<PAGE>
_______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
/X/ Filed by the Registrant
/ / Filed by a Party other than the Registrant
Check the appropriate box:
/ / Preliminary Information Statement
/X/ Definitive Information Statement
AMACAN RESOURCES
CORPORATION
-----------------------------------------
(Name of Registrant as Specified in its Charter)
AMACAN RESOURCES CORPORATION
-----------------------------------------
(Name of Person(s) Filing Information Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14c-5(g).
/X/ Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(i) Common Stock, par value $.25 per share, of Amacan
Resources Corporation ("Amacan Common Stock"); (ii) Common
Stock, par value $.01 per share, of Spire Technologies, Inc.
("Spire Common Stock"); and (iii) Common Stock, no par value,
of Spire Technologies Systems Division, Inc. ("Spire Systems
Common Stock")
(2) Aggregate number of securities to which transaction applies:
(i) 3,501,883 shares of Amacan Common Stock; (ii) 87,386
shares of Spire Common Stock; and (iii) 100,000 shares of
Spire Systems Common Stock
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined): The only property to be distributed to
security holders in the transaction will be 3,501,883 shares
of Amacan Common Stock. Pursuant to Exchange Act Rule
0-11(c)(1)(i), the value of these shares is based upon the
market value of the securities to be received by the acquiring
person, in this case 87,386 shares of Spire Common Stock and
100,000 shares of Spire Systems Common Stock. Pursuant to
Exchange Act Rule 0-11(a)(4), the value of these shares, which
have no market, is $7.9189 per share of Spire Common Stock and
$.8963 per share of Spire Systems Common Stock.
(4) Proposed maximum aggregate value of transaction: $781,631.
(5) Total fee paid: $156.33.
/X/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid: $156.33
(2) Form, Schedule or Registration Statement No.: Preliminary Information
Statement on Schedule 14C
(3) Filing Party: Amacan Resources Corporation
(4) Date Filed: February 5, 1996
_____________________________________________________________________________
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AMACAN RESOURCES CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 18, 1996
To the Stockholders of Amacan Resources Corporation:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of Stockholders (the
"Special Meeting") of Amacan Resources Corporation, a Utah corporation (the
"Company"), will be held at the law offices of Kimball, Parr, Waddoups, Brown &
Gee, 185 South State Street, Suite 1300, Salt Lake City, Utah, on April 18,
1996 at 10:00 a.m., (local time) for the following purposes:
1. To consider and act upon a proposal to approve, authorize and
adopt (a) the Agreement and Plan of Reorganization (the ""Exchange
Agreement") among the Company, Spire Technologies, Inc., a Utah
corporation ("Spire"), Spire Technologies Systems Division, Inc., a Utah
corporation ("Spire Systems") and the holders of the capital stock of
Spire and Spire Systems (collectively, the "Spire Stockholders") and (b)
all of the related transactions contemplated by the Exchange Agreement
(the "Share Exchange"), including, among other things: (i) The
acquisition by the Company of all of the issued and outstanding shares
of the capital stock of Spire and Spire Systems in exchange for the
issuance by the Company of an aggregate of 3,501,883 shares of the
common stock, par value $0.25 per share, of the Company ("American
Common Stock") to the Spire Stockholders; (ii) a one-for-seven reverse
split of the shares of Amacan Common Stock issued and outstanding at the
effective time (the "Effective Time") of the Share Exchange; (iii)
amendment of the Articles of Incorporation of the Company to change the
name of the Company to Spire International Corp.; (iv) adoption of the
the Amacan Resources Corporation Stock Incentive Plan (the "Amacan
Option Plan"); (v) substitution of options to purchase shares of the
common stock, par value $.01 per share, of Spire issued pursuant to the
Spire 1995 Stock Option and Award Plan; and (vi) the resignation,
subsequent to the Effective Time, of the Company's current officers and
directors, and the appointment of replacement officers and directors by
the Spire Stockholders (provided, however, that, as permitted under the
Exchange Agreement, the Company's Board has designated Sherman H.
Smith, a financial advisor to the Company, to serve as a director of
the Company subsequent to the closing of the Share Exchange).
2. To tranact such other business as may properly come before
the Special Meeting or any adjournment or postponement thereof.
The Share Exchange and other related matters are more fully described in
the accompanying information Statement, and a copy of the Exchange Agreement
is attached thereto as Exhibit A.
The Board of Directors of the Company has fixed the close of business on
February 27, 1996 as the record date for the determination of stockholders
entitled to receive notice of, and to vote at, the Special Meeting and any
adjournments or postponements thereof. Accordingly, only stockholders of
record of the Company at the close of business on that date will be entitled
to vote at the Special Meeting.
All stockholders are cordially invited to attend the Special Meeting.
By Order of the Board of Directors,
LAMAR H. HOLLEY
Secretary
Salt Lake City, Utah
March 28, 1996
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_____________________________________________________________________________
AMACAN RESOURCES CORPORATION
1399 SOUTH SEVENTH EAST, NO. 9
SALT LAKE CITY, UTAH 84105
____________________________
INFORMATION STATEMENT
____________________________
SPECIAL MEETING OF STOCKHOLDERS -- APRIL 18, 1996
This Information Statement is being furnished by Amacan
Resources Corporation, a Utah corporation (the "Company" or "Amacan"), to the
holders of the Company's common stock, par value $.25 per share (the "Amacan
Common Stock"), in connection with a Special Meeting of Stockholders of the
Company (the "Special Meeting") to be held at the offices of Kimball, Parr,
Waddoups, Brown & Gee, 185 South State Street, Suite 1300, Salt Lake City,
Utah 84111, on April 18, 1996 at 10:00 a.m., local time. At the Special
Meeting, stockholders of the Company will consider and act upon a proposal to
approve, authorize and adopt an Agreement and Plan of Reorganization dated
January 23, 1996, (the "Exchange Agreement") by and among the Company, Spire
Technologies, Inc., a Utah corporation ("Spire"), Spire Technologies Systems
Division, Inc., a Utah corporation ("Spire Systems," and collectively with
Spire, the "Spire Companies"), and the holders of the capital stock of the
Spire Companies (collectively, the "Spire Stockholders") and the related
transactions contemplated by the Exchange Agreement (the "Share Exchange").
Subject to stockholder approval, the Exchange Agreement provides for, among
other things: (a) the acquisition by the Company of all of the issued and
outstanding shares of the capital stock of Spire and Spire Systems in
exchange for the issuance by the Company of an aggregate of 3,501,883 shares
of Amacan Common Stock to the Spire Stockholders; (b) a one-for-seven reverse
split of the shares of Amacan Common Stock issued and outstanding at the
effective time (the "Effective Time") of the Share Exchange (the shares of
Amacan Common Stock to be issued to the Spire Stockholders will not be
subject to the reverse split of the Amacan Common Stock); (c) amendment of
the Company's Articles of Incorporation to change the Company's name to Spire
International Corp.; (d) adoption of the Amacan Resources Corporation Stock
Incentive Plan (the "Amacan Option Plan"); (e) substitution of options to
purchase shares of Amacan Common Stock under the Amacan Option Plan for
outstanding options to purchase shares of the common stock, par value $.01
per share, of Spire (the "Spire Common Stock") issued pursuant to the Spire
1995 Stock Option and Award Plan (the "Spire Option Plan"); and (f) the
resignation, subsequent to the Effective Time, of the Company's current
officers and directors, and the appointment of replacement officers and
directors designated by the Spire Stockholders (provided, however, that, as
permitted under the Exchange Agreement, the Company's Board of Directors has
designated Sherman H. Smith, a financial advisor to the Company, to serve as
a director of the Company subsequent to the closing of the Share Exchange).
Immediately following the consummation of the Share Exchange, if consummated,
the shares of Amacan Common Stock owned by the current stockholders of the
Company will represent approximately 10% of the then issued and outstanding
shares of Amacan Common Stock.
The Share Exchange and other related matters are more
fully described herein, and a copy of the Exchange Agreement is attached
hereto as Exhibit A. The Share Exchange is a complex transaction.
Stockholders of the Company should consider carefully the matters discussed
in this Information Statement. In addition to being furnished to holders of
Amacan Common Stock, this Information Statement may also be furnished to the
Spire Companies and the Spire Stockholders to provide them relevant
information in connection with any required actions or consents on the part
of the Spire Stockholders or the Spire Companies to be delivered pursuant to
the Share Exchange.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO
SEND US A PROXY.
OTHER THAN DULY AUTHORIZED OFFICERS OF THE COMPANY, NO
PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
OTHER THAN THOSE CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THE DELIVERY OF THIS INFORMATION STATEMENT SHALL NOT UNDER ANY
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF, OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
_____________________
THIS INFORMATION STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OF THE COMPANY.
_____________________
The date of this Information Statement is March 28, 1996
<PAGE>
TABLE OF CONTENTS
Page
-------
SUMMARY OF INFORMATION STATEMENT . . . . . . . . . . . . . . . 1
INTRODUCTION . . . .. . . . . . . . . . . . . . . . . . . . . . 11
General. . . . . . . . . . . . . . . . . . 11
Record Date. . . . . . . . . . . . . . . . 13
Vote Required . . . . . . . . . . . . . . . 13
THE SHARE EXCHANGE . . . . . . . . . . . . . . . . . . . . . . 14
Exchange of Shares . . . . . . . . . . . . 14
Background of the Share Exchange . . . . . 14
Reasons for the Share Exchange . . . . . . 15
Recommendation of the Board of Directors . 16
Interests of Certain Persons in the Share
Exchange . . . . . . . . . . . . . . . . 16
Principal Effects of the Share Exchange . . 17
Expenses of the Share Exchange . . . . . . 18
Closing and Closing Date . . . . . . . . . 18
Reverse Split of Amacan Common Stock . . . 18
Management of the Company's
Business After the Share Exchange . . . . 18
Accounting Treatment. . . . . . . . . . . . 19
Dissenters' Rights. . . . . . . . . . . . . 19
Federal Income Tax Consequences . . . . . . 19
THE EXCHANGE AGREEMENT . . . . . . . . . . . . . . . . . . . . 21
Effective Date and Time of the
Share Exchange . . . . . . . . . . . . . 21
Representations and Warranties . . . . . . 21
Conditions to the Share Exchange . . . . . 21
Certain Covenants. . . . . . . . . . . . . 22
Stock Option Plans . . . . . . . . . . . . 22
Termination. . . . . . . . . . . . . . . . 22
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . 23
AMACAN COMMON STOCK AND DIVIDEND POLICY. . . . . . . . . . . . 26
SPIRE AND SPIRE SYSTEMS COMMON STOCK AND DIVIDEND POLICY . . . 26
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS. . 27
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF THE COMPANY . . . . . . . . . . 32
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF THE SPIRE COMPANIES . . . . . . 32
BUSINESS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . 37
General. . . . . . . . . . . . . . . . . . 37
Competition and Markets. . . . . . . . . . 37
Regulation . . . . . . . . . . . . . . . . 37
Operating Risks; Insurance . . . . . . . . 38
Properties . . . . . . . . . . . . . . . . 38
<PAGE>
BUSINESS OF THE SPIRE COMPANIES. . . . . . . . . . . . . . . . 41
Background . . . . . . . . . . . . . . . . 41
Products . . . . . . . . . . . . . . . . . 41
Sales and Distribution . . . . . . . . . . 44
Competition. . . . . . . . . . . . . . . . 45
Materials. . . . . . . . . . . . . . . . . 45
Significant Customers. . . . . . . . . . . 45
Patents. . . . . . . . . . . . . . . . . . 45
Research and Engineering . . . . . . . . . 45
Employees. . . . . . . . . . . . . . . . . 45
Property . . . . . . . . . . . . . . . . . 46
Proprietary Marks. . . . . . . . . . . . . 46
MANAGEMENT OF THE COMPANY. . . . . . . . . . . . . . . . . . . 47
MANAGEMENT OF THE SPIRE COMPANIES. . . . . . . . . . . . . . . 49
VOTING SECURITIES OF THE COMPANY
AND PRINCIPAL HOLDERS THEREOF. . . . . . . . . . . . . . . . 50
VOTING SECURITIES OF THE SPIRE COMPANIES
AND PRINCIPAL HOLDERS THEREOF. . . . . . . . . . . . . . . . 51
DESCRIPTION OF THE COMPANY'S CAPITAL STOCK . . . . . . . . . . 52
DESCRIPTION OF THE CAPITAL STOCK OF THE SPIRE COMPANIES. . . . 53
ADOPTION OF AMACAN OPTION PLAN . . . . . . . . . . . . . . . . 55
General. . . . . . . . . . . . . . . . . . 55
Description of the Amacan Option Plan. . . 55
Federal Income Tax Consequences. . . . . . 57
Approval of Amacan Option Plan . . . . . . 59
Certain Interests of Directors . . . . . . 59
PRINCIPAL ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . 60
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . 60
OTHER MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . 60
EXHIBITS TO INFORMATION STATEMENT
Exhibit A Agreement and Plan of Reorganization
Exhibit B Consolidated Financial Statements of the Company
Exhibit C Combined Financial Statements of the Spire Companies
<PAGE>
SUMMARY OF INFORMATION STATEMENT
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION
CONTAINED ELSEWHERE IN THIS INFORMATION STATEMENT. REFERENCE IS MADE TO, AND
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION
CONTAINED ELSEWHERE IN THIS INFORMATION STATEMENT AND THE EXHIBITS ATTACHED
HERETO. CROSS-REFERENCES IN THIS SUMMARY ARE TO CAPTIONS IN THIS INFORMATION
STATEMENT. STOCKHOLDERS OF THE COMPANY ARE URGED TO READ AND CAREFULLY
CONSIDER THIS INFORMATION STATEMENT IN ITS ENTIRETY, PARTICULARLY THE MATTERS
DISCUSSED IN THE SECTION ENTITLED "RISK FACTORS."
THE SPECIAL MEETING
PURPOSE, TIME, DATE AND PLACE. A Special Meeting of
Stockholders (the "Special Meeting") of Amacan Resources Corporation, a Utah
corporation (the "Company" or "Amacan"), will be held at the offices of
Kimball, Parr, Waddoups, Brown & Gee, 185 South State Street, Suite 1300,
Salt Lake City, Utah 84111, on April 18, 1996 at 10:00 a.m., local time, to
consider and act upon a proposal to approve, authorize and adopt an Agreement
and Plan of Reorganization dated January 23, 1996 (the "Exchange Agreement")
by and among the Company, Spire Technologies, Inc., a Utah corporation
("Spire"), Spire Technologies Systems Division, Inc., a Utah corporation
("Spire Systems," and collectively with Spire, the "Spire Companies"), and
the holders of the capital stock of the Spire Companies (collectively, the
"Spire Stockholders"), and the related transactions contemplated by the
Exchange Agreement (the "Share Exchange").
RECORD DATE; VOTE REQUIRED. The Board of Directors of
the Company has fixed the close of business on February 27, 1996 as the
record date (the "Record Date") for the determination of stockholders
entitled to receive notice of and to vote at the Special Meeting. Only
stockholders of record on the Record Date will be entitled to vote at the
Special Meeting or any adjournments or postponements thereof. On the Record
Date, 2,723,714 shares of the common stock of the Company, par value $.25 per
share, (the"Amacan Common Stock"), held by approximately 387 holders of
record, were issued and outstanding and entitled to vote.
The presence of a majority of the outstanding shares of
Amacan Common Stock entitled to vote at the Special Meeting is required for a
quorum at the Special Meeting. Abstentions will be counted as represented
for purposes of the determination of a quorum. Approval of the Exchange
Agreement and the Share Exchange requires the affirmative vote of the holders
of a majority of the issued and outstanding shares of Amacan Common Stock
entitled to vote at the Special Meeting. Accordingly, abstentions will have
the effect of a vote cast against the Exchange Agreement and the Share
Exchange. Holders of Amacan Common Stock are entitled to one vote at the
Special Meeting for each share of Amacan Common Stock held of record on the
Record Date. See "INTRODUCTION -- Vote Required" and "VOTING SECURITIES OF
THE COMPANY AND PRINCIPAL HOLDERS THEREOF."
THE SHARE EXCHANGE
GENERAL. The Exchange Agreement provides for the
acquisition by the Company of all of the issued and outstanding shares of the
capital stock of the Spire Companies in exchange for 3,501,883 shares of
Amacan Common Stock. The shares of Amacan Common Stock to be issued to the
Spire Stockholders will not be subject to the one-for-seven reverse split of
the Amacan Common Stock described in the following paragraph. If the Share
Exchange is consummated, Spire and Spire Systems will become wholly-owned
subsidiaries of the Company and the Spire Stockholders will acquire
approximately 90% of the shares of Amacan Common Stock issued and outstanding
after the Share Exchange.
EXCHANGE OF SHARES. Subject to the approval of the
stockholders of the Company, the Exchange Agreement contemplates that the
Company will acquire the Spire Companies through the exchange of all of the
issued and outstanding shares of the capital stock of the Spire Companies for
3,501,883 shares of Amacan Common Stock to be issued to the Spire
Stockholders. The Exchange Agreement provides that at the effective time of
the Share Exchange (the "Effective Time") (i) the Company will effect a
one-for-seven reverse split of the Amacan Common Stock pursuant to which each
issued and outstanding share of Amacan Common Stock will be reverse split and
converted into one-seventh (.142857) of a share of Amacan Common Stock (the
shares of Amacan Common Stock to be issued to the Spire Stockholders will not
be subject to the reverse split of the Amacan Common Stock), (ii) each issued
and outstanding share of the common stock, par value $.01 per share, of Spire
(the "Spire Common Stock") will be exchanged for 35.4786 shares of Amacan
Common Stock, and (iii) each issued and outstanding share
<PAGE>
of the common stock, no par value, of Spire Systems (the "Spire Systems
Common Stock") will be exchanged for 4.0155 shares of Amacan Common Stock;
provided, however, that no fractional shares of Amacan Common Stock will be
issued in connection with the Share Exchange. If any holder of Spire Common
Stock or Spire Systems Common Stock would otherwise be entitled to a
fractional share of Amacan Common Stock on exchange of such shares, the
Company will round the number of shares of Amacan Common Stock to be issued
to such holder to the nearest whole share. There will be no cash payments in
lieu of fractional shares. See "THE SHARE EXCHANGE -- Exchange of Shares"
and " -- Reverse Split of Amacan Common Stock."
RECOMMENDATION OF THE BOARD OF DIRECTORS. The Company's
Board of Directors has unanimously determined that the Exchange Agreement and
the Share Exchange are fair to, and in the best interests of, the Company and
its stockholders, and has therefore unanimously approved the Exchange
Agreement and the Share Exchange. The primary factors considered and relied
upon by the Company's Board of Directors in reaching its recommendation are
referred to in "THE SHARE EXCHANGE -- Reasons for the Share Exchange." THE
BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S
STOCKHOLDERS VOTE FOR APPROVAL OF THE EXCHANGE AGREEMENT AND THE SHARE
EXCHANGE. See "THE SHARE EXCHANGE -- Recommendation of the Board of
Directors."
The recommendation of the Company's Board of Directors to
its stockholders should not be considered a recommendation to any person
other than the stockholders of the Company. In particular, this
recommendation should not be considered advice to the Spire Stockholders.
INTERESTS OF CERTAIN PERSONS IN THE SHARE EXCHANGE. A
member of the Company's Board of Directors may be deemed to have an interest
in the Share Exchange in addition to his interest as a stockholder of Amacan
generally. This interest consists of acceleration of deferred compensation
payments payable to the director of the Company. See "THE SHARE EXCHANGE
- --Interests of Certain Persons in the Share Exchange."
CLOSING AND CLOSING DATE. The closing of the Share
Exchange (the "Closing") is anticipated to occur on or before April 30, 1996,
or on such other date as the Company, Spire, Spire Systems and the Spire
Stockholders shall agree, provided all conditions to the obligations of the
parties to consummate the Share Exchange have been satisfied or waived. See
"THE SHARE EXCHANGE -- Closing and Closing Date" and "THE EXCHANGE AGREEMENT
- -- Effective Date and Time of the Share Exchange" and " -- Conditions to the
Share Exchange." The date on which the Closing occurs is hereinafter
referred to as the "Closing Date." The filing of Articles of Share Exchange
setting forth the terms and conditions of the Share Exchange (the "Articles
of Exchange") with the Utah Division of Corporations and Commercial Code (the
"Division of Corporations") is expected to be made as soon as practicable
after the approval of the Exchange Agreement and the Share Exchange by the
Company's stockholders at the Special Meeting and the receipt of all required
consents and approvals.
MANAGEMENT OF THE COMPANY'S BUSINESS AFTER THE SHARE
EXCHANGE. Following consummation of the Share Exchange, the Spire Companies
will continue, as wholly-owned subsidiaries of the Company, their respective
business operations. The current directors of the Company will resign and
will appoint four individuals designated by the Spire Stockholders and one
individual designated by the current Board of Directors to serve as members
of the Company's Board of Directors with terms expiring at the Company's 1996
annual meeting of stockholders. The Board of Directors has designated
Sherman H. Smith, a financial advisor to the Company, to serve as a director
of the Company. See "MANAGEMENT OF THE COMPANY." The current officers of
the Company will also resign and, upon their election, the new directors of
the Company will appoint persons to serve as officers of the Company in
accordance with the procedures outlined in the Utah Revised Business
Corporations Act (the "Utah Act") and the Company's Articles of Incorporation
and Bylaws. The Company anticipates that certain of the current officers of
the Spire Companies will be appointed to serve as officers of the Company
following consummation of the Share Exchange. See "THE SHARE EXCHANGE --
Management of the Company's Business after the Share Exchange" and
"MANAGEMENT OF THE SPIRE COMPANIES."
ACCOUNTING TREATMENT. The Share Exchange will be
accounted for under the "purchase" method of accounting, in accordance with
generally accepted accounting principles. Due to the acquisition by the
Spire Stock- holders of approximately 90% of the Amacan Common Stock in the
Share Exchange, the Share Exchange will be treated for accounting purposes as
a "reverse merger" wherein the Spire Companies will be treated as the
acquiring company. See "THE SHARE EXCHANGE -- Accounting Treatment."
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DISSENTERS' RIGHTS. Holders of shares of the Amacan
Common Stock are not entitled to exercise dissenters' rights under the Utah
Act in connection with the Share Exchange. Holders of the capital stock of
the Spire Companies are entitled to exercise dissenters' rights under the
Utah Act in connection with the Share Exchange, but have agreed not to
exercise such rights. See "THE SHARE EXCHANGE -- Dissenters' Rights."
FEDERAL INCOME TAX CONSEQUENCES. The Share Exchange is
intended to constitute a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
Holders of Amacan Common Stock will not receive cash or stock in the Share
Exchange and should not recognize gain or loss in connection therewith, nor
should the holders of Amacan Common Stock recognize gain or loss as a result
of the reverse split of the outstanding shares of Amacan Common Stock as
contemplated by the Exchange Agreement. Assuming the Share Exchange
qualifies as a reorganization under the Code, holders of shares of the Spire
Common Stock and the Spire Systems Common Stock generally should not
recognize gain or loss upon their receipt of shares of Amacan Common Stock in
the Share Exchange. The aggregate tax basis of shares of Amacan Common Stock
received in the Share Exchange should be the same as the aggregate tax basis
of the shares of Spire Common Stock or Spire Systems Common Stock to be
exchanged therefor, and the tax holding period of shares of Amacan Common
Stock received in the Share Exchange should generally include the period
during which shares of Spire Common Stock or Spire Systems Common Stock were
held prior to the Share Exchange. The Spire Companies will continue to hold
their assets with the same tax basis for those assets that existed before the
Share Exchange. The Company will obtain a tax basis in the shares of the
Spire Common Stock and the Spire Systems Common Stock equal to the tax basis
in those shares that the Spire Stockholders had at the time of the Exchange.
The Company and the Spire Companies will be eligible to file their federal
income tax returns on a consolidated basis with the Company as the common
parent. The Company may, however, be limited in its ability to offset
certain losses and tax credits from periods prior to the Share Exchange
against Company income recognized in periods subsequent to the Share
Exchange. STOCKHOLDERS OF THE COMPANY, SPIRE AND SPIRE SYSTEMS ARE
ENCOURAGED TO CONSULT WITH THEIR OWN TAX ADVISORS IN DETERMINING ANY FEDERAL,
STATE OR LOCAL TAX CONSEQUENCES OF THE TRANSACTIONS DESCRIBED HEREIN. See
"THE SHARE EXCHANGE -- Federal Income Tax Consequences."
THE EXCHANGE AGREEMENT
EFFECTIVE DATE AND TIME OF THE SHARE EXCHANGE. The Share
Exchange will become effective upon confirmation of the filing of Articles of
Exchange with the Division of Corporations. The Articles of Exchange are
expected to be filed as soon as practicable after the satisfaction or waiver
of each of the conditions to consummation of the Share Exchange, which is
expected to occur as soon as practicable following receipt of stockholder
approval at the Special Meeting. See "THE EXCHANGE AGREEMENT -- Conditions to
the Share Exchange" and " -- Termination."
CONDITIONS TO THE SHARE EXCHANGE. The obligations of the
Company and the Spire Companies to consummate the Share Exchange are subject
to the satisfaction or waiver of various conditions, including: (i) approval
and adoption of the Exchange Agreement and the Share Exchange by the
stockholders of the Company and the Spire Companies; (ii) confirmation that
none of the stockholders of the Spire Companies has elected to exercise
dissenters' rights under the Utah Act; (iii) receipt by the Company and the
Spire Companies of legal opinions from counsel to the other party in form and
substance customary for transactions such as the Share Exchange; and (iv)
other customary closing conditions, including, without limitation, the
truthfulness and accuracy of the parties' respective representations and
warranties, the absence of any material adverse change in the business
condition of the respective parties, the confirmation that the consummation
of the Share Exchange and the transactions contemplated thereby will not
violate any law or regulation and will not result in the creation of any lien
or encumbrance on the respective properties of the Company, Spire and Spire
Systems, the receipt of all material third-party consents and approvals, and
the absence of any litigation which would have a material adverse effect on
the business condition of the respective parties. See "THE EXCHANGE
AGREEMENT -- Conditions to the Share Exchange."
REPRESENTATIONS AND WARRANTIES. Under the Exchange
Agreement, the Company, the Spire Companies and the Spire Stockholders made a
number of representations concerning their respective capital structures,
operations, financial conditions, assets and properties (including
intellectual properties), environmental matters, compliance with laws and
other matters. See "THE EXCHANGE AGREEMENT -- Representations and
Warranties."
3
<PAGE>
CERTAIN COVENANTS. Under the Exchange Agreement, the
Company and the Spire Companies have agreed to carry on their respective
businesses in the same manner as conducted prior to the execution of the
Exchange Agreement, to maintain existing or comparable insurance coverages,
to perform their respective obligations under material contracts, leases and
instruments relating to their respective business conditions and not to take
certain actions (including changing their articles of incorporation or
bylaws, paying dividends, entering into material transactions, modifying
management compensation, incurring indebtedness, selling or disposing of
certain assets and similar actions) without the prior written approval of the
other parties. The Company and the Spire Companies have also agreed to take
other customary actions to facilitate the consummation of the Share Exchange.
See "THE EXCHANGE AGREEMENT -- Certain Covenants."
TERMINATION. The Exchange Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval by the
stockholders of the Company, (i) by mutual agreement of the Company, Spire
and Spire Systems; (ii) by the Company, Spire or Spire Systems, if the Share
Exchange shall not have been consummated on or before April 15, 1996 or such
later date as approved by the Company, Spire and Spire Systems (provided,
however, that the Company and the Spire Companies have agreed to extend such
termination date until April 30, 1996); (iii) by the Company if Spire or
Spire Systems shall fail to comply in any material respect with any covenant
or agreement contained in the Exchange Agreement or if any of the
representations or warranties of Spire or Spire Systems shall be inaccurate
in any material respect; and (iv) by Spire and Spire Systems if the Company
shall fail to comply in any material respect with any covenant or agreement
contained in the Exchange Agreement or if any of the representations or
warranties of the Company shall be inaccurate in any material respect. See
"THE EXCHANGE AGREEMENT -- Conditions to the Share Exchange," " --
Termination" and " -- Expenses of the Share Exchange."
EXPENSES OF THE SHARE EXCHANGE. Except as described
below, whether or not the Share Exchange is consummated, the fees, costs and
expenses incurred by the Company, Spire and Spire Systems in connection with
the Exchange Agreement and the consummation or attempted consummation of the
Share Exchange, including fees and expenses of legal counsel, will be borne
by the party incurring such fees, costs or expenses. In the event, however,
that the Exchange Agreement is terminated as a result of a party's failure to
comply in any material respect with the covenants or agreements contained in
the Exchange Agreement or as a result of a materially inaccurate
representation or warranty made by a party, the party causing such
termination shall bear the fees, costs and expenses incurred by the other
party or parties. See "THE EXCHANGE AGREEMENT --Conditions to the Share
Exchange," " -- Termination" and " -- Expenses of the Share Exchange."
STOCK OPTION PLANS. Under the Share Exchange, the
Company will substitute options ("Substitute Options") to purchase shares of
Amacan Common Stock for each outstanding employee stock option to purchase
shares of Spire Common Stock issued pursuant to the Spire Option Plan (a
"Spire Option") and will reserve for issuance upon the exercise of such
Substitute Options not less than 650,000 shares of Amacan Common Stock. Each
Substitute Option will continue to be outstanding on the same terms and
conditions as a Spire Option, except that the number of shares of Amacan
Common Stock to be received upon its exercise and the exercise price will be
adjusted in accordance with the exchange ratio for the Spire Common Stock set
forth in the Exchange Agreement. To facilitate the substitution of the
Substitute Options, among other reasons, the Board has approved, and will
submit to the stockholders of the Company for approval at the Special
Meeting, the Amacan Resources Corporation Stock Incentive Plan (the "Amacan
Option Plan"). If the Share Exchange and the adoption of the Amacan Option
Plan are approved by the stockholders of the Company at the Special Meeting,
the Company will exchange the Substitute Options for the Spire Options, and
the holders of the Substitute Options will participate in the Amacan Option
Plan. See "THE EXCHANGE AGREEMENT -- Stock Option Plans" and "ADOPTION OF
AMACAN OPTION PLAN."
RISK FACTORS
In considering whether to vote for the approval and
adoption of the Exchange Agreement and the Share Exchange, holders of the
Amacan Common Stock should carefully consider all of the information
contained in this Information Statement and, in particular, the information
set forth in the section entitled "RISK FACTORS."
4
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
AMACAN HISTORICAL FINANCIAL INFORMATION. The following
table sets forth selected consolidated financial information with respect to
the Company for the periods indicated. This information should be read in
conjunction with "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF THE COMPANY" and the Consolidated Financial
Statements and related Notes of the Company attached hereto as Exhibit B.
The selected financial information as of April 30, 1995, and for the year
then ended, has been derived from consolidated financial statements which
have been audited by Tanner + Co., certified public accountants, whose report
with respect to such financial statements appears elsewhere herein. The
selected financial information as of April 30, 1994, and for the year then
ended, has been derived from consolidated financial statements which have
been audited by KPMG Peat Marwick LLP, independent auditors, whose report
with respect to such financial information appears elsewhere herein. The
selected financial information as of January 31, 1996, and for the nine-month
period then ended, has been derived from unaudited consolidated financial
statements which, in the opinion of the Company's management, reflect all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation of the results of such interim period.
Results of operations for the interim period are not necessarily indicative
of results which may be expected for any other interim or annual period.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED Year Ended April 30,
JANUARY 31, -------------------
1996 1995 1994
---------- -------- --------
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS:
Oil and gas revenues . . . . . . . $108,850 $187,533 $188,422
Loss from operations . . . . . . . (71,732) (4,416) (59,677)
Other income . . . . . . . . . . . 17,434 (5,767) 8,841
Net loss . . . . . . . . . . . . . (55,201) (11,382) (51,816)
Loss per common share(1) . . . . . (0.02) 0.00 (0.02)
BALANCE SHEET DATA:
Total assets . . . . . . . . . . . $748,136 $790,753 $829,179
Long-term obligations(2) . . . . . 15,150 38,210 68,382
Net stockholders' equity . . . . . 654,402 709,603 720,985
Cash Dividends . . . . . . . . . . -- -- --
</TABLE>
- --------------------
(1) The loss per common share amounts are based upon the weighted average
number of shares of Amacan Common Stock outstanding (2,723,714 shares
outstanding at January 31, 1996, April 30, 1995 and April 30, 1994).
(2) Consists of deferred compensation payable to the Company's immediate
past-president. See "THE SHARE EXCHANGE -- Interests of Certain Persons
in the Share Exchange."
5
<PAGE>
SPIRE COMPANIES HISTORICAL FINANCIAL INFORMATION. The
following table sets forth selected combined financial information with
respect to the Spire Companies for the periods indicated. This information
should be read in conjunction with "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE SPIRE COMPANIES" and the
Combined Financial Statements and related Notes of the Spire Companies
attached hereto as Exhibit C. The selected financial information as of April
30, 1995 and 1994, and for the years then ended, has been derived from
combined financial statements which have been audited by KPMG Peat Marwick
LLP, independent auditors, whose report with respect to such financial
information appears elsewhere herein. The selected financial information as
of January 31, 1996, and for the nine-month period then ended, has been
derived from unaudited combined financial statements which, in the opinion of
Spire management, reflect all adjustments (consisting of only normal
recurring adjustments) considered necessary for a fair presentation of the
results of such interim period. Results of operations for the interim period
are not necessarily indicative of results which may be expected for any other
interim or annual period.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED Year Ended April 30,
JANUARY 31, -------------------
1996 1995 1994
----------- ---------- ----------
<S> <C> <C> <C>
STATEMENTS OF OPERATIONS:
Revenues
Software licenses and maintenance. . $6,018,605 $5,356,572 $3,136,919
Hardware sales and service . . . . . 4,553,858 4,318,111 2,906,492
---------- ---------- ----------
Total revenues. . . . . . . . . . $10,572,463 $9,674,683 $6,043,411
Income from operations. . . . . . . . . 602,422 133,527 43,869
Income before taxes . . . . . . . . . . 609,378 145,223 27,164
Net income. . . . . . . . . . . . . . . 371,685 98,735 18,233
Net income per common share(1). . . . . 2.03 0.53 0.09
BALANCE SHEET DATA:
Total assets. . . . . . . . . . . . . . $4,328,004 $2,815,857 $1,821,325
Total long-term obligations . . . . . . 263,231 228,185 313,886
Total stockholders' equity. . . . . . . 904,629 423,294 324,559
Cash Dividends. . . . . . . . . . . . . -- -- --
</TABLE>
- --------------------
(1) The net income per common share amounts are based upon the weighted
average number of shares of Spire Common Stock and Spire Systems Common
Stock outstanding (183,461 shares, 183,000 shares and 190,499 shares
outstanding at January 31, 1996, April 30, 1995 and April 30, 1994,
respectively).
6
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION. The following unaudited pro forma condensed combined financial
information of the Company has been derived from, or prepared on a basis
consistent with, the Consolidated Financial Statements and related Notes of
the Company and the Combined Financial Statements and related Notes of the
Spire Companies attached hereto as Exhibits B and C, respectively, and should
be read in conjunction with such historical financial statements. The pro
forma financial information reflects the adjustments that will result from
the Share Exchange as if it had occurred as of the beginning of the periods
presented with respect to pro forma statements of operations data and as of
the balance sheet date with respect to pro forma balance sheet data. The
following pro forma financial information is presented for analysis purposes
only and does not purport to indicate the results which actually would have
been obtained if the Share Exchange had been effected on the dates indicated,
or of the results which may be obtained in the future. See "UNAUDITED PRO
FORMA CONDENSED COMBINED FINANCIAL STATEMENTS."
<TABLE>
<CAPTION>
NINE MONTHS YEAR
ENDED ENDED
JANUARY 31, APRIL 30,
1996 1995
---------- ----------
<S> <C> <C>
STATEMENTS OF OPERATIONS:
Revenues
Software licenses and maintenance . . . . . . . . . . . $ 6,018,605 $5,356,572
Hardware sales and service. . . . . . . . . . . . . . . 4,553,858 4,318,111
Oil and gas sales . . . . . . . . . . . . . . . . . . . 108,850 187,533
---------- ----------
Total revenues . . . . . . . . . . . . . . . . . . . $10,681,313 $9,862,216
Income from operations . . . . . . . . . . . . . . . . . . 558,761 174,617
Income before taxes. . . . . . . . . . . . . . . . . . . . 583,151 180,546
Net income . . . . . . . . . . . . . . . . . . . . . . . . 339,984 127,258
Net income per share . . . . . . . . . . . . . . . . . . . .09 .04
BALANCE SHEET DATA:
Total assets . . . . . . . . . . . . . . . . . . . . . . . $ 4,851,927
Total long-term liabilities. . . . . . . . . . . . . . . . 278,381
Net stockholders' equity . . . . . . . . . . . . . . . . . 1,334,818
</TABLE>
7
<PAGE>
COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per
share data of Amacan and the Spire Companies and combined per share data on
an unaudited pro forma basis, after giving effect to the Share Exchange as
contemplated under the Exchange Agreement as adjusted to reflect the
recapitalization through the Amacan one-for-seven reverse stock split and the
issuance of 3,501,883 shares of Amacan Common Stock in exchange for all
issued shares of the capital stock of the Spire Companies. The unaudited pro
forma combined financial data are not necessarily indicative of the operating
results that would have been achieved had the Share Exchange been in effect
at the beginning of the periods presented and should not be construed as
representative of future operations. This data should be read in conjunction
with the pro forma condensed combined financial statements and the separate
historical financial statements of Amacan and the Spire Companies and notes
thereto included elsewhere herein.
<TABLE>
<CAPTION>
Nine months
Ended Years ended April 30,
January 31, --------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
HISTORICAL -- AMACAN
Net Loss $(0.02) $0.00 $(0.02)
Book Value 0.24 -- --
HISTORICAL -- SPIRE COMPANIES
Net Income 2.03 0.54 0.10
Book Value 4.83 -- --
PRO FORMA COMBINED
Net Income 0.09 0.04 0.01
Book Value 0.34 -- --
EQUIVALENT PRO FORMA COMBINED
PER SPIRE COMPANIES SHARE(1)
Net Income 1.68 0.75 0.19
Book Value 6.35
</TABLE>
(1) For purposes of this calculation, an assumed blended exchange rate of
18.6881 shares of Amacan Common Stock for each outstanding Spire Companies
share has been used. The assumed blended exchange rate is calculated using
an exchange rate of 35.4786 shares of Amacan Common Stock for each of
Spire's 87,386 shares outstanding, and 4.0155 shares of Amacan Common
Stock for each of Spire Systems' 100,000 shares outstanding.
8
<PAGE>
BUSINESS OF THE COMPANY
The Company was incorporated in the State of Utah in May
1969 for the purpose of mineral exploration and development. Since 1974, the
Company has been almost exclusively engaged as a participant with others in
oil and gas exploration and development. The Company's principal assets are
working interests in producing oil and gas wells and options or rights to
participate in the drilling of additional wells. The Company presently has
an interest in 31 productive oil and gas wells.
BUSINESS OF THE SPIRE COMPANIES
Spire, a Utah corporation founded in 1986, and Spire
Systems, a Utah corporation founded in 1992, resell Digital Equipment
Corporation's ("Digital" or "DEC") network computer systems and components on
a value added basis, develop and sell office automation software products,
act as "service and value added resellers" and distributors of software
developed by third parties and develop and implement client/server solutions
for open computing environments. The Spire Companies offer a wide range of
desktop, client/server and production systems and related components,
peripheral equipment, software and services used in a wide variety of
applications, industries and computing environments. The Spire Companies
have entered into strategic partner arrangements with Lotus Development
Corporation and Novell, Inc., two major application software manufacturers,
and DEC, a major hardware manufacturer.
AMACAN COMMON STOCK AND DIVIDEND POLICY
The Amacan Common Stock is publicly held and is traded
under the symbol "ANRP" in the United States over-the-counter market
maintained by the National Association of Securities Dealers, Inc. On
January 23, 1996, the last day prior to the public announcement of the
proposed Share Exchange, the high and low bid prices for the Amacan Common
Stock in the over-the-counter market, as reported by the National Quotation
Bureau, Inc., were $.10 and $.03125, respectively. These prices reflect
interdealer quotations without retail markup, markdown or commissions and do
not necessarily represent actual transactions. As of January 23, 1996,
approximately 1,202,500 of the approximately 2,723,714 issued and outstanding
shares of Amacan Common Stock were "restricted securities," as that term is
defined under Rule 144 ("Rule 144") promulgated pursuant to the Securities
Act of 1933, as amended (the "Securities Act"). All of the restricted shares
are currently eligible for sale in reliance upon Rule 144, subject to certain
volume and resale restrictions.
The shares of Amacan Common Stock proposed to be issued
in connection with the Share Exchange will not be registered under the
Securities Act, and thus will be restricted securities. Restricted
securities may not be resold unless they are registered under the Securities
Act or sold pursuant to an applicable exemption from registration. Each
certificate representing Amacan Common Stock issued in the Share Exchange
will bear a legend respecting such restrictions on transfer.
The Company has never declared or paid dividends on the
Amacan Common Stock. Payment of dividends will be within the discretion of
the Company's Board of Directors and will depend, among other factors, on
earnings, capital requirements and the operating and financial condition of
the Company. At the present time the Company intends to retain any future
earnings for use in its business and therefore does not anticipate paying any
dividends on Amacan Common Stock in the foreseeable future.
SPIRE AND SPIRE SYSTEMS COMMON STOCK AND DIVIDEND POLICY
Shares of the Spire Common Stock and the Spire Systems
Common Stock are not publicly traded and no public market exists therefor.
As of January 23, 1996, there were 87,386 shares of Spire Common Stock
outstanding, held by six holders of record and 100,000 shares of Spire
Systems Common Stock outstanding, held by five holders of record. See
"VOTING SECURITIES OF THE SPIRE COMPANIES AND PRINCIPAL HOLDERS THEREOF."
The stockholders of Spire entered into a Stockholders Agreement on January 1,
1989 (the "Spire Stockholders Agreement"), which, among other things,
restricts the stockholders' lifetime transfer of shares of Spire Common
Stock, provides a right of first refusal to Spire and remaining stockholders
to purchase shares of Spire Common Stock from a selling stockholder, and
provides for the purchase of the shares of Spire Common Stock held by a
stockholder in the event of death of the stockholder and for the funding of
such purchase by insurance proceeds. Following the completion of the
transactions contemplated by the Exchange Agreement, the
9
<PAGE>
Spire Stockholders Agreement will be terminated. See "DESCRIPTION OF THE
CAPITAL STOCK OF THE SPIRE COMPANIES -- Termination of Stockholder Agreement."
Dividends are payable on the Spire Common Stock and Spire
Systems Common Stock when, as and if declared by the Boards of Directors of
Spire and Spire Systems, respectively. The Spire Companies have never
declared or paid dividends on the Spire Common Stock or the Spire Systems
Common Stock. Upon consummation of the Share Exchange, the Company will
become the sole stockholder of the Spire Companies. Any dividends paid by
either of the Spire Companies will be paid solely to the Company. Existing
holders of the Spire Common Stock and Spire Systems Common Stock will not be
entitled to receive dividends or any other distributions from the Spire
Companies.
PROPRIETARY MARKS
The Spire Companies offer, sell and utilize many
third-party products represented by registered or common law trademarks,
including the following trademarks. Novell-Registered Trademark-,
Wordperfect-Registered Trademark-, UNIX-Registered Trademark-, WP Office-TM-
and Groupwise-TM- are trademarks of Novell, Inc. DEC-Registered Trademark-,
VMS-Registered Trademark-, OpenVMS-TM-, VAX-Registered Trademark- and
Alpha-TM- are trademarks of Digital Equipment Corporation.
Microsoft-Registered Trademark-, MS-DOS-Registered Trademark-, DOS-TM-,
Windows-Registered Trademark-, Windows NT-Registered Trademark- and Windows
95-TM- are trademarks of Microsoft Corporation. Lotus-Registered Trademark-
and Lotus 1-2-3-TM- are trademarks of Lotus Development Corporation.
Apple-Registered Trademark-, Macintosh-Registered Trademark- and
Mac-Registered Trademark- are registered trademarks of Apple Computer Inc.
OS/2-TM- is a trademark of IBM Corporation. Intel-Registered Trademark- is a
registered trademark of Intel Corporation. This Information Statement also
contains trademarks of other companies.
10
<PAGE>
AMACAN RESOURCES CORPORATION
1399 SOUTH SEVENTH EAST, NO. 9
SALT LAKE CITY, UTAH 84105
____________________________
INFORMATION STATEMENT
____________________________
SPECIAL MEETING OF STOCKHOLDERS
APRIL 18, 1996
INTRODUCTION
GENERAL
This Information Statement is being furnished by Amacan
Resources Corporation, a Utah corporation (the "Company" or "Amacan"), to
holders of the Company's common stock, par value $.25 per share (the "Amacan
Common Stock"), for use in connection with a Special Meeting of Stockholders
of the Company to be held at the offices of Kimball, Parr, Waddoups, Brown &
Gee, 185 South State Street, Suite 1300, Salt Lake City, Utah 84111 on April
18, 1996 at 10:00 a.m., local time, and at any adjournments or postponements
thereof (the "Special Meeting"). This Information Statement and the attached
Notice of Special Meeting are first being mailed to stockholders of the
Company on or about March 28, 1996.
The purpose of the Special Meeting is to consider and act
upon a proposal to approve, authorize and adopt an Agreement and Plan of
Reorganization dated January 23, 1996 (the "Exchange Agreement") by and among
the Company, Spire Technologies, Inc., a Utah corporation ("Spire"), Spire
Technologies Systems Division, Inc., a Utah corporation ("Spire Systems," and
collectively with Spire, the "Spire Companies"), and the holders of the
capital stock of the Spire Companies (collectively, the "Spire
Stockholders"), and the related transactions contemplated by the Exchange
Agreement (the "Share Exchange"). Subject to stockholder approval, the
Exchange Agreement provides for, among other things: (a) the acquisition by
the Company of all of the issued and outstanding shares of the capital stock
of Spire and Spire Systems in exchange for the issuance by the Company of an
aggregate of 3,501,883 shares of Amacan Common Stock to the Spire
Stockholders; (b) a one-for-seven reverse split of the shares of Amacan
Common Stock issued and outstanding at the effective time (the "Effective
Time") of the Share Exchange (the shares of Amacan Common Stock to be issued
to the Spire Stockholders will not be subject to the reverse split of the
Amacan Common Stock); (c) amendment of the Company's Articles of
Incorporation to change the Company's name to Spire International Corp.; (d)
adoption of the Amacan Resources Corporation Stock Incentive Plan (the
"Amacan Option Plan"); (e) substitution of options to purchase shares of
Amacan Common Stock under the Amacan Option Plan for outstanding options to
purchase shares of the common stock, par value $.01 per share, of Spire (the
"Spire Common Stock") issued pursuant to the Spire 1995 Stock Option and
Award Plan (the "Spire Option Plan"); and (f) the resignation, subsequent to
the Effective Time, of the Company's current officers and directors, and the
appointment of replacement officers and directors designated by the Spire
Stockholders (provided, however, that, as permitted under the Exchange
Agreement, the Company's Board of Directors has designated Sherman H. Smith,
a financial advisor to the Company, to serve as a director of the Company
subsequent to the closing of the Share Exchange). Immediately following the
consummation of the Share Exchange, if consummated, the shares of Amacan
Common Stock owned by the current stockholders of the Company will represent
approximately 10% of the then issued and outstanding shares of Amacan Common
Stock.
The Share Exchange, if consummated, will materially
affect the Company, the Spire Companies and their respective stockholders.
Among other effects, consummation of the Share Exchange would result in the
following principal advantages to the Company, the Spire Companies or their
respective stockholders: (i) the Spire Companies will become wholly-owned
subsidiaries of the Company and the operating and financial results of the
Company will
11
<PAGE>
include the operating and financial results of the Spire
Companies; (ii) the Spire Stockholders will acquire approximately 90% of the
shares of Amacan Common Stock which will be outstanding following
consummation of the Share Exchange; (iii) the Company's business will no
longer be limited to passive participation as a working interest holder in
oil and gas wells and will become the business presently conducted by the
Spire Companies; (iv) the Company will be positioned to pursue growth
opportunities in the expanding and changing information technology industry;
(v) the Company's management will be undertaken by individuals selected by
the Spire Stockholders based upon their knowledge and experience in
developing, implementing and marketing office automation systems and
components; (vi) as compared to the present resources of the Spire Companies,
the Company will possess greater access to traditional capital markets and,
as determined appropriate by the Company's management, will be in an improved
position to raise additional capital to develop the business and products of
the Spire Companies; (vii) the Company will substitute options to purchase
shares of Amacan Common Stock pursuant to the Amacan Option Plan for each
outstanding employee stock option to purchase shares of Spire Common Stock
pursuant to the Spire Option Plan; and (viii) the Share Exchange will be
structured as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). The Share Exchange, including
the impact of the foregoing effects on the Company, the Spire Companies and
their respective stockholders, is more fully described elsewhere in this
Information Statement and a copy of the Exchange Agreement is attached hereto
as Exhibit A. See "THE SHARE EXCHANGE -- Principal Effects of the Share
Exchange," "-- Reasons for the Share Exchange," "-- Recommendation of the
Board of Directors" and "-- Management of the Company's Business After the
Share Exchange," "THE EXCHANGE AGREEMENT -- Stock Option Plans," "UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS" and "BUSINESS OF THE SPIRE
COMPANIES."
The Share Exchange, if consummated, would result in the
following disadvantages to the Company, the Spire Companies or their
respective stockholders: (i) the existing holders of Amacan Common Stock will
experience immediate and substantial dilution, resulting in a reduction of
their collective interest in the Company from 100% of the Amacan Common Stock
to approximately 10% of the then issued and outstanding shares of Amacan
Common Stock; (ii) negotiation of the terms of the Share Exchange has
required significant management resources of the Company and the Spire
Companies and consummation of the Share Exchange will require additional
management time and resources, which may disrupt the operations of the
Company (including the operations presently conducted by the Spire Companies)
and may affect its operating results; (iii) the "reverse acquisition" nature
of the Share Exchange may limit the Company's ability to offset certain
existing tax losses and credits against the post-exchange income of the
Company for periods subsequent to the Share Exchange; (iv) under the terms of
the Utah Revised Business Corporation Act, the existing stockholders of the
Company will not be entitled to exercise dissenters' rights; and (v) the
Company will become a minor competitor in the information technology
industry, which is high competitive and subject to rapid change, and will be
forced to compete with larger information technology companies that possess
significantly greater resources and access to capital. Such disadvantages
are more fully described elsewhere in the Information Statement. See "THE
SHARE EXCHANGE -- Exchange of Shares," " -- Principal Effects of the Share
Exchange," "-- Dissenters' Rights" and "-- Federal Income Tax Consequences"
and "RISK FACTORS."
Stockholders of the Company should consider carefully the
matters discussed in this Information Statement. In addition to being
furnished to holders of the Amacan Common Stock, this Information Statement
may also be furnished to the Spire Companies and the Spire Stockholders to
provide them relevant information in connection with any required actions or
consents on the part of the Spire Companies and the Spire Stockholders in
connection with the Share Exchange. Nonetheless, the recommendations of the
Company's Board of Directors to its stockholders hereinafter set forth should
not be considered recommendations or advice to the Spire Companies or the
Spire Stockholders.
THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT THE
EXCHANGE AGREEMENT AND THE SHARE EXCHANGE ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS
THAT THE STOCKHOLDERS OF THE COMPANY VOTE FOR APPROVAL OF THE EXCHANGE
AGREEMENT AND THE SHARE EXCHANGE. The recommendation of the Board of
Directors to its stockholders should not be considered a recommendation to
any person other than the stockholders of the Company. In particular, the
recommendation of the Board of Directors to its stockholders should not be
considered advice to the stockholders of Spire. A member of the Board of
Directors has an interest which may present him with a conflict of interest
in connection with the Share Exchange. See "THE SHARE EXCHANGE -- Interests
of Certain Persons in the Share Exchange."
12
<PAGE>
The Board of Directors knows of no business that
will be presented for consideration at the Special Meeting other than the
matters described in this Information Statement.
The principal executive offices of the Company are
located at 1399 South Seventh East, No. 9, Salt Lake City, Utah 84105, and
the Company's telephone number is (801) 486-9911. Upon consummation of the
Share Exchange, the Company intends to consolidate its offices with the
offices of the Spire Companies, located at 311 North State Street, Orem, Utah
84057. The Company anticipates that its telephone number will become (801)
226-3355.
RECORD DATE
The Board of Directors has fixed the close of business on
February 27, 1995 as the record date (the "Record Date") for the
determination of stockholders entitled to receive notice of and to vote at
the Special Meeting. Accordingly, only holders of the Amacan Common Stock of
record on the books of the Company at the close of business on the Record
Date will be entitled to vote at the Special Meeting. At the close of
business on the Record Date, there were 2,723,714 shares of Amacan Common
Stock issued and outstanding and entitled to vote at the Special Meeting held
by approximately 387 holders of record.
VOTE REQUIRED
The presence of a majority of the outstanding shares of
Amacan Common Stock entitled to vote at the Special Meeting is required for a
quorum at the Special Meeting. Abstentions will be counted as represented
for purposes of the determination of a quorum. If the number of shares of
Amacan Common Stock represented at the Special Meeting is insufficient to
constitute a quorum, the Special Meeting will be adjourned and the Company's
management will evaluate alternative methods of obtaining stockholder
approval of the Share Exchange, including soliciting proxies in connection
with a subsequent Special Meeting of Shareholders called for the purpose of
approving the Share Exchange.
Approval of the Exchange Agreement and the Share Exchange
requires the affirmative vote of the holders of a majority of the issued and
outstanding shares of Amacan Common Stock entitled to vote at the Special
Meeting. Accordingly, abstentions will have the effect of a vote cast
against the Exchange Agreement and the Share Exchange. Holders of Amacan
Common Stock are entitled to one vote at the Special Meeting for each share
of Amacan Common Stock held of record on the Record Date.
As of the date of this Information Statement, the
officers and directors of the Company, consisting of four persons, owned,
directly or indirectly, an aggregate of approximately 936,000 shares of the
Amacan Common Stock, representing approximately 34% of the outstanding shares
of the Amacan Common Stock. See "VOTING SECURITIES OF THE COMPANY AND
PRINCIPAL HOLDERS THEREOF." Each of the officers and directors has indicated
his intention to vote all shares owned by him in favor of the proposal to
approve, authorize and adopt the Exchange Agreement and the Share Exchange.
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THE SHARE EXCHANGE
The following information with respect to the Share
Exchange is qualified in its entirety by reference to the complete text of
the Exchange Agreement, a copy of which is attached to this Information
Statement as Exhibit A and incorporated by reference herein.
EXCHANGE OF SHARES
Subject to the approval of the stockholders of the
Company, the Exchange Agreement was entered into as of January 23, 1996 by
and among the Company, Spire, Spire Systems and the Spire Stockholders.
Pursuant to the Exchange Agreement, the Company proposes to acquire the Spire
Companies through the exchange of all of the issued and outstanding shares of
the capital stock of the Spire Companies for 3,501,883 shares of Amacan
Common Stock to be issued to the Spire Stockholders in the Share Exchange.
At the Effective Time, (i) the Company will effect a one-for-seven reverse
split of the Amacan Common Stock pursuant to which each issued and
outstanding share of Amacan Common Stock will be reverse split and converted
into one-seventh (.142857) of a share of Amacan Common Stock, (ii) each share
of Spire Common Stock issued and outstanding immediately at the Effective
Time will be exchanged for 35.4786 shares of Amacan Common Stock, and (iii)
each share of the common stock, no par value, of Spire Systems (the "Spire
Systems Common Stock") issued and outstanding immediately at the Effective
Time will be exchanged for 4.0155 shares of Amacan Common Stock; provided,
however, that in an effort to avoid the administrative burdens associated
with the issuance of fractional shares, no fractional shares of Amacan Common
Stock will be issued in connection with the Share Exchange. Furthermore, the
Company and the Spire Stockholders have concluded that the value of any
fractional share interest that would otherwise be received by any Spire
Stockholder, relative to the number of shares of Amacan Common Stock to be
issued to the Spire Stockholders, would be nominal. Accordingly, the Company
and the Spire Stockholders have agreed that there will be no cash payments in
lieu of fractional shares. If any holder of Spire Common Stock or Spire
Systems Common Stock would otherwise be entitled to a fractional share of
Amacan Common Stock on exchange of such shares, the Company will round the
aggregate number of shares of Amacan Common Stock to be issued to such holder
to the nearest whole share.
Upon consummation of the Share Exchange (including the
reverse split of the Amacan Common Stock), the Spire Stockholders will own
3,501,883 shares or approximately 90% of the then issued and outstanding
shares of Amacan Common Stock, and the holders the Amacan Common Stock at the
Effective Time will own approximately 389,102 shares or approximately 10% of
the then issued and outstanding shares of Amacan Common Stock.
BACKGROUND OF THE SHARE EXCHANGE
For more than 20 years, the Company has been a passive
participant in oil and gas exploration and development, accumulating small
working interests in oil and gas wells. The Company has had extremely
limited resources and in recent years has incurred losses from operations.
In 1994, the Company's Board of Directors determined that the Company should
actively seek an acquisition or merger with an operating company in an effort
to increase stockholder value. The Board's determination was based largely
upon the Board's assessment that the Company was unlikely to undertake oil
and gas exploration activities in the future and that the Company's oil and
gas reserves were being depleted without replacement. In the period since
that determination, the Board of Directors has considered a number of
possible acquisitions, but has elected not to pursue those acquisitions
because of the Company's limited resources or because of the belief of the
Board of Directors that the proposed acquisitions did not represent viable
transactions.
In October 1995, representatives of the Company met with
Gary B. Godfrey, President of Spire, and other representatives of the Spire
Companies to discuss, in general terms, the possibility of a business
combination between the Company and the Spire Companies. Mr. Godfrey
provided to the Company's representatives an introduction to the operations
and financial condition of Spire and responded to the Company's questions.
On October 26, 1995, three of the directors of the Company visited Spire's
facilities in Orem, Utah, met with Spire's officers, directors and senior
management and received from Spire management a presentation outlining the
operations, financial condition and prospects of the Spire Companies. The
directors then excused Spire's management and discussed the information
presented by Spire management and the Company's operations and prospects.
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On November 10, 1995, the Spire Companies submitted to
the Board of Directors a proposal for the combination of the Spire Companies
with the Company. In response to Spire's proposal, the Board requested that
Sherman H. Smith, a certified public accountant and financial advisor to the
Company, meet with Spire management to conduct further investigation of the
possible combination. On November 17, 1995, Mr. Smith met with Spire
management to review additional information, consisting principally of
financial and accounting information.
On November 21, 1995, the Company's Board of Directors
convened a special meeting of directors for the purposes of continuing its
review of the proposed combination. During the course of that meeting, the
Board reviewed the financial and accounting information collected by Mr.
Smith during his meeting with Spire management, considered additional
business and financial information supplied by the Spire Companies and
discussed the business, industry, financial condition, management, prospects
and risks associated with the Spire Companies. Following extended
discussions regarding the proposed transaction, the Board authorized the
Company's officers and advisors to enter into discussions with Spire
management to negotiate a plan of reorganization and to take additional
actions those officers and advisors determined necessary to effect the
proposed business combination.
During the period between December 1, 1995 and January
15, 1996, the officers and advisors of the Company negotiated the terms of
the Exchange Agreement, reviewed due diligence materials and developed
disclosure schedules relating to the businesses of the Company and the Spire
Companies. During that period, the Board of Directors met on January 5 and
15, 1996 to review the progress of the negotiations and evaluate the business
and financial information delivered by the Spire Companies. At the January
15 meeting, the directors of the Company received reports from the Company's
officers and advisors involved in the negotiation of the transaction and
completed their evaluation of the terms of the Share Exchange. The members
of the Company's Board of Directors then voted unanimously to approve the
Exchange Agreement and to recommend that the Company's stockholders vote in
favor of the Share Exchange.
REASONS FOR THE SHARE EXCHANGE
In approving the Exchange Agreement and the transactions
contemplated thereby, and in resolving to recommend that the stockholders of
the Company approve the Share Exchange, the Exchange Agreement and the other
transactions contemplated thereby, the Company's Board of Directors
considered a number of factors. The principal factors were:
- The Board's evaluation of the Company's
business and financial condition and the
limited nature of the Company's current
operations as a working interest holder in oil
and gas exploration and development activities
conducted by other parties. In particular, the
Board concluded that the Company was unlikely
to undertake oil and gas exploration activities
in the future and recognized that the Company's
oil and gas reserves were being depleted
without replacement. Based upon its evaluation
of the Company's business, financial condition
and operations, the Board concluded that the
Company's existing operations offered little,
if any, potential for increasing stockholder
value.
- The Board's evaluation of the business,
financial condition, operating history,
management and prospects of the Spire Companies
and its conclusion that the acquisition of the
capital stock of the Spire Companies offers a
realistic possibility of increasing Amacan
stockholder value. The Board's conclusion that
the Share Exchange offers a realistic
possibility of increasing stockholder value was
based upon the following assessments; (i) the
Spire Companies have identified and begun to
exploit a market segment that offers
significant growth potential; (ii) Spire
management is actively involved in the
operation and development of Spire's business;
and (iii) the Spire Companies have developed
strategic partner arrangements with major
hardware and software developers and
manufacturers, and appear to be in a position
to capitalize on those arrangements.
- The Board's determination that the number of
shares of Amacan Common Stock to be issued to
the Spire Stockholders fairly reflects the
value of the Spire Companies. The Board's
determination was based upon (i) its assessment
of the value of the Company's principal
financial and non-financial assets (primarily
the Company's cash, investments, oil and gas
interests and status as a public company); (ii)
the aggregate market value of the outstanding
shares of the
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Amacan Common Stock (recognizing
that the Amacan Common Stock has experienced
extremely limited trading activity during the
past several years); (iii) its evaluation of
the current and forecasted revenues and
earnings of the Spire Companies; (iv) its
estimate of the combined value of the Spire
Companies, based upon revenues, earnings,
projected growth and market potential; and (v)
its assessment of the relative values of Spire
and Spire Systems.
- In reaching its determination, the Board did
not obtain an independent valuation of the
Spire Companies, nor did the Company retain the
services of an investment banking firm or other
third party to assess the fairness of the
consideration to be issued by the Company to
the Spire Stockholders. The directors of the
Company do not possess any particular expertise
in the area of business valuation. The Board's
analysis was based upon the factors described
above, utilizing the information available to
the Board at the time of its decision, and the
final exchange ratio was determined through
arms-length negotiations between the Company
and the Spire Companies. The Board did not
rely on any single factor described above,
assign relative weights to the factors
considered by it, or develop any conclusion as
to how any factor, taken alone, supported its
determination.
- The risks associated with the business of the
Spire Companies. The principal risks reviewed
by the Board are set forth below under the
heading "RISK FACTORS."
- Current economic and market conditions.
After considering each of the principal factors described
above, the Board of Directors determined that the Share Exchange was in the
best interests of the Company and its stockholders and that the Company
should proceed to effectuate the Share Exchange at the earliest possible
date. In view of the wide variety of factors considered in connection with
its evaluation of the Share Exchange, the Board did not find it practicable
to assign relative weights to or otherwise quantify each of the factors
considered in reaching its determination regarding the fairness of the Share
Exchange.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Company's Board of Directors has unanimously
determined that the Exchange Agreement and the Share Exchange are fair to,
and in the best interests of, the Company and its stockholders, and has
therefore unanimously approved the Exchange Agreement and the Share Exchange.
The primary factors considered and relied upon by the Company's Board of
Directors in reaching its recommendation are referred to above in " --
Reasons for the Share Exchange." THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS VOTE FOR APPROVAL OF THE EXCHANGE
AGREEMENT AND THE SHARE EXCHANGE. The recommendation of the Board of
Directors to the Company's stockholders should not be considered a
recommendation to any person other than the stockholders of the Company. In
particular, this recommendation should not be considered advice to the
stockholders of Spire Companies. A member of the Company's Board of
Directors has an interest which may present him with a conflict of interest
in connection with the Share Exchange. See " -- Interests of Certain Persons
in the Share Exchange."
INTERESTS OF CERTAIN PERSONS IN THE SHARE EXCHANGE
A member of the Company's Board of Directors may be
deemed to have an interest in the Share Exchange in addition to his interest
as a stockholder of Amacan generally. His interest is summarized below.
In November, 1988, Mr. Russell G. Holley, a director of
the Company and its President and Chief Executive Officer from 1974 until
1994, and the Company entered into a Deferred Compensation Agreement (the
"Holley Agreement") which provides for payment by the Company to Mr. Holley
of annual deferred compensation payments in the amount of $12,000, commencing
upon Mr. Holley's retirement from the Company and continuing for a period of
ten years. The Company's obligation under the Holley Agreement, which is
subject to certain conditions, was undertaken in exchange for Mr. Holley's
agreement to continue his employment with the Company until January 1, 1990
or a later date agreed upon by the Company and Mr. Holley. The Company and
Mr. Holley subsequently amended the Holley Agreement to provide for monthly
payments in the amount of $3,000, commencing on May 1, 1994 and continuing
for a period of three years. In connection with the Share Exchange,
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which contemplates that Mr. Holley and other officers and directors of the
Company resign their positions with the Company, the Company and Mr. Holley
have agreed to terminate the Holley Agreement and accelerate the payment of
the unpaid balance, in the amount of approximately $45,000, due thereunder.
PRINCIPAL EFFECTS OF THE SHARE EXCHANGE
The Share Exchange, if consummated, will materially
affect the Company, the Spire Companies and their respective stockholders.
Among other effects, consummation of the Share Exchange would result in the
following principal advantages to the Company, the Spire Companies or their
respective stockholders: (i) the Spire Companies will become wholly-owned
subsidiaries of the Company and the operating and financial results of the
Company will include the operating and financial results of the Spire
Companies; (ii) the Spire Stockholders will acquire approximately 90% of the
shares of Amacan Common Stock which will be outstanding following
consummation of the Share Exchange; (iii) the Company's business will no
longer be limited to passive participation as a working interest holder in
oil and gas wells and will become the business presently conducted by the
Spire Companies; (iv) the Company will be positioned to pursue growth
opportunities in the expanding and changing information technology industry;
(v) the Company's management will be undertaken by individuals selected by
the Spire Stockholders based upon their knowledge and experience in
developing, implementing and marketing office automation systems and
components; (vi) as compared to the present resources of the Spire Companies,
the Company will possess greater access to traditional capital markets and,
as determined appropriate by the Company's management, will be in an improved
position to raise additional capital to develop the business and products of
the Spire Companies; (vii) the Company will substitute options to purchase
shares of Amacan Common Stock pursuant to the Amacan Option Plan for each
outstanding employee stock option to purchase shares of Spire Common Stock
pursuant to the Spire Option Plan; and (viii) the Share Exchange will be
structured as a tax-free reorganization under Section 368(a) of the Code.
The Share Exchange, including the impact of the foregoing effects on the
Company, the Spire Companies and their respective stockholders, is more fully
described elsewhere in this Information Statement, and a copy of the Exchange
Agreement is attached hereto as Exhibit A. See "THE SHARE EXCHANGE --
Reasons for the Share Exchange," "-- Recommendation of the Board of
Directors" and "-- Management of the Company's Business After the Share
Exchange," "THE EXCHANGE AGREEMENT -- Stock Option Plans," "UNAUDITED PRO
FORMA CONDENSED COMBINED FINANCIAL STATEMENTS" and "BUSINESS OF THE SPIRE
COMPANIES."
The Share Exchange, if consummated, would result in the
following disadvantages to the Company, the Spire Companies or their
respective stockholders: (i) existing holders of Amacan Common Stock will
experience immediate and substantial dilution, resulting in a reduction of
their collective interest in the Company from 100% of the Amacan Common Stock
to approximately 10% of the then issued and outstanding shares of Amacan
Common Stock; (ii) negotiation of the terms of the Share Exchange has
required significant management resources of the Company and the Spire
Companies and consummation of the Share Exchange will require additional
management time and resources, which may disrupt the operations of the
Company (including the operations presently conducted by the Spire Companies)
and may affect its operating results; (iii) the "reverse acquisition" nature
of the Share Exchange may limit the Company's ability to offset certain tax
losses and credits against the post-exchange income of the Company for
periods subsequent to the Share Exchange; (iv) under the terms of the Utah
Revised Business Corporation Act, the existing stockholders of the Company
will not be entitled to exercise dissenters' rights with respect to the Share
Exchange; and (v) the Company will become a minor competitor in the
information technology industry, which is highly competitive and subject to
rapid change, and will be forced to compete with larger information
technology companies that possess significantly greater resources and access
to capital. Such disadvantages are more fully described elsewhere in the
Information Statement. See "THE SHARE EXCHANGE -- Exchange of Shares," "--
Dissenters' Rights" and "-- Federal Income Tax Consequences" and "RISK
FACTORS."
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EXPENSES OF THE SHARE EXCHANGE
Except as described below, whether or not the Share
Exchange is consummated, the fees, costs and expenses incurred by the
Company, Spire and Spire Systems in connection with the Exchange Agreement
and the consummation or attempted consummation of the Share Exchange,
including fees and expenses of legal counsel, will be borne by the party
incurring such fees, costs or expenses. In the event, however, that the
Exchange Agreement is terminated as a result of a party's failure to comply
in any material respect with the covenants or agreements contained in the
Exchange Agreement or as a result of a materially inaccurate representation
or warranty made by a party, the party causing such termination will bear the
fees, costs and expenses incurred by the other party or parties. See "THE
EXCHANGE AGREEMENT -- Conditions to the Share Exchange" and " -- Termination."
CLOSING AND CLOSING DATE
The closing of the Share Exchange (the "Closing") is
anticipated to occur on or before April 30, 1996, or on such other date as
the Company and the Spire Companies shall agree, provided all conditions to
the obligations of the parties to consummate the Share Exchange have been
satisfied or waived, including (i) approval and adoption of the Exchange
Agreement and the Share Exchange by the stockholders of the Company and the
Spire Companies; (ii) confirmation that none of the stockholders of the Spire
Companies has elected to exercise dissenters' rights under the Utah Revised
Business Corporation Act (the "Utah Act"); (iii) receipt by the Company and
the Spire Companies of legal opinions from counsel to the other party in form
and substance customary for transactions such as the Share Exchange; and (iv)
other customary conditions to closing, including without limitation, the
truthfulness and accuracy of the parties' respective representations and
warranties, the absence of any material adverse change in the business
condition of the respective parties, the confirmation that the consummation
of the Share Exchange and the transactions contemplated thereby will not
violate any law or regulation and will not result in the creation of any lien
or encumbrance on the respective properties of the Company, Spire and Spire
Systems, the receipt of all material third-party consents and approvals, and
the absence of any litigation which would have a material adverse effect on
the business condition of the respective parties. The date on which the
Closing occurs is hereinafter referred to as the "Closing Date." The filing
of Articles of Share Exchange setting forth the terms and conditions of the
Share Exchange (the "Articles of Exchange") with the Utah Division of
Corporations and Commercial Code (the "Division of Corporations") is expected
to be made as soon as practicable after the approval of the Exchange
Agreement and the Share Exchange by the stockholders of the Company at the
Special Meeting and the receipt of all required consents and approvals. See
"THE EXCHANGE AGREEMENT -- Effective Date and Time of the Share Exchange" and
" -- Conditions to the Share Exchange."
REVERSE SPLIT OF AMACAN COMMON STOCK
If the Share Exchange and the Exchange Agreement are
approved by the holders of Amacan Common Stock at the Special Meeting, at the
Effective Time the Company will effect a reverse stock split pursuant to
which each issued and outstanding share of Amacan Common Stock will be
reverse split and converted into one-seventh (.142857) of a share of Amacan
Common Stock; provided, however, that no fractional shares of Amacan Common
Stock will be issued in connection with the Share Exchange. If any holder of
Amacan Common Stock would otherwise be entitled to a fractional share of
Amacan Common Stock in connection with the reverse split of the Amacan Common
Stock, the Company will round the number of shares of Amacan Common Stock to
be issued to such holder to the nearest whole share. There will be no cash
payments in lieu of fractional shares.
MANAGEMENT OF THE COMPANY'S BUSINESS AFTER THE SHARE EXCHANGE
Following consummation of the Share Exchange, the Spire
Companies will continue, as wholly-owned subsidiaries of the Company, their
respective business operations. The current directors of the Company will
resign and will appoint four individuals designated by the Spire Stockholders
and one individual designated by the current Board of Directors to serve as
members of the Company's Board of Directors with terms expiring at the
Company's 1996 annual meeting of stockholders. The Board of Directors has
designated Sherman H. Smith, a financial advisor to the Company, to serve as
a director of the Company following consummation of the Share Exchange. See
"MANAGEMENT OF THE COMPANY." The current officers of the Company will also
resign and, upon their election, the new directors of the Company will
appoint persons to serve as officers of the Company in accordance with the
procedures outlined in the Utah Act and the Company's Articles of
Incorporation and Bylaws. The
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Company anticipates that certain of the current officers of the Spire
Companies will be appointed to serve as officers of the Company following
consummation of the Share Exchange. See "MANAGEMENT OF THE SPIRE COMPANIES."
ACCOUNTING TREATMENT
The Share Exchange will be accounted for under the
"purchase" method of accounting, in accordance with generally accepted
accounting principles. For the reasons described below, the Share Exchange
will be treated for accounting purposes as a "reverse merger" wherein the
Spire Companies will be treated as the acquiring company. The treatment of
the Share Exchange as a "reverse merger," even though the Company will issue
shares of Amacan Common Stock to the Spire Stockholders, is due to the
acquisition by the Spire Stockholders of approximately 90% of the outstanding
shares of Amacan Common Stock after consummation of the Share Exchange and
the expectation that, if the Share Exchange is consummated, the existing
management of Spire will become the management of the Company. Under the
purchase method of accounting, the net assets of the Company will be recorded
at their fair market value at the Closing Date and the operating results of
the Company prior to the Share Exchange will not be included with the
historical operating results of the Spire Companies.
The Unaudited Pro Forma Condensed Combined Financial
Statements appearing elsewhere in this Information Statement are based upon
certain assumptions and allocate the purchase price to assets and liabilities
based upon preliminary estimates of their respective fair values. The pro
forma adjustments and combined amounts are included for informational
purposes only. If the Share Exchange is consummated, the Company's financial
statements will reflect effects of acquisition adjustments only from the
Effective Time. The actual allocation of the purchase price may differ
significantly from the allocation reflected in the Unaudited Pro Forma
Condensed Combined Financial Statements. See "SELECTED HISTORICAL AND PRO
FORMA FINANCIAL INFORMATION" and "UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS."
DISSENTERS' RIGHTS
The proposed Share Exchange creates dissenters' rights
for the stockholders of the Spire Companies under the Utah Act. Holders of
Amacan Common Stock are not entitled to assert dissenters' rights in
connection with the Share Exchange. The procedure to be followed by
stockholders of the Spire Companies in order to dissent from the proposed
Share Exchange and to assert dissenters' rights is outlined in Part 13 of the
Utah Act. Stockholders of the Spire Companies who desire to enforce
dissenters' rights must comply with the requirements of the Utah Act.
Holders of Spire Common Stock and Spire Systems Common Stock who elect to
exercise such dissenters' rights in accordance with the procedures specified
under the Utah Act will be entitled to have their shares purchased by the
Company for cash.
Under the terms of the Exchange Agreement, the Spire
Stockholders have represented to Amacan that they have not elected to
exercise dissenters' rights in connection with the Share Exchange.
Furthermore, the Spire Stockholders, each of whom was represented in the
negotiation of the terms of the Share Exchange and the preparation of the
Exchange Agreement, have agreed that in order to induce the Company to enter
into the Exchange Agreement and consummate the Share Exchange, they will not
elect to exercise dissenters' rights subsequent to the execution of the
Exchange Agreement. The agreement of the Spire Stockholders to not exercise
dissenters' rights was made voluntarily by each of the Spire Stockholders in
consideration of the obligations of the Company set forth in the Exchange
Agreement. Furthermore, the obligations of Amacan under the Exchange
Agreement are expressly subject to the condition that no stockholder of Spire
or Spire Systems shall have elected to exercise dissenters' rights under the
Utah Act.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain of the
federal income tax consequences of the Share Exchange that are generally
applicable to holders of shares of the Amacan Common Stock, the Spire Common
Stock and the Spire Systems Common Stock under the Code. This discussion
does not deal with all federal income tax considerations that may be relevant
to particular stockholders of the Company and the Spire Companies in light of
their particular circumstances, such as stockholders who are dealers in
securities, foreign persons, tax-exempt entities or stockholders who acquired
their shares in connection with stock option or stock purchase plans or in
other compensatory transactions. In addition, the following discussion does
not address the tax consequences of
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transactions effectuated prior or subsequent to or concurrently with the
Share Exchange (whether or not such transactions are in connection with the
Share Exchange), including without limitation, transactions in which shares
of Amacan Common Stock are acquired or shares of Spire Common Stock or Spire
Systems Common Stock are disposed of. The following discussion is based upon
provisions of the Code, regulations, administrative rulings and judicial
decisions presently in effect, all of which are subject to change (possibly
with retroactive effect) or to different interpretations. Furthermore, no
foreign, state or local tax considerations are addressed herein.
The Share Exchange is intended to constitute a
"reorganization" within the meaning of Section 368(a) of the Code. Assuming
the Share Exchange does so "qualify," the following tax consequences will
generally result (subject to the limitations and qualifications referred to
herein):
(a) No gain or loss
should be recognized by holders of Amacan
Common Stock by virtue of the proposed
one-for-seven reverse split of the Amacan
Common Stock or the Company's exchange of
shares of Amacan Common Stock for all of the
issued and outstanding shares of the capital
stock of the Spire Companies;
(b) No gain or loss
should be recognized by holders of Spire Common
Stock or Spire Systems Common Stock solely upon
their receipt in the Share Exchange of shares
of Amacan Common Stock in exchange therefor;
(c) The aggregate tax
basis of the shares of Amacan Common Stock
received in the Share Exchange should be the
same as the aggregate tax basis of shares of
Spire Common Stock or Spire Systems Common
Stock surrendered in exchange therefor; and
(d) The tax holding
period of the shares of Amacan Common Stock
received in the Share Exchange should include
the period for which the shares of Spire Common
Stock or Spire Systems Common Stock surrendered
in exchange therefor were held, provided that
the shares of Spire Common Stock or Spire
Systems Common Stock are held as a capital
asset at the time of the Share Exchange.
(e) The Spire Companies
will continue to hold their assets with the
same tax basis for those assets that existed
before the Share Exchange.
(f) The Company will
have a tax basis in the shares of the Spire
Common Stock and the Spire Systems Common Stock
equal to the tax basis in those shares that the
Spire Stockholders had at the time of the
Exchange.
(g) The Company and the
Spire Companies will be eligible to file their
federal income tax returns on a consolidated
basis with the Company as the common parent,
but the Company may, however, be limited in its
ability to apply any carryforwards of
pre-exchange net operating losses, unused
general business credits, corporate minimum tax
credits or capital loss carryovers against the
post-exchange income of the Company from
non-oil and gas operations.
The parties are not requesting a ruling from the Internal
Revenue Service ("IRS") in connection with the Share Exchange. Qualification
of the Share Exchange as a "reorganization" will be subject to certain
assumptions and qualifications and will be based on the truth and accuracy of
certain representations made by Spire, Spire Systems, the Company and the
Spire Stockholders.
Even if the Share Exchange qualifies as a
"reorganization," a recipient of shares of Amacan Common Stock would
recognize gain to the extent that such shares were considered to be received
in exchange for services or property (other than solely for shares of Spire
Common Stock or Spire Systems Common Stock). All or a portion of such gain
may be taxable as ordinary income. In addition, gain would have to be
recognized to the extent that a Spire Stockholder was treated as receiving
(directly or indirectly) consideration other than shares of Amacan Common
Stock in exchange for his or her shares of Spire Common Stock or Spire
Systems Common Stock.
A successful IRS challenge to the "reorganization" status
of the Share Exchange would result in the Spire Stockholders recognizing gain
or loss with respect to each share of Spire Common Stock or Spire Systems
Common Stock surrendered equal to the difference between the holder's basis
in such surrendered share and the fair market
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value, as of the Effective Time, of the share of Amacan Common Stock received
in exchange therefor. In such event, a stockholder's aggregate basis in the
Amacan Common Stock so received would equal its fair market value and the
stockholder's holding period for such stock would begin the day after the
Share Exchange.
The Exchange Agreement also provides that the Company
will substitute options to purchase shares of Amacan Common Stock for each
and every outstanding employee stock option for shares of Spire Common Stock
issued pursuant to the Spire Option Plan. See "THE EXCHANGE AGREEMENT
- --Stock Option Plans."
THE EXCHANGE AGREEMENT
The following information with respect to the Exchange
Agreement is qualified in its entirety by reference to the complete text of
the Exchange Agreement, a copy of which is attached to this Information
Statement as Exhibit A and incorporated by reference herein.
EFFECTIVE DATE AND TIME OF THE SHARE EXCHANGE
The Share Exchange will become effective upon
confirmation of the filing of the Articles of Exchange with the Division of
Corporations. The Articles of Exchange are expected to be filed as soon as
practicable after the satisfaction or waiver of each of the conditions to
consummation of the Share Exchange, which is expected to occur as soon as
practicable following receipt of stockholder approval at the Special Meeting.
See " -- Conditions to the Share Exchange" and " -- Termination."
REPRESENTATIONS AND WARRANTIES
Under the Exchange Agreement, the Company, the Spire
Companies and the Spire Stockholders have made a number of representations
and warranties which are customary for transactions of this nature. The
Company has represented and warranted, among other things, as to its due
organization, its possession of the authority necessary to enter into the
Exchange Agreement and consummate the Share Exchange, its capitalization, its
financial condition, its compliance with governmental laws and regulations,
the absence of material litigation, the absence of defaults under material
orders, judgments, agreements, licenses and the like, and the absence of
material adverse changes in the Company's business since October 31, 1995.
It is a condition to the obligations of the Spire Companies to consummate the
Share Exchange that the Company's representations and warranties be true and
correct in all material respects as of the date of the execution of the
Exchange Agreement and the Closing Date.
The Spire Companies have made similar representations and
warranties as to their due organization, their possession of the authority
necessary to enter into the Exchange Agreement and to consummate the Share
Exchange, their capitalization, their financial condition, their compliance
with governmental laws and regulations, the absence of material litigation,
the absence of defaults under material orders, judgments, agreements,
licenses and the like, and the absence of material adverse changes in their
businesses since October 31, 1995. It is a condition of the obligations of
the Company to consummate the Share Exchange that the representations and
warranties of the Spire Companies be true and correct in all material
respects as of the date of the execution of the Exchange Agreement and the
Closing Date.
The Spire Stockholders have made a series of
representations and warranties relating to their acquisition of the shares of
Amacan Common Stock in the Share Exchange. These representations and
warranties are intended to assure the Company of the suitability of the
Amacan Common Stock for investment by the Spire Stockholders, the ability of
the Spire Stockholders to assess the risks associated with the Share Exchange
and the intentions of the Spire Stockholders to hold the shares of Amacan
Common Stock to be obtained in the Share Exchange for investment purposes,
without a present view to distribute such shares.
CONDITIONS TO THE SHARE EXCHANGE
The obligations of the Company, Spire and Spire Systems
to consummate the Share Exchange are subject to the satisfaction or waiver of
various conditions contained in Articles VII and VIII of the Exchange
Agreement, including: (i) approval and adoption of the Exchange Agreement and
the Share Exchange by the stockholders of the Company, Spire and Spire
Systems; (ii) confirmation that none of the stockholders of the Company,
Spire or Spire
21
<PAGE>
Systems has elected to exercise dissenters' rights under the Utah Act; (iii)
receipt by the Company and the Spire Companies of legal opinions from counsel
to the other party in form and substance customary for transactions such as
the Share Exchange; and (iv) other customary closing conditions, including
without limitation, the truthfulness and accuracy of the parties' respective
representations and warranties, the absence of any material adverse change in
the business condition of the respective parties, the confirmation that the
consummation of the Share Exchange and the transactions contemplated thereby
will not violate any law or regulation and will not result in the creation of
any lien or encumbrance on the respective properties of the Company, Spire
and Spire Systems, the receipt of all material third-party consents and
approvals, and the absence of any litigation which would have a material
adverse effect on the business condition of the respective parties.
CERTAIN COVENANTS
Under the Exchange Agreement, the Company and the Spire
Companies have agreed to carry on their respective businesses in the same
manner as conducted prior to the execution of the Exchange Agreement, to
maintain existing or comparable insurance coverages, to perform their
obligations under material contracts, leases and instruments relating to
their respective business conditions and not to take certain actions
(including changing their articles of incorporation or bylaws, paying
dividends, entering into material transactions, modifying management
compensation, incurring indebtedness, selling or disposing of certain assets
and similar actions) without the prior written approval of the other parties.
The Company and the Spire Companies have also agreed to take other customary
actions to facilitate the consummation of the Share Exchange.
STOCK OPTION PLANS
Under the Share Exchange, the Company will substitute
options (the "Substitute Options") to purchase shares of Amacan Common Stock
pursuant to the Amacan Option Plan for each outstanding employee stock option
to purchase shares of Spire Common Stock issued pursuant to the Spire Option
Plan (a "Spire Option") and will reserve for issuance upon the exercise of
such Substitute Options not less than 650,000 shares of Amacan Common Stock.
Each Substitute Option will provide former Spire Option holders the right to
purchase an aggregate of 35.4786 shares of Amacan Common Stock for each share
of Spire Common Stock subject to the Spire Option prior to the consummation
of the Share Exchange. Each Substitute Option shall continue to be
outstanding on the same terms and conditions as a Spire Option, except that
(i) it will be exercisable for a number of whole shares of Amacan Common
Stock equal to the number of shares of Spire Common Stock subject to such
Spire Option immediately prior to the Closing, multiplied by the exchange
ratio set forth above, and rounded to the nearest whole number, and (ii) the
per share exercise price for shares of Amacan Common Stock issuable upon the
exercise of a Substitute Option will be equal to the per share exercise price
under the corresponding Spire Option divided by the exchange ratio, and
rounded to the nearest whole cent. The exchange of Substitute Options for
Spire Options, as described above, will occur automatically at the Effective
Time without further action on the part of the holders of Spire Options. The
right to receive a Substitute Option may not be assigned or transferred in
any manner except by operation of law, by will or by the laws of descent.
Any attempt to assign or transfer a Substitute Option shall be void and of no
force or effect.
To facilitate the substitution of the Substitute Options,
among other reasons, the Board has approved, and will submit to the
stockholders of the Company for approval at the Special Meeting, the Amacan
Option Plan. If the Share Exchange and the adoption of the Amacan Option
Plan are approved by the stockholders of the Company at the Special Meeting,
the Company will exchange the Substitute Options for the Spire Options and
the holders of the Substitute Options will participate in the Amacan Option
Plan. See "ADOPTION OF AMACAN OPTION PLAN."
TERMINATION
The Exchange Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of the Company, (i) by mutual agreement of the Company and the
Spire Companies; (ii) by the Company, Spire or Spire Systems, if the Share
Exchange shall not have been consummated on or before April 15, 1996 or such
later date as approved by the Company and the Spire Companies (provided,
however, that the Company and the Spire Companies have agreed to extend such
termination date until April 30, 1996); (iii) by the Company if Spire or
Spire Systems shall fail to comply in any material respect with any covenant
or agreement contained in the Exchange Agreement or if any of the
representations or warranties of Spire or Spire Systems shall be inaccurate
in any material respect; and (iv) by the Spire Companies if the Company shall
fail to comply in any
22
<PAGE>
material respect with any covenant or agreement contained in the Exchange
Agreement or if any of the representations or warranties of the Company shall
be inaccurate in any material respect. See " -- Conditions to the Share
Exchange" and " -- Certain Covenants."
RISK FACTORS
In addition to the other information provided in this
Information Statement, the following factors should be considered carefully
in evaluating the terms of the Exchange Agreement and the Share Exchange.
RELIANCE ON SUPPLIERS/TERMINATION OF AGREEMENTS
The Spire Companies are solely dependent on Digital
Equipment Corporation ("Digital" or "DEC") and authorized distributors of
Digital products for their supply of hardware. In addition, the Spire
Companies obtain and resell software from various third-party vendors, many
of whom are the Spire Companies' sole source for such software. Over 70% of
the combined revenues of the Spire Companies are derived from products they
obtain from three suppliers, Digital, Novell, Inc. ("Novell") and Lotus
Development Corporation ("Lotus"). If one of the third-party vendors of such
hardware or software products became unavailable, the Spire Companies would
be required to seek other sources for alternative products. There can be no
assurance that the Spire Companies would be able to obtain competitive and
alternate sources of supply for such products. The failure of such suppliers
to deliver such items on a timely basis, or the requirement of the Spire
Companies to obtain replacement products for unavailable suppliers, could
adversely affect the operating results of the Spire Companies until
alternative sources of supply, if any, could be arranged. Should these
suppliers select a different distribution channel or fail to renew existing
distribution agreements with the Spire Companies, the profitability and
ability of the Spire Companies to continue in business could be significantly
compromised.
These suppliers could fail to supply hardware or software
to the Spire Companies for many reasons, including but not limited to the
following:
- The supplier could go out of business or sell
its product line;
- The supplier could change its distribution
methods and channels and cancel agreements with
third parties such as the Spire Companies or
otherwise fail to renew the agreement with the
Spire Companies;
- The supplier could increase its product price
to the Spire Companies thereby adversely
affecting profit margins for such products and
the desire of the Spire Companies to continue
to represent such products; or
- The Spire Companies could fail to meet
performance quotas or other standards contained
in certain of their agreements with suppliers,
resulting in termination of the agreements.
Many of the agreements between the Spire Companies and
third-party suppliers are verbal agreements and have not been reduced to
writing.
CHANGING MARKET
The market for computer products and services is
continually changing. The Spire Companies anticipate that the market for
office automation products on server applications will decrease as those
functions move to desk-top computers. Spire management has identified the
markets for UNIX and Windows NT operating systems as promising growth
potential for the Spire Companies; however, such potential is not yet proven
and may not evolve or prove sufficiently profitable. Spire management
anticipates that there will be significant competition for products in the
Windows NT market, resulting in lower margins.
COMPETITION
The market for computer products is competitive, evolving
and subject to rapid technological change. Many of the current and potential
competitors of the Spire Companies have longer operating histories, greater
name
23
<PAGE>
recognition, larger installed customer bases, and significantly greater
financial, technical and marketing resources than the Spire Companies.
The methods of competition in the computer products
industry include marketing, product performance, price, service, technology
and compliance with various industry standards, among others. It is possible
for companies to be at various times competitors, customers and collaborators
of the Spire Companies in different markets. There can be no assurance that
additional products will not be developed in competition with those sold by
the Spire Companies. If developed, such products may be more effective than
those sold by the Spire Companies. Although the Spire Companies continue to
seek new products to complement their existing product lines and, as
necessary, to replace existing products with newer and better products, there
can be no assurance that the Spire Companies will be able to do so.
DEPENDENCE ON KEY PERSONNEL
The success of the Spire Companies depends, in large
part, on their ability to attract and retain highly-qualified scientific,
technical, managerial and marketing personnel. The Spire Companies have not
entered into employment agreements that require the services of their key
personnel to remain with the Spire Companies for any specified period of
time. The loss of the current key personnel of the Spire Companies could
have a material adverse effect on the Spire Companies. Competition for such
personnel is intense, and there can be no assurance that the Spire Companies
will be able to attract and maintain all personnel necessary for the
development and operation of their business. The loss of the services of key
personnel or an inability to attract, retain and motivate qualified personnel
could have a material adverse effect on the business, financial condition and
results of operations of the Spire Companies.
MARKETING
The Spire Companies market their products and services
through a direct sales force of 30 persons operating from locations in Utah
and North Carolina. In addition, arrangements with third parties, including
hardware manufacturers, software developers, resellers and authorized
distributors, are becoming an increasingly important part of the Spire
Companies' focus on providing solutions to their customers and expanding
distribution of their products and services through indirect channels
domestically and internationally. The loss of services of certain of such
third-party distributors or resellers could have a material adverse effect on
the business, financial condition and results of operations of the Spire
Companies.
COLLECTION OF ACCOUNTS
The Spire Companies' business of selling hardware and
software products involves certain account collection risks. In the event a
hardware purchaser defaults on its payment obligation, the Spire Companies
would file a credit insurance claim; however, the insurer may deny coverage
or otherwise fail to pay. With respect to software sales, a customer who has
ordered and received software from the Spire Companies may fail to pay timely
for the software, thus creating a collection problem for the Spire Companies.
In addition, a distributor may default in timely payment of amounts owing to
the Spire Companies.
INTEGRATION OF OPERATIONS
Negotiation of the Exchange Agreement and the terms of
the Share Exchange has required significant management resources of the
Company and the Spire Companies. If consummated, the Share Exchange will
require additional management time and resources to integrate the operations
of the three entities and may disrupt the business operations of the combined
company (including the existing business and operations of the Spire
Companies). The industry and business of the Spire Companies are unrelated
to the industry and business of the Company. The current officers and
directors of the Spire Companies have no experience in the oil and gas
industry and will depend heavily on outside advisors with respect to
decisions involving the Company's existing oil and gas interests. The
integration and consolidation of the operations of the Company and the Spire
Companies could have a material adverse effect on the operating results of
the combined companies for a period following the Share Exchange.
Furthermore, pursuant to provisions of the Code, the Company will be limited
in its ability to apply any carryforwards of pre-exchange net operating
losses, unused general business credits, corporate minimum tax credits or
capital loss carryovers against the post-exchange income of the Company from
its non-oil and gas operations.
24
<PAGE>
CAPITAL REQUIREMENTS
The Spire Companies plan to evaluate opportunities for
the license or acquisition of additional software products as well as the
possible acquisition of, or development of strategic relations with, other
companies who may have products or distribution channels that are compatible
with the business objectives of the Spire Companies. In the event the Spire
Companies elect to pursue such opportunities, additional capital in the form
of equity or debt will likely be required. There can be no assurance that
capital sought by the Spire Companies to pursue such opportunities can be
obtained on terms favorable to the Spire Companies, if at all. The failure
of the Spire Companies to obtain such financing could restrict their ability
to pursue the business opportunities described above.
DILUTION AND CONCENTRATION OF SHARE OWNERSHIP
Following the consummation of the Share Exchange, holders
of Amacan Common Stock prior to the Effective Time will hold approximately
10% of the issued and outstanding capital stock of the post-exchange Company.
This reduction of proportionate share ownership from 100% to approximately
10% represents a significant and substantial reduction in the relative equity
interests of the pre-exchange holders of the Amacan Common Stock and their
corresponding voting rights and rights with respect to the earnings and
assets of the Company. Furthermore, after the Effective Time, the Spire
Stockholders will own approximately 90% of the issued and outstanding Common
Stock of the Company. As a result, the Spire Stockholders will possess
effective voting power as a group to elect all of the Company's directors, to
approve or veto matters requiring stockholder approval and to control the
management and affairs of the Company. Such concentration of ownership may
have the effect of delaying, deferring or preventing a change in control or
management of the Company. See "THE SHARE EXCHANGE -- Exchange of Shares,"
"MANAGEMENT OF THE SPIRE COMPANIES -- Executive Officers, Key Employees and
Directors" and "VOTING SECURITIES OF THE SPIRE COMPANIES AND PRINCIPAL
HOLDERS THEREOF."
25
<PAGE>
AMACAN COMMON STOCK AND DIVIDEND POLICY
The Amacan Common Stock is traded in the United States
over-the-counter market maintained by the NASD under the symbol "ANRP." From
May 1, 1995 through March 25, 1996, the high and low bid prices for the
Amacan Common Stock in the over-the-counter market, as reported by the
National Quotation Bureau, Inc. (the "NQB"), have been $.50 and $.03125,
respectively. On January 23, 1996 the last day prior to the public
announcement of the proposed Share Exchange, the high and low bid prices for
the Amacan Common Stock, as reported by NQB, were $.10 and $.03125,
respectively. These prices reflect interdealer quotations without retail
markup, markdown or commissions and do not necessarily represent actual
transactions.
On the Record Date, the Company had 2,723,714 shares of
Amacan Common Stock outstanding, held by approximately 387 holders of record
(including brokers and nominees holding shares of Amacan Common Stock for
multiple customers). Approximately 1,202,500 of the 2,723,714 shares of
Amacan Common Stock issued and outstanding as of the Record Date are
"restricted securities," as that term is defined under Rule 144. All of the
restricted shares are currently eligible for sale in reliance upon Rule 144,
subject to certain volume and resale restrictions.
The shares of Amacan Common Stock proposed to be issued
in connection with the Share Exchange will not be registered under the
Securities Act, and thus will be restricted securities. Restricted
securities may not be resold unless they are registered under the Securities
Act or sold pursuant to an applicable exemption from registration. Each
certificate representing Amacan Common Stock issued in the Share Exchange
will bear a legend respecting such restrictions on transfer.
The Company has never declared or paid dividends on the
Amacan Common Stock. Payment of dividends will be within the discretion of
the Company's Board of Directors and will depend, among other factors, on
earnings, capital requirements and the operating and financial condition of
the Company. At the present time the Company intends to retain any future
earnings for use in its business and therefore does not anticipate paying any
dividends on Amacan Common Stock in the foreseeable future.
The Share Exchange will not change the rights of the
existing holders of shares of Amacan Common Stock, except by diminishing
their percentage equity interest in the Company. Based solely on the number
of shares of Amacan Common Stock and the number of shares of Spire Common
Stock and Spire Systems Common Stock outstanding prior to the Share Exchange,
and assuming no exercise of options for, or conversion of securities into,
Amacan Common Stock, Spire Common Stock or Spire Systems Common Stock, the
Company will have approximately 3,891,000 shares of Amacan Common Stock
outstanding after the Share Exchange.
SPIRE AND SPIRE SYSTEMS COMMON STOCK AND DIVIDEND POLICY
Shares of the Spire Common Stock and Spire Systems Common
Stock are not publicly traded and no public market exists therefor. As of
January 23, 1996, there were 87,386 shares of Spire Common Stock outstanding,
held by six holders of record and 100,000 shares of Spire Systems Common
Stock outstanding, held by five holders of record.
Dividends are payable on the Spire Common Stock and Spire
Systems Common Stock when, as and if declared by the Boards of Directors of
Spire and Spire Systems, respectively. The Spire Companies have never
declared or paid dividends on the Spire Common Stock or the Spire Systems
Common Stock. Upon consummation of the Share Exchange, the Company will
become the sole stockholder of the Spire Companies. Any dividends paid by
either of the Spire Companies will be paid solely to the Company. Existing
holders of the Spire Common Stock and Spire Systems Common Stock will not be
entitled to receive dividends or any other distributions from the Spire
Companies.
26
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined
financial statements show the acquisition by the Company of all the
outstanding shares of the common stock of the Spire Companies as contemplated
under the Exchange Agreement. The following statements have been prepared
using the historical financial statements of the Company, and the historical
financial statements of the Spire Companies, and should be read in
conjunction with the Consolidated Financial Statements and related notes of
the Company and the Combined Financial Statements and related notes of the
Spire Companies attached hereto as Exhibits B and C, respectively. The pro
forma financial information reflects the adjustments that will result from
the Share Exchange as if it had occurred as of the beginning of the periods
presented with respect to pro forma statements of operations data and as of
the balance sheet date with respect to pro forma balance sheet data. The pro
forma financial data is provided for analysis purposes only and does not
purport to indicate the results which actually would have been obtained if
the Share Exchange had been effected on the dates indicated, or of the
results which may be obtained in the future.
Because the Spire Stockholders will hold the controlling
interest in the combined entity, the Share Exchange is shown as a reverse
acquisition in which the Spire Companies acquire the Company.
The pro forma financial information is based on the
purchase method of accounting for the Share Exchange. The pro forma
adjustments are described in the accompanying notes to the unaudited pro
forma condensed combined financial statements. The unaudited pro forma
condensed combined financial statements of income combine the results for the
nine months ended January 31, 1996, and for the year ended April 30, 1995.
The unaudited pro forma condensed combined balance sheets show the combined
positions as of January 31, 1996.
27
<PAGE>
AMACAN AND SPIRE COMPANIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
JANUARY 31, 1996
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
-------------------------------------------------------------
AMACAN SPIRE ADJUSTMENTS COMBINED
COMPANIES
-------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 56,523 $ 1,285,511 $ $ 1,342,034
Investments --certificates of
deposit 454,119 -- 454,119
Accounts receivable 13,281 2,528,569 2,541,850
Other current assets -- 18,294 18,294
Deferred tax asset -- 11,310 11,310
--------- ----------- ------------- ------------
Total current assets 523,923 3,843,684 4,367,607
--------- ----------- ------------- ------------
Net property and equipment -- 484,320 484,320
Interest in oil and gas properties,
and equipment 224,213 -- (224,213)(3) --
--------- ----------- ------------- ------------
$ 748,136 $ 4,328,004 $ (224,213) $ 4,851,927
--------- ----------- ------------- ------------
--------- ----------- ------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to bank $ -- $ 3,722 $ $ 3,722
Current portion of long--term
debt -- 7,560 7,560
Accounts payable and
accrued expenses 78,584 1,910,843 1,989,427
Income taxes payable -- 384,073 384,073
Deferred maintenance
revenue -- 853,946 853,946
--------- ----------- ------------- ------------
Total current liabilities 78,584 3,160,144 3,238,728
Long--term liabilities:
Debt, excluding current
portion -- 217,682 217,682
Deferred tax liability -- 45,549 45,549
Deferred compensation 15,150 -- 15,150
Total long--term liabilities 15,150 263,231 278,381
Stockholders' equity:
Common stock 680,929 2,000 289,817 (1) 972,746
Additional paid--in capital 89,504 73,200 (162,704)(1) --
Treasury stock -- (126,140) 126,140 (2) --
Retained earnings (deficit) (116,031) 955,569 (477,466)(3) 362,072
--------- ----------- ------------- ------------
Net stockholders' equity 654,402 904,629 (224,213) 1,334,818
--------- ----------- ------------- ------------
$ 748,136 $4,328,004 $ (224,213) $ 4,851,927
--------- ----------- ------------- ------------
--------- ----------- ------------- ------------
</TABLE>
28
<PAGE>
AMACAN AND SPIRE COMPANIES
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENTS
NINE MONTHS ENDED JANUARY 31, 1996
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
-------------------------------------------------------------
AMACAN SPIRE ADJUSTMENTS COMBINED
COMPANIES
-------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Software licenses and
maintenance $ -- $ 6,018,605 $ $ 6,018,605
Hardware sales and service -- 4,553,858 4,553,858
Oil and gas sales 108,850 -- 108,850
----------- ----------- ------------- -----------
Total revenues 108,850 10,572,463 10,681,313
COST OF SALES:
Software licenses and
maintenance -- 2,605,631 2,605,631
Hardware sales and service -- 3,958,663 3,958,663
Oil and gas sales 71,084 -- (28,071)(3) 43,013
----------- ----------- ------------- -----------
Total cost of sales 71,084 6,564,294 (28,071) 6,607,307
----------- ----------- ------------- -----------
Gross profit 37,766 4,008,169 28,071 4,074,006
Selling, general, and
administrative expenses 109,498 3,405,747 3,515,245
Income (loss) from
operations (71,732) 602,422 28,071 558,761
----------- ----------- ------------- -----------
Other income 17,434 6,956 24,390
----------- ----------- ------------- -----------
Income (loss) before income
taxes (54,298) 609,378 28,071 583,151
Income tax expense 903 237,693 4,571 243,167
----------- ----------- ------------- -----------
Net income (loss) $ (55,201) $ 371,685 $ 23,500 $ 339,984
----------- ----------- ------------- -----------
----------- ----------- ------------- -----------
Net income (loss) per
common share $ (0.02) $2.03 $0.09
----------- ----------- ----------
----------- ----------- ----------
</TABLE>
29
<PAGE>
AMACAN AND SPIRE COMPANIES
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENTS
YEAR ENDED APRIL 30, 1995
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
-------------------------------------------------------------
AMACAN SPIRE ADJUSTMENTS COMBINED
COMPANIES
-------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Software licenses and
maintenance $ -- $ 5,356,572 $ $ 5,356,572
Hardware sales and service -- 4,318,111 4,318,111
Oil and gas sales 187,533 -- 187,533
------------ ----------- ------------- -----------
Total revenues 187,533 9,674,683 9,862,216
COST OF SALES:
Software licenses and
maintenance -- 2,879,943 2,879,943
Hardware sales and service -- 3,734,132 3,734,132
Oil and gas sales 130,141 -- (45,506)(3) 84,635
------------ ----------- ------------- -----------
Total cost of sales 130,141 6,614,075 (45,506) 6,698,710
------------ ----------- ------------- -----------
Gross profit 57,392 3,060,608 45,506 3,163,506
Selling, general, and
administrative expenses 61,808 2,927,081 2,988,889
Income from operations (4,416) 133,527 45,506 174,617
------------ ----------- ------------- -----------
Other income (expense) (5,767) 11,696 5,929
Income (loss) before income
taxes (10,183) 145,223 45,506 180,546
Income tax expense 1,199 46,488 5,601 53,288
------------ ----------- ------------- -----------
Net income (loss) $ (11,382) $ 98,735 $ 39,905 $ 127,258
------------ ----------- ------------- -----------
------------ ----------- ------------- -----------
Net income (loss) per
common share $ (0.00) $0.54 $0.04
------------ ----------- ------------
------------ ----------- ------------
</TABLE>
30
<PAGE>
NOTES TO AMACAN AND SPIRE COMPANIES
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. The pro forma combined common stock as of January 31, 1996 is adjusted to
reflect the recapitalization through the Amacan one-for-seven reverse stock
split, resulting in 389,102 shares of Amacan Common Stock outstanding, with
par value remaining at $0.25 and the subsequent issuance of 3,501,883
shares of Amacan Common Stock in exchange for all issued shares of the
Spire Common Stock and Spire Systems Common Stock. This results in an
increase in common stock of $289,817 as follows:
Total common shares outstanding. . . . . . . . . . . . 3,890,985
Par value of $.25. . . . . . . . . . . . . . . . . . . $0.25
----------
$ 972,746
----------
Less balance of common stock issued prior to merger. . $ 682,929
----------
$ 289,817
----------
----------
Additional paid-in capital is reduced by the $289,817
resulting in negative additional paid-in capital of
$127,113 which is charged to retained earnings to
eliminate the negative balance.
2. The Spire Companies' treasury stock in the amount of
$126,140 is cancelled in connection with the Share
Exchange and is charged to retained earnings because
there is no remaining additional paid-in capital.
3. Because the estimated fair market value of the Amacan
Common Stock at the date the Exchange Agreement was
signed and announced to the public (based on the number
of shares of Amacan Common Stock outstanding
(2,723,714) multiplied by the average of the bid and
ask price $.07 of the common stock on that date), is
less than the recorded value of its current assets, net
of total liabilities, the Company's interest in oil and
gas properties, and equipment of $224,213 as of January
31, 1996, has been reduced to zero, with an offset to
retained earnings. Related historical amortization and
depreciation for each period has been eliminated in the
pro forma condensed combined income statements.
The net adjustment to retained earnings is summarized as follows:
Elimination of negative balance in additional paid-in
capital . . . . . . . . . . . . . . . . . . . . . . . . . $ 127,113
Elimination of treasury stock. . . . . . . . . . . . . . . . . 126,140
Write off of net property and equipment, and oil and gas
properties of Amacan . . . . . . . . . . . . . . . . . . . 224,213
----------
$ 477,466
----------
----------
31
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF THE COMPANY
RESULTS OF OPERATIONS
NINE MONTHS ENDED JANUARY 31, 1996 COMPARED TO NINE MONTHS ENDED
JANUARY 31, 1995
During the nine months ended January 31, 1996, the
Company reported a net loss of $55,201 compared with a net loss of $2,854 for
the comparable nine months of 1995.
REVENUES. Oil and gas revenues decreased from $142,944
to $108,850, primarily because of decreased production of the oil and gas
reserves in which the Company holds an interest. Interest income increased
from $14,922 to $17,434, due to increased principal amounts for investments
in certificates of deposit.
COSTS AND EXPENSES. Depreciation and depletion decreased
from $38,091 to $28,071, because of decreased production of the Company's oil
and gas reserves on which depreciation and depletion cost is based. Operating
costs did not materially differ from the comparable nine months of 1995.
Selling, general and administrative expenses increased during the nine months
ended January 31, 1996 from $78,101 to $109,498 primarily due to increased
professional and accounting fees incurred in connection with the Share
Exchange compared with the same period of 1995.
FISCAL 1995 COMPARED TO FISCAL 1994
Revenues from the Company's participation in oil and gas
production decreased in fiscal 1995 compared to fiscal 1994 reflecting a
decrease in production of both oil and gas. The Company incurred a net loss
of $11,382 in 1995 compared to a net loss of $51,816 in fiscal 1994. In
addition to the decrease in oil and gas production, the Company's results of
operations in 1995 were adversely affected by a writeoff of its interest in a
limited partnership amounting to $15,333. The loss in fiscal 1994 was
attributable to a decline in oil prices and to increases in production costs
and in general and administrative expenses relating to a modification to a
deferred compensation agreement for the Company's retiring President.
In May 1994, Russell G. Holley retired as President of
the Company and Tad M. Ballantyne was appointed as President. The Board
instructed Mr. Ballantyne, whose background is in acquisitions and management
of manufacturing companies, to seek out and evaluate business opportunities
which would allow the Company to diversify its business. The Exchange
Agreement and the Share Exchange are the result of the Board's efforts in
actively seeking and evaluating such opportunities on behalf of the Company.
Apart from the Exchange Agreement and the Share Exchange, there are presently
no arrangements, understandings, commitments or agreements for the Company to
engage in any new business.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity is provided by revenue from
participation in oil and gas operations, and historically by long-term debt
provided by bank loans, and issues of capital stock. The Company has during
the nine months ended January 31, 1996 been able to generate sufficient cash
to pay for its share of expenses associated with production of the Company's
interest in oil and gas reserves.
The Company anticipates that its oil and gas operations
during the 1996 fiscal year can be adequately financed through its share of
revenues from such operations. The Company has actively sought to diversify
its business and has evaluated opportunities unrelated to oil and gas
production. The Company's negotiation of the Share Exchange and execution of
the Exchange Agreement resulted from the Company's pursuit of such
opportunities. The Company has no long term commitments for capital
expenditures.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF THE SPIRE COMPANIES
OVERVIEW
The Spire Companies resell Digital's network computer
systems and components on a value added basis, develop and sell office
automation software products, act as "service and value added resellers" and
distributors of software developed by third parties and develop and implement
client/server solutions for open computing environments. The Spire Companies
offer a wide range of desktop, client/server and production systems and
related components, peripheral equipment, software and services used in a
wide variety of applications, industries and computing environments. The
Spire Companies have entered into strategic partner arrangements with Lotus
and Novell, Inc., two major application software manufacturers, and DEC, a
major hardware manufacturer.
Historically, the Spire Companies have focused their
efforts toward marketing software products operating on the OpenVMS operating
system that runs on Digital's VAX systems. The Spire Companies are expanding
their distribution formula to include software products that operate in the
growing UNIX operating system marketplace and have recently started to market
a third-party product known in the industry as a "firewall," which is
designed to protect an organization's computer network from access by
unauthorized users. The Spire Companies have also recently expanded their
services to include systems configuration, and hardware and software sales in
support of Digital's new 64-bit Alpha computer platforms.
As part of the ongoing efforts of the Spire Companies to
support their customers' needs in the areas of training, support and system
configuration, the Spire Companies offer an annual maintenance agreement.
This allows customer access to the technical resources and support personnel
at the Spire Companies, including automatic product upgrades, "bug fixing"
and system configuration consulting.
During the past fiscal year, the combined revenues of the
Spire Companies from these various activities were broken down as follows:
OpenVMS software sales 44% of revenues
System configuration and hardware sales 36% of revenues
Technical support and maintenance service 17% of revenues
UNIX platform software sales and access protection 3% of revenues
Spire management expects that during 1996, revenues from
the sale of UNIX platform products, security products and management and
performance product lines will grow faster as a percentage of revenues than
other products and services offered by the Spire Companies. In particular,
Spire management believes the rate of revenue growth for office automation
product sales will be slower than in the past.
No single market sector represents a dominant portion of
the Spire Companies' revenues, with governmental and educational institutions
representing approximately 32% of combined revenues and small to large
corporations representing the remaining 68%. No single customer represents
more than ten percent of the combined revenues of the Spire Companies.
Like other "value added resellers" and distributors, the
Spire Companies rely on their vendors and suppliers of software and hardware
products for their ongoing product lines. Over 70 percent of the combined
revenues of the Spire Companies are derived from products they obtain from
DEC, Novell and Lotus. Should these suppliers select a different
distribution channel or fail to renew existing distribution agreements with
the Spire Companies, the profitability and ability of the Spire Companies to
continue in business could be significantly compromised. The Spire Companies
are expanding their product lines in an effort to reduce this risk; however,
the business of the Spire Companies will continue to be dependent on vendors'
selection of this particular channel of distribution for their product.
The Spire Companies sell their products through a direct
sales force of 30 representatives in the United States, and through a number
of third-party distributors in Europe and Australia.
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<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods
indicated, selected Statement of Operations data and other selected financial
information of the Spire Companies, expressed in dollars and as a percentage
of combined revenues.
<TABLE>
<CAPTION>
(Unaudited) (Unaudited) Year Ended Year Ended
Nine Months Ended Nine Months Ended April 30, April 30,
January 31, 1996 January 31, 1995 1995 1994
-------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Summary Statement
of Operations:
Revenues $10,572,463 100 % $7,186,905 100 % $9,674,683 100 % $6,043,411 100 %
Cost of Sales 6,564,294 62 % 5,071,706 71 % 6,614,075 68 % 3,967,029 66 %
------------ --------- --------- ----------
Gross Profit 4,008,169 38 % 2,115,199 29 % 3,060,608 32 % 2,076,382 34 %
Selling,general, and
administrative expenses 3,405,747 32 % 2,053,560 28 % 2,927,081 30 % 2,032,513 34 %
------------ --------- --------- ----------
Income from
operations 602,422 6 % 61,639 1 % 133,527 1 % 43,869 1 %
Other income (expense) 6,956 0 % 12,766 0 % 11,696 0 % (16,075) 0 %
------------ --------- --------- ----------
Income before
income taxes 609,378 6 % 74,405 1 % 145,223 2 % 27,164 0 %
Income tax expense 237,693 2 % 29,762 0 % 46,488 0 % 8,931 0 %
------------ --------- --------- ----------
Net income $371,685 4 % $44,643 1 % $98,735 1 % $18,233 0 %
------------ --------- --------- ----------
------------ --------- --------- ----------
Net income per
common share $2.03 0.24 0.54 0.10
------------ --------- --------- ----------
------------ --------- --------- ----------
SUMMARY BALANCE
SHEET:
Cash $1,285,511 30 % $209,731 7 % $766,247 27 % $493,460 27 %
Other current assets 2,558,173 59 % 2,408,900 80 % 1,581,399 56 % 932,993 51 %
Fixed assets, net of
accumulated depreciation 484,320 11 % 389,463 13 % 468,211 17 % 394,872 22 %
------------ --------- --------- ----------
Total assets $4,328,004 100 % $3,008,094 100 % $2,815,857 100 % $1,821,325 100 %
------------ --------- --------- ----------
------------ --------- --------- ----------
Total current liabilities $3,160,144 73 % 2,381,813 79 % 2,164,378 77 % 1,182,880 65 %
Total long--term
liabilities 263,231 6 % 257,079 9 % 228,185 8 % 313,886 17 %
Total stockholders'
equity 904,629 21 % 369,202 12 % 423,294 15 % 324,559 18 %
------------ --------- --------- ----------
Total liabilities and
stockholders' equity $4,328,004 100 % $3,008,094 100 % $2,815,857 100 % $1,821,325 100 %
------------ --------- --------- ----------
------------ --------- --------- ----------
</TABLE>
NINE MONTHS ENDED JANUARY 31, 1996 COMPARED TO NINE MONTHS ENDED
JANUARY 31, 1995
REVENUES. Revenues increased 47% from $7,186,905 for the
nine months ended January 31, 1995 to $10,572,463 for the nine months ended
January 31, 1996. The Spire Companies continued to expand their product
offerings into new software lines and increased their distribution channels
to include international third party
34
<PAGE>
distributors, in addition to expanding their domestic direct sales team. The
Spire Companies also expanded their product sales into the UNIX and Windows
NT operating systems market niches.
GROSS PROFIT. Gross profit as a percent age of revenues
was 29% and 38% for the nine months ended January 31, 1995 and 1996,
respectively. During these periods, costs generally remained stable. The
increased margin percentage is attributable primarily to two factors. First,
the new product lines are more technical in nature, less competitive and
therefore carry a higher gross margin, and second, the "fixed cost" portion
of "Cost-of-sales" was spread over a larger sales base and therefore
represented a smaller percentage of sales.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling,
general and administrative expenses increased from 28% to 32% of revenues for
the nine months ended January 31, 1995 compared to the nine months ended
January 31, 1996. The Spire Companies are expanding their sales staffs,
which entails increased training expense, time and effort. In addition, the
Spire Companies continued to expand international distribution channels which
are more costly to administer than the historic domestic direct sales team.
RESEARCH AND DEVELOPMENT. The Spire Companies incurred
nominal research and development costs during the nine months ended January
31, 1995 and 1996. The additional product lines and the ongoing efforts of
the Spire Companies to upgrade their present product lines will likely result
in increased research and development costs in future periods.
OTHER INCOME. Other income consists primarily of
interest income and interest expense. This expense category was
insignificant when compared to other income and expense items. Interest
expense for the nine months ended January 31, 1995 and 1996 was $22,713 and
$16,418, respectively.
FISCAL 1995 COMPARED TO FISCAL 1994
REVENUES. Revenues increased 60% from $6,043,411 for the
year ended April 30, 1994 to $9,674,683 for the year ended April 30, 1995.
This growth in revenues is primarily the result of increases in volume of the
Company's historic line of products, the Company's expanded market presence
and its entrance into the UNIX and Windows NT software market niche. During
the period ending April 30, 1995, the Company expanded its direct sales force
along with expanding its relationship with additional third party
distributors. The Company also expanded its product line to include Network
Management and Performance software tools which operate on the UNIX and
Windows NT operating systems platforms. Product pricing and sales margins
remained relatively stable during these periods. The Company is continuing
to expand its direct sales staff and its indirect distribution channel.
GROSS PROFIT. Gross profit as a percentage of revenues
was 34% and 32% for the years ended April 30, 1994 and 1995, respectively.
This increase resulted primarily from a larger volume of products shipped
spread over fixed costs which remained more constant and the sales of the new
lines of products which have better cost margins than the historic product
lines. There is no guarantee that gross operating margins can be maintained
at this level in the future. Competition in the Spire Companies' industry
remains very high and plays a significant role in determining the margins
that the Spire Companies are able to maintain.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling,
general and administrative expenses decreased from 34% of revenues for the
year ended April 30, 1994 to 30% of revenues for the year ended April 30,
1995. These changes resulted primarily from the timing of the Spire
Companies' sales staff expansion and the growth of the Spire Companies'
marketing budget, compared to the level of sales volume during any given
period. In November 1995, due principally to an increased number of product
lines and an expanding customer base, the Spire Companies began increasing
the number of internal direct sales personnel. In addition, the Spire
Companies are currently expanding their international channel of third-party
distributors. This expansion activity could increase future sales and
marketing costs and decrease margins.
RESEARCH AND DEVELOPMENT. Historically, the Spire
Companies have incurred nominal research and development costs. Spire
management plans to add new products and may begin to develop proprietary
software products. These development activities, along with ongoing efforts
to upgrade the Spire Companies' present line of products, are likely to
result in increased research and development expenses.
35
<PAGE>
OTHER INCOME. Other income consists primarily of
interest income and interest expense. In addition, for the year ended April
30, 1995 other income reflected receipt of a one-time consulting fee in the
amount of $29,772. Interest expense increased from $25,517 for the year
ended April 30, 1994 to $28,348 in the year ended April 30, 1995. This was
due to short-term borrowings relating to working capital funding needs.
LIQUIDITY AND CAPITAL RESOURCES
The increase in accounts receivable during the nine
months from April 30, 1995 to January 31, 1996 is attributable largely to
increased sales activity, reflecting an increase in average monthly sales of
the Spire Companies from approximately $800,000 per month for the year ended
April 30, 1995 to approximately $1,175,000 per month during the nine months
ended January 31, 1996. During the nine month period there was no change in
the sales terms of the Spire Companies, nor was there any significant change
in the number of days sales outstanding. Substantially all of the increase in
accounts payable and a portion of the increase in accounts receivable during
the period resulted from the request in July 1995 of a principal supplier of
the Spire Companies to defer royalty payments due from the Spire Companies
and corresponding offsetting amounts due from this supplier for technical
services provided by the Spire Companies. As of January 31, 1996, the
accounts payable of the Spire Companies included approximately $710,000 in
royalties payable to this supplier and the accounts receivable of the Spire
Companies included approximately $452,000 due from such supplier. As agreed
by the parties, the net payable will be paid by the Spire Companies in April
1996.
Historically, the Spire Companies have financed their
operations through long-term debt, short-term borrowings and cash generated
from operations. During the years ended April 30, 1995 and 1994, the Spire
Companies generated cash from operating activities in the amounts of $434,910
and $214,209, respectively. For the same years, net cash increased $272,787
and $124,753, respectively. For the nine-month period ended January 31,
1996, the Spire Companies generated cash from operations in the amount of
$1,021,282 and their net cash increased by $480,108.
Based on anticipated working capital requirements, Spire
management believes that existing cash and cash equivalents, cash generated
from operations, long-term debt financing and borrowings under the Spire
Companies' existing lines of credit will be sufficient to finance the
operations of the post-exchange Company through the foreseeable future.
The Spire Companies plan to evaluate opportunities for
the license or acquisition of additional software products as well as the
possible acquisition of, or development of strategic relations with, other
companies who may have products or distribution channels that are compatible
with the business objectives of the Spire Companies. In the event the Spire
Companies elect to pursue such opportunities, additional capital in the form
of equity or debt will likely be required.
36
<PAGE>
BUSINESS OF THE COMPANY
GENERAL
The Company was incorporated in the State of Utah in May
1969 for the purpose of mineral exploration and development. Since 1974, the
Company has been almost exclusively engaged as a participant with others in
oil and gas exploration and development. The Company's principal assets are
working interests in producing oil and gas wells and options or rights to
participate in the drilling of additional wells. The Company has
participated almost exclusively with an independent operator, Luff
Exploration Company ("Luff") of Denver, Colorado in its exploration activity.
Kenneth D. Luff, the owner of Luff, was appointed to the Company's Board of
Directors on May 31, 1994. Potential projects are evaluated by Luff and, in
Luff's discretion, the Company is offered the right to participate in a
particular project; however, Amacan may elect not to participate in any
particular project.
Since 1974, the Company has participated with Luff in
drilling a total of 122 wells, 31 of which are presently productive. The
Company did not participate with Luff in the drilling of any wells during the
fiscal year ended April 30, 1995. Nine additional productive wells were
previously sold and 22 were abandoned when depleted. Of the 122 wells, 50
have been exploratory wells and 72 have been developmental wells. Through its
participation with Luff, the Company has farmed out its interest for drilling
by other companies, at their expense, a total of 28 additional wells, one of
which is presently productive. Including this well, the Company presently
has an interest in 31 productive oil and gas wells.
The Company has one subsidiary, Amacan Industries, Inc.
("AII"), organized during fiscal year 1991 to seek out and consider unrelated
business opportunities. In June 1992, AII made a $20,000 investment for a
two percent (2%) interest in a limited partnership organized under Illinois
law to conduct the business of accounts receivable recovery and financial
consulting. The Company's share of losses reported by the limited
partnership for the 1995 fiscal year was $15,553. The Company's principal
line of business is natural resources exploration and development and income
received by the Company during the fiscal year ending April 30, 1995 was
derived from production on oil and gas properties.
The Company did not devote any of its time or resources
to exploration or development of properties outside of the United States
during the 1995 fiscal year and does not anticipate that any time or
resources will be allocated to properties outside of the United States in the
future. The Company presently has two employees. There are no pending
material legal proceedings to which the Company is a party.
COMPETITION AND MARKETS
The oil and gas industry is intensely competitive in all
of its phases and in the areas where the Company owns working interests in
oil and gas wells. The Company is not a competitive factor in the industry.
Luff encounters strong competition from major oil companies, other
independent operators and other companies, many of which have greater
financial and technical resources and are more experienced in the exploration
for and production of oil and gas.
Independent producers currently market production of
crude oil, condensate, natural gas and natural gas liquids in the United
States under contracts with various oil companies and gas pipeline companies.
The continued availability of a ready market depends upon numerous factors
beyond the control of the operator, including crude oil imports, actions by
oil producing nations, the availability of adequate pipeline and other
transportation facilities, the marketing of competitive fuels and
fluctuations in supply and demand.
REGULATION
The oil and gas industry is currently subject to
extensive regulation by both federal and state authorities. Most states have
regulations pertaining to the spacing of wells, prevention of waste,
limitation of rates of production, proration of production, prevention and
cleanup of pollution, and similar matters in addition to the environmental
and federal price regulations discussed below. The marketing of oil and gas
including the construction of production, storage handling or transmission
facilities, also has been and could be delayed pending government approval.
37
<PAGE>
The Company's operations are significantly affected by
the impact of federal income tax laws. Such laws can affect the Company
directly and can also adversely affect the operator's ability to secure
drilling funds if changes in such laws should eliminate or reduce federal
income tax incentives. Of particular importance are provisions of the Code
which permit the owner of an economic interest in oil and gas to deduct from
the income realized from each property an amount based on the greater of cost
or percentage depletion, subject to certain limitations. If cost depletion is
utilized, the taxpayer is entitled to recover its capitalized cost in the
property over its productive life. For production after 1984, percentage
depletion at a rate of 15% of gross revenues, not to exceed 50% of the
taxable income attributable thereto, is still available under the independent
producer exemption, for which the Company qualifies, for production of up to
1,000 barrels of domestic crude oil (or natural gas equivalent) per day.
Percentage depletion is not limited to the owner's basis in the property.
There are numerous federal laws and regulations
controlling the discharge of materials into the environment, or otherwise
relating to the protection of the environment, to which the oil and gas
drilling and recovery operations in which the Company participates are
subject and which increase the cost of exploring for, developing or producing
oil and gas.
OPERATING RISKS; INSURANCE
The oil and gas operations in which the Company
participates are subject to all the risks normally incident to drilling for
and producing oil and gas, including blowouts and fires, which could result
in damage to, or destruction of, oil and gas wells or production facilities
and loss of life and property. Operators are not typically insured against
all of these risks either because insurance is not available or because
operators have elected not to insure due to prohibitive premium costs. The
occurrence of an uninsured event or of an event only partially insured could
result in substantial losses to an operator and severely impair its ability
to continue operations.
Pollution or discharge of materials into the environment
which might be caused by an operator's drilling or producing operations could
result in liabilities to third parties, or restrictions on the activities in
which the Company participates, or both.
PROPERTIES
The Company owns a working interest in each oil and gas
drill site for which it has paid a percentage of the costs of drilling and,
where warranted, a percentage of the costs of completion of a well. The
Company's working interest results in a "net revenue interest", which is
computed as a percentage of income before the expenses of drilling and
completion are recovered (before payout) and a lesser revenue interest after
such costs have been recovered (after payout). The Company's after-payout
working interest in the wells varies from a low of 1.641% to a high of
10.9999%. In addition to these revenue interests, the Company, through
participation in certain of the drill sites, has earned the right to
participate in income from any additional wells that may be drilled.
Alternatively, the Company may become entitled to an income interest in
certain wells completed by unrelated third parties on acreage in which the
Company has an interest under "farm-out" agreements which entitle said third
parties to an agreed amount of production from such wells before the Company
receives its income interest. The income interest would be less than the
interest which would be earned if the Company had shared in the costs of
drilling and completion.
Reserves. An estimate, as of April 30, 1995, of proved
developed producing reserves underlying oil and gas wells in which the
Company has an interest (all of which are located in the United States), is
as follows:
Gross Net
---------- ------------
Barrels of Oil . . . . . . . 1,191,072 43,070
Gas in MCF . . . . . . . . . 4,057,045 222,043
There are no estimates of proved developed nonproducing
reserves or proved undeveloped reserves in connection with these properties.
These reserve estimates were prepared by petroleum engineers employed by
Luff. No
38
<PAGE>
estimates of such reserves are filed with or included in reports by the
Company to any other federal authority or agency.
Production. All production has been from wells located
in the continental United States. Net oil and gas production for oil in
barrels and gas in MCF for each of the last five years, representing the
Company's interest in oil and gas wells and the average cost of production
per equivalent barrels for each of the past five years, is as follows:
Year Ending Oil Average Production Cost
April 30, Barrels Gas MCF per Equivalent Barrels
----------- --------- --------- ------------------------
1995 6,561 48,977 $5.75
1994 7,181 49,794 $5.14
1993 8,017 69,925 4.55
1992 9,450 75,077 4.47
1991 7,668 81,941 4.43
The average sales price per unit of oil produced and of
gas produced during the last three fiscal years is as follows:
Year Ending
April 30, Sales Price/Barrels of Oil Sales Price/MCF Gas
------------ -------------------------- -------------------
1995 $14.38 $1.42
1994 14.35 1.71
1993 19.03 1.46
Drilling. Set forth below are the gross and net
productive and nonproductive wells drilled or acquired in each of the last
three fiscal years.
Productive Wells Dry Wells
---------------- ---------
Gross Net
----- -----
1995 . . . . . . . -- -- --
1994 . . . . . . . -- -- --
1993 . . . . . . . 3 02763 3
Gross and Net Wells and Acreage. At April 30, 1995, the
total gross and net productive wells (expressed separately for oil and gas
wells) and the total gross and net producing acres in which the Company has
an interest were as follows:
April 30, 1995 Oil* GAS
---------------------------- ------- -------
Gross wells. . . . . . . . . 25 8
Net wells. . . . . . . . . . 2 2
Gross acres. . . . . . . . . 8,696 3,592
Net acres. . . . . . . . . . 376 217
* The Company has an interest in 16 wells from which both oil and gas are
produced; these wells are shown as gross and net oil wells in the foregoing
table.
39
<PAGE>
At April 30, 1995, the Company had interests in producing acreage as set
forth below:
Total Producing Acreage -- April 1995
---------------------------------------------------
State Gross Net
---------------------------------- ------- -----
Montana. . . . . . . . . . . . . . 7,000 323
North Dakota . . . . . . . . . . . 1,760 91
South Dakota . . . . . . . . . . . 1,600 53
Wyoming. . . . . . . . . . . . . . 1,920 120
The foregoing tables include only the acreage underlying
drill sites which are currently held by production. As stated, the Company
has, in connection with drilling a number of wells, earned an interest in
additional acreage which may be the subject of drilling in the future. The
Company does not expect to maintain its interest in such acreage, however,
except through drilling of additional wells with Luff or through farm-out or
nonconsent arrangements as determined by Luff.
Title to Properties. As is customary in the oil and gas
industry, Luff conducts a title examination at the time oil and gas
exploration leases are acquired. The oil and gas properties in which the
Company participates are subject to royalty, overriding royalty and other
interests which are customary in the industry, liens incident to operating
agreements, current taxes and other burdens, minor encumbrances, easements
and restrictions.
40
<PAGE>
BUSINESS OF THE SPIRE COMPANIES
Spire, a Utah corporation founded in 1986, and Spire
Systems, a Utah corporation founded in 1992, resell DEC network computer
systems and components on a value added basis, develop and sell office
automation software products, act as "service and value added resellers" and
distributors of software developed by third parties and develop and implement
client/server solutions for open computing environments. The Spire Companies
offer a wide range of desktop, client/server and production systems and
related components, peripheral equipment, software and services used in a
wide variety of applications, industries and computing environments. The
Spire Companies have entered into strategic partner arrangements with Lotus,
Novell and DEC.
BACKGROUND
The original computers were large, mainframe pieces of
equipment that required vast amounts of space, energy and capital investment.
Technological advances have allowed computers to become increasingly smaller,
faster and less costly. Although there continue to be many applications
requiring mainframe computers for large organizations, the largest segment of
the computing market needs mid-range computing equipment for government,
education and business sites, and smaller, consumer-oriented equipment,
including personal computers.
Many different approaches were developed by numerous
emerging manufacturers to create a set of operating instructions to allow the
computer hardware to operate properly. In the personal computer market,
these well-recognized "operating systems" or "platforms" include MicroSoft
Corporation's MS-DOS (and related Windows and Windows 95) products, IBM's
OS/2, and the proprietary operating system developed for Apple's Macintosh.
Other operating systems include DEC's VMS and OpenVMS operating systems, the
UNIX operating system which has been separately developed by many different
manufacturers, and the new Microsoft Windows NT.
Computer application software, such as wordprocessors,
spreadsheets and other types of programs designed for use on one operating
system do not operate on another platform without making extensive and often
costly modifications.
As a result of the complexity of various hardware and
software systems, as well as the changing needs of buyers of such products,
the Spire Companies were formed to serve the role of an "integrator" of these
various components, principally for the needs of mid-range users in
government, education, and business. The Spire Companies have reviewed the
hardware and software being offered by current manufacturers, compared the
various competing products, and elected to represent and sell those hardware
and software systems that the Spire Companies consider to be the finest
products available on a stand-alone basis, but which are also capable of
being integrated with the other software and hardware product needs of Spire
customers. Accordingly, the Spire Companies are principally a sales and
technical support organization for third-party products which Spire employees
have tested and used in a variety of applications and, if necessary, adapted
for cross-operating system operation so that the entire computing needs of
Spire customers can be well served by the best products that work well
together.
PRODUCTS
OVERVIEW. The Spire Companies are authorized value-added
resellers for Digital and provide their customers with desktop integration
and system hardware. The Spire Companies fill their customers' unique
computer needs through a combination of integrated software packages from
different manufacturers and technical support for such products. The Spire
Companies are one of the largest licensing and support organizations for
cross-platform compatible VMS and OpenVMS versions of WordPerfect, WP Office,
and Lotus 1-2-3. The Spire Companies endeavor to meet the specialized
mid-range computing needs of governmental, educational and corporate
organizations worldwide by providing networking expertise in integrating
multi-vendor networks, network consulting with respect to connectivity,
compatibility, inter-operability and management of the end-user's local area
network ("LAN"), installation of the end-user's LAN, including interface
hardware and software, and timely and professional technical support.
DIGITAL HARDWARE. The Spire Companies are licensed to
sell Digital's 64-bit reduced instruction set computing ("RISC") architecture
known as "Alpha" which is designed to support multiple operating systems.
The Spire Companies offer Digital's line of Alpha-based products ranging from
chips and boards to high performance workstations and servers. Alpha
supports three major operating systems: Digital's 64-bit UNIX operating
system,
41
<PAGE>
Digital's OpenVMS operating system and Microsoft Corporation's
Windows NT operating system. The Alpha-based systems include high
performance database servers and workstations.
The Spire Companies also offer Digital's VAX computer
systems, components and Intel-based personal computer systems.
The Spire Companies offer and sell peripherals
manufactured by Digital and other entities such as magnetic disk drives, tape
drives, solid state disk and in-film heads, video terminals, printers and
network components.
SOFTWARE. The Spire Companies design and develop,
acquire from third parties and distribute under license, or act as resellers
for, various software products for use on Digital computer systems and
computer systems from other vendors.
OFFICE AUTOMATION. Under licenses from Lotus and Novell,
the Spire Companies obtained the right to create derivative works of the
source code for WordPerfect, Lotus 1-2-3 and WP Office (aka Groupwise) with
ownership of such derivative works remaining in the licensors. Spire
engineers have developed and the Spire Companies now market these software
solutions for the OpenVMS operating platform. The Spire Companies also
market these office automation products developed by third parties for UNIX,
MS-DOS and Windows 95 operating platforms. Because of the wide variety of
computing platforms used today in many organizations, the ability of the
Spire Companies to offer powerful office tools which provide cross-platform
compatibility and user familiarity is important in assisting Spire customers
to create effective corporate standards. The Spire Companies also offer
other third- party office automation products including Fax Sr., an
enterprise faxing server. The following paragraphs describe the office
automation products currently offered by the Spire Companies:
* WORDPERFECT for OpenVMS systems is one of the
leading word processing programs, and DEC's word
processing application of choice for OpenVMS users.
Powerful word processing tools, graphics integration
and drawing capabilities, flexible tables, an equation
editor, and seamless cross-platform file compatibility
have earned WordPerfect nine Target Awards-TM- for
best word processing software.
* LOTUS 1-2-3 for OpenVMS provides users with
essential spreadsheet tools combined with the power
and resources of an OpenVMS environment. Features
such as 3-D worksheets, cross-platform file
compatibility, high impact business graphics, and
presentation quality output capabilities make Lotus
1-2-3 the preferred spreadsheet application for
OpenVMS environments.
* FAX SR. ENTERPRISE SERVER sends and receives
faxes directly from within WordPerfect, or almost any
other OpenVMS application, as easily as printing a
document or receiving a mail message. Faxes are sent
directly to a recipient's fax machine via a server's
modem, and can include text, pictures, graphics,
scanned images, logos, cover sheets, and special
characters. Clients are available for Windows, Mac,
Windows NT, MS-DOS, and Motif users.
* WP OFFICE is an office automation package which
provides electronic mail, personnel and resources
scheduling, a floating calendar and planner, a
powerful multi-function calculator, a customizable
database notebook, and a file manager. Each component
is integrated through a flexible shell menu which
allows users to switch between programs and launch
non-WordPerfect programs with a single keystroke.
SYSTEM SECURITY. The Spire Companies offer a wide array
of third-party UNIX and OpenVMS operating system security products. These
system security software tools include firewalls (I.E., products designed to
protect an organization's computer network from access by unauthorized
Internet users), user monitoring, auditing and logging, authorization and
access control, message integrity and confidentiality protocols, and
automated system security analysis, reporting and correction tools. System
security products offered by the Spire Companies include the following:
42
<PAGE>
* THE BORDERWARE FIREWALL SERVER-TM- provides
comprehensive gateway services while maintaining the
highest level of security for organizations connecting
to the Internet and other Transmission Control
Protocol/Internet Protocol ("TCP/IP") works. It
combines Internet application-level servers (like WWW,
Mail, News, and FTP) with a transparent IP firewall.
In addition, it uses its intimate knowledge of
application processes and protocols to examine,
control, audit, and validate all network traffic to
and from the trusted network at both the packet and
connection level. The BorderWare Firewall Server-
Registered Trademark- has been promoted as a one-stop
solution to a complete and secure Internet gateway.
* KBLOCK lets users lock their unattended, logged-
in terminals to make them unavailable to unauthorized
users. It can also automatically lock and remove idle
processes when they have been inactive for a
prescribed period of time.
STORAGE MANAGEMENT. The Spire Companies offer
third-party media management and remote device access products including
media libraries, backup and restore, and data recovery solutions, including
the following:
* THRUWAY-Registered Trademark- is a remote device
access system which bridges the gap between the
customer's remote OpenVMS systems and its central
site. THRUway-Registered Trademark- simplifies file
access, and provides easy and direct management,
backup and restoration of remote data from the
customer's OpenVMS system.
* TAPESYS-Registered Trademark- is a media
management system which gives the customer complete
control over its OpenVMS libraries, including magnetic
tapes, optical disks and super-high-density
cartridges. TAPESYS-Registered Trademark- also
automates backup scheduling and keeps an on-line
directory of backed-up files for easy restoring.
* RAXMASTER-TM- is a comprehensive OpenVMS
performance solution combining PerfectDisk-TM-,
PerfectTune-TM-, PerfectCache-TM- and I/O Monitor-TM-
into an integrated performance enhancing tool.
Whether a customer's problems are due to CPU, resource
allocation, memory, or I/O, RAXMaster-TM- provides
proactive, multi-function performance solutions to
help customers get the most out of their existing
systems.
USER TRAINING AND SUPPORT. The third party software
solutions offered by the Spire Companies for training and support allow Spire
customers to track user problems and establish interactive links between the
trainers' and users' terminals. From the trainer's keyboard, the trainer
may intervene, create log files of sessions, and conduct local and remote
product training for groups of users. The following user training and
support products are offered by the Spire Companies:
* CONTRL-Registered Trademark- AND CLYDESUPPORT-
TM- are integrated user support tools for training,
monitoring and assisting OpenVMS users. Utilizing
these tools, the customer can monitor users'
terminals, establish interactive links between
terminals, create log files of sessions, communicate
with and transfer files to sites not connected by
DECnet-TM-, and create and run multiple interactive
terminal sessions simultaneously.
* PC-DUO-Registered Trademark- is a remote
control software solution that returns control of
distributed PC users to the customer. With
TalkRemote, the customer can conduct interactive on-
line conversations or training sessions, provide
immediate on-line help, perform file transfers across
networks and monitor user productivity.
NETWORK MANAGEMENT AND PERFORMANCE. The third-party
software offered by the Spire Companies relative to system performance
management allows Spire customers to monitor systems, databases, events and
remote nodes to manage performance tuning, capacity planning, saturation
analysis, bench marking and resource accounting from a central site. This
performance management is conducted in real time interactive or background
modes, across a wide array of UNIX and database environments. The Spire
Companies offer the following management and performance products:
43
<PAGE>
* SYSMON-TM- monitors and manages UNIX and Windows
NT environments in both interactive and background
modes. Data collectors track and report resource
usage, perform trend analysis, monitor and log system
events, measure relative response times and alert and
intervene upon the occurrence of critical events.
Data is managed through interactive Graphical User
Interface ("GUI") graphs, charts and meters. SYSMON-
TM- monitors UNIX and Windows NT operating systems;
Oracle, Ingres, Informix and Sybase databases; and
third-party applications through its flexible
application management interface.
* ENSIGN-TM- provides distributed system
administration and centralized control for UNIX and
Windows NT. Ensign-TM- automates and simplifies
system administration tasks, eliminates repetitive
administrative activities, reduces reactive tasks
through a surveillance and recovery facility and can
allow delegation of routine processes to others.
Administrative tasks are managed through a GUI
interface, eliminating the need to learn different
UNIX syntax and commands.
* LANUTIL-TM- uses the customer's OpenVMS
resources to automate its LAN management procedures.
It lets the customer distribute or update applications
to the PCs on the customer's LAN, integrate PC backups
with automatic tape management system (such as
TAPESYS-Registered Trademark-), inventory software or
hardware resources or edit or reconfigure PC files
from the customer's OpenVMS system.
* PATHWORKS-TM- lets users share applications,
information, and large system resources across
OpenVMS, UNIX, Windows, MS-DOS, and Mac environments.
It provides users with LAN Manager-TM- file and print
services, Novell compatibility, E-Mail communications,
security for PC files, LAN and Wide Area Network
("WAN") capabilities, and a host of network management
and integration tools.
* XJET-TM- AND XCONNECT are Ethernet-TM- print
servers which allow users of all six major network
operating systems to simultaneously share printer
resources. Users on DEC, UNIX, Novell, and Apple
networks can all print jobs to the same printer as if
it were connected directly to their computer-without
any modification to application programs. Concurrent
support for LAN Manager-TM-, LAN Server-TM-, and
Banyan VINES-TM- is also available.
TECHNICAL SERVICES AND SUPPORT. The Spire Companies
provide to their customers technical consulting, systems integration and
product support services to help Spire customers plan, implement and manage
their information technology solutions. The Spire Companies' services
include maintenance and support services for Spire software solutions, as
well as third-party products sold by the Spire Companies; information systems
consulting; technical and application design services, education and training
services; systems integration and project management services; network design
and support services; and outsourcing and resourcing management services.
The Spire Companies' service organization provides these
services through two sites in the United States.
SALES AND DISTRIBUTION
The Spire Companies market their products and services
through a direct sales force of 30 representatives based in Utah and North
Carolina. Arrangements with third parties, including hardware manufacturers,
software developers, resellers and authorized distributors are an
increasingly important part of the Spire Companies' focus on providing
complete solutions to its customers and expanding distribution of its
products and services through indirect channels domestically and to customers
in Europe and Australia.
44
<PAGE>
COMPETITION
The information technology industry is highly
competitive, international in scope, and comprised of many companies. The
methods of competition include marketing, product performance, price,
service, technology and compliance with various industry standards, among
others. Present and potential competition in the various markets served by
the Spire Companies comes from firms of various sizes and types, many of
which are larger and have greater resources than the Spire Companies. Firms
not now in direct competition with the Spire Companies may introduce
competing products in the future. It is possible for companies to be at
various times competitors, customers and collaborators in different markets.
MATERIALS
The Spire Companies are solely dependent on Digital and
authorized distributors of Digital products for their supply of hardware. In
addition, the Spire Companies obtain software from numerous third-party
vendors, many of which are the sole source for such software. The Spire
Companies then incorporate the various hardware, peripheral and software
components into an integrated system for installation at their customers'
locations. If one of the third-party vendors of either hardware or software
were to become unavailable to the Spire Companies, Spire management believes
that it would be able to obtain competing and alternate sources of supply of
similar but not identical products. The failure of such suppliers to deliver
such items on a timely basis could adversely effect the operating results of
the Spire Companies until alternative sources of supply could be arranged.
Also, if any of the license agreements relative to the office automation
products developed by the Spire Companies were to be terminated, the
operating results of the Spire Companies could also be adversely effected.
SIGNIFICANT CUSTOMERS
Although the Spire Companies sell to many customers
involved in certain industries (e.g. government and education) which, if
aggregated together, would result in sales to a particular industry of more
than 10%, no single customer represents sales by the Spire Companies in the
aggregate amount of 10% or more of the consolidated revenues of the Spire
Companies. Accordingly, Spire management believes that the loss of any
single customer would not have a material adverse effect on the Spire
Companies taken as a whole.
PATENTS
The Spire Companies do not own any patents nor do they
have any patent applications relating to their products. The Spire Companies
have a limited number of copyrights and have obtained licenses to create
derivative works relative to copyrights owned by third parties. The
ownership of such derivative works vests in the licensor. The Spire
Companies are also seeking tradename and trademark protection for certain of
their names and marks. Accordingly, Spire management does not believe that
any particular patent or group of patents, copyrights, trademarks, or
tradenames is of material importance to the business of the Spire Companies
as a whole.
RESEARCH AND ENGINEERING
The Spire Companies compete in an industry which is
characterized by rapid technological change. In the nine-month period ended
January 31, 1996 and the fiscal years ended April 30, 1995 and 1994, the
Spire Companies incurred insignificant expenses for research and development.
Spire management anticipates that it will begin investing in research and
development during the 1996 calendar year to maintain and strengthen its
competitive position. Spire management does not anticipate that research and
development expense will exceed three percent of gross revenues for the
fiscal year ended April 30, 1997.
EMPLOYEES
The Spire Companies had 50 full and part-time employees
at December 31, 1995.
45
<PAGE>
PROPERTY
The headquarters and research and development facilities
of the Spire Companies are located at 311 N. State, Orem, Utah. The Spire
Companies own a 5200 square foot building, subject to encumbrances of
approximately $123,000 and $102,000 at January 31, 1996, which bear interest
at rate of 8.25% and 8.70%, respectively. In addition, the Spire Companies
occupy 7500 square feet of contiguous space under a one year lease subject to
an option to extend the term for an additional five extensions of one year
each. The monthly base rent is $5,500 subject to adjustment during the
renewal periods. Spire management believes these contiguous facilities are
suitable and adequate to meet the anticipated needs of the Spire Companies
for the current fiscal year. Spire management anticipates that continued
growth of the Spire Companies will necessitate acquisition of additional
office space in the future.
PROPRIETARY MARKS
The Spire Companies offer, sell and utilize many
third-party products represented by registered or common law trademarks,
including the following trademarks. Novell-Registered Trademark-,
Wordperfect-Registered Trademark-, UNIX-Registered Trademark-, WP Office-TM-
and Groupwise-TM- are trademarks of Novell. DEC-Registered Trademark-,
VMS-Registered Trademark-, OpenVMS-TM-, VAX-Registered Trademark- and
Alpha-TM- are trademarks of Digital. Microsoft-Registered Trademark-,
MS-DOS-Registered Trademark-, DOS-TM-, Windows-Registered Trademark-, Windows
NT-Registered Trademark- and Windows 95-TM- are trademarks of Microsoft
Corporation. Lotus-Registered Trademark- and Lotus 1-2-3-TM- are trademarks
of Lotus. Apple-Registered Trademark-, Macintosh-Registered Trademark- and
Mac-Registered Trademark- are registered trademarks of Apple Computer Inc.
OS/2-TM- is a trademark of IBM Corporation. Intel-Registered Trademark- is a
registered trademark of Intel Corporation. This Information Statement also
contains trademarks of other companies.
46
<PAGE>
MANAGEMENT OF THE COMPANY
EXECUTIVE OFFICERS AND DIRECTORS
The following sets forth the name and age of each
executive officer of the Company, the positions and offices with the Company
held by each executive officer, the principal occupation, employment and
business experience of each executive officer during the past five years, and
the year each director first became a director:
<TABLE>
<CAPTION>
Has Served as a
Name Age Position with the Company Director/Officer Since
- ---------------------------------- --- ------------------------- ----------------------
<S> <C> <C> <C>
Tad M. Ballantyne. . . . . . . . . 40 President and Director 1988
Lamar H. Holley. . . . . . . . . . 72 Vice President, 1971
Secretary/Treasurer
and Director
Russell G. Holley. . . . . . . . . 76 Director 1971
Kenneth D. Luff. . . . . . . . . . 62 Director 1994
Sherman H. Smith 51 Designee for director N/A
</TABLE>
Tad M. Ballantyne - Mr. Ballantyne was elected to the
Board of Directors in 1988 and was appointed as President in May 1994. He is
engaged principally in management of private investments and in that capacity
serves as an officer and director of several private companies, including
Hoopeston Foods, Inc., a food processing company. He continues to be a
principal stockholder and consultant to BR Industries, a metals processing
company. He also serves as President and Treasurer of AII. Mr. Ballantyne
was previously engaged in the business of arranging financing for companies,
which at times required Mr. Ballantyne to guarantee various loans. In 1992,
an involuntary petition for relief under Chapter 11 of the United States
Bankruptcy Code was filed against Mr. Ballantyne by a lender on two real
estate loans guaranteed by Mr. Ballantyne. A plan of reorganization was
subsequently confirmed in August 1994.
Lamar H. Holley - Mr. Holley was a founder of the Company
in 1971. For more than the past five years he has been a manufacturers'
representative for Western Sales Associates.
Russell G. Holley - Mr. Holley was a founder of the
Company in 1971 and served as its President and Chief Executive Officer from
1974 to May 1994 when he retired as President. He also serves as Vice
President and Secretary of AII, the Company's wholly owned subsidiary.
Kenneth D. Luff - Mr. Luff is now and for more than the
past five years has been President and Owner of Luff Exploration Company, an
independent oil and gas producer. He is a geologist and a past-President of
the Rocky Mountain Oil and Gas Association.
Sherman H. Smith - Mr. Smith has been engaged in the
practice of accounting with the accounting firm of Schmitt, Griffiths, Smith
& Co. in Ogden, Utah since 1974. Mr. Smith is not currently serving as an
officer or director of the Company; however, as permitted by the Exchange
Agreement, the Company's Board of Directors has designated Mr. Smith to serve
as a director of the Company if the Share Exchange is consummated.
There are no executive officers who are not also
directors of the Company. Russell G. Holley and Lamar H. Holley are
brothers. Except with respect to the designation of Mr. Sherman H. Smith to
serve as a director of the Company if the Share Exchange is consummated, no
arrangement or understanding exists between any officer or director and any
other person pursuant to which he was nominated or elected as a director or
selected as an officer. See "THE SHARE EXCHANGE --Management of the
Company's Business after the Share Exchange." Directors serve until the next
annual meeting of stockholders or until a successor is elected and qualified.
Officers serve until the next annual meeting of the Board of Directors or
until a successor is elected and qualified.
47
<PAGE>
The Company has a standing Audit Committee consisting of
Lamar H. Holley and Tad M. Ballantyne. The Audit Committee's function
includes the recommendation of engagement and discharge of independent
auditors, reviewing the independent auditors' results and reviewing
management's actions relative thereto. The Company does not have nominating
or compensation committees of the Board.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
FISCAL
YEAR PREFERRED
ENDED OTHER STOCK LTIP ALL OTHER
NAME/PRINCIPAL POSITION APRIL 30, SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
- ----------------------- --------- -------- ------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Tad M. Ballantyne, 1995 $10,000 $ -0- $ -0- $ -0- $ -0-
President and Chief 1994 -0- $ -0- $ -0- $ -0- $ -0-
Executive Officer 1993 -0- $ -0- $ -0- $ -0- $ -0-
</TABLE>
DIRECTOR'S COMPENSATION
Directors who are not employed by the Company are paid a
fee of $200 for each board meeting attended. No separate fees are paid for
attendance at committee meetings. One meeting of the Board was held during
the year ended April 30, 1995.
48
<PAGE>
MANAGEMENT OF THE SPIRE COMPANIES
EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS
The executive officers, key employees, and directors of
the Spire Companies, and their respective ages at December 31, 1995, are as
follows:
NAME AGE POSITION
- --------------------- ---- ----------------------------
Gary B. Godfrey 35 President and Director of
Spire and Spire Systems
Brian W. Braithwaite 35 Vice President, Secretary,
Treasurer and Director of
Spire and Spire Systems
Douglas D. Yates 43 Sales Manager of Spire and
Director of Spire and
Spire Systems
Jeffrey L. Webster 42 Manager of Information
Systems of Spire
Robert K. Bench 46 Chief Financial Officer of
Spire
GARY B. GODFREY has been President and a director of
Spire since its organization in 1986 and has had responsibility for financial
management, marketing and personnel. Mr. Godfrey has been President and a
director of Spire Systems since 1992.
BRIAN W. BRAITHWAITE has been Vice President, Secretary
and Treasurer of Spire since its inception in 1986. He has also served as a
director of Spire during that period. Mr. Braithwaite has been Vice
President, Secretary, Treasurer and a director of Spire Systems since 1992.
DOUGLAS D. YATES has been involved in sales and
management at Spire since 1989 and has been a director of Spire since 1992.
Mr. Yates has served as a director of Spire Systems since 1992.
JEFFREY L. WEBSTER currently serves as the Manager of
Information Systems for Spire and has been employed by Spire since its
inception in 1986.
ROBERT K. BENCH became the chief financial officer of
Spire in January 1996. Mr. Bench served as the chief financial officer for
CerProbe Corporation, a publicly-held corporation which manufactures products
for the semi-conductor industry, from April 1995 through February 1996.
CerProbe Corporation acquired, through a merger, Fresh Test Technology
Corporation in April 1995. Mr. Bench was president of Fresh Test Technology
Corporation from April 1993 to the time of the merger. From 1991 through
1993, Mr. Bench served as vice president and chief operating officer for
Fresh Technology Company, an affiliate of Fresh Test Technology Corporation.
From 1986 through 1991, Mr. Bench served as vice president and chief
financial officer at Clyde Digital Corporation.
EXECUTIVE COMPENSATION
It is anticipated that upon completion of the
reorganization, the current Board of Directors of Amacan will appoint certain
existing members of Spire management to be the executive officers and key
employees of Amacan. See "THE SHARE EXCHANGE -- Management of the Company's
Business After the Share Exchange." Upon such appointment, the directors
intend to set salary, bonus, and other compensation items for such
newly-appointed officers at levels it deems to be comparable in the industry
for small, publicly-traded, high technology companies.
49
<PAGE>
VOTING SECURITIES OF THE COMPANY
AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information regarding the
beneficial ownership of the Amacan Common Stock as of March 1, 1996 by: (i)
each person known by the Company to beneficially own more than 5% of the
outstanding shares of Common Stock; (ii) each of the Company's directors;
(iii) each of the executive officers identified in the Summary Compensation
Table; and (iv) all directors and executive officers as a group. Unless
otherwise indicated, each of the stockholders named in the table has sole
voting and investment power with respect to the shares identified as
beneficially owned.
<TABLE>
<CAPTION>
PERCENT
OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS
- ---------------- ------------------------ -------------------- ---------
<S> <C> <C> <C>
Common Tad M. Ballantyne 376,700(1) 13.8%
1135 South Main Street (direct and indirect)
Racine, Wisconsin 53403
Common Lance Industries, Inc. 376,700(2) 13.8
1135 South Main Street
Racine, Wisconsin 53403
Common Russell G. Holley 360,532(3) 13.2
2881 Melony Drive (direct and indirect)
Salt Lake City, Utah 84124
Common Gary R. Davis 275,650(4)(5) 10.1
4448 Covecrest Drive (direct and indirect)
Salt Lake City, Utah 84124
Common Reed D. Davis 245,650(4)(5) 9.0
4448 Covecrest Drive (direct and indirect)
Salt Lake City, Utah 84124
Common Sue Purcell 245,650(4)(5) 9.0
4448 Covecrest Drive (direct and indirect)
Salt Lake City, Utah 84124
Common Clara W. Davis 230,650 8.5
4448 Covecrest Drive (direct)
Salt Lake City, Utah 84124
Common Lamar H. Holley 199,150(6) 7.3
979 East Hillcrest Drive (direct)
Springville, Utah 84603
Common Kenneth D. Luff -0- --
1580 Lincoln Street,
Suite 850
Denver, Colorado 80203
Common All officers and directors as 936,382 34.3
a group (4 persons)
</TABLE>
- --------------------
(1) Includes Mr. Ballantyne's indirect beneficial ownership (376,700
shares) as an affiliate of Lance Industries, Inc. referred to in
the table.
(2) Affiliated through Mr. Ballantyne.
(3) Includes 250 shares held by Mr. Holley's wife and 275,750 shares
held jointly with Mrs. Holley.
(4) Includes 230,650 shares held jointly by Clara W. Davis and her
three adult children, Gary R. Davis, Reed D. Davis and Sue
Purcell.
(5) Includes shares held in custodial accounts for the benefit of Gary
R. Davis, Reed D. Davis and Sue Purcell in the amounts of 42,000
shares, 12,000 shares and 12,000 shares, respectively.
(6) Includes 145,900 shares held by Mr. Holley jointly with his wife.
50
<PAGE>
VOTING SECURITIES OF THE SPIRE COMPANIES
AND PRINCIPAL HOLDERS THEREOF
The following table sets forth information regarding the
beneficial ownership of the Spire Common Stock and the Spire Systems Common
Stock, respectively, as of March 1, 1996 by: (i) each person known by the
Spire Companies to beneficially own more than 5% of the outstanding shares of
Spire Common Stock or Spire Systems Common Stock; (ii) each of the directors
of the Spire Companies; (iii) each of the executive officers of the Spire
Companies; and (iv) all directors and executive officers of the Spire
Companies as a group. Unless otherwise indicated, each of the stockholders
named in the table has sole voting and investment power with respect to the
shares identified as beneficially owned.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
of Spire of Spire Systems
----------------------------- -----------------------------
Number of Percentage of Number of Percentage of
NAME Shares Class Shares Class
- -------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Common Stock:
Gary B. Godfrey. . . . . . . . . . . 27,450 31.4% 33,075 33.1%
149 North 835 East (indirect (1)) (indirect (1))
Lindon, Utah 84042
Douglas D. Yates . . . . . . . . . . 18,000 20.6 21,690 21.7
797 North 500 West (indirect (2)) (indirect (2))
Lehi, Utah 84043
Brian W. Braithwaite . . . . . . . . 13,500 15.5 16,263 16.2
1348 North 1400 West
Provo, Utah 84604
Jeffrey L. Webster. . . . . . . . . 15,750 18.0 18,972 19.0
465 West 320 North
American Fork, UT 84003
Robert K. Bench . . . . . . . . . . 11,672(3) 13.0 10,000 10.0
2632 East El Moro Avenue
Mesa, Arizona 85204
All officers and directors as a
group (4 persons). . . . . . . . 69,622 78.6% 81,028 81.0%
</TABLE>
- -------------------
(1) Shares held by Gary B. Godfrey and Karie Godfrey, Trustees of the
Gary B. Godfrey Family Revocable Trust dated July 1, 1993.
(2) Shares held by Douglas D. Yates and Rita S. Yates, Trustees of the
Rita S. Yates Family Revocable Trust dated July 1, 1993.
(3) Includes options to purchase 1,179 shares of Spire Common Stock
that are presently exercisable.
51
<PAGE>
DESCRIPTION OF THE COMPANY'S CAPITAL STOCK
GENERAL
As of January 23, 1996, there were 2,723,714 shares of
Amacan Common Stock issued and outstanding, held by approximately 388
stockholders of record. After giving effect to the one-for-seven reverse
split of the Amacan Common Stock as contemplated by the Exchange Agreement,
the Company anticipates that there would be approximately 389,100 shares of
Amacan Common Stock issued and outstanding as of January 23, 1996.
The Articles of Incorporation of the Company, as amended
(the "Articles"), authorize the issuance of eight million (8,000,000) shares
of Common Stock, par value $.25 per share. Except as otherwise required by
law, each share of Amacan Common Stock entitles the stockholder to one vote
on each matter which stockholders may vote on at all meetings of stockholders
of the Company. Holders of the Amacan Common Stock are not entitled to
cumulative voting in the election of directors. Holders of the Amacan Common
Stock do not have preemptive, subscription or conversion rights and there are
no redemption or sinking fund provisions applicable thereto. Shares of
Amacan Common Stock are entitled to share equally and ratably in dividends
paid from the funds legally available for the payment thereof, when, as and
if declared by the Board of Directors of the Company. The declaration of
dividends, however, is subject to the discretion of the Board of Directors.
Holders of Amacan Common Stock are also entitled to share ratably in the
assets of the Company available for distribution to holders of Amacan Common
Stock after payment of liabilities of the Company upon liquidation or
dissolution of the Company, whether voluntary or involuntary. All the
outstanding shares of Amacan Common Stock are fully paid and nonassessable.
The Company has no present intention of paying any cash
dividends on the Amacan Common Stock and plans to retain any earnings to
finance the development and expansion of its operations. The payment of cash
dividends also may be restricted by a number of other factors, including
future earnings, capital requirements and the financial condition of the
Company, and restrictions on the payment of dividends imposed under Utah law.
CERTAIN INDEMNIFICATION AND LIMITED LIABILITY PROVISIONS
The Company's Bylaws provide that the Company shall
indemnify all directors and officers of the Company as permitted by the Utah
Act. Under such provisions, any director or officer, who in his capacity as
such, is made a party to any suit or proceeding, shall be indemnified if such
director or officer acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interest of the Company and, in
the case of a criminal proceeding, he or she had no reasonable cause to
believe his or her conduct was unlawful; provided, however, that no
indemnification may be given a director or officer where the claim or
liability arose out of that person's own negligence or willful misconduct, or
if such person is ultimately adjudged in the proceeding to be liable to the
Company or liable on the basis that he or she derived an improper personal
benefit. The Bylaws and the Utah Act further provide that such
indemnification is not exclusive of any other rights to which such
individuals may be entitled under the Articles, the Company's Bylaws, any
agreement, vote of stockholders or otherwise.
The Company currently maintains no policy of director's
and officer's liability insurance for the benefit of the officers and
directors of the Company.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Amacan Common
Stock is Atlas Stock Transfer, Inc., 5899 South State Street, Murray, Utah
84107, United States (telephone number (801) 266-7151).
52
DESCRIPTION OF THE CAPITAL STOCK OF THE SPIRE COMPANIES
GENERAL -- SPIRE
As of January 23, 1996, there were 87,386 shares of Spire
Common Stock issued and outstanding, held by six stockholders of record. See
"VOTING SECURITIES OF THE SPIRE COMPANIES AND PRINCIPAL HOLDERS THEREOF."
The Articles of Incorporation of Spire (the "Spire
Articles"), authorize the issuance of one hundred thousand (100,000) shares
of Common Stock, par value $.01 per share. As provided by the Bylaws of
Spire (the "Spire Bylaws"), except as otherwise required by law or by the
Spire Articles, each share of Spire Common Stock entitles the holder to one
vote on each matter which stockholders may vote on at all meetings of
stockholders of Spire. Holders of the Spire Common Stock are not entitled to
cumulative voting in the election of directors. Holders of the Spire Common
Stock do not have preemptive, subscription or conversion rights and there are
no redemption or sinking fund provisions applicable thereto. Shares of Spire
Common Stock are entitled to share equally and ratably in dividends paid from
the funds legally available for the payment thereof, when, as and if declared
by the Board of Directors of Spire. The declaration of dividends, however,
is subject to the discretion of the Board of Directors. Holders of Spire
Common Stock are also entitled to share ratably in the assets of Spire
available for distribution to holders of Spire Common Stock after payment of
the liabilities of Spire upon liquidation or dissolution of Spire, whether
voluntary or involuntary. All the outstanding shares of Spire Common Stock
are fully paid and nonassessable.
Spire has no present intention of paying any cash
dividends on the Spire Common Stock and plans to retain any earnings to
finance the development and expansion of its operations. The payment of cash
dividends also may be restricted by a number of other factors, including the
future earnings, capital requirements and financial condition of Spire, and
restrictions on the payment of dividends imposed under Utah law.
CERTAIN INDEMNIFICATION AND LIMITED LIABILITY PROVISIONS -- SPIRE
The Spire Articles provide that Spire shall indemnify all
directors and officers of Spire, or any person who has served or may serve,
at the request of the Board of Directors of Spire, as an officer or director
of another corporation in which Spire at the time owned or may own shares of
stock or of which it was or may be a creditor, as permitted by the Utah Act.
Under such provisions, any director or officer, who in his capacity as such,
is made a party to any suit or proceeding, shall be indemnified if such
director or officer acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interest of Spire and, in the
case of a criminal proceeding, he or she had no reasonable cause to believe
his or her conduct was unlawful; provided, however, that no indemnification
may be given in connection with any claim or liability arising out of such
person's own negligence or willful misconduct or if such person is ultimately
adjudged in the proceeding to be liable to Spire or otherwise liable on the
basis that he or she derived an improper personal benefit. The Spire Articles
and the Utah Act further provide that such indemnification is not exclusive
of any other rights to which such individuals may be entitled under the
Articles, the Spire Bylaws, any agreement, vote of stockholders or otherwise.
The Spire Bylaws provide that the Board of Directors may authorize Spire,
unless otherwise provided in the Spire Articles, to indemnify any officer,
employee or agent of Spire who is not a director of Spire, to the extent
permitted by the Utah Act.
Spire currently maintains no policy of director's and
officer's liability insurance for the benefit of its officers and directors.
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GENERAL -- SPIRE SYSTEMS
As of January 23, 1996, there were 100,000 shares of
Spire Systems Common Stock issued and outstanding, held by five stockholders
of record. See "VOTING SECURITIES OF THE SPIRE COMPANIES AND PRINCIPAL
HOLDERS THEREOF."
The Articles of Incorporation of Spire Systems (the
"Spire Systems Articles"), authorize the issuance of one million (1,000,000)
shares of Common Stock, no par value. As provided by the Bylaws of Spire
Systems (the "Spire Systems Bylaws"), except as otherwise required by law or
by the Spire Systems Articles, each share of Spire Systems Common Stock
entitles the stockholder to one vote on each matter which stockholders may
vote on at all meetings of stockholders of Spire Systems. Holders of the
Spire Systems Common Stock are not entitled to cumulative voting in the
election of directors. Holders of the Spire Systems Common Stock do not have
preemptive, subscription or conversion rights and there are no redemption or
sinking fund provisions applicable thereto. Shares of Spire Systems Common
Stock are entitled to share equally and ratably in dividends paid from the
funds legally available for the payment thereof, when, as and if declared by
the Board of Directors of Spire Systems. The declaration of dividends,
however, is subject to the discretion of the Board of Directors. Holders of
Spire Systems Common Stock are also entitled to share ratably in the assets
of Spire Systems available for distribution to holders of Spire Systems
Common Stock after payment of the liabilities of Spire Systems upon
liquidation or dissolution of Spire Systems, whether voluntary or
involuntary. All the outstanding shares of Spire Systems Common Stock are
fully paid and nonassessable.
Spire Systems has no present intention of paying any cash
dividends on the Spire Systems Common Stock and plans to retain any earnings
to finance the development and expansion of its operations. The payment of
cash dividends also may be restricted by a number of other factors, including
the future earnings, capital requirements and financial condition of Spire
Systems, and restrictions on the payment of dividends imposed under Utah law.
CERTAIN INDEMNIFICATION AND LIMITED LIABILITY PROVISIONS -- SPIRE SYSTEMS
The Spire Systems Bylaws provide that Spire Systems shall
indemnify all directors and officers of Spire Systems as permitted by the
Utah Act. Under such provisions, any director or officer, who in his
capacity as such, is made a party to any suit or proceeding, shall be
indemnified if such director or officer acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best interest of
Spire Systems and, in the case of a criminal proceeding, he or she had no
reasonable cause to believe his or her conduct was unlawful; provided,
however, that no indemnification may be given in connection with any claim or
liability arising out of such person's own negligence or willful misconduct
or if such person is ultimately adjudged in the proceeding to be liable to
Spire Systems or otherwise liable on the basis that he or she derived an
improper personal benefit. The Spire Systems Bylaws and the Utah Act further
provide that such indemnification is not exclusive of any other rights to
which such individuals may otherwise lawfully be entitled.
Spire Systems currently maintains no policy of director's
and officer's liability insurance for the benefit of its officers and
directors.
TERMINATION OF STOCKHOLDER AGREEMENT
The stockholders of Spire entered into a Stockholders Agreement on January 1,
1989 (the "Spire Stockholders Agreement"), which, among other things,
restricts the stockholders' lifetime transfer of shares of Spire Common
Stock, provides a right of first refusal to Spire and remaining stockholders
to purchase shares of Spire Common Stock from a selling stockholder, and
provides for the purchase of the shares of Spire Common Stock held by a
stockholder in the event of death of the stockholder and for the funding of
such purchase by insurance proceeds. Following the completion of the
transactions contemplated by the Exchange Agreement, the Spire Stockholders
Agreement will be terminated.
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ADOPTION OF AMACAN OPTION PLAN
GENERAL
The Amacan Resources Corporation Stock Amacan Option Plan
(the "Amacan Option Plan") was adopted by the Board of Directors of the
Company effective January 31, 1996. The following description of the Amacan
Option Plan does not purport to be complete and is qualified in its entirety
by reference to the full text of the Amacan Option Plan.
DESCRIPTION OF THE AMACAN OPTION PLAN
PURPOSE. The purpose of the Amacan Option Plan is to
promote the long-term success of the Company and the creation of incremental
stockholder value by (a) encouraging directors and key employees of the
Company and its subsidiaries to focus on critical long-range objectives, (b)
encouraging the attraction and retention of key employees with exceptional
qualifications, and (c) linking the interests of key employees of the Company
directly to stockholder interests through increased stock ownership.
ADMINISTRATION. The Amacan Option Plan is administered
by a committee (the "Committee") of the Board of Directors consisting of a
sufficient number of disinterested members of the Board of Directors so as to
qualify the Committee to administer the Amacan Option Plan as contemplated by
Rule 16b-3 promulgated pursuant to the Exchange Act. The Committee will
select the directors and employees who are to receive awards under the Amacan
Option Plan, determine the amount, vesting requirements and other conditions
of such awards, interpret the Amacan Option Plan, execute agreements setting
forth the terms of such awards (each, a "Stock Award Agreement") and make all
other decisions relating to the operation of the Amacan Option Plan.
DURATION OF THE AMACAN OPTION PLAN. The Amacan Option
Plan became effective on March 1, 1996, subject to receipt of stockholders
approval, and will remain in effect until terminated by the Board of
Directors, except that no Incentive Option (as defined below) may be granted
under the Amacan Option Plan after March 1, 2006. Notwithstanding the
termination of the Amacan Option Plan, the Amacan Option Plan will continue
in effect after such termination for purposes of the administration of any
Amacan Option Plan award granted at the effective date of the termination of
the Amacan Option Plan.
SHARES SUBJECT TO THE AMACAN OPTION PLAN. The Amacan
Option Plan provides for the issuance of Incentive Stock Options (the
"Incentive Options"), as that term is defined in Section 422 of the Code,
nonqualified stock options which are not governed by the provisions of
Section 422 of the Code ("Nonqualified Options") for shares of Amacan Common
Stock (the Incentive Options and the Nonqualified Options may be referred to
collectively as the "Options"), certain corresponding stock appreciation
rights ("SARs"), restricted shares of Amacan Common Stock ("Restricted
Shares") and Stock Units (as defined below) or any combination thereof (the
various awards are referred to collectively as the "Awards"). The maximum
number of Options, Restricted Shares and Stock Units that may be awarded
under the Amacan Option Plan is currently 1,000,000., and the maximum number
of Options, Restricted Shares and Stock Units that may be awarded to a single
participant in any calendar year is 200,000. If any Options, Restricted
Shares or Stock Units are forfeited or if any Option terminates for any
reason before being exercised, then such Options, Restricted Shares or Stock
Units will again become available for Awards under the Plan. Notwithstanding
the above, if any Options are surrendered because corresponding SARs are
exercised, such Options will not become available again for Awards under the
Amacan Option Plan. Any Amacan Common Stock issued pursuant to the Amacan
Option Plan may be authorized but unissued shares or treasury shares. On
January 23, 1996, the high and low bid prices of the Amacan Common Stock in
the over-the-counter market, as reported by the National Quotation Bureau,
were $.10 and $.03125, respectively.
In the event of a subdivision of the outstanding shares
of Amacan Common Stock, a declaration of a dividend payable in Amacan Common
Stock, a declaration of a dividend payable in a form other than Amacan Common
Stock in an amount that has a material effect on the price of the shares of
Amacan Common Stock, a combination or consolidation of the outstanding shares
of Amacan Common Stock (by reclassification or otherwise) into a lesser
number of shares of Amacan Common Stock, a recapitalization or similar
occurrence (the occurrence of each of which may be referred to as a "Capital
Change"), the Committee will make appropriate adjustments in the number of
Options, Restricted Shares and Stock Units available for future awards under
the Amacan Option Plan.
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ELIGIBILITY. Awards may be granted only to directors of
the Company and employees of the Company and its subsidiaries that the
Committee, in its sole discretion, will determine to be key employees (the
"Key Employees"). Members of the Committee are not eligible to participate
in the Amacan Option Plan. Because the Committee will maintain complete
discretion to determine the number and selection of Key Employees eligible to
participate in the Amacan Option Plan, it is not possible to estimate
accurately the number of persons who will be eligible to participate therein.
Nonetheless, because the Bylaws of the Company provide that the Company
shall have not less than three and not more than nine directors and because
at least two of the Company's directors must serve on the Committee as
disinterested directors pursuant to the Amacan Option Plan, the number of
persons eligible to participate in the Amacan Option Plan may range from one
non-Committee director to as many as seven non-Committee directors and as
many Key Employees as the Committee, in its discretion, may determine.
OPTIONS. The Committee, in its sole discretion, may
grant both Incentive Options and Nonqualified Options from time to time. The
Committee has complete authority, subject to the terms of the Amacan Option
Plan, to determine the persons to whom and the time or times at which grants
of Options will be made. The Amacan Option Plan provides that the exercise
price of Options, restrictions upon the exercise of Options and restrictions
on the transferability of shares issued upon the exercise of Options, will be
determined by the Committee in its sole discretion, except that (i) the
exercise price of any Incentive Option will not be less than the fair market
value of a share of Amacan Common Stock as of the date of the grant and (ii)
in the case of an Incentive Option granted to any individual who, at the time
that the Incentive Option is granted, owns more than ten percent of the total
combined voting power of all classes of stock of the Company or any of its
subsidiaries (a "Restricted Stockholder"), the exercise price of such
Incentive Option will not be less than 110% of the fair market value,
determined pursuant to the Amacan Option Plan, of a share of Amacan Common
Stock as of the date on which the Option is granted. The Committee, in its
sole discretion, will determine the time or times when each Option vests and
becomes exercisable. The term of an Incentive Option, however, may not be
more than ten years from the date of grant and the term of any Incentive
Option granted to a Restricted Stockholder may not be more than five years
from the date of grant. During the lifetime of the employee receiving the
Option (the "Optionee"), the Option will be exercisable only by the Optionee
and will not be assignable or transferrable. Each Option will become
exercisable in such installments, at such time or times, and is subject to
such conditions, as the Committee, in its discretion, may determine at or
before the time the Option is granted. The Committee may provide for the
accelerated exercisability of an Option in the event of the death, disability
or retirement of the Optionee. Unless otherwise provided by the Committee,
all Options will terminate ninety days after the termination of the
employment of an Optionee, unless the Optionee's employment was terminated
for cause, in which event the Options will immediately terminate upon the
termination of such Optionee's employment.
PAYMENT. The exercise price of Options granted under the
Amacan Option Plan will be payable at the time of exercise in cash or, in the
discretion of the Committee, in shares of Amacan Common Stock or other forms
approved by the Committee. In the case of an Incentive Option, payment will
be made only pursuant to the express provisions with regard to exercise that
the Committee determines to include in the applicable Stock Award Agreement.
Any payment method approved by the Committee must be consistent with
applicable law, regulations and rules as well as the terms and conditions of
the Plan.
STOCK APPRECIATION RIGHTS. In connection with the grant
of any Option, the Committee, in its sole discretion, may also grant an SAR,
which will relate to a specific Option granted to the Optionee. Such SAR
will entitle the Optionee to surrender to the Company, unexercised, all or
any part of that portion of the Option which then is exercisable and to
receive from the Company an amount equal to the difference between the
aggregate exercise price of the shares of Amacan Common Stock subject to the
Option and the fair market value, as determined under the Amacan Option Plan,
of such shares on the date of such exercise. Payment by the Company of any
amount owing pursuant to the exercise of an SAR may be made in shares of
Amacan Common Stock, cash, or any combination of cash and shares, as
determined in the sole discretion of the Committee. The determination of the
Committee to include an SAR in an Incentive Option may be made only at the
time of the grant of the Incentive Option. The Committee may include an SAR
in a Nonqualified Option at the time of the grant, and any time thereafter
until six months before the expiration of the Nonqualified Option.
An SAR may be exercised only to the extent the Option to
which it is applicable is exercisable and may not be exercised unless both
the SAR and the related Option have been outstanding for more than six
months. If, on the date an Option expires, the exercise price of the Option
is less than the fair market value of the shares of
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Amacan Common Stock on such date, then any SARs included in such Option will
automatically be deemed to be exercised as of such date with respect to any
portion of such Option that has not been exercised or surrendered.
RESTRICTED SHARES. The Committee may grant shares of
Amacan Common Stock which are subject to vesting conditions as an Award under
the Amacan Option Plan (the "Restricted Shares"). The award of Restricted
Shares may be made at any time and for any year of the Amacan Option Plan.
The Restricted Shares will become vested, in full or in installments, upon
satisfaction of the conditions specified in the Stock Award Agreement. The
Committee will select the vesting conditions, which may be based upon the
recipient's service and/or performance, the Company's performance, or such
other criteria as the Committee may adopt. The Stock Award Agreement may
also provide for accelerated vesting in the event of the recipient's death,
disability or retirement. A recipient of Restricted Shares, as a condition to
the grant of such Restricted Shares, may be required to pay the Company, in
cash, an amount equal to the par value of the Restricted Shares. The holders
of Restricted Shares will have the same voting, dividend and other rights as
the Company's other stockholders.
STOCK UNITS. A Stock Unit is an unfunded and unsecured
bookkeeping entry representing the equivalent of one share of Amacan Common
Stock which is subject to certain vesting conditions (a "Stock Unit").
Holders of Stock Units have no voting rights or other rights of a
stockholder, but are entitled to receive "Dividend Equivalents" in an amount
equal to the amount of cash dividends paid on the number of shares of Amacan
Common Stock represented by the Stock Units while the Stock Units are
outstanding. Stock Units and corresponding Dividend Equivalents will be
settled at a time determined by the Committee and may be paid, in the
discretion of the Committee, in the form of cash, shares of Amacan Common
Stock or a combination thereof.
Stock Units may be awarded in combination with Restricted
Shares or Nonqualified Options, and the Committee may provide that the Stock
Units will be forfeited in the event that the related Nonqualified Options
are exercised. No cash consideration will be required for an award of a
Stock Unit. The Committee may grant Stock Units at anytime during the term
of the Amacan Option Plan. The Committee will, in its sole discretion,
select the vesting conditions for each award of a Stock Unit. The vesting
conditions may be based upon the recipient's service or performance, the
Company's performance, or such other criteria that the Committee may adopt.
AMENDMENTS TO AMACAN OPTION PLAN. The Board of Directors
may, at any time and for any reason, amend or terminate the Amacan Option
Plan. Any amendment to the Amacan Option Plan, however, will be subject to
the approval of the Company's stockholders to the extent required by
applicable laws, regulations or rules. No amendment, suspension or
termination of the Amacan Option Plan will affect an Award granted on or at
the effective date of such amendment.
GENERAL PROVISIONS. Neither the Amacan Option Plan nor
the grant of any Award thereunder will be deemed to give any individual the
right to remain employed by the Company or any of its subsidiaries. The
Amacan Option Plan will not inhibit the Company's ability to terminate or
modify the terms of the employment of any employee at anytime, with or
without cause. Participants in the Amacan Option Plan will have no rights
with respect to dividends, voting or any other privileges accorded to the
Company's stockholders at the issuance of stock certificates for shares of
Amacan Common Stock. Recipients of Options under the Amacan Option Plan will
have no obligation to exercise such Options. Participants in the Amacan
Option Plan will not have any rights or interest under the Plan in any Option
or shares of the Amacan Common Stock prior to the grant of an Option,
Restricted Share or Stock Unit to such participant.
NEW PLAN BENEFITS. Because the Committee will maintain
complete discretion to determine the number and selection of Key Employees,
as well as the recipients, number, type, vesting requirements and other terms
of any Award under the Amacan Option Plan, it is not possible to determine
the benefits or amounts, if any, that will be received by or allocated to any
person under the Amacan Option Plan, nor is it possible to determine the
benefits or amounts, if any, that would have been received or allocated to
any person during any prior year if the Amacan Option Plan had been in effect.
FEDERAL INCOME TAX CONSEQUENCES
The following tax discussion is a brief summary of
federal income tax law applicable to the Amacan Option Plan. The discussion
is intended solely for general information and omits certain information
which does not apply generally to all participants in the Amacan Option Plan.
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INITIAL GRANT OF OPTIONS AND STOCK APPRECIATION RIGHTS.
A recipient of Options, whether Nonqualified Options or Incentive Options, or
SARs incurs no income tax liability, and the Company obtains no deduction,
from the grant of Options or SARs.
INCENTIVE OPTIONS. The holder of an Incentive Option
will not be subject to federal income tax upon the exercise of the Incentive
Option, and the Company will not be entitled to a tax deduction by reason of
such exercise, provided that the holder is still employed by the Company (or
terminated employment no longer than three months before the exercise date).
Additional exceptions to this exercise timing requirement apply upon the
death or disability of the Optionee. A sale of the shares of Amacan Common
Stock received upon the exercise of an Incentive Option which occurs both
more than one year after the exercise of the Incentive Option and more than
two years after the grant of the Incentive Option will result in the
realization of long-term capital gain or loss to the Optionee in the amount
of the difference between the amount realized on the sale and the exercise
price for such shares. Generally, upon a sale or disposition of the shares
prior to the foregoing holding requirements (referred to as a "disqualifying
disposition"), the Optionee will recognize ordinary compensation income, and
the Company will receive a corresponding deduction, equal to the lesser of
(i) the excess of the fair market value of the shares on the date of transfer
to the Optionee over the exercise price, or (ii) the excess of the amount
realized on the disposition over the exercise price.
The excess of the fair market value of the shares of
Amacan Common Stock at the time of the exercise of an Incentive Stock Option
over the Option price will increase the Optionee's alternative minimum
taxable income subject to the alternative minimum tax, unless a subsequent
disqualifying disposition occurs in the same taxable year of the Optionee in
which the Amacan Common Stock was purchased.
NONQUALIFIED OPTIONS. Upon the exercise of a
Nonqualified Option, the amount by which the fair market value of the shares
of Amacan Common Stock on the date of exercise exceeds the exercise price
will be taxed to the Optionee as ordinary compensation income. The Company
will generally be entitled to a deduction in the same amount, provided it
satisfies certain requirements relating to the terms of the option and makes
all required wage withholdings on the compensation element attributable to
the exercise. In general, the Optionee's tax basis in the shares acquired by
exercising a Nonqualified Option is equal to the fair market value of such
shares on the date of exercise. Upon a subsequent sale of any such shares in
a taxable transaction, the Optionee will realize capital gain or loss in an
amount equal to the difference between his or her basis in the shares and the
sale price.
RESTRICTED SHARES. The recipient of an award of
Restricted Shares will be required to recognize income in the first year that
(i) the Restricted Shares become transferable by the recipient, or (ii) the
Restricted Shares are not subject to a substantial risk of forfeiture. The
various vesting conditions imposed upon the Restricted Shares in the
applicable Stock Award Agreement will determine if the Restricted Shares are
subject to a substantial risk of forfeiture. The amount of income that must
be recognized in connection with a grant of Restricted Shares will be equal
to the difference between the fair market value of the Restricted Shares in
the year that income is recognized and the value paid by the recipient for
the Restricted Shares. The income recognized will be taxed as ordinary
income. The tax basis in the Restricted Shares will be the value paid by the
recipient plus any income recognized by the recipient.
A recipient may elect to recognize income in the year he
or she receives an award of Restricted Shares even if the Restricted Shares
are non-transferable and subject to a substantial risk of forfeiture. The
recipient will recognize as income the difference between the fair market
value of the Restricted Shares and the value paid for such Restricted Shares.
The tax basis in the Restricted Shares will be the value paid by the
recipient plus any income recognized by the recipient. By making such
election, the recipient can defer recognizing as income the increase in value
of the Restricted Shares during such period until the Restricted Shares are
sold or transferred. Upon the subsequent sale of any Restricted Shares in a
taxable transaction, the recipient will realize capital gain or loss
(long-term or short-term, depending on whether the Restricted Shares were
held for more than twelve months before the sale) in an amount equal to the
difference between his or her basis in the Restricted Shares and the sale
price.
STOCK UNITS AND STOCK APPRECIATION RIGHTS. Upon the
exercise of an SAR and/or the payment of Stock Units and corresponding
Dividend Equivalents, a participant under the Amacan Option Plan will
recognize ordinary compensation income in the amount of both the cash and the
fair market value of the shares of Amacan Common Stock received upon the
exercise of the SAR or the payment of the Stock Unit and Dividend Equivalent,
and
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generally the Company will be entitled to a corresponding deduction. In the
event the participant receives shares of Amacan Common Stock upon the
exercise of the SAR or the payment of the Stock Unit or Dividend Equivalent,
any shares so acquired will have a tax basis equal to their fair market value
on the date of such exercise or payment, and the holding period of the shares
will commence on the day following that date. Upon a subsequent sale of such
shares, the participant will recognize capital gain or loss (long-term or
short-term, depending on whether the shares were held for more than twelve
months before the sale) in an amount equal to the difference between his or
her basis in the shares and the sale price.
WITHHOLDING TAX OBLIGATIONS. To the extent required by
applicable federal, state, local or foreign law, the recipient of any payment
or distribution under the Amacan Option Plan will make arrangements
satisfactory to the Company for the satisfaction of any withholding tax
obligations that arise by reason of such payment or distribution. The
Company will not be required to make such payment or distribution until such
obligations are satisfied. The Committee may permit an Amacan Option Plan
participant who exercises a Nonqualified Option to satisfy all or part of his
or her withholding tax obligation by having the Company withhold a portion of
the Amacan Common Stock that otherwise would be issued to the participant
under such Nonqualified Option.
APPROVAL OF AMACAN OPTION PLAN
Approval of the Amacan Option Plan requires the
affirmative vote of a majority of the shares of Amacan Common Stock
represented at the Special Meeting and entitled to vote.
CERTAIN INTERESTS OF DIRECTORS
In considering the recommendation of the Board of
Directors with respect to the Amacan Option Plan, stockholders should be
aware that the members of the Board of Directors have certain interests which
may present them with conflicts of interest in connection with such proposal.
As discussed above, all directors, except those who may be serving as
members of the Committee, are eligible to participate in the Amacan Option
Plan. Nonetheless, the Exchange Agreement provides that if the Share
Exchange is consummated, all of the current directors of the Company will
resign and the Spire Stockholders will designate five individuals, including
one individual selected by the current Board of Directors, to serve as
directors of the Company. See "INTRODUCTION --General."
The Board of Directors recognizes that adoption of the
proposed amendment to the Amacan Option Plan may benefit individual directors
of the Company and their successors, but it believes that approval of the
Amacan Option Plan will strengthen the Company's ability to continue to
attract, motivate and retain qualified employees, officers and directors.
Furthermore, the Board of Directors believes that approval of the Amacan
Option Plan will advance the interests of the Company and its stockholders by
encouraging directors and Key Employees to make significant contributions to
the long-term success of the Company. The Board of Directors believes that
the Amacan Option Plan is in the best interests of the Company and its
stockholders, and therefore, unanimously recommends a vote FOR the proposal
to approve the Amacan Option Plan. In considering the foregoing
recommendation of the Board of Directors, stockholders should be aware that
the current members of the Board of Directors own, in the aggregate,
approximately 34% of the shares of the Amacan Common Stock outstanding as of
January 23, 1996. See "VOTING SECURITIES OF THE COMPANY AND PRINCIPAL HOLDERS
THEREOF."
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PRINCIPAL ACCOUNTANTS
Tanner + Co. has acted as the principal accountants for
the Company since July 1995. KPMG Peat Marwick LLP has acted as the
principal accountants for the Spire Companies since October 1995. The
Company anticipates that one or more representatives of Tanner + Co. and KPMG
Peat Marwick LLP will be present at the Special Meeting and will have an
opportunity to make statements if they so desire and will be available to
respond to appropriate questions.
ADDITIONAL INFORMATION
A copy of the Exchange Agreement is attached to this
Information Statement as Exhibit A and is incorporated herein by reference.
This Information Statement does not contain all of the information set forth
in the Exchange Agreement and any schedules and exhibits thereto. Statements
contained in this Information Statement as to the contents of the Exchange
Agreement and any contract, document, agreement or transaction attached or
related thereto are not necessarily complete, and are qualified in their
entirety by reference to the actual and complete contract, document,
agreement or transaction, copies of which may be obtained from the Company.
Requests for such copies should be addressed to Amacan Resources Corporation,
1399 South Seventh East, No. 9, Salt Lake City, Utah 84105.
OTHER MATTERS
The Board of Directors of the Company does not intend to
bring any other matters before the Special Meeting and is not aware of any
other matters that may be brought before the Special Meeting by others.
BY ORDER OF THE BOARD OF DIRECTORS
<PAGE>
AGREEMENT AND
PLAN OF REORGANIZATION
among
AMACAN RESOURCES CORPORATION
and
SPIRE TECHNOLOGIES, INC.
and
SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
and
THE HOLDERS OF THE COMMON STOCK OF SPIRE
TECHNOLOGIES, INC. AND SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
<PAGE>
_______________________________________________________________________________
TABLE OF CONTENTS
_______________________________________________________________________________
ARTICLE PAGE
- ------- -----
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II THE SHARE EXCHANGE . . . . . . . . . . . . . . . . . 4
ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES . 6
ARTICLE IV REPRESENTATIONS, COVENANTS AND WARRANTIES
OF SPIRE AND SPIRE SYSTEMS . . . . . . . . . . . . . 8
ARTICLE V REPRESENTATIONS, COVENANTS AND WARRANTIES
OF AMACAN . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI SPECIAL COVENANTS TO BE SATISFIED PRIOR
TO CLOSING . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF
AMACAN . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS
OF SPIRE AND SPIRE SYSTEMS. . . . . . . . . . . . . 32
ARTICLE IX GENERAL PROVISIONS . . . . . . . . . . . . . . . . . 34
EXHIBITS
Exhibit A - Articles of Share Exchange
SCHEDULES
Spire Disclosure Schedules
Amacan Disclosure Schedules
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "AGREEMENT"), is entered
into this 23nd day of January, 1996, by and among SPIRE TECHNOLOGIES, INC., a
Utah corporation ("SPIRE"); SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC., a Utah
corporation ("SPIRE SYSTEMS"); AMACAN RESOURCES CORPORATION, a Utah corporation
("AMACAN"); and GARY B. GODFREY AND KARIE GODFREY, TRUSTEES OF THE GARY B.
GODFREY FAMILY REVOCABLE TRUST DATED JULY 1, 1993, RITA S. YATES AND DOUGLAS D.
YATES, TRUSTEES OF THE RITA S. YATES FAMILY REVOCABLE TRUST DATED JULY 1, 1993,
JEFFREY L. WEBSTER, an individual, BRIAN W. BRAITHWAITE, an individual, ROBERT
K. BENCH, an individual, and WILLIAM A. FRESH, an individual (collectively, the
"SPIRE STOCKHOLDERS"); based on the following:
PREMISES
A. The Spire Stockholders are the owners of all of the issued and
outstanding shares of the capital stock of Spire and Spire Systems. It is the
intention of the parties to this Agreement that all of the issued and
outstanding shares of the capital stock of Spire and Spire Systems shall be
acquired by Amacan in exchange solely for voting stock of Amacan.
B. The respective Boards of Directors of Spire, Spire Systems and Amacan
have determined that the exchange and conversion (the "SHARE EXCHANGE") by the
Spire Stockholders of all of the shares of the capital stock of Spire and Spire
Systems for 3,501,883 shares of the common stock of Amacan, $0.25 par value, on
the terms and subject to the conditions set forth in this Agreement, would be
advantageous and beneficial to their respective corporations and stockholders.
C. For United States federal income tax purposes, the parties intend that
the Share Exchange qualify as a reorganization under Section 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended.
AGREEMENT
NOW, THEREFORE, on the stated premises, which are incorporated herein by
reference, and for and in consideration of the mutual covenants, agreements and
representations hereinafter set forth and the mutual benefits to the parties to
be derived herefrom, Spire, Spire Systems, Amacan and the Spire Stockholders
hereby agree as follows:
ARTICLE I
DEFINITIONS
When used herein, the following terms shall have the meanings indicated:
Section 1.01 AFFILIATE. "Affiliate" of any specified Person means any
other Person, directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified Person. For the purposes
of this definition, "control" when used with respect to any Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Section 1.02 AMACAN. Amacan Resources Corporation, a Utah corporation.
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Section 1.03 AMACAN BALANCE SHEET. The balance sheet of Amacan, dated
October 31, 1995, included in the Amacan Schedules and described in Section
5.05(c).
Section 1.04 AMACAN COMMON STOCK. The shares of common stock of Amacan,
$.25 par value.
Section 1.05 AMACAN INDUSTRIES. Amacan Industries Corporation, a Utah
corporation.
Section 1.06 AMACAN INTELLECTUAL PROPERTY RIGHTS. "Amacan Intellectual
Property Rights" shall have the meaning set forth in Section 5.19.
Section 1.07 AMACAN SCHEDULES. The Amacan Disclosure Schedules described
in Section 5.21.
Section 1.08 ARTICLES OF EXCHANGE. The Articles of Share Exchange
executed by Spire, Spire Systems and Amacan, respectively, substantially in the
form attached hereto as Exhibit A and incorporated herein by this reference.
Section 1.09 BUSINESS CONDITION. "Business Condition" with respect to
any Person shall mean the business, financial condition, results of operation,
properties and assets of such Person.
Section 1.10 CLOSING. "Closing" shall have the meaning set forth in
Section 2.03.
Section 1.11 CLOSING DATE. "Closing Date" shall have the meaning set
forth in Section 2.03.
Section 1.12 CODE. The Internal Revenue Code of 1986, as amended.
Section 1.13 DIVISION. The Utah Department of Commerce, Division of
Corporations and Commercial Code.
Section 1.14 EFFECTIVE DATE AND EFFECTIVE TIME . "Effective Date" and
"Effective Time" shall have the respective meanings set forth in Section 2.02.
Section 1.15 ENVIRONMENTAL LAWS. "Environmental Laws" shall mean any and
all laws, statutes, ordinances, judgments, injunctions, decrees, regulations,
rules and orders of any Governmental Authority relating to pollution or the
protection of human health or the environment or to emissions, discharges,
releases or threatened releases of any substance that is regulated by any
Governmental Authority or that has been designated by any Governmental Authority
to be toxic, hazardous, radioactive or otherwise a danger to health or the
environment.
Section 1.16 ERISA. The Employee Retirement Income Security Act of 1974,
as amended.
Section 1.17 EXCHANGE ACT. The Securities Exchange Act of 1934, as
amended.
Section 1.18 GAAP. "GAAP" means generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect on the date of this Agreement.
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Section 1.19 GOVERNMENTAL AUTHORITY. "Governmental Authority" means any
federal, state, local or foreign court or governmental, administrative or
regulatory authority or agency.
Section 1.20 HAZARDOUS MATERIAL. "Hazardous Material" shall mean any
substance that is regulated by any Governmental Authority or that has been
designated by any Governmental Authority to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment.
Section 1.21 INFORMATION STATEMENT. The Information Statement of Amacan
described in Section 5.13.
Section 1.22 PERSON. "Person" means any individual, partnership,
corporation, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization, government or agency or political
subdivision thereof, or other entity.
Section 1.23 RULE 144. Rule 144 promulgated pursuant to the Securities
Act.
Section 1.24 SEC. The United States Securities and Exchange Commission.
Section 1.25 SECURITIES ACT. The Securities Act of 1933, as amended.
Section 1.26 SHARE EXCHANGE. "Share Exchange" shall have the meaning set
forth in Premise B.
Section 1.27 SPIRE. Spire Technologies, Inc., a Utah corporation.
Section 1.28 SPIRE BALANCE SHEETS. The combined balance sheets of Spire
and Spire Systems, dated October 31, 1995, included in the Spire Schedules and
described in Section 4.05(c).
Section 1.29 SPIRE COMMON STOCK. The shares of common stock of Spire,
$.01 par value.
Section 1.30 SPIRE EXCHANGE RATIO. "Spire Exchange Ratio" shall have the
meaning set forth in Section 3.01(b).
Section 1.31 SPIRE INTELLECTUAL PROPERTY RIGHTS. "Spire Intellectual
Property Rights" shall have the meaning set forth in Section 4.19.
Section 1.32 SPIRE OPTION. "Spire Option" shall have the meaning set
forth in Section 3.03.
Section 1.33 SPIRE OPTION PLAN. The Spire 1995 Stock Option and Award
Plan adopted and maintained by Spire.
Section 1.34 SPIRE SCHEDULES. The Spire Disclosure Schedules described
in Section 4.21.
Section 1.35 SPIRE STOCKHOLDERS. The individuals and trusts identified
on the signature page hereof, who own collectively all of the issued and
outstanding shares of the capital stock of Spire and Spire Systems in the
respective amounts set forth on the signature page hereof.
Section 1.36 SPIRE SYSTEMS. Spire Technologies Systems Division, Inc., a
Utah corporation.
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Section 1.37 SPIRE SYSTEMS COMMON STOCK. The shares of common stock of
Spire Systems, no par value.
Section 1.38 SPIRE SYSTEMS EXCHANGE RATIO. "Spire Systems Exchange
Ratio" shall have the meaning set forth in Section 3.01(c).
Section 1.39 STOCKHOLDERS' MEETING. The special meeting of stockholders
of Amacan described in Section 5.13.
Section 1.40 SUBSIDIARY. "Subsidiary" means any corporation with respect
to which a specified Person (or a Subsidiary thereof) owns a majority of the
common stock or has the power to vote or direct the voting of sufficient
securities to elect a majority of directors.
Section 1.41 UTAH ACT. The Utah Revised Business Corporation Act.
ARTICLE II
THE SHARE EXCHANGE
Section 2.01 EXCHANGE. Subject to the terms and conditions of this
Agreement and the Articles of Exchange, Amacan will acquire all of the issued
and outstanding shares of the capital stock of Spire and Spire Systems in
exchange solely for shares of Amacan Common Stock. The Articles of Exchange
provide, among other things, the mode of effecting the Share Exchange and the
manner and basis of converting each issued and outstanding share of capital
stock of Spire and Spire Systems into shares of Amacan Common Stock. The total
consideration for the acquisition by Amacan of all of the capital stock of Spire
and Spire Systems, subject to all of the terms, covenants, and conditions set
forth herein, shall consist of 3,501,883 shares of Amacan Common Stock.
Section 2.02 EFFECTIVE TIME. Subject to the provisions of this Agreement
and the Articles of Exchange, the Articles of Exchange, together with all
required exhibits and attachments, shall be filed with the Division in
accordance with the Utah Act on the Closing Date. The Share Exchange shall
become effective upon confirmation of such filing of the Articles of Exchange
and such other exhibits and attachments (the time of such filing being referred
to hereinafter as the "EFFECTIVE TIME" and the date of such filing being
referred to hereinafter as the "EFFECTIVE DATE").
Section 2.03 CLOSING. The Closing of the Share Exchange and the other
transactions contemplated herein (the "CLOSING") shall be on a date and at such
time on or prior to March 15, 1996, as the parties may agree (the "CLOSING
DATE"), following the satisfaction of every material term, covenant or condition
set forth herein that is required to be satisfied prior to Closing.
Section 2.04 CLOSING EVENTS. At the Closing,
(a) the parties hereto shall execute and deliver copies of the
Articles of Exchange and all other documents necessary to effectuate the Share
Exchange. All forms shall be acceptable to the parties hereto and their
respective legal counsel and the Articles of Exchange shall be filed with the
Division in accordance with the Utah Act;
(b) as contemplated pursuant to Section 3.02, the Spire Stockholders
shall transfer and deliver to Amacan certificates evidencing all of the issued
and outstanding shares of Spire Common Stock and Spire Systems Common Stock,
constituting all of the capital stock of Spire and Spire Systems,
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<PAGE>
Amacan shall obtain and possess all rights in respect thereof, and Spire and
Spire Systems shall become wholly-owned subsidiaries of Amacan;
(c) each of the respective parties hereto shall execute, acknowledge
and deliver (or shall cause to be executed, acknowledged and delivered) any and
all articles of share exchange, certificates, opinions, financial statements,
schedules, agreements, resolutions, rulings or other instruments required by
this Agreement to be so delivered at or prior to the Closing, together with such
other items as may be reasonably requested by the parties hereto and their
respective legal counsel in order to effectuate or evidence the transactions
contemplated hereby;
(d) in addition to the foregoing, each of the parties shall execute
and deliver such additional documents as may reasonably be required in order to
effectuate the transactions herein contemplated in accordance with the
requirements of Section 368(a)(1)(B) of the Code and shall treat such
transactions for all tax purposes consistently with the other parties' treatment
thereof and with such other characterization as a reorganization under such Code
section.
Section 2.05 EFFECT OF SHARE EXCHANGE. At the Effective Time, the Share
Exchange shall have the effects set forth in the Utah Act. Without in any
manner limiting the generality of the foregoing, and subject thereto, (a) the
Spire Stockholders shall acquire 3,501,883 shares of Amacan Common Stock, (b)
Spire and Spire Systems shall become wholly-owned Subsidiaries of Amacan, and
(c) Amacan shall change its name to Spire Technologies International Corporation
or such other name as Amacan, Spire and Spire Systems shall mutually agree.
Section 2.06 TERMINATION
(a) This Agreement, the Share Exchange and the other transactions
contemplated hereby may be terminated at any time prior to the Effective Time:
(i) by the mutual consent of Amacan, Spire and Spire Systems
through action of their respective Boards of Directors; or
(ii) by any of Amacan, Spire or Spire Systems if the Share
Exchange shall not have become effective prior to April 15, 1996, or such
later date as shall have been approved by the Boards of Directors of each
of Amacan, Spire and Spire Systems.
In the event of termination pursuant to this Section 2.06(a), no
obligation, right, remedy or liability shall arise hereunder, and Amacan, Spire
and Spire Systems shall each bear its own costs incurred in connection with the
preparation and execution of this Agreement, the preparation and review of
financial statements required to be delivered pursuant hereto, and the
negotiation of the transactions contemplated hereby.
(b) This Agreement, the Share Exchange and the other transactions
contemplated hereby may be terminated at any time prior to the Effective Time by
action of the Amacan Board of Directors if Spire or Spire Systems shall fail to
comply in any material respect with any of its covenants or agreements contained
in this Agreement or if any of the representations or warranties of Spire or
Spire Systems contained herein shall be inaccurate in any material respect. In
the event of termination pursuant to this Section 2.06(b), no obligation, right,
remedy or liability shall arise hereunder, except that each of Spire and Spire
Systems shall bear all of its own costs and Spire and Spire Systems shall
promptly reimburse Amacan for all reasonable costs incurred by Amacan in
connection with the preparation and
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execution of this Agreement, the preparation and review of financial
statements required to be delivered pursuant hereto, and the negotiation of
the transactions contemplated hereby.
(c) This Agreement, the Share Exchange and the other transactions
contemplated hereby may be terminated at any time prior to the Effective Time by
joint action of the Boards of Directors of Spire and Spire Systems if Amacan
shall fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement or if any of the representations or
warranties of Amacan contained herein shall be inaccurate in any material
respect. In the event of termination pursuant to this Section 2.06(c), no
obligation, right, remedy or liability shall arise hereunder, except that Amacan
shall bear all of its own costs and shall promptly reimburse Spire and Spire
Systems for all reasonable costs incurred by them in connection with the
preparation and execution of this Agreement, the preparation and review of
financial statements required to be delivered pursuant hereto, and the
negotiation of the transactions contemplated hereby.
Section 2.07 ACCOUNTING FOR TRANSACTIONS. This transaction will be
accounted for as a purchase transaction.
Section 2.08 POST-CLOSING COVENANTS.
(a) Subsequent to the Closing Date, Amacan shall timely file with the
SEC a Current Report on Form 8-K with respect to the consummation of the
transactions contemplated by this Agreement in accordance with the requirements
of Sections 13 and 15 of the Exchange Act.
(b) For a period of at least three years following the Closing Date,
Amacan will at all times comply with all reporting requirements of the Exchange
Act, including timely filing of all periodic reports required under the Exchange
Act and the rules and regulations promulgated thereunder, in order to make
available to the holders of the Amacan Common Stock the provisions of Rule 144
for the resale of the Amacan Common Stock.
(c) Promptly following the Closing Date, the directors and officers
of Amacan shall resign and the Spire Stockholders shall designate five
individuals, including one individual designated by the current Board of
Directors of Amacan, to serve as members of the Amacan Board of Directors with
terms expiring at the 1996 annual meeting of stockholders. Upon such
designation of new members of the Amacan Board of Directors, the new Amacan
Board of Directors shall appoint persons to serve as officers of Amacan in
accordance with the Utah Act and the Articles of Incorporation and Bylaws of
Amacan.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 3.01 CONVERSION OF SECURITIES. As more fully set forth in the
Articles of Exchange, as of the Effective Time, by virtue of the Share Exchange
and without any action on the part of the parties hereto:
(a) AMACAN COMMON STOCK; REVERSE SPLIT. Each share of Amacan Common
Stock issued and outstanding at the Effective Time shall continue to be issued
and outstanding. Each stock certificate of Amacan evidencing ownership of any
shares of Amacan Common Stock shall continue to evidence ownership of such
shares of Amacan Common Stock. At the Effective Time, Amacan shall consummate a
reverse stock split pursuant to which each issued and outstanding share of
Amacan Common Stock will be reverse split and converted into one-seventh
(0.142857) of a share of Amacan
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Common Stock. The other provisions set forth in this Agreement contemplate
the completion of such stock split and assume that such stock split is
effective on the date of execution hereof. The exchange ratios set forth in
Section 3.01(b) and (c) and the number of shares of Amacan Common Stock to be
issued to the Spire Stockholders pursuant to this Section 3.01 have been
determined on a post-split basis.
(b) SPIRE COMMON STOCK. The 87,386 shares of Spire Common Stock
issued and outstanding at the Effective Time, constituting all of the issued and
outstanding capital stock of Spire at the Effective Time, shall be exchanged and
converted, without any action on the part of the holders thereof, into an
aggregate of 3,100,333 shares of Amacan Common Stock, which constitutes an
exchange ratio of 35.4786 shares of Amacan Common Stock for each share of Spire
Common Stock to be exchanged (the "SPIRE EXCHANGE RATIO"). Prior to the
Effective Time, all shares of the capital stock of Spire that are owned directly
or indirectly by Spire, Spire Systems or any Affiliate of Spire other than the
Spire Stockholders shall be cancelled and no capital stock of Amacan or other
consideration shall be delivered in exchange therefor.
(c) SPIRE SYSTEMS COMMON STOCK. The 100,000 shares of Spire Systems
Common Stock issued and outstanding at the Effective Time, constituting all of
the issued and outstanding capital stock of Spire Systems at the Effective Time,
shall be exchanged and converted into an aggregate of 401,550 shares of Amacan
Common Stock, when constitutes an exchange ratio of 4.0155 shares of Amacan
Common Stock for each share of Spire Systems Common Stock to be exchanged (the
"SPIRE SYSTEMS EXCHANGE RATIO"). Prior to the Effective Time, all shares of the
capital stock of Spire Systems that are owned directly or indirectly by Spire,
Spire Systems or any Affiliate of Spire Systems other than the Spire
Stockholders shall be cancelled and no capital stock of Amacan or other
consideration shall be delivered in exchange therefor.
(d) ADJUSTMENT OF EXCHANGE RATIOS. If, between the date of this
Agreement and the Effective Time, (i) the outstanding shares of Amacan Common
Stock shall have been changed into a different number of shares or a different
class by reason of any reclassification, recapitalization, split-up, stock
dividend, stock combination, exchange of shares or readjustment (other than the
one-for-seven reverse stock split referred to in Section 3.01(a) above), or (ii)
Amacan shall, without consideration or for a consideration per share less than
the per share value of the shares of Amacan Common Stock to be issued to the
Spire Stockholders pursuant to Sections 3.01(b) and (c), issue shares of Amacan
Common Stock, the Spire Exchange Ratio and Spire Systems Exchange Ratio shall be
adjusted correspondingly.
(e) FRACTIONAL SHARES. No fractional shares of Amacan Common Stock
shall be issued in connection with the Share Exchange or the reverse split of
the Amacan Common Stock described in Section 3.01(a). If any holder of Spire
Common Stock or Spire Systems Common Stock would otherwise be entitled to a
fractional share of Amacan Common Stock on exchange of such shares or on the
consummation of such reverse split, Amacan shall round the number of shares of
Amacan Common Stock to be issued to such holder to the nearest whole share.
There will be no cash payments in lieu of fractional shares.
3.02 EXCHANGE OF CERTIFICATES.
(a) AMACAN TO PROVIDE COMMON STOCK. At the Closing, Amacan shall
make available for exchange in accordance with this Article III, through such
reasonable procedures as Amacan may adopt, the shares of Amacan Common Stock
issuable pursuant to Section 3.01 in exchange for the shares of Spire Common
Stock and Spire Systems Common Stock to be exchanged by the Spire Stockholders
as contemplated hereby.
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(b) RESTRICTIONS ON TRANSFER. The Amacan Common Stock issued
pursuant to the Share Exchange will not be registered under the Securities Act.
The Amacan Common Stock issued pursuant to the Share Exchange will not be
registered under the Securities Act and may not be sold, transferred, or
otherwise disposed of for value unless it is subsequently registered under the
Securities Act or an exemption from such registration is available. Each
certificate of Amacan Common Stock issued pursuant to the Share Exchange shall
be stamped or otherwise imprinted with a legend substantially in the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND ARE "RESTRICTED SECURITIES" WITHIN THE MEANING
OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT. THE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED
WITHOUT COMPLYING WITH RULE 144 IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION OR OTHER COMPLIANCE UNDER THE SECURITIES ACT.
3.03 CONVERSION OF STOCK OPTIONS. Upon the Closing, Amacan shall assume
each and every outstanding employee stock option for shares of Spire Common
Stock (a "SPIRE OPTION") issued pursuant to the Spire Option Plan and all
obligations of Spire under the Spire Option Plan relating to the Spire Options.
In furtherance of the foregoing obligation, Amacan shall reserve for issuance
upon the exercise of such assumed options not less than 650,000 shares of Amacan
Common Stock. Each and every assumed Spire Option (an "ASSUMED OPTION") shall
continue to be on the same terms and conditions of the corresponding Spire
Option except that (i) it will be exercisable for the number of whole shares of
Amacan Common Stock equal to the product obtained by multiplying the number of
shares of Spire Common Stock subject to such Spire Option immediately prior to
the Closing by the Spire Exchange Ratio and rounded down to the nearest whole
number and (ii) the per share exercise price for the shares of Amacan Common
Stock issuable upon exercise of an Assumed Option shall be determined by
dividing the per share exercise price under the corresponding Spire Option by
the Spire Exchange Ratio, and rounding the exercise price up to the nearest one-
hundredth of a cent. The right to receive any Assumed Option may not be
assigned or transferred in any manner except by operation of law, by will or by
the laws of descent, or as otherwise expressly provided under the Spire Option
Plan. Any attempted assignment in violation of this Section 3.03 shall be void.
ARTICLE IV
REPRESENTATIONS, COVENANTS AND WARRANTIES OF SPIRE AND SPIRE SYSTEMS
Except as specifically disclosed in the Spire Schedules which identify the
section of this Agreement to which the disclosure relates, as an inducement to,
and to obtain the reliance of, Amacan, each of Spire and Spire Systems
represents and warrants as follows:
Section 4.01 ORGANIZATION. Each of Spire and Spire Systems is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Utah and has the corporate power to own all of its properties
and assets and to carry on its business in all material respects as it is now
being conducted, and there is no jurisdiction, domestic or foreign, in which it
is not so qualified in which the character and location of the assets owned by
it or the nature of the business transacted by it requires qualification, except
where failure to do so would not have a material adverse effect on its Business
Condition. Included in the Spire Schedules are complete and correct copies of
the Articles of Incorporation and Bylaws of each of Spire and Spire Systems as
in effect on the date hereof. The execution and delivery of this Agreement does
not, and the consummation of the transactions
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contemplated by this Agreement in accordance with the terms hereof will not,
violate any provision of the Articles of Incorporation or Bylaws of Spire or
Spire Systems.
Section 4.02 BINDING AGREEMENT. Each of Spire and Spire Systems has all
requisite corporate power and corporate authority to enter into this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite corporate action of Spire and
Spire Systems, respectively, and have been approved unanimously by the
stockholders of Spire and Spire Systems. This Agreement is a legal, valid and
binding obligation of Spire and Spire Systems, enforceable against each of them
in accordance with its terms, except as enforcement thereof may be limited by
general principles of equity and the effect of applicable bankruptcy,
insolvency, moratorium and other similar laws of general application relating to
or affecting creditor's rights generally, including, without limitation, the
effect of statutory or other laws regarding fraudulent conveyances and
preferential transfers. Included in the Spire Schedules is an accurate and
complete list of the stockholders of Spire and Spire Systems as of the date
hereof, stating the name, record address, and number of shares of Spire Common
Stock and Spire Systems Common Stock held by each.
Section 4.03 CAPITALIZATION. The authorized capitalization of Spire
consists solely of 100,000 shares of Common Stock, $.0.01 par value, of which
87,386 shares are currently issued and outstanding. The authorized
capitalization of Spire Systems consists solely of 1,000,000 shares of Common
Stock, no par value, of which 1,000 shares are currently issued and outstanding.
All issued and outstanding shares of Spire Common Stock and Spire Systems Common
Stock are validly authorized, legally issued, fully paid, nonassessable and not
issued in violation of the preemptive or other right of any Person. Spire
currently holds 12,614 shares of Spire Common Stock in its treasury. Except for
the Spire Options, with respect to which Spire has reserved for issuance upon
the exercise thereof 12,000 shares of Spire Common Stock (and 8,216 shares of
Spire Common Stock are currently issuable with respect thereto), there are no
options, warrants, calls, conversion rights, commitments or agreements of any
character to which Spire or Spire Systems is a party or by which Spire or Spire
Systems may be bound that obligates or may obligate Spire or Spire Systems to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of the capital stock of Spire or Spire Systems or that obligate or may
obligate Spire or Spire Systems to grant, extend or enter into any such option,
warrant, call, conversion right, commitment or agreement.
Section 4.04 SUBSIDIARIES AND PREDECESSORS. Neither Spire nor Spire
Systems has any direct or indirect equity interest in or loans to any
partnership, corporation, limited liability company, joint venture, business
association or other Person. Neither Spire nor Spire Systems has had, since its
inception, any predecessor, as that term is defined under generally accepted
accounting principles.
Section 4.05 FINANCIAL STATEMENTS; TAXES.
(a) Included in the Spire Schedules are (i) an audited combined
balance sheet of Spire and Spire Systems as of April 30, 1995 and 1994, and
combined statements of income, changes in stockholders' equity, and cash flows
for the years ended April 30, 1995 and 1994, including the notes thereto, and
(ii) an unaudited combined balance sheet of Spire and Spire Systems as of
October 31, 1995 and the related unaudited statements of income, changes in
stockholders' equity and cash flows for the six months ended October 31, 1995
(collectively, the "SPIRE FINANCIAL STATEMENTS").
(b) All of the Spire Financial Statements have been prepared in
accordance with GAAP consistently applied throughout the periods involved. All
of such balance sheets present fairly, as of their respective dates, the
financial position of Spire and Spire Systems on such date. Neither Spire
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nor Spire Systems had, as of the date of any such balance sheet, except as
and to the extent reflected or reserved against therein, any liabilities or
obligations (absolute or contingent) which should be reflected in a balance
sheet or the notes thereto prepared in accordance with GAAP and all assets
reflected therein present fairly the assets of Spire or Spire Systems, as the
case may be, in accordance with GAAP. The statements of income,
stockholders' equity and cash flows present fairly the information required
to be set forth therein under GAAP. Spire and Spire Systems maintain and
will continue to maintain standard systems of accounting established and
maintained in a manner permitting the preparation of financial statements in
accordance with GAAP.
(c) Spire and Spire Systems have filed all tax returns and reports as
required by law, both in the U.S. and in any foreign countries in which Spire or
Spire Systems is doing business. All such returns and reports are accurate and
correct in all material respects. Neither Spire nor Spire Systems has any
liabilities with respect to the payment of any federal, state, county, local,
foreign or other taxes (including any deficiencies, interest or penalties)
accrued for or applicable to the periods ended on the dates of the most recent
combined balance sheets of Spire and Spire Systems included in the Spire
Schedules (collectively, the "SPIRE BALANCE SHEETS") and all such dates and
years and periods prior thereto and for which Spire or Spire Systems, as the
case may be, may at said dates have been liable, except for taxes accrued but
not yet due and payable. Included in the Spire Schedules are copies of the
federal and state income tax returns of Spire and Spire Systems filed since
1990, and any foreign returns filed by Spire, Spire Systems or any Affiliate of
Spire or Spire Systems during the same period. Except as set forth in the Spire
Schedules, none of such federal, state or foreign income tax returns has been
examined or is currently being examined by the Internal Revenue Service or any
other Governmental Authority. Neither Spire nor Spire Systems has made any
election pursuant to the Code (other than elections which relate solely to
methods of accounting, depreciation or amortization) which would have a material
adverse effect on Spire or Spire Systems, as the case may be, or their
respective Business Conditions. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any tax return of
Spire or Spire Systems.
(d) The books and records, financial and otherwise, of Spire and
Spire Systems are in all material respects complete and correct and have been
made and maintained in accordance with sound business and bookkeeping practices
and, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of Spire and Spire Systems. Each of Spire and Spire
Systems has maintained a system of internal accounting controls sufficient to
provide reasonable assurances that (i) transactions have been and are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit the preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals, and appropriate
action is taken with respect to any differences.
(e) Except as set forth in the Spire Balance Sheets or in the notes
thereto, (i) Spire and Spire Systems have good and marketable title to their
respective accounts receivable, and all other debts due or recorded in the
records and books of account of Spire and Spire Systems, free of any security
interests or liens and free of any material defenses, counterclaims and set-
offs; (ii) all such accounts receivable, invoices and debts are actual and bona
fide amounts due Spire or Spire Systems, as the case may be, for the total
dollar amount thereof shown on the books of Spire or Spire Systems, as the case
may be, and resulted from the regular course of their respective businesses; and
(iii) the accounts receivable, invoices and debts set forth on the Spire Balance
Sheets arose in the ordinary course of business and are collectible in full in
all material respects on the continuation of reasonable collection efforts by
personnel of Spire or Spire Systems, as the case may be, and without resorting
to litigation and
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in any event not later than 90 days after the date billed. Included in the
Spire Schedules is a compete and accurate list of all accounts receivable of
Spire and Spire Systems as of November 30, 1995.
(f) The inventories of Spire and Spire Systems shown on the Spire
Balance Sheets were valued at cost (determined on a first-in, first-out basis)
or market, whichever is lower, with proper allowances for obsolescence, in
accordance with GAAP. Such inventories consist of items which Spire and Spire
Systems believe are of quality and quantity readily usable or saleable in the
ordinary course of business of Spire and Spire Systems, except such amounts as
are revised in accordance with GAAP and accurately reflected on the Spire
Balance Sheets.
Section 4.06 INFORMATION. The information concerning Spire and Spire
Systems set forth in this Agreement and in the Spire Schedules is complete and
accurate in all material respects and does not contain any untrue statement of a
material fact or omit to state a material fact required to make the statements
made, in light of the circumstances under which they were made, not misleading.
No representation or warranty made by Spire or Spire Systems in this Agreement,
nor any document, written information, statement, financial statement,
certificate, schedule or exhibit prepared and furnished or to be prepared and
furnished by Spire or Spire Systems or their representatives pursuant hereto or
in connection with the transactions contemplated hereby (including, without
limitation, information to be included in the Information Statement), contains
or will contain any untrue statement of a material fact, or omits or will omit
to state a material fact necessary to make the statements or facts contained
herein or therein not misleading in light of the circumstances under which they
were furnished. To the knowledge of Spire and Spire Systems, there is no event,
fact or condition that materially and adversely affects the Business Condition
of Spire or Spire Systems, or that reasonably could be expected to do so, that
has not been set forth in this Agreement or in the Spire Schedules.
Section 4.07 NO DEFAULTS. Neither Spire nor Spire Systems is, nor has
either Spire or Spire Systems received notice that it would be with the passage
of time, (i) in violation of any provision of its Articles of Incorporation or
Bylaws, or (ii) to the knowledge of Spire and Spire Systems, in default or
violation of any material term, condition or provision of (A) any material
judgment, decree, order, injunction or stipulation applicable to Spire or Spire
Systems, as the case may be, or (B) any material agreement, note, mortgage,
indenture, contract, lease, instrument, permit, concession, franchise or license
to which Spire or Spire Systems is a party or by which Spire or Spire Systems or
their respective properties or assets may be bound.
Section 4.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in this Agreement or in the Spire Schedules, since the date of the Spire Balance
Sheets, each of Spire and Spire Systems has conducted its business in the
ordinary course and:
(a) there has not been (i) any material adverse change in the
Business Condition of Spire or Spire Systems, or (ii) any damage, destruction or
loss to Spire or Spire Systems (whether or not covered by insurance) materially
and adversely affecting the Business Condition of Spire or Spire Systems;
(b) neither Spire nor Spire Systems has (i) amended its Articles of
Incorporation or Bylaws; (ii) declared or made, or agreed to declare or make,
any payment of dividends or distributions of any assets of any kind whatsoever
to stockholders or purchased or redeemed, or agreed to purchase or redeem, any
of its capital stock; (iii) waived any rights of value which in the aggregate
are extraordinary or material considering the Business Condition of Spire or
Spire Systems, as the case may be; (iv) made any material change in its method
of management, operation or accounting; (v) entered into any other material
transaction; (vi) made any accrual or arrangement for or payment of bonuses or
special
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compensation of any kind or any severance or termination pay to any
present or former officer, employee or stockholder; (vii) increased the rate of
compensation payable or to become payable by it to any of its officers or
directors or any of its employees whose monthly compensation exceeds $3,000;
(viii) made provision for, or made any increase in, any profit sharing, bonus,
deferred compensation, insurance, pension, retirement or other employee benefit
plan, payment or arrangement made to, for, or with its officers, directors or
employees; or (ix) transferred or granted a right in or relating to any Spire
Intellectual Property Right;
(c) neither Spire nor Spire Systems has (i) granted or agreed to
grant any option, warrant or other right for its capital stock, bonds or other
corporate securities calling for the issuance thereof; (ii) borrowed or agreed
to borrow any funds or incurred, or become subject to, any material obligation
or liability (absolute or contingent) except liabilities incurred in the
ordinary course of business which have been fully disclosed to Amacan; (iii)
paid any material obligation or liability (absolute or contingent) other than
current liabilities reflected in or shown on the Spire Balance Sheets and
current liabilities incurred since that date in the ordinary course of business;
(iv) sold or transferred, or agreed to sell or transfer, any of its assets,
properties, or rights (except assets, properties or rights not used or useful in
its business which, in the aggregate have a value of less than $20,000); (v)
made or permitted any amendment or termination of any contract, agreement or
license to which it is a party if such amendment or termination is material,
considering the Business Condition of Spire or Spire Systems, as the case may
be; (vi) issued, delivered, or agreed to issue or deliver any capital stock,
bonds or other corporate securities including debentures (whether authorized and
unissued or held as treasury stock); (vii) created or assumed any mortgage,
pledge, security interest, lien or other encumbrance on any asset except in the
ordinary course of business consistent with past practice; (viii) made any loan,
advance or capital contribution to or investment in any Person other than travel
loans or advances made in the ordinary course of business of Spire or Spire
Systems, as the case may be, in an aggregate amount which does not exceed $2,000
at any time; or (ix) disclosed to third parties any confidential or proprietary
information respecting its services or marketing procedures or practices,
methods of pricing, or other data material to the Business Condition of Spire or
Spire Systems, as the case may be; and
(d) to the best knowledge of Spire and Spire Systems, neither Spire
nor Spire Systems has become subject to any law or regulation which materially
and adversely affects, or in the future may materially and adversely affect, the
Business Condition of Spire or Spire Systems.
Section 4.09 TITLE AND RELATED MATTERS.
(a) Except as disclosed in the Spire Balance Sheets, each of Spire
and Spire Systems has good and marketable title to all its properties,
inventory, know-how, interests in property and assets, both real and personal,
which are reflected in the Spire Balance Sheets or were acquired after that date
(except those sold or otherwise disposed of since such date in the ordinary
course of business) or are used in the business of Spire or Spire Systems, as
the case may be, free and clear of all mortgages, security interests, royalties,
liens, pledges, charges or encumbrances, except (i) statutory liens or claims
not yet delinquent; (ii) such imperfections of title and easements as do not and
will not materially detract from or interfere with the present or proposed use
of the properties subject thereto or affected thereby or otherwise materially
impair present business operations on such properties; and (iii) as completely
and accurately described in the Spire Schedules.
(b) Included in the Spire Schedules is an accurate and complete list
of all (i) real property owned by Spire or Spire Systems or used in their
respective businesses, and (ii) personal property owned by Spire or Spire
Systems or used in their respective businesses and having a purchase price of
over $2,000. The Spire Schedules contain a complete and accurate description of
any mortgage,
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financing instrument, or other encumbrance to the title to such properties.
All real and personal property owned by Spire or Spire Systems or used in
either of their businesses is in a state of good maintenance and repair and
is adequate and suitable for the purposes for which it is presently being
used.
(c) Included in the Spire Schedules are details of all leases for
real and personal property to which Spire or Spire Systems is a party,
identifying the real or personal property involved, the amount of the monthly or
other period payment due thereunder, a notation of any additional charges, the
expiration date and any residual or similar payment required on expiration of
the lease in order to acquire ownership of the leased property. Except as
disclosed in the Spire Schedules, each such lease is in full force and effect;
all rents and additional rents due to date on each such lease have been paid; in
each case, the lessee has been in peaceable possession since the commencement of
the original term of such lease and is not in default thereunder and no waiver,
indulgence or postponement of the lessee's obligation thereunder has been
granted by the lessor; and there exists no event of default or event,
occurrence, condition or act, which, with the giving of notice, the lapse of
time, or the happening of any further event or condition, would become a default
under such lease. Neither Spire nor Spire Systems has violated any of the terms
or conditions under any such lease in any material respect and, to the best
knowledge, information and belief of Spire and Spire Systems, all of the
covenants to be performed by any other party under any such lease have been
fully performed. The property leased by Spire and Spire Systems is in a state
of good maintenance and repair and is adequate and suitable for the purposes for
which it is presently being used.
Section 4.10 LITIGATION AND PROCEEDINGS. There is no action, suit or
proceeding pending or, to the knowledge of Spire or Spire Systems, threatened by
or against Spire or Spire Systems, or any of their respective officers,
directors or shareholders, affecting Spire, Spire Systems or their respective
properties, at law or in equity, before any court or other Governmental
Authority or before any arbitrator of any kind.
Section 4.11 CONTRACTS.
(a) Included in the Spire Schedules is a description of every
material contract, agreement, instrument, license, arrangement or commitment to
which Spire or Spire Systems is a party or by which any of their respective
properties are bound;
(b) Except as described in this Agreement or in the Spire Schedules,
neither Spire nor Spire Systems is a party to or bound by, and none of the
properties of Spire or Spire Systems are subject to, any contract, agreement,
other commitment or instrument or any charter or other corporate restriction or
any judgment, order, writ, injunction, decree or award which materially and
adversely affects, or in the future may (as far as Spire and Spire Systems can
now foresee) materially and adversely affect, the Business Condition of Spire or
Spire Systems;
(c) Except as included or described in the Spire Schedules, neither
Spire nor Spire Systems is a party to any oral or written (i) contract for the
employment of any officer, director or employee which is not terminable on 30
days (or less) notice; (ii) profit sharing, bonus, deferred compensation, stock
option, severance pay, pension benefit or retirement plan, agreement or
arrangement covered by Title IV of ERISA; (iii) agreement, contract or indenture
relating to the borrowing of money; (iv) guarantee of any obligation for the
borrowing of money or otherwise, excluding endorsements made for collection and
other guarantees of obligations, which, in the aggregate do not exceed $10,000;
(v) consulting or other similar contract with an unexpired term of more than one
year or providing for payments in excess of $10,000 in the aggregate; (vi)
collective bargaining agreement; (vii) agreement with
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any present or former officer or director of Spire or Spire Systems; or
(viii) contract, agreement or other commitment involving payments by it of
more than $20,000 in the aggregate; and
(d) Each contract, agreement, arrangement and commitment listed or
described in the Spire Schedules pursuant to this Section 4.11 is valid and
binding on Spire or Spire Systems, as the case may be, and is in full force and
effect, and, except as otherwise disclosed in this Agreement or the Spire
Schedules, neither Spire nor Spire Systems nor, to the knowledge of Spire and
Spire Systems, any other party thereto has breached any provision of, or is in
default in any material respect under the terms of, any such contract,
agreement, arrangement or commitment, and there is no event of default or other
event which, with notice or lapse of time or both, would constitute a default in
any material respect under any such contract, agreement, arrangement or
commitment.
Section 4.12 CUSTOMER COMPLAINTS. Except as set forth in the Spire
Schedules, since inception, neither Spire nor Spire Systems has received any
material customer complaints concerning its services, other than minor,
nonrecurring problems in the normal course of business. The Spire Balance
Sheets reflect adequate reserves for all known or reasonably anticipated
customer complaints, credits, setoffs and similar items. Included in the Spire
Schedules is a copy of each express warranty and related disclaimer or
limitation of warranty used in connection with products sold or services
provided by Spire or Spire Systems since inception, indicating for each such
warranty, limitation or disclaimer an accurate description of the products or
services to which it relates.
Section 4.13 AUTHORIZATIONS. Except as set forth in the Spire Schedules,
to the best knowledge of Spire and Spire Systems, each of Spire and Spire
Systems possesses all licenses, franchises, permits and other governmental
authorizations, domestic and foreign, that are legally required to enable them
to conduct their respective businesses in all material respects as conducted on
the date hereof or as presently foreseeable in connection therewith. To the
knowledge of Spire and Spire Systems, the execution and delivery of this
Agreement does not, and the consummation of the transactions contemplated hereby
will not, conflict with or result in any violation of any material statute, law,
rule, regulation, judgment, order, decree or ordinance applicable to Spire,
Spire Systems or their respective properties or assets, or conflict with or
result in any breach or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of a material lien or encumbrance on any of the properties or
assets of Spire or Spire Systems pursuant to (i) any provision of the Articles
of Incorporation or Bylaws of Spire or Spire Systems or (ii) except as
completely and accurately described in the Spire Schedules, any material
agreement, contract, note, mortgage, indenture, lease, instrument, permit,
concession, franchise or license to which either Spire or Spire Systems is a
party or by which any of their respective properties or assets may be bound or
affected. To the knowledge of Spire and Spire Systems, no consent, approval,
order or authorization of, or registration, declaration or filing with, any
Governmental Authority is required by or with respect to Spire or Spire Systems
in connection with the execution and delivery of this Agreement by Spire and
Spire Systems or the consummation by Spire and Spire Systems of the transactions
contemplated hereby or thereby, except for (y) the filing of the Articles of
Exchange with the Division and appropriate documents with the relevant
Governmental Authorities of other jurisdictions in which Spire or Spire Systems
is qualified to do business, and (z) such consents, approvals, orders,
authorizations, registrations, declarations and filings which if not obtained or
made would not have a material adverse effect on the Business Condition of Spire
or Spire Systems.
Section 4.14 COMPLIANCE WITH LAWS AND REGULATIONS. Except as set forth
in the Spire Schedules and to the best of each of their knowledge, each of Spire
and Spire Systems has complied with all applicable statutes and regulations of
any Governmental Authority, except to the extent that noncompliance would not
materially and adversely affect the Business Condition of Spire or Spire
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Systems or except to the extent that noncompliance would not result in the
incurrence of any material liability for Spire or Spire Systems. To the
knowledge of Spire or Spire Systems, there are no material judgments or
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court or administrative agency or by arbitration) against Spire or Spire
Systems or any of their respective properties. Included in the Spire
Schedules is a copy of each letter of inquiry, review or investigation or
other writing from or to any Governmental Authority evidencing a violation or
possible or alleged violation of any of the foregoing.
Section 4.15 INSURANCE. Included in the Spire Schedules is a complete
list of all insurance policies which Spire or Spire Systems maintains respecting
their respective services, business, properties and employees. Such policies
are in full force and effect and are free from any right of termination by the
insurance carriers. All premiums payable under all such policies have been paid
and Spire and Spire Systems are otherwise in full compliance with the terms of
such policies. Except as set forth in the Spire Schedules, all of the insurable
properties of Spire and Spire Systems are insured for their respective benefits
in the amount of their full replacement value (subject to reasonable
deductibles) against losses due to fire and other casualty, with extended
coverage and coverage against other risks customarily insured against by persons
operating similar properties in the localities where such properties are
located, and under valid and enforceable policies issued by insurers of
recognized responsibility. Such policies will be outstanding and in full force
at the Closing Date. Included in the Spire Schedules is a complete and accurate
list of all insurance policies carried by Spire or Spire Systems, showing for
each type of coverage the policy limits, principal exclusions, deductibles and
insurer. Neither Spire nor Spire Systems knows of any threatened termination
of, or material premium increase with respect to, any of such policies.
Section 4.16 TRANSACTIONS WITH AFFILIATES. Set forth in the Spire
Schedules is a description of every material contract, agreement or arrangement
between Spire or Spire Systems and any person who is or has ever been an officer
or director of Spire or Spire Systems or person owning of record, or known by
Spire or Spire Systems to own beneficially, five percent or more of the issued
and outstanding Spire Common Stock or Spire Systems Common Stock, as the case
may be, and which is to be performed in whole or in part after the date hereof
or was entered into within three years before the date hereof. In all such
circumstances, the contract, agreement or arrangement was for a bona fide
business purpose of Spire or Spire Systems, as the case may be, and the amount
paid or received, whether in cash, in services, or in kind, is, has been during
the full term thereof, and is required to be during the unexpired portion of the
term thereof, no less favorable to Spire or Spire Systems, as applicable, than
terms available from otherwise unrelated parties in arm's length transactions.
The Spire Schedules also include a description of any commitment by Spire or
Spire Systems, whether written or oral, to lend any funds to, borrow any money
from, or enter into any other material transaction with, any Affiliate of Spire
or Spire Systems.
Section 4.17 MINUTE BOOK. The minute books of Spire and Spire Systems
contain, and will contain at the Closing Date, evidence of the due election and
incumbency of the Board of Directors and officers of Spire and Spire Systems
executing this Agreement or any document, certificate, or other instrument
executed in order to consummate the transactions contemplated hereby.
Section 4.18 LABOR AGREEMENTS AND ACTIONS. Neither Spire nor Spire
Systems is bound by or subject to (and none of their respective assets or
properties is bound by or subject to) any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and no labor union has
requested nor, to the knowledge of Spire or Spire Systems, has sought to
represent any of the employees, representatives, or agents of Spire or Spire
Systems. There is no strike or other labor dispute involving Spire or Spire
Systems pending, or to the knowledge of Spire or Spire Systems threatened,
which could
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have a material adverse effect on the Business Condition of Spire or Spire
Systems (as such business is presently conducted and as it is proposed to be
conducted), nor is Spire or Spire Systems aware of any labor organization
activity involving its employees. Neither Spire nor Spire Systems is aware
that any officer or key employee, or that any group of key employees, intends
to terminate their employment with Spire or Spire Systems, nor does Spire or
Spire Systems have a present intention to terminate the employment of any of
the foregoing. The employment of each officer and employee of Spire and
Spire Systems is terminable at the will of Spire or Spire Systems, as the
case may be.
Section 4.19 INTELLECTUAL PROPERTY. Each of Spire and Spire Systems
owns, or is licensed or otherwise entitled to use, all patents, trademarks,
trade names, service marks, copyrights and any applications therefore,
maskworks, net lists, schematics, technology, know-how, computer software
programs or applications and tangible or intangible proprietary information
or materials that in any material respect are used or currently proposed to
be used in the business of Spire or Spire Systems as currently conducted or
as currently proposed to be conducted by Spire or Spire Systems, as the case
may be (the "SPIRE INTELLECTUAL PROPERTY RIGHTS"). The Spire Schedules list
all patents, trademarks, registered and material unregistered copyrights,
trade names and service marks, and any applications therefore, included in
the Spire Intellectual Property Rights, together with a list of all currently
marketed software products of Spire and Spire Systems and an indication as to
which, if any, of such software products have been registered for copyright
protection with the United States Copyright Office or any foreign office.
Neither Spire nor Spire Systems is, nor as a result of the execution and
delivery of this Agreement or the performance of its obligations hereunder
will be, in violation of any license, sublicense or agreement which is
material to the Business Condition of Spire or Spire Systems, as the case may
be. Except as set forth in the Spire Schedules, no claims with respect to
the Spire Intellectual Property Rights have been asserted or, to the
knowledge of Spire or Spire Systems, are threatened by any Person, nor does
Spire or Spire Systems know of any valid grounds for any bona fide claim (i)
to the effect that the manufacture, sale or use of any product as now used or
offered or proposed for use or sale by Spire or Spire Systems infringes on
any copyright, patent or trade secret, (ii) against the use by Spire or Spire
Systems of any trademark, trade name, trade secret, copyright, technology,
know-how or computer software program or application used in the business of
Spire and Spire Systems as currently conducted or as proposed to be
conducted, or (iii) challenging the ownership, validity or effectiveness of
any of the Spire Intellectual Property Rights. All registered trademarks and
copyrights held by Spire or Spire Systems are valid and subsisting. To the
knowledge of Spire and Spire Systems, there is no material unauthorized use,
infringement or misappropriation of any of the Spire Intellectual Property
Rights by any third party, including any employee or former employee of Spire
or Spire Systems. No Spire Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting in
any manner the licensing thereof by Spire or Spire Systems, as applicable.
Neither Spire nor Spire Systems has entered into any agreement to indemnify
any other Person against any charge of infringement of any Spire Intellectual
Property Right.
Section 4.20 ENVIRONMENTAL MATTERS. Neither Spire nor Spire Systems
has transported, stored, used, manufactured, released or exposed its
employees or any other Person to, any Hazardous Material in violation of any
applicable statute, rule, regulation, order or law, except as would not have
a material adverse effect on the Business Condition of Spire or Spire
Systems. Spire and Spire Systems have obtained all material permits,
licenses and other authorizations required to be obtained by either of them
under any Environmental Law. Spire and Spire Systems (a) are in compliance
with all terms and conditions of such permits, licenses and authorizations,
and (b) are in compliance in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws or
contained in any regulation, code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved thereunder, except as
would not have a material adverse effect on the Business Conditions of Spire
and Spire
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Systems. Neither Spire nor Spire Systems has received any notice, nor does
either Spire or Spire Systems possess any knowledge, of any past or present
condition or practice of the businesses conducted by Spire, Spire Systems or
their Affiliates which forms or could form the basis of any material claim,
action, suit, proceeding, hearing or investigation against Spire or Spire
Systems, arising out of the manufacture, processing, distribution, use,
treatment, storage, spill, disposal, transport or handling, or the emission,
discharge, release or threatened release into the environment, of any
Hazardous Material.
Section 4.21 SPIRE SCHEDULES. Spire and Spire Systems have delivered
to Amacan the schedules described in this Article IV, which are collectively
referred to as the "SPIRE SCHEDULES" and which consist of separate schedules
dated as of the date of execution of this Agreement and instruments and data
as of such date, all certified by the chief executive officer of Spire and
Spire Systems as complete, true and accurate. Spire and Spire Systems shall
cause the Spire Schedules and the instruments and data delivered to Amacan
hereunder to be updated after the date hereof up to and including a specified
date not more than three business days prior to the Closing Date. Such
updated Spire Schedules, certified in the same manner as the original Spire
Schedules, shall be delivered prior to the Closing and as a condition
precedent to the obligation of Amacan to close.
ARTICLE V
REPRESENTATIONS, COVENANTS AND WARRANTIES OF AMACAN
Except as specifically disclosed in the Amacan Schedules which identify
the section of this Agreement to which the disclosure relates, as an
inducement to, and to obtain the reliance of, Spire and Spire Systems, Amacan
represents and warrants as follows:
Section 5.01 ORGANIZATION. Amacan is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Utah
and has the corporate power to own all of its properties and assets and to
carry on its business in all material respects as it is now being conducted,
and there is no jurisdiction, domestic or foreign, in which it is not so
qualified in which the character and location of the assets owned by it or
the nature of the business transacted by it requires qualification, except
where failure to do so would not have a material adverse effect on the
Business Condition of Amacan. Included in the Amacan Schedules are complete
and correct copies of the Articles of Incorporation and Bylaws of Amacan as
in effect on the date hereof. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not, violate any provision
of the Articles of Incorporation or Bylaws of Amacan.
Section 5.02 BINDING AGREEMENT. Amacan has all requisite corporate
power and corporate authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all requisite corporate action, subject to approval
of Amacan's stockholders. This Agreement is a legal, valid and binding
obligation of Amacan, enforceable against it in accordance with its terms,
except as enforcement thereof may be limited by general principles of equity
and the effect of applicable bankruptcy, insolvency, moratorium and other
similar laws of general application relating to or affecting creditor's
rights generally, including, without limitation, the effect of statutory or
other laws regarding fraudulent conveyances and preferential transfers.
Included in the Amacan Schedules is an accurate and complete record
stockholder list as of December 20, 1995, prepared by Amacan's transfer
agent, stating the name, record address, and number of shares of Amacan
Common Stock held by each.
Section 5.03 CAPITALIZATION. The authorized capitalization of Amacan
consists solely of 8,000,000 shares of Amacan Common Stock, $.0.25 par value
per share, of which 389,102 shares shall
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be issued and outstanding after giving effect to the reverse split described
in Section 3.01(a). All issued and outstanding shares of Amacan Common Stock
are validly authorized, legally issued, fully paid, nonassessable and not
issued in violation of the preemptive or other rights of any Person. There
are no shares of Amacan Common Stock held in Amacan's treasury. There are no
options, warrants, calls, conversion rights, commitments or agreements of any
character to which Amacan is a party or by which Amacan may be bound that
obligate or may obligate Amacan to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of the capital stock of Amacan
or that obligate or may obligate Amacan to grant, extend or enter into any
such option, warrant, call, conversion right, commitment or agreement.
Section 5.04 SUBSIDIARIES AND PREDECESSORS. Amacan Industries is a
corporation duly organized, validity existing, and in good standing under the
laws of the State of Utah and has the corporate power to own all of its
properties and assets and to carry on its business in all material respects
as it is now being conducted. The authorized capitalization of Amacan
Industries consists solely of 500,000 shares of common stock, $.10 par value
per share, of which 25,000 shares are issued and outstanding and are held by
Amacan. All issued and outstanding shares of the capital stock of Amacan
Industries are validly authorized, legally issued, fully paid, nonassessable
and not issued in violation of the preemptive or other right of any Person.
There are no options, warrants, calls, conversion rights, commitments or
agreements of any character to which Amacan Industries is a party or by which
Amacan Industries may be bound that obligate or may obligate Amacan
Industries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of the capital stock of Amacan Industries or that
obligate or may obligate Amacan Industries to grant, extend or enter into any
such option, warrant, call, conversion right, commitment or agreement.
Except as described in this Section 5.04 or the Amacan Schedules, Amacan has
no direct or indirect equity interest in or loans to any partnership,
corporation, limited liability company, joint venture, business association
or other Person. Since its inception, Amacan has not had any predecessor, as
that term is defined under GAAP.
Section 5.05 FINANCIAL STATEMENTS; TAXES.
(a) Included in the Amacan Schedules are (i) audited balance
sheets of Amacan as of April 30, 1995 and 1994, and statements of operations,
stockholders' equity and cash flows for the years ended April 30, 1995 and
1994, including the notes thereto, and (ii) an unaudited consolidated balance
sheet of Amacan as of October 31, 1995, and the related unaudited statement
of earnings for the six months ended October 31, 1995 (collectively, the
"AMACAN FINANCIAL STATEMENTS").
(b) All of the Amacan Financial Statements have been prepared in
accordance with GAAP consistently applied throughout the periods involved.
All of such balance sheets present fairly, as of their respective dates, the
financial position of Amacan on such date. Amacan did not have, as the date
of any of such balance sheet, except as and to the extent reflected or
reserved against therein, any liabilities or obligations (absolute or
contingent) which should be reflected in a balance sheet or the notes thereto
prepared in accordance with GAAP and all assets reflected therein present
fairly the assets of Amacan in accordance with GAAP. The statements of
income, stockholders' equity and cash flows present fairly the information
required to be set forth therein under GAAP. Amacan maintains and will
continue to maintain a standard system of accounting established and
maintained in a manner permitting the preparation of financial statements in
accordance with GAAP.
(c) Amacan has filed all tax returns and reports as required by
law. All such returns and reports are accurate and correct in all material
respects. Amacan has no liabilities with respect to the payment of any
federal, state, county, local, foreign or other taxes (including any
deficiencies, interest or penalties) accrued for or applicable to the period
ended on the date of the most recent balance sheet
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included in the Amacan Schedules (the "AMACAN BALANCE SHEET") and all such
dates and years and periods prior thereto and for which Amacan may at said
date have been liable, except for taxes accrued but not yet due and payable.
Included in the Amacan Schedules are copies of the federal and state income
tax returns of Amacan filed since 1990. Except as set forth in the Amacan
Schedules, none of such federal or state income tax returns has been examined
or is currently being examined by the Internal Revenue Service or any other
Governmental Authority. Amacan has not made any election pursuant to the
Code (other than elections which relate solely to methods of accounting,
depreciation or amortization) which would have a material adverse effect on
Amacan or its Business Condition. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any tax
return of Amacan.
(d) The books and records, financial and otherwise, of Amacan are
in all material respects complete and correct and have been made and
maintained in accordance with sound business and bookkeeping practices and,
in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of Amacan. Amacan has maintained a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions have been and are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as
necessary to permit the preparation of financial statements in conformity
with GAAP and to maintain accountability for assets; (iii) access to assets
is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals, and appropriate action is
taken with respect to any differences.
(e) Except as set forth in the Amacan Balance Sheet or in the
notes thereto, (i) Amacan has good and marketable title to its accounts
receivable, and all other debts due or recorded in the records and books of
account of Amacan, free of any security interests or liens and free of any
material defenses, counterclaims and set-offs; (ii) all such accounts
receivable, invoices and debts are actual and bona fide amounts due Amacan
for the total dollar amount thereof shown on the books of Amacan and resulted
from the regular course of its business; and (iii) the accounts receivable,
invoices and debts set forth on the Amacan Balance Sheet arose in the
ordinary course of business and are collectible in full in all material
respects on the continuation of reasonable collection efforts by Amacan
personnel and without resorting to litigation and in any event not later than
90 days after the date billed. Included in the Amacan Schedules is a complete
and accurate list of all accounts receivable to Amacan as of October 31, 1995.
Section 5.06 INFORMATION. The information concerning Amacan set forth
in this Agreement and in the Amacan Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material
fact or omit to state a material fact required to make the statements made,
in light of the circumstances under which they were made, not misleading. No
representation or warranty made by Amacan in this Agreement, nor any
document, written information, statement, financial statement, certificate,
schedule or exhibit prepared and furnished or to be prepared and furnished by
Amacan or its representatives pursuant hereto or in connection with the
transactions contemplated hereby (including, without limitation, information
to be included in the Information Statement), contains or will contain any
untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained herein or
therein not misleading in light of the circumstances under which they were
furnished. To the knowledge of Amacan, there is no event, fact or condition
that materially and adversely affects the Business Condition of Amacan, or
that reasonably could be expected to do so, that has not been set forth in
this Agreement or in the Amacan Schedules.
Section 5.07 NO DEFAULTS. Amacan is not, nor has it received notice
that it would be with the passage of time, (i) in violation of any provision
of its Articles of Incorporation or Bylaws, or (ii) to the knowledge of
Amacan, in default or violation of any material term, condition or provision
of (A) any
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material judgment, decree, order, injunction or stipulation applicable to
Amacan, or (B) any material agreement, note, mortgage, indenture, contract,
lease, instrument, permit, concession, franchise or license to which Amacan
is a party or by which Amacan or its properties or assets may be bound.
Section 5.08 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in this Agreement or in the Amacan Schedules, since the date of the
Amacan Balance Sheet, Amacan has conducted its business in the ordinary
course and:
(a) there has not been (i) any material adverse change in the
Business Condition of Amacan, or (ii) any damage, destruction or loss to
Amacan (whether or not covered by insurance) materially and adversely
affecting the Business Condition of Amacan;
(b) Amacan has not (i) amended its Articles of Incorporation or
Bylaws; (ii) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or redeem, any
of its capital stock; (iii) waived any rights of value which in the aggregate
are extraordinary or material considering the Business Condition of Amacan;
(iv) made any material change in its method of management, operation or
accounting; (v) entered into any other material transaction; (vi) made any
accrual or arrangement for or payment of bonuses or special compensation of
any kind or any severance or termination pay to any present or former
officer, employee or stockholder; (vii) increased the rate of compensation
payable or to become payable by it to any of its officers or directors or any
of its employees whose monthly compensation exceeds $3,000; (viii) made
provision for, or made any increase in, any profit sharing, bonus, deferred
compensation, insurance, pension, retirement or other employee benefit plan,
payment or arrangement made to, for, or with its officers, directors or
employees; or (ix) transferred or granted a right in or relating to any
Amacan Intellectual Property Right;
(c) Amacan has not (i) granted or agreed to grant any option,
warrant or other right for its capital stock, bonds or other corporate
securities calling for the issuance thereof; (ii) borrowed or agreed to
borrow any funds or incurred, or become subject to, any material obligation
or liability (absolute or contingent) except liabilities incurred in the
ordinary course of business which have been fully disclosed to Spire; (iii)
paid any material obligation or liability (absolute or contingent) other than
current liabilities reflected in or shown on the Amacan Balance Sheet and
current liabilities incurred since that date in the ordinary course of
business; (iv) sold or transferred, or agreed to sell or transfer, any of its
assets, properties, or rights (except assets, properties or rights not used
or useful in its business which, in the aggregate have a value of less than
$20,000); (v) made or permitted any amendment or termination of any contract,
agreement or license to which it is a party if such amendment or termination
is material, considering the Business Condition of Amacan; (vi) issued,
delivered, or agreed to issue or deliver any capital stock, bonds or other
corporate securities including debentures (whether authorized and unissued or
held as treasury stock); (vii) created or assumed any mortgage, pledge,
security interest, lien or other encumbrance on any asset except in the
ordinary course of business consistent with past practice; (viii) made any
loan, advance or capital contribution to or investment in any Person other
than travel loans or advances made in the ordinary course of business of
Amacan, in an aggregate amount which does not exceed $2,000 at any time; or
(ix) disclosed to third parties any confidential or proprietary information
respecting its services or marketing procedures or practices, methods of
pricing, or other data material to the Business Condition of Amacan; and
(d) To the best knowledge of Amacan, it has not become subject to
any law or regulation which materially and adversely affects, or in the
future may materially and adversely affect, the Business Condition of Amacan.
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Section 5.09 TITLE AND RELATED MATTERS.
(a) Except as disclosed in the Amacan Balance Sheet, Amacan has
good and marketable title to all its properties, inventory, know-how,
interests in property and assets, both real and personal, which are reflected
in the Amacan Balance Sheet or were acquired after that date (except those
sold or otherwise disposed of since such date in the ordinary course of
business) or are used in Amacan's business, free and clear of all mortgages,
security interests, royalties, liens, pledges, charges or encumbrances,
except (i) statutory liens or claims not yet delinquent; (ii) such
imperfections of title and easements as do not and will not materially
detract from or interfere with the present or proposed use of the properties
subject thereto or affected thereby or otherwise materially impair present
business operations on such properties; and (iii) as completely and
accurately described in the Amacan Schedules.
(b) Included in the Amacan Schedules is an accurate and complete
list of all (i) real property owned by Amacan or used in its business, and
(ii) personal property owned by Amacan or used in its business and having a
purchase price of over $2,000. The Amacan Schedules contain a complete and
accurate description of any mortgage, financing instrument or other
encumbrance to the title to such properties. All real and personal property
owned by Amacan or used in its business is in a state of good maintenance and
repair and is adequate and suitable for the purposes for which it is
presently being used.
(c) Included in the Amacan Schedules are details of all leases
for real and personal property to which Amacan is a party, identifying the
real or personal property involved, the amount of the monthly or other period
payment due thereunder, a notation of any additional charges, the expiration
date and any residual or similar payment required on expiration of the lease
in order to acquire ownership of the leased property. Except as disclosed in
the Amacan Schedules, each such lease is in full force and effect; all rents
and additional rents due to date on each such lease have been paid; in each
case, the lessee has been in peaceable possession since the commencement of
the original term of such lease and is not in default thereunder and no
waiver, indulgence or postponement of the lessee's obligation thereunder has
been granted by the lessor; and there exists no event of default or event,
occurrence, condition or act, which, with the giving of notice, the lapse of
time, or the happening of any further event or condition, would become a
default under such lease. Amacan has not violated any of the terms or
conditions under any such lease in any material respect and, to the best of
Amacan's knowledge, information and belief, all of the covenants to be
performed by any other party under any such lease have been fully performed.
The property leased by Amacan is in a state of good maintenance and repair
and is adequate and suitable for the purposes for which it is presently being
used.
Section 5.10 LITIGATION AND PROCEEDINGS. There is no action, suit or
proceeding pending or, to the knowledge of Amacan, threatened by or against
Amacan, or any of its officers, directors or stockholders, affecting Amacan
or its properties, at law or in equity, before any court or other
Governmental Authority, or before any arbitrator of any kind.
Section 5.11 CONTRACTS.
(a) Included in the Amacan Schedules is a description of every
material contract, agreement, instrument, license, arrangement or commitment
to which Amacan is a party or by which its properties are bound;
(b) Except as described in this Agreement or in the Amacan
Schedules, Amacan is not a party to or bound by, and the properties of Amacan
are not subject to, any contract, agreement, other commitment or instrument
or any charter or other corporate restriction or any judgment, order,
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writ, injunction, decree or award which materially and adversely affects, or
in the future may (as far as Amacan can now foresee) materially and
adversely affect, the Business Condition of Amacan;
(c) Except as included or described in the Amacan Schedules,
Amacan is not a party to any oral or written (i) contract for the employment
of any officer, director or employee which is not terminable on 30 days (or
less) notice; (ii) profit sharing, bonus, deferred compensation, stock
option, severance pay, pension benefit or retirement plan, agreement or
arrangement covered by Title IV of ERISA; (iii) agreement, contract or
indenture relating to the borrowing of money; (iv) guarantee of any
obligation for the borrowing of money or otherwise, excluding endorsements
made for collection and other guarantees of obligations, which, in the
aggregate do not exceed $10,000; (v) consulting or other similar contract
with an unexpired term of more than one year or providing for payments in
excess of $10,000 in the aggregate; (vi) collective bargaining agreement;
(vii) agreement with any present or former officer or director of Amacan; or
(viii) other contract, agreement or other commitment involving payments by it
of more than $20,000 in the aggregate; and
(d) Each contract, agreement, arrangement and commitment listed or
described in the Amacan Schedules pursuant to this Section 5.11 is valid and
binding on Amacan and is in full force and effect, and, except as otherwise
disclosed in this Agreement or the Amacan Schedules, neither Amacan nor, to
the knowledge of Amacan, any other party thereto has breached any provision
of, or is in default under the terms of, any such contract, agreement,
arrangement or commitment, and there is no event of default or other event
which, with notice or lapse of time or both, would constitute a default in
any material respect under any such contract, agreement, arrangement or
commitment.
Section 5.12 SEC DOCUMENTS. Included in the Amacan Schedules are
copies of Amacan's Annual Report on Form 10-KSB for the fiscal years ended
April 30, 1995, 1994 and 1993, respectively, and all other reports filed or
required to be filed with the SEC since May 1, 1992 (collectively, the
"AMACAN SEC DOCUMENTS"), which are all the documents (other than preliminary
material) that Amacan was required to file with the SEC since such date. As
of their respective filing dates, the Amacan SEC Documents complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and none of the Amacan SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not
misleading, except to the extent corrected by a subsequently filed Amacan SEC
Document. The financial statements of Amacan included in the Amacan SEC
Documents comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto, have been prepared in accordance with GAAP
consistently applied (except as may be indicated in the notes thereto or, in
the case of unaudited statements, as permitted by the SEC) and fairly present
the financial position of Amacan at the dates thereof and the results of its
operations and changes in financial position for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring audit
adjustments).
Section 5.13 AUTHORIZATIONS. Except as set forth in the Amacan
Schedules, to the best knowledge of Amacan, it possesses all licenses,
franchises, permits and other governmental authorizations, domestic and
foreign, that are legally required to enable it to conduct its business in
all material respects as conducted on the date hereof or as presently
foreseeable in connection therewith. To the knowledge of Amacan, the
execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby will not, conflict with or result in any
violation of any material statute, law, rule, regulation, judgment, order,
decree or ordinance applicable to Amacan or its properties or assets, or
conflict with or result in any breach or default (with or without notice or
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lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material
benefit under, or result in the creation of a material lien or encumbrance on
any of the properties or assets of Amacan pursuant to (i) any provision of
the Articles of Incorporation or Bylaws of Amacan or (ii) except as
completely and accurately described in the Amacan Schedules, any material
agreement, contract, note, mortgage, indenture, lease, instrument, permit,
concession, franchise or license to which Amacan is a party or by which any
of its properties or assets may be bound or affected. To the knowledge of
Amacan, no consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Authority is required by or with
respect to Amacan in connection with the execution and delivery of this
Agreement by Amacan or the consummation by Amacan of the transactions
contemplated hereby or thereby, except for (x) the preparation and
distribution to the stockholders of Amacan of an information statement (the
"INFORMATION STATEMENT") in preparation for and relating to a special meeting
of stockholders of Amacan to be called for the purpose of soliciting approval
of the Share Exchange, this Agreement and the transactions contemplated
hereby (the "STOCKHOLDERS MEETING"), (y) the filing of the Articles of
Exchange with the Division and appropriate documents with the relevant
Governmental Authorities of other jurisdictions in which Amacan is qualified
to do business, and (z) such consents, approvals, orders, authorizations,
registrations, declarations and filings which if not obtained or made would
not have a material adverse effect on the Business Condition of Amacan.
Section 5.14 COMPLIANCE WITH LAWS AND REGULATIONS. Except as set
forth in the Amacan Schedules and to the best of its knowledge, Amacan has
complied with all applicable statutes and regulations of any Governmental
Authority, except to the extent that noncompliance would not materially and
adversely affect the Business Condition of Amacan or except to the extent
that noncompliance would not result in the incurrence of any material
liability for Amacan. To the knowledge of Amacan, there are no material
judgments or orders, injunctions, decrees, stipulations or awards (whether
rendered by a court or administrative agency or by arbitration) against
Amacan or any of its properties. Included in the Amacan Schedules is a copy
of each letter of inquiry, review or investigation or other writing from or
to any Governmental Authority evidencing a violation or possible or alleged
violation of any of the foregoing.
Section 5.15 INSURANCE. Included in the Amacan Schedules is a
complete list of all insurance policies which Amacan maintains respecting its
services, business, properties and employees. Such policies are in full
force and effect and are free from any right of termination by the insurance
carriers. All premiums payable under all such policies have been paid and
Amacan is otherwise in full compliance with the terms of such policies.
Except as set forth in the Amacan Schedules, all of the insurable properties
of Amacan are insured for its benefit in the amount of their full replacement
value (subject to reasonable deductibles) against losses due to fire and
other casualty, with extended coverage and coverage against other risks
customarily insured against by persons operating similar properties in the
localities where such properties are located, and under valid and enforceable
policies issued by insurers of recognized responsibility. Such policies will
be outstanding and in full force at the Closing Date. Included in the
Amacan Schedules ia a complete and an accurate list of all insurance policies
carried by Amacan, showing for each type of coverage the policy limits,
principal exclusions, deductibles and insurer. Amacan does not know of any
threatened termination of, or material premium increase with respect to, any
of such policies.
Section 5.16 TRANSACTIONS WITH AFFILIATES. Set forth in the Amacan
Schedules is a description of every material contract, agreement or
arrangement between Amacan and any person who is or has ever been an officer
or director of Amacan or person owning of record, or known by Amacan to own
beneficially, five percent or more of the issued and outstanding Amacan
Common Stock and which is to be performed in whole or in part after the date
hereof or was entered into within three years before the
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date hereof. In all such circumstances, the contract, agreement or
arrangement was for a bona fide business purpose of Amacan and the amount
paid or received, whether in cash, in services, or in kind, is, has been
during the full term thereof, and is required to be during the unexpired
portion of the term thereof, no less favorable to Amacan than terms available
from otherwise unrelated parties in arm's length transactions. The Amacan
Schedules also include a description of any commitment by Amacan, whether
written or oral, to lend any funds to, borrow any money from, or enter into
any other material transaction with, any Affiliate of Amacan.
Section 5.17 MINUTE BOOK. The minute book of Amacan contains, and
will contain at the Closing Date, evidence of the due election and incumbency
of the Board of Directors and officers of Amacan executing this Agreement or
any document, certificate or other instrument executed in order to consummate
the transactions contemplated hereby.
Section 5.18 LABOR AGREEMENTS AND ACTIONS. Amacan is not bound by or
subject to (and none of its assets or properties is bound by or subject to)
any written or oral, express or implied, contract, commitment or arrangement
with any labor union, and no labor union has requested or, to the knowledge
of Amacan, has sought to represent any of the employees, representatives, or
agents of Amacan. There is no strike or other labor dispute involving Amacan
pending, or to the knowledge of Amacan threatened, which could have a
material adverse effect on the Business Condition of Amacan (as such
business is presently conducted and as it is proposed to be conducted), nor
is Amacan aware of any labor organization activity involving its employees.
Amacan is not aware that any officer or key employee, or that any group of
key employees, intends to terminate their employment with Amacan, nor does
Amacan have a present intention to terminate the employment of any of the
foregoing. The employment of each officer and employee of Amacan is
terminable at the will of Amacan.
Section 5.19 INTELLECTUAL PROPERTY. Amacan owns, or is licensed or
otherwise entitled to use, all patents, trademarks, trade names, service
marks, copyrights and any applications therefor, maskworks, net lists,
schematics, technology, know-how, computer software programs or applications
and tangible or intangible proprietary information or materials that in any
material respect are used or currently proposed to be used in the business of
Amacan as currently conducted or as currently proposed to be conducted by
Amacan (the "AMACAN INTELLECTUAL PROPERTY RIGHTS"). The Amacan Schedules
list all patents, trademarks, registered and material unregistered
copyrights, trade names and service marks, and any applications therefor,
included in the Amacan Intellectual Property Rights. Amacan is not, nor as a
result of the execution and delivery of this Agreement or the performance of
Amacan's obligations hereunder will be, in violation of any license,
sublicense or agreement which is material to the Business Condition of
Amacan. Except as set forth in the Amacan Schedules, no claims with respect
to the Amacan Intellectual Property Rights have been asserted or, to the
knowledge of Amacan, are threatened by any Person, nor does Amacan know of
any valid grounds for any bona fide claim (i) to the effect that the
manufacture, sale or use of any product as now used or offered or proposed
for use or sale by Amacan infringes on any copyright, patent or trade secret,
(ii) against the use by Amacan of any trademark, trade name, trade secret,
copyright, technology, know-how or computer software program or application
used in the business of Amacan as currently conducted or as proposed to be
conducted, or (iii) challenging the ownership, validity or effectiveness of
any of the Amacan Intellectual Property Rights. To Amacan's knowledge, there
is no material unauthorized use, infringement or misappropriation of any of
the Amacan Intellectual Property Rights by any third party, including any
employee or former employee of Amacan. No Amacan Intellectual Property Right
is subject to any outstanding order, judgment, decree, stipulation or
agreement restricting in any manner the licensing thereof by Amacan. Amacan
has not entered into any agreement to indemnify any other Person against any
charge of infringement of any Amacan Intellectual Property Right.
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Section 5.20 ENVIRONMENTAL MATTERS. Amacan has not transported,
stored, used, manufactured, released or exposed its employees or any other
Person to, any Hazardous Material in violation of any applicable statute,
rule, regulation, order or law, except as would not have a material adverse
effect on Amacan's Business Condition. Amacan has obtained all material
permits, licenses and other authorizations required to be obtained by it
under any Environmental Law. Amacan is (a) in compliance with all terms and
conditions of such permits, licenses and authorizations, and (b) in
compliance in all material respects with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws or contained in any
regulation, code, plan, order, decree, judgment, notice or demand letter
issued, entered, promulgated or approved thereunder except as would not have
a material adverse effect on Amacan's Business Condition. Amacan has not
received any notice, nor does it possess any knowledge, of any past or
present condition or practice of the businesses conducted by Amacan or its
Affiliates which forms or could form the basis of any material claim, action,
suit, proceeding, hearing or investigation against Amacan, arising out of (x)
the manufacture, processing, distribution, use treatment, storage, spill,
disposal, transport or handling, or the emission, discharge, release or
threatened release into the environment, of any Hazardous Material (y) any
actual or potential violation or failure to comply with any Environmental
Law, or (z) any actual or threatened obligation to undertake or bear the cost
of any liability pursuant to any Environmental Law with respect to any of the
properties or assets in which Amacan or its Subsidiaries has ir had an
interest. There are no pending or, to the knowledge of Amacan and its
Subsidiaries, threatened claims, encumbrances or other restrictions of any
nature arising under or pursuant to any Environmental Law with respect to or
affecting any of the properties and assets in which Amacan or its
Subsidiaries has or had an interest.
Section 5.21 AMACAN SCHEDULES. Amacan has delivered to Spire and
Spire Systems the schedules described in this Article V, which are
collectively referred to as the "AMACAN SCHEDULES" and which consist of
separate schedules dated as of the date of execution of this Agreement and
instruments and data as of such date, all certified by the chief executive
officer of Amacan as complete, true and accurate. Amacan shall cause the
Amacan Schedules and the instruments and data delivered to Spire hereunder to
be updated after the date hereof up to and including a specified date not
more than three business days prior to the Closing Date. Such updated Amacan
Schedules, certified in the same manner as the original Amacan Schedules,
shall be delivered prior to the Closing and as a condition precedent to the
obligations of Spire and Spire Systems to close.
ARTICLE VI
SPECIAL COVENANTS TO BE SATISFIED PRIOR TO CLOSING
Section 6.01 ACTIVITIES OF SPIRE, SPIRE SYSTEMS AND AMACAN.
(a) From and after the date of this Agreement until the Closing
Date and except as expressly permitted or contemplated by this Agreement,
Spire, Spire Systems and Amacan will each:
(i) carry on its business in substantially the same manner as it
has heretofore;
(ii) maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iii) perform in all material respects all of its obligations
under material contracts, leases and instruments relating to or affecting
its Business Condition;
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(iv) use its best efforts to maintain and preserve its business
organization intact, to retain its key employees, and to maintain its
relationships with its material suppliers and customers; and
(v) comply fully with and perform in all material respects all
obligations and duties imposed on it by all federal, foreign, state and
local laws and all rules, regulations and orders imposed by Governmental
Authorities.
(b) Except as provided herein or with the prior written consent of
the other parties hereto, from and after the date of this Agreement and until
the Closing Date, neither Spire, Spire Systems nor Amacan will:
(i) make any change in its Articles of Incorporation or Bylaws;
(ii) take any action described in Section 4.08, in the case of
Spire and Spire Systems, or in Section 5.08, in the case of Amacan; or
(iii) enter into or amend any material contract, agreement or
other instrument of any of the types described in such party's disclosure
schedules other than in the normal course of business and without
materially and adversely affecting the Business Condition of such party.
Section 6.02 ACCESS TO PROPERTIES AND RECORDS. Spire, Spire Systems
and Amacan each will afford to the officers and authorized representatives of
the other full access to the properties, books and records of Spire, Spire
Systems or Amacan, as the case may be, in order that each may have full
opportunity to make such reasonable investigation as it shall desire to make
of the affairs of the other, and each will furnish the other parties with
such additional financial and operating data and other information as to the
business and properties of Spire, Spire Systems or Amacan, as the case may
be, as the others shall from time to time reasonably request.
Section 6.03 INFORMATION FOR SEC REPORTS. Spire and Spire Systems
will furnish Amacan with all information concerning Spire and Spire Systems
required for inclusion in any report (including a Current Report on Form 8-K)
to be filed by Amacan with any Governmental Authority in connection with the
Share Exchange and other transactions contemplated hereby, and each of Spire
and Spire Systems represents and warrants to Amacan that all information so
furnished for such reports shall be true and correct in all material respects
without omission to state any material fact required to make the information
provided not misleading.
Section 6.04 INDEMNIFICATION BY AMACAN. Amacan will indemnify and
hold harmless Spire and Spire Systems and their respective Affiliates, from
and against any and all losses, claims, damages, expenses, liabilities or
actions to which any of them may become subject under applicable law
(including the Securities Act and the Exchange Act) and will reimburse them
for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any claim or action, whether or not resulting
in liability, insofar as such losses, claims, damages, expenses, liabilities
or actions arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any report or other document
filed with a Governmental Authority or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary in order to make the statements therein not
misleading, provided that such claim or action is not based on, and does not
arise out of, information furnished by Spire or Spire Systems for inclusion
in such report or document. The indemnity agreement contained in this
Section 6.04 shall remain operative and
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in full force and effect, regardless of any investigation made by or on
behalf of Spire and Spire Systems and shall survive the consummation of the
transactions contemplated hereby.
Section 6.05 INDEMNIFICATION BY SPIRE. Each of Spire and Spire
Systems will indemnify and hold harmless Amacan and its Affiliates, from and
against any and all losses, claims, damages, expenses, liabilities or actions
to which any of them may become subject under applicable law (including the
Securities Act and the Exchange Act) and will reimburse them for any legal or
other expenses reasonably incurred by them in connection with investigating
or defending any claim or action, whether or not resulting in liability,
insofar as such losses, claims, damages, expenses, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any report or other document filed
with a Governmental Authority or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein, or necessary in order to make the statements therein not misleading,
provided that such claim or action is not based on, and does not arise out
of, information furnished by Amacan for inclusion in such report or other
document. The indemnity agreement contained in this Section 6.05 shall
remain operative and in full force and effect, regardless of any
investigation made by or on behalf of Amacan and shall survive the
consummation of the transactions contemplated hereby.
Section 6.07 ACQUISITION OF AMACAN COMMON STOCK. The consummation of
the Share Exchange and the other transactions contemplated under this
Agreement, including the issuance of shares of the Amacan Common Stock to the
Spire Stockholders as contemplated hereby, constitutes the offer and sale of
securities under the Securities Act and applicable state statutes. Such
transactions shall be consummated in reliance on exemptions from the
registration and prospectus delivery requirements of such statutes which
depend, among other items, on the circumstances under which the Spire
Stockholders acquire such securities.
(a) In order to provide documentation for reliance upon exemptions
from the registration and prospectus delivery requirements for such
transactions, the execution of this Agreement by each of the Spire
Stockholders shall constitute his or her affirmation and acceptance of, and
concurrence in, the following representations and warranties:
(i) Such Spire Stockholder acknowledges that neither the SEC nor
the securities commission of any state or other federal agency has made any
determination as to the merits of acquiring the Amacan Common Stock, and
that this transaction involves certain risks.
(ii) Such Spire Stockholder has received and read this Agreement
and understands the risks related to the consummation of the transactions
contemplated hereby.
(iii) Such Spire Stockholder has such knowledge and
experience in business and financial matters that he or she is capable of
evaluating Amacan and its business operations.
(iv) Such Spire Stockholder has been provided with a copy of this
Agreement and the Amacan and Spire Schedules plus all materials and
information requested by such stockholder or his or her representative,
including any information requested to verify any information furnished (to
the extent such information is available or can be obtained without
unreasonable effort or expense), and such stockholder has been provided the
opportunity for direct communication between Amacan and its representatives
and such stockholder and his or her representatives regarding the
transactions contemplated hereby.
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(v) All information which such Spire Stockholder has provided to
Amacan or its agents or representatives concerning such Spire Stockholder's
suitability to hold shares of Amacan Common Stock following the
transactions contemplated hereby is complete, accurate, and correct.
(vi) Such Spire Stockholder has not offered or sold any
securities of Amacan or interest in this Agreement and has no present
intention of dividing the shares of Amacan Common Stock to be received or
the rights under this Agreement with others or of reselling or otherwise
disposing of any portion of such stock or rights, either currently or after
the passage of a fixed or determinable period of time or on the occurrence
or nonoccurrence of any predetermined event or circumstance.
(vii) Such Spire Stockholder was at no time solicited by any
leaflet, public promotional meeting, circular, newspaper or magazine
article, radio or television advertisement or any other form of general
advertising or solicitation in connection with the offer, sale or purchase
of shares of Amacan Common Stock through this Agreement.
(viii) Such Spire Stockholder has adequate means of providing
for his or her current needs and possible personal contingencies and has no
need now, and anticipates no need in the foreseeable future, to sell shares
of the Amacan Common Stock which the undersigned will receive. Such Spire
Stockholder is able to bear the economic risks of this investment, and
consequently, without limiting the generality of the foregoing, is able to
hold the shares of Amacan Common Stock to be received in the Share Exchange
for an indefinite period of time and has a sufficient net worth to sustain
a loss of the entire investment, in the event such loss should occur.
(ix) Such Spire Stockholder is (a) a citizen of the United
States, (b) at least 21 years of age, and (c) a bona fide permanent
resident of and is domiciled in the state indicated on the signature page
hereof, and has no present intention of becoming a resident of any other
state or jurisdiction.
(x) Such Spire Stockholder understands that the Amacan Common
Stock has not been registered, but is being acquired by reason of a
specific exemption under the Securities Act as well as exemptions under
certain state statutes and that any disposition of the shares of Amacan
Common Stock acquired in the Share Exchange may, under certain
circumstances, be inconsistent with these exemptions and may cause the
undersigned to be deemed an "underwriter" within the meaning of the
Securities Act. Such Spire Stockholder understands that the definition of
"underwriter" arises out of the concept of "distribution" and that any
subsequent disposition of the subject Amacan Common Stock can only be
effected in transactions which are not considered distributions.
Generally, the term "distribution" is considered synonymous with "public
offering" or any other offer or sale involving general solicitation or
general advertising. Under present law, in determining whether a
distribution occurs when securities are sold into the public market, under
certain circumstances, the relevant considerations are the availability of
public information regarding the issuer, a holding period for the
securities sufficient to assure that the persons desiring to sell the
securities without registration first bear the economic risk of their
investment, and a limitation on the number of securities which the
stockholder is permitted to sell and on the manner of sale, thereby
reducing the potential impact of the sale on the trading markets. These
criteria are set forth specifically in Rule 144, and sales of securities in
reliance upon Rule 144 can only be made in limited amounts after satisfying
applicable holding periods and are subject to additional terms and
conditions set forth in that Rule 144.
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(xi) Such Spire Stockholder acknowledges that the shares of
Amacan Common Stock must be held and may not be sold, transferred, or
otherwise disposed of for value unless they are subsequently registered
under the Securities Act or an exemption from such registration is
available. Amacan is under no obligation to register the shares of Amacan
Common Stock to be acquired by the Spire Stockholders in the Share Exchange
under the Securities Act. Amacan's registrar and transfer agent will
maintain stop transfer orders against the transfer of the shares of Amacan
Common Stock to be obtained by the Spire Stockholders in the Share
Exchange, and the certificates representing such shares of Amacan Common
Stock will bear a legend in substantially the form set forth in Section
3.02(c).
(xii) Amacan may refuse to effect transfer of the Amacan
Common Stock in the absence of compliance with Rule 144 unless the holder
furnishes Amacan with a "no-action" or interpretive letter from the SEC or
an opinion of counsel reasonably acceptable to Amacan stating that the
transfer is proper. Further, unless such interpretive letter or opinion
states that the shares of Amacan Common Stock are free of any restrictions
under the Securities Act, Amacan may refuse to transfer the Amacan Common
Stock to any transferee who does not furnish in writing to Amacan the same
representations and agree to the same conditions with respect to such
Amacan Common Stock as set forth herein. Amacan may also refuse to
transfer shares of Amacan Common Stock if any circumstances are present
reasonably indicating that the transferee's representations are not
accurate.
(b) Each of the Spire Stockholders, for the purpose of inducing
Amacan to enter into this Agreement, consummate the Share Exchange and
complete the other transactions contemplated hereby, represents and warrants
to Amacan as follows:
(i) such Spire Stockholder is the legal and beneficial owner of the
number of shares of Spire Common Stock and Spire Systems Common Stock set
forth below his or her name on the signature page hereof, and all such
shares are owned by such Spire Stockholder free and clear of any lien,
security interest, charge, encumbrance, pre-emptive right or other
restriction whatsoever;
(ii) such Spire Stockholder has not elected to exercise dissenters'
rights in connection with the Share Exchange and such Spire Stockholder
shall not elect to do so subsequent to the execution of this Agreement;
(iii) such Spire Stockholder is not required to obtain any
consent, approval or authorization or to make any filing with, any
Governmental Authority or any other Person in connection with the execution
of this Agreement and the consummation of the Share Exchange and the other
transactions contemplated hereby;
(iv) the execution of this Agreement by such Spire Stockholder and the
consummation of the Share Exchange and the other transactions contemplated
hereby will not violate, conflict with, result in a breach of, or
constitute a default under, any order of any Governmental Authority or any
provision of any indenture, mortgage, contract, instrument or other
agreement to which such Spire Stockholder is a party or by which he or she
is bound.
(c) In connection with the Share Exchange and the transactions
contemplated hereby, Spire, Spire Systems and Amacan shall each file, with
the assistance of the other and their respective legal counsel, such notices,
applications, reports or other instruments as may be deemed by them to be
necessary or appropriate in an effort to document reliance on applicable
exemptions from the registration
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requirements of the Securities Act with the appropriate Governmental
Authorities in such states as the Spire Stockholders are residents, all to
the extent and in the manner as may be deemed by such parties to be
appropriate.
(d) In order to more fully document reliance on the exemptions as
provided herein, the Spire Stockholders shall execute and deliver to Amacan,
at or prior to the Closing, such letters of representation, acknowledgment,
suitability or the like, as Amacan and its counsel may reasonably request in
connection with reliance on exemptions from registration under such
securities laws.
(e) Each of Spire and Spire Systems acknowledges that the basis
for relying on exemptions from registration or qualifications are factual,
depending on the conduct of the various parties, and that no legal opinion or
other assurance will be required or given to the effect that the transactions
contemplated hereby are in fact exempt from registration or qualification.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF AMACAN
The obligations of Amacan under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 7.01 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by Spire and Spire Systems in this Agreement were true when
made and shall be true as of the Closing Date (except for changes therein
permitted by this Agreement) with the same force and effect as if such
representations and warranties were made at and as of the Closing Date, and
Spire and Spire Systems shall have performed and complied with all covenants
and conditions required by this Agreement to be performed or complied with by
Spire or Spire Systems, as the case may be, prior to or at the Closing.
Amacan shall have been furnished certificates, signed by the duly authorized
chief executive and principal financial or accounting officer or officers of
Spire and Spire Systems, respectively, dated the Closing Date, to the
foregoing effect.
Section 7.02 OFFICER'S CERTIFICATE. Amacan shall have been furnished
with certificates dated the Closing Date and signed by the duly authorized
officer or officers of Spire and Spire Systems, as applicable, to the effect
that:
(a) the Share Exchange, this Agreement and the other transactions
contemplated hereunder have been duly approved by the Boards of Directors and
stockholders of Spire and Spire Systems, respectively, and have been duly
executed and delivered in the name and on behalf of Spire and Spire Systems
by their duly authorized officers pursuant to, and in compliance with,
authority granted by the Boards of Directors of Spire and Spire Systems, as
applicable;
(b) the representations and warranties of Spire and Spire Systems
set forth in this Agreement are true and correct as of the date of the
certificate;
(c) there has been no material adverse change in the Business
Condition of Spire or Spire Systems, nor has any event occurred which, with
the lapse of time or giving of notice, may cause or create any material
adverse change in the Business Condition of Spire or Spire Systems, as
applicable, up to and including the date of the certificate;
(d) all conditions required by this Agreement to have been met,
satisfied or performed by Spire or Spire Systems have been met, satisfied or
performed;
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(e) the consummation of the Share Exchange and the transactions
contemplated hereby do not violate any law, regulation, order, writ,
injunction or decree of any court or Governmental Authority or result in the
creation or imposition of any mortgage, lien, charge or encumbrance of any
nature upon any of the properties of Spire or Spire Systems pursuant to any
mortgage, resolution, agreement or instrument to which Spire or Spire Systems
is a party;
(f) all authorizations, consents, approvals, registrations and/or
filings with any Governmental Authority required in connection with the
execution and delivery of this Agreement and any documents or instruments
contemplated hereby by Spire or Spire Systems have been obtained and are in
full force and effect or, if not required to have been obtained, will be in
full force and effect by such time as may be required; and
(g) there is no action, suit, proceeding, inquiry or investigation
at law or in equity by any Governmental Authority pending or threatened
against Spire or Spire Systems, wherein an unfavorable decision, ruling or
finding would have a material adverse effect on the Business Condition of
Spire or Spire Systems, the Share Exchange or any other transaction
contemplated hereby, or any material agreement or instrument by which Spire
or Spire Systems is bound or would in any way contest the existence of Spire
or Spire Systems.
Section 7.03 GOOD STANDING. Amacan shall have received certificates of
good standing from the Division, with respect to each of Spire and Spire
Systems, dated as of a date within five days prior to the Closing Date,
certifying that Spire and Spire Systems are in good standing under the laws
of the State of Utah. Amacan shall have also received evidence of the
foreign qualification and good standing of Spire and Spire Systems in each
other jurisdiction in which the failure to so qualify would have a material
adverse effect on the Business Condition of Spire or Spire Systems, as the
case may be.
Section 7.04 UCC CERTIFICATE. Amacan shall have received a Uniform
Commercial Code certificate from the Division, dated as of the Closing Date,
to the effect that there are no encumbrances of record on the assets of Spire
and Spire Systems other than those disclosed in the Spire Schedules.
Section 7.05 LEGAL MATTERS. Amacan shall have received an opinion in
form and substance reasonably satisfactory to it from the firm of Kruse,
Landa & Maycock, L.L.C., legal counsel to Spire and Spire Systems, to the
effect that:
(a) each of Spire and Spire Systems (i) is a corporation validly
existing and in good standing under the laws of the State of Utah, (ii) is
duly qualified and in good standing as a foreign corporation under the laws
of each other jurisdiction in which it is authorized to do business, and
(iii) has all requisite corporate power and authority to own, lease and
operate its assets and carry on its business as is now being conducted;
(b) each of Spire and Spire Systems has the corporate power and
authority to enter into and perform this Agreement and to consummate the
transactions contemplated hereby, and this Agreement and all instruments
delivered pursuant hereto have been duly authorized by all necessary
corporate action, have been duly executed and delivered, and are the legal,
valid and binding obligations of Spire and Spire Systems, as the case may be;
(c) the authorized, issued and outstanding capitalization of Spire
and Spire Systems is as represented in this Agreement; the outstanding shares
of capital stock of Spire and Spire Systems are validly issued, fully paid
and nonassessable and not subject to any preemptive rights of any Person; and
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(d) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not contravene any
provision of the Articles of Incorporation or Bylaws of Spire or Spire
Systems.
In rendering the foregoing opinions, such counsel may rely on
certificates or affidavits from executive officers of Spire and Spire Systems
or public officials with respect to factual matters and may except therefrom
any effect of laws affecting creditor's rights, the enforcement of
indemnification, or the equitable remedy of specific performance. Counsel
shall not be required to express any opinion with respect to any accounting
matters pertaining to the transaction.
Section 7.06 STOCKHOLDER APPROVAL; NO DISSENTERS' RIGHTS. The
stockholders of Spire and Spire Systems shall have, to the extent necessary
under applicable law, approved this Agreement and the consummation of the
transactions contemplated hereby. No stockholder of Spire or Spire Systems
shall have elected to exercise dissenters' rights under the Utah Act.
Section 7.07 OTHER ITEMS. Amacan shall have received such further
documents, certificates or instruments relating to this Agreement and the
transactions contemplated hereby as Amacan may reasonably request. The
Information Statement shall not be at the Effective Time subject to any
proceedings commenced or threatened by the SEC.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SPIRE AND SPIRE SYSTEMS
The obligations of Spire and Spire Systems under this Agreement are
subject to the satisfaction, at or before the Closing Date, of the following
conditions:
Section 8.01 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by Amacan in this Agreement were true when made and shall be
true at the Closing Date with the same force and effect as if such
representations and warranties were made at and as of the Closing Date
(except for changes therein permitted by this Agreement), and Amacan shall
have performed or complied with all covenants and conditions required by this
Agreement to be performed or complied with by Amacan prior to or at the
Closing. Spire and Spire Systems shall be furnished with a certificate,
signed by the chief executive and principal financial or accounting officer
or officers of Amacan and dated the Closing Date, to the foregoing effect.
Section 8.02 OFFICERS' CERTIFICATE. Spire and Spire Systems shall be
furnished with a certificate dated the Closing Date and signed by the duly
authorized chief executive officer and principal accounting and financial
officer or officers of Amacan to the effect that:
(a) The Share Exchange, this Agreement and the other transactions
contemplated hereunder have been duly approved by Amacan's Board of Directors
and stockholders and have been duly executed and delivered in the name and on
behalf of Amacan by its duly authorized officers pursuant to, and in
compliance with, authority granted by the Board of Directors of Amacan;
(b) The representations and warranties of Amacan set forth in this
Agreement are true and correct as of the date of the certificate;
(c) There has been no material adverse change in the Business
Condition of Amacan nor has any event occurred which, with the lapse of time
or giving of notice, may cause or create any
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material adverse change in the Business Condition of Amacan up to and
including the date of the certificate;
(d) All conditions required by this Agreement to have been met,
satisfied or performed by Amacan have been met, satisfied or performed;
(e) The consummation of the Share Exchange and the transactions
contemplated hereby do not violate any law, regulation, order, writ,
injunction or decree of any Governmental Authority or result in the creation
or imposition of any mortgage, lien, charge or encumbrance of any nature upon
any of the properties of Amacan pursuant to any mortgage, resolution,
agreement or instrument to which Amacan is a party;
(f) All authorizations, consents, approvals, registrations and/or
filings with any Governmental Authority required in connection with the
execution and delivery of this Agreement and any documents or instruments
contemplated hereunder by Amacan have been obtained and are in full force and
effect or, if not required to have been obtained, will be in full force and
effect by such time as may be required;
(g) There is no action, suit, proceeding, inquiry or investigation
at law or in equity by any Governmental Authority pending or threatened
against Amacan, wherein an unfavorable decision, ruling or finding would have
a material adverse effect on the Business Condition of Amacan, the Share
Exchange or any other transaction contemplated hereby, or any material
agreement or instrument by which Amacan is bound or would in any way contest
the existence of Amacan.
Section 8.03 GOOD STANDING. Spire and Spire Systems shall have
received a certificate of good standing from the Division, dated as of a date
within five days prior to the Closing Date, certifying that Amacan is in good
standing as a corporation in the State of Utah. Spire and Spire Systems
shall also have received evidence of the foreign qualification and good
standing of Amacan in every other jurisdiction in which the failure to so
qualify would have a material adverse effect on the Business Condition of
Amacan.
Section 8.04 UCC CERTIFICATE. Spire and Spire Systems shall have
received a Uniform Commercial Code certificate from the Division, dated as of
the Closing Date, to the effect that there are no encumbrances of record on
the assets of Amacan other than those disclosed in the Amacan Schedules.
Section 8.05 LEGAL MATTERS. Spire shall have received an opinion in
form and substance reasonably satisfactory to it from the firm of Kimball,
Parr, Waddoups, Brown & Gee, legal counsel to Amacan, to the effect that:
(a) Amacan (i) is a corporation validly existing and in good
standing under the laws of the State of Utah, (ii) is duly qualified and in
good standing as a foreign corporation under the laws of each other
jurisdiction in which it is authorized to do business, and (iii) has all
requisite corporate power and authority to own, lease and operate its assets
and carry on its business as it is now being conducted;
(b) Amacan has the corporate power and authority to enter into and
perform this Agreement and to consummate the transactions contemplated hereby
and this Agreement and all instruments of transfer delivered pursuant hereto
have been duly authorized by all necessary corporate action, have been duly
executed and delivered by Amacan, and are the legal, valid and binding
obligations of Amacan;
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(c) the authorized, issued and outstanding capitalization of
Amacan is as represented in this Agreement; the outstanding shares of capital
stock of Amacan are validly issued, fully paid, and nonassessable and not
subject to any preemptive rights of any Person; and
(d) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not contravene any
provision of Amacan's Articles of Incorporation or Bylaws.
In rendering the foregoing opinions, such counsel may rely on
certificates or affidavits from executive officers of Amacan or public
officials with respect to factual matters and may except therefrom any effect
of laws affecting creditor's rights, the enforcement of indemnification, or
the equitable remedy of specific performance. Counsel shall not be required
to express any opinion with respect to the accounting matters pertaining to
the transaction.
Section 8.06 AMACAN SHAREHOLDER APPROVAL. The stockholders of Amacan
shall have approved this Agreement and the consummation of the transactions
contemplated hereby. No Stockholder of Amacan shall have elected to exercise
dissenter's rights under the Utah Act.
Section 8.07 OTHER ITEMS. Spire and Spire Systems shall have received
such further documents, certificates or instruments relating to this
Agreement and the transactions contemplated hereby as Spire and Spire Systems
may reasonably request. The Information Statement shall not be at the
Effective Time subject to any proceedings commenced or threatened by the SEC.
ARTICLE IX
GENERAL PROVISIONS
Section 9.01 BROKERS. Except for compensation previously paid by
Spire, each of Spire, Spire Systems and Amacan agree that there were no
finders or brokers involved in bringing the parties together or who were
instrumental in the negotiation, execution or consummation of this Agreement
to whom either Spire, Spire Systems or Amacan is obligated to pay any
compensation. Further, Spire and Spire Systems each agree to indemnify
Amacan, and Amacan agrees to indemnify Spire and Spire Systems, against any
claim by any third person for any commission, brokerage or finder's fee or
other payment with respect to this Agreement or the transactions contemplated
hereby based on any alleged agreement or understanding between such
indemnifying party and such third person, whether express or implied,
resulting from the actions of such indemnifying party. The covenants set
forth in this Section 9.01 shall survive the Closing Date and the
consummation of the transactions herein contemplated.
Section 9.02 NO REPRESENTATION REGARDING TAX TREATMENT. No
representation or warranty is being made or legal opinion given by any party
to any other regarding the treatment of this transaction for federal, state
or foreign income taxation. Although this transaction has been structured in
an effort to qualify for treatment under Section 368(a)(1)(B) of the Code,
there is no assurance that any part of this transaction in fact meets the
requirements for such qualification. Each party has relied exclusively on
its own legal, accounting, and other tax advisers regarding the treatment of
this transaction for federal, state and foreign income tax purposes and on no
representation, warranty or assurance from any party hereto that this
transaction in fact meets the requirements for such qualification.
Section 9.03 GOVERNING LAW. This Agreement shall be governed by,
enforced and construed under and in accordance with the laws of the United
States of America and, with respect to matters of state law, with the laws of
the State of Utah.
34
<PAGE>
Section 9.04 NOTICES. Any notices or other communications to any party
required or permitted hereunder shall be sufficiently given if personally
delivered, if sent by facsimile or telecopy transmission or other electronic
communication confirmed by registered or certified mail, postage prepaid, or
if sent by prepaid overnight courier addressed as follows:
If to Spire, to: Spire Technologies, Inc.
Attn: Gary B. Godfrey
311 North State Street
P.O. Box 1970
Orem, Utah 84059
With copies to: Lyndon L. Ricks, Esq.
Kruse, Landa & Maycock, L.L.C.
50 West Broadway, Eighth Floor
Salt Lake City, Utah 84101-2034
If to Spire Systems, to: Spire Technologies Systems Division, Inc.
Attn: Gary B. Godfrey
311 North State Street
P.O. Box 1970
Orem, Utah 84059
With copies to: Lyndon L. Ricks, Esq.
Kruse, Landa & Maycock, L.L.C.
50 West Broadway, Eighth Floor
Salt Lake City, Utah 84101-2034
If to Amacan, to: Amacan Resources Corporation
Attn: Russell G. Holley
1399 South Seventh East, Number 9
Salt Lake City, Utah 84105
With copies to: Brian G. Lloyd, Esq.
Kimball, Parr, Waddoups, Brown & Gee
185 South State, Suite 1300
Salt Lake City, Utah 84111
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication
shall be deemed to have been given as of the date so delivered or sent by
facsimile or telecopy transmission or other electronic communication, or one
day after the date so sent by overnight courier.
Section 9.05 ATTORNEYS' FEES. In the event that any party institutes
any action or suit to enforce this Agreement or to secure relief from any
default hereunder or breach hereof, the breaching party or parties shall
reimburse the non-breaching party or parties for all costs, including
reasonable attorneys' fees, incurred in connection therewith and in enforcing
or collecting any judgment rendered therein.
Section 9.06 SCHEDULES; KNOWLEDGE. Whenever in any section of this
Agreement reference is made to information
35
<PAGE>
set forth in the Amacan or Spire Schedules such reference is to information
specifically set forth in such schedules and clearly marked to identify the
section of this Agreement to which the information relates. Whenever any
representation is made to the "knowledge" of any party, it shall be deemed to
be a representation as to the actual knowledge of the party and the knowledge
reasonably expected to be possessed by the party.
Section 9.07 THIRD-PARTY BENEFICIARIES. This contract is solely
between Amacan, Spire and Spire Systems and, except as specifically provided
in Sections 6.04 and 6.05, no director, officer, stockholder, employee,
agent, independent contractor or any other Person shall be deemed to be a
third party beneficiary of this Agreement.
Section 9.08 ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof. All
previous agreements between the parties, whether written or oral, have been
merged into this Agreement. This Agreement alone fully and completely
expresses the agreement of the parties relating to the subject matter hereof.
There are no other courses of dealing, understandings, agreements,
representations, or warranties, written or oral, except as set forth herein.
Section 9.09 TERMINATION; SURVIVAL. Except as expressly set forth in
this Agreement, the representations, warranties, and covenants of the
respective parties shall survive the Closing and terminate three months after
the Effective Date.
Section 9.10 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
taken together shall be but a single instrument.
Section 9.11 AMENDMENT OR WAIVER. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether
conferred herein, at law or in equity, and may be enforced concurrently
herewith, and no waiver by any party of the performance of any obligation by
the other shall be construed as a waiver of the same or any other default
then, theretofore or thereafter occurring or existing. At any time prior to
the Closing Date, this Agreement may be amended by a writing signed by all
parties hereto, with respect to any of the terms contained herein, and any
term or condition of this Agreement may be waived or the time for performance
thereof may be extended by a writing signed by the party or parties for whose
benefit the provision is intended.
Section 9.12 HEADINGS AND REFERENCES. The article, section and
subsection headings of this Agreement are for convenience only, shall not be
deemed part of this Agreement, and in no way define, limit, augment, extend
or describe the scope, content or intent of any provision of this Agreement.
References in this Agreement to articles, sections and subsections shall
refer to the articles, sections and subsections of this Agreement unless
expressly indicated otherwise.
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, as of the
date first above written.
"Spire"
Spire Technologies, Inc.,
a Utah corporation Attest:
By /s/ GARY B. GODFREY By /s/ BRIAN W. BRAITHWAITE
------------------------------ -------------------------------
Gary B. Godfrey, President Brian W. Braithwaite, Secretary
"Spire Systems"
Spire Technologies Systems Division, Inc.,
a Utah corporation Attest:
By /s/ GARY B. GODFREY By /s/ BRIAN W. BRAITHWAITE
------------------------------ -------------------------------
Gary B. Godfrey, President Brian W. Braithwaite, Secretary
"Amacan"
Amacan Resources Corporation,
a Utah corporation Attest:
By /s/ TAD. M. BALLANTYNE By /s/ LAMAR H. HOLLEY
------------------------------ -------------------------------
Tad M. Ballantyne, President Lamar H. Holley, Secretary
37
<PAGE>
"Spire Stockholders"
Gary B. Godfrey and Karie Godfrey, Rita S. Yates and Douglas D. Yates,
Trustees of the Gary B. Godfrey Family Trustees of the Rita S. Yates Family
Revocable Trust dated July 1, 1993 Revocable Trust dated July 1, 1993
By /s/ GARY B. GODFREY By /s/ RITA S. YATES
--------------------------------- ------------------------------------
Gary B. Godfrey, Trustee Rita S. Yates, Trustee
/s/ KARIE GODFREY /s/ DOUGLAS D. YATES
--------------------------------- ------------------------------------
Karie Godfrey, Trustee Douglas D. Yates, Trustee
27,450 shares Spire Common Stock 18,000 shares Spire Common Stock
33,075 shares Spire Systems Common 21,690 shares Spire Systems Common
Stock Stock
State of residence: Utah State of residence: Utah
By /s/ JEFFREY L. WEBSTER By /s/ BRIAN B. BRAITHWAITE
--------------------------------- ------------------------------------
Jeffrey L. Webster, an individual Brian B. Braithwaite, an individual
15,750 shares Spire Common Stock 13,500 shares Spire Common Stock
18,972 shares Spire Systems Common 16,623 shares Spire Systems Common
Stock Stock
State of residence: Utah State of residence: Utah
By /s/ ROBERT K. BENCH By /s/ WILLIAM A FRESH
--------------------------------- ------------------------------------
Robert K. Bench, an individual William A. Fresh, an individual
10,493 shares Spire Common Stock 2,193 shares Spire Common Stock
10,000 shares Spire Systems Common
Stock
State of residence: Arizona State of residence: Utah
38
<PAGE>
BOARD OF DIRECTORS AND STOCKHOLDERS
AMACAN RESOURCES CORPORATION:
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheet of Amacan
Resources Corporation and subsidiary as of April 30, 1995, and the related
consolidated statements of operations, stockholders' equity and cash flows
for the year ended April 30, 1995. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Amacan
Resources Corporation and subsidiary as of April 30, 1995, and the results of
their operations and their cash flows for the year ended April 30, 1995, in
conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The supplementary
information included in the Schedule of Supplementary Information on Oil and
Gas Operations is presented for purposes of additional analysis and is not a
required part of the basic consolidated financial statements. Such
supplementary information, except for that portion marked "unaudited", on
which we express no opinion, has been subjected to the auditing procedures
applied in the audits of the basic consolidated financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
basic consolidated financial statements taken as a whole.
Tanner + Co.
Salt Lake City, Utah
July 25, 1995
<PAGE>
BOARD OF DIRECTORS AND STOCKHOLDERS
AMACAN RESOURCES CORPORATION:
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheet of Amacan
Resources Corporation and subsidiary as of April 30, 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows
for the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Amacan
Resources Corporation and subsidiary as of April 30, 1994, and the results of
their operations and their cash flows for the year then ended, in conformity
with generally accepted accounting principles.
As discussed in notes 1 and 4 to the consolidated financial statements, the
Company changed its method of accounting for income taxes as of May 1, 1993
to adopt the provisions of Statement of Financial Accounting Standards No.
109, ACCOUNTING FOR INCOME TAXES.
Our audit was made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The supplementary
information included in the Schedule of Supplementary Information on Oil and
Gas Operations is presented for purposes of additional analysis and is not a
required part of the basic consolidated financial statements. Such
supplementary information, except for that portion marked "unaudited," on
which we express no opinion, has been subjected to the auditing procedures
applied in the audit of the basic consolidated financial statements and, in
our opinion, is fairly stated in all material respects in relation to the
basic consolidated financial statements and, in our opinion, is fairly stated
in all material respects in relation to the basic consolidated financial
statements taken as a whole.
KPMG Peat Marwick LLP
Salt Lake City, Utah
July 14,1994
<PAGE>
AMACAN RESOURCES CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
APRIL 30, 1995
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 84,851
Accounts receivable 7,956
Accounts receivable from operator 10,755
Investment in certificate of deposit 436,686
---------
Total current assets 540,248
---------
Property and equipment, at cost:
Interests in oil and gas properties,
full cost method 3,550,241
Office furniture and equipment 6,114
---------
3,556,355
Less accumulated depreciation,
depletion and amortization 3,305,850
---------
Net property and equipment 250,505
---------
$790,753
---------
---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,592
Payable to operator 6,164
State income taxes payable 2,000
Deferred compensation, current portion 33,184
---------
Total current liabilities 42,940
Deferred compensation 38,210
Stockholders' equity:
Common stock, $.25 par value.
Authorized 8,000,000 shares; issued
and outstanding 2,723,714 shares 680,929
Additional paid-in capital 89,504
Retained earnings (deficit) (60,830)
---------
Net stockholders' equity 709,603
---------
$790,753
---------
---------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
AMERICAN RESOURCES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED APRIL 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Oil and gas revenues $187,533 188,422
-------- -------
Cost of operations:
Depreciation, depletion and amortization 45,506 66,946
Operating costs 60,139 55,288
Production and other taxes 24,496 24,269
General and administrative expenses 61,808 101,596
-------- -------
191,949 248,099
-------- -------
Loss from operations (4,416) (59,677)
-------- -------
Other income (expense):
Interest income 18,659 9,228
Interest expense (3,893) -
Equity in loss from limited partnership (15,333) (387)
Impairment in value of mining claims
and rights (5,200) -
-------- -------
(5,767) 8,841
-------- -------
Loss before income taxes (10,183) (50,836)
Income tax expense (1,199) (980)
-------- -------
Net loss $(11,382) $(51,816)
-------- -------
-------- -------
Loss per common share:
Net loss $0.00 (0.02)
-------- -------
-------- -------
</TABLE>
See accompanying notes to consolidated financial statements. 4
<PAGE>
AMACAN RESOURCES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEAR ENDED APRIL 30, 1995 AND 1994
<TABLE>
<CAPTION>
PAR
VALUE ADDITIONAL RETAINED NET
NUMBER COMMON PAID-IN EARNINGS STOCKHOLDERS'
OF SHARES STOCK CAPITAL (DEFICIT) EQUITY
--------- -------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
Balances, May 1, 1993 2,723,714 $680,929 89,504 2,368 772,801
Net loss - - - (51,816) (51,816)
--------- -------- ------ -------- --------
Balances, April 30, 1994 2,723,714 680,929 89,504 (49,448) 720,985
Net loss - - - (11,382) (11,382)
--------- -------- ------ -------- --------
Balances, April 30, 1995 2,723,714 $680,929 89,504 (60,830) 709,603
--------- -------- ------ -------- --------
--------- -------- ------ -------- --------
</TABLE>
See accompanying notes to consolidated financial statements. 5
<PAGE>
AMACAN RESOURCES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED APRIL 30, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $(11,382) (51,816)
Adjustments to reconcile net (loss) to net
cash provided by operating activities:
Depreciation, depletion and amortization 46,008 66,946
Equity in loss from limited partnership 15,333 -
Impairment of mining claims 5,200 387
Decrease in accounts receivable 2,370 7,031
Increase in accounts payable 309 1,093
Increase (decrease) in payable to operator 1,754 (2,803)
Increase (decrease) in deferred
compensation (29,107) 32,680
Decrease in payable to officer and
stockholder - (3,000)
--------- --------
Net cash provided by operating activities 30,485 50,518
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in certificate of deposit (436,686) -
Capital expenditures (11,809) (3,335)
--------- --------
Net cash used in investing activities (448,495) (3,335)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES - -
--------- --------
Increase (decrease) in cash and cash equivalents (418,010) 47,183
Cash and cash equivalents, beginning of year 502,861 455,678
--------- --------
Cash and cash equivalents, end of year $ 84,851 502,861
--------- --------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for taxes $ 1,199 980
--------- --------
Cash paid for interest $ 3,893 -
--------- --------
</TABLE>
See accompanying notes to consolidated financial statements. 6
<PAGE>
AMACAN RESOURCES CORPORATION AND SUBSIDIARY
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1995 AND 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following significant accounting policies are followed by Amacan
Resources Corporation in preparing and presenting its consolidated
financial statements:
CONSOLIDATION
The consolidated financial statements include the accounts of Amacan
Resources Corporation and its wholly-owned subsidiary, Amacan Industries.
(Collectively referred to as the Company). All significant intercompany
balances and transactions have been eliminated in consolidation.
OPERATIONS AND INTERESTS IN OIL AND GAS PROPERTIES
The Company follows the full-cost accounting method of capitalizing all
exploration and development costs including nonproductive drilling
expenses, lease abandonments, and other related costs. The total
investment in oil and gas properties (including for depletion purposes,
estimated future development costs) is being amortized on the
units-of-production method based on proved oil and gas reserves. Under
this method of accounting, no gains or losses are recognized from the
sale or disposition of properties with insignificant proved oil and gas
reserves. The excess of net capitalized costs over the present value of
future net revenues from estimated proved oil and gas reserves is charged
to expense.
The Company's operations and substantially all of its assets are devoted
to oil and gas exploration and development, all of which are located in
the United States. All of its accounts receivable are due from either
purchasers of oil and gas or from oil and gas operators.
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities as of the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
7
<PAGE>
AMACAN RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
APRIL 30, 1995 AND 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the
Company considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents. Certificates
of deposit with maturities in excess of three months are classified
as investments. The Company maintains its cash in bank deposit accounts
which, at times, may exceed federally insured limits. The Company
has not experienced any losses in such accounts and believes it is not
exposed to any significant credit risk on cash and cash equivalents.
CONCENTRATIONS OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentration of credit risk consist primarily of accounts
receivable and certificate of deposit. In the normal course of business,
the Company provides credit terms to its customers. Accordingly,
the Company performs ongoing credit evaluations of its customers and
maintains allowances for possible losses which, when realized, have
been within the range of management's expectations.
OFFICE FURNITURE AND EQUIPMENT
Office furniture and equipment are stated at cost and depreciated
on a straight-line basis over their estimated useful lives of five
years.
INVESTMENT IN LIMITED PARTNERSHIP
The investment in limited partnership is accounted for using the
equity method which represents the Company's investment, adjusted
for its allocable portion of partnership profits and losses.
INCOME TAXES
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities resulting from a
change in tax rates is recognized in income in the period that includes
the enactment date.
8
<PAGE>
AMACAN RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
APRIL 30, 1995 AND 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per common share are based on the weighted average
number of common shares outstanding (2,723,714 in 1995 and 1994).
(2) CERTIFICATE OF DEPOSIT
At April 30, 1995, the Company had a certificate of deposit
totaling $436,686. The certificate matures October 11, 1995, and
bears interest at 6.25%. The certificate is insured by the FDIC up to
$100,000. The cost of the certificate is also the market value.
(3) DEFERRED COMPENSATION AGREEMENT
During the year ended April 30, 1994, the Company amended the
deferred compensation plan for its immediate past president (or his
beneficiary upon death) to provide monthly payments of $3,000 for three
years commencing upon retirement. Monthly payments under the
amended plan commenced May 1, 1994. Payments of $33,000 were made during
the year ended April 30, 1995.
(4) INCOME TAXES
The components of income tax expense are as follows:
<TABLE>
<CAPTION>
YEARS ENDED APRIL 30
--------------------
1995 1994
-------- ------
<S> <C> <C>
Current:
Federal tax effect of net
operating losses $ - -
State current 1,199 980
-------- ------
Deferred - -
-------- ------
Total income tax expense $1,199 980
-------- ------
-------- ------
</TABLE>
9
<PAGE>
AMACAN RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
APRIL 30, 1995 AND 1994
(4) INCOME TAXES, CONTINUED
Income tax expense for 1995 and 1994 differs from the amounts computed by
applying the U.S. federal income tax rate of 34 percent to income (loss)
before income taxes as a result of the following:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Computed "expected" tax expense (benefit) $(3,462) (17,600)
Increase (decrease) in income taxes from:
Effect of graduated tax rates 1,935 9,670
Change in the valuation allowance 8,144 21,996
State income tax expense, net 752 647
Other (6,170) (13,733)
-------- --------
$1,199 980
-------- --------
-------- --------
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax liabilities at April 30, 1995 and 1994,
are presented below:
<TABLE>
<CAPTION>
1995 1994
--------- --------
<S> <C> <C>
Deferred tax assets:
Deferred compensation $ 26,630 37,487
Investment tax credit carryfowards 14,633 16,100
Percentage depletion carryforwards 287,502 280,386
Net operating loss carryforwards 55,634 50,728
--------- --------
Total gross deferred tax assets 384,399 384,701
Less valuation allowance (302,230) (293,296)
--------- --------
Net deferred tax assets 82,169 91,405
--------- --------
Deferred tax liabilities:
Property and equipment, principally
due to differences in depreciation 82,169 91,405
--------- --------
Total gross deferred tax liability 82,169 91,405
--------- --------
Net deferred income taxes $ - -
--------- --------
--------- --------
</TABLE>
10
<PAGE>
AMACAN RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
APRIL 30, 1995 AND 1994
(4) INCOME TAXES, CONTINUED
The valuation allowance for deferred tax assets as of May 1, 1993, was
$269,165. The net change in the total valuation allowance for the years
ended April 30, 1995 and 1994 was an increase of $8,934 and $24,131,
respectively. Subsequently recognized tax benefits relating to the
valuation allowance for deferred tax assets as of April 30, 1994, are
reported in the consolidated statement of operations.
At April 30, 1995, the Company has, for income tax purposes, net
operating loss and investment tax credit carryforwards that are
available to offset future taxable income and income tax. These
carryforwards expire as listed in the following table:
<TABLE>
<CAPTION>
AMOUNT OF
CARRYFORWARDS
-----------------------
CARRYFORWARDS NET INVESTMENT
EXPIRING OPERATING TAX
APRIL 30, LOSS CREDIT
------------- --------- ----------
<S> <C> <C>
1996 $ - 4,500
1997 77,000 7,000
1998 - 1,000
1999 - 1,000
2000 - 900
2001 - 200
2002 - -
2003 - -
2004 40,000 -
2005 19,000 -
2006 - -
2007 13,000 -
-------- --------
$149,000 14,600
-------- --------
-------- --------
</TABLE>
The Company also has approximately $750,000 of statutory percentage
depletion carryforwards available to reduce future taxable income.
Deduction of these carryforwards in any one year is limited to 65
percent of taxable income before percentage depletion deduction and is
carried forward indefinitely until utilized.
11
<PAGE>
AMACAN RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
APRIL 30, 1995 AND 1994
(5) SALES TO MAJOR CUSTOMERS
A summary of sales to major customers (ten percent or more of total
sales) follows:
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Rhone Poulenc $ 15,550 $17,964
Murphy Oil 105,519 85,568
Questar Pipeline 43,717 47,580
</TABLE>
(6) STOCK OPTION PLAN
On November 1, 1988, the Company's Board of Directors granted
nonqualified options for the purchase of 25,000 shares of the Company's
common stock at $.32 per share, the fair market value at date of grant,
to each of the Company's four directors. These options were exercisable
over a five-year period at a rate of 20 percent annually and subject to
forfeiture in the event any option holder ceased to serve as a director.
During October of 1993, all remaining options expired.
(7) RELATED PARTY TRANSACTIONS
DIRECTOR REIMBURSEMENTS
During the years ended April 30, 1995, a stockholder and director was
reimbursed $12,312 for expenses incurred in the course of investigating
business opportunities on behalf of the Company. No such expenses were
incurred during the year ended April 30, 1994.
OPERATING AGREEMENT
The Company has an operating agreement with an oil and gas exploration
company that acts as operator for the majority of the oil and gas
properties in which the Company has an interest. The operator is owned
by a director of the Company, who also owns an interest in many of the
properties, is responsible for managing the properties, paying operating
expenses, billing the working interest
12
<PAGE>
AMACAN RESOURCES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
APRIL 30, 1995 AND 1994
(7) RELATED PARTY TRANSACTION, CONTINUED
OPERATING AGREEMENT, CONTINUED
owners for their proportionate share, and arranging for the sale of oil
and gas production from the properties. The Company reimburses the
operator for its share of expenditures based upon monthly billings
provided pursuant to the operating agreement. The Company made payments
of $68,433 and $58,523 to the operator for the years ended April 30,
1995 and 1994, respectively.
(8) RECLASSIFICATION
Certain amounts for 1994 have been reclassified to be consistent with
the presentation for 1995.
13
<PAGE>
AMACAN RESOURCES CORPORATION AND SUBSIDIARY
SCHEDULE OF SUPPLEMENTARY INFORMATION ON OIL AND GAS OPERATIONS
YEARS ENDED APRIL 30, 1995 AND 1994
This information on the Company's oil and gas operations as shown in this
schedule is based on the full-cost method of accounting, as defined by the
Securities and Exchange Commission (SEC), and is presented in conformity with
the disclosure requirements of the SEC and Statement of Financial Accounting
Standards No. 69 DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES.
COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION,
EXPLORATION, AND DEVELOPMENT ACTIVITIES
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Acquisition of properties:
Proved $ - -
-------- -------
-------- -------
Unproved 184 143
-------- -------
-------- -------
Exploration costs - -
-------- -------
-------- -------
Development costs $ 8,110 3,192
-------- -------
-------- -------
RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES
Revenues:
Sales $187,533 188,422
Transfers - -
-------- -------
187,533 188,422
-------- -------
Costs:
Production costs 84,635 79,557
Exploration costs - -
Depreciation, depletion, amortization, and valuation
provisions 45,506 66,946
-------- -------
130,141 146,503
-------- -------
Results of operations from producing activities before
taxes (excluding corporate overhead and interest costs) 57,392 41,919
Income tax expense (1,199) (980)
-------- -------
Results of operations from producing activities (excluding
corporate overhead and interest costs $ 56,193 40,939
</TABLE>
14
<PAGE>
AMACAN RESOURCES CORPORATION AND SUBSIDIARY
SCHEDULE OF SUPPLEMENTARY INFORMATION ON OIL AND GAS OPERATIONS CONTINUED
YEARS ENDED APRIL 30, 1995 AND 1994
CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Proved oil and gas properties $3,550,241 3,541,947
Accumulated depreciation, depletion
amortization, and valuation allowances (3,302,749) (3,257,243)
---------- ----------
Net capitalized costs $247,492 284,704
---------- ----------
---------- ----------
</TABLE>
ESTIMATED QUANTITIES OF RESERVES (UNAUDITED)
The estimated quantities of proved oil and gas reserves disclosed in the
table below are based upon estimates by the Company's petroleum engineers.
Such estimates are inherently imprecise and may be subject to substantial
revisions. All quantities shown in the table are proved developed reserves
and are located within the United States.
<TABLE>
<CAPTION>
APRIL 30,
------------------------------------
1995 1994
----------------- -----------------
BARRELS MCF BARRELS MCF
------- ------- ------- -------
<S> <C> <C> <C> <C>
Proved oil and gas reserves:
Balance at beginning of year 40,272 299,040 39,551 330,733
Revisions of previous estimates 9,360 (28,020) 7,902 18,101
Extensions, discoveries, and other additions - - - -
Production (6,561) (48,977) (7,181) (49,794)
------- ------- ------- -------
43,071 222,043 40,272 299,040
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
15
<PAGE>
AMACAN RESOURCES CORPORATION AND SUBSIDIARY
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH
FLOWS RELATING TO PROVED OIL AND GAS RESERVES (UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Future cash inflows $947,000 994,000
Future production and development costs (416,000) (476,000)
Future income tax expenses (83,000) (71,000)
-------- --------
Future net cash flows 448,000 447,000
Annual discount for estimated timing of
cash flows at 10% (147,000) (128,000)
-------- --------
Standardized measure of discounted future
net cash flows $301,000 319,000
-------- --------
-------- --------
</TABLE>
CHANGES RELATING TO STANDARDIZED MEASURE OF DISCOUNTED
FUTURE NET CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Sales and transfers of oil and gas
produced, net of production costs $(103,000) (109,000)
Net changes in prices and production costs 56,000 (14,000)
Extensions, discoveries, and improved
recovery, less related costs - -
Revisions of previous quantity estimates 5,000 60,000
Accretion of discount 32,000 35,000
Net change in income taxes (8,000) (3,000)
--------- --------
Net change $(18,000) (31,000)
--------- --------
--------- --------
</TABLE>
16
<PAGE>
AMACAN RESOURCES CORPORATION
Consolidated Balance Sheets
January 31, 1996 and April 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
JANUARY 31, APRIL 30,
ASSETS 1996 1995
------ ----------- ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 56,523 $ 84,851
Accounts receivable 6,439 7,956
Accounts receivable from operator 6,842 10,755
Investment in certificate of deposit 454,119 436,686
----------- ----------
Total current assets 523,923 540,248
----------- ----------
Property and equipment, at cost:
Interest in oil and gas properties,
full cost method 3,552,020 3,550,241
Office furniture and equipment 6,114 6,114
----------- ----------
3,558,134 3,556,355
Less accumulated depreciation,
depletion and amortization 3,333,921 3,305,850
----------- ----------
Net property and equipment 224,213 250,505
----------- ----------
$ 748,136 $ 790,753
----------- ----------
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 40,460 $ 1,592
Payable to operator 4,612 6,164
State income taxes payable 2,000 2,000
Deferred compensation, current portion 31,512 33,184
----------- ----------
Total current liabilities 78,584 42,940
Deferred compensation payable 15,150 38,210
Stockholders' equity:
Common stock, $.25 par value. Authorized
8,000,000 shares; issued and outstanding
2,723,714 shares 680,929 680,929
Additional paid-in capital 89,504 89,504
Retained earnings (deficit) (116,031) (60,830)
----------- ----------
Total stockholders' equity 654,402 709,603
----------- ----------
$ 748,136 $ 790,753
----------- ----------
----------- ----------
See accompanying notes to financial statements.
</TABLE>
17
<PAGE>
AMACAN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months and Nine Months Ended January 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
January 31, January 31,
------------------- -------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Oil and gas revenues $ 33,718 $ 46,740 $ 108,850 $ 142,944
--------- --------- --------- ---------
Cost of operations:
Depreciation and depletion 8,889 13,134 28,071 38,091
Operating costs 14,675 14,476 43,013 43,405
Production and other taxes 4,162 6,022 14,199 18,850
General and administrative 56,067 22,220 95,299 59,251
--------- --------- --------- ---------
83,793 55,852 180,582 159,597
--------- --------- --------- ---------
Loss from operations (50,075) (9,112) (71,732) (16,653)
--------- --------- --------- ---------
Other income (expense):
Interest income 3,750 6,252 17,434 14,922
Interest expense (653) (1,022) (1,615) (2,959)
--------- --------- --------- ---------
3,097 5,230 15,819 11,963
--------- --------- --------- ---------
Loss before taxes (46,325) (2,860) (54,298) (1,731)
Income tax expense - - (903) (1,123)
--------- --------- --------- ---------
Net (loss) earnings (46,325) (2,860) (55,201) (2,854)
Retained earnings (deficit),
beginning (69,706) (49,442) (60,830) (49,448)
--------- --------- --------- ---------
Retained earnings (deficit),
ending $(116,031) $(52,302) $(116,031)$ (52,302)
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings (loss) per share $ (.0170) $ (.0010) $ (.0203)$ (.0010)
--------- --------- --------- ---------
--------- --------- --------- ---------
Dividends None None None None
Average shares outstanding 2,723,714 2,723,714 2,723,714 2,723,714
--------- --------- --------- ---------
--------- --------- --------- ---------
Sales of unregistered
securities None None None None
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
AMACAN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended January 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $(55,201) $ (2,854)
-------- --------
Adjustments to reconcile
net earnings to cash
provided by operating activities:
Depreciation, depletion
and amortization 28,071 38,091
(Increase) decrease in
accounts receivable 5,430 (4,191)
Increase (decrease) in
accounts payable and
accrued liabilities 35,644 7,637
Increase (decrease) in
deferred compensation (23,060) (17,177)
-------- --------
Total adjustments 46,085 24,360
-------- --------
Net cash provided (used) by operating
activities (9,116) 21,506
-------- --------
Cash flows from investing activities:
Capital expenditures (1,779) (11,592)
Investments in certificate of deposit (17,433) (432,949)
-------- --------
Net cash used in investing activities (19,212) (444,541)
-------- --------
Increase (decrease) in cash and
cash equivalents (28,328) (423,035)
Cash and cash equivalents,
beginning of year 84,851 502,861
-------- --------
Cash and cash equivalents,
end of year $ 56,523 $ 79,826
-------- --------
-------- --------
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
AMACAN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1996 and 1995
(Unaudited)
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and
Item 310(b) of Regulation S-B. Accordingly, they do not
include all of the information and footnotes required by
generally accepted accounting principles for complete
financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included. Operating results for the nine months ended
January 31, 1996 are not necessarily indicative of the
results that may be expected for the year ended April 30,
1996. The unaudited condensed consolidated financial
statements should be read in conjunction with the
consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-KSB for
the year ended April 30, 1995.
NOTE B -- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
The Company paid cash of $1,615 and $903 during the period
ended January 31, 1996 for interest and income taxes,
respectively.
For the same period ended January 31, 1995, the Company paid
cash of $2,959 for interest and $1,123 for taxes.
NOTE C -- SUBSEQUENT EVENT
On January 23, 1996, the Company entered into an Agreement
and Plan of Reorganization (the "Agreement") among the
Company, Spire Technologies, Inc. ("Spire"), Spire
Technologies Systems Division, Inc. ("Spire Systems," and
collectively with Spire, the "Spire Companies") and the
holders of all of the capital stock of the Spire Companies,
pursuant to which, among other things, the Company will
acquire all of the outstanding shares of the Spire Companies
in exchange for the issuance of an aggregate of 3,501,883
shares of the Company's Common Stock (which will represent
approximately 90% of the outstanding shares of the Company's
Common Stock following the transaction). The Agreement and
transactions contemplated thereby are subject to certain
conditions, including the approval of the Company's
shareholders.
20
<PAGE>
AMACAN RESOURCES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1996 and 1995
(Unaudited)
NOTE C -- SUBSEQUENT EVENT, CONTINUED
The Spire Companies operate together as a value added
reseller of network computer systems and components, a
developer and seller of certain office automation software
products and a "service and value added reseller" and
distributer of software developed by third parties.
Accordingly, if the transactions contemplated by the
Agreement are consummated, the principal business and
operations of the Company will become the business and
operations presently conducted by the Spire Companies and
will be substantially different than the current business
and operations of the Company.
21
<PAGE>
SPIRE TECHNOLOGIES, INC.
AND SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
COMBINED FINANCIAL STATEMENTS
APRIL 30, 1995 AND 1994
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders of
Spire Technologies, Inc. and Spire Technologies Systems
Division, Inc.:
We have audited the accompanying combined balance sheets of Spire
Technologies, Inc. and Spire Technologies Systems Division, Inc. as of April
30, 1995 and 1994, and the related combined statements of income,
stockholders' equity, and cash flows for the years then ended. These
combined financial statements are the responsibility of the Companies'
management. Our responsibility is to express an opinion on these combined
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 audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Spire
Technologies, Inc. and Spire Technologies Systems Division, Inc. as of April
30, 1995 and 1994, and the combined results of their operations and their
cash flows for the years then ended in conformity with generally accepted
accounting principles.
-----------------------------
KPMG Peat Marwick LLP
Salt Lake City, Utah
January 5, 1996
<PAGE>
SPIRE TECHNOLOGIES, INC.
AND SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
Combined Balance Sheets
<TABLE>
<CAPTION>
(UNAUDITED)
JANUARY 31, APRIL 30, APRIL 30,
ASSETS 1996 1995 1994
----------- ---------- ---------
<S> <C> <C> <C>
Current assets:
Cash $ 1,285,511 766,247 493,460
Accounts receivable 2,528,569 1,524,948 879,007
Other current assets 18,294 17,410 26,518
Deferred tax assets (note 3) 11,310 39,041 27,468
----------- --------- ---------
Total current assets 3,843,684 2,347,646 1,426,453
Fixed assets:
Land 36,021 36,021 36,021
Buildings 250,489 250,489 250,489
Furniture and equipment 427,317 372,669 258,274
Transportation equipment 11,516 11,516 11,516
Accumulated depreciation (241,023 (202,484) (161,428)
----------- --------- ---------
Net fixed assets 484,320 468,211 394,872
----------- --------- ---------
$4,328,004 2,815,857 1,821,325
----------- --------- ---------
----------- --------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to bank (note 2) $ 3,722 -- --
Current portion of long-term debt
(note 2) 7,560 87,527 50,912
Accounts payable 1,700,748 998,115 541,811
Accrued liabilities 210,095 360,388 55,370
Income taxes payable (note 3) 384,073 32,154 12,737
Deferred maintenance revenue 853,946 686,194 522,050
----------- --------- ---------
Total current liabilities 3,160,144 2,164,378 1,182,880
----------- --------- ---------
Long-term liabilities:
Long-term debt, excluding
current portion (note 2) 217,682 223,412 307,755
Deferred tax liability (note 3) 45,549 4,773 6,131
----------- --------- ---------
Total long-term liabilities 263,231 228,185 313,886
----------- --------- ---------
Stockholders' equity (note 5):
Spire Technologies, Inc.
Common stock, $.01 par value.
Authorized and issued 100,000
shares 1,000 1,000 1,000
Additional paid-in capital 73,200 7,410 7,410
Treasury stock, 12,614 shares,
at cost (126,140) (170,000) (170,000)
Spire Technologies Systems
Division, Inc.
Common stock, no par value.
Authorized 1,000,000 shares;
issued and outstanding
100,000 shares 1,000 1,000 1,000
Combined retained earnings 955,569 583,884 485,149
----------- --------- ---------
Total stockholders' equity 904,629 423,294 324,559
Commitments and contingencies
(notes 4 and 7)
----------- --------- ---------
$4,328,004 2,815,857 1,821,325
----------- --------- ---------
----------- --------- ---------
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
SPIRE TECHNOLOGIES, INC.
AND SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
Combined Statements of Income
Nine months ended January 31, 1996 and 1995 (Unaudited)
and years ended April 30, 1995 and 1994
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
JANUARY 31, JANUARY 31, APRIL 30, APRIL 30,
1996 1995 1995 1994
----------- --------- --------- ----------
<S> <C> <C> <C> <C>
Revenues:
Software licenses and
maintenance $ 6,018,605 3,545,896 5,356,572 3,136,919
Hardware sales and service 4,553,858 3,641,009 4,318,111 2,906,492
----------- --------- --------- ---------
Total revenues 10,572,463 7,186,905 9,674,683 6,043,411
----------- --------- --------- ---------
Cost of sales:
Software licenses and
maintenance 2,605,631 1,875,896 2,879,943 1,441,133
Hardware sales and service 3,958,663 3,195,810 3,734,132 2,525,896
----------- --------- --------- ---------
Total cost of sales 6,564,294 5,071,706 6,614,075 3,967,029
----------- --------- --------- ---------
Gross profit 4,008,169 2,115,199 3,060,608 2,076,382
Selling, general, and
administrative expenses 3,405,747 2,053,560 2,927,081 2,032,513
----------- --------- --------- ---------
Income from operations 602,422 61,639 133,527 43,869
Other income (expense):
Interest income 17,678 6,047 10,272 8,812
Interest expense (16,418) (22,713) (28,348) (25,517)
Other income 5,696 29,432 29,772 --
----------- --------- --------- ---------
Total other income
(expense) 6,956 12,766 11,696 (16,705)
----------- --------- --------- ---------
Income before taxes 609,378 74,405 145,223 27,164
Income tax expense
(note 3) 237,693 29,762 46,488 8,931
----------- --------- --------- ---------
Net income $ 371,685 44,643 98,735 18,233
----------- --------- --------- ---------
----------- --------- --------- ---------
Net income per common
share $ 2.03 0.24 0.54 0.10
----------- --------- --------- ---------
----------- --------- --------- ---------
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
SPIRE TECHNOLOGIES, INC.
AND SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED JANUARY 31, 1996 (UNAUDITED)
AND YEARS ENDED APRIL 30, 1995 AND 1994
<TABLE>
<CAPTION>
STI TOTAL
STI STSDI ADDITIONAL STOCK-
COMMON COMMON PAID-IN TREASURY RETAINED HOLDERS'
STOCK STOCK CAPITAL STOCK EARNINGS EQUITY
------ ------ ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Balances at April 30, 1993 $1,000 -- 7,410 -- 466,916 475,326
Stock issuance -- 1,000 -- -- -- 1,000
Stock repurchase -- -- -- (170,000) -- (170,000)
Net income -- -- -- -- 18,233 18,233
------ ------ ------- -------- -------- -------
Balances at April 30, 1994 1,000 1,000 7,410 (170,000) 485,149 324,559
Net income -- -- -- -- 98,735 98,735
------ ------ ------- -------- -------- -------
Balances at April 30,1995 $1,000 1,000 7,410 (170,000) 583,884 423,294
Issuance of treasury shares -- -- 65,790 43,860 -- 109,650
Net income -- -- -- -- 371,685 371,685
------ ------ ------- -------- -------- -------
Balances at January 31,1996
(Unaudited) $1,000 1,000 73,200 (126,140) 955,569 904,629
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
SPIRE TECHNOLOGIES, INC.
AND SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
COMBINED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JANUARY 31, 1996 (UNAUDITED)
AND YEARS ENDED APRIL 30, 1995 AND 1994
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
January 31, January 31, April 30, April 30,
1996 1995 1995 1994
--------- ---------- -------- --------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 371,685 44,643 98,735 18,233
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred taxes 68,507 1,357 (12,931) 12,249
Depreciation 38,539 29,515 41,056 37,313
Decrease (increase) in assets:
Accounts receivable (1,003,621) (1,483,060) (645,941) 368,801
Other current assets (884) 5,134 9,108 (26,518)
Increase (decrease) in liabilities:
Accounts payable 702,633 742,088 456,304 (304,540)
Accrued liabilities (150,293) 315,437 305,018 20,929
Income taxes payable 351,919 6,813 19,417 (2,135)
Deferred maintenance revenue 167,752 113,402 164,144 89,877
--------- ---------- -------- --------
Net cash provided by (used in) operating
activities 546,237 (224,671) 434,910 214,209
--------- ---------- -------- --------
Cash flows from investing activities--purchase
of fixed assets (54,648) (24,106) (114,395) (25,123)
--------- ---------- -------- --------
Cash flows from financing
activities:
Proceeds from issuance of stock 109,650 -- -- 1,000
Net borrowings on note payable to bank 3,722 -- -- (13,166)
Principal payments of long-term debt (85,697) (50,912) (176,167) (52,167)
--------- ---------- -------- --------
Proceeds from long-term debt issuance -- 15,960 128,439 --
Net cash used in financing activities 27,675 (34,952) (47,728) (64,333)
--------- ---------- -------- --------
Net increase (decrease) in cash 519,264 (283,729) 272,787 124,753
Cash at beginning of year 766,247 493,460 493,460 368,707
--------- ---------- -------- --------
Cash at end of year $ 1,285,511 209,731 766,247 493,460
--------- ---------- -------- --------
--------- ---------- -------- --------
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash paid for interest $ 16,218 22,713 28,348 25,517
Cash paid for income taxes -- 23,832 23,832 17,705
</TABLE>
See accompanying notes to combined financial statements.
<PAGE>
SPIRE TECHNOLOGIES, INC.
AND SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
Notes to Combined Financial Statements
April 30, 1995 and 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Spire Technologies, Inc. and Spire Technologies Systems Division,
Inc., are resellers of computer software and hardware, and also
provide technical support for certain software. Their customers
consist of business and governmental entities, geographically
dispersed throughout the United States. As a reseller, the
Company is dependent upon third party suppliers. Over seventy
percent of the Company's revenues are derived from products it
obtains from three suppliers.
PRINCIPLES OF COMBINATION
The combined financial statements include the financial statements
of Spire Technologies, Inc. (Spire Technologies or STI) and Spire
Technologies Systems Division, Inc. (STSDI) (the Companies). The
Companies operate under the direction of the same management team
and the ownership of the two entities is controlled by the same
individuals. STSDI has no employees. All work is performed by
Spire Technologies and a management fee is charged for the
services provided. All significant intercompany balances and
transactions have been eliminated in combination.
CASH EQUIVALENTS
Cash equivalents of $766,247 and $493,460 at April 30, 1995 and
1994, respectively, consist of deposits at financial institutions.
For purposes of the combined statements of cash flows, the
Companies consider all highly liquid debt instruments with
original maturities of three months or less to be cash
equivalents.
FIXED ASSETS
Fixed assets are stated at cost. Depreciation of fixed assets is
computed on the straight-line method over the estimated useful
lives of individual classes of assets. The estimated useful lives
of the individual classes of assets are as follows:
Buildings 40 years
Furniture and equipment 3-10 years
Transportation equipment 5 years
<PAGE>
2
SPIRE TECHNOLOGIES, INC.
AND SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
Notes to Combined Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
REVENUE RECOGNITION
Revenue from the sale of software licenses and hardware sales is
recognized at the time of delivery. Revenue from maintenance
contracts and customer service is recognized as the service is
performed. Deferred maintenance revenue consists of payments
received on software maintenance contracts and recorded as revenue
over the period of the contract, which is typically one year.
INCOME TAXES
Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.
INCOME PER SHARE
Per share amounts are computed by dividing net income by the
weighted average number of common shares outstanding. There were
183,461, 183,000, 183,000 and 190,499 weighted average common
shares outstanding at January 31, 1996, January 31, 1995, April
30, 1995 and April 30, 1994, respectively.
USE OF ESTIMATES
Management of the Companies has made a number of estimates and
assumptions relating to the reporting of assets and liabilities
and the disclosure of contingent assets and liabilities to prepare
these combined financial statements in conformity with generally
accepted accounting principles. Actual results could differ from
those estimates.
UNAUDITED COMBINED FINANCIAL STATEMENTS
In the opinion of management, the unaudited combined financial
statements as of January 31, 1996 and for the nine months ended
January 31, 1996 and 1995, reflect all adjustments that include
only normal and recurring items necessary to present fairly the
financial position and results of operations for such periods.
Results of operations for interim periods are not necessarily
indicative of results that might be achieved for the entire year.
<PAGE>
3
SPIRE TECHNOLOGIES, INC.
AND SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
Notes to Combined Financial Statements
(2) NOTE PAYABLE TO BANK AND LONG-TERM DEBT
Spire Technologies has available with a commercial bank an
unsecured line of credit agreement totaling $75,000. The line of
credit bears interest at prime plus two percent and expires March
23, 1996.
Long-term debt at April 30, 1995 and 1994, consisted of the
following:
<TABLE>
<CAPTION>
1995 1994
--------- -------
<S> <C> <C>
8.75% first mortgage payable in monthly installments
of $1,385, including interest, secured by the
Company's land and building with a book value of
$261,495 at April 30, 1995 $ -- 128,033
8.25% first mortgage payable in monthly installments
of $1,173, including interest, with final payment of
$107,417 due July 15, 1999, secured by the Company's
land and building with a book value of $261,495 at
April 30, 1995 125,755 --
8.70% SBA loan payable in monthly installments of
$1,078, including interest, secured by the Company's
land and building with a book value of $261,495 at
April 30, 1995 104,754 107,736
5% simple interest loan payable in monthly
installments of 1.4% of the Spire Technologies gross
margin from the prior month, secured by common stock
of Spire Technologies 80,430 122,898
--------- -------
Total long-term debt 310,939 358,667
Less current portion 87,527 50,912
Long-term debt, excluding current portion $223,412 307,755
--------- -------
--------- -------
</TABLE>
<PAGE>
4
SPIRE TECHNOLOGIES, INC.
AND SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
Notes to Combined Financial Statements
(2) NOTE PAYABLE TO BANK AND LONG-TERM DEBT (continued)
Aggregate maturities of long-term debt are as follows:
<TABLE>
<S> <C>
Year ended April 30:
1996 $ 87,527
1997 7,721
1998 8,400
1999 9,139
2000 112,877
Thereafter 85,275
--------
$310,939
--------
--------
</TABLE>
(3) INCOME TAXES
Income tax expense consists of:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
-------- -------- ------
<S> <C> <C> <C>
Year ended April 30, 1995:
Federal $ 50,242 (11,273) 38,969
State 9,177 (1,658) 7,519
-------- ------- ------
$ 59,419 (12,931) 46,488
-------- ------- ------
-------- ------- ------
Year ended April 30, 1994:
Federal $ (3,179) 10,679 7,500
State (139) 1,570 1,431
-------- ------- ------
$ (3,318) 12,249 8,931
-------- ------- ------
-------- ------- ------
</TABLE>
Actual income tax expense differs from the "expected" tax expense
(computed by applying the U.S. federal corporate income tax rate
of 34 percent to income before income taxes) as follows:
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Computed "expected" tax expense $ 49,376 9,236
Increase (decrease) in income taxes
resulting from:
State income taxes, net of
federal tax benefit 4,963 840
Other (7,851) (1,145)
-------- -------
Income taxes $ 46,488 8,931
-------- -------
-------- -------
</TABLE>
<PAGE>
5
SPIRE TECHNOLOGIES, INC.
AND SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
Notes to Combined Financial Statements
(3) INCOME TAXES (continued)
The tax effects of temporary differences that give rise to current
deferred tax assets and noncurrent deferred tax liabilities at
June 30, 1995 and 1994, are presented below:
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Current deferred tax assets:
Vacation accrual $ 9,232 7,435
Allowance for bad debts 29,809 20,033
------- ------
Total current deferred tax assets $39,041 27,468
------- ------
------- ------
Noncurrent deferred tax liability -- tax
depreciation in excess of book depreciation $ 4,773 6,131
------- ------
------- ------
</TABLE>
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which
those temporary differences become deductible. Based upon the
level of historical taxable income and projections for future
taxable income over the periods which the deferred tax assets are
deductible, management believes it is more than likely than not
the Companies will realize the benefits of these deductible
differences.
(4) LEASES
The Companies have several operating leases for office space and
equipment, all of which have terms of one year or less. The
Companies incurred rent expenses of $19,973 and $-0- for the years
ended April 30, 1995 and 1994, respectively. The Companies
anticipate renewing these leases under options clauses in the
agreements. Rent expense under these options clauses for 1996
would be $66,174.
<PAGE>
6
SPIRE TECHNOLOGIES, INC.
AND SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
Notes to Combined Financial Statements
(5) STOCK RESTRICTION AGREEMENT
Spire Technologies has entered into an agreement with each of its
stockholders that places certain restrictions on the transfer of
common stock by the stockholders. In general, in the event of a
proposed transfer of stock, the agreement provides Spire
Technologies with the first right of refusal to purchase the
shares proposed for transfer. If Spire Technologies declines to
purchase the shares, other stockholders may acquire the shares not
acquired by Spire Technologies. If neither Spire Technologies nor
other stockholders exercise the right to purchase the shares, the
individual may transfer the shares to a third party with the prior
written consent of 75 percent of the issued and outstanding stock
of Spire Technologies. These restrictions would be eliminated in
conjunction with the business combination described in note 7.
(6) RETIREMENT PLAN
Spire Technologies has a qualified defined contribution retirement
plan under Section 401(k) of the Internal Revenue Code. The Plan
covers all employees who meet minimum age and service
requirements, and allows participants to defer a portion of their
annual compensation on a pretax basis. In addition, employer
contributions are made at the discretion of the Board of
Directors. Participants are fully vested at all times in employee
contributions. Employer contributions vest over a six-year
period. Employer contributions of $11,545 and $6,001 were made
for the years ended April 30, 1995 and 1994, respectively.
(7) SUBSEQUENT EVENTS
In January 1996, the Companies entered into an agreement and plan
of reorganization with Amacan Resources Corporation (Amacan) that
when consummated will result in a business combination wherein the
Companies will become wholly owned subsidiaries of Amacan. Since
1974, Amacan has been almost exclusively engaged as a participant
with others in oil and gas operations and development. Amacan's
principal assets are working interests in producing oil and gas
wells and options or rights to participate in the drilling of
additional wells.
<PAGE>
7
SPIRE TECHNOLOGIES, INC.
AND SPIRE TECHNOLOGIES SYSTEMS DIVISION, INC.
Notes to Combined Financial Statements
(7) SUBSEQUENT EVENTS (continued)
At the closing of the business combination, (a) the 389,102 shares
of Amacan's common stock previously outstanding (as adjusted for a
reverse stock split) will remain outstanding and (b) Amacan will
issue an additional 3,501,883 shares of its common stock for all
of the issued and outstanding shares of the Companies' common
stock. The business combination will be treated for accounting
purposes as a "reverse merger" wherein the Companies will be shown
as the acquiring company even though Amacan will issue its common
shares to acquire the Companies because the stockholders of the
Companies will have the significant majority of the outstanding
common stock after the combination, and management of the
Companies will become the management of the combined Companies.
The business combination will be accounted for as a purchase
transaction with the net assets of Amacan being recorded at their
fair value at the date of closing and operating results of Amacan
prior to the business combination will not be included with the
historical operating results of the Companies.
The following unaudited proforma financial information presents
the combined results of operations of the Companies and Amacan as
if the acquisition had occurred as of May 1, 1993. The proforma
financial information does not necessarily reflect the results of
operations that would have occurred had the Companies and Amacan
constituted a single entity during such periods.
<TABLE>
<CAPTION>
Nine months
ended Years ended April 30,
January 31, -----------------------
1996 1995 1994
------------ --------- ---------
<S> <C> <C> <C>
Net sales $ 10,681,313 9,862,216 6,231,833
Net income 339,984 127,258 31,242
Net income per share .09 .04 .01
</TABLE>
In December 1995, Spire Technologies adopted an employee stock
option plan for which 12,000 shares (pre merger) of its common
stock have been reserved for issuance under the plan. A total of
8,155 options (pre merger) were granted, at a price of $44 per
share upon adoption of the plan.