forth in this By-law.
Except as otherwise provided by law, the Certificate of Incorporation, as
amended, or these by-laws, the officer of the Corporation or other person
presiding over the meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was made or
proposed, as the case may be, in accordance with the procedures set forth in
this by-law and, if any proposed nomination or business is not in compliance
with this by-law, to declare that such defective proposal or nomination shall
be disregarded.
2) For purpose of this By-law, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
Notwithstanding the foregoing provisions of the By-law, a stockholder
shall also comply with all applicable requirements of the Exchange Act and the
rules and regulations thereunder with respect to the matters set forth in this
Bylaw. Nothing in the Bylaw shall be deemed to affect any rights of stockholders
to request inclusion of proposals in the Corporation's proxy statement pursuant
to Rule 14a-8 under the Exchange Act.
ARTICLE II. DIRECTORS
Section 2.1. Board of Directors. The property and business of the
Corporation shall be
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<PAGE>
managed by its Board of Directors, which may exercise all such powers of the
Corporation and do all such lawful acts and things on its behalf as are not
required to be exercised or done by the stockholders.
Section 2.2. Number; Election and Tenure. The first Board of Directors
shall consist of three (3) members and thereafter the number of directors
constituting the whole Board of Directors shall be not less than one (1) nor
more than nine (9) as fixed from time to time by resolution of the whole Board
or by the stockholders at any annual or special meeting; provided, that no
decrease in the number of directors shall shorten the term of any incumbent
director. With the exception of the first Board of Directors, which shall be
elected by the incorporators of the Corporation, and except as otherwise
provided in these Bylaws, directors shall be elected at the annual meeting of
stockholders. Each director shall hold office until the annual meeting of the
stockholders next succeeding his election and until his successor is elected and
has qualified or until his earlier displacement from office by resignation,
removal or otherwise.
Section 2.3. Resignation and Removal. Any director may resign at any time
by written notice to the Corporation. Any director may be removed, for cause or
without cause, by the holders of a majority of the shares then entitled to vote
at an election of directors.
Section 2.4. Vacancies. Any vacancy in the Board of Directors occurring
by reason of the death, resignation or disqualification of any director, the
removal of any director from office for cause or without cause, an increase in
the number of directors, or otherwise, may be filled by vote of the stockholders
or the Board or, if the number of directors then in office is less than a
quorum, by vote of a majority of the directors then in office or by a sole
remaining director. When one or more director shall resign from the Board,
effective at a future date, majority of the directors then in office, including
those who have so resigned, shall have power to fill such vacancy or vacancies,
the vote thereon to take effect when such resignation or resignations shall
become effective, and each director so chosen shall hold office as provided in
this Section in the filling of other vacancies. If at any time, by reason of
death or resignation or other cause, the Corporation should have no directors in
office, then any officer or any stockholder or an executor, administrator,
trustee or guardian of a stockholder, or other fiduciary entrusted with like
responsibility for the person or estate of a stockholder, may call a special
meeting of stockholders in accordance with the provisions of these Bylaws. Each
director elected to fill a vacancy shall hold office until the next succeeding
annual meeting of stockholders and until his successor is elected and has
qualified or until his earlier displacement from office by resignation, removal,
replacement or otherwise.
Section 2.5. Access to Books and Reliance. Any director shall have the
right to examine the Corporation's stock ledger, a list of its stockholders and
its other books and records for a purpose reasonably related to his position as
a director. A director shall, in the performance of his duties, 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 in relying in good faith upon other records of the Corporation.
ARTICLE III. MEETINGS OF THE BOARD
Section 3.1. Time and Place. Meetings of the Board of Directors may be
held at such time and place, within or without the State of Nevada, as shall be
determined in accordance with these Bylaws.
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Section 3.2. First Meeting. The directors elected at each annual meeting
of stockholders shall hold their first meeting at the place at which the annual
meeting of stockholders shall have been held and immediately thereafter, and no
notice of such meeting to the newly-elected directors shall be necessary in
order legally to constitute the meeting, provided a quorum shall be present.
Section 3.3. Regular Meetings. Regular meetings of the Board of Directors
may be held, without notice, at such time and place as shall from time to time
be fixed in advance by resolution of the Board.
Section 3.4 Special Meetings. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President, and at the written
request of any two (2) directors shall be called by the Chairman of the Board,
the President or the Secretary. Written notice of each special meeting of
directors stating the time and place thereof shall be served on each director,
in the manner provided in Section 5.1 of these Bylaws, at least two (2) business
days before such meeting, provided, however, that if notice is served by mail it
shall be posted at least five (5) business days before such meeting. The time
and place of any special meeting of directors may also be fixed by a duly
executed waiver of notice thereof.
Section 3.5. Quorum and Voting. At all meetings of the Board of Directors
one-third (1/3) of the total number of directors but not less than (2) directors
shall be necessary and sufficient to constitute a quorum for the transaction of
business, and the vote of a majority of the directors present at the time of the
vote, if a quorum is present at such time, shall be the act of the Board of
Directors, except as may be otherwise specifically provided by statute. If a
quorum shall not be present at any meeting of the Board of Directors, the
members of the Board present thereat may adjourn the meeting from time to time,
without notice other than an announcement at the meeting, until a quorum shall
be present. Any director who participates in any meeting of the Board by means
of conference telephone or similar communications equipment by means of which
all persons participating in a meeting can hear each other shall be deemed to be
present in person at such meeting.
Section 3.6. Meetings During Emergency. During any nuclear or atomic
disaster, or during the existence of any catastrophe, or other similar emergency
condition, as a result of which a quorum of the Board of Directors cannot
readily be convened for action, notice of any meeting of the Board during such
an emergency may be given only to such of the directors as it may be feasible to
reach at the time and by such means as may be feasible at the time, including
publication or radio. To the extent required to constitute a quorum at any
meeting of the Board of Directors during such an emergency, the officers of the
Corporation who are present shall be deemed, in order of rank and within the
same rank in order of seniority, directors for such meeting.
Section 3.7. Consents. Whenever any action is required or permitted to be
taken at a meeting of the Board of Directors, such action may be taken without a
meeting if all members of the Board consent thereto in writing and such written
consent or consents are filed with the minutes of the Proceedings of the Board.
ARTICLE IV. COMMITTEES
Section 4.1. Executive Committee. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate directors of the
Corporation in such number as the Board shall see fit, but not less than two
(2), as an Executive Committee which shall have and
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may exercise, during intervals between meetings of the Board, the powers of the
Board of Directors in the management of the business and affairs of the
Corporation (including, but without limitation, the powers of the Board of
Directors as specified in these Bylaws, provided, however, that it shall not
have power to fill vacancies in its membership, to authorize the issuance of
shares of the capital stock of the Corporation, or to make or amend these
Bylaws), and may authorize the seal of the Corporation to be affixed to all
papers which may require it. The Board of Directors shall designate one of the
members of the Executive Committee to be the Chairman of said Committee. Each
member of the Executive Committee shall continue to act as such only so long as
he/she shall be a director of the Corporation and only during the pleasure of a
majority of the total number of directors of the Corporation at the time in
office. In the absence or disqualification of a member of the Executive
Committee, the member or members present at any meeting and not disqualified
from voting, whether or not he/she 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.
Section 4.2. Meetings. Regular meetings of the Executive Committee, of
which no notice shall be necessary, shall be held on such days and at such
places, within or without the State of Nevada, as shall be fixed by resolution
adopted by a majority of, and communicated to all, the members of the Executive
Committee. Special meetings of said Committee may be called at the request of
any member. Notice of each special meeting of said Committee shall be given in
the manner provided in Sections 3.4 and 5.1 of these Bylaws. Subject to the
provisions of this Article IV, the Executive Committee, by resolution of the
majority of all its members, shall fix its own rules of procedure and keep a
record of its proceedings and report them to the Board of Directors at the next
regular meeting thereof after such proceedings shall have been taken.
Section 4.3. Quorum and Manner of Acting. Not less than a majority of the
members of the Executive Committee then in office shall constitute a quorum for
the transaction of business, and the act of a majority of those present at a
meeting thereof at which a quorum is present shall be the act of the Executive
Committee. The directors comprising said Committee shall act only as a
committee, and such directors, individually, shall have no power as such.
Section 4.4. Vacancies. The Board of Directors, by vote of a majority of
the whole Board, shall have power to fill any vacancy in the Executive
Committee due to death, resignation, removal, or any other cause.
Section 4.5. Resignation. Any director may resign from the Executive
Committee at any time by giving written notice of his/her resignation to the
Board of Directors or to the Chairman of the Board, the Chairman of the
Executive Committee, the President, or the Secretary. Such resignation shall
take effect at the date of receipt of such notice or at any later time specified
therein; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 4.6. Other Committees. The Board of Directors may, by resolution
or resolutions passed by a majority of the whole Board, designate one or more
other committees, each such committee to consist of two (2) or more directors of
the Corporation, which shall have any may exercise such powers as the Board of
Directors may determine and specify in such resolution or resolutions, such
committee or committees to have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors. A majority of all
the members of any such committee may fix its rules of procedure, determine its
actions, and fix the time and place (whether within or without the State of
Nevada) of its
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meetings and specify what notice thereof, if any, shall be given, unless the
Board of Directors shall otherwise by resolution provide. The Board of Directors
shall have the power to change the members of any such committee at any time, to
fill vacancies, and to discharge any such committee, either with or without
cause, at any time. In the absence or disqualification of a member of any such
committee, the member or members present at any meeting and not disqualified
from voting, whether or not he/she 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.
Section 4.7. Action by Consent. Any action required or permitted to be
taken at any meeting of any committee authorized hereunder may be taken
without a meeting if prior to such action a written consent thereto is signed by
all members of such committee, and such written consent is filed with the
minutes of the proceedings of the Board or such committee.
ARTICLE V. NOTICES
Section 5.1. Delivery of Notices. Notices to directors and stockholders
shall be in writing and may be delivered personally or by mail. Notice by mail
shall be deemed to be given at the time when deposited in the post office or a
letter box, with first class postage prepaid, and addressed to directors or
stockholders at their respective addresses appearing on the books of the
Corporation. Notice to directors may also be given by telegram or telecopier
addressed to directors at their respective addresses appearing on the books of
the Corporation or by leaving the notice at the residence or usual place of
business of a director. Notice by telegram shall be deemed to be given when
received by the communications carrier. Notice by telecopier shall be deemed to
be given when transmitted.
Section 5.2. Waiver of Notice. Whenever the Corporation or the Board of
Directors is authorized to take any action after notice to any person or
persons, such action may be taken without notice, if at any time before or after
such action is completed the person or persons entitled to such notice submit a
signed waiver of notice. Attendance of a person at a meeting of stockholders or
directors, as the case may be, shall constitute a waiver of notice of such
meeting, except where the person is attending 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. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of
stockholders or directors need be specified in any written waiver or notice.
ARTICLE VI. OFFICERS
Section 6.1. Executive Officers. The executive officers of the
Corporation shall be a Chairman of the Board, a President, one (1) or more
Executive Vice Presidents, a Treasurer and a Secretary. The Chairman of the
Board and the President shall be selected from among the directors, but no other
executive officer need be a member of the Board. Two (2) or more officers,
except those of President and Vice President and those of President and
Secretary, may be held by the same person, but no officer shall execute,
acknowledge or verify an instrument in more than one capacity. The executive
officers of the Corporation shall be appointed annually by the Board of
Directors at its first meeting following the meeting of stockholders at which
the Board was elected.
Section 6.2. Other Officers and Agents. The Board of Directors may also
appoint one (1) or more Assistant Vice Presidents, Assistant Treasurers and
Assistant Secretaries, and such
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other officers and agents as the Board may determine to be advisable.
Section 6.3. Tenure; Resignation; Removal; Vacancies. Each officer of the
Corporation shall hold office until his successor is appointed or until his
earlier displacement from office by resignation, removal or otherwise. Any
officer may resign by written notice to the Corporation and may be removed for
cause or without cause by the Board of Directors, provided, that any such
removal shall be without prejudice to the rights, if any, of the officer so
removed under any employment contract or other agreement with the Corporation.
If the office of any officer becomes vacant for any reason, the vacancy may be
filled by the Board of Directors.
Section 6.4. Authority and Duties. All officers as between themselves and
the Corporation, shall have such authority and perform such duties in the
management of the Corporation as may be provided in these Bylaws, or, to the
extent not provided, as may be prescribed by the Board of Directors.
Section 6.5. The Chairman of the Board. The Chairman of the Board may but
shall not necessarily be the President of the Corporation. He/She shall preside
at all meetings of the stockholders and the directors. He/She shall have general
and active management of the business of the Corporation, shall see to it that
all resolutions and orders of the Board of Directors are carried into effect,
and, in connection therewith, shall be authorized to delegate to the President
and the other executive officers such of his/her powers and duties as Chairman
of the Board at such times and in such manner as he/she may deem to be
advisable. Except where by law or by order of the Board of Directors the
signature of the President is required, the Chairman of the Board shall have the
same power as the President to execute instruments on behalf of the Corporation.
Section 6.6. The President. The President shall be the Chief Operating
Officer of the Corporation, and its executive officer next in authority to the
Chairman of the Board. He/She shall assist the Chairman of the Board in the
management of the business of the Corporation and, in the absence or disability
of the Chairman, or in the event of the explicit refusal of the Chairman to
discharge the duties of his office, he/she shall preside at all meetings of the
stockholders and the directors, and exercise the other powers and perform the
other duties of the Chairman or designate the executive officers of the
Corporation by whom such other powers shall be exercised and other duties
performed; and he/she shall have such other powers and duties as may from time
to time be assigned to him/her by the Board of Directors or the Chairman of the
Board. During the vacancy in the office of Chairman of the Board the President
shall serve as Acting Chairman.
Section 6.7. The Vice Presidents. The Vice President or, if there be more
than one, the Vice Presidents, shall assist the Chairman of the Board in the
management of the business of the Corporation and the implementation of
resolutions and orders of the Board of Directors at such times and such manner
as the Chairman of the Board may deem to be advisable. If there be more than one
Vice President, the Board of Directors may grant such titles as shall be
descriptive of their respective functions or indicative of their relative
seniority. The Vice President, or, if there be more than one, the Vice
Presidents in the order of their seniority as indicated by their titles or as
otherwise determined by the Board of Directors shall in the absence or
disability of the Chairman of the Board and the President, or in the event of
the explicit refusal of the Chairman and the President to discharge the duties
of their offices, exercise the powers and perform the duties of those officers;
and he/she or they shall have such other powers and duties as the Board of
Directors or the Chairman of the Board may from time to time prescribe. Said
Vice President shall serve as Acting President during a vacancy in the
Page 8 of 13
<PAGE>
office of President and, in the event the offices of both the Chairman of the
Board and the President are vacant shall serve as Acting Chairman.
Section 6.8. The Assistant Vice Presidents. The Assistant Vice President,
if any, or, if there be more than one, the Assistant Vice Presidents, shall
perform such duties as may from time to time be prescribed by the Board of
Directors or by the Chairman of the Board.
Section 6.9. The Treasurer. The Treasurer shall have the care and custody
of the corporate funds, and other valuable effects, including securities, and
shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and other valuable
effects in the name of and to the credit of the Corporation in such depositories
as may be designated by the Board of Directors. The Treasurer shall disburse the
funds of the Corporation as may be ordered by the Board of Directors, taking
proper vouchers for such disbursements, shall render to the chairman of the
Board and the Board of Directors, at meetings or whenever it may require it, an
account of all his transactions as Treasurer and of the financial condition of
the Corporation; and he shall perform such other duties as the Board of
Directors or the Chairman of the Board may from time to time prescribe.
Section 6.10. The Assistant Treasurer. The Assistant Treasurer, if any,
or, if there be more than one, the Assistant Treasurers, in the order determined
by the Board of Directors or by the Chairman of the Board, shall, in the absence
or disability of the Treasurer, or in the event of the explicit refusal of the
Treasurer to discharge the duties of the his/her office, exercise the powers
and perform the duties of the Treasurer; and he/she or they shall perform such
other duties as the Board of Directors or the Chairman of the Board may from
time to time prescribe. Said Assistant Treasurer shall serve as Acting Treasurer
during a vacancy in the office of Treasurer.
Section 6.11. The Secretary. The Secretary shall attend all meetings of
the stockholders and of the Board of Directors and shall record the minutes of
all proceedings taken at such meetings, and maintain all documents evidencing
corporate actions taken by written consent of the stockholders or of the Board
of Directors, in a book to be kept for that purpose. He/She shall see to it that
all notices of meetings of the stockholders and of special meetings of the Board
of Directors are duly given in accordance with these Bylaws or as required by
statute; he/she shall be the custodian of the seal of the Corporation, and, when
authorized by the Board of Directors, he shall cause the corporate seal to be
affixed, attested by his signature as Secretary or by the signature of an
Assistant Secretary; he shall also keep or cause to be kept a stock book,
containing the names, alphabetically arranged, of all persons who are
stockholders of the Corporation showing their respective addresses, the number
of shares registered in the name of each, and the dates when they respectively
became the owners of record thereof, and such book shall be open for inspection
as prescribed by the laws of the State of Nevada; and he/she shall perform such
other duties as may from time to time be prescribed by the Board of Directors or
by the Chairman of the Board.
Section 6.12. The Assistant Secretary. The Assistant Secretary, if any,
or, if there be more than one, the Assistant Secretaries, in the order
determined by the Board of Directors or by the Chairman of the Board shall, in
the absence or disability of the Secretary, or in the event of the explicit
refusal of the Secretary to discharge the duties of his/her office, exercise the
powers and perform the duties of the Secretary; and he/she or they shall perform
such other duties as the Board of Directors or the Chairman of the Board from
time to time prescribe. Said Assistant Secretary shall serve as Acting Secretary
during a vacancy in the office of the
Page 9 of 13
<PAGE>
Secretary.
ARTICLE VII. STOCK CERTIFICATES
Section 7.1. Form and Signature. The stock certificates of the
Corporation shall be in such form as shall be determined by the Board of
Directors, and shall be numbered and entered in the books of the Corporation as
they are issued. Each certificate shall exhibit the registered holder's name and
the number of shares that it evidences, shall set forth such other statements as
may be required by statute, and shall be signed by the Chairman of the Board,
President or Vice President and by the Treasurer or an Assistant Treasurer or by
the Secretary or an Assistant Secretary.
Section 7.2. Lost Certificates. The Board of Directors may direct that a
new stock certificate or certificates which have been mutilated or which are
alleged to have been lost, stolen or destroyed, upon presentation of each such
mutilated certificate or the making by the person claiming any such certificate
to have been lost, stolen or destroyed of an affidavit as to the fact and
circumstances of the loss, theft or destruction thereof. The Board, in its
discretion and as a condition precedent to the issuance of any new certificate,
may require the owner of any certificate alleged to have been lost, stolen or
destroyed, or his legal representative, to furnish the Corporation with a bond,
in such sum and with such surety or sureties as it may direct, as indemnity
against any claim that may be made against the Corporation in respect of such
lost, stolen or destroyed certificate.
Section 7.3. Registration of Transfer. Upon surrender to the Corporation
or any transfer agent of the Corporation of a stock certificate duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation shall issue or cause its transfer agent to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
ARTICLE VIII. GENERAL PROVISIONS
Section 8.1. Record Date.
(a) For the purpose of determining the stockholders entitled to
notice of, or to vote at, any meeting of stockholders or at any adjournment
thereof in respect of which a new record date is not fixed, or to express
written consent to the taking of corporate action without a meeting or to
receive notice that any such corporate action was taken without a meeting or for
the purpose of determining the stockholders entitled to receive payment of any
dividend or other distribution or allotment of any rights, or to exercise any
rights in respect of any change, conversion or exchange of shares, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a date as the record date for any such determination of stockholders. Such date
shall not be more than sixty (60) nor less than ten (10) days before the date of
such meeting, nor more than sixty (60) days prior to any other action.
(b) If no record date is fixed:
(1) The record date for determining the stockholders entitled to
notice of or to vote at a meeting shall be at the close of business on the day
next preceding the day on which notice is given, or, if no notice is given, the
day next preceding the day on which the meeting is held;
Page 10 of 13
<PAGE>
(2) The record date for determining stockholders entitled to
express written consent to the taking of any corporate action 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; and
(3) The record date for determining stockholders for any purpose
other than those specified in subparagraphs (1) and (2) shall be at the close of
business on the day on which the resolution of the Board of Directors relating
thereto is adopted.
Section 8.2. Registered Stockholders. There shall be kept at the office
of the Corporation in the State of Nevada a record containing the names and
addresses of all stockholders, the number of shares held by each and the dates
when they respectively became the owners of record thereof. Except as otherwise
required by law, the Corporation shall be entitled to recognize a sole owner of
such shares for all purposes, and shall not be bound to recognize any equitable
or legal claim to or interest in such shares on the part of any person other
than such registered holder, regardless of whether it shall have knowledge or
notice of any such claim or interest. Without limiting the generality of the
foregoing, the Corporation shall be entitled to recognize the exclusive right of
a person whose holding of shares is so pursuant to Section 7.1 of these Bylaws
to be treated as the sole owner of such shares for the purpose for which such
record date was so fixed or determined.
Section 8.3. Dividends and Distributions; Reserves. Subject to all
applicable requirements of law and any indenture or other agreement to which the
Corporation is a party or by which it is bound, the Board of Directors may
declare to be payable, in cash, in other property or in shares of the
Corporation, such dividends and distributions upon or in respect of outstanding
shares of the Corporation as the Board may deem to be advisable. Before
declaring any such dividend or distribution, the Board may cause to be set
aside, out of any funds or other property or assets of the Corporation legally
available for the payment of dividends or distributions, such sum or sums as the
Board, in its absolute discretion, may consider to be proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the Corporation, or for such other purpose as the
Board may deem conducive to the interest of the Corporation, and the Board may
modify or abolish any such reserve in the manner in which it was created.
Section 8.4. Annual Statement. The Board of Directors shall present at
each annual meeting of the stockholders a full and clear statement of the
business and financial condition of the Corporation.
Section 8.5. Fiscal Year. The fiscal year of the Corporation shall be
fixed and may from time to time be changed by resolution of the Board of
Directors.
Section 8.6. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and the words "Corporate
Seal Nevada".
Section 8.7 Securities of Other Corporations. The Chairman of the Board
or any other officer authorized by the Board of Directors shall have power to
vote and otherwise act on behalf of the Corporation, in person or by proxy, at
any meeting of stockholders of or with respect to any action of stockholders of
any other corporation in which this Corporation may hold securities and
otherwise to exercise any and all rights and powers which this Corporation may
possess by reason of its ownership of securities in such other corporation.
Section 8.8. Loans to Directors. A loan shall not be made by the
Corporation to any
Page 11 of 13
<PAGE>
director, provided, however, that the Corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the Corporation or of any of its subsidiaries, including any officer or
employee who is a director of the Corporation, whenever in the judgment of the
directors such loan, guarantee or assistance may reasonably be expected to
benefit the Corporation.
Section 8.9. Litigation by Corporation. No court action, suit or
arbitration proceeding shall be commenced by the Corporation against a member of
the Board of Directors unless authorized by a specific resolution of the Board.
ARTICLE IX. INDEMNIFICATION
Section 9.1. Indemnification. The Corporation shall (a) indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he/she
is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually and reasonably
incurred by him/her in connection with the defense or settlement of such action
or suit, and (b) indemnify any person who was or is a 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/she is or was a director, officer, employee or agent of the Corporation, or
served at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him/her in
connection with any such action, suit or proceeding; in each case to the fullest
extent permissible under CHAPTER 87, NRS or the indemnification provisions of
any successor statute. The foregoing right of indemnification shall in no way be
exclusive of any other right of indemnification to which any such person may be
entitled, under any by-law, agreement, vote of stockholders or disinterested
directors or direction of any court or otherwise, and shall inure to the benefit
of the heirs, executors and administrators of such a person.
For purposes of the Section, references to "OTHER ENTERPRISES" shall
include employee benefit plans; references to "FINES" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "SERVING AT THE REQUEST OF THE CORPORATION" shall include any
service as a director, officer, employee or agent of the Corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries.
For the purposes of this Section, references to "THE CORPORATION"
include all constituent corporations absorbed in a consolidation or merger as
well as the resulting or surviving corporation so that any person who is or was
a director, officer, employee or agent of such a constituent corporation or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, or other enterprise shall stand in the same position under the provisions
of this Section with respect to the resulting or surviving corporation as he/she
would if he/she served the resulting or surviving corporation in the same
capacity.
Page 12 of 13
<PAGE>
ARTICLE X. AMENDMENTS
Section 10.1. Power to Amend. These Bylaws may be amended or repealed and
new Bylaws may be adopted, in the manner provided in the Certificate of
Incorporation.
Page 13 of 13
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