SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ending December 31,1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from___________ to _____________
Commission File No. 0000-9297
CRONUS CORPORATION
( Formerly Thunderstone Group, Inc. )
NEVADA 36-3890744
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
7660 E. BROADWAY BLVD., TUCSON, ARIZONA 85710
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(520) 885-1220
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant Title of Class
to Section 12(g) of the Act: Common
Check whether the issuer (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X]Yes [ ] No
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B is not contained in
this form, and no disclosure will be contained, to the best
of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III
of this Form 10-KSB or any amendment to this Form 10-KSB.
[ ]
The issuer's revenues for its most recent fiscal year is: $0
As of December 31,1995 there was no aggregate market value
of voting stock held by non-affiliates of the registrant.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.
Class Outstanding as of February 28,1997
$.001 PAR VALUE COMMON STOCK 11,453,106 SHARES
DOCUMENTS INCORPORATED BY REFERENCE:
1. Reorganization Stock Exchange Agreement with Perimeter
Bicycling Association of America, Inc. 8-K November 30, 1995.
2. Reorganization Stock Exchange Agreement with Amateur Golf
Association of America, Inc. 8-K November 30, 1995.
3. Reorganization Stock Exchange Agreement with TGI Inc. 8-K
December 13, 1995.
4. Purchase Agreement with Black Diamond Mining Corporation. 8-
K May 23, 1996.
5. Reorganization Agreement with Black Diamond Mining
Corporation. 8-K July 31, 1996.
6. Asset Purchase Agreement with El Tour de Tucson, Inc. 8-K
July 31, 1996.
7. Termination of Reorganization Agreement with Black Diamond
Mining Corporation. 8-K December 20, 1996.
PART 1
ITEM 1. Business
History of the Company.
The Company was incorporated in Nevada as TR-3 Industries,
Inc. in 1979. Together with its subsidiary, TR-3 Chemical
Corporation, TR-3 Industries was involved in the manufacture
and sale of TR-3 Resin Glaze, a cleanser and polisher for
automobiles. The products were sold internationally through
mass marketing distributors. TR-3 Industries, Inc. filed a
registration statement on Form 10 with the Securities and
Exchange Commission for the purpose of registering its
common stock under Section 12(g) of the Securities Exchange
Act of 1934, as amended (the "Act"). Such registration was
filed on June 23, 1980.
In 1982, TR-3 Industries, Inc. and its wholly owned
subsidiary TR-3 Chemical Corporation (a California
corporation), filed a Chapter 11 proceeding in the U.S.
Bankruptcy Court, Central District of California, Docket
Number SA82-3767. The case was converted to a proceeding
under Chapter 7 of the Bankruptcy Code in January, 1986.
The proceedings were concluded and the bankruptcy case was
closed pursuant to an order issued by the U.S. Bankruptcy
Court on June 11, 1992. In connection therewith, the assets
of TR-3 Industries and TR-3 Chemical Corporation were
liquidated and applied to satisfy liabilities to the extent
of available assets. Because liabilities of a corporation
cannot be discharged pursuant to a Chapter 7 proceeding, the
unsatisfied liabilities of TR-3 Industries, Inc. and TR-3
Chemical Corporation remained outstanding after the closing
of the Chapter 7 bankruptcy case.
The unsatisfied liabilities of TR-3 Industries, Inc. and TR-
3 Chemical Corporation may have been assumed by the Company,
as successor to TR-3 Industries, Inc. Current management of
the Company only has limited information regarding the
amount and nature of unsatisfied liabilities of TR-3
Industries Inc. and TR-3 Chemical Corporation, and is unable
to quantify the amount of such unsatisfied liabilities that
may now constitute liabilities of the Company. However,
management of the Company notes that the liabilities of TR-3
Industries, Inc. and TR-3 Chemical Corporation, as scheduled
in their Chapter 11 reorganization petition, amounted to
approximately $4,500,000 of secured and unsecured debt, held
by 248 holders, and various unquantified contingent
liabilities, including ten pending lawsuits, and that, as
set forth in the final accounting of the Chapter 7 case, the
assets of TR-3 Industries, Inc. and TR-3 Chemical
Corporation were applied to satisfy approximately $30,000 of
such debt. TR-3 Chemical Corporation was suspended under
California law on July 2, 1984.
On June 14, 1995, the Company changed its name to
Diversified American Industries, Inc. On November 13, 1995
the Company changed its name to Thunderstone Group Inc.
On November 30, 1995 all of the outstanding stock of the
Amateur Golf Association of America, Inc. ("AGAA"), a
company involved in promoting and staging amateur golf
tournaments, was acquired by the Company through a
reorganization stock exchange agreement. The assets of AGAA
included franchise rights, trademarks, tournament rights,
capital assets and membership list. The Shareholders of
AGAA were issued 614,000 shares of the Company"s Common
Stock in exchange for 100% of AGAA's outstanding stock.
On December 5, 1995 all of the outstanding stock of the
Perimeter Bicycling Association of America, Inc. ("PBAA"), a
company involved in international bicycle event promoting,
staging and publications, was acquired by the Company
through a reorganization stock exchange agreement. The
assets of PBAA included the rights to four bicycling events,
a monthly and annual publication, capital assets and
membership list. The principal shareholders of PBAA were
issued 750,000 shares of the Company"s Common Stock in
exchange for 100% of PBAA's outstanding stock.
On December 13, 1995 all of the outstanding stock of TGI
Inc. ("TGII"), a niche marketing company providing goods and
services in the entertainment industry, was acquired through
a reorganization stock exchange agreement. TGII held
various video, radio and recording assets. The shareholders
of TGII were issued a total of 2,000,000 shares of the
Company"s Common Stock in exchange for 100% of TGII"s
outstanding stock.
On February 27, 1996 the Company sold all of the stock of
both AGAA and TGII, to Applied Logic Inc., pursuant to an
Assignment and Release Agreement, in exchange for 3,114,000
shares of the Company"s Common Stock. Such 3,114,000 shares
of Common stock consisted of (i) the 614,000 shares
previously issued to the former shareholders of AGAA, (ii)
2,000,000 shares previously issued to the former
shareholders of TGII, and (iii) 500,000 shares previously
issued in payment of consulting fees in connection with the
original acquisition of TGII, all of which were transferred
by the holders thereof to Applied Logic, Inc., and then by
Applied Logic, Inc. to the Company, pursuant to the
Assignment and Release Agreement. Also pursuant to the
agreement, Applied Logic, Inc. issued shares of its common
stock to the former shareholders of AGAA and TGII. In
addition, AGAA, TGII and their former shareholders agreed to
release the Company from all liabilities the Company might
have to any of them in connection with the matters arising
prior to the date of the Assignment and Release Agreement,
and the Company agreed to release AGAA, TGII and their
former shareholders from all liability any of them might
have to the Company in connection with matters arising prior
to the date of such agreement. Pursuant to such agreement,
the Company received a note for $500,000.00 and 500,000
shares of Applied Logic, Inc. common stock for those assets.
On March 4, 1996, the Company changed its name to Cronus
Corporation.
On March 31, 1996 the Company entered into an agreement with
the Black Diamond Mining Corporation to purchase the Lelan-
Dividend Mine Group assets. The Company agreed to issue
2,250,000 shares of its Common Stock for the purchase of the
Lelan-Dividend Mine Group assets owned by Black Diamond
Mining Corporation. Subsequently, while waiting for the
appraisal and audited financial statements, a new agreement
was negotiated. The new agreement consisted of a
Reorganization and Stock Exchange Agreement between Cronus
Corporation and Black Diamond Mining Corporation which was
signed May 23, 1996. While this agreement was in effect,
the parties formulated a second reorganization agreement on
July 8, 1996 in the form of a reverse triangular merger for
tax purposes. Pursuant to the merger agreement, the
shareholders of Black Diamond Mining Corporation"s sole
shareholder were to have acquired shares of the Company"s
Common Stock constituting 80% of the outstanding Common
Stock of the Company.
On July 19, 1996 PBAA, then a wholly owned subsidiary of
Cronus Corporation, sold substantially all of its assets,
other than shares of the Company"s Common Stock held by
PBAA, to EI Tour De Tucson, Inc., a Arizona non-profit
corporation, as provided for in an Asset Purchase Agreement.
As consideration for such sale, El Tour de Tucson, Inc.
assumed PBAA's outstanding obligations. On August 7, 1996,
Perimeter Bicycling Association of America, Inc. changed its
name to Sunorc, Inc.
On December 11, 1996, the Company and Black Diamond Mining
Corporation agreed to terminate the reorganization
Agreement, due to questions that had arisen regarding the
appraisals of the Leland-Dividend Mine Group assets.
Subsequently, share certificates previously delivered to
Black Diamond Mining Corporation's shareholders pending
closing of the merger were returned to the Company and
certain affiliates of Black Diamond Mining Corporation
transferred their interests in certain mining claims to the
Company as consideration for certain testing and development
expenditures made by the Company in connection with the
Leland-Dividend mine Group assets. The mining claims
transferred to the Company consist of the Black Diamond Lode
Mining Claims and Gila Gold Placer Claims, which are more
fully described below under the Properties section.
Business of Issuer.
Original Business.
The Company originally was engaged in the manufacture and
sale of TR-3 Resin Glaze, a cleanser and polish for
automobiles. In 1988, the Company divested itself of assets
related to such business in connection with its bankruptcy.
See History of Company above.
The Company did not engage in any further business until
November 13, 1995, when it recommenced business through the
acquisition of the stock of AGAA, PBAA and TGII. See
History of Company above. During the fiscal year ended
December 31, 1995, the Company engaged in various sports
promotion and entertainment businesses through three wholly
owned subsidiaries: The Amateur Golfers Association of
America, Inc. ("AGAA"), Perimeter bicycling Association of
America, Inc. ("PBAA") and TGI Inc. ("TGII"). Both AGAA and
TGII were sold on February 27, 1996. The assets of PBAA
were sold on July 19, 1996.
AGAA:
The Amateur Golfer's Association of America was formed in
1991 as a membership driven organization, similar to AARP,
that intended to service the needs of amateur golfers in the
United States and to raise revenues by providing goods,
services and benefits to its members. AGAA anticipated that
it would generate revenue through the sale of individual
memberships in AGAA and the sale of sponsorship to national
AGAA sanctioned tournaments, similar to the Ryders Cup. The
AGAA developed a 6 flight handicapping system which was
adopted in over 150 local tournaments. AGAA was sold to
Applied Logic Inc. on February 27, 1996.
PBAA:
The Perimeter Bicycling Association of America was formed
in 1982 to promote and stage bicycling events across the
country. PBAA stages an international perimeter cycling
event - EI Tour de Tucson, which is the United States
largest perimeter bicycling event, with over 3500 entrants,
as well as three other annual events. In addition to
bicycling events, PBAA publishes a regional newspaper,
Tailwinds, the Southwest's largest distributed newspaper for
cyclist, runners, triathletes and duathletes. PBAA intended
to assemble a perimeter cycling event package for licensing
based on its experience in staging events. Substantially
all of the assets of PBAA were sold to El Tour de Tucson,
Inc. on July 19, 1996.
TGII:
TGI Inc. was formed to provide goods and services in the
entertainment industry through the following divisions or
subsidiaries: InterMax Film, Television and Video Library,
Satellite Radio Syndicated Programming, and ThunderSound
Records.
The InterMax Film, Television and Video Library consists of
1500 public domain motion picture masters and television
masters, suitable for foreign and domestic television
syndication and video compilation sales.
Satellite-Radio Syndicated Programming project involves the
development of a program called "The Pulse of America's
Music", consisting of R&B cross-over music hits of the late
sixties and the seventies, targeted at urban and rural
audiences with an interest in R&B music and disenchanted
with "rap" and "hip hop" music. TGII tested the concept in
various markets and commenced efforts to syndicate the
program in up to 27 target markets.
ThunderSounds is a contemporary music niche marketing record
label that specializes in the Latin Music market.
ThunderSounds is in the business of leasing recorded album
masters from artists that have completed the recording and
are seeking an entity to produce and distribute recordings.
ThunderSounds is also a music publishing company that
acquires music catalogues and the publishing rights to
songs.
TGII was sold to Applied Logic Inc., on February 27, 1996.
Subsequent Business Developments.
During the fiscal year ended December 31, 1996, the Company
exited the sports promotion and entertainment businesses,
selling the stock of AGAA and TGII, and the assets of PBAA.
During such year, the Company took steps to become involved
in the natural resources industry focusing on the
acquisition of mining assets in Arizona. In 1996, the
Company considered acquiring Black Diamond Mining
Corporation which held title to the Leland-Dividend Mining
Group of Claims, but elected not to consummate such
acquisition. See History of Company above.
On October 2, 1996, the Company acquired from affiliates of
Black Diamond Mining Corporation, two groups of mining
claims located in the State of Arizona. Title to such
claims was transferred to the Company through quit claim
mining deeds as reimbursement for certain testing and
development expenditures incurred by the Company for the
benefit of Black Diamond Mining Corporation's Leland-
Dividend Mining Group Claims. The two groups of mining
claims acquired by the Company are the Black Diamond group
of claims, and the Gila Gold Placer claims. The management
of the Company has not been able to determine whether the
Black Diamond and the Gila Gold Placer claims have mineral
deposits that could be economically and legally extracted or
produced. The claims were transferred to the Company by
quit claim deeds and without further representation or
warranty or title assurance. Thus, the Company is presently
uncertain as to the legal status of its rights, title and
interest, if any, in and to the claims. See "Title to
Mining Properties" below. Moreover, although information
exists regarding mineral deposits located at the claims,
such information was not prepared for the Company, and the
Company has not been authorized to rely on such information,
and, accordingly, the Company's management is unable to
determine the reliability or accuracy of such information.
The Company desires to asses the nature of mineral deposits
within these mining claims and the feasibility of developing
mining operations at such claims.
Black Diamond Mining Group:
The Black Diamond group of claims is located in northeastern
Maricopa County, Arizona and is owed by Cronus Corporation
by way of mining deed. The claims lie in an unsurveyed
area, but a projection of the township and range grid
indicates that they are located, approximately, in Sec. 3,
T. 7 N., R. 4 E., and in Secs. 26, 34 and 35, T. 8 N., R. 4
E. This locality is found on the New River Mesa and the
Cooks Mesa Quadrangles of the U. S. Geological Survey 7.5
minute topographic series. The claims are some 35 miles
north of Phoenix and 4 miles west of Seven Springs camp
site. They lie along Grays Gulch just east of New River
Mesa. The property consists of a group of 10 unpatented
claims which trend in a northeasterly direction. The
Company is seeking a joint venture partner for the
exploration and, if appropriate, development of the Black
Diamond Claims. There can be no assurance that such joint
venture will be formed or that such exploration and
development will be profitable. The Black Diamond Mining
claims are more fully described below in the Properties
section.
Gila Gold Placer Mining Claims:
Gila Gold Placer mining claims consist of unpatented
association placer claims covering 640 acres in the Safford
Mining District, Graham County, Arizona. Cronus Corporation
owns the claims by way of mining deeds. The Company is
negotiating with Tehrom Ltd., an Irish corporation, to form
a joint venture to explore and, if appropriate, develop the
Gila Gold Placer claims. There can be no assurance that
such joint venture will be formed or that such exploration
and development will be profitable. The Gila Gold Placer
mining claim is more fully described below in the
"Properties" section.
Future Operations
In 1997, Cronus Corporation intends to asses the feasibility
of potential future mining projects, involving (1) its Gila
Gold Placer mining claims, (2) its Black Diamond group of
claims, and (3) other possible projects. The steps the
Company intends to take to assess the feasibility of these
projects is described below.
1. Gila Association Placer Mine Project.
Gila Gold Placer Project:
The Company plans to verify and confirm the existence,
extend and grade of placer gold located at the Gila Gold
Placer claims. First, it intends to asses the presence and
tenor of placer gold as described in engineering reports of
past exploration efforts. Next, the /company will analyze
the economic viability of such deposit by determining
optimal production rate and stripping-sorting ratios,
Defining a mining and reclamation technique, Generating a
flow sheet, and isolating processing, mining, capital,
reclamation and general overhead cost factors.
The Company plans to conduct a seismic survey consisting of
a 5-line, 25foot spacing, 9000 lineal foot, segmented survey.
This survey will be complimented with computer enhanced
calculations, storage, retrieval and printout capabilities.
This survey will provide definitions of the alluvial-bedrock
contact. From this information, cross-sectional views will
be generated to define ore reserve volume, assist in mine
planning and describe mining technique.
The Company also plans to conduct a bulk sampling, intended
to ascertain the following: value recoverable per cubic
yard, concentrating ratio, concentrating technique, and
general ground conditions and boulder contact, nature of
interbeds, slope stability, reject swell and nature of
backfill material. The accumulation of data from this
sampling project will provide the baseline to confirm ore
reserves and feasibility of the mining project.
2. Black Diamond Mining Project.
Black Diamond Project:
The Company intends to evaluate the Black Diamond mining
claims as follows.
First, the Company plans to gather data from Exxon
Corporation regarding past exploration work performed by
Humble Oil. Next, it intends to assess other geological,
geophysical and geochemical data gathered on the subject
property. Finally, it will formulate a development plan and
seek a possible joint venture partner.
Competition
There is considerable competition for mining prospects on
federal lands. Costs of exploration, testing and mining,
milling, transportation, labor and other costs have risen
dramatically. These costs would be a factor in determining
whether the discovery of minerals, if any, would be
commercial or not, and could render a discovery
unprofitable, even if made.
Commencing in 1972, various federal, state and local
environmental laws and regulations began to have a
significant impact on the mining industry in Arizona, where
the Black Diamond and Gila Gold Placer properties are
located, and elsewhere in the Western States.
In addition to the uncertainty surrounding the eventual
development of commercial mineralization on the Company's
properties, the success of any mining operation which might
be conducted is dependent upon the price of minerals on the
domestic and world markets, which is subject to
fluctuations, in part as a result of actions by central
banks and government policies.
Government Regulation
Any exploration, rehabilitation, and development programs of
the Company, as well as any commercial production which
might be warranted, will be subject to extensive federal,
state and local laws and regulations controlling not only
the exploration for viable minerals in the ground, the
condition of the shafts and the nature of milling and
leaching operations, but also the possible environmental
effects of water and particle contaminant discharges
resulting from the Company's activities. No environmental
impact studies have been performed by the Company, and there
is no assurance that environmental or safety standards more
stringent than those presently in effect will not be imposed
in the future. At present, in the opinion of the Company,
the current and immediate proposed activities of the Company
are such that no compliance problems are anticipated.
Employees
As of March 15, 1997, the Company had two employees,
Jonathan Roberts and Kevin Sherlock. All other work,
geographical, engineering, metallurgical, legal, accounting
and otherwise, is performed on a fee basis. The Company's
activities in connection with the acquisition, exploration
and development of mining and other mineral properties, the
development of new business lines, and the negotiation with
potential contractual and joint venture partners are
conducted principally by Jonathan Roberts, President of the
Company. See Item 10, Directors and Executive Officers
below. Mr. Roberts has a six year employment contract with
the Company calling for an annual salary of $175,000. Mr.
Roberts owns 3,000,000 of the Common Stock of the Company,
and holds employee incentive stock options for 500,000
shares of the Company's Common Stock at an exercise price of
$0.31 per share. See "Item 11, Executive Compensation"
below.
The Company presently has no plans to expand its staff.
Certain Factors Affecting the Industry and the Company.
Exploration, development and mining of mineral properties
involve unique and greater risks than those generally
associated with other industries. Many exploration programs
do not result in the discovery of a commercially mineable
mineral deposit, in which case the costs of exploration are
not recoverable. The Company's operations are subject to
all the hazards and risks normally incident to the
exploration, development and mining of mineral properties,
including the particular risks described below:
1. Long Lead Time, Expense and Delay.
The risks normally associated with the exploration and
development of a mineral deposit include the extended period
of time, and the costs and expenses, required to complete
such exploration and development, as well as the risks and
delays normally associated with permitting and construction.
Such events can result in a delay in the receipt of income
from a property or operation with serious adverse
consequences to the Company's liquidity, financial
condition and profitability. In addition, there can be no
assurance that any such exploration activities will be
successful. Therefore, exploration costs could result in
substantial losses to the Company which might not be offset
by revenues from the properties explored or otherwise.
2. Need for Additional Financing
If the Company were to undertake significant exploration at
any mining property, the Company would need additional
financing beyond its current capital resources, such as
additional debt or equity financing or a joint venture or
merger with another mining company. The amount of
additional capital needed cannot be accurately predicted at
this time.
Mining companies have historically required substantial
capital to conduct and expand an exploration and development
program, and have frequently sought additional capital as
business has developed. The Company's current capital
resources are limited (See "Item 6 -- Management's
Discussion and Analysis or Plan of Operation; Financial
Condition, Liquidity and Capital Resources" below) and it
will need additional financing if it is to conduct any
significant exploration activities. Financing for such
purpose could be sought through the issuance of additional
shares of Common Stock or other equity securities, or
through debt financing, or through various arrangements with
third parties. There is no assurance that the Company could
obtain any such additional financing. Any such additional
financing obtained through the issuance of additional shares
of Common Stock or other equity securities could result in
further dilution to the Company's shareholders. Any
arrangement with third parties to finance the Company 's
exploration, development, or operations could take the form
of a joint venture, merger, lease, royalty, purchase option,
or some other participation which could reduce, or involve a
disposition of, the Company 's interests in its properties
or the revenues therefrom.
3. Effect of Exploration Costs, Risk of Losses.
Exploration costs incurred by the Company will not generate
offsetting revenues unless and until the exploration is
successful and the Company can commence additional
production, sell the property or otherwise realize the
benefits of additional discoveries.
4. Fluctuating Price for Minerals.
Most of the Company's revenues would be derived from the
sale of minerals produced from its mining and processing
operations. The Company's prospects will depend upon the
ability of the Company to locate and profitably exploit
mineral deposits through the mining, production and sale of
minerals. Therefore, the feasibility of developing and
operating new gold mining operations and the future
profitability of any such operations will depend on the
price of minerals. Mineral prices, and in particular gold
prices, fluctuate widely from time to time and are affected
by numerous factors beyond the Company's control which
cannot be accurately predicted, including expectations about
inflation, exchange rates, banking, economic and political
crises, interest rates, global supply and demand, political
and economic conditions, and production costs in major
mineral producing regions, and many other factors.
5. Title to Properties.
The legal status of the Company's right, title and interest,
if any, in and to the Black Diamond and Gila Gold Placer
claims is currently uncertain. See Properties section
below. Therefore, the Company may be required to expend
additional funds in order to, or may ultimately be unable
to, establish its rights to develop and mine such
properties.
6. Governmental Regulation, Environmental Controls and
Indemnification.
The gold mining industry is subject to extensive federal,
state and local laws and regulations covering exploration,
development, operations and production, taxes, labor
standards, occupational health, waste disposal,
environmental protection, reclamation, mine safety, toxic
substances and other matters. Environmental, operating,
water, dust and other federal and state permits are
essential to any mining operation. The nature of the mining
business is such that mining companies are frequently in the
process of applying for additional permits or modifications
to existing permits at any given time. There can be no
assurance that such permits will be granted in the future as
needed, and, if such permits are not granted, the Registrant
or any mining venture in which it is a participant could be
required to curtail or cease its development plans or
operations with serious adverse consequences to its
liquidity and profitability. Amendments to current laws and
regulations governing operations and activities of mining
companies or more stringent implementation thereof or
additional taxes could have a material adverse impact on the
Registrant. In addition, opposition to development of
mining operations by environmental and other groups is
increasing, and such opposition may result in delays,
increased costs or abandonment of development plans.
ITEM 2. Properties
BLACK DIAMOND CLAIMS:
On October 2, 1996 Cronus Corporation acquired 10 unpatented
mining claims by way of mining deeds.
Location
The Black Diamond group of claims is located in northeastern
Maricopa County, Arizona. The claims lie in an unsurveyed
area, but a projection of the township and range grid
indicates that they are located, approximately in Sec. 3, T.
7 N., R. 4 E., and in Secs. 26, 34 and 35, T. 8 N., R. 4 E.
This locality is found on the New River Mesa and the Cooks
Mesa Quadrangles of the U. S. Geological Survey 7.5 minute
topographic series. The claims are some 35 miles north of
Phoenix and 4 miles west of Seven Springs camp site. They
lie along Grays Gulch just east of New River Mesa.
Property
The property consists of a group of 10 unpatented lode
claims which trend in a northeasterly direction.
Relief and Topography
The elevation of the area is approximately 3600 feet above
sea level. Relief in the claim area ranges from 400 to over
1000 feet. The claims are located along Grays Gulch in an
area of rugged topography characterized by canyons and steep
tributary valleys.
Accessibility
The claims are reached via the graded forestry road that
extends from Cave Creek to Seven Springs camp site and then
northward to Forestry Road #41. The latter road leads
westward to the Black Canyon Highway (Interstate 17), about
11 miles to the east. The forestry road passes adjacent to
the northern end of the claims. A graded access road leads
from the forestry road into the claim area along the west
side of Grays Gulch. Along the divides, road grades are
gentle and there is ready access to various parts of the
claims. However, where roads descend into Grays Gulch or
its tributaries, grades of roads may be steep and may have
to be modified for ore haulage. The northern end of the
claim area can be approached along its eastern side by a
trail along the divide between Grays Gulch and the stream to
the east.
Weather and Climate
Weather is typically semi-arid. At no time of the year will
climate cause a serious problem. Rainfall occurs chiefly in
summer as thunderstorms. These can cause damage to roads
and structures if they are not properly engineered.
Water and Power
Some water is available in Grays Gulch, especially during
the rainy season. If more water is necessary, it can
probably be brought in from Cave Creek where Grays Gulch
empties into it. This is about two miles south of the
claims. There is no electric power in the claim area. It
will have to be generated at the mine site.
Housing and Supplies
The nearest ample housing would be in the general Phoenix
metropolitan area. Ranches and small towns are found
nearer to the claims and might furnish some housing, or
trailers can be readily moved into the area and a mine camp
established. Supplies could come from the Phoenix
metropolitan area. Specialized mining tools and equipment
would be available from various mining centers located the
southeast of the Black Diamond claims. These same centers
together with Tucson some 180 miles to the south would also
adequately supply technical services and technical
personnel.
Mills, Smelters and Similar Facilities
No mills, smelters or related facilities are available in
the claim area. Concentrates, or any direct shipping ore,
would be trucked to Hayden or other smelters in the general
area. The smelters in the Hayden and Miami areas would be
about 150 miles distant. Others are at greater distances.
The nearest custom mill is at Pumpkin Center some 80 miles
to the east. Cement copper produced through leaching of the
copper oxides in the ore at a leach facility in the mine
area would go to the same smelters or might be shipped
directly to one of the consumers of this type of copper
concentrate.
GEOLOGY
The main copper bearing mineral bodies of interest on the
property are located in the Precambrian Yavapai or Pinal
schist. Their geology and relationships are similar to those
of the Iron King, Orizaba, Blue Bell and other mines of the
northeastern Bradshaw Mountains and Black Canyon area.
Rock Types
The claims lie in an area of Precambrian Yavapai schist
which in this area is largely composed of greenish chlorite
schist derived from weakly metamorphosed sedimentary
deposits, tuffs, rhyolites, andesites and related volcanic
rocks. In many areas the schist carries many chert and
siliceous nodules and lenses which may range from less than
an inch in size to massive siliceous dikes several tens of
feet across and hundreds of feet long. These siliceous or
"iron" dikes usually follow the schistosity of the enclosing
rock fairly closely but may cut across it at a low angle.
The quartz and siliceous material may be relatively clear or
the mass may be essentially a red jasper. There has been
more than one period of silicification. Quartzitic beds,
and more rarely metamorphosed limestones, are sometimes
found in the schist sequence. Some of the quartzitic and
siliceous units have been derived from volcanic tuffs and
other siliceous units inter-bedded in the original
Precambrian sediments. Metamorphism and hot aqueous
solutions caused a certain amount of re-mobilization of the
silica as well as the metallic minerals.
The Yavapai schist in the area has been intruded by acidic
(light colored) igneous rocks which range in composition
from rhyolitic to andesitic to dioritic. These intrusives
occur as dikes and small masses which are fine grained and
may be porphyritic. The Precambrian intrusives have been
metamorphosed with the more basic ones becoming
amphibolites. Some of the intrusives appear to be less
metamorphosed but may be highly sheared with some tendency
for the fracturing to trend parallel to the metamorphic
structural trends in the schist. They probably are
Precambrian in age, but could be later, such as of Lararnide
age. These intrusives were most frequently noted in the
northern portion of the claim area. They are also well
developed to the north, northwest and northeast of the
claims.
Large masses of darker Precambrian granites are present both
to the east and west of the claims and a smaller one to the
south of the area. A few Laramide intrusives also are found
to the south. Basalts and other volcanics of Quaternary
and/or Tertiary age are found at higher elevations to the
west and north of the claim area. The quartz veins present
in the area may be small, irregular veins or large massive
structures. The former are intimately related to the
Yavapai schist structures and are of Precambrian age. These
veins, veinlets and quartz pods and stringers are often
contorted, branching and net-work forming. They may cut
across the schistosity but tend to trend roughly parallel to
it. The massive quartz veins are probably younger than the
Precambrian. Some veins are quartz filled fractures with
well developed quartz crystals projecting into open
cavities. There are probably three or more periods during
which quartz veins developed in the rocks of the area.
Drilling
At least two holes have been drilled upon the property but
their depth, length, and what they found are unknown.
Reportedly the holes were drilled at a low angle from the
general area of Claim # 6 presumably to intersect the main
mineralized zone of Claims # 3 and # 2. A few fragments of
drill core found in Grays Gulch wash are of chlorite schist
composition. No mineralization was noted in these
discarded fragments.
Development
At the present time there is no mining activity on any of
the claims. About two miles to the southeast on Cramm
Mountain a mineralized area somewhat similar to that found
in the Grays Gulch area was drilled and partly opened by a
series of cuts and excavations. The rich Red Rover silver-
copper-gold mine is located about 5 miles to the northeast.
Reportedly it is worked out. Some 9 miles to the northwest
the old Orizaba copper (originally gold-silver) mine is
under re-examination. Further to the west, southwest and
northwest are the Bradshaw Mountain mines. All of the above
mines are basically in Yavapai schist and are similar to the
geological setting of the Grays Gulch area. Most of these
other mines, which were abandoned or shut-down before copper
was an important and well-paying metal, are being re-
examined. Deep ore bodies are reported.
Numerous shafts, cuts, tunnels, pits and other excavations
exist in the claim area but only the more important ones
will be mentioned. In addition to those on the claims, a
number of shafts, cuts and prospect holes are found on the
stream divide just to the east of the claims. Some of these
had interesting mineralization and alteration of the rocks
in which they were located. Since the exact position of the
claim boundaries was not always determinable, some of the
workings near claim boundaries may actually be located on
adjacent claims rather than on the one specified.
Shafts
A number of shafts of varying depths have been sunk on
various claims. A shaft on Claim # 6 was not accessible but
is probably 60- 80 feet deep. It is in Yavapai schist and
on the dump is a large amount of copper carbonate bearing
rock. Samples from the shaft dump reportedly ran over 5
percent copper. Most of the shaft reportedly was in copper
carbonate bearing rock. However, the shaft was sunk for
gold and at the time it was dug there was no interest in the
copper. A shaft on Claim # 5 was sunk to a depth of about
80 feet and shows good copper mineralization along a shear
zone. Most of the copper is in the form of copper
carbonates but native copper and other copper oxides are
present. The shaft was sunk for gold and some flakes of
what are probably native gold were observed. Reportedly
some coarse gold has been found recently in some of the dump
samples. Silver is present. Cerargyrite and related silver
chlorides and bromides as well as ruby silver appear to be
present. Assays from the dumps reportedly ran up to 20
percent copper and several ounces of silver per ton.
A shaft a short distance to the east was also sunk in search
of gold. Its location was controlled by the presence of a
quartz vein showing open vein filling characteristics and
extensive malachite and azurite (copper carbonates)
occurring in the vein and surrounding rock. Some primary
copper sulfides are also present. Two shafts were sunk on
opposite sides of Grays Gulch creek bed near the southern
end of Claim # 3. The western one is inaccessible but is at
least 100 feet deep. Reportedly it found some copper as
well as gold, but their grade is not known. The presence of
copper is confirmed by copper carbonate bearing rock on the
remnants of the dump. The eastern shaft was shallow and did
not reach any significant mineralization.
Underground Workings
The "Lower Tunnel" is located in or near the southwest
corner of Claim # 3 near the bottom of Grays Gulch and along
its west side. It cross-cuts the schistosity and structure
and was designed to intersect the mineralized vein which
crops out some 200 feet higher on the hill. The tunnel is
driven in a westerly direction and penetrates the
mineralized zone exposed in the major cuts near the southern
end of Claim # 2. The tunnel face terminates in mineralized
rock and the further extent of this mineralized zone at this
depth is not known. Only short cross-cuts have been driven
along the mineralized zone. About 20 feet of true thickness
of good copper carbonate mineralization was penetrated by
the tunnel. Primary sulfides were also present. The tunnel
contains considerable broken rock which appears to be mainly
good copper ore. Reportedly this mineralized zone
recovered 2.2 percent copper on a leach test.
The "Upper Tunnel" is located near the southern end of Claim
# 3. It entered along a fracture zone and was in carbonate
as well as siliceous rock. A granitic intrusive is to the
west and a strongly silicified jasper dike is to the east
with the copper mineralization in the Yavapai schist between
them. There are two levels to this mine and a start to a
third level. The total vertical distance between workings
is about 60 feet. The tunnel walls are extensively coated
with copper sulfate minerals as well as by carbonates.
High grade copper mineralization is present along the walls
of both levels. Fresh wall-rock underneath the sulfate
coating carries copper but in lesser amounts. Both the
Upper and Lower Tunnels were driven for gold. As in the
case of the shafts, copper was of no consideration because
of the difficulties of transportation, distance to smelters,
and the low price of copper at the time these shafts and
tunnels were being worked.
Cuts
Along the access road leading from the west side of Grays
Gulch to the mineralized areas in the Gulch and near the
southern end of Claim # 2 is an extensive cut across the
width of the surface outcrop of the vein found in the Lower
Tunnel. A short distance to the east near the line between
Claims # 2 and # 3 is another cut parallel to the strike of
the mineralized vein and over 300 feet in length. The
cross-cut of the outcrop is some 200 feet above the Lower
Tunnel: the other cut is at a somewhat lesser height above
the tunnel.
Both cuts carry copper mineralization at the surface along
fractures, joints and to a lesser extent within the host
rock. Essentially all mineralization is in the form of the
copper carbonates. The vein is nearly vertical but dips
slightly to the east: The mineralization is of lower grade
than that found in the Lower Tunnel because of surface
leaching of the ore minerals although locally high-grade
pockets of mineralization may be found along the trace of
the vein. The mineralized zone is silicified or in more
siliceous rock than the surrounding country rock. As a
result, the vein can be traced for a considerable distance
to the northeast: to the southwest it is covered but
probably extends to the mineralized bodies in the southern
portion of the claim area which are exposed on the outcrop
and whose presence is confirmed by the geochemical and
geophysical work. Above the Upper Tunnel on Claim # 3 an
extensive cut has been made across the mineralized vein.
The rock has been highly fractured and the fracture surfaces
are coated with copper carbonates as well as other copper
oxides. The carbonate is not as well developed as elsewhere
along the vein possibly due to greater leaching and a
difference in the host-rock. However, a good copper anomaly
is present.
Pits, Minor Cuts and Other Workings
Throughout the claim area pits, minor cuts and other minor
workings are found. Many of these are assessment work
Mining And Processing
Although well developed exposures of copper bearing rock are
found at the surface, because of the steepness of the dip of
the vein and its relatively narrow width, surface mining
techniques will be limited and before long mining will have
to be by underground methods. If grade of rock is rich
enough, it can be shipped directly to the smelter. If it is
not high enough, the copper contained in the rock will have
to be concentrated. Since the copper ore at the surface
occurs in the form of oxides, concentration of it will be by
means of leaching the copper from the ore. Since the
enclosing rock is not high in lime, leaching will probably
be by sulfuric acid. The copper will be removed from the
sulfate solution by passing it over scrap iron scrap
aluminum to produce "cement copper" which can then be
shipped to a smelter for further refining or it may be
shipped directly to a consumer of cement copper such as some
of the brass manufacturing companies.
As mining proceeds to depth, the content of copper sulfides
could increase as the primary and/or secondary copper
mineralization is reached and the zone of oxidation is left
behind. These sulfides will be concentrated by means of
flotation. If assays indicate that gold and/or silver are
present in high enough quantities to be worth extracting,
provisions for taking them out can be made.
GILA GOLD PLACER MINING CLAIMS:
Gila Placer Mining Claims consist of unpatented association
mining claims covering 640 acres. Cronus Corporation
acquired the claims by way of mining deed on October 2,
1996. The claims lie along the prehistoric bed of which
once was part of the Gila river. The terrace gravel's are
of auriferous origin, deposited by erosive agents, and are
of a later flow than the Gila conglomerate. This
conglomerate forms the bed-rock or strates of gold
concentration. These gravel's no doubt are a remnant of an
ancient river channel. The channel may be traced by its
exposed edges and rims in several places. The gold is of
ancient origin and is derived from the disintegration of the
immeasurable gold-bearing quartz veins in the igneous rocks
which are of the post-Paleozoic age. There has been no
previous mining on these claims. The property is without
reserves, and any activities to be undertaken would be
exploratory in nature.
Location
The Gila Mining Group of Claims are located in the Safford
Mining District, Graham County, State of Arizona. The
association placer claims are approximately 25 miles
northeast of Safford, Arizona.
Access
The claims are reached via a graded county road that extends
from Highway 666. The forest road passes adjacent to the
northern end of the claims.
Relief and Topography
The elevation of the area is approximately 4600 feet above
sea level. Relief in the claim area ranges from 50 feet to
over 1000 feet. The claims are located in an area of rugged
topography characterized by canyons and steep tributary
valleys.
Weather and Climate
Weather is typically semi-arid. At no time of the year will
climate cause a serious problem. Rainfall occurs chiefly in
summer as thunderstorms. These can cause damage to roads
and structures if they are not properly engineered.
Water and Power
There is no electrical power or water in the claim area. It
will have to be generated at the mine site and wells
drilled.
Mills, Smelter and Similar Facilities
No mills, smelter or related facilities are available in the
claim area. Concentrates or any direct shipping of are
would be trucked off-site to a processing plant.
TITLE TO MINING PROPERTIES
Cronus Corporation's only significant assets as of March 15,
1997, consists of its possessory interest in the Black
Diamond group of mining claims and the Gila Gold Placer
mining claims, all of which consist of unpatented mining
claims. The validity of all unpatented mining claims is
dependent upon various inherent uncertainties and conditions
that may prevent a fee title in the usual sense from
existing or vesting.
Unpatented mining claims, when properly is located, staked
and posted according to regulation, give the claimant
possessory right only. Possessory title to an unpatented
claim, when validly initiated, endures unless lost through
abandonment or through a forfeiture which results from an
adverse location made while the prior location is in default
with respect to the performance of annual assessment work.
Because many of these factors involve findings of fact,
title validity cannot be determined solely from an
examination of the record.
The continued validity of the Black Diamond and Gila
unpatended mining claims is subject to many contingencies,
including the available of land for the location at the time
location is made, the making of valid mineral discoveries
within the boundary of each claim, the compliance with all
regulations, both state and federal, for locating claims,
and the performance of annual assessment work which is
currently in the amount of $100.00 per claim. Failing
satisfaction of the requirements, the claims are subject to
cancellation by the United States upon finding of no valid
discovery and, perhaps, upon failure to perform annual
assessment work. Failure to perform annual assessment work
subjects the claimant to the risk of forfeiture of rights
through valid subsequent locations by others or through
cancellation by the government agency involved.
In addition, the Company acquired its possessory interests
in the Black Diamond and Gila Gold Placer claims through
quit-claim deeds. Pursuant to a quit-claim deed, the
transfer of an interest in property transfers whatever
right, title and interest it may have in and to the property
without representation or warranty as the extent of such
right, title and interest or as to the absence of adverse
claims. Thus, the Company's claims is dependent upon the
validity, extent and quality of the transferor's right,
title and interest in and to such claims. The Company does
not have any information regarding the nature of its
transferor's right, title and interest in and to the Black
Diamond and Gila Gold Placer claims, nor has the Company
received any warranties of title, title opinions or policies
of title insurance. As a result, the legal status of the
Company's right, title and interest, if any, in and to these
claims is currently uncertain.
ITEM 3. Legal Proceedings.
Cronus, f.n.a. TR-3 Industries, Inc., was in Chapter 7
bankruptcy from 1982 through 1992. The Company had no
operations and substantially no assets or liabilities through
November 1995. During 1997, legal counsel informed management
that liabilities previously believed to be discharged in
bankruptcy had not been discharged. These liabilities relate
to the operations of the Company prior to 1982. The Company
has recorded a correction of an error in the accompanying
financial statements and, accordingly has restated retained
earnings (accumulated deficit) at December 31, 1993. The
adjustment had no effect on net income, net income after
taxes, or earnings per share for the years ended December 31,
1995, 1994 or 1993. Management is currently investigating
the possibility of the expiration of the statute of
limitations relating to these liabilities; however, the full
amount of the undischarged debts have been included in
current liabilities in the accompanying balance sheet.
The Company is subject to a number of lawsuits and claims
(some of which involve substantial amounts) arising out of
the conduct of its business prior to 1982. Although the
Company does not currently possess sufficient information to
reasonably estimate the amounts of liabilities to be
recorded, they may be significant to the results of
operations.
ITEM 4. Submission of Matters to a Vote of Security Holders.
Cronus Corporation has not submitted any matter to vote of
security holders during the period of this report.
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholders Matters.
The common stock of the Company was authorized for trading
on the NASDAQ OTC Bulletin Board on March 5, 1996, under the
symbol CRON. The quarterly high and low prices for 1996 are
as follows:
High Low
First Quarter $0.00 $0.00
Second Quarter $3.25 $1.50
Third Quarter $2.00 $0.50
Fourth Quarter $1.81 $0.62
The foregoing are over-the-counter market quotations obtain
through PC Quotes, which may reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not
represent actual transactions.
As of February 28, 1997, there are approximately 173 record
holders of the Company's common stock. The Company has not
declared any dividends during the period of this report, and
does not anticipate declaring any dividends in the
foreseeable future.
ITEM 6. Management's Discussion and Analysis of Financial
Condition and Results of Operation.
The Company has had no operational history since 1988.
There has been limited operations this fiscal year as the
Company acquired its operations in December, 1995. The
historical operations of both the AGAA and PBAA were
cyclical in nature. Revenues and expenses are concentrated
around events which take place at various times through the
fiscal year. As the company entered the natural resources
market in March of 1996, and sold AGAA, PBAA and TGII, the
Company has embarked upon a new direction focusing on the
acquisition, development and management of natural
resources.
Financial Requirements and Source of Funds.
As the Company currently has no revenue producing assets,
the Company will seek to acquire a business with an income
stream sufficient to cover basic operating expenses of the
Company, through its exploratory period, of $250,000 for
1997. The Company intends to issue shares of the Company's
stock in order to acquire such a business. Thereafter, the
Company will need to raise $100,000 in order to conduct
seismic survey and bulk sampling of the Gila Gold Placer
Project. The Company intends to raise such funds through
the sale of its stock. Any additional financing that may be
required could be sought through the issuance of additional
shares of the Company's Common Stock or other equity
securities, through debt financing, or through various
arrangements, including joint ventures and/or mergers, with
third parties. However, the Company currently has no
commitments for any type of funding, and there is no
assurance that the Company could obtain such financing if
and when needed.
ITEM 7. Financial Statements.
Audited Balance Sheet for 1995.
See Item 13
ITEM 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
See 8-K filed on November 7, 1996.
PART III
ITEM 9. Directors and Executive Officers of the Registrant.
At the time the Company's Chapter 7 case was concluded in
1991, the Company's board of directors consisted of seven
persons, all of whom resigned on or prior to July 14, 1992,
other than Jeanette Bowen, who remained as a director,
pursuant to the Company's by-laws, until the election and
qualification of a successor. On or prior to July 14, 1992,
all of the Company's officers resigned from their respective
positions, other than Jeanette Bowen, who remained as the
sole officer of the Company.
The Company's shareholders have not met for an annual or
other meeting since October 23, 1990. Consequently, in
accordance with the Company's by-laws, Jeanette Bowen
continued as the sole director of the Company until December
21, 1994, at which time she acted to appoint Jonathan
Roberts as president, and as a director, filling one of the
vacant directorships in accordance with the Company's by-
laws.
After making such appointment, on December 14, 1995,
Jeanette Bowen resigned as director with the result that
Jonathan Roberts became the sole director of the Company.
On July 22, 1996, Mr. Roberts, acting as sole director of
the Company, appointed George Hennessey and Kevin Sherlock
to be Directors of the Company, filling two of the vacant
directorships in accordance with the Company's by-laws.
Also on July 22, 1996, Kevin Sherlock was appointed as
secretary of the Company.
The Company intends to call a meeting of shareholders for
the purpose of electing directors and taking other action
with respect to other matters as promptly as practicable
after it has prepared and distributed to shareholders an
annual report of the Company for the most recently ended
fiscal year. Following the election of such directors, such
directors will take action to appoint officers of the
Company.
The following table shows the positions held by the
Company's officers and directors. The directors were
appointed and will serve until the next annual meeting of
the Company's shareholders, and until their successors have
been elected and have qualified. The officers were
appointed to their positions, and continue in such
positions, at the discretion of the directors.
NAME AGE POSITION TERM
Jonathan Roberts 38 President *
Director
George Hennessey 51 Director *
Kevin Sherlock 35 Secretar *
Director
*The original terms of office of each of the Company's
directors have expired, and each director is serving in such
capacity until the next meeting of the Company's
shareholders and until his successor has been elected and
qualified.
JONATHAN ROBERTS, was appointed a director in 1994, and was
appointed as President in December , 1994. In addition to
his management position with the Company, Mr. Roberts has
been the General Manager of R K Management Group L. C. since
1993. Prior to 1993, Mr. Roberts owned and managed
businesses related to health, sports and travel.
GEORGE HENNESSEY, was appointed a director in July, 1996.
He has been a geological consultant since 1977. As a
geological consultant, and in some instances as
owner/operator, Mr. Hennessey has consulted for several
major mining companies, at various exploration, development
and production levels of involvement regarding surface,
underground and offshore precious metals and base metal
deposits and mill tailing recovery undertakings.
KEVIN SHERLOCK, was appointed a director and the Secretary
in July, 1996. He has been a practicing attorney since
1988. Mr. Sherlock practiced aviation law and insurance
defense litigation in Washington D.C. until 1993, when he
then opened a solo practice assisting small businesses with
various matters, including mergers and acquisitions.
Based solely upon a review of Forms 3 and 4 and amendments
thereto furnished to the Company during its most recent
fiscal year, and Form 5 and amendments thereto furnished to
the Company with respect to its most recent fiscal year, and
any written representation received by the Company, there is
no person, except as disclosed below, who was a director,
officer, or beneficial owner of more than 10 percent of any
class of equity securities of the Company pursuant to
Section 12 of the Exchange Act that failed to file on a
timely basis reports required by Section 16(a) of the
Exchange Act during the most recent fiscal year.
Based on the foregoing review, the Company believes the
following persons failed to file on a timely basis reports
required by Section 16(a) of the Exchange Act:
Messrs. Roberts and Sherlock filed late reports identifying
3 transactions that were not reported on a timely basis.
ITEM 10. Executive Compensation.
In 1995 there was no cash compensation for officers and
directors for performance of their duties. Mr. Roberts was
issued 1,000,000 shares of Common Stock of the Company in
consideration of his services in 1995. Also, as part of the
company's Executive Long-term Stock Investment Plan, Mr.
Roberts was granted an option to purchase 2,000,000 shares
of Common Stock, which was exercised in 1996. Pursuant to
the Executive Long-term Stock Investment Plan, Mr. Roberts
was granted an option in 1997 to purchase 500,000 shares of
Common Stock of the Company.
In 1996, Mr. Roberts also entered into a employment
agreement with the company for $175,000 per year, of which
$100,000 is deferred until the company obtains additional
operating funds. Mr. Roberts received total cash
compensation of $18,000.00 in 1996.
In 1996, Cronus Corporation entered into an employment
agreement with Mr. Sherlock for $48,000 per year. Also, as
part of the company's Executive Long-term Stock Investment
Plan, Mr. Sherlock was granted the option to purchase
550,000 shares of the Company's Common Stock. Mr. Sherlock
received employee compensation of $10,500.00, and $3,186.78
in consulting and expense reimbursement, for a total cash
compensation of $13,686.78 in 1996.
The Company is currently negotiating a consulting agreement
with its chief geological consultant, Mr. George Hennessey.
Mr. Hennessey received a total cash compensation of
$26,180.26, in consulting fees and expense reimbursement in
1996.
ITEM 11. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth, as of February 28, 1997,
information regarding the beneficial ownership of shares of
the Company's Common Stock by each person known by the
Company to own five percent or more of the outstanding
shares of the Company's Common Stock, by each of the
officers and directors, and by the officers and directors as
a group.
Name and Address of Amount of Percent
Security Ownership of Beneficial of
Certain Beneficial Owners Ownership Class
Richard J. DeBernardis 750,000 6.5%
4042 N. Pontatoc Road
Tucson, Arizona 85718
Bartaca Inc. 700,000 6.1%
800 S. Wells
Chicago, Illinois 60606
Franklin Cook 642,300 5.6%
800 S. Wells
Chicago, Illinois 60606
Ownership of Management:
Jonathan Roberts 3,500,000* 29%
President and Director
660 S. Freeman Rd.
Tucson, Arizona 85748
Kevin Sherlock 550,000** 4.6%
43 E. 2nd Street
Tucson, Arizona 85705
All Directors and Officers 4,050,000* ** 33%
*Includes option to purchase 50,000 shares.
**Includes option to purchase 550,000 shares.
ITEM 12. Certain Relationships and Related Transactions.
No officer, director, nominee for election as a director, or
associate of such officer, director or nominee is or has
been in debt to the Company during the last fiscal year.
PART IV
ITEM 13. Exhibits, Financial Statements Schedules and
Reports on Form 8-K.
Exhibits.
1. The Company's Articles of Incorporation, as amended.
2. The Company's By-Laws, as amended.
3. The Company's Executive long-term Stock Investment Plan.
4. Employment Contract of Jonathan Roberts.
5. Employment Contract of Kevin Sherlock.
6. 8-K of November 7, 1996 regarding change in certifying
accountant.
7. List of subsidiaries.
8. Consent of auditors.
Financial Statements and Financial Statement Schedules.
(a) Independent Auditor's Report.
(b) Balance Sheet December 31, 1995.
(c) Statement of Operations for the years ended December
31, 1995 and 1994.
(d) Statement of Changes in Stockholders' Deficit for the
years ended December 31, 1995 and 1994.
(e) Statement of Cash Flows for the years ended December
31, 1995 and 1994.
(f) Notes to Financial Statements.
Reports on Form 8-K.
There were two reports on Form 8-K filed during the fiscal
quarter ending December 31, 1995. The dates of the reports
were November 30, 1995 and December 13, 1995.
The 8-K report filed on November 30, 1995 included audited
financial statements for PBAA, AGAA and TGI Inc., with a
consolidated pro forma for the Company. The items included
are as follows:
Item 1. Changes in Control of Registrant.
Item 2. Acquisition or Disposition of Assets.
Item 5. Other Events.
The 8-K report filed on December 13, 1995 included the
following items:
Item 1. Change in Control of Registrant.
Item 2. Acquisition or Disposition of Assets.
During the fiscal quarter ending on March 31, 1996, two
reports on form 8-K were filed, February 12, 1996 and March
7, 1996.
The 8-K report filed of February 12, 1996 contained item 7.
The 8-K report filed on March 7, 1996 contained the
following items:
Item 2. Acquisition or Disposition of Assets.
Item 5. Other Events.
During the fiscal quarter ending on June 30, 1996, one 8-K
report was filed on May 23, 1996 containing the following
items:
Item 1. Changes in Control of Registrant.
Item 2. Acquisition or Disposition of Assets.
Item 5. Other Events.
Item 7. Financial Statements and Exhibits.
During the fiscal quarter ending on September 30, 1996, one
8-K report was filed on July 31, 1996 containing the
following Items:
Item 1. Changes in Control of Registrant.
Item 2. Acquisition or Disposition of Assets.
Item 5. Other Events.
Item 7. Financial Statements and Exhibits.
During the fiscal quarter ending on December 31, 1996, two
8-K reports were filed, on November 7, 1996 and on December
20, 1996.
The 8-K report filed on November 7, 1996 contained Item 4,
Changes in Registrant's Certifying Accountant.
The 8-K report filed on December 20, 1996 contained the
following Items:
Item 1. Changes in Control of Registrant.
Item 2. Acquisition or Disposition of Assets.
Item 7. Financial Statements and Exhibits.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CRONUS CORPORATION
DATE: April 2, 1997
Kevin M. Sherlock, Secretary and Director
On behalf of the Board of Directors.
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities
and on the dates indicated.
Date: April 2, 1997 By:
/s/
Jonathan Roberts, President and Director
Date: April 2, 1997 By:
/s/
Kevin M. Sherlock, Secretary and Director
CRONUS CORPORATION
Exhibits.
1. The Company's Articles of Incorporation, as amended.
2. The Company's By-Laws, as amended.
3. The Company's Executive long-term Stock Investment Plan.
4. Employment Contract of Jonathan Roberts.
5. Employment Contract of Kevin Sherlock.
6. 8-K of November 7, 1996 regarding change in certifying
accountant.
7. List of subsidiaries.
8. Consent of auditors.
Financial Statements and Financial Statement Schedules.
(a) Independent Auditor's Report.
(b) Balance Sheet December 31, 1995.
(c) Statement of Operations for the years ended December 31, 1995 and
1994.
(d) Statement of Changes in Stockholders' Deficit for the years
ended December 31, 1995 and 1994.
(e) Statement of Cash Flows for the years ended December 31, 1995 and
1994.
(f) Notes to Financial Statements.
Exhibit 1.
ARTICLES OF INCORPORATION
OF
CRONUS CORPORATION
AS AMENDED
* * * *
We, the undersigned, have voluntarily associated
ourselves together for the purpose of forming a corporation
under the laws of the State of Nevada relating to private
corporations, and to that end do hereby adopt articles of
incorporation as follows:
ARTICLE ONE. [Name]. The name of the corporation is:
Cronus Corporation
ARTICLE TWO. [Location]. The address of the corporation's
principal office is Suite 1400 First National Bank Building,
One East First Street, in the city of Reno, County of Washoe,
State of Nevada. The initial agent for service of process at
that address is Nevada Agency and Trust Company.
ARTICLE THREE. [Purposes]. The purposes for which the
corporation is organized are to engage in any activity or
business not in conflict with the laws of the State of Nevada
or of the United States of America, and without limiting the
generality of the foregoing, specifically:
I. [Omnibus]. To have and to exercise all of the powers now
or hereafter conferred by the laws of the State of Nevada
upon corporations organized pursuant to the laws under
which the corporation is organized and any and all acts
amendatory thereof and supplemental thereto.
II. [Develop, Manufacture And Sell]. To carry on the business
of developing, manufacturing and selling resin glaze and
polish, and formulating glazes and polishes of every form
and description.
III. [Real Property]. To purchase, or in any way acquire for
investment or for sale or otherwise, lands, contracts, for
the purchases or sale of lands, buildings, improvements,
and any other real property of any kind or any interest
therein, and as the consideration for same to pay cash or
to issue the capital stock, debenture bonds, mortgage
bonds, or other obligations of the corporation, and to
sell, convey, lease, mortgage, deed of trust, turn to
account, or otherwise deal with all or any part of the
property of the corporation; to make and obtain loans upon
real estate, improved or unimproved, and upon personal
property, giving or taking evidences of indebtedness and
securing the payment thereof by mortgage, trust deed,
pledge or otherwise; and to enter into contracts to buy or
sell any property, real or personal; to buy or sell
mortgages, trust deeds, contracts, and evidences of
indebtedness; to purchase or otherwise acquire, for the
purpose of holding or disposing of the same, real or
personal property of every kind and description, including
the good will, stock, rights, and property of any person,
firm, association, or corporation; and to draw, make,
accept, endorse, discount, execute and issue promissory
notes, bills of exchange, warrants, bonds, debentures and
other negotiable or transferable instruments, or
obligations of the corporation, from time to time, for any
of the objects or purposes of the corporation without
restriction or limit as to amount.
IV. [Carrying On Business Outside State]. To conduct and
carry on its business or any branch thereof in any state
or territory of the United States or in any foreign
country
in conformity with the laws of such state, territory, or
foreign country, and to have and maintain in any state,
territory, or foreign country a business office, plant,
store or other facility.
V. [Purposes To Be Construed As Powers]. The purposes
specified herein shall be construed both as purposes and
powers and shall be in no wise limited or restricted by
reference to, or inference from, the terms of any other
clause in this or any other article, but the purposes and
powers specified in each of the clauses herein shall be
regarded as independent purposes and powers, and the
enumeration of specific purposes and powers shall not be
construed to limit or restrict in any manner the meaning
of general terms or of the general powers of the
corporation; nor shall the expression of one thing be
deemed to exclude another, although it be of like nature
not expressed.
ARTICLE FOUR. [Capital Stock]. The corporation shall have
authority to issue an aggregate of 40,000,000 shares of
capital stock having a par value of $0.001 per share.
The holders of shares of capital stock of the
corporation shall not be entitled to preemptive or
preferential rights to subscribe to any unissued stock or any
other securities which the corporation may now or hereafter
be authorized to issue.
The corporation's capital stock may be issued and sold
from time to time for such consideration as may be fixed by
the Board of Directors, provided that the consideration so
fixed is not less than par value.
The stockholders shall possess cumulative voting rights
at all shareholders' meetings called for the purpose of
electing a Board of Directors.
ARTICLE FIVE. [Directors]. The affairs of the corporation
shall be governed by a Board of Directors of three (3)
persons. All decisions of the Board must have unanimous
consent of the Directors. The names and addresses of the
members of the first Board of Directors are:
NAME AND ADDRESS TITLE
Thomas J. Neavitt President
2207 Crestview Circle
Brea, CA 92621
Franklin C. Cook Vice-President
2390 Lorain Road
San Marino, CA 91108
Jack A. Birnbaum Vice-President
2226 Shadetree Circle
Brea, CA 92621
Robert L. Meester Director
1831 Calle Don Guillermo
La Habra, CA 90631
R. Wright Director
8440 Fountain Ave., #105
Los Angeles, CA 90069
Gene Keefner Director
2674 Dawson Avenue
Signal Hill, CA 90806
William Buck Director
937 N. Miller Drive
Tucson, Arizona 85710
ARTICLE SIX. [Incorporators]. The name and address of each
incorporator of the company is as follows:
NAME ADDRESS
Thomas J. Neavitt 2207 Crestview Circle
Brea, CA 92621
Franklin C. Cook 2390 Lorain Road
San Marino, CA 91108
Jack A. Birnbaum 2226 Shadetree Circle
Brea, CA 92621
ARTICLE SEVEN. [Period of Existence]. The period of
existence of the corporation shall be perpetual.
ARTICLE EIGHT. [Assessment of Stock]. The capital stock of
the corporation, after the amount of the subscription price
or par value has been paid in, shall not be subject to pay
debts of the corporation, and no paid up stock and no stock
issued as fully paid up shall be assessable or assessed.
ARTICLE NINE. [By-Laws]. The initial By-Laws of the
corporation shall be adopted by its Board of Directors. The
power to alter, amend or repeal the By-Laws, or to adopt new
By-Laws, shall be vested in the Board of Directors, except as
otherwise may be specifically provided in the By-Laws.
ARTICLE TEN. [Stockholders' Meetings]. Meetings of
stockholders shall be held at such place within or without
the State of Nevada as may be provided by the By-Laws of the
corporation. Special meetings of the stockholders may be
called by the President or any other executive office of the
corporation, the Board of Directors, or any member thereof,
or by the record holder or holders of at least ten percent
(10%) of all shares entitled to vote at the meeting. Any
action otherwise required to be taken at a meeting of the
stockholders, except election of directors, may be taken
without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by stockholders having at
least a majority of the voting power.
ARTICLE ELEVEN. [Contracts of Corporation]. No contract or
other transaction between the corporation and any other
corporation, whether or not a majority of the shares of the
capital stock of such other corporation is owned by this
corporation, and no act of this corporation shall in any way
be affected or invalidated by the fact that any of the
directors of this corporation are pecuniarily or otherwise
interested in, or are directors or officers of such other
corporation. Any director of this corporation, individually,
or any firm of which such director may be a member, may be a
party to, or any be pecuniarily or otherwise interested in
any contract or transaction of the corporation; provided,
however, that the fact that he or such firm is so interested
shall be disclosed or shall have been known to the Board of
Directors of this corporation, or a majority thereof; and any
director of this corporation who is also a director or
officer of such other corporation, or who is so interested,
may be counted in determining the existence of a quorum at
any meeting of the Board of Directors of this corporation
that shall authorize such contract or transaction, with like
force and effect as if he were not so interested.
IN WITNESS WHEREOF, the undersigned incorporators have
hereunto fixed their signatures at Orange, California, this
8th day of August, 1979.
/s/
Thomas J Neavitt
/s/
Franklin C. Cook
/s/
Jack A. Birnbaum
Exhibit 2.
BY-LAWS
OF
CRONUS CORPORATION
AS AMENDED
ARTICLE 1
OFFICES
1. Registered or Statutory Office, and Agent or Clerk.
The registered or statutory office of the corporation in the
state of incorporation is 502 E. John Street, Carson City,
NV 89706-3078. The registered, statutory or resident agent
of the corporation at such office is CSC/Prentice Hall.
2. Other Places of Business. Branch or subordinate
offices or places of business may be established at any time
by the Board of Directors at any place or places where the
corporation is qualified to do business.
ARTICLE 2
SHAREHOLDERS
1. Annual Meeting. The annual meeting of
shareholders shall be held upon not less than ten (10) nor
more than fifty (60) days written notice of the time, place
of the meeting, at one o'clock p.m. on the first day of the
sixth month of each year at the principal office of the
corporation or at such other time and place as shall be
specified in the notice of meeting, in order to elect
directors and transact such other business as shall come
before the meeting, including the election of any officers
as required by law. If that date is a legal holiday, the
meeting shall be held at the same hour on the next
succeeding business day.
2. Special Meetings. A special meeting of shareholders
may be called for any purpose by the holders of not less
then ten percent (10%) of the voting stock or the President
or the Board of Directors or as permitted by law. Actions
taken at such meetings shall have the approval of at least a
majority of voting shareholders.
3. Action Without Meeting. The shareholders may act
without a meeting if, prior or subsequent to such action, at
least a majority of shareholders shall consent in writing to
such action. Such written consent or consents shall be filed
in the minute book.
4. Quorum. The presence at a meeting in person or by
proxy of the holders of shares entitled to cast a majority
of all shares issued and outstanding shall constitute a
quorum.
5 Record Date. The record date for all meetings of
shareholders shall be as fixed by the Board of Directors or
as provided by statute.
ARTICLE 3
BOARD OF DIRECTORS
1. Number and Term of Office. The Board of Directors
shall consist of at least one member. Each director shall be
elected by the shareholders at each annual meeting and shall
hold office until the next annual meeting of shareholders and
until that director's successor shall have been elected and
qualified.
2. Regular Meetings. A regular meeting of the Board
shall be held without notice immediately following and at the
same place as the annual shareholders' meeting for the
purpose of electing officers and conducting such other
business as may come before the meeting. The Board, by
resolution, may provide for additional regular meetings which
may be held without notice, except to members not present at
the time of the adoption of the resolution.
3. Special Meetings. A special meeting of the Board may
be called at any time by the president or by a majority of
the directors for any purpose. Such meeting shall be held
upon not less than two (2) days notice if given orally,
(either by telephone or in person), or by telegraph, or upon
not less than ten (10) days notice if given by depositing
the notice in the United States mail, postage prepaid. Such
notice shall specify the time, place and purpose of the
meeting.
4. Action Without Meeting. The Board may act without a
meeting if, prior to such action, each member of the Board
shall consent in writing thereto. Such consent or consents
shall be filed in the minute book.
5. Quorum. A majority of the entire Board shall
constitute a quorum for the transaction of business.
6. Vacancies in Board of Directors. Vacancies in the
Board, whether caused by removal, death, mental or physical
incapacitation or any other reason, including vacancies
caused by an increase in the number of directors, may be
filled by the affirmative vote of a majority of the
remaining directors, even though less than a quorum of the
Board, or by a sole remaining director.
ARTICLE 4
WAIVERS OF NOTICE
Any notice required by these By-Laws, the certificate of
incorporation or the law of the state of incorporation may
be waived in writing by any person entitled to notice. The
waiver or waivers may be executed either before, at or after
the event with respect to which notice is waived. Each
director or shareholder attending a meeting without
protesting the lack of proper notice, prior to the
conclusion of the meeting, shall be deemed conclusively to
have waived such notice.
ARTICLE 5
OFFICERS
1. Election. At its regular meeting following the
annual meeting of shareholders, the Board shall elect a
president, a treasurer, and a secretary and such other
officers, including one or more vice presidents, as it shall
deem necessary. One person may hold two or more offices, but
not person shall hold the offices of president and secretary
or clerk at the same time.
2. Duties and Authority of President. The president
shall be chief executive officer of the corporation. Subject
only to the authority of the Board, he shall have general
charge and supervision over, and responsibility for, the
business and affairs of the Corporation. Unless otherwise
directed by the Board, all other officers shall be subject
to the authority and supervision of the president. The
president may enter into and execute in the name of the
corporation contracts or other instruments in the regular
course of business which are authorized, either generally or
specifically, by the Board. He shall have the general powers
and duties of management usually vested in the office of
president of a corporation.
3. Duties and Authority of Vice President. The vice
president shall perform such duties and have such authority
as from time to time may be delegated to him by the
president or by the Board. In the event of the absence,
death, inability or refusal to act by the president, the
vice president shall perform the duties and be vested with
the authority of the president.
4. Duties and Authority of Treasurer. The treasurer
shall have the custody of the funds and securities of the
corporation and shall keep or cause to be kept regular books
of account for the corporation. The treasurer shall perform
such other duties and possess such other powers as are
incident to that office or as shall be assigned by the
president or the Board.
5. Duties and Authority of Secretary. The secretary
shall cause notices of all meetings to be served as
prescribed in these By-Laws and shall keep or cause to be
kept the minutes of all meetings of the shareholders and the
Board. The secretary shall have charge of the seal of the
corporation. The secretary shall perform such other duties
and possess such other powers as are incident to that office
or as are assigned by the president or the Board.
6. Removal of Officers. The Board may remove any
officer or agent of the corporation if such action, in the
judgment of the Board, is in the best interest of the
corporation. Appointment or election to a corporate office
shall not, of itself, establish or create contract rights.
7. Vacancies in Offices. The Board, in its absolute
discretion, may fill all vacancies in offices, regardless of
the cause of such vacancies, for the remainder of the terms
of the offices.
ARTICLE 6
AMENDMENTS TO AND EFFECT OF BYLAWS
FISCAL YEAR
1. Force and Effect of By-Laws. These By-Laws are
subject to the provisions of the law of the State of Nevada
and the corporation's certificate of incorporation, as it
may be amended from time to time. If any provision in these
By-Laws is inconsistent with a provision in the state
statutes or the certificate of incorporation, the provision
of the state statutes or the certificate of incorporation
shall govern.
2. Amendments to By-Laws. These By-Laws may be altered,
amended or repealed by the Board of Directors. The
shareholders may reserve for themselves the right to alter,
amend, or repeal the Bylaws. Any By-Law adopted, amended or
repealed by the shareholders may be amended or repealed by
the Board, unless the resolution of the shareholders
adopting such By-Law expressly reserves to the shareholders
the right to amend or repeal it.
3. Fiscal Year. The fiscal year of the corporation
shall end on the last day of December of each year.
Exhibit 3.
CRONUS CORPORATION
Executive long-term Stock Investment Plan
ARTICLE I - GENERAL
1.01. Purpose.
The purposes of this Cronus Corporation, ("CRONUS"),
Executive Long-term Stock Investment Plan (the "Plan") are
to:
(a) closely associate the interests of the management of
CRONUS and its subsidiaries and affiliates (collectively
referred to as the "Company") with the shareholders by
reinforcing the relationship between participants' rewards
and shareholder gains;
(b) provide management with an equity ownership in the
Company commensurate with Company performance, as reflected
in increased shareholder value;
(c) maintain competitive compensation levels; and
(d) provide an incentive to management for continuous
employment with the Company.
1.02. Administration.
(a) The Plan shall be administered by a Committee
appointed by the Board of Directors of CRONUS (the
"Committee"), as constituted from time to time. The
Committee shall consist of at least two members of the Board.
During the one year prior to commencement of service on the
Committee, the Committee members will not have participated
in, and while serving and for one year after serving on the
Committee, such members shall not be eligible for selection
as persons to whom stock may be allocated or to whom stock
options or stock appreciation rights may be granted under the
Plan or any other discretionary plan of the Company under
which participants are entitled to acquire stock, stock
options or stock appreciation rights of the Company.
(b) The Committee shall have the authority, in its sole
discretion and from time to time to: (i) designate the
employees or classes of employees eligible to participate in
the Plan; (ii) grant awards provided in the Plan in such
form and amount as the Committee shall determine; (iii)
impose such limitations, restrictions and conditions upon any
such award as the Committee shall deem appropriate; and (iv)
interpret the Plan, adopt, amend and rescind rules and
regulations relating to the Plan, and make all other
determinations and take all other action necessary or
advisable for the implementation and administration of the
Plan.
(c) Decisions and determinations of the Committee on all
matters relating to the Plan shall be in its sole discretion
and shall be conclusive. No member of the Committee shall be
liable for any action taken or decision made in good faith
relating to the Plan or any award thereunder.
1.03. Eligibility for Participation.
Participants in the Plan shall be selected by the Committee
from the executive officers and other key employees of the
Company who occupy responsible managerial or professional
positions and who have the capability of making a substantial
contribution to the success of the Company. In making this
selection and in determining the form and amount of awards,
the Committee shall consider any factors deemed relevant,
including the individual's functions, responsibilities, value
of services to the Company and past and potential
contributions to the Company's profitability and sound
growth.
1.04. Types of Awards Under Plan.
Awards under the Plan may be in the form of any one or more
of the following: (i) Stock Options, as described in Article
II; (ii) Incentive Stock Options, as described in Article
III; (iii) Reload Options, as described in Article IV; (iv)
Alternate Appreciation Rights, as described in Article V;
and (v) Limited Rights, as described in Article VI.
1.05 Aggregate Limitation on Awards.
(a) Shares of stock which may be issued under the Plan
shall be authorized and unissued or treasury shares of Common
Stock of CRONUS ("Common Stock"). The maximum number of
shares of Common Stock which may be issued under the Plan
shall be 5 million.
(b) For purposes of calculating the maximum number of
shares of Common Stock which may be issued under the Plan:
(i) all the shares issued (including the shares, if any,
withheld for tax withholding requirements) shall be counted
when cash is used as full payment for shares issued upon
exercise of a Stock Option, Incentive Stock Option or Reload
Option; (ii) only the shares issued (including the shares,
if any, withheld for tax withholding requirements) as a
result of an exercise of Alternate Appreciation Rights shall
be counted; and (iii) only the net shares issued (including
the shares, if any, withheld for tax withholding
requirements) shall be counted when shares of Common Stock
are used as full or partial payment for shares issued upon
exercise of a Stock Option, Incentive Stock Option or Reload
Option.
(c) In addition to shares of Common Stock actually issued
pursuant to the exercise of Stock Options, Incentive Stock
Options, Reload Options or Alternate Appreciation Rights,
there shall be deemed to have been issued a number of shares
equal to the number of shares of Common Stock in respect of
which Limited Rights (as described in Article VI) shall have
been exercised.
(d) Shares tendered by a participant as payment for
shares issued upon exercise of a Stock Option, Incentive
Stock Option or Reload Option shall be available for issuance
under the Plan. Any shares of Common Stock subject to a Stock
Option, Incentive Stock Option or Reload Option which for any
reason is terminated unexercised or expires shall again be
available for issuance under the Plan, but shares subject to
a Stock Option, Incentive Stock Option or Reload Option which
are not issued as a result of the exercise of Limited Rights
shall not again be available for issuance under the Plan.
1.06. Effective Date and Term of Plan.
(a) The Plan shall become effective on the date approved
by the Board of Directors.
(b) No awards shall be made under the Plan after the last
day of the Company's 2000 fiscal year provided, however, that
the Plan and all awards made under the Plan prior to such
date shall remain in effect until such awards have been
satisfied or terminated in accordance with the Plan and the
terms of such awards.
ARTICLE II - STOCK OPTIONS
2.01. Award of Stock Options.
The Committee may from time to time, and subject to the
provisions of the Plan and such other terms and conditions as
the Committee may prescribe, grant to any participant in the
Plan one or more options to purchase for cash or shares the
number of shares of Common Stock ("Stock Options") allotted
by the Committee. The date a Stock Option is granted shall
mean the date selected by the Committee as of which the
Committee allots a specific number of shares to a participant
pursuant to the Plan.
2.02. Stock Option Agreements.
The grant of a Stock Option shall be evidenced by a written
Stock Option Agreement, executed by the Company and the
holder of a Stock Option (the "optionee"), stating the number
of shares of Common Stock subject to the Stock Option
evidenced thereby, and in such form as the Committee may from
time to time determine.
2.03. Stock Option Price.
The option price per share of Common Stock deliverable
upon the exercise of a Stock Option shall be 100 % of the
fair market value of a share of Common Stock on the date the
Stock Option is granted.
2.04. Term and Exercise.
Each Stock Option shall be fully exercisable six months
from the date of its grant and unless a shorter period is
provided by the Committee or by another Section of this Plan,
may be exercised during a period of ten years from the date
of grant thereof (the "option term"). No Stock Option shall
be exercisable after the expiration of its option term.
2.05. Manner of Payment.
Each Stock Option Agreement shall set forth the procedure
governing the exercise of the Stock Option granted
thereunder, and shall provide that, upon such exercise in
respect of any shares of Common Stock subject thereto, the
optionee shall pay to the Company, in full, the option price
for such shares with cash or with previously owned Common
Stock.
2.06. Restrictions on Certain Shares.
As soon as practicable after receipt of payment, the
Company shall deliver to the optionee a certificate or
certificates for such shares of Common Stock. The optionee
shall become a shareholder of the Company with respect to
Common Stock represented by share certificates so issued and
as such shall be fully entitled to receive dividends, to vote
and to exercise all other rights of a shareholder.
Notwithstanding the foregoing, a number of shares of Common
Stock received upon the exercise of the options shall be
subject to certain restrictions. The number of shares
subject to the restrictions shall be equal to the total
number of shares received in the exercise of the options
minus (i) the number of shares which have a fair market value
on the date of the option exercise equal to the total option
price for all the shares received in the option exercise and
(ii) the number of shares which have a fair market value on
the date of the option exercise equal to the applicable
federal, state and local withholding tax on the total option
exercise and any brokerage commission or interest charges, if
applicable, to the exercise. The restrictions on these
shares of Common Stock shall be as follows:
(a) The optionee shall be prohibited from the sale,
exchange, transfer, pledge, hypothecation, gift or other
disposition of such shares of Common Stock until the earlier
of the expiration of the option term or termination of the
optionee's employment for any reason. Notwithstanding the
foregoing, such shares of Common Stock may be used as payment
of the option price of shares issued upon the exercise of
other Stock Options.
(b) The restrictions shall apply to any new, additional or
different securities the optionee may become entitled to
receive with respect to such shares by virtue of a stock
split or stock dividend or any other change in the corporate
or capital structure of the Company.
(c) Until such time as the restrictions hereunder lapse,
the share certificate representing such shares shall contain
a restrictive legend evidencing said restrictions.
Alternatively, the optionee shall be required to deposit the
share certificate with the Company or its agent, endorsed in
blank or accompanied by a duly executed irrevocable stock
power or other instrument of transfer.
2.07. Death of Optionee.
(a) Upon the death of the optionee, any rights to the
extent exercisable on the date of death may be exercised by
the optionee's estate, or by a person who acquires the right
to exercise such Stock Option by bequest or inheritance or by
reason of the death of the optionee, provided that such
exercise occurs within both the remaining effective term of
the Stock Option and one year after the optionee's death.
(b) The provisions of this Section shall apply
notwithstanding the fact that the optionee's employment may
have terminated prior to death, but only to the extent of any
rights exercisable on the date of death.
2.08. Retirement or Disability.
Upon termination of the optionee's employment by reason of
retirement or permanent disability (as each is determined by
the Committee), the optionee may, within 36 months from the
date of termination, exercise any Stock Options to the extent
such options are exercisable during such 36-month period.
2.09. Termination for Other Reasons.
Except as provided in Sections 2.07 and 2.08, or except as
otherwise determined by the Committee, all Stock Options
shall terminate upon the termination of the optionee's
employment.
2.10. Effect of Exercise.
The exercise of any Stock Option shall cancel that number
of related Alternate Appreciation Rights and/or Limited
Rights, if any, which is equal to the number of shares of
Common Stock purchased pursuant to said option.
ARTICLE III - INCENTIVE STOCK OPTIONS
3.01. Award of Incentive Stock Options.
The Committee may, from time to time and subject to the
provisions of the Plan and such other terms and conditions as
the Committee may prescribe, grant to any participant in the
Plan one or more "incentive stock options" (intended to
qualify as such under the provisions of section 422 of the
Internal Revenue Code of 1986, as amended ("Incentive Stock
Options") to purchase for cash or shares the number of shares
of Common Stock allotted by the Committee. The date an
Incentive Stock Option is granted shall mean the date
selected by the Committee as of which the Committee allots a
specific number of shares to a participant pursuant to the
Plan. Notwithstanding the foregoing, Incentive Stock Options
shall not be granted to any owner of 10% or more of the total
combined voting power of the Company and its subsidiaries.
3.02. Incentive Stock Option Agreements.
The grant of an Incentive Stock Option shall be evidenced
by a written Incentive Stock Option Agreement, executed by
the Company and the holder of an Incentive Stock Option (the
"optionee"), stating the number of shares of Common Stock
subject to the Incentive Stock Option evidenced thereby, and
in such form as the Committee may from time to time
determine.
3.03. Incentive Stock Option Price.
The option price per share of Common Stock deliverable
upon the exercise of an Incentive Stock Option shall be 100%
of the fair market value of a share of Common Stock on the
date the Incentive Stock Option is granted.
3.04. Term and Exercise.
Each Incentive Stock Option shall be fully exercisable six
months from the date of its grant and unless a shorter period
is provided by the Committee or another Section of this Plan,
may be exercised during a period of ten years from the date
of grant thereof (the "option term"). No Incentive Stock
Option shall be exercisable after the expiration of its
option term.
3.05. Maximum Amount of Incentive Stock Option Grant.
The aggregate fair market value (determined on the date the
option is granted) of Common Stock subject to an Incentive
Stock Option granted to an optionee by the Committee in any
calendar year shall not exceed $100,000.
3.06. Death of Optionee.
(a) Upon the death of the optionee, any Incentive Stock
Option exercisable on the date of death may be exercised by
the optionee's estate or by a person who acquires the right
to exercise such Incentive Stock Option by bequest or
inheritance or by reason of the death of the optionee,
provided that such exercise occurs within both the remaining
option term of the Incentive Stock Option and one year after
the optionee's death.
(b) The provisions of this Section shall apply
notwithstanding the fact that the optionee's employment may
have terminated prior to death, but only to the extent of any
Incentive Stock Options exercisable on the date of death.
3.07. Retirement or Disability.
Upon the termination of the optionee's employment by reason
of permanent disability or retirement (as each is determined
by the Committee), the optionee may, within 36 months from
the date of such termination of employment, exercise any
Incentive Stock Options to the extent such Incentive Stock
Options were exercisable at the date of such termination of
employment. Notwithstanding the foregoing, the tax treatment
available pursuant to Section 422 of the Internal Revenue
Code of 1986 upon the exercise of an Incentive Stock Option
will not be available to an optionee who exercises any
Incentive Stock Options more than (i) 12 months after the
date of termination of employment due to permanent disability
or (ii) three months after the date of termination of
employment due to retirement.
3.08. Termination For Other Reasons.
Except as provided in Sections 3.06 and 3.07 or except as
otherwise determined by the Committee, all Incentive Stock
Options shall terminate upon the termination of the
optionee's employment.
3.09. Applicability of Stock Options Sections.
Sections 2.05, Manner of Payment; 2.06, Restrictions on
Certain Shares; and 2.10, Effect of Exercise, applicable to
Stock Options, shall apply equally to Incentive Stock
Options. Said Sections are incorporated by reference in this
Article III as though fully set forth herein.
ARTICLE IV - RELOAD OPTIONS
4.01. Authorization of Reload Options.
Concurrently with the award of Stock Options and/or the award
of Incentive Stock Options to any participant in the Plan,
the Committee may authorize reload options ("Reload Options")
to purchase for cash or shares a number of shares of Common
Stock. The number of Reload Options shall equal (i) the
number of shares of Common Stock used to exercise the
underlying Stock Options or Incentive Stock Options and (ii)
to the extent authorized by the Committee, the number of
shares of Common Stock used to satisfy any tax withholding
requirement incident to the exercise of the underlying Stock
Options or Incentive Stock Options. The grant of a Reload
Option will become effective upon the exercise of underlying
Stock Options, Incentive Stock Options or Reload Options
through the use of shares of Common Stock held by the
optionee for at least 12 months. Notwithstanding the fact
that the underlying option may be an Incentive Stock Option,
a Reload Option is not intended to qualify as an "incentive
stock option" under Section 422 of the Internal Revenue Code
of 1986.
4.02. Reload Option Amendment.
Each Stock Option Agreement and Incentive Stock Option
Agreement shall state whether the Committee has authorized
Reload Options with respect to the underlying Stock Options
and/or Incentive Stock Options. Upon the exercise of an
underlying Stock Option, Incentive Stock Option or other
Reload Option, the Reload Option will be evidenced by an
amendment to the underlying Stock Option Agreement or
Incentive Stock Option Agreement.
4.03. Reload Option Price.
The option price per share of Common Stock deliverable
upon the exercise of a Reload Option shall be the fair market
value of a share of Common Stock on the date the grant of the
Reload Option becomes effective.
4.04. Term and Exercise.
Each Reload Option is fully exercisable six months from the
effective date of grant. The term of each Reload Option
shall be equal to the remaining option term of the underlying
Stock Option and/or Incentive Stock Option.
4.05. Termination of Employment.
No additional Reload Options shall be granted to
optionee's when Stock Options, Incentive Stock Options and/or
Reload Options are exercised pursuant to the terms of this
Plan following termination of the optionee's employment.
4.06. Applicability of Stock Options Sections.
Sections 2.05, Manner of Payment; 2.06, Restrictions on
Certain Shares; 2.07, Death of Optionee; 2.08, Retirement
or Disability; 2.09, Termination for Other Reasons; and
2.10, Effect of Exercise, applicable to Stock Options, shall
apply equally to Reload Options. Said Sections are
incorporated by reference in this Article IV as though fully
set forth herein. Value of a share of Common Stock on the
date the option related to said Alternate Right was granted
or became effective, as the case may be.
ARTICLE V-ALTERNATE APPRECIATION RIGHTS
5.01. Award of Alternate Rights.
Concurrently with or subsequent to the award of any Stock
Option, Incentive Stock Option or Reload Option to purchase
one or more shares of Common Stock, the Committee may,
subject to the provisions of the Plan and such other terms
and conditions as the Committee may prescribe, award to the
optionee with respect to each share of Common Stock, a
related alternate appreciation right ("Alternate Right"),
permitting the optionee to be paid the appreciation on the
option in lieu of exercising the option.
5.02. Alternate Rights Agreement.
Alternate Rights shall be evidenced by written agreements
in such form as the Committee may from time to time
determine.
5.03. Exercise.
An optionee who has been granted Alternate Rights may, from
time to time, in lieu of the exercise of an equal number of
options, elect to exercise one or more Alternate Rights and
thereby become entitled to receive from the Company payment
in Common Stock the number of shares determined pursuant to
Sections 5.04 and 5.05. Alternate Rights shall be
exercisable only to the same extent and subject to the same
conditions as the options related thereto are exercisable, as
provided in this Plan. The Committee may, in its discretion,
prescribe additional conditions to the exercise of any
Alternate Rights.
5.04. Amount of Payment.
The amount of payment to which an optionee shall be
entitled upon the exercise of each Alternate Right shall be
equal to 100% of the amount, if any, by which the fair market
value of a share of Common Stock on the exercise date exceeds
the fair market Rights shall terminate upon the termination
of the optionee's employment or upon the death of the
optionee.
5.05. Form of Payment.
The number of shares to be paid shall be determined by
dividing the amount of payment determined pursuant to Section
5.04 by the fair market value of a share of Common Stock on
the exercise date of such Alternate Rights. As soon as
practicable after exercise, the Company shall deliver to the
optionee a certificate or certificates for such shares of
Common Stock. All such shares shall be issued with the
rights and restrictions specified in Section 2.06.
5.06. Effect of Exercise.
The exercise of any Alternate Rights shall cancel an equal
number of Stock Options, Incentive Stock Options, Reload
Options and Limited Rights, if any, related to said Alternate
Rights.
5.07. Retirement or Disability.
Upon termination of the optionee's employment (including
employment as a director of the Company after an optionee
terminates employment as an officer or key employee of the
Company) by reason of permanent disability or retirement (as
each is determined by the Committee), the optionee may,
within six months from the date of such termination, exercise
any Alternate Rights to the extent such Alternate Rights are
exercisable during such six-month period.
5.08. Death of Optionee or Termination for Other Reasons.
Except as provided in Section 5.07, or except as otherwise
determined by the Committee, all Alternate
ARTICLE VI - LIMITED RIGHTS
6.01. Award of Limited Rights.
Concurrently with or subsequent to the award of any Stock
Option, Incentive Stock Option, Reload Option or Alternate
Right, the Committee may, subject to the provisions of the
Plan and such other terms and conditions as the Committee may
prescribe, award to the optionee with respect to each share
of Common Stock, a related limited right permitting the
optionee, during a specified limited time period, to be paid
the appreciation on the option in lieu of exercising the
option ("Limited Right").
6.02. Limited Rights Agreement.
Limited Rights granted under the Plan shall be evidenced
by written agreements in such form as the Committee may from
time to time determine.
6.03. Exercise Period.
Limited Rights are exercisable in full for a period of
seven months following the date of a Change in Control of
Acquiring Company (the "Exercise Period"); provided,
however, that Limited Rights may not be exercised under any
circumstances until the expiration of the six-month period
following the date of grant. As used in the Plan, a "Change
in Control" shall be deemed to have occurred if:
(a) individuals who were directors of Acquiring Company
immediately prior to a Control Transaction shall cease,
within one year of such Control Transaction, to constitute a
majority of the Board of Directors of CRONUS (or of the Board
of Directors of any successor to Acquired Company, or to all
or substantially all of its assets), or
(b) any entity, person or Group other than CRONUS or a
subsidiary of CRONUS acquires shares of CRONUS in a
transaction or series of transactions that result in such
entity, person or Group directly or indirectly owning
beneficially fifty-one percent (51 %) or more of the
outstanding shares.
As used herein, "Control Transaction" shall be (i) any tender
offer for or acquisition of capital stock of CRONUS, (ii) any
merger, consolidation, or sale of all or substantially all of
the assets of CRONUS which has been approved by the
shareholders, (iii) any contested election of directors of
CRONUS or (iv) any combination of the foregoing which results
in a change in voting power sufficient to elect a majority of
the Board of Directors of CRONUS As used herein, "Group"
shall mean persons who act in concert as described in
Sections 13(d)(3) and/or 14(d)(2) of the Securities Exchange
Act of 1934, as amended.
6.04. Amount of Payment.
The amount of payment to which an optionee shall be
entitled upon the exercise of each Limited Right shall be
equal to 100% of the amount, if any, which is equal to the
difference between the price per share of Common Stock
covered by the related option on the date the option was
granted and the Market Price of a share of such Common Stock.
Market Price is defined to be the greater of (i) the highest
price per share of the Company's Common Stock paid in
connection with any Change in Control and (ii) the highest
price per share of the Company's Common Stock reflected in
the consolidated trading tables of the Wall Street Journal
during the 60-day period prior to the Change in Control.
6.05. Form of Payment.
Payment of the amount to which an optionee is entitled
upon the exercise of Limited Rights, as determined pursuant
to Section 6.04, shall be made solely in cash.
6.06. Effect of Exercise.
If Limited Rights are exercised, the Stock Options,
Incentive Stock Options, Reload Options and Alternate Rights,
if any, related to such Limited Rights cease to be
exercisable to the extent of the number of shares with
respect to which the Limited Rights were exercised. Upon the
exercise or termination of the options, and Alternate Rights,
if any, related to such Limited Rights, the Limited Rights
granted with respect thereto terminate to the extent of the
number of shares as to which the related options and
Alternate Rights were exercised or terminated.
6.07. Retirement or Disability.
Upon termination of the optionee's employment (including
employment as a director of this Company after an optionee
terminates employment as an officer or key employee of this
Company) by reason of permanent disability or retirement (as
each is determined by the Committee), the optionee may,
within six months from the date of termination, exercise any
Limited Right to the extent such Limited Right is exercisable
during such six-month period.
6.08. Death of Optionee or Termination for Other Reasons.
Except as provided in Sections 6.07 and 6.09, or except as
otherwise determined by the Committee, all Limited Rights
granted under the Plan shall terminate upon the termination
of the optionee's employment or upon the death of the
optionee.
6.09. Termination Related to a Change in Control.
The requirement that an optionee be terminated by reason
of retirement or permanent disability or be employed by the
Company at the time of exercise pursuant to Sections 6.07 and
6.08 respectively, is waived during the Exercise Period as to
any optionee who (i) was employed by the Company at the time
of the Change in Control and (ii) is subsequently terminated
by the Company other than for just cause or who voluntarily
terminates if such termination was the result of a good faith
determination by the optionee that as a result of the Change
in Control he is unable to effectively discharge his present
duties or the duties of the position which he occupied just
prior to the Change in Control. As used herein "just cause"
shall mean willful misconduct or dishonesty or conviction of
or failure to contest prosecution for a felony, or excessive
absenteeism unrelated to illness.
ARTICLE VII - MISCELLANEOUS
7.01. General Restriction.
Each award under the Plan shall be subject to the
requirement that, if at any time the Committee shall
determine that (i) the listing, registration or qualification
of the shares of Common Stock subject or related thereto upon
any securities exchange or under any state or Federal law, or
(ii) the consent or approval of any government regulatory
body, or (iii) an agreement by the grantee of an award with
respect to the disposition of shares of Common Stock, is
necessary or desirable as a condition of, or in connection
with, the granting of such award or the issue or purchase of
shares of Common Stock thereunder, such award may not be
consummated in whole or in part unless such listing,
registration, qualification, consent, approval or agreement
shall have been effected or obtained free of any conditions
not acceptable to the Committee.
7.02. Non-Assignability.
No award under the Plan shall be assignable or
transferable by the recipient thereof, except by will or by
the laws of descent and distribution. During the life of the
recipient, such award shall be exercisable only by such
person or by such person's guardian or legal representative.
7.03. Withholding Taxes.
Whenever the Company proposes or is required to issue or
transfer shares of Common Stock under the Plan, the Company
shall have the right to require the grantee to remit to the
Company an amount sufficient to satisfy any Federal, state
and/or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares.
Alternatively, the Company may issue or transfer such shares
of Common Stock net of the number of shares sufficient to
satisfy the withholding tax requirements. For withholding
tax purposes, the shares of Common Stock shall be valued on
the date the withholding obligation is incurred.
7.04. Right to Terminate Employment.
Nothing in the Plan or in any agreement entered into
pursuant to the Plan shall confer upon any participant the
right to continue in the employment of the Company or effect
any right which the Company may have to terminate the
employment of such participant.
7.05. Non-uniform Determinations.
The Committee's determinations under the Plan (including
without limitation determinations of the persons to receive
awards, the form, amount and timing of such awards, the terms
and provisions of such awards and the agreements evidencing
same) need not be uniform and may be made by it selectively
among persons who receive, or are eligible to receive, awards
under the Plan, whether or not such persons are similarly
situated.
7.06. Rights as a Shareholder.
The recipient of any award under the Plan shall have no
rights as a shareholder with respect thereto unless and until
certificates for shares of Common Stock are issued to him.
7.07. Definitions.
In this Plan the following definitions shall apply:
(a) "Subsidiary" means any corporation of which, at the
time more than 50% of the shares entitled to vote generally
in an election of directors are owned directly or indirectly
by CRONUS or any subsidiary thereof.
(b) "Affiliate" means any person or entity which
directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with
CRONUS.
(c) "Fair market value" as of any date and in respect of
any share of Common Stock means the closing price on such
date or on the next business day, if such date is not a
business day, of a share of Common Stock reflected in the
consolidated trading tables of the Wall Street Journal or any
other publication selected by the Committee, provided that,
if shares of Common Stock shall not have been traded for more
than 10 days immediately preceding such date or if deemed
appropriate by the Committee for any other reason, the fair
market value of shares of Common Stock shall be as determined
by the Committee in such other manner as it may deem
appropriate. In no event shall the fair market value of any
share of Common Stock be less than its par value.
(d) "Option" means Stock Option, Incentive Stock Option
or Reload Option.
(e) "Option price" means the purchase price per share of
Common Stock deliverable upon the exercise of a Stock Option,
Incentive Stock Option or Reload Option.
7.08. Leaves of Absence.
The Committee shall be entitled to make such rules,
regulations and determinations as it deems appropriate under
the Plan in respect of any leave of absence taken by the
recipient of any award. Without limiting the generality of
the foregoing, the Committee shall be entitled to determine
(i) whether or not any such leave of absence shall constitute
a termination of employment within the meaning of the Plan
and (ii) the impact, if any, of any such leave of absence on
awards under the Plan theretofore made to any recipient who
takes such leave of absence.
7.09. Newly Eligible Employees.
The Committee shall be entitled to make such rules,
regulations, determinations and awards as it deems
appropriate in respect of any employee who becomes eligible
to participate in the Plan or any portion thereof after the
commencement of an award or incentive period.
7.10. Adjustments.
In any event of any change in the outstanding Common Stock by
reason of a stock dividend or distribution, recapitalization,
merger, consolidation, split-up, combination, exchange of
shares or the like, the Committee may appropriately adjust
the number of shares of Common Stock which may be issued
under the Plan, the number of shares of Common Stock subject
to Options theretofore granted under the Plan, the option
price of Options theretofore granted under the Plan, the
amount of Restricted Stock Units theretofore awarded under
the Plan, the performance targets referred to in Section 7.08
and any and all other matters deemed appropriate by the
Committee.
7.11. Amendment of the Plan.
(a) The Committee may, without further action by the
shareholders and without receiving further consideration from
the participants, amend this Plan or condition or modify
awards under this Plan in response to changes in securities
or other laws or rules, regulations or regulatory
interpretations thereof applicable to this Plan or to comply
with stock exchange rules or requirements.
(b) The Committee may at any time and from time to time
terminate or modify or amend the Plan in any respect, except
that without shareholder approval the Committee may not (i)
increase the maximum number of shares of Common Stock which
may be issued under the Plan (other than increases pursuant
to Section 7.10), (ii) extend the period during which any
award may be granted or exercised, or (iii) extend the term
of the Plan. The termination or any modification or amendment
of the Plan, except as provided in subsection (a), shall not
without the consent of a participant, affect his or her
rights under an award previously granted to him or her.
Exhibit 4.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is entered into and
dated for reference purposes as of July 22, 1996, by and
between Cronus Corporation, a Nevada corporation having a
principal place of business at 7660 E. Broadway, Suite 210,
Tucson, Arizona (hereinafter referred to as the "Company"),
and Jonathan Roberts, an individual residing at 660 S.
Freeman Road, Tucson, Arizona (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 for the
management and administration of all phases of the operations
of Cronus Corporation.
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 of Cronus Corporation. 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 6 years,
unless sooner terminated in accordance with the provisions
hereof.
1.3 Location. The duties which Employee shall be
required to perform under this Agreement shall be structured
such that he can perform said duties in Tucson, Arizona.
Employee shall not be required to relocate from Tucson,
Arizona, without his consent.
2. COMPENSATION.
2.1 Base Salary. The Company shall pay Employee during
the term of his employment hereunder a base salary of
$175,000 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 and shall commence effective
July 15, 1996. Employee agrees to defer $100,000 of annual
salary until company is, in the opinion of the Board of
Directors, generating sufficient income, or until July 1,
1997, whichever occurs first.
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 four 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.
3. EXPENSES AND PRIOR AGREEMENTS
3.1 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, including but
not limited to any use of Employee as a guarantor for the
rental of office space and for the initial establishment of a
corporate credit card.
3.2 Upon execution of this agreement, the employment
agreement dated November 15, 1995 between Diversified
American Industries Inc. (a prior name of the Company) and
employee will be terminated and have no further effect with
the exception of any options for shares of the Company's
stock, which options shall continue in full effect.
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 of Cronus, 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 of President 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 sixty (60) 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 four years. 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), the Company shall remain obligated to pay
Employee the compensation set forth in Section 2.1 hereof for
a period of four years. 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.
(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 of Cronus Corporation; 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:
Cronus Corporation
7660 E. Broadway, Suite 210
Tucson, Arizona 85710
If to the Employee:
Jonathan Roberts
660 S. Freeman Road
Tucson, Arizona 85748
(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:
CRONUS CORPORATION
Jonathan Roberts By: Kevin M. Sherlock,
Member, Board of Directors
Exhibit 5.
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is entered into and
dated for reference purposes as of July 22, 1996, by and
between Cronus Corporation, a Nevada corporation having a
principal place of business at 7660 E. Broadway, Suite 210,
Tucson, Arizona (hereinafter referred to as the "Company"),
and Kevin Sherlock, an individual residing at 43 E. 2nd
Street, Tucson, Arizona (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
president of the Company and to act as the secretary of
Cronus Corporation.
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 Secretary of Cronus Corporation. 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 4 years,
unless sooner terminated in accordance with the provisions
hereof.
1.3 Location. The duties which Employee shall be
required to perform under this Agreement shall be structured
such that he can perform said duties in Tucson, Arizona.
Employee shall not be required to relocate from Tucson,
Arizona, without his consent.
2. COMPENSATION.
2.1 Base Salary. The Company shall pay Employee during
the term of his employment hereunder a base salary of $48,000
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 and shall commence effective September
1, 1996. Employee agrees to defer $1,000 of monthly salary
until company is, in the opinion of the Board of Directors,
generating sufficient income, or until July 1, 1997,
whichever occurs first.
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 four 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.
3. EXPENSES AND PRIOR AGREEMENTS
3.1 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.
3.2 Upon execution of this agreement, the consulting
agreement dated May 24, 1995 between Company and Employee
will be terminated and have no further effect.
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 of Cronus, 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 of President 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 sixty (60) 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 four years. 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), the Company shall remain obligated to pay
Employee the compensation set forth in Section 2.1 hereof for
a period of four years. 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.
(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
Secretary of Cronus Corporation; 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:
Cronus Corporation
7660 E. Broadway, Suite 210
Tucson, Arizona 85710
If to the Employee:
Kevin Sherlock
43 E. 2nd Street
Tucson, Arizona 85705
(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:
CRONUS CORPORATION
Kevin Sherlock By: Jonathan Roberts,
President, and
Member, Board of Directors
Exhibit 6.
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) November
7, 1996
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 Blvd., Suite 210, Tucson, Arizona
85748
( Address of principal executive offices ) (
Zip Code )
Registrant's telephone number, including area code:
(520) 885-1220
Item 1. Changes in Control of Registrant.
None.
Item 2. Acquisition or Disposition of Assets.
None.
Item 3. Bankruptcy or Receivership.
None.
Item 4. Changes in Registrant's Certifying Accountant.
By mutual agreement, the issuer's independent
accountants, Schroeder & Stevenson, C.P.A.'s P.C., will not
perform further accounting services for the issuer as of
November 7, 1996. The issuer retained the accounting firm of
Addison, Roberts & Ludwig, P.C. on October 4, 1996.
Schroeder & Stevenson reports on the financial
statements for the past two years do not contain an adverse
opinion or disclaimer of opinion, nor were they modified as
to uncertainty, audit scope, or accounting principles,
The decision to change accountants was approved by the
Board of Directors on November 6, 1996.
There were no disagreements with the former accountants
on any matter of accounting principle or practices, financial
statement disclosure, or audit scope or procedure, which, if
not resolved to the former accountants' satisfaction, would
have caused it to make reference to the subject matter of the
disagreement in connection with its report.
After review of the foregoing disclosure, the accounting
firm of Schroeder & Stevenson provided a letter to the
Commission indicating its assent with the above statements.
That letter is attached as Exhibit 1.
Item 5. Other Events.
None.
Item 6. Resignations of Registrant's Directors.
None.
Item 7. Financial Statements and Exhibits.
Exhibit 1, letter of Schroeder & Stevenson, C.P.A.'s
P.C. indicating assent to statements made by issuer in this
disclosure.
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: November 7, 1996 s/s Jonathan
Roberts
Jonathan Roberts, President
EXHIBIT 1 To 8-K
November 7, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Commission:
We have review the Form 8-K Current Report to be filed by
Cronus Corporation regarding the appointment of successor
accountants, Addison, Roberts & Ludwig, P.C. We are in
agreement with the statements made by Cronus Corporation in
that disclosure.
If we may provide you with any further information, please do
not hesitate to contact us.
Sincerely,
s/s Grant Schroeder
Schroeder & Stevenson, C.P.A.'s P.C.
Exhibit 7. List of Subsidiaries.
Sunorc, Inc., a wholly owned subsidiary, incorporated in
Arizona on December 4, 1995.
Big Bug Acquisition Company, a wholly owned subsidiary, was
incorporated in Arizona on August 6, 1996.
Exhibit 8. Consent of Auditors.
ADDISON, ROBERTS & LUDWIG, P.C.
Certified Public Accountants
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the inclusion of our report dated March
28, 1997, in the annual report of Cronus Corporation on Form
10-KSB for the year ended December 31, 1995.
/s/
Addison, Roberts & Ludwig, P.C.
Tucson, Arizona
March 28, 1997
2910 North Swan Road, Suite 204
Tucson, Arizona 85712
CRONUS CORPORATION
Audited Financial Statements
For the years ended December 31, 1995 and 1994
ADDISON, ROBERTS & LUDWIG, P.C.
Certified Public Accountants
(a) INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Cronus Corporation
We have audited the accompanying balance sheet of Cronus
Corporation as of December 31, 1995, and the related
statements of operations, changes in stockholders' deficit,
and cash flows for the years ended December 31, 1995 and
1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Cronus Corporation as of December 31, 1995, and
the results of its operations and its cash flows for the
years ended December 31, 1995 and 1994, in conformity with
generally accepted accounting principles.
/s/
Addison, Roberts & Ludwig, P.C.
March 28, 1997
CRONUS CORPORATION
(b) BALANCE SHEET
December 31, 1995
ASSETS
Current assets:
Cash $ 630
Prepaid compensation 2,000
Total current assets 2,630
Deposits 700
Total assets $ 3,330
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accrued compensation $ 29,166
Liabilities not discharged in bankruptcy
2,930,134
Total current liabilities 2,959,300
Note payable to a shareholder 84,900
Total liabilities 3,044,200
Commitments and contingencies (Notes 6 and 8)
Stockholders' deficit:
Common stock, $.001 par value; 30,000,000 shares
authorized, 10,354,907 shares issued and outstanding
10,355
Additional paid in capital 2,000
Accumulated deficit (3,053,225)
Total stockholders' deficit (3,040,870)
Total liabilities and stockholders' deficit
$ 3,330
The accompanying notes are an integral part
of the financial statements.
Page 2
CRONUS CORPORATION
(c) STATEMENTS OF OPERATIONS
For the years ended December 31, 1995 and 1994
1995 1994
Revenues $ -0- $ -0-
Expenses:
Professional fees 72,224
License and registration 7,225
Commissions 4,250
Officer compensation 30,166
Other 57
Total expenses 114,436 -0-
Loss from operations (114,436) -0-
Other expense:
Equity in net loss of unconsolidated
subsidiaries (4,114) -0-
Loss before income taxes(118,550) -0-
Income tax provision -0- -0-
Net loss $ (118,550) $ -0-
Loss per share $ (0.02) $ 0.00
Average outstanding common shares 5,575,247 5,240,907
The accompanying notes are an integral part
of the financial statements.
Page 3
(d) CRONUS CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the years ended December 31, 1995 and 1994
____________
Common Stock Additional
Par Paid in Accumulated
Shares Value Capital Deficit Total
Balance at December 31, 1993
As previously reported
5,240,907 $5,241 $ -0- $ (4,541) $ 700
Adjustment (Note 8) -0- -0- (2,930,134) (2,930,134)
As restated
5,240,907 5,241 -0- (2,934,675) (2,929,434)
Net income (loss) for the year
ended December 31, 1994 -0- -0- -0-
Balance at December 31, 1994
5,240,907 5,241 -0- (2,934,675) (2,929,434)
Common stock issued:
Officer compensation
1,000,000 1,000 -0- -0- 1,000
Purchase of subsidiaries
4,114,000 4,114 -0- -0- 4,114
Incentive stock options issued
(2,000,000 options at $0.001 each)
-0- 2,000 -0- 2,000
Net loss for the year ended
December 31, 1995 (118,550) (118,550)
Balance at December 31, 1995
10,354,907 $10,355 $2,000 $(3,053,225) $(3,040,870)
The accompanying notes are an integral part
of the financial statements.
Page 4
CRONUS CORPORATION
(e) STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995 and 1994
1995 1994
Cash flows from operating activities:
Net loss $(118,550) $ -0-
Adjustments to reconcile net loss to net cash
used in operating activities:
Equity in net loss of unconsolidated subsidiaries
4,114 -0-
Stock based compensation 1,000 -0-
Change in current assets and liabilities:
Increase in accrued compensation 29,166 -0-
Total adjustments 34,280 -0-
Net cash used in operating activities (84,270) -0-
Cash flows from financing activities:
Borrowings on note payable 84,900
Net cash provided by financing activities 84,900 -0-
Net increase in cash 630 -0-
Cash, beginning of year -0- -0-
Cash, end of year $ 630 $ -0-
Supplemental disclosures of cash flow information:
Cash paid during the year for
Interest $ -0- $ -0-
Taxes -0- -0-
Noncash investing and financing activities:
Three subsidiaries were purchased through the issuance of
4,114,000 shares of common stock, as described in Note 3.
1,000,000 shares of common stock were issued to an officer in
lieu of compensation, as described in Note 6.
2,000,000 stock options, at an exercise price of $0.001 each,
were issued to an officer, as described in Note 7.
The accompanying notes are an integral part
of the financial statements.
Page 5
CRONUS CORPORATION
(f) NOTES TO FINANCIAL STATEMENTS
1. Organization
Cronus Corporation (the Company), formerly Thunderstone
Group, Inc., formerly Diversified American Industries, Inc.,
formerly TR-3 Industries, Inc., was incorporated in the State
of Nevada in 1979. The Company is primarily engaged in the
acquisition and sale of privately held corporations.
Management is currently looking into raising additional
capital and expanding operations by merging with privately
held natural resource companies. The issuance of common stock
and the exploration of mining claims are also being
considered.
2. Summary of Significant Accounting Policies
Accounting Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could
differ from those estimates.
Income Taxes
Income taxes are recognized during the year in which
transactions enter into the determination of financial
statement income, with deferred taxes being provided for
temporary differences between amounts of assets and
liabilities for financial reporting purposes and such amounts
as measured by tax laws.
Cash
For purposes of the statements of cash flows, the Company
considers all highly liquid debt instruments with a purchased
maturity of three months or less to be cash equivalents.
Per Share Data
Net loss per share is computed based on the weighted average
number of shares outstanding. There is no dilutive effect on
net loss per share due to common stock equivalents.
Stock Compensation
The Company measures compensation cost related to employee
stock purchase options using the fair value method. This
method requires determining the amount of compensation cost
equal to the fair value of the options at the date of grant.
Recognition of the cost is provided over the periods in which
the related services are rendered, generally the vesting
period.
3. Investments in Subsidiaries
On October 18, 1995, Thunderstone Group, Inc., an unrelated
corporation, purchased 100% of the outstanding stock of
Amateur Golfers Association of America (AGAA) for 614,000
shares of ($0.001 per share, $614) restricted, unregistered,
common stock. On November 30, 1995, Thunderstone Group, Inc.
assigned its interest in the purchase to the Company.
Subsequent to the assignment, Thunderstone Group, Inc.
changed its name to TGI, Inc. (TGII). On November 13, 1995,
the Company changed its name to Thunderstone Group, Inc. and
subsequently purchased 100% of the outstanding stock of TGII
for 2,500,000 shares of ($0.001 per share, $2,500)
restricted, unregistered, common stock.
On December 5, 1995, the Company purchased 100% of the
outstanding stock of Perimeter Bicycling Association of
America (PBAA) for 1,000,000 shares of ($0.001 per share,
$1,000) restricted stock.
These investments in subsidiaries have been accounted for
under the equity method. Under this method, the original
investment is recorded at cost (fair value), reduced to
reflect a pro-rata share of losses and distributions
received, and increased to reflect a pro-rata share of income
and contributions made. The book value of these investments
was zero at December 31, 1995. No dividends were received and
no contributions were made during the period held. These
subsidiaries are primarily engaged in promoting bicycling
events (PBAA), promoting golfing events (AGAA), and promoting
radio programming (TGII).
Investments in subsidiaries were recorded at fair value at
date of purchase. Fair value was determined by the estimated
market value of the Company's stock ($0.001 per share).
Subsequent to purchase, the investments were reduced to zero
by the Company's share of the subsidiaries' losses incurred
from purchase date through December 31, 1995. The Company's
share of losses in excess of book value have not been accrued
because the Company has not guaranteed the obligations of the
subsidiaries nor is it otherwise committed to further
financial support. The combined net deficit of the
subsidiaries exceeded the book value recorded by the Company
by $(303,568) at December 31, 1995. Summarized financial
information (unaudited) for these investments was as follows:
1995 1994
Total assets $ 278,197 $ 199,489
Total liabilities 581,765 319,108
Net deficit $ (303,568) $ (119,619)
Revenues $ 442,902 $ 763,169
Cost and other deductions
592,872 887,246
Net loss $ (149,970) $ (124,077)
As described in note 9, two subsidiaries, and all the assets
of the third subsidiary, were sold subsequent to December 31,
1995. Due to the short duration of ownership, the financial
statements of the subsidiaries have not been consolidated
with those of the Company because the Company effectively
held only temporary control. Further, pro-forma financial
statements for the Company for the year ended December 31,
1995, assuming a purchase date of January 1, 1995, have not
been provided. Pro-forma results under this assumption would
not materially differ from these financial statements.
4. Note Payable to a Stockholder
At December 31, 1995, the Company held a note payable to a
stockholder, bearing interest at 10%, principal and accrued
interest that was originally due during December, 1996. The
balance on this note payable was $84,900 at December 31,
1995. During February, 1997, this note payable was converted
to common stock, as described in note 9.
5. Income Taxes
At December 31, 1995, the Company had net operating loss
carryforwards totaling $118,550 that may be offset against
future income through 2010. No tax benefit has been recorded
in the financial statements since the Company is unsure as to
if or when the net operating loss carryforwards would be
realized. The potential benefit of the net operating loss
carryforwards and the deferred tax benefit of future timing
differences is approximately $52,162.
The income tax benefit for the years ended December 31, is
comprised of the following amounts:
1995 1994
Current $ -0- $ -0-
Deferred
Federal $ 41,492 $ -0-
State 10,670 -0-
52,162 -0-
Valuation allowance 52,162
Total tax benefit $ -0- $ -0-
The Company's tax benefit differs from the benefit calculated
using the federal statutory income tax rate for the following
reasons:
1995 1994
Statutory tax rate 35% 35%
State income taxes 9% 9%
Release of valuation allowance
44% 44%
Effective tax rate 0% 0%
The components of the net deferred tax asset are as follows:
1995
Deferred tax asset:
Net operating loss carry forward $ 52,162
Valuation allowance 52,162
$ -0-
6. Transactions with Officers
In November 1995, the Company issued 1,000,000 shares of
common stock to an officer in lieu of compensation.
Compensation expense of $1,000 was recorded as the services
were performed during 1995. The Company estimated the fair
value of the stock issued at $0.001 per share at date of
issue.
In November 1995, the Company executed a two-year employment
agreement with an officer for an annual salary of $175,000.
Compensation expense incurred under this contract totaled
$29,166. At December 31, 1995, none of the compensation had
been paid.
In December 1995, the Company issued 2,000,000 incentive
stock options to an officer as described in note 7.
7. Stock Option Plan
During 1995, the company adopted an incentive stock option
plan (the Plan). The Plan provides for the granting of
incentive stock options by the Board to directors, officers
and key employees of the Company.
Under the terms of the Plan, options granted have an exercise
price of 110% of the fair market value of the underlying
stock at the date of grant. Further, the options have a
vesting period of one year and expire five years from the
date of grant.
The Company granted to an officer, options to purchase
2,000,000 shares of restricted, unregistered, common stock in
connection with the Plan. The options were granted at the
estimated market price of $.001 per share on the date of the
grant, December 15, 1995. The options relate to services to
be performed during the year ending December, 1996 (the
vesting period). Therefore, the estimated market value of the
options of $2,000 will be recognized during 1996 and has been
recorded as prepaid compensation at December 31, 1995. No
other options were issued, outstanding, or exercised during
1995.
8. Contingencies and Correction of an Error
Cronus, d.b.a. Diversified American Industries, Inc. was in
Chapter 7 bankruptcy from 1982 through 1988. The Company had
no operations and substantially no assets or liabilities
through November 1995. During 1995, legal counsel informed
management that liabilities previously believed to be
discharged in bankruptcy had not been discharged. These
liabilities relate to the operations of the Company prior to
1982. The Company has recorded a correction of an error in
the accompanying financial statements and, accordingly has
restated retained earnings (accumulated deficit) at December
31, 1993. The adjustment had no effect on net income, net
income after taxes, or earnings per share for the years ended
December 31, 1995, 1994 or 1993. Management is currently
investigating the possibility of the expiration of the
statute of limitations relating to these liabilities;
however, the full amount of the undischarged debts have been
included in current liabilities in the accompanying balance
sheet.
The Company is subject to a number of lawsuits and claims
(some of which involve substantial amounts) arising out of
the conduct of its business prior to 1982. Although the
Company does not currently possess sufficient information to
reasonably estimate the amounts of liabilities to be
recorded, they may be significant to the results of
operations.
As described in note 9, the Company purchased various mining
claims in southern Arizona in October, 1996. Under the
Comprehensive Environmental Response, Compensation and
Liability Act (Superfund), and similar state law, the Company
is one of many potentially responsible parties for
environmental remediation. In order to determine whether
there has been environmental contamination at the mining
claims, a phase 1 assessment should be performed. As such an
environmental study of the mining claims has not been
performed, the Company is unable to estimate any possible
liability.
9. Subsequent Events
On January 24, 1996, the Company issued 1,035,000 shares of
registered, unrestricted common stock to advisors and
consultants for $0.15 per share. The Company recorded
professional fee expense of $155,250, and $154,215 of
additional paid in capital relating to this transaction.
On February 27, 1996, the Company sold its 100% owned
subsidiaries AGAA and TGII to Applied Logic, Inc. in return
for 3,114,000 shares of Company stock, 500,000 shares of
Applied Logic stock, and a note receivable of $500,000. The
Company recorded treasury stock of $(3,114) and a net gain on
sale of $3,114 relating to the transaction. Management has
determined the note to be uncollectible and the stock of
Applied Logic to have no value, and accordingly wrote off
these assets during 1996 against the gain on sale. Subsequent
to the sale, Applied Logic, Inc. changed its name to
Thunderstone Group, Inc., and the Company changed its name
from Thunderstone Group, Inc. to Cronus Corporation.
On July 18, 1996, the Company sold the assets of PBAA, for
$100 cash and 250,000 shares of Company stock. The Company
recorded treasury stock of $250 and a gain on sale of $350
relating to this transaction. Subsequent to the sale, PBAA
changed its name to Sunorc.
The Company granted to an officer, options to purchase
550,000 shares of restricted, unregistered, common stock in
connection with the Stock Option Plan. The options relate to
services performed during the period February 1, 1997, to
July 31, 1997 (the vesting period), and may be exercised on
an installment basis during the vesting period in accordance
with the terms of the grant. The options were granted at the
estimated market price of $0.05 per share on the date of the
grant, July 22, 1996. The options expire July 22, 2001.
During July 1996, the Company entered into employment
contracts with two key personnel that provide for minimum
annual compensation of $223,000 and expire in July, 2000 and
2002. The contracts contain provisions whereby $112,000 of
annual compensation shall be deferred until July 1997, or
until such time as management determines the Company has
generated sufficient cash flow.
In September 1996, the Company executed an agreement to sell
250,000 shares of restricted, unregistered, common stock to
Docu-Form Express for $0.50 per share. As of the date of this
report, this transaction has not been consummated.
In December 1996, an officer exercised options to purchase
2,000,000 shares of restricted, unregistered common stock for
$0.001 per share. The Company recorded common stock of $2,000
and a reduction of additional paid in capital of $(2,000)
pursuant the execution of these options.
In February 1997, the Company exchanged 814,600 shares of
restricted, unregistered, common stock for a $407,300 note
payable to Charles Kalav. The Company recorded common stock
of $815 and additional paid in capital of $406,485 relating
to this transaction.
In February 1997, the Company exchanged 70,744 shares of
restricted, unregistered, common stock for a $35,372 note
payable to James Karten. The Company recorded common stock
of $71 and additional paid in capital of $35,281 relating to
this transaction.
The Company granted to an officer, options to purchase
500,000 shares of restricted, unregistered, common stock in
connection with the Stock Option Plan. The options relate to
services performed during the period August, 1997, to
January, 1998 (the vesting period), and may be exercised on
an installment basis during the vesting period in accordance
with the terms of the grant. The options were granted at the
estimated market price of $0.31 per share on the date of the
grant, February 14, 1997. The options expire February, 2002.
In October 1996, the Company purchased various mining claims
in southern Arizona. As of the date of this report, the
Company has not performed an environmental study of the
claims to determine the possibility of any environmental
contamination. Without such a study, the Company cannot
determine the possibility and the amount of any potential
environmentally related liabilities. However, if
contamination under the Comprehensive Environmental Response,
Compensation and Liability Act was found to exist, it could
have a materially adverse effect on the financial condition
of the Company.
