SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Act of
1934
Date of Report (Date of earliest event reported) June 16,
1997
Cronus Corporation
(Exact name of registrant as specified in its charter)
Nevada 0-9297 36-3880744
( State or other ( Commission ( I.R.S.
Employer
jurisdiction File Number )
Identification No.)
of Incorporation )
7660 E. Broadway, Suite 210, Tucson, Arizona 85710
( Address of principal executive offices )
( Zip Code )
Registrant's telephone number, including area code:(602)
885-1220
Item 1. Changes in Control of Registrant.
None.
Item 2. Acquisition or Disposition of Assets.
On April 3, 1997, the Company entered into a
Reorganization Agreement with PetroSun Exploration &
Production, Inc. (hereinafter referred to as
"PetroSun"), an Arizona corporation incorporated on
April 4, 1996. Pursuant to the Reorganization
Agreement, a copy of which is attached hereto as
Exhibit 1, the outstanding shares of PetroSun were
acquired by the Company in return for 600,000 shares of
the Company's restricted common stock. The Agreement
called for PetroSun to be merged with Big Bug
Acquisition Company, a wholly owned subsidiary of the
Company, in the form of a reverse triangular merger.
The transaction closed on June 4, 1997.
PetroSun has executed an Employment Contract, a copy of
which is attached hereto as Exhibit 2, with the
President of PetroSun, Gordon M. LeBlanc, Jr.
Additionally, Mr. LeBlanc was granted an employee
Incentive Stock Option, a copy of which is attached
hereto as Exhibit 3. The grant provides the option for
Mr. LeBlanc, Jr. to acquire up to 2,400,000 shares of
the Company's stock at a price of $ 0.50.
PetroSun controls oil and gas reserves in Louisiana,
Northern Arizona and Arkansas. Geologist, Gordon
LeBlanc Jr., PetroSun's president, has been in the oil
and gas industry for over 20 years and has agreed to
remain as president with a mandate to bring these
reserves into production expeditiously and to continue
PetroSun's exploration program.
Item 3. Bankruptcy or Receivership.
None.
Item 4. Changes in Registrant's Certifying
Accountant.
None.
Item 5. Other Events.
None.
Item 6. Resignations of Registrant's Directors.
None.
Item 7. Financial Statements and Exhibits.
Financial statements and pro forma financial
information for Cronus Corporation pursuant to
Regulation S-X shall be provided as are available.
(a) Exhibits provided herein as follows:
1. Reorganization Agreement
2. Employment Agreement
3. Grant of Employee Incentive Stock
Item 8. Change in Fiscal Year.
None
Signatures
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto
duly authorized.
Cronus Corporation
( Registrant )
Date: June 16, 1997 /s/ Jonathan
Roberts______________
Jonathan Roberts, President
EXHIBIT 1
REORGANIZATION AGREEMENT
PETROSUN EXPLORATION & PRODUCTION, INC.
(an Arizona corporation)
and
CRONUS CORPORATION
(a Nevada corporation)
and
BIG BUG ACQUISITION COMPANY
(an Arizona corporation)
April 3, 1997
ABLE OF CONTENTS
ARTICLE I: Merger
1.01. Closing 5
1.02. Surviving 6
1.03. Terms of the Merger 6
1.04. Payment for Shares 6
1.05. Certain effects of the Merger 7
1.06. Filing of the Certificate of Merger 8
1.07. Sales of Shares 8
ARTICLE II: Representations and Warranties of PetroSun
to Cronus and Acquiring Corporation
2.01. Corporate Organization 8
2.02. Authorization 8
2.03. Compliance with Law 9
2.04. No Violations 9
2.05. Shareholder Interest 9
2.06. Subsidiaries and Affiliates
9
2.07. Consents and Approvals of Government
Authorities 9
2.08. Financial Statements 9
2.09. No Undisclosed Liabilities or Obligations 10
2.10. Absence of Certain Changes 10
2.11. Title to Properties; Encumbrances 12
2.12. Contracts and Commitments; No Default 12
2.13. Leases 14
2.14. Litigation 14
2.15. Tax Returns 14
2.16. Permits and Licenses 14
2.17. Disclosure 14
ARTICLE III: Representations and Warranties of Cronus
and Acquiring Corporation to PetroSun
3.01. Corporate Organization 15
3.02. Authorization 15
3.03. Compliance with Law 15
3.04. No Violations 16
3.05. Subsidiaries and Affiliates 16
3.06. Consents and Approvals of Government Authorities
16
3.07. Financial Statements 16
3.08. No Undisclosed Liabilities or Obligations 16
3.09. Absence of Certain Changes 17
3.10. Title to Properties; Encumbrances 18
3.11. Contracts and Commitments; No Default 18
3.12. Litigation 19
3.13. Tax Returns 20
3.14. SEC Reports 20
3.15. Disclosure 20
3.16 Corporate Status 20
ARTICLE IV: Conduct of PetroSun Pending Closing
4.01. Regular Course of Business 20
4.02. Capital Changes 20
4.03. Subsidiaries 21
4.04. Organization 21
4.05. Contracts 21
4.06. No Default; Amendment 21
4.07. Compliance with Laws 21
4.08. Tax Returns 21
4.09. No Acquisitions 21
ARTICLE V: Obligations of Cronus, Acquiring
Corporation and PetroSun Pending Closing
5.01 Full Access 21
5.02. Confidentiality 22
5.03. Auditable Financial Statements 22
5.04. Further Assurances 22
5.05. Public Announcements 23
ARTICLE VI: Conditions to PetroSun's Closing
Obligation
6.01 Representations and Warranties True 23
6.02. Performance 23
6.03. Delivery of Audited Cronus Financial Statements
23
6.04. No Governmental Proceedings or Litigation 23
6.05 Delivery of Consideration 23
ARTICLE VII: Conditions to Cronus' and Acquiring
Corporation's Closing Obligations
7.01. Representations and Warranties True 24
7.02. Performance 24
7.03. Delivery of Auditable PetroSun Financial
Statements 24
7.04. Delivery of Appraisal 24
7.05. No Governmental Proceedings or Litigation 24
ARTICLE VIII: Termination and Abandonment
8.01. Methods of Termination 24
8.02. Procedure Upon Termination
24
ARTICLE IX: General Provisions
9.01. Waiver 25
9.02. Notices 25
9.03. Entire Agreement 25
9.04. Headings 25
9.05. Governing Law 25
9.06. Counterparts 25
9.07. No Oral Modification 25
9.08. Survival of Representations, Warranties and
Covenants 26
9.09. Severability 26
9.10. Successor and Assigns 26
9.11. Brokers 26
9.12. Expenses 26
THIS REORGANIZATION AGREEMENT ("Agreement") made
and entered into this 3rd day of April, 1997
("Execution Date"), by and between PetroSun Exploration
& Production, Inc. ("PetroSun"), a privately-held
Arizona corporation, Cronus Corporation ("Cronus"), a
publicly-held Nevada corporation, and Big Bug
Acquisition Company (hereinafter referred to as
"Acquiring Corporation"), an Arizona corporation which
is wholly-owned by Cronus, for the purpose of acquiring
PetroSun as a wholly-owned subsidiary of Cronus in an
"A Reorganization" or "Reverse Triangular Merger"
("Merger"),
WITNESSETH:
WHEREAS, Cronus intends to acquire (through a reverse
triangular Merger between PetroSun and Acquiring
Corporation) PetroSun and its business;
WHEREAS, Acquiring Corporation is currently a wholly-
owned subsidiary of Cronus; and
WHEREAS, the respective boards of PetroSun, Cronus and
Acquiring Corporation and the sole stockholders of
PetroSun and Acquiring Corporation (deeming it
advisable for the benefit of each corporation and their
respective stockholders that Cronus acquire through the
Merger PetroSun as a wholly-owned subsidiary) have
approved this Agreement, subject to the conditions
precedent to Closing set forth in Articles VI and VII
hereof, and, therefore, have agreed that Acquiring
Corporation be merged with and into PetroSun and that
Cronus thereby, through its subsidiary, Acquiring
Corporation, acquire the business and prospects of
PetroSun;
NOW, THEREFORE, in consideration of the above and
foregoing premises and the mutual terms, covenants,
representations, warranties, covenants and conditions
set forth herein, and such other and further
consideration, the receipt and sufficiency of which are
hereby acknowledged, THE PARTIES HEREBY ADOPT THIS
AGREEMENT AS A TAX-FREE REORGANIZATION UNDER SECTION
368(a) OF THE INTERNAL REVENUE CODE AND AGREE AS
FOLLOWS:
ARTICLE I: Merger
1.01. Closing. The closing of the transactions
evidenced by this Agreement the ("Closing") shall take
place at the offices of Cronus Corporation, 7660 E.
Broadway, Suite 210, Tucson, Arizona, (or such other
place as the parties may agree, telephonically or in
person) at 10:00 a.m. local time on March 31, 1997 (the
"Closing Date"); provided, however, either party may,
for any reason, postpone the Closing Date for a period
up to fifteen (15) days. In addition, the Closing Date
may be postponed to a later time and date by mutual
agreement of the parties but provided, however, the
Closing Date shall not be extended beyond April 15,
1997, without the consent of all parties hereto. If
the Closing Date is postponed, all references to the
Closing Date in this Agreement shall refer to the
postponed date. At Closing, PetroSun shall deliver to
Cronus all of its files, documents, papers, agreements,
books of account and records pertaining to its
business.
1.02. Surviving Corporation. Acquiring
Corporation shall be merged with and into PetroSun,
which may herein sometimes referred to as "Surviving
Corporation." The Merger shall become effective on the
filing date of the Articles of Merger with the
appropriate State Authorities.
(a) Articles of Incorporation. The articles of
incorporation of PetroSun, as in effect immediately
prior to the execution and delivery of this Agreement,
shall be the articles of the Surviving Corporation and
shall thereafter continue to be its articles until duly
amended or repealed.
(b) Bylaws. The bylaws of PetroSun, as in effect
immediately prior to the execution and delivery of this
Agreement, shall be the bylaws of the Surviving
Corporation and shall thereafter continue to be its
bylaws until duly amended or repealed.
(c) Director. The directors of PetroSun, after
fulfillment of the conditions precedent to
effectiveness of this Agreement, shall be Mr. Jonathan
Roberts, Mr. Sean Larruso and Mr. Gordon LeBlanc, Jr.
(d) Executive Officer. The chief executive officer of
PetroSun, after fulfillment of the conditions precedent
to effectiveness of this Agreement, shall be Mr. Gordon
LeBlanc, Jr. Mr. LeBlanc shall hold office after the
execution and delivery hereof for the term to which he
has been elected or appointed, subject to the
provisions set forth in the bylaws governing the
respective corporations.
1.03. Terms of the Merger. Upon the execution and
delivery of this Agreement and the effectiveness of the
Merger, each share of the issued and outstanding stock
of Acquiring Corporation shall, (i) by virtue of the
Merger and without any action on the part of the
holder(s) thereof, (a) cease to exist and shall be
canceled and retired, (ii) each share of the issued and
outstanding stock of PetroSun shall by virtue of the
merger and without any action on the part of the
holders thereof, be converted into the right to
receive, upon surrender of the certificate representing
such shares, the consideration set forth under
paragraph 1.04 hereof, (b) and (iii) PetroSun shall
issue 100 shares of newly issued common stock to
Cronus.
1.04. Consideration. In consideration for the
Merger, Cronus shall issue and deliver, upon
fulfillment of the conditions precedent hereto, 600,000
shares of the outstanding common stock of Cronus. The
certificates representing shares to be issued shall be
delivered to the shareholders of PetroSun at closing.
The aforesaid shares shall be fully-paid and non-
assessable shares of the common stock of Cronus, all
of which shall be "restricted," as defined in
Regulation D and Rule 144 under the Securities Act of
1933, as amended (the "Securities Act"). Recipient of
the shares understands that: (i) the Shares will not be
registered under the 1933 Act, the Arizona Securities
Act (the "Arizona Act") or the securities laws of any
other jurisdiction; (ii) the Shares are being offered
pursuant to an exemption from such registration
provided by Section 4(2) and 4(6) of the 1933 Act,
Regulation D promulgated under the 1933 Act and
comparable provisions of the Arizona Act; and (iii) the
Shares must be held, and the Recipient must bear the
economic risk of Recipient's investment in the Shares,
indefinitely without any transfer, sale or other
disposition unless the Shares are subsequently
registered under the 1933 Act, the Arizona Act and the
securities laws of any other applicable jurisdictions
or, in the opinion of counsel for the Company,
registration is not required under such Acts or laws as
the result of an available exemption. Recipient
further understands that: (i) the Company will be under
no obligation, to register the Shares under the 1933
Act, the Arizona Act or the securities laws of any
other jurisdiction or to take any action which would
make available any exemption from such registration,
and (ii) Recipient therefore may be precluded from
transferring, selling or otherwise disposing of any
Shares or any interest therein for an indefinite period
of time or at any particular time. However, the
Company does agree to include the shares issued
pursuant to this agreement in a registration, should
the Company decide to do such registration. Recipient
understands that there shall be endorsed on the
certificate evidencing the Shares a legend
substantially to the following effect:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
RESTRICTED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND ARE "RESTRICTED SECURITIES" AS DEFINED BY
RULE 144 UNDER THAT ACT. THE SHARES MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT REGISTERING THE
SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR, IN LIEU THEREOF, AN OPINION OF COUNSEL FOR THIS
COMPANY TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED
UNDER THAT ACT. WITHOUT LIMITING THE FOREGOING, THE
SHARES MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF WITHOUT AN OPINION OF COUNSEL FOR THIS
COMPANY THAT SUCH TRANSFER, SALE OR OTHER DISPOSITION
DOES NOT VIOLATE THE ARIZONA SECURITIES ACT OR THE
SECURITIES LAWS OF ANY OTHER APPLICABLE JURISDICTION OR
ANY RULES OR REGULATIONS THEREUNDER."
Upon and after the execution and delivery of this
Agreement, no transfer of stock outstanding prior to
said date shall be made on the stock transfer books of
the Surviving Corporation.
1.05. Certain Effects of the Merger. Upon
effectiveness of this Agreement, the separate existence
of Acquiring Corporation shall cease, and Acquiring
Corporation shall be merged with and into PetroSun,
which, as the Surviving Corporation, shall possess all
the assets, properties, rights, privileges, powers and
franchises of a public or of a private nature, and be
subject to all liabilities, restrictions, disabilities
and duties of Acquiring Corporation. If at any time
the Surviving Corporation shall consider or be advised
that any further assignment or assurances of law or any
things are necessary or desirable to vest in the
Surviving Corporation, according to the terms hereof,
the title to any property or rights of Acquiring
Corporation, the last acting officers and directors of
Acquiring Corporation (or the corresponding officers
and directors of the Surviving Corporation) shall
execute and make all such proper assignments and
assurances and do all things necessary or proper to
vest title in such property or rights in the Surviving
Corporation, and otherwise to carry out the purpose and
intent of this Agreement.
1.06. Filing of Certificate of Merger. As soon as
practicable after the effectiveness of this Agreement,
PetroSun and Acquiring Corporation shall deliver for
filing duly executed Articles of Merger as required by
Title 10 of the Arizona Business Organizations Law and
the Nevada Corporation Code, and will take such other
and further action in connection therewith, as may be
required by Arizona and Nevada law to make the Merger
effective as soon as practicable thereafter.
1.07. Sales of Shares. The parties hereto agree
and recognize that any sales of shares of Cronus common
stock, held by the Officers, Directors of Cronus and
all parties to this Agreement, shall be in strict
accordance with State and Federal laws, rules and
regulations and shall be agreed upon by said parties
prior to sale.
ARTICLE II: Representations and Warranties of
PetroSun to Cronus and Acquiring Corporation
PetroSun hereby represents and warrants to Cronus and
Acquiring Corporation that, as of Closing:
2.01 Corporate Organization. PetroSun (which term
for purposes of this Article II shall include any and
all subsidiaries of PetroSun, if any), (a) is duly
organized, validly existing and in good standing under
the laws of the state of its organization and has all
power and authority necessary to carry on its business
as now being conducted and to own, lease or operate its
properties and assets, and (b) is duly qualified or
licensed to do business as a foreign corporation in
good standing in every jurisdiction in which the
character or location of the properties and assets
owned, leased or operated by it or the conduct of its
business requires such qualification or licensing.
Prior to Closing, a schedule shall be initialed and
delivered by PetroSun to Cronus and Acquiring
Corporation (the "PetroSun Disclosure Schedule") which
lists in paragraph 2.0l thereof all jurisdictions in
which PetroSun is qualified or licenses to do business
and has true, correct and complete copies of the
articles and bylaws of PetroSun as presently in effect
attached, as well as a Certificate of
Existence/Authority from the various states of
organization, and Certificates of Authority to do
Business in each and every jurisdiction requiring such
for the conduct of the business or operations of
PetroSun.
2.02. Authorization. PetroSun has full corporate
power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby. The
board of directors governing PetroSun has duly taken
all action required by law and its governing documents
to authorize the execution and delivery of this
Agreement and the consummation of the transactions
contemplated hereby. This Agreement has been duly and
validly executed and delivered and no other individual
or corporate action is necessary. This Agreement is a
valid and binding obligation of PetroSun and is
enforceable in accordance with its terms, except to the
extent that: (a) the enforcement of certain rights and
remedies created by this Agreement is subject to
bankruptcy, insolvency, reorganization and similar laws
of general application affecting the rights and
remedies of the parties, and (b) the enforceability of
any particular provision of this agreement under
principles of equity or the availability of equitable
remedies (such as specific performance, injunctive
relief waiver or other equitable remedies) is subject
to the discretion of court.
2.03. Compliance with laws. PetroSun is in
material compliance with all laws, regulations and
orders applicable to its businesses. PetroSun has not
received any notification that it is in violation of
any law, regulation or order and no material violation
exists.
2.04. No Violations. Neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby will: (a) violate any
provision of the articles or bylaws of PetroSun, (b)
violate, be in conflict with, constitute a default (or
an event which, with or without due notice or lapse of
time, or both), would constitute a default under, or
cause or permit the acceleration of the maturity of any
(i) debt, (ii) obligation, (iii) contract, (iv)
commitment or (v) other agreement to which PetroSun is
a party, (c) result in the creation or imposition of
any mortgage, pledge, lien, security interest,
encumbrances or charge of any kind upon any of the
property or assets of PetroSun under any debt,
obligation, contract, agreement or commitment to which
PetroSun is a party or by which PetroSun is bound, or
(d) violate any statute or law or any judgment, decree,
order, regulation or rule of any court or governmental
authority by which PetroSun is a party.
2.05. Shareholder Interests. The authorized and
outstanding capital interests of PetroSun are set forth
in paragraph 2.05 of the PetroSun Disclosure Schedule,
each of the interests listed in paragraph 2.05 have
been fully paid for and no amount is owing PetroSun in
regards thereof and the same are owned free and clear
if any and all liens and encumbrances of any kind
whatsoever. There are no outstanding options,
warrants, conversion privileges or other rights to
purchase or acquire any interest in PetroSun and there
were no contracts, commitments, understandings,
arrangements or restrictions by which PetroSun is bound
to issue any additional interests.
2.06. Subsidiaries and Affiliates. PetroSun has no
subsidiaries or affiliates.
2.07. Consents and Approvals of Government
Authorities. No consent, approval or authorization of
or declaration, filing or registration with, any
governmental or regulatory authority is required in
connection with the execution, delivery and performance
of this Agreement by PetroSun and the consummation of
the transactions contemplated hereby.
2.08. Financial Statements. PetroSun, prior to
Closing, shall furnish Cronus and Acquiring Corporation
with an auditable balance sheet of PetroSun as of
February 28, 1997 (the "PetroSun Balance Sheets"), as
well as footnotes thereto (collectively, the "PetroSun
Footnotes"). The PetroSun Balance Sheets, and
Footnotes shall have be auditable and have been and
examined by independent certified public accountants.
The PetroSun Balance Sheets, and Footnotes shall be in
accordance with the books and records of PetroSun and
shall present fairly the assets, liabilities and
financial condition of PetroSun as of the date thereof,
all in accordance with generally accepted accounting
principles ("GAAP") consistently followed and presented
in accordance with the rules and regulations
promulgated under the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
2.09. No Undisclosed Liabilities or Obligations.
The PetroSun Balance Sheets shall reflect in the
appropriate category or categories all material
liabilities and obligations of PetroSun as of the date
thereof and as of Closing, PetroSun shall have no
material obligations or liabilities of any nature
(absolute, accrued, contingent or otherwise, and
whether due or to become due (herein "liabilities")
except (a) liabilities which have been fully reflected
or reserved against in the PetroSun Balance Sheets,
which reserves are appropriate and reasonable, (b)
liabilities incurred in the ordinary course of business
and consistent with past practice since the date of the
PetroSun Balance Sheets and (c) as otherwise disclosed
and set forth in paragraph 2.09 of the PetroSun
Disclosure Schedule.
2.10. Absence of Certain Changes. Except for the
execution of this Agreement and the consummation of the
transactions contemplated herein and as set forth in
paragraph 2.10 of the PetroSun Disclosure Statement,
from the date of the PetroSun Balance Sheet and to
Closing, PetroSun shall not have:
(a) suffered any material and adverse change in its
financial conditions, working capital, assets,
liabilities, reserves, business, operations or
prospects;
(b) suffered any loss, damage, destruction or other
casualty material and adversely affecting any of the
properties, assets or business of PetroSun (whether or
not covered by insurance);
(c) borrowed or agreed to borrow any funds or incurred,
or assumed or became subject to, whether directly or by
way of guarantee or otherwise, any obligation or
liability except obligations and liabilities incurred
in the ordinary course of business and consistent with
past conduct;
(d) paid, discharged or satisfied any claims,
liabilities or obligations, other than payments,
discharges or satisfactions in the ordinary course of
business and consistent with past practice of
liabilities or obligations reflected or reserved
against in the PetroSun Balance Sheets or incurred in
the ordinary course of business and consistent with
past practice since the date of the PetroSun Balance
Sheets;
(e) permitted or allowed any of its property or assets
(real, personal or mixed, tangible or intangible) to he
subjected to any mortgage, pledge, lien, security
interest, encumbrance, restriction or charge of any
kind other than in the ordinary course of business;
(f) written down the value of any inventory or written
off as un-collectable any notes or accounts receivable;
(g) canceled any debts or waived any claims or rights
of substantial value, or sold, transferred, or
otherwise disposed of any of its properties or assets
(real, personal or mixed, tangible or intangible) other
than in the ordinary course of business;
(h) licensed or disposed of or permitted to lapse any
rights to the use of any patent, trademark, trade
name, technology, process, or other intangible asset,
copyright, or disposed of or disclosed to any person
any such matters not theretofore a matter of public
knowledge;
(i) granted any general increase in the compensation
of its directors, officers or employees (including any
such increase pursuant to any bonus, pension, profit-
sharing or other plan or commitment) or any increase in
the compensation payable or to become payable to any
such director, officer or employee;
(j) made any capital expenditure or commitment in
excess of $50,000 individually or in excess of $50,000
in the aggregate for additions to property, plant or
equipment;
(k) declared, paid or set aside for payment any
distribution in respect of its proprietary interests
(directly or indirectly) or redeemed, purchased or
otherwise acquired any of its outstanding proprietary
interests or other securities;
(l) made any change in any method of accounting
practice;
(m) paid, loaned or advanced any amounts to, or sold,
transferred or leased any properties or assets (real,
personal or mixed, tangible or intangible) to, or
entered into any agreement or arrangement with, any of
its directors, officers or affiliates;
(n) entered into any other transaction, contract or
commitment other than in the ordinary course of
business;
(o) been subject to any other event or condition of
any character that has or might reasonably have a
material and adverse effect upon its financial
condition, business, assets or properties; or
(p) agreed, whether in writing or otherwise, to take
any action described in this paragraph.
2.11. Title to Properties; Encumbrances. The
PetroSun Balance Sheets shall reflect in the
appropriate category or categories all assets of
PetroSun (real, personal and mixed, tangible and
intangible) as of the dates thereof since the date of
the latter of said balance sheets and to the Closing
Date. Additionally, PetroSun shall provide Cronus with
a true and accurate list of all leaseholds and all oil
and gas interests, herein after referred to as Exhibit
A List. PetroSun shall not have acquired or disposed
of any assets (herein "assets") except (a) assets
acquired or disposed of in the ordinary course of
business and consistent with past practice since the
date of the PetroSun Balance Sheet, or (b) as otherwise
disclosed and set forth in paragraph 2.11 of the
PetroSun Disclosure Schedule. PetroSun has good and
marketable title to, or a valid leasehold interest in,
all such assets and each is disclosed, as appropriate,
in the PetroSun Balance Sheets, and in the Exhibit A
list. None of such properties or assets is subject to
any mortgage, pledge, lien, security interest,
encumbrance, restriction or charge of any kind except
the following: (a) liens which are shown on the
PetroSun Balance Sheets securing specified liabilities
or obligations with respect to which no default exists;
(b) liens disclosed and reflected in paragraph 2.11 of
the PetroSun Disclosure Schedule; (c) minor
imperfections of title, if any, none of which
(individually or in the aggregate) is substantial in
amount, materially detracts from the value or impairs
the existing me of the property subject thereto, or
impairs the operations of the entity owning the same;
and (d) liens for current taxes not yet due and
payable.
2.12. Contracts and Commitments; No Default.
Paragraph 2.12 of the PetroSun Disclosure Schedule
lists all material contracts and commitments to which
PetroSun is a party, including promissory notes, as of
the date thereof. Except as shall be set forth in
Paragraph 2.12 of the PetroSun Disclosure Schedule:
(a) PetroSun has no employment agreement with any
officer, director, employee or agent, nor any agreement
that contains any severance or termination pay
liabilities or obligations;
(b) PetroSun has no employee to whom it is paying
aggregate direct remuneration at the annual rate of
more than $50,000 for services rendered or commissions
at a rate which (based on sales by such employee during
the last fiscal year would exceed $50,000;
(c) PetroSun does not have any collective bargaining
or union contract agreements;
(d) PetroSun is not restricted by agreement from
carrying on any of its businesses or any part thereof
anywhere in the world or from competing in any line of
said businesses with any person;
(e) PetroSun has no debt obligation for borrowed
money, including guarantees of or agreements to acquire
any such debt obligation, of others;
(f) PetroSun has no outstanding loan to any person;
(g) PetroSun has no obligation or liability as
guarantor, surety, consignor, endorser, co-maker,
indemnitor or otherwise in respect of the obligation of
any other person;
(h) PetroSun is not subject to any obligation or
requirement to provide funds to or make any investment
(in the form of a loan, capital contribution or
otherwise) in any person;
(i) PetroSun is not a party to any agreement,
contract, commitment or loan to which any of its
directors, officers or affiliates or any of their
affiliates is a party;
(j) there are no outstanding sales or purchases
contracts, commitments or proposals of PetroSun which
will result in any loss exceeding $10,000 upon
completion or performance thereof, alter allowance for
direct distribution expenses, except sales or purchase
contracts, commitments or proposals which, in the
aggregate, call for fixed and/or contingent payments
thereunder of less than $10,000 per year;
(k) PetroSun is not a party to any purchase or sale
contract or agreement which has exceeded or will exceed
10% of the gross revenues, as provided under GAAP, in
the twelve (12) month fiscal period;
(1) PetroSun is not under any liability or obligation
with respect to the return of inventory or merchandise
in the possession of wholesalers, distributors,
retailers or other customers;
(m) PetroSun has not given any irrevocable power of
attorney to any person, firm, corporation or other
entity for any purpose whatsoever, except the
appointment of agents to accept service of process, and
(n) except for agreements, contracts, commitments or
restrictions referred to in this section or elsewhere
specifically disclosed pursuant to this Agreement,
PetroSun has no agreement, contract, commitment or
restriction which is material to any of its businesses,
operations or prospects (for the purpose of this
subsection, any agreement, contract, commitment or
restriction may be deemed "immaterial" if it is a
purchase or sale contract or agreement which has not
exceeded or will not exceed 10% of the gross revenues,
as provided under GAAP, in the 12 month fiscal period
or if it may be canceled 30 days notice without
premium, penalty or forfeiture and it calls for fixed
and/or contingent payments thereunder of less than
$10,000 per year).
All contracts, agreement, commitments or restrictions
referred to in this section are valid and enforceable
in accordance with their respective terms and PetroSun
is not in default in the performance of any of its
obligations thereunder and is not aware of any event of
default that has occurred which (whether with or
without notice, lapse of time, or both, or the
happening or the occurrence of any other event) would
constitute a default thereunder.
2.13. Leases. Paragraph 2.13 of the PetroSun
Disclosure Schedule lists all material leases to which
PetroSun is a party. All such leases are valid, binding
and enforceable in accordance with their terms, and are
in full force and effect. Except as set forth in said
paragraph of the PetroSun Disclosure Schedule, (a)
there are no existing defaults by PetroSun or any other
party (including its subsidiaries) under any lease, (b)
no event of default has occurred which (whether with or
without notice, lapse of time or the happening or
occurrence of any other event) would constitute a
default under any lease, and (c) all lessors under the
leases have consented (where such consent is necessary)
to the consummation of the transactions contemplated by
this Agreement.
2.14. Litigation. There is no legal,
administrative, arbitration or other proceeding, claims
or action of any nature or investigation pending or
threatened against or involving PetroSun, or which
questions or challenges the validity of this Agreement,
or any action to be taken by PetroSun pursuant to this
Agreement or in connection with the transactions
contemplated hereby, and PetroSun does not know or have
any reason to know of any valid basis for any such
legal, administrative, arbitration or other proceeding,
claim or action of any nature or investigation.
PetroSun is not subject to any judgment, order or
decree entered in any lawsuit or proceeding which has
an adverse effect on their respective business
practices or on its ability to acquire any property or
conduct its businesses in any area.
2.15. Tax Returns. PetroSun and its subsidiaries,
if any, have duly filed all federal, state and local
tax reports and returns required to be filed by them
and have duly paid all taxes and other charges due or
claimed to be due from them by federal, state and local
taxing authorities; further, the reserves for taxes
reflected in the PetroSun Balance Sheets, if any, are
adequate, and there are no tax liens upon any property
or assets of PetroSun or its subsidiaries.
2.16. Permits and Licenses. PetroSun has, to the
best of its knowledge, obtained all necessary permits
and licenses required in the operation and conduct of
its businesses, all of which are now valid and in good
standing, further, none of such unduly burdens or
restricts PetroSun in the ordinary course of its
businesses; and, further, PetroSun has complied with
all commitments and obligations under all such items.
2.17. Disclosure. No representations or warranties
by PetroSun in this Agreement and no statement
contained in any document (including, without
limitation, the PetroSun Disclosure Schedule),
certificate, or other writing furnished by PetroSun to
Cronus or Acquiring Corporation pursuant to the
provisions hereof or in connection with the
transactions contemplated hereby, contain any untrue
statement of material fact or omit to state any
material fact necessary in order to make the statements
herein or therein, in light of the circumstances under
which they were made, not materially misleading;
further, there are no facts known or discoverable to
PetroSun which (either individually or in the
aggregate) could or would materially and adversely
affect or involve any substantial possibility of having
a material, adverse effect upon the condition
(financial or otherwise), results of operations,
assets, liabilities or businesses of PetroSun which
have not been disclosed in this Agreement.
ARTICLE III: Representations and Warranties of Cronus
and Acquiring Corporation to PetroSun
Cronus and Acquiring Corporation hereby represent and
warrant to PetroSun that, as of Closing:
3.01. Corporate Organization. Cronus and each of
its subsidiaries (a) are duly organized, validly
existing and in good standing under the laws of the
state of their organization and have all corporate
power and authority necessary to carry on their
business as now being conducted and to own, lease or
operate their respective properties and assets, and (b)
are duly qualified or licensed to do business as
foreign corporations in good standing in every
jurisdiction in which the character or location of the
properties and assets owned, leased or operated by them
or the conduct of their business requires such
qualification or licensing.
3.02. Authorization. Cronus and Acquiring
Corporation, has full corporate power and authority to
enter into this Agreement and to carry out the
transactions contemplated hereby. The board of
directors governing Cronus and Acquiring Corporation
has taken all action required by law and their
governing documents to authorize the execution and
delivery or this Agreement and the consummation of the
transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered and no
other corporate action is necessary. This Agreement is
a valid and binding obligation of Cronus and Acquiring
Corporation, enforceable in accordance with its terms,
except to the extent that: (a) the enforcement of
certain rights and remedies created by this agreement
is subject to bankruptcy, insolvency, reorganization
and similar laws of general application affecting the
rights and remedies of the parties, and (b) the
enforceability of any particular provision of this
Agreement under principles of equity or the
availability of equitable remedies (such as specific
performance, injunctive relief, waiver or other
equitable remedies) is subject to the discretion of
court.
3.03. Compliance with Law. Cronus and each of its
subsidiaries are in compliance with all laws,
regulations and orders applicable to their respective
businesses. Neither Cronus nor any of its subsidiaries
has received any notification that they or any of them
are in violation or any law, regulation or order and no
such violation exists.
3.04. No Violations. Neither the execution and
delivery of this Agreement nor the consummation of the
transactions contemplated hereby will: (a) violate any
provision of the articles or bylaws of Cronus or any of
its subsidiaries, (b) violate, be in conflict with,
constitute a default (or an event which, with or
without due notice or lapse of time, or both, would
constitute a default) under, or cause or permit the
acceleration of the maturity or any (i) debt, (ii)
obligation, (iii) contract, (iv) commitment or (v)
other agreement to which Cronus or any of its
subsidiaries is or are a party, (c) result in the
creation or imposition of any mortgage, pledge, lien,
security interest, encumbrance or charge of any kind
upon any of the property or assets of Cronus and/or any
of its subsidiaries under any debt, obligation.
contract, agreement or commitment to which Cronus
and/or any of its subsidiaries is or are a party or by
which Cronus and/or any of its subsidiaries is or are
bound, or (d) violate any statute or law or any
judgment, decree, order, regulation or rule of any
court or governmental authority by which Cronus and/or
any of its subsidiaries is or are a party.
3.05. Subsidiaries and Affiliates. Big Bug
Acquisition Company and Sunorc, Inc. are wholly owned
subsidiaries of Cronus. There are currently no other
subsidiaries or affiliates of Cronus.
3.06. Consents and Approvals of Government
Authorities. No consent, approval or authorization of,
or declaration, filing or registration with, any
governmental or regulatory authority is required in
connection with the execution, delivery and performance
of this Agreement by Cronus and the consummation of the
transactions contemplated hereby.
3.07. Financial Statements. Cronus at Closing has
furnished PetroSun with audited balance sheets as of
December 3l, 1995 (the "Cronus Balance Sheets"), as
well footnotes thereto (collectively, the "Cronus
Operating Statements and Footnotes"). The Cronus
Operating Statements and Footnotes have been audited
and examined by independent certified public
accountants. The Cronus Operating Statements and
Footnotes are in accord with the books and records of
Cronus and they fairly present the assets, liabilities
and financial condition of Cronus as of the date
thereof and the results of Cronus' operations, all in
accordance with (GAAP consistently followed and
presented in accordance with the rules and regulations
promulgated under the Securities Act and Use Exchange
Act.
3.08. No Undisclosed Liabilities or Obligation's.
The Cronus Balance Sheets list in the appropriate
category or categories all liabilities and obligations
of Cronus and its subsidiaries as of the date thereof
Cronus and its subsidiaries as of Closing have no
obligations or liabilities of any nature (absolute,
accrued, contingent or otherwise, and whether due or to
become due (herein "liabilities") except; (a)
liabilities which have been fully reflected or reserved
against the Cronus Balance Sheets, which reserves are
appropriate and reasonable; (b) liabilities incurred in
the ordinary course of business and consistent with
past practice since the date of the Cronus Balance
Sheets; and (c) as otherwise disclosed.
3.09. Absence of Certain Changes. Except as
otherwise disclosed, since the date of the 1995 Cronus
Balance Sheet, neither Cronus nor any of its
subsidiaries have;
(a) suffered any material and adverse change in their
respective financial conditions, working capital,
assets, liabilities, reserves, business, operations or
prospects;
(b) suffered any loss, damage, destruction or other
casualty materially and adversely affecting any of the
properties, assets or business of Cronus and/or its
subsidiaries (whether or not covered by insurance);
(c) borrowed or agreed to borrow any funds or
incurred, or assumed or became subject to, whether
directly or by way of guarantee or otherwise, any
obligation or liability except obligations and
liabilities incurred in the ordinary course of business
and consistent with past conduct;
(d) paid, discharged or satisfied any claims,
liabilities or obligations, other than payments,
discharges or satisfactions in the ordinary course of
business and consistent with past practice of
liabilities or obligations reflected or reserved
against in the Cronus Balance Sheet or incurred in the
ordinary course of business and consistent with past
practice since the date of the Cronus Balance Sheet;
(e) permitted or allowed any of their property or
assets (real, personal or mixed, tangible or
intangible) to be subjected to any mortgage, pledge,
lien, security interest, encumbrances, restriction or
charge of any kind;
(0 written down the value of any inventory or written off
as uncollectible any notes or accounts receivable;
(g) canceled any debts or waived any claims or rights
of substantial value, or sold, transferred, or
otherwise disposed of any of their properties or assets
(real, personal or mixed, tangible or intangible);
(h) licensed or disposed of or permitted to lapse any
rights to the use of any patent, trademark, trade name,
technology, process, or other intangible asset,
copyright, or disposed of or disclosed to any person
any such matters not theretofore a matter of public
knowledge;
(i) declared, paid or set aside for payment any
dividend or other distribution in respect of the Common
Stock or (directly or indirectly) redeemed, purchased
or otherwise acquired any of its Common Stock or other
securities;
(j) made any change in any method of accounting
practice;
(k) paid, loaned or advanced any amounts to, or sold,
transferred or leased any properties or assets (real,
personal or mixed, tangible or intangible) to, or
entered into any agreement or arrangement with, any of
their respective directors, officers or affiliates;
(l) entered into any other transaction, contract or
commitment other than in the ordinary course of
business;
(m) been subject to any other event or condition of
any character that has or might reasonably have a
material and adverse effect upon their financial
condition, business, assets or properties; or
(n) agreed, whether in writing or otherwise, to take
any action described in this paragraph.
3.10. Title to Properties; Encumbrances. The Cronus
Balance Sheets list in the appropriate category or
categories all of the assets of Cronus and its
subsidiaries (real, personal and mixed, tangible and
intangible) as of the dates thereof. Since the date of
said balance sheets, neither Cronus nor any of its
subsidiaries have acquired or disposed of any assets
(herein "assets") except (a) assets acquired or
disposed of in the ordinary course of business and
consistent with past practice since the date of the
Cronus Balance Sheets and (b) as otherwise disclosed.
3.11 Contracts and Commitments; No Default. The Cronus
Balance Sheets or Footnotes list all material contracts
and commitments to which Cronus and/or any of its
subsidiaries is or are a party, including promissory
notes, as of the date thereof except as otherwise
disclosed:
(a) neither Cronus nor any of its subsidiaries has any
collective bargaining or union contract agreements;
(b) neither Cronus nor any of its subsidiaries is
restricted by agreement from carrying on their
respective businesses or any part thereof anywhere in
the world or from competing in any line of said
businesses with any person;
(c) neither Cronus nor any of its subsidiaries is
subject to any obligation or requirement to provide
funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any person;
(d) there am no outstanding sales or purchase contracts,
commitments or proposals of Cronus or any of its
subsidiaries which will result in any loss exceeding $
10,000 upon completion or performance thereof, after
allowance for direct distribution expenses, except
sales or purchase contracts, commitments or proposals
which, in the aggregate, call for fixed and/or
contingent payments thereunder of less than $10,000 per
year;
(e) neither Cronus nor any of its subsidiaries is a
party to any purchase or sale contract or agreement
which continues for a period of more than twelve months
(including periods covered by any option to renew);
(f) neither Cronus nor any of its subsidiaries is
under any liability or obligation with respect to the
return of inventory or merchandise in the possession of
wholesalers, distributors, retailers or other
customers;
(g) neither Cronus nor any of its subsidiaries have
given any irrevocable power of attorney to any person,
firm, corporation or other entity for any purpose
whatsoever, except the appointment of agents to accept
service of process; and
(h) except for agreements, contracts, commitments or
restrictions referred to in this section or elsewhere
specifically disclosed pursuant to this Agreement,
neither Cronus nor any of its subsidiaries has any
agreement, contract, commitments or restriction which
is material to any of their respective businesses,
operations or prospects (for the purpose of this
subsection, any agreement, contract, commitment or
restriction may be deemed "immaterial" if it may be
canceled on 30 days notice without premium, penalty or
forfeiture and it calls for fixed and/or contingent
payments thereunder of less than $10,000 per year).
All contracts, agreements, commitments or restrictions
referred to in this section are valid and enforceable
in accordance with their respective terms and neither
Cronus nor any of its subsidiaries is in default in the
performance of any of their respective obligations
thereunder and no event of default has occurred which
(whether with or without notice, lapse of time, or
both, or the happening or the occurrence of any other
event would constitute a default thereunder.
3.12. Litigation. There is no legal,
administrative, arbitration or other proceeding, claim
or action of any nature or investigation pending or
involving Cronus or any of its subsidiaries, or which
questions or challenges the validity of this Agreement,
or any action to be taken by Cronus pursuant to this
Agreement or in connection with the transactions
contemplated hereby, and Cronus and its subsidiaries do
not know or have any reason to know of any valid basis
for any such legal, administrative, arbitration or
other proceeding, claim or action of any nature or
investigation, except as otherwise disclosed. Neither
Cronus nor any of its subsidiaries is subject to any
judgment, order or decree entered in any lawsuit or
proceeding which has an adverse effect on their
respective business practices or on their ability to
acquire any property or conduct their respective
businesses in any area.
3.13. Tax returns. Cronus and its subsidiaries have
duly filed all federal, state and local tax reports and
returns required to be filed by them and have duly paid
all taxes and other charges due or claimed to be due
from them by federal, state and local taxing
authorities; further, the reserves for taxes reflected
in the Cronus Balance Sheets, if any, are adequate, and
there are no tax liens upon any property or assets of
Cronus or its subsidiaries.
3.14. SEC Report. Cronus may not have filed all
reports with the Securities and Exchange Commission
(the "Commission" ) required to be filed by it prior to
the period ended December 31, 1996. Cronus has not
filed the December 31, 1995 or 1996 10-KSB or the March
31, 1996, June 30, 1996, and September 30, 1996 10-
QSB's. Cronus will file all Commission reports at the
earliest date possible.
3.15. Disclosure. No representations or
warranties by Cronus in this Agreement and no statement
contained in any document, certificate, or other
writing furnished by Cronus to PetroSun pursuant to the
provisions hereof or in connection with the
transactions contemplated hereby, contain any untrue
statement of material fact or omit to state any
material fact necessary in order to make the statements
herein of therein, in light of the circumstances under
which they were made, not misleading; further, there
are no facts known to Cronus or its subsidiaries which
(either individually or in the aggregate) could or
would materially and adversely affect or involve any
substantial possibility of having a material, adverse
effect upon the condition (financial or otherwise),
results of operations, assets, liabilities or
businesses of Cronus and/or its subsidiaries which have
not been disclosed in this Agreement.
3.16. Corporate Status. Cronus is currently
trading on NASDAQ bulletin board under the symbol
"CRON". The total number of shares of common stock
issued and outstanding, as of February 28, 1997, is
11,453,106, with a total of 40,000,000 shares
authorized and approximately 173 shareholders of
record.
ARTICLE IV: Conduct of PetroSun Pending Closing
Pending Closing and until the Termination Date:
4.01. Regular Course of Business. PetroSun and its
subsidiaries, if any, will carry on their respective
businesses diligently and substantially in the same
manner as heretofore conducted, and PetroSun and such
subsidiaries shall not institute any new methods of
purchase, sale, lease, management, accounting or
operation or engage in any transaction or activity,
enter into any agreement or make any commitment except
in the ordinary course of business and consistent with
past practice.
4.02. Capital Changes. Neither PetroSun nor any of
its subsidiaries. if any, shall issue or sell, or issue
options, warrants to purchase, conversion privileges or
other rights to subscribe to, or enter into any
arrangement or contract with respect to, any interests
therein or any of their other securities, or make any
other changes in their capital structure.
4.03. Subsidiaries. Neither PetroSun nor any of
its subsidiaries, if any, shall organize any
subsidiary, acquire any capital stock or other equity
security of any entity or acquire any interest (equity,
debt or otherwise) in any business.
4.04. Organization. PetroSun and its
subsidiaries, if any, shall preserve their existence
and business organizations intact, keep available their
key employees, and preserve their relationships with
suppliers, dealers, licenses, licensees, distributors,
customers and others having business relations with
them.
4.05. Contracts. No contracts or commitments
shall be entered into by or on behalf of PetroSun or
any of its subsidiaries, if any, except in the ordinary
course of business.
4.06. No Default; Amendment. Neither PetroSun nor
any of its subsidiaries, if any, shall do any act or
omit to do any act, or permit any act or omission to
act, which shall cause a material breach of any
material contract or commitment of PetroSun or any of
its subsidiaries, nor shall they amend any material
contract.
4.07. Compliance with Laws. PetroSun and its
subsidiaries, if any, shall duly comply with all laws
applicable to them and their properties, operations,
businesses and employees.
4.08. Tax Returns. PetroSun and its subsidiaries,
if any, shall promptly prepare and file all federal,
state, local and foreign tax returns and amendments
thereto required to be filed by them.
4.09. No Acquisitions or Sales. Neither PetroSun
nor any of its subsidiaries, if any, will approve or
undertake in any manner any merger, consolidation,
asset acquisition or disposition or tender offer or
other takeover transaction or furnish or cause to be
furnished any information concurring their business,
properties or assets to any person (other than to
Cronus) which is interested in any such transaction, or
solicit or encourage any inquiries or proposals for the
acquisition of all or any part of their capital
interests, assets or business.
ARTICLE V: Obligations of PetroSun, Cronus and
Acquiring Corporation Pending Closing.
PetroSun, Cronus and Acquiring Corporation hereby
covenant and agree with one another that:
5.01. Full Access. PetroSun, Cronus and Acquiring
Corporation shall afford to one another, their
respective counsel, officers, directors, accountants
and authorized representatives full access to one
anothers' physical facilities, books and records in
order that they may each have full opportunity to make
such investigations as they shall desire to make of the
affairs of one another; provided, however, that any
such investigation shall be conducted in such a manner
so as nor to interfere unreasonably with the operation
of the business of either PetroSun, Cronus and
Acquiring Corporation, and, further, each of the
parties hereto shall cause their respective officers,
directors and independent and in-house accountants and
attorneys to furnish such additional financial and
operating data and other information as either shall
from time to time reasonably request, including access
to the working papers of their independent certified
public accountants.
5.02. Confidentiality. PetroSun, Cronus and
Acquiring Corporation shall (and shall cause their
respective counsel, officers, directors, accountants
and representatives to) hold in confidence and not
disclose to others for any reason whatsoever, any and
all information received by any one or more from one or
more of the others in connection with the transactions
contemplated hereby that any party identifies with
reasonable specificity in writing as proprietary
("propriety information"), except to the extent that
such Proprietary Information was previously known to
the party to whom it is being disclosed or was
otherwise available from third persons without
restriction on its further use or disclosure or was
otherwise not legally protectable as proprietary
information; provided, however, that nothing herein
contained shall be deemed to preclude either party
from, (a) asserting that any document or information
whether or not embodied in a document asserted by any
party to be proprietary is not entitled to protection
as such on the grounds that such Proprietary
Information was previously known to the party to whom
it was disclosed or was otherwise available from third
persons without restriction on its further use or
disclosure or otherwise not legally protectable as
proprietary, (b) thereafter freely using or disclosing
such information unless a court of competent
jurisdiction finally determines that this provision
does not apply to such information, or (c) disclosing
information if required by law, regulation , court or
administrative order.
5.03. Auditable Financial Statements. On or prior
to Closing, PetroSun shall deliver to Cronus and
Acquiring Corporation the auditable PetroSun Balance
Sheets, and Footnotes and an opinion from independent
certified public accountants pertaining thereto. The
presentation of the foregoing shall be in such a manner
so as to comply with the rules and regulations under
the Securities Act and Exchange Act. Correspondingly,
on or prior to Closing, Cronus shall deliver to
PetroSun an unqualified audit opinion by independent
certified public accountants on the Audited 1995 Cronus
Balance Sheets, Operating Statements and Footnotes.
The presentation of the foregoing shall be in such a
manner so as to comply with the rules and regulations
under the Securities Act and the Exchange Act.
5.04. Further Assurances. PetroSun, Cronus and
Acquiring Corporation shall after the Execution Date
and Closing execute and deliver such instruments and
take such other actions as the other party may
reasonably require in order to carry out the intent of
this Agreement.
5.05 Public Announcement. PetroSun, Cronus and
Acquiring Corporation shall consult with each other
before issuing any press releases or otherwise making
any public statements with respect to the transactions
contemplated herein and shall not issue any such press
release or make any such public statement prior to such
consultation. Approval by PetroSun, Cronus or Acquiring
Corporation of such press releases and public
statements shall not be unreasonably withheld.
ARTICLE VI: Conditions to PetroSun's Closing Obligation
The obligation of PetroSun to effect the transactions
contemplated herein shall be subject to the
satisfaction, on or before Closing, of each of the
following conditions.
6.01. Representations and Warranties True. The
representations and warranties of Cronus and Acquiring
Corporation contained herein and in all certificates
and other documents delivered by Cronus to PetroSun
pursuant hereto or in connection with the transactions
contemplated hereby shall be in all material respects
true and accurate as of Closing.
6.02. Performance. Cronus shall have performed and
complied with all agreements, obligations, conditions
and covenants required by this Agreement to be
performed or complied with by it on or prior to
Closing.
6.03. Delivery of Audited Cronus Financial
Statements. Cronus shall deliver to PetroSun, audited
Cronus Financial Statements and the financial
statements required in the filing by Cronus as of and
for the year ended December 31, 1995, on form l0-KSB.
6.04. No Governmental Proceeding or Litigation. No
suit, action, investigation, inquiry or other
proceeding by any governmental body or other person or
entity or legal or administrative proceeding shall have
been instituted or threatened which questions the
validity or legality of the transactions contemplated
hereby or which if successfully asserted would
otherwise have a material and adverse effect on the
conduct of the business or assets of Cronus or its
subsidiaries.
6.05. Delivery of Consideration. Cronus shall have
delivered that consideration set forth in Article I.
ARTICLE VII: Conditions to Cronus' and Acquiring
Corporation's Closing Obligations
The obligation of Cronus and Acquiring Corporation to
effect the transactions contemplated herein shall be
subject to the satisfaction, on or before Closing, of
each of the following conditions:
7.01. Representations and Warranties True. The
representations and warranties of PetroSun contained
herein, in the PetroSun Disclosure Schedule and in all
certificates and other documents delivered by PetroSun
pursuant hereto or in connection with the transactions
contemplated hereby shall be in all material respects
true and accurate as of Closing.
7.02. Performance. PetroSun shall have performed
and complied with all agreements, obligations,
conditions and covenants required by this Agreement to
be performed or complied with by them on or prior to
Closing.
7.03. Delivery of Auditable PetroSun Financial
Statements. PetroSun shall have delivered to Cronus
and Acquiring Corporation auditable PetroSun Financial
Statements.
7.04. Delivery of Appraisal. PetroSun shall have
delivered to Cronus and Acquiring Corporation
appraisals in form, substance and amount acceptable to
management of Cronus, all as previously represented and
warranted to by PetroSun.
7.05. No Governmental Proceeding or Litigation. No
suit, action, investigation, inquiry or other
proceeding by any governmental body or other person or
entity or legal or administrative proceeding shall have
been instituted or threatened which questions the
validity or legality of the transactions contemplated
hereby or which if successfully asserted would
otherwise have a material and adverse effect on the
conduct of the business or assets of PetroSun or any of
its subsidiaries.
ARTICLE VIII: Termination and Abandonment
8.01. Methods of termination. This Agreement may be
terminated and the acquisition evidenced hereby
abandoned at any time prior to Closing by:
(a) mutual written consent of PetroSun, Cronus and
Acquiring Corporation;
(b) PetroSun if those conditions provided for in
Article VI of this Agreement shall not have been met or
waived in writing by PetroSun on or prior to April 15,
1997;
(c) Cronus and Acquiring Corporation if those
conditions provided for in Article VII of this
Agreement shall not have been met or waived in writing
by Cronus on or prior to April 15, 1997.
8.02. Procedure Upon Termination. In the event of
termination and abandonment pursuant to subsections (b)
or (c) of Section 8.01 hereof, written notice thereof
shall forthwith be given to the other party or parties,
and this Agreement shall terminate and the transactions
contemplated hereby shall he abandoned without further
action by either party. If this Agreement is
terminated as provided herein:
(a) each party will return all documents, work papers
and other material of any other party relating to the
transactions contemplated hereby, whether obtained
before or after the execution hereof, to the party
furnishing the same; and,
(b) all Proprietary Information received by any party
hereto with respect to the business of the other party
or its subsidiaries shall not at any time be used for
the advantage of, or disclosed to third Persons by,
such party for any reason whatsoever, except as
contemplated in Article V, Section 5.02 hereof.
ARTICLE IX: General Provisions
9.01. Waiver. Any failure on the part of the party
to comply with any of its obligations, agreements or
conditions hereunder may be waived in writing by the
party to whom such compliance is owed; however, waiver
on one occasion does not operate to effectuate a waiver
on any other occasion.
9.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to
have been given on the date of receipt if delivered in
person or three days after such is sent by prepaid,
first class, registered or certified mail, return
receipt requested, or, again, on the date of receipt if
sent by facsimile as follows: if to PetroSun, Mr.
Gordon LeBlanc, Jr., 6735 E. Greenway Parkway, #1040,
Scottsdale, Arizona 85254, (602) 998-9771, and if to
Cronus, Mr. Jon Roberts at 7660 E. Broadway, Suite 210,
Tucson, Arizona 85710, (520) 885-1220.
9.03. Entire Agreement. This Agreement (and the
documents, notes, lists and other agreements executed
in connection and on even date herewith, including the
PetroSun Disclosure Schedule) constitutes the entire
agreement between the parties regarding the subject
matter hereof, and supersedes and cancels any other
agreement, representation or communication, whether
oral or written, between the parties hereto and
relating to the subject matter hereof.
9.04. Headings. The article and paragraph headings
in this Agreement are inserted for convenience only and
shall not affect in any way the meaning or
interpretation of this Agreement.
9.05. Governing Law. This Agreement shall he
governed by and construed and enforced in accordance
with the laws of the State of Arizona.
9.06. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be
deemed an original, but all of which together shall
constitute but one and the same instrument.
9.07. No Oral Modification. This Agreement may be
amended solely in writing, and only after the mutual
agreement of the parties.
9.08. Survival of Representations, Warranties and
Covenants. The representations, warranties, covenants
and agreements contained herein shall survive Closing
for a period of two years at which time they shall
expire.
9.09. Severability. The invalidity or
unenforceability of any one or more of the provisions
of this Agreement shall not affect the validity or
enforceability of any of the other provisions hereof,
and this Agreement shall be construed in all material
respects as if such invalid or unenforceable provisions
were omitted.
9.10. Successor and Assigns. This Agreement, and
each and every provision hereof, shall be binding upon
and inure to the benefit of the parties, their
respective successors, successors-in-title and assigns,
and each and every successor-in-interest to any party,
whether such successor acquires such interest by way of
gift, purchase, foreclosure, or by any other method,
who shall hold such interest subject to all of the
terms and conditions of this Agreement.
Notwithstanding the foregoing, this agreement and the
rights and obligations hereunder shall not be
assignable or delegable by any party.
9.11. Brokers. Neither PetroSun, Cronus nor
Acquiring Corporation have engaged or are otherwise
liable for any amount due or to become due to any
broker or sales agent in regards of the transactions
giving rise to and evidenced by this Agreement. In the
event that any claim is asserted by any person claiming
a commission or finders fee with respect to this
Agreement or the transactions contemplated hereby and
arising from any act, representation or promise of a
party hereto or its representatives, such party shall
indemnify, save, defend and hold every other party
harmless from and against any and all such claims, as
well as against all costs and expenses related thereto,
including attorneys' fees and costs.
9.12. Expenses. Each party shall pay its own
expenses incurred by or on behalf of it in connection
with the authorization, preparation, execution and
performance of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered.
PETROSUN EXPLORATION & PRODUCTION, INC., an Arizona
corporation
By: _/s/______________________
Gordon LeBlanc, Jr., President
CRONUS CORPORATION, a Nevada corporation
By: /s/
Jon Roberts, President
BIG BUG ACQUISITION COMPANY, an Arizona corporation
By: /s/
Jon Roberts, President
EXHIBIT 2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is entered into
and dated for reference purposes as of April 28, 1997,
by and between PetroSun, an Arizona corporation having
a principal place of business in Arizona and a mailing
address in care of Cronus Corporation, 7660 E.
Broadway, Suite 210, Tucson, Arizona (hereinafter
referred to as the "Company"), and Gordon LeBlanc, Jr.,
an individual residing at 6735 E. Greenway Parkway,
#1040, Scottsdale, Arizona 85254(hereinafter referred
to as "Employee"). Company and Employee are sometime
collectively referred to as "the Parties".
RECITALS
A. WHEREAS, the Company desires to employ Employee
and Employee desires to work for the Company in the
capacity and on the terms and conditions hereinafter
provided.
B. WHEREAS, Employee will be one of the key personnel
of the Company with the primary responsibility of
assisting the Company in oil and gas exploration and
production.
NOW, THEREFORE, in consideration of the mutual
covenants and promises herein, the Parties hereto agree
as follows:
AGREEMENT
1. EMPLOYMENT
1.1 Office and Duties. The Company agrees to
employ Employee and Employee agrees to work for the
Company in the capacity of President and director of
oil and gas operations. Employee shall have those
duties as are normally associated with his office and
such other duties pertaining to such office as may from
time to time be assigned to him. While employed
hereunder, Employee shall devote his time, effort,
skill and attention to the affairs of Cronus., and
shall faithfully and diligently promote the business
and interest of Cronus. Employee may make personal
investments in business entities or purchase shares of
stock traded upon a recognized U.S. securities
exchange, provided that such investments or purchases
are not in companies which compete, directly or
indirectly, with Cronus, and do not otherwise interfere
or conflict with Employee's performance of this
Agreement.
Employee shall not, without the prior written
consent of the Company, directly or indirectly, during
the term of this Agreement, engage in any business
activity, directly or indirectly, competitive with or
adverse to the Company's business or interests, whether
alone, as a partner, or as an officer, director,
employee or shareholder of any other corporation, or
otherwise.
1.2 Term. The term of employment hereunder
commences as of the date written above and shall
continue for 2 years, unless sooner terminated in
accordance with the provisions hereof.
2. COMPENSATION.
2.1 Base Salary. The Company shall pay Employee
during the term of his employment hereunder a base
salary of $60,000 per annum. Employee may receive
annual increases and bonuses based on performance, at
the discretion of the Board of Directors. The base
salary shall be due and payable in equal bi-weekly
installments.
2.2 Employment Benefits.
(a) Employee shall be entitled to receive or
to participate in such disability, life, accidental
death and dismemberment and other similar plans as
shall be generally available to salaried employees of
the Company. Employee's participation in such plans
will be in accordance with and subject to the terms and
provisions of the plans.
(b) Employee shall receive reimbursements of
business expenses and other perquisites in accordance
with and subject to Company policy.
(c) Employee shall receive two weeks of
vacation time per year plus one additional week for
every three years of service under this contract.
2.3 Bonus. Employee shall be entitled to participate
in any incentive compensation plan hereafter adopted by
the Company.
(a) Incentive plan. Employee is entitled to the following
bonuses based on performance:
Criteria Bonus
1 Discovery well (Arizona) $100,000
2 Discovery well (non-Arizona) $50,000
3 Discovery of a new producing zone
within existing field or well $20,000
4 Field extension $20,000
5 Drilling well bonus $2,500
6 Re-work bonus $500
1, 2 and 3 applies to the discovery of oil and
gas. Any bonuses to be received pursuant to 1 or 2
must be received, at a minimum of 50%, in the form of a
credit towards payment of any employee stock option
grant.
Employee will be granted a 3.5% over-riding
royalty interest covering all oil and gas leaseholds,
which may be converted to a carried working interest at
the employee's option. Employee is also authorized to
offer consultants a 1% ORRI on prospects.
2.4 Automobile. Employee is to be provided with
a vehicle suitable for travel to locations.
3. EXPENSES AND PRIOR AGREEMENTS
Reimbursement of Expenses. During the term of
this agreement, the Company shall reimburse Employee
for all reasonable and necessary expenses related to
the performance of the Employee's duties under this
agreement, upon submission of detailed vouchers thereof
in accordance with the Company's standard practices.
The Company agrees to indemnify Employee for the use of
Employee's credit in obtaining goods and services for
the Company.
4. TERMINATION
4.1 Termination of Employment. The employment of
Employee shall terminate prior to the expiration of the
term specified in Section 1.2 upon the occurrence of
any of the following events:
(a) The death of Employee.
(b) Employee's disability pursuant to
Section 4.2.
(c) Company's termination for cause of
Employee pursuant to Section 4.3.
(d) Employee's resignation from his
employment with Company.
4.2 Disability. If, by reason of any physical or
mental disability, Employee is unable to satisfactorily
perform his duties under this Agreement for six
consecutive months, or six months in any single
calendar year, his services hereunder may be terminated
by the Company upon two months' notice ("Notice
Period") to be given to Employee at any time after the
period of six continuous months of disability and while
such disability continues. If, prior to the expiration
of the Notice Period, Employee recovers from his prior
disability and returns to the active discharge of his
duties, the Notice Period shall be deemed canceled and
Employee's employment shall continue as if the same had
been uninterrupted. If Employee does not so recover
from his disability and return to his duties, then his
employment shall terminate at the expiration date of
the Notice Period. During the period of Employee's
disability and until the expiration date of the Notice
Period, Employee shall continue to earn all
compensation provided in Section 2 hereof as if he had
not been disabled. In the event a dispute arises
between Employee and the Company concerning Employee's
physical or mental ability to continue or return to the
performance of his duties as President and director of
oil and gas operations, Employee agrees to submit
himself to examination by a competent physician
mutually agreeable to both parties, and such
physician's opinion on Employee's ability to perform
the duties as President and director of oil and gas
operations will be final and binding. Physician means
a medical doctor licensed to practice in the state of
Arizona.
4.3 Termination For Cause. Employee may be
terminated for cause only by reason of one or more of
the following occurrences:
(a) Employee's conviction, by a court of
competent jurisdiction, of any crime (other than minor
civil offenses such as traffic infractions), whether or
not committed during the term or in the course of
employment under this Agreement;
(b) Employee's willful misconduct, breach of
his fiduciary duties to the Company, or commission of
an act of fraud upon, or an act materially evidencing
dishonesty;
(c) Employee's willful and material failure
to observe or perform his duties under this Agreement;
or
(d) Employee's habitual neglect of the
faithful performance of his duties under this
Agreement.
If the basis for termination is pursuant to
paragraphs 4.3(c) or (d) above, Employee may be
terminated only if he has been given at least thirty
(30) days notice of the alleged failure or neglect and
during such period he has failed to remedy same.
4.4 Consequences of Termination.
(a) In the event that Employee's employment
under this Agreement is terminated for any reason other
than that set forth at Section 4.1, the Company shall
remain obligated to pay Employee the compensation set
forth in Section 2.1 hereof for a period of six months.
Provided, however, that if Employee owes any debt to
the Company, Employee hereby authorizes Company to
deduct from his bi-weekly paychecks an amount equal to
the bi-weekly repayment of such debt at the time of
termination.
(b) In the event that Employee's employment
under this Agreement is terminated for any reason set
forth at Section 4.1(c), Employee's base salary, as
identified at Section 2.1, shall cease to accrue and be
due him.
(c) In the event that Employee's employment
hereunder shall terminate as a result of Employee's
resignation as set forth at Section 4.1(d), or
Employee's death as set forth at Section 4.1(a),
Employee's base salary, as identified at Section 2.1,
shall cease to accrue and be due him after the
effective date of said resignation.
(d) In the event that Employee's employment
hereunder shall terminate pursuant to any of the
provisions of this Section 4, the rights of the
Employee under the employee benefit plans or other
plans referred to in Section 2.2 and under any
incentive compensation plan adopted pursuant to Section
2.3, shall be determined in accordance with the terms
and provisions of such plans and options.
(e) In the event Employee's employment
terminates, all provisions of this Agreement shall
remain in effect except as otherwise specifically
provided in this Section 4.4.
5. OTHER COVENANTS OF EMPLOYEE
5.1 Employee shall not at any time or in any
manner make or cause to be made any copies, pictures,
duplicates, facsimiles or other reproductions,
recordings or any abstracts or summaries of any
reports, studies, memoranda, correspondence, manuals,
recordings, internal financial statements, cost data or
business projections, plans or other written, printed
or otherwise recorded materials of any kind whatever
belonging to or in the possession of the Company or its
subsidiaries. Employee shall have no right, title or
interest in any such material, and Employee agrees that
he will not, without the prior written consent of the
Company, remove any such material from any premises of
the Company or its subsidiaries and that he will
surrender all such material to the Company immediately
upon the termination of his employment or at any time
prior thereto upon the request of the Company.
5.2 Without the prior written consent of the
Company, Employee shall not at any time (whether during
or after his employment with the Company) use for his
own benefit, or for the benefit of or purposes of any
other person, firm, partnership, association,
corporation or business organization, entity or
enterprise ("Entity"), or disclose (except in the
performance of his duties hereunder) in any manner to
any other Entity, any trade secrets, confidential
information, data know-how or knowledge (including but
not limited to, that relating to service techniques,
patents, software, manufacturing processes, purchasing
organizations and methods, sales organizations and
methods, inventory and financial information, market
development and expansion plans, medical therapies,
methodologies and its markets, client lists, medical
programs and customer and supplier identities and
relationships) belonging to, or relating to the affairs
of, the Company or its subsidiaries.
5.3 During the term of this Agreement, Employee
shall not in any manner induce, attempt to induce or
assist others to induce or attempt to induce (1) any
employee, agent, representative or other person
associated with the Company or any of its subsidiaries
to terminate his or her association with the Company or
such subsidiary, nor in any manner prohibited under
Arizona law interfere with the relationship between the
Company or such subsidiary and any such persons, or (2)
any customer or supplier of the Company or any of its
subsidiaries to terminate its or his or her association
with the Company or such subsidiary, or do anything to
interfere, as prohibited under Arizona law, with the
relationship between the Company or such subsidiary and
any customer or supplier.
5.4 Employee acknowledges and agrees that the
Company's remedy at law for any breach of any
Employee's obligations under any of Sections 4.1
through 4.4 would be inadequate, and agrees and
consents that temporary and permanent injunctive relief
may be granted in any proceeding that may be brought to
enforce any provision of such sections, without the
necessity of proof of actual damage. It is the intent
of the Employee and the Company that the provisions of
Section 4.1 and 4.4 be given the fullest effect
consistent with applicable law, and that they survive
the termination of this Agreement.
6. GENERAL PROVISIONS
6.1 Representations and Warranties.
(a) Employee represents and warrants to the
Company that (1) he is free to accept employment
hereunder; (2) he has no prior or other obligations or
commitments of any kind to anyone that would hinder or
interfere with his acceptance of, or the exercise of
his best efforts, as an employee of the Company and to
perform his duties as President and director of oil and
gas operations; and (3) when executed and delivered,
this Agreement will constitute his legal and binding
obligation.
6.2 Entire Agreement/Amendments. This Agreement
sets forth the entire agreement and understanding of
the parties concerning the subject matter hereof and
supersedes all prior agreements, arrangements and
understandings between Employee and the Company
concerning the subject matter. This Agreement may not
be amended or modified except by a written document
specifically referring to this Agreement and executed
by the parties hereto.
6.3 Notices.
(a) Any notices or other communication
required or permitted to be given hereunder shall be in
writing and may either be delivered personally to the
addressee or be mailed, first class, postage prepaid
and shall be deemed given when so delivered personally,
or if mailed, 5 days after the time of mailing, or if
by facsimile, then one business day after the sending
of the facsimile, as follows:
If to the Company:
PETROSUN EXPLORATION & PRODUCTION,
INC.
C/O Cronus Corporation
7660 E. Broadway, Suite 210
Tucson, Arizona 85710
If to the Employee:
Gordon LeBlanc, Jr.
6735 E. Greenway Parkway, #1040
Scottsdale, Arizona 85254
(b) In the event that a dispute arises between
the parties with respect to this Agreement and
litigation results, service of process is sufficient if
made pursuant to the provisions of this Section 6.3.
(c) Either party may change the address to which
any such notices or communications are to be delivered
to it by giving written notice to the other party in
the manner provided in Section 6.3(a) hereof.
6.4 Assignments; Binding Effect.
(a) Employee acknowledges that the services
to be rendered by him are unique and personal.
Accordingly, Employee may not assign any of his rights
or delegate any of his duties or obligations under this
Agreement. This Agreement shall be binding upon and,
to the extent herein permitted, shall inure to the
benefit of Employee's heirs, legatees and legal
representatives.
(b) The Company may assign this Agreement or
its rights hereunder; provided, however, such an
assignment shall not relieve the Company of any of its
obligations herein. This Agreement shall be binding
upon and, to the extent herein permitted, shall inure
to the benefit of the Company's successors and assigns.
6.5 Waivers. The failure of either party hereto
at any time, or from time to time, to require
performance of any of the other party's obligations
under this Agreement shall in no manner affect the
right to enforce any provision of this Agreement at a
subsequent time, and the waiver of any rights arising
out of any breach shall not be construed as a waiver of
any rights arising out of any subsequent breach.
6.6 Severability. The parties intend that this
Agreement be enforceable to the extent of its
provisions. The parties agree that each provision
hereof is a separate and distinct agreement and
independent of the others, so that if any provision
hereof is held to be invalid or unenforceable for any
reason, such invalidity or unenforceability shall not
affect the validity or enforceability of any other
provision hereof.
6.7 Applicable Law. The provisions of this
Agreement shall be governed and interpreted in
accordance with the laws of the State of Arizona.
6.8 Venue. The parties hereby agree that any
dispute between them regarding this Agreement will be
resolved in Pima County Superior Court, Tucson,
Arizona, and the parties hereby consent to the
jurisdiction of said court.
IN WITNESS HEREOF, the parties hereto have
executed this Agreement as of the date first above
written.
EMPLOYEE: EMPLOYER:
PETROSUN EXPLORATION
&
PRODUCTION, INC.,
an Arizona
corporation
__/s/________ ___/s/___________
Gordon LeBlanc, Jr. By: Jonathan Roberts,
Member, Board of
Directors
EXHIBIT 3
CRONUS CORPORATION, INCENTIVE STOCK OPTION PLAN
GRANT OF INCENTIVE STOCK OPTION
Date of Grant: March 31 ,1997
THIS GRANT, dated as of the date of grant first stated
above (the "Date of Grant"), is delivered by Cronus
Corporation, a Nevada corporation ("Cronus") to Gordon
LeBlanc, Jr. (the "Grantee"), who is an employee or
officer of Cronus or one of its subsidiaries (the
Grantee's employer is sometimes referred to herein as
the "Employer").
WHEREAS, the Board of Directors (the "Board") on
November 1, 1995, adopted, the Incentive Stock Option
Plan (the "Plan");
WHEREAS, the Plan provides for the granting of
incentive stock options by a committee to be appointed
by the Board (the "Committee") to directors, officers
and key employees of Cronus or any subsidiary of Cronus
(excluding directors and officers who are not
employees) to purchase, or to exercise certain rights
with respect to, shares of the Class A Common Stock of
Cronus, par value $.001 per share (the "Stock"), in
accordance with the terms and provisions thereof; and
WHEREAS, the Committee considers the Grantee to be a
person who is eligible for a grant of incentive stock
options under the Plan, and has determined that it
would be in the best interest of Cronus to grant the
incentive stock options documented herein.
NOW, THEREFORE, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. Grant of Option.
Subject to the terms and conditions hereinafter set
forth, Cronus, with the approval and at the direction
of the Committee, hereby grants to the Grantee, as of
the Date of Grant, an option to purchase up to
2,400,000 shares of Stock at a price of $0.50 per
share, the fair market value. Such option is
hereinafter referred to as the "Option" and the shares
of stock purchasable upon exercise of the Option are
hereinafter sometimes referred to as the "Option
Shares." The Option is intended by the parties hereto
to be, and shall be treated as, an incentive stock
option (as such term is defined under section 422 of
the Internal Revenue Code of 1986).
2. Installment Exercise.
Subject to such further limitations as are provided
herein, the Option shall become exercisable in three
(3) installments, the Grantee having the right
hereunder to purchase from Cronus the following number
of Option Shares upon exercise of the Option, on and
after the following dates, in cumulative fashion:
(a) on and after the six month anniversary of the
Date of Grant, up to one-third (ignoring fractional
shares) of the total number of Option Shares;
(b) on and after the nine month anniversary of the
Date of Grant, up to an additional one-third (ignoring
fractional shares) of the total number of Option
Shares; and
(c) on and after the first year anniversary of the
Date of Grant, all the remaining Option Shares, whether
or not the first and second installments have been
exercised.
3. Termination of Option.
(a) The Option and all rights hereunder with respect
thereto, to the extent such rights shall not have been
exercised, shall terminate and become null and void
after the expiration of five (5) years from the Date of
Grant (the "Option Term").
(b) Upon the occurrence of the Grantee's ceasing for
any reason to be employed by the Employer (such
occurrence being a "termination of the Grantee's
employment") , the Option, to the extent not previously
exercised, shall terminate and become null and void
immediately upon such termination of the Grantee's
employment, except in a case where the termination of
the Grantee's employment is by reason of retirement,
disability or death. Upon a termination of the
Grantee's employment by reason of retirement,
disability or death, the Option may be exercised during
the following periods, but only to the extent that the
Option was outstanding and exercisable on any such date
of retirement, disability or death: (i) the one-year
period following the date of such termination of the
Grantee's employment in the case of a disability
(within the meaning of Section 22(e) (3) of the Code),
(ii) the six-month period following the date of
issuance of letters testamentary or letters of
administration to the executor or administrator of a
deceased Grantee, in the case of the Grantee's death
during his employment by the Employer, but not later
than one year after the Grantee's death, and (iii) the
three-month period following the date of such
termination in the case of retirement on or after
attainment of age 65, or in the case of disability
other than as described in (i) above. In no event,
however, shall any such period extend beyond the Option
Term.
(c) In the event of the death of the Grantee, the
Option may be exercised by the Grantee's legal
representative(s), but only to the extent that the
Option would otherwise have been exercisable by the
Grantee.
(d) A transfer of the Grantee's employment between
Cronus and any subsidiary of Cronus, or between any
subsidiaries of Cronus, shall not be deemed to be a
termination of the Grantee's employment.
(e) Notwithstanding any other provisions set forth
herein or in the Plan, if the Grantee shall (i) commit
any act of malfeasance or wrongdoing affecting Cronus
or any subsidiary of Cronus, (ii breach any covenant
not to compete, or employment contract, with Cronus or
any subsidiary of Cronus, or (iii) engage in conduct
that would warrant the Grantee's discharge for cause
(excluding general dissatisfaction with the performance
of the Grantee's duties, but including any act of
disloyalty or any conduct clearly tending to bring
discredit upon or any subsidiary of Cronus), any
unexercised portion of the Option shall immediately
terminate and be void.
4. Exercise of Options.
(a) The Grantee may exercise the Option with respect
to all or any part of the number of Option Shares then
exercisable hereunder by giving the Secretary of Cronus
written notice of intent to exercise. The notice of
exercise shall specify the number of Option Shares as
to which the Option is to be exercised and the date of
exercise thereof, which date shall be at least five
days after the giving of such notice unless an earlier
time shall have been mutually agreed upon.
(b) Full payment (in U.S. dollars) by the Grantee of
the option price for the Option Shares purchased shall
be made on or before the exercise date specified in the
notice of exercise in cash, or, with the prior written
consent of the Committee, in whole or in part through
the surrender of previously acquired shares of Stock at
their fair market value on the exercise date. On the
exercise date specified in the Grantee's notice or as
soon thereafter as is practicable, Cronus shall cause
to be delivered to the Grantee, a certificate or
certificates for the Option Shares then being purchased
(out of theretofore unissued Stock or reacquired Stock,
as Cronus may elect) upon full payment for such Option
Shares. The obligation of Cronus to deliver Stock
shall, however, be subject to the condition that if at
any time the Committee shall determine in its
discretion that the listing, registration or
qualification of the Option or the Option Shares upon
any securities exchange or under any state or federal
law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a
condition of, or in connection with, the Option or the
issuance or purchase of Stock thereunder, the Option
may not be exercised in whole or in part unless such
listing, registration, qualification, consent or
approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.
(c) If the Grantee fails to pay for any of the
Option Shares specified in such notice or fails to
accept delivery thereof, the Grantee's right to
purchase such Option Shares may be terminated by
Cronus. The date specified in the Grantee's notice as
the date of exercise shall be deemed the date of
exercise of the Option, provided that payment in full
for the Option Shares to be purchased upon such
exercise shall have been received by such date.
5. Adjustment of and Changes in Stock of Cronus.
In the event of a reorganization, recapitalization,
change of shares, stock split, spin-off, stock
dividend, reclassification, subdivision or combination
of shares, merger, consolidation, rights offering, or
any other change in the corporate structure or shares
of capital stock of Cronus, the Committee shall make
such adjustment as it deems appropriate in the number
and kind of shares of Stock subject to the Option or in
the option price; provided, however, that no such
adjustment shall give the Grantee any additional
benefits under the Option.
6. Fair Market Value.
As used herein, the "fair market value" of a share
of Stock shall be the average of the high and low sale
prices per share of Stock on the NASDAQ bulletin board,
composite tape or other recognized market source, as
determined by the Committee, on the applicable date of
reference hereunder, or if there is no sale on such
date, then the average of such high and low sale prices
on the last previous day on which a sale is reported.
If Cronus is not trading on the date of this grant then
par value will be used. If the stock to be optioned is
"restricted" then the committee will set the value.
7. No Rights of Stockholders.
Neither the Grantee nor any personal representative
shall be, or shall have any of the rights and
privileges of, a stockholder of Cronus with respect to
any shares of Stock purchasable or issuable upon the
exercise of the Option, in whole or in part, prior to
the date of exercise of the Option.
8. Non-Transferability of Option.
During the Grantee's lifetime, the Option hereunder
shall be exercisable only by the Grantee or any
guardian or legal representative of the Grantee, and
the Option shall not be transferable except, in case of
the death of the Grantee, by will or the laws of
descent and distribution, nor shall the Option be
subject to attachment, execution or other similar
process. In no event of (a) any attempt by the Grantee
to alienate, assign, pledge, hypothecate or otherwise
dispose of the Option, except as provided for herein,
or (b) the levy of any attachment, execution or similar
process upon the rights or interest hereby conferred,
Cronus may terminate the Option by notice to the
Grantee and it shall thereupon become null and void.
9. Employment Not Affected.
The granting of the Option nor its exercise shall
not be construed as granting to the Grantee any right
with respect to continuance of employment of the
Employer. Except as may otherwise be limited by a
written agreement between the Employer and the Grantee,
the right of the Employer to terminate at will the
Grantee's employment with it at any time (whether by
dismissal, discharge, retirement or otherwise) is
specifically reserved by Cronus, as the Employer or on
behalf of the Employer (whichever the case may be), and
acknowledged by the Grantee.
10. Amendment of Option.
The Option may be amended by the Board or the
Committee at any time (i) if the Board or the Committee
determines, in its sole discretion, that amendment is
necessary or advisable in the light of any addition to
or change in the Internal Revenue Code of 1986 or in
the regulations issued thereunder, or any federal or
state securities law or other law or regulation, which
change occurs after the Date of Grant and by its terms
applies to the Option; or (ii) other than in the
circumstances described in clause (i), with the consent
of the Grantee.
11. Notice.
Any notice to Cronus provided for in this instrument
shall be addressed to it in care of its Secretary at
its executive offices at , and any notice to the
Grantee shall be addressed to the Grantee at the
current address shown on the payroll records of the
Employer. Any notice shall be deemed to be duly given
if and when properly addressed and posted by registered
or certified mail, postage prepaid.
12. Incorporation of Plan by Reference.
The Option is granted pursuant to the terms of the
Plan, the terms of which are incorporated herein by
reference, and the Option shall in all respects be
interpreted in accordance with the Plan. The Committee
shall interpret and construe the Plan and this
instrument, and its interpretations and determinations
shall be conclusive and binding on the parties hereto
and any other person claiming an interest hereunder,
with respect to any issue arising hereunder or
thereunder.
13. Governing Law.
The validity, construction, interpretation and
effect of this instrument shall exclusively be governed
by and determined in accordance with the law of the
State of Nevada, except to the extent preempted by
federal law, which shall to the extent govern.
IN WITNESS WHEREOF, Cronus has caused its duly
authorized officers to execute an attest this Grant of
Incentive Stock Option, and to apply the corporate seal
hereto, and the Grantee has placed his or her signature
hereon, effective as of the Date of Grant.
Cronus Corporation Attest:
By: __/s/___________________
Kevin Sherlock, Secretary
ACCEPTED AND AGREED TO;
By: ___/s/__________________
Gordon LeBlanc, Grantee
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