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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the quarterly period ended November 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _________________.
WORLDCALL CORPORATION
------------------------------------------------
(Name of small business issuer in its charter)
Delaware 0-14873 84-0897771
(State of incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
Address of principal executive offices: 321 W. Lake Lansing Road
Asher Court, Suite 100
E. Lansing, MI 48823
Issuer's telephone number: (517) 333-5277
Former names: PowerTel USA, Inc.
Nevada Energy Company, Inc.
Munson Geothermal, Inc.
Former addresses: 510 Castillo Street
Santa Barbara, CA 93101
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Phone (805) 884-8350; Fax (805)
884-9221
77-564 B Country Club Drive, Suite 340
Palm Dessert, CA 92260
Phone (619) 772-3100; Fax (619)
772-3132
1000 Bible Way, Suite 40
Reno, Nevada 89502
Phone (702) 324-0922 and
(702) 324-5064
989 Bible Way
Reno, NV 89502
Phone (702) 786-7979;
Fax (702) 786-7989
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes No X
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 9,573,487
Transitional Small Business Disclosure Format (check one): Yes _________
No___________
Securities registered under Section 12(b) of the Act: NONE
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TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION.....................................................................................1
Item 1. Financial Statements............................................................................24
Item 2. Management's discussion and analysis of financial condition and results
of operation....................................................................................24
RISK FACTORS......................................................................................................24
LIQUIDITY AND CAPITAL RESOURCES...................................................................................25
RESULTS OF OPERATIONS.............................................................................................26
GENERAL COMMENTS..................................................................................................26
PART II - Other Information.......................................................................................26
FORWARD LOOKING STATEMENTS........................................................................................26
Item 1. Legal Proceedings...............................................................................26
Item 2. Changes in Securities and Use of Proceeds.......................................................29
Item 3. Defaults Upon Senior Securities.................................................................33
Item 4. Submission of Matters to a Vote of Security Holders.............................................33
Item 5. Other Information...............................................................................34
Risk Factors......................................................................................................39
Description of Business...........................................................................................40
COMPANY HISTORY...................................................................................................41
Brady Hot Springs Geothermal Associates..................................................................42
Brady Geo Park Power Partners 1996.......................................................................42
Brady Power Partners.....................................................................................43
Nevada Geothermal Power Partners.........................................................................44
Nevada Energy Partners I L.P.............................................................................44
San Jacinto Power Company................................................................................44
Combustion Energy Company................................................................................45
Oreana Power Partners....................................................................................45
CHANGE IN CONTROL.................................................................................................46
FORMATION OF NEW SUBSIDIARIES.....................................................................................47
San Jacinto Energy Corporation...........................................................................47
Central Communications Corporation.......................................................................47
MANAGEMENT CHANGES................................................................................................49
INVOLUNTARY BANKRUPTCY............................................................................................50
INTERVENING EVENTS................................................................................................50
CORPORATE OBJECTIVES..............................................................................................51
POWER MARKETS.....................................................................................................52
COMPETITION.......................................................................................................52
GOVERNMENT REGULATION.............................................................................................53
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FEDERAL ENERGY REGULATORY COMMISSION ("FERC") LAW.................................................................53
POWER CONTRACT REGULATIONS........................................................................................53
EXEMPTIONS FROM FEDERAL AND STATE REGULATIONS.....................................................................53
TELECOMMUNICATIONS MARKET, COMPETITION
AND GOVERNMENT REGULATION................................................................................54
RESEARCH AND DEVELOPMENT..........................................................................................54
EMPLOYEES.........................................................................................................55
DESCRIPTION OF PROPERTY...........................................................................................55
ELECTRIC POWER GENERATING EQUIPMENT......................................................................55
BINARY-CYCLE POWER PLANTS................................................................................55
RAFT RIVER POWER PLANT...................................................................................55
LEGAL PROCEEDINGS.................................................................................................55
MUNSON LAWSUIT...........................................................................................55
ANTISDEL LITIGATION......................................................................................56
CASCARILLA LITIGATION....................................................................................56
SMITH, KATZENSTEIN LITIGATION............................................................................56
HARTMAN, KASSOUFF, MODESITT LITIGATION...................................................................56
NEVADA ENERGY PARTNERS 1-LP LITIGATION...................................................................57
SHAREHOLDER DERIVATIVE SUIT.......................................................................................58
SANTA BARBARA OFFICE SPACE...............................................................................58
JUDGMENT AGAINST WATERFORD TRUST AND GOLDEN CHANCE, LTD..................................................59
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS......................................................59
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS..................................................................................................60
MARKET INFORMATION................................................................................................60
HOLDERS..................................................................................................62
DIVIDENDS................................................................................................62
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS........................................................63
PLAN OF OPERATIONS................................................................................................63
RISK FACTORS......................................................................................................63
LIQUIDITY AND CAPITAL RESOURCES...................................................................................65
DEBT .........................................................................................................65
RESULTS OF OPERATIONS.............................................................................................66
GENERAL COMMENTS..................................................................................................66
REVENUES AND EXPENSES.............................................................................................66
COSTS AND EXPENSES COMPARISON OF 1997 AND 1996....................................................................66
INCOME TAXES......................................................................................................67
NET INCOME (LOSS).................................................................................................67
FINANCIAL STATEMENTS..............................................................................................68
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.......................................................................68
CHANGES IN ACCOUNTANTS............................................................................................87
DIRECTORS.........................................................................................................89
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EXECUTIVE OFFICERS................................................................................................90
REPORTS UNDER SECTION 16(a) OF THE EXCHANGE ACT...................................................................91
EXECUTIVE COMPENSATION............................................................................................91
DIRECTOR COMPENSATION.............................................................................................91
CHANGE-IN-CONTROL ARRANGEMENTS,
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ......................................................92
PART II - EXHIBIT LIST............................................................................................94
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
---------------------
In February, 1997, an involuntary Petition for Reorganization was filed
pursuant to Section 1103 of the United States Bankruptcy Code. The following
unaudited Financial Statements reflect the financial condition of the company
for the nine months ended November 30, 1998. The Company is unable to provide
comparable financial statements for the nine months ended November 30, 1997, due
to the pendency of the Chapter 11 proceeding and the absence of accurate and,
complete books and records for the period May 1, 1996 through February, 1997.
The Company is in the process of attempting to reconstruct these records and
intends, to the extent feasible, to amend this quarterly report in the near
future in order to include comparable financial statements for the nine months
ended November 30, 1997. While the following financial statements are, in the
opinion of management, a reasonable compilation of the financial condition of
the Company as at November 30, 1998, these financial statements are derived, in
part, from books and records maintained by the Company prior to February, 1998.
In this context, during the period May, 1996 through January, 1997, there were
substantial operational and financial problems with the Company (see discussion
below and in the Debtor's Second Amended Disclosure Statement as filed in the
Bankruptcy proceeding, a copy of which is enclosed as EXHIBIT (2)A). The Company
does not have access to all of its books and records for that period and is in
the process of attempting to reconstruct financial events which took place
during that time frame. Accordingly, the following financial statements are
subject to revision and modification on the basis of information ascertained by
management during the course of its reconstruction.
In addition, on or about September 15, 1998, the United States
Bankruptcy Court confirmed a Plan of Reorganization ("Plan of Reorganization" or
"Plan") pursuant to which the claims of creditors of the Company will be
compromised and/or discharged pursuant to the terms of the Plan on various dates
through the first quarter of 1999. In addition, pursuant to the terms of the
Plan, there will be substantial changes with respect to the number of shares of
Class A Common Stock which are issued and outstanding. These revisions are
discussed below in more detail.
Accordingly, while the following financial statements represent
management's best effort to present the financial condition of the Company as at
November 30, 1998, it is anticipated that there will be substantial
modifications to the Company's balance sheet and to its shareholders'
capitalization prior to the close of its fiscal year on February 28, 1999.
For the nine months ended November 30, 1998, the Company's only
operating unit consisted of Herth Printing and Business Supply, a Division of
Combustion Energy Company, a wholly owned subsidiary of the Company. Following
the Company's unaudited financial statements (consolidated) as at November 30,
1998, the Company is submitting a compilation of the assets and liabilities of
Herth Printing and Business Supply and the related statements of revenue and
expenses and cash flows for this operation as at November 30, 1997 and as at
November 30, 1998.
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WORLDCALL CORPORATION
CONSOLIDATED BALANCE SHEETS
AT
NOVEMBER 30, 1998
(UNAUDITED)
ASSETS
------
November 30, 1998
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CURRENT ASSETS:
Cash $ 94,156
Receivables 206,357
Inventory 12,010
Deposits and prepaid expenses 15,254
----------
Total Current Assets 327,777
==========
PROPERTY AND EQUIPMENT, at cost (Notes 1 & 2)
Furniture, equipment and vehicles 478,071
Building 253,156
Power generation equipment -0-
Idle power generation equipment (Net of obsolescence 5,700,000
of $2,532,472)
Land 70,000
----------
6,501,227
Less - Accumulated depreciation and amortization (379,800)
----------
Net Property and Equipment 6,121,427
==========
OTHER ASSETS (Note 2):
Investments in partnerships -0-
Investments in subsidiaries (14,500)
Deposits (Note 4) -0-
Power Purchase Agreements, net of Amortization -0-
Organization Expense, net of amortization -0-
----------
(14,500)
TOTAL ASSETS $6,434,700
</TABLE>
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WORLDCALL CORPORATION
CONSOLIDATED BALANCE SHEETS
AT
NOVEMBER 30, 1998
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS EQUITY
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November 30, 1998
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CURRENT LIABILITIES:
Accounts Payable $ 275,485
Current Portion - Long Term Debt 31,033
Payable to related party 4,000
Accrued payroll 903
Other liabilities 42,948
Liabilities subject to compromise (Note 1) -0-
Accounts Payable - Post-Chapter 11 647,000
-----------
Total Current Liabilities $ 1,001,369
===========
NON-CURRENT LIABILITIES:
Long Term Debt (Note 3) $ 183,775
-----------
Total Non-Current Liabilities $ 183,775
===========
COMMITMENTS AND CONTINGENT LIABILITIES (Note 3) -0-
-----------
Total Liabilities $ 1,185,144
===========
MINORITY INTEREST IN SUBSIDIARY (Note 2) -0-
SHAREHOLDERS' EQUITY (Notes 1, 4, 5, 6, 7 and 8):
Preferred stock, $.001 Par Value, Authorized 2,000,000 shares; )
Issued and outstanding - )
Series A - 0 shares at Nov. 30, 1998, 1,960,745 at February 28, 1998 )
Class A Common Stock, $.001 par value, Authorized 25,000,000 shares: )
Issued pursuant to the Plan of Reorganization and outstanding 9,573,487 )
shares at Nov. 30, 1998, 8,808,485 shares at February 29, 1996 )
Class B Common Stock, $.001 par value, Authorized 25,000,000 shares: ) 5,756,962
Issued pursuant to the Plan of Reorganization and outstanding 12,568,465 )
shares at Nov. 30, 1998, (Note 10) and 4,437,473 shares at )
February 28, 1998 )
Additional paid-in capital )
Series A - note receivable
Accumulated deficit
Treasury stock -
Class A, 16,785 shares at Nov. 30, 1998 and ) (498,301)
16,785 shares at February 28, 1998 ) (9,101)
Total Shareholders' Equity $ 5,249,560
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,434,704
===========
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WORLDCALL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR
NOVEMBER 30, 1998
(UNAUDITED)
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November 30, 1998
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REVENUES:
Energy Sales -0-
Printing and Business Supply Sales $ 640,562
Total Revenues 640,562
COSTS AND EXPENSES:
Costs of Sales 461,683
Costs of Operations -0-
Depreciation and Amortization (Note 1) 51,938
Provision for Obsolescence (Note 1) -0-
Professional Fees 289,938
General and Administrative 159,364
---------
Total Costs and Expenses 962,923
=========
OTHER INCOME AND (EXPENSES):
Interest Income -0-
Other Income -0-
Gain on disposition of assets (Note 2) -0-
Interest Expense (16,585)
Minority Interests (Notes 1 and 2) -0-
---------
Total other income and (expenses) (16,585)
LOSS BEFORE TAXES AND EXTRAORDINARY ITEM $(338,946)
=========
PROVISION FOR INCOME TAXES (Note 9) -0-
---------
NET INCOME (LOSS) $(338,946)
=========
NET INCOME (LOSS) PER SHARE (Notes 1 and 6) (.04)
=========
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WORLDCALL CORPORATION
STATEMENTS OF CASH FLOW
FOR
NOVEMBER 30, 1998
(UNAUDITED)
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November 30, 1998
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CASH FLOWS FROM OPERATING ACTIVITIES: $ 338,946
Net Income (Loss)
Adjustments to reconcile net income (loss) -0-
to net cash used in operating activities 51,938
Depreciation and Amortization (Note 1) -0-
Provision for Obsolescence (Note 1) -0-
Minority Interest in Subsidiary Profit (Loss) -0-
Stock issued to Directors/Officers/Employees -0-
Changes in assets and liabilities
Decrease (Increase) in Receivables 4,324
Decrease (Increase) in Receivables from related party -0-
Decrease (Increase) in Inventories 712
Decrease (Increase) in Deposits and Prepaids -0-
Increase (Decrease) in Accounts Payable 237,551
Increase (Decrease) in Payable to related party -0-
Increase (Decrease) in Other Liabilities 7,254
Increase (Decrease) in Liabilities subject to compromise -0-
---------
Net cash used in operating activities (37,167)
=========
CASH FLOW FROM INVESTING ACTIVITIES:
Deposit on print equipment -0-
Investment in Subsidiaries 14,500
(Advances) to and Repayments from Partnerships -0-
---------
Net cash provided by investing activities 14,500
=========
CASH FLOW FROM FINANCING ACTIVITIES:
Loans from Shareholders 4,000
Principal repayments on financing -0-
Net proceeds from cash sales of common and preferred stock -0-
Repayment of Long-Term Debt (21,375)
Minority Interest -0-
---------
Net cash used in financing activities (17,375)
=========
NET INCREASE (DECREASE) IN CASH (40,042)
CASH AT BEGINNING OR PERIOD 134,198
CASH AT END OF PERIOD 94,156
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION (Note 1)
Cash expenditures during the nine months for -
Interest
Taxes, including taxes paid through payments on liabilities subject to
compromise of approximately $26,000 in 1997 and $16,015 in 1996 and
$13,386 in 1995
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(The accompanying notes are an integral part of these statements)
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NOTE 1 - Organization and Summary of Significant Accounting Policies:
PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiary Combustion Energy Company, Inc.,
a Nevada corporation and Yerington Acquisition Company.
ORGANIZATION AND OPERATIONS:
PowerTel USA, Inc. ("the Company") was organized on December 2, 1982,
and incorporated under the laws of Delaware on December 20, 1982, under the name
Munson Geothermal, Inc. Pursuant to an action of the Board of Directors, the
Company's name was changed to Nevada Energy Company, Inc. on December 3, 1990.
Subsequently, the Company's name was changed to PowerTel USA, Inc. on January
21, 1997. The Company filed Chapter 11 bankruptcy on February 13, 1997, and was
approved to operate as debtor-in-possession on September 24, 1997. The Company's
Plan of Reorganization was approved by the Court on September 15, 1998. (SEE,
PLAN OF RE-ORGANIZATION)
IDLE POWER GENERATION EQUIPMENT:
Idle power generation equipment includes ten Ormat power plants capable
of producing up to an estimated maximum 3,700 KW average output and the
relocated Raft River Power Plant with an estimated capacity of up to 7,200 KW of
output. Total net book value of these assets is $5,700,000. A May 1996 appraisal
of these assets determined the fair market value to be approximately $5,700,000.
DEPRECIATION AND AMORTIZATION:
The Company provides for depreciation of furniture and office equipment
utilizing straight-line and accelerated methods over the useful lives of three
to seven years beginning when assets are placed in service.
Idle geothermal power generation equipment was adjusted to the lower of
cost or appraisal value at February 29, 1992. Subsequently, provisions for
obsolescence have been provided based on the remaining economic life estimated
to be 18 years at that time. Based on the May 1996 appraisal, an additional
$83,288 of obsolescence was provided on the Ormat power plants reducing their
net book value to the then appraisal value of approximately $5,700,000.
NET INCOME (LOSS) PER COMMON SHARE:
The net income (loss) per common share is computed based upon the
weighted average number of shares of Class A Common Stock outstanding during
each period. Shares issued as
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dividends (Note 6) have been treated as issued at February 28, 1993. Weighted
average shares of Class A Common Stock outstanding were 8,808,485 in the year
ended November 30, 1998 and 1,463,451 in the year ended February 29, 1996.
Shares issuable upon exercise of warrants or options are excluded from the
computation since the effect of their inclusion would be antidilutive. Shares of
Class B Common Stock are excluded from the computation since Class B
shareholders did not historically participate in the earnings of the Company and
this class of stock was extinguished under the plan.
RECAPITALIZATION
Pursuant to the Plan of Reorganization as approved by the Bankruptcy
Court, there will be a significant change with respect to the shareholder
capitalization of the Company. See Note 7.
NOTE 2 - Business Segment Information
COMBUSTION ENERGY COMPANY
The Company formed a wholly-owned subsidiary, Combustion Energy
Company, Inc. ("CEC"), a Nevada corporation, on February 12, 1993 for the
purpose of being a general partner of Oreana Power Partners ("OPP") (See OREANA
POWER PARTNERS below). The Company is also a limited partner in OPP.
On November 30, 1994, the Company caused CEC to merge with Herth
Printing and Business Supplies, Inc. ("Herth"), in exchange for Class A Common
Stock of the Company. The Company, through its ownership of CEC, owned 100% of
the post-merger business and consolidated the financial results of CEC in its
reported results. In an agreement entered into on September 1, 1996, the Company
exchanged its interest in CEC, and thereby Herth, in a transaction which
included the reacquisition of all right, title and interest in the Company's
then outstanding Class B Common shares, which was later the subject of a
settlement agreement between NEP, NEPC and the Company which modified the
substance of the NEP September 1996 Settlement Agreement. (See EXHIBIT (10) A).
SAN JACINTO POWER CORPORATION
San Jacinto Power Corporation, a Nevada Corporation, ("SJPC") was
formed on December 15, 1993.The Company contributed 222,267 shares of its Class
A Common Stock, valued at $222,267, based on 50% of market price at the time of
issue due to resale restrictions imposed pursuant to Rule 144, and total cash of
$275,055 in exchange for its 50.01% ownership interest in SJPC. The New World
Power Corporation ("New World") contributed 48,000 shares of its Common Stock,
with market value of $516,000 at time of issue, to SJPC. On February 10, 1994,
New World contributed cash of $149,970 to SJPC and delivered a balance of cash
of $124,975 on March 8, 1994. New World's contribution of Common Stock and cash
of $274,945 to SJPC were in exchange for its 49.99% ownership interest in SJPC.
The Company and New World subsequently engaged in negotiations to
acquire, and did acquire, the operating assets of Smith Wind Energy Company and
six affiliated limited partnerships known collectively as Triad. The purchase
price of $1,038,029 was equal to the agreed value of the shares plus assumed
liabilities totaling approximately $293,957 for long-term secured debt and
certain delinquent property taxes.
7
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The total cost was allocated based on managements estimate of fair
market value of assets acquired, except for prepaid BLM rent which was valued at
cost, as follows:
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Field Equipment $ 21,177
Prepaid BLM Rent 46,892
Power Sales Contract 52,500
Power Generation Equipment 917,460
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Total $1,038,029
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The Company managed the operations of San Jacinto Power Corporation
and the wind farm until June 27, 1997. On June 27, 1997 the sale of the
Company's 50.01% interest in its consolidated subsidiary, San Jacinto Power
Corporation, was completed by the court appointed bankruptcy trustee. The
Company's interest, represented by 50,010 shares of common stock, was sold at
bid for $200,000 cash. The successful bidder, SeaWest Corporation of San
Diego, CA also agreed to pay all outstanding debts of San Jacinto Power
Corporation, estimated in excess of $175,000.
In its most recently filed financial report, the 10-QSB for the quarter
ended November 30, 1996, the Company had reported consolidated San Jacinto Power
Corporation assets of approximately $1,105,986, consolidated liabilities of
approximately $159,287 and minority interest of $632,720. The transaction will
result in a reported net loss of approximately $113,979.
At the time of the sale, San Jacinto Power Corporation was one of two
operating properties held by the Company. This Company is not included in the
current financial statements.
MT. APO CORPORATION
Mount Apo Corporation, a Nevada corporation ("MAC") was formed on May
9, 1994. MAC is a joint venture of NEC and Geothermal Development Associates and
was formed for the purpose of submitting a competitive bid on a 40 MWe
geothermal project in the Philippines. The bid was unsuccessful. The Company's
investment in MAC is carried at cost of $590.
BRADY GEO PARK POWER PROJECT, 1986, LTD.
The Company's investment in Brady Geo Park Power Project, 1986, Ltd.,
("BGPPP") including note and related interest receivable and advances for
property taxes were written down to a combined book value substantially equal to
the appraised value of the Ormat energy converter interests held by the
partnership. Except for the residual partnership interest, the Company
transferred all of its interest in the assets of BGPPP to its wholly owned
subsidiary effective December 1, 1995. (See Note 2, Yerington Acquisition
Company.) The Company has classified this asset as Idle Power Generation
Equipment in the accompanying consolidated balance sheet.
8
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NEVADA ENERGY PARTNERS - I
In February 1991, the Company received a 60% interest as a limited
partner in Nevada Energy Partners I, a Nevada limited partnership (NEP-I LP),
which holds a 31.66% interest in the equity of Nevada Geothermal Power Partners
("NGPP"). NGPP is a Nevada limited partnership whose general partners are Hot
Springs Power Company and NEP-I LP. The Company issued a total of 3,476,875
shares of Class B common shares for this interest. The shares were valued at par
of $0.001 per share as there is no market for these shares and there was no
other basis for valuing the interest acquired. An additional 548,043 shares were
issued to NEP-I LP in conjunction with the Company's 5% stock dividends made in
July and October 1994 and January 1995. Class B common shares have full voting
rights, but have no cash dividend participation. In a transaction completed on
September 1, 1996, the Company exchanged its interest in NEP-I LP together with
its interest in Combustion Energy Company, Inc. (a previously wholly owned
subsidiary) for all right, title and interest in the Company's Class B common
shares held by NEP-I LP. Pursuant to a settlement agreement entered into
December 1, 1997, the September 1996 Agreement was rescinded and modified to,
among other things, allocate 99% of all NEP gains resulting from the sale of
NGPP's interests in BPP from 1995 to date to the Company, together with all
outstanding Class B Common Stock and Class B Common Stock rights to future
issuances, in consideration of the Company's issuance of new common shares
pursuant to the Company's Plan of Reorganization. (See EXHIBIT (10)A).
The Company's interest in NEP-I LP was valued at $3,080 based on the
par value of the shares issued, less amounts recorded as treasury stock due to
the Company's then effective ownership of 60% of the Class B shares held by
NEP-I LP, plus subsequent cash investments, less estimated partnership losses.
As a general partner of NGPP, NEP-I LP had been entitled to a share in
NGPP's distributable cash flow. As a general partner in Brady Power Partners
("BPP"), NGPP held a fifty percent (50%) ownership interest in the completed
Brady project and was also entitled to receive project development fees and a
share of BPP's distributable cash flow. BPP was a Nevada general partnership
whose general partners were NGPP and ESIBH Limited Partnership, a Delaware
limited partnership. The Company had been entitled to receive sixty percent
(60%) of NEP-I LP's distributable cash flow. There has been no cash available
for distribution through February 28, 1997.
On May 8, 1995, NGPP sold its 50% interest in the Brady Power Project
for approximately $5.5 million dollars. NGPP has received net cash distributions
of approximately $4.3 million dollars. The Company received $508,018 in July
1995 as its share of the distribution of these proceeds. The balance due of
$77,493 was recorded as a receivable. However, the receivable has subsequently
been charged to bad debts as it is believed to be uncollectible. As a result of
the Settlement Agreement with NEP, the Company has adjusted its gain upwards to
reflect the assumption of 99% of all gains from NEP from January 1, 1995 to the
present.
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OREANA POWER PARTNERS
Oreana Power Partner ("OPP") is a limited partnership which was formed
in February 1993 for the purpose of developing and financing gas turbine
electricity generating facilities to provide power to Sierra Pacific Power
Company ("Sierra") pursuant to power sales contracts to be obtained. The Company
is a limited partner and its interest is valued at $46 based on its initial cash
investment, less expenses and returned capital. The general partners of OPP are
Energy Development Associates ("EDA", a Nevada corporation and a wholly-owned
subsidiary of Geothermal Development Associates) and CEC, a wholly-owned
subsidiary of the Company. EDA is the Managing General Partner and CEC is the
Financial General Partner. Geothermal Development Associates is a privately
owned Nevada company, not related to the Company. There was no activity with
respect to development in the year ending February 29, 1996. OPP was
subsequently dissolved.
YERINGTON ACQUISITION COMPANY, INC.
Yerington Acquisition Company, Inc., a Nevada corporation ("YAC") was
formed on December 8, 1994 for the purpose of acquiring the assets of Tad's
Geothermal, a non-related owner/operator of a geothermal power generating
facility located near Yerington, Nevada. The acquisition was not completed. In
December 1995, the Company transferred all of its right, title and interest in
10 Ormat power generating units (classified as idle power generating equipment
in the financial statements) to YAC. In April 1995, the Company entered into an
agreement through a non-binding letter of intent, to transfer, through merger
with YAC, to Pollution Controls, International, all of its right, title and
interest in the 10 Ormat units together with any remaining interest in
acquiring the assets of Tad's. Aggregate consideration to be received by the
Company, in the form of convertible preferred stock and convertible debt would
have exceeded the net book value of the assets.
CENTRAL COMMUNICATIONS CORPORATION
Central Communications Corporation, a Nevada corporation ("CCC"), was
formed for the purpose of acquiring interests in the telecommunications
business. On May 21, 1996, the Company announced that it had signed a binding
letter of intent to acquire, through CCC, all of the outstanding shares of
Telecom Technologies, Inc. an Oregon corporation ("TTI"), and certain other
related assets. The terms of the acquisition provided for the payment of
$500,000 in cash and issuance of 2,000,000 Class A common shares. The Company
advanced to CCC $492,000 in cash in the quarter ended August 31, 1996 in
anticipation of the completion of the acquisition. The acquisition was completed
on June 21, 1996, however, it was subsequently reversed. The cash payment and
stock issued were never returned. Certain shareholders have filed an action in
Delaware in an attempt to recover some or all of the Company's investment. (See
Item 1. Legal Proceedings) There is no assurance that such recovery will occur.
10
<PAGE> 16
NOTE 3 - Commitments and Contingencies:
The Company's wholly owned subsidiary CCC, entered into a long-term
lease for office space in Santa Barbara, California. The Company occupied the
space for approximately three months in the fiscal year ended February
28, 1997. The space has been vacated and the landlord filed suit for recovery of
earned rents of $64,687, interest thereon, costs and damages. Estimated payments
on the original terms of the lease as of February 28, 1997 are as follows:
<TABLE>
<S> <C>
1997 $ 228,408
1998 228,408
1999 228,408
2000 228,408
2001 152,272
-----------
Total $1,065,904
===========
</TABLE>
The claim for payment by the lessor against the Company was withdrawn in its
entirety. Accordingly, this commitment is no longer an obligation of the
Company.
NOTE 4 - Short-Term Borrowings and Mortgage Payable:
There is no short-term borrowing at November 30, 1998. The Company's
subsidiary, Combustion Energy Company, which operates Herth Printing and
Business Supply, has a long term debt (8 years) on the purchase of a printing
press in May, 1996. Monthly payments are $4,218 with interest at 9.75%.
NOTE 5 - Related Transactions:
During the fiscal year ended February 28, 1998, the Company sold its
50.01% interest in San Jacinto Power Corporation (then the Company's majority
owned consolidated subsidiary) sold its interest of 50.01% for $200,000.00 plus
assumption of debt in excess of $175,000.00
NOTE 6 - Preferred Stock:
The Court approved Plan of Reorganization provides that all existing
Series A and Series C preferred stock shall be extinguished promptly after the
Confirmation Date of September 15, 1998. The five (5) Series B shares held by
the prior directors were repurchased by the Corporation for 100,000 new Class A
common shares, per B share for a total of 500,000 shares. The repurchase was
approved by the Court and the shares were issued pre-split. All preferred shares
have been extinguished. The Plan further provided for the authorization of seven
(7) shares of "Special Stock." Three shares have been issued, one to each of the
current directors. These shares have no cash value, will not receive dividends
and are for the sole purchase of electing two (2) directors to the Board.
11
<PAGE> 17
NOTE 7 - Class A and Class B Common Stock:
The Plan of Reorganization as confirmed and ratified by the United
States Bankruptcy Court effects substantial changes with respect to the
Company's capitalization. In summary, the Plan of Reorganization provides that
the Company will repurchase 100% of the issued and outstanding Series B
Preferred Stock. Thereafter, the Company will amend its Articles of
Incorporation in order to extinguish the Series A, Series B and Series C
Preferred Stock. The Class B Common Stock will be converted into Class A Common
Stock pursuant to the terms of an Amended and Restated Settlement and Release
Agreement entered into by and among the Company, Nevada Energy Partners II, a
Nevada Limited Partnership, Nevada Energy Corporation and sixteen Bahamian
corporations (See EXHIBIT (10)A).
In addition, pursuant to the Plan, certain creditors holding claims
totaling $64,000.00 will be converted into Class A Common Stock totaling 512,000
shares. Class A Common Stock has also been issued to Members of the Board of
Directors.
The Plan further provides that all holders of Class A Common Stock will
be reinstated to the exact same share ownership which existed as of May 3, 1996
plus shareholders who (1) are a bona fide purchaser for value, and (2) filed a
Proof of Interest on or before November 10, 1997 with evidence of consideration
paid, and (3) is not contested by the Corporation. All other shares purchased
after May 3, 1996 are deemed to be void ab initio. As of May 3, 1996 there were
8,808,487 Class A Shares issued and outstanding. The allowed equity holders
filing claims that were not contested by the Corporation is 2,483,008; however,
these shares are to be issued at a later date. The only Class A Common Shares
issued as of November 30, 1998 consists of (i) 500,000 Class A Common for the
repurchase of the Class B Preferred and an additional (ii) 265,000 Class A
Common to the directors for services rendered prior to September 15, 1998, and
(iii) 8,808,475 issued and outstanding as of May 3, 1996.
In addition, pursuant to the Plan of Reorganization, an Agreement has
been reached with Mr. Jeffrey Antisdel, the former President of the Company, to
issue a promissory note in the amount of $239,000, which is convertible into
1,500,000 shares of Class A Common Stock. Also pursuant to the Plan of
Reorganization, the Company may issue Class A Common Stock to Mr. David Wallace
in an amount not to exceed 35.0% of the Class A Common Stock of the Company.
Subsequent to November 15, 1998, the Company's Board of Directors,
pursuant to the Plan of Reorganization, adopted a resolution to affect a 1:15
reverse stock split which will be effective as of the resumption of trading,
which is expected to resume in March, 1999.
NOTE 8 - Stock Option Plans:
All stock options plans in existence prior to Confirmation on September
15, 1998 have been extinguished.
The Corporation's repurchase of the five (5) Series B preferred shares
also included a twenty-four (24) month option to purchase an additional 100,000
shares, per Series B share held, of Class A Common Stock at an exercise price of
$ .10 per share. The options are effective December 8, 1998. The Series B
Preferred shares were held by Richard A. Cascarilla (2), Michael R. Kassouff
(1), Jeffrey L. Hartman (1) and Jeffrey Modesitt, Sr. (1). The options are not
transferrable other than by will or the laws of descent and distribution. Copies
of the Stock Option are attached and marked as Exhibit 4(A-D).
The Plan of Reorganization also provided that three current and former
directors, Richard A. Cascarilla and Michael R. Kassouff (current directors) and
H. Lawrence Herth, a former director, shall be entitled to compensation for
service rendered to the Corporation prior to Confirmation on September 15, 1998.
The options allow each director to purchase 5,000 shares of Class A Common Stock
per month at $.10 per share. Mr. Cascarilla and Mr. Herth's option rights
commenced on May 19, 1997. Mr. Kassouff's option rights commenced on January 1,
1997. The options shall be exercisable for a twenty four (24) month period
effective December 10, 1998. The options are not transferrable except by will or
the laws of descent and distribution. Copies of the Stock Option are attached as
Exhibit 4(H-J).
The Plan of Reorganization also provided that the current directors of
the Corporation, Richard A. Cascarilla, Michael R. Kassouff and Jeffrey L.
Hartman are to be given stock options to purchase 2,500 shares of Class A Common
Stock, per director, per quarter, at $.10 per share. These
12
<PAGE> 18
options are effective December 10, 1998 and are exercisable for a period of
twenty-four (24) months. The options are not transferrable except by will or the
laws of descent and distribution. Copies of the Stock Options are attached as
Exhibit 4(E-F).
NOTE 9 - Income Taxes:
The Company has adopted FASB 109 in the fiscal year 1994. Due to
uncertainty of realization in light of the Company's continuing operating
losses, no deferred tax asset has been recorded in the financial statements
because the Company has assessed a valuation account to the full extent of its
potential deferred tax asset. The following is a summary of the potential
deferred tax asset and the valuation allowance:
<TABLE>
<S> <C>
Property and equipment due to differences
in depreciation and reserve for obsolescence $ 809,795
Net operating loss carry forward $ 2,637,611
Energy credit carry forward -
-----------
Total deferred tax asset $ 3,443,406
Valuation allowance $(3,443,406)
-----------
Net deferred tax asset $ -
===========
</TABLE>
No provision for Federal income taxes was recorded during the years
ended February 28, 1997 and February 29, 1996 due to the net losses of the
Company.
As of February 28, 1998 the Company has potential federal income tax
loss carry forwards available to offset future taxable income for income tax
purposes of $6,140,428 which expire in 2006 through 2010.
The Company has no energy credit carry forwards as of February 28,
1998.
There is no assurance or guaranty that the net operating loss carry
forward has not been adversely affected by the Plan of Reorganization, the
issuance of Class A Common Stock, or other developments.
Pursuant to the Settlement Agreement of December 1997, by and among the
Company, NEP, NEPC and others, the Company has reallocated 99% of the
profits of NEP retroactive to 1995, which may result in a taxable event to the
Company.
NOTE 10 - CLASS B STOCK
As of November 30, 1998, a total of 12,568,495 shares of Class B
Common Stock were issued and outstanding. Pursuant to the Plan of
Reorganization, these shares are to be converted into Class A Common Stock in an
amount equal to 50.0% of the issued and outstanding Class A Common Stock
subsequent to implementation of the Plan of Reorganization. This conversion had
not occurred as of November 30, 1998.
13
<PAGE> 19
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998
(UNAUDITED)
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
CASH $ 91,717
ACCOUNTS RECEIVABLE 112,357
INVENTORY 12,010
PREPAID EXPENSES 12,500
--------
TOTAL CURRENT ASSETS 228,584
OTHER ASSETS
DEPOSITS 2,754
--------
PROPERTY AND EQUIPMENT
FURNITURE AND FIXTURES 17,433
MACHINERY AND EQUIPMENT 455,938
VEHICLES 4,700
BUILDING 253,156
LAND 70,000
--------
801,227
LESS ACCUMULATED DEPRECIATION 379,800
--------
TOTAL PROPERTY AND EQUIPMENT 421,427
--------
$652,765
========
</TABLE>
14
<PAGE> 20
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1998
(UNAUDITED)
LIABILITIES AND STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
<S> <C>
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 10,927
CUSTOMER DEPOSITS 18,343
CONTRACT - CURRENT PORTION 31,033
ACCRUED PAYROLL COSTS 903
ACCRUED PROFESSIONAL FEES 22,000
ACCRUED SALES TAX 2,547
--------
TOTAL CURRENT LIABILITIES 85,753
--------
LONG TERM DEBT
NET OF CURRENT PORTION 183,775
--------
HOME OFFICE EQUITY 384,220
CURRENT PERIOD REVENUE
OVER EXPENSES 12,017
--------
383,237
$652,765
========
</TABLE>
15
<PAGE> 21
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF REVENUES AND EXPENSES
ONE MONTH AND NINE MONTHS ENDED
NOVEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
(IN $) (IN $)
CURRENT YEAR TO
MONTH PERCENT DATE PERCENT
----------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES
SALES-OFFICE SUPPLIES 783 1.29 70,594 11.02
SALES-PRINTING 59,936 98.69 573,585 89.54
SALES RETURNS AND ALLOW (120) 0.20 (4,096) 0.64
OTHER INCOME 133 0.22 479 0.07
------ ------ ------- ------
60,732 100.00 640,562 100.00
------ ------ ------- ------
COST OF SALES
BEGINNING INVENTORY 2,164 12,722
PURCHASES 19,828 235,733
LABOR SALARIES 11,833 113,972
SALES SALARIES 10,549 105,495
SUPPLIES & FREIGHT 28 5,771
DEPRECIATION 5,748 51,741
ENDING INVENTORY (12,010) (12,010)
------ -------
48,140 79.27 513,424 80.15
------ ------ ------- ------
GROSS PROFIT 12,592 20.73 127,138 19.85
------ ------ ------- ------
OPERATING EXPENSES
ADVERTISING 0 0.00 32 0.00
AUTOMOBILE 101 0.17 641 0.10
CASH VARIANCE 0 0.00 161 0.03
DEPRECIATION 22 0.04 197 0.03
DUES AND SUBSCRIPTIONS 0 0.00 266 0.04
</TABLE>
16
<PAGE> 22
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF REVENUES AND EXPENSES
ONE MONTH AND NINE MONTHS ENDED
NOVEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
(IN $) (IN $)
CURRENT YEAR TO
MONTH PERCENT DATE PERCENT
--------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING EXPENSES
(CONTINUED)
FREIGHT OUT 122 0.20 5,182 0.81
INSURANCE 956 1.57 8,476 1.32
INTEREST 0 0.00 16,585 2.59
JANITORIAL 0 0.00 180 0.03
LAUNDRY AND LINEN 177 0.29 1,508 0.24
LEGAL AND ACCOUNTING 500 0.82 9,815 1.53
MAINTENANCE AND REPAIR 59 0.10 10,418 1.63
OFFICE EXPENSE 59 0.10 3,112 0.49
OFFICE AND ADMINISTRATIVE 1,812 2.98 17,426 2.72
SECURITY 0 0.00 365 0.06
SUPPLIES 0 0.00 7 0.00
TAXES AND LICENSES 3,754 6.18 4,224 0.66
TAXES-PAYROLL 2,173 3.58 26,872 4.20
TELEPHONE 290 0.48 2,032 0.32
UTILITIES 1,012 1.67 7,622 1.19
------ ----- ------- -----
11,037 18.17 115,121 17.97
EXPENSES OVER
REVENUES 1,555 2.56 12,017 1.88
====== ===== ======= =====
</TABLE>
17
<PAGE> 23
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF CASH FLOWS
ONE MONTH AND NINE MONTHS ENDED
NOVEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
CURRENT YEAR TO
MONTH DATE
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME $ 1,555 $ 12,017
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
DEPRECIATION 5,770 51,938
(INCREASE) IN RECEIVABLES (496) (8,676)
DECREASE IN INVENTORY 154 712
INCREASE (DECREASE) IN ACCOUNTS PAYABLE 2,008 (17,006)
(DECREASE) IN ACCRUED LIABILITIES (5,973) (8,235)
INCREASE IN CUSTOMER DEPOSITS 0 17,968
-------- --------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,018 48,718
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
PAYMENTS ON LONG TERM DEBT 0 (21,375)
-------- --------
NET CASH (USED) BY
FINANCING ACTIVITIES 0 (21,375)
-------- --------
NET INCREASE
IN CASH & EQUIVALENTS 3,018 27,343
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 88,699 64,374
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 91,717 $ 91,717
======== ========
</TABLE>
18
<PAGE> 24
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
<S> <C>
CURRENT ASSETS
CASH $ 40,547
ACCOUNTS RECEIVABLE 147,350
INVENTORY 23,168
PREPAID EXPENSES 12,500
--------
TOTAL CURRENT ASSETS 223,565
--------
OTHER ASSETS
DEPOSITS 2,734
--------
PROPERTY AND EQUIPMENT
FURNITURE AND FIXTURES 17,433
MACHINERY AND EQUIPMENT 455,078
VEHICLES 4,700
BUILDING 253,156
LAND 70,000
--------
800,367
LESS ACCUMULATED DEPRECIATION 304,551
--------
TOTAL PROPERTY AND EQUIPMENT 495,816
--------
$722,135
========
</TABLE>
19
<PAGE> 25
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997
(UNAUDITED)
LIABILITIES AND STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
<S> <C>
CURRENT LIABILITIES
ACCOUNTS PAYABLE $ 14,144
CUSTOMER DEPOSITS 375
CONTRACT - CURRENT PORTION 28,162
ACCRUED PAYROLL COSTS 554
ACCRUED PROFESSIONAL FEES 22,000
ACCRUED SALES TAX 3,307
--------
TOTAL CURRENT LIABILITIES 68,542
========
LONG TERM DEBT
NET OF CURRENT PORTION 214,807
--------
HOME OFFICE EQUITY 435,897
CURRENT PERIOD REVENUE
OVER EXPENSES 2,889
--------
438,786
========
$722,135
========
</TABLE>
20
<PAGE> 26
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF REVENUES AND EXPENSES
NOVEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
CURRENT YEAR TO
MONTH DATE
(IN $) PERCENT (IN $) PERCENT
----- ------- ---- -------
<S> <C> <C> <C> <C>
SALES
SALES-OFFICE SUPPLIES 2,650 3.95 35,078 4.62
SALES-PRINTING 64,471 96.02 724,456 95.36
SALES RETURNS & ALLOW 0 0.00 (271) 0.04
OTHER INCOME 23 0.03 436 0.05
------- ----- ------- -----
67,144 100.00 759,699 100.00
COST OF SALES
BEGINNING INVENTORY 22,945 31,516
PURCHASES 14,988 291,050
LABOR SALARIES 12,467 126,500
SALES SALARIES 6,674 69,877
SUPPLIES & FREIGHT 3,163 27,397
DEPRECIATION 7,670 67,249
OUTSIDE SERVICES 0 12,848
ENDING INVENTORY (23,168) (23,168)
------- -------
44,739 66.63 603,269 79.41
------- ----- ------- -----
GROSS PROFIT 22,405 33.37 156,430 20.59
------- ----- ------- -----
OPERATING EXPENSES
ADVERTISING 0 0.00 45 0.01
AUTOMOBILE 193 0.29 1,482 0.20
BAD DEBTS 0 0.00 919 0.12
CONTRIBUTIONS 0 0.00 60 0.01
DEPRECIATION 43 0.06 389 0.05
DUES AND SUBSCRIPTIONS 0 0.00 341 0.04
</TABLE>
21
<PAGE> 27
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF REVENUES AND EXPENSES
NOVEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
CURRENT YEAR TO
MONTH DATE
(IN $) PERCENT (IN $) PERCENT
----- ------- ---- -------
<S> <C> <C> <C> <C>
OPERATING EXPENSES
(CONTINUED)
EQUIPMENT RENTAL 264 0.39 2,376 0.31
FREIGHT OUT 337 0.50 2,341 0.31
INSURANCE 1,100 1.64 4,440 0.59
INTEREST 1,992 2.97 19,091 2.51
JANITORIAL 0 0.00 609 0.08
LAUNDRY AND LINEN 181 0.27 1,621 0.21
LEGAL AND ACCOUNTING 475 0.71 5,659 0.74
MAINTENANCE & REPAIR 25 0.04 5,703 0.75
OFFICE EXPENSE 45 0.07 1,657 0.22
OFFICE & ADMINISTRATIVE 6,346 9.45 59,703 7.86
SECURITY 0 0.00 477 0.06
SUPPLIES 0 0.00 178 0.02
TAXES AND LICENSES 0 0.00 4,347 0.57
TAXES-PAYROLL 2,383 3.55 30,187 3.97
TELEPHONE 260 0.39 1,967 0.26
TRAVEL-LODGING 0 0.00 370 0.05
UTILITIES 1,071 1.60 9,571 1.26
------ ----- ------- -----
14,715 21.92 153,541 20.21
------ ===== ======= =====
REVENUES OVER
EXPENSES 7,690 11.45 2,889 0.38
====== ===== ======= =====
</TABLE>
22
<PAGE> 28
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF CASH FLOWS
NOVEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
CURRENT YEAR TO
MONTH DATE
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME $7,690 $ 2,889
ADJUSTMENTS TO RECONCILE NET
INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
DEPRECIATION 7,713 67,638
DECREASE IN RECEIVABLES 5,696 1,183
(INCREASE) DECREASE IN INVENTORY (224) 8,346
(INCREASE) IN PREPAID EXPENSES 0 (12,500)
(DECREASE) IN ACCOUNTS PAYABLE (12,942) (19,579)
------- -------
(DECREASE) IN ACCRUED LIABILITIES (5,837) (6,712)
------- -------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 2,096 41,267
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
PURCHASES OF MACHINERY AND
EQUIPMENT 0 (19,268)
------- -------
NET CASH (USED) BY
INVESTING ACTIVITIES 0 (19,268)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
PAYMENTS ON LONG TERM DEBT (2,226) (35,085)
------- -------
NET CASH (USED) BY
FINANCING ACTIVITIES (2,226) (35,085)
------- -------
NET (DECREASE)
IN CASH & EQUIVALENTS (130) (13,086)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 40,677 53,633
------- -------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $40,547 $40,547
======= =======
</TABLE>
23
<PAGE> 29
Item 2. Management's discussion and analysis of financial condition
-----------------------------------------------------------
and results of operation.
- -------------------------
The Company has an asset base which includes several electric power
generating units (currently not in service and with a net book value as of
November, 1998 of $5,700,000)(which does not include obsolescence from May,
1996) unencumbered by debt, from which the Company plans to develop revenues
and earnings. Management hopes to deploy all of its idle power generating
assets in one or more projects which are currently under review. If the Company
is unable to sell or deploy these generating units, there may be a material
negative impact on the financial position of the Company (See "RISK FACTORS").
During the period June 1997 to date, financial liquidity for on-going
operations was provided primarily from the sale of the Company's 50.01%
interest in San Jacinto Power Corporation ("SJPC") on June 27, 1997 by the
Court appointed Trustee. The Company received $200,000 in cash (See Item 5,
Description of Business). Dividends from the operation of its wholly owned
subsidiary, Combustion Energy Company d/b/a Herth Printing and Business Supply
Company, were also utilized.
The Company's current monthly operating expenses are less than $10,000.
Under the Court approved Plan of Reorganization (See EXHIBIT (2)B), payments to
the allowed unsecured creditors will not commence until September 16, 1999. The
monthly payments to these creditors will be approximately $5,700 for sixty (60)
months. This debt is in addition to normal operating expenses. The Company also
has allowed administrative claims of approximately $250,000 which are due on the
Effective Date unless otherwise agreed between the parties. The allowed Class 6
creditors total $30,000 and are also due on the Effective Date unless other
agreements are reached. The allowed Class 3 Priority Tax claim is less than
$27,000 (See the Debtor's First Amended Plan of Reorganization and Disclosure
Statement, EXHIBITS (2)A and (2)B). The Company is negotiating with one creditor
(Mr. Jeffrey Antisdel) whose claim of $239,000 may be liquidated by the issuance
of a promissory note that would be convertible into Class A Common Stock. If
this occurs, the Company will incur additional debt in the amount of $239,000.
RISK FACTORS
The Company has historically been unable to finance operations from
revenues and cash flow. In the past, the Company has been financing operations
from the sale of its Class A common stock, asset sales, litigation recoveries
and management fees. If such financing should not be available, for any reason,
there would be a material adverse effect on the 12 month operations of the
Company. If the new business plan is successfully implemented, the Company
believes it will be able to pay normal operating expenses from the revenue
generated. There is no guarantee that the Company will be successful. (See RISK
FACTORS and Section XI of the Disclosure Statement, EXHIBIT (2)A).
24
<PAGE> 30
Since the Company maintains a holding company structure, the Company
does not intend to enter into direct purchases of capital equipment at the
parent company level in order to complete the deployment of its idle power
equipment in any proposed project. However, any capital expenditures required
for project development will be completed at the subsidiary level and will most
likely require equity, debt or project financing for which the Company will need
to seek additional funding.
The Company intends to evaluate, from time to time, prospective
acquisitions in the telecommunication industry. If such an acquisition were to
occur and the Company were to suffer a material negative event, the Company's
financial performance could be adversely and materially impacted. Significant
acquisitions outside the Company's primary energy business may have the effect
of reducing or eliminating certain tax benefits associated with prior net
operating losses, as well as negative financial impacts associated with possible
accruals of goodwill and potential increased depreciation charges against
earnings.
Presently, there are no plans for product research and development at
the parent company level over the coming twelve (12) months.
LIQUIDITY AND CAPITAL RESOURCES
Due to working capital constraints encountered during the course of the
fiscal year, the Company has not yet met its goal of covering all of its
operational costs with internally generated cash flows.
To date, the Company's ownership stake in Nevada Energy Partners, a
Nevada limited partnership ("NEP") had provided no recurring equity returns,
primarily due to costs associated with certain credit enhancements and loan
guarantee costs provided by ESI Energy, Inc. and NEP's continuing litigation
with HSP. During the year ending February 29, 1996, the Company had received
through NEP $508,018 in cash from the sale of NEP's interest in the Brady Power
Project (held by NEP through its 50% interest in NGPP), plus an additional gain
of $77,493 from NEP as a result of the above referenced sale, and additional
gains of $508,018 resulting from the settlement agreement between NEP, NEPC and
the Company. However, the $77,493 has subsequently been charged to bad debts as
it is believed to be uncollectible. (See Nevada Energy Partners I L.P. for
detailed summary.)
The Company expects no further income from NEP and effective September
1, 1996, the Company had disposed of its interest in NEP through a reacquisition
of the general partners interest in the Class B common shares held by NEP.
As a result of the difficulties caused by the change in control which
was initiated on May 1, 1996, the Company had not timely met its debt
obligations during the year ending February 28, 1997. As a result, its creditors
initiated an involuntary Chapter 11 proceeding on February 13, 1997. The Company
operated as debtor in possession from September 24, 1997 until the Court
approved its Plan of Reorganization on September 15, 1998.
25
<PAGE> 31
Currently, the majority of the Company's ongoing expenses are for
auditing fees, legal fees, trustee fees and consulting services.
RESULTS OF OPERATIONS
General Comments
The Company has, during fiscal year 1998 undergone a severe financial
crisis as a result of the now aborted change in control which took place early
in the fiscal year. As a result the Company was unable to look for and bid upon
opportunities to deploy its current core of idle power generating equipment. The
Company had previously sought to deploy the power generation plants and
equipment where little resource development risk was present. Development
opportunities in the Philippines, the Caribbean and Central America had been
evaluated from the standpoint of seeking least risk opportunities. More
specifically, the Company had sought to either acquire a fully developed
geothermal resource or a fully developed geothermal plant to which its assets
could be deployed with reduced risk. These efforts were set aside this period.
New management expects to re-explore these opportunities with new vigor and
resolve.
PART II - Other Information
FORWARD LOOKING STATEMENTS
This Form 10-QSB contains certain forward-looking statements. All
statements, other than statements of historical fact, included in this Form
10-QSB are Forward-Looking Statements. Although the Company believes that the
expectations reflected in the Forward-Looking Statements are reasonable, there
is no assurance that those expectations will be achieved.
Item 1. Legal Proceedings
-----------------
On February 13, 1997, three of the Company's creditors filed a petition
for involuntary bankruptcy pursuant to Chapter 11 of the United States
Bankruptcy Code. The case was filed in the United States Bankruptcy Court
situated in Reno, Nevada and is styled In Re PowerTel USA, Inc., Case No.
BK-97-30265-BMG.
The Creditors who filed the petition were Richard A. Cascarilla (who
has subsequently been elected to the Company's Board of Directors and functions
as its president, see discussion below), Geothermal Development Associates, Inc.
and UniShippers, Inc. The involuntary petition was supported by affidavits from
Mr. Jeffrey Antisdel, former president and director of the Company, and Mr.
Kenton Bowers, former controller and chief financial officer of the Company. The
Creditors were represented a Jeffrey L. Hartman, Esq., a former and current
Director of the Company.
A preliminary hearing was held in Reno, Nevada on March 3, 1997, and
the Court appointed Mr. Barry L. Solomon as Trustee ("Trustee"). A formal order
confirming the bankruptcy was issued on April 7, 1997.
26
<PAGE> 32
On or about September 24, 1997, the Trustee consented to a petition
filed by the Company to resume operations functioning as Debtor-in-Possession
pursuant to Section 1107 of the United States Bankruptcy Code. The Court
approved that petition on September 24, 1997. On or about June 29, 1998, the
Company filed with the Bankruptcy Court a proposed Disclosure Statement
containing detailed information regarding the proposed plan. Thereafter, the
Bankruptcy Court entered an order finding that the Disclosure Statement complied
with the provisions of Section 11 USC Section 1125 of the United States
Bankruptcy Code and authorized the Disclosure Statement to be transmitted to all
creditors and shareholders of record for the purpose of soliciting votes in
favor of or against the proposed Plan of Reorganization.
On or about August 25, 1998, a hearing was held in the United States
Bankruptcy Court for the District of Nevada (Reno Division) in which the company
reported that the Plan had been approved by both shareholders and Creditors in
conformance with the terms and provisions of the United States Bankruptcy Code.
On September 15, 1998, the United States Bankruptcy Court entered an
order confirming the proposed Plan of Reorganization. (See discussion below).
Prior to the commencement of the Chapter 11 proceeding, on December 12,
1996, the Company was named as a nominal Defendant in a Shareholder Derivative
Action filed in the Court of Chancery of the State of Delaware in and for New
Castle County, Docket No. 15421-NC. The Plaintiffs were Richard A. Cascarilla
and Michael R. Kassouff, both former and current directors of the Company. Named
as Defendants in that proceeding were Charles A. Cain, Peter J. Cannell, Stefan
Tevis and John C. Goold (all former members of the Company's Board of
Directors). The Complaint sought damages on the basis of alleged breach of
fiduciary duty, usurping corporate opportunity, misappropriation, conversion and
breach of the duty of loyalty. The Complaint alleged, in pertinent part, that
the Defendants diverted corporate funds to non-corporate purposes and that the
Defendants breached their duty of loyalty by failing to take action against
Waterford Trust Company and Golden Chance Limited arising out of defaults with
respect to a $5,000,000 note issued in May, 1996 by Golden Chance guaranteed by
Waterford in connection with the purchase of Series A preferred shares by Golden
Chance. This transaction is discussed in detail in the Company's quarterly
report for the three months ended May 30, 1996 as reported on Form 10-QSB.
Subsequent to confirmation of the Plan of Reorganization, the Company
has entered into a Settlement and Release Agreement with Messrs. Charles Cain
and Peter J. Cannell. Pursuant to the terms of this Settlement Agreement, the
terms of which are confidential, the settling Defendants have agreed to continue
to fully cooperate with the Company. The litigation remains pending with respect
to claims against Defendants Tevis and Goold.
Also prior to the filing of the Chapter 11 proceeding, five additional
lawsuits had been initiated against the Company. In one proceeding, Mary Kay
Robinson, Trustee, sued Central Communications Company and Nevada Energy Company
for alleged breach of a lease to occupy a building situated in Santa Barbara,
California. The Plaintiff alleged damages of $1,200,000. The proceeding was
initiated in Superior Court, Santa Barbara, California (Docket No. 216651).
27
<PAGE> 33
During the Chapter 11 case, the Plaintiff withdrew the Proof of Claim which had
been filed, thereby waiving this cause of action.
In another proceeding, Mr. Jeffery Antisdel, the former President of
the Company, sued the Company in the County of Washoe, Nevada alleging breach of
contract and seeking damages of approximately $380,000. This action was settled
for $239,000 without interest with Mr. Antisdel to be a general unsecured
creditor for purposes of the Plan of Reorganization.
The third case was initiated by Jeffrey L. Hartman, Michael Kassouff
and Jeffrey Modesitt in the County of Washoe, Nevada alleging breach of contract
and seeking damages of approximately $13,200 per individual. During the Chapter
11 proceeding, these matters were settled for $13,200 per claim with interest
and Messrs. Hartman, Kassouff and Modesitt were deemed to be general unsecured
creditors for purposes of Plan of Reorganization.
In a transaction entered into on September 1, 1996 between Nevada
Energy Partners I, Limited Partnership, a Nevada limited partnership ("NEP")
and the Company, the Company exchanged its 60% limited partnership interests in
NEP and CEC, plus the promise to deliver Class A Common stock in exchange for
all of the right, title and interest to 100% of its outstanding Class B Common
shares, plus the rights to future share issuances owing to NEP, which were held
by NEP and its general partner, Nevada Electric Power Company. The agreement
was the subject of litigation between NEP and the Company, which has since been
resolved.
Nevada Energy Partners, a Nevada Limited Partnership, sued the Company
(then known as Nevada Energy Company) in the County of Washoe, Nevada (Docket
No. CV 96-07487) alleging breach of contract, specific performance and damages
in excess of $6,000,000 arising out of an agreement entered into on or about
August 16, 1996. During the Chapter 11 case, the Company negotiated a resolution
and settlement of this lawsuit. In summary, the August 16, 1996 agreement was
deemed to be null and void and all assets transferred to Nevada Energy Partners
as a result of that document were reconveyed to the parties from whom such
assets were transferred. In addition, the Nevada Energy Partners Partnership
Agreement was amended to reallocate profits and losses between the General
Partner and Limited Partner. (The settlement is discussed in detail under
Sections VIII and X Settlement of Claims and Interest in the Disclosure
Statement. A copy of the Settlement Agreement is attached as EXHIBIT (10)A).
Smith Katzenstein & Furlow sued Nevada Energy Company in the Superior
Court, County of New Castle, Delaware (Docket No. 96-12-004-JEB) alleging a
delinquent account payable in seeking damages in the amount of $78,731. This
matter has been settled with a Stipulated Judgment for $78,731 plus interest. As
of the Plan of Reorganization, Smith Katzenstein & Furlow was deemed to be a
general unsecured creditor and its claim has been settled.
In addition, the Company was the Plaintiff in a civil matter filed
against Nevada Energy Partners in Superior Court, Santa Barbara, California
(Docket No. 216568) in which the Company alleged that the August 16, 1996
28
<PAGE> 34
Agreement referenced above should be declared null and void. The Company's
claims were compromised and settled as of a comprehensive agreement entered
into with Nevada Energy Partners as summarized above.
The Company also sued Waterford Trust Company and Golden Chance Limited
in Superior Court, New Castle County, Delaware (Case No. 96C-12-150) alleging
breach of contract arising out of the purchase in May, 1996 of a Series A
preferred shares by Golden Chance, Ltd. The Company obtained a default judgment
for approximately $5,000,000 and is in the process of seeking to collect on that
judgment.
As part of its Plan of Reorganization, the Company identified claims
and potential claims which it had against numerous individuals and entities
arising out of activities of the Company, its officers and directors and third
parties during the period May, 1996 through February, 1997. These claims are
discussed in detail on pages 37 through 39 of the Company's Disclosure
Statement.
On December 16, 1998, PowerTel USA, Inc., now WorldCall Corporation,
filed a civil claim in the United States District Court for the District of
Nevada alleging violations of the Racketeer Influenced and Corrupt Organizations
Act ("RICO") and common law conversion and fraud. Defendants include Mr.
Pattison Hayton; Mr. Roderick R. McCloy, individually and practicing law as
Roderick R. McCloy, P.C. and Jones, McCloy, Peterson, affiliated law practices;
Mr. Kevin Quinn; Golden Chance Limited, an Isle of Man Private Company Limited
by Shares; Waterford Trust Company, an Irish corporation; and Mortlake Venture
Capital Fund, a California corporation. The complaint requests damages in excess
of $1,000,000 and alleges that the defendants participated in a scheme of
taking over small publicly-traded companies, illegally looting them for their
own profit, and then leaving them on the verge of bankruptcy.
Item 2. Changes in Securities and Use of Proceeds.
------------------------------------------
As part of the Plan of Reorganization confirmed by the United States
Bankruptcy Court, all securities issued by the Company from and after May 3,
1996 have been declared null and void with certain limited exceptions as
follows: The Plan of Reorganization specifically reinstates the shareholder
ledger in effect as of May 3, 1996, with the exception that any shareholder who
purchased Class A common shares subsequent to May 3, 1996 will be permitted to
retain such shares if (1) a Proof of Interest is filed with the United States
Bankruptcy Court on or before November 10, 1997, (2) the shareholder is a bona
fide purchaser for value and (3) the Company does not contest or otherwise
object to the validity of the proof of interest. Approximately 170 shareholders
filed a Proof of Interest representing about 2,200,000 shares of Class A Common
Stock.
In or about January, 1997, the then Board of Directors for the Company
attempted to affect a 1:6 reverse stock split, increase authorized shares and
create a new class of common equity. The Plan of Reorganization specifically
rescinds and voids that reverse stock split. The Company's trading symbol was
changed to PWLUA.
As part of the Plan of Reorganization, there were significant changes
with respect to the capitalization of the Company. In summary, as of a
29
<PAGE> 35
compromise settlement and release agreement entered into by and among Nevada
Energy Partners, Mr. Jeffery Antisdel, the Company and 16 Bahamian Corporations
(the "Corporations"), the Company agreed to recognize a conveyance of interest
affected subsequent to August 16, 1996 between Nevada Energy Partners, Mr.
Jeffery Antisdel and the Corporations. As a result of recognizing this
conveyance, the Company in the Plan of Reorganization, stipulated and consented
that the Corporations would be issued restricted Class A Common Stock such that
they collectively would own 50% of the issued and outstanding Class A Common
Stock as of the date computed to be 10 days after the effective date of the
Plan of Reorganization.
In addition, during the course of the Bankruptcy Proceeding, the
Company entered into an Agreement to acquire 100% of the issued and outstanding
common stock of Diego Telecommunications, Inc. ("DiegoTel"), a Nevada
Corporation, from Mr. David Wallace. Under the terms of this transaction, Mr.
Wallace will receive Class A Common Stock based upon a formula which takes into
consideration the revenue generated by DiegoTel in its telecommunications
business (See Amended and Restated Agreement for Exchange of Stock VivaTel
Agreement), which is attached as Exhibit 10(C), over a period of 30 months.
Under the terms of the acquisition agreement, Mr. Wallace may receive Class A
Common Shares in an amount not to exceed 35% of the issued and outstanding
common stock computed on the effective date of the Plan of Reorganization
taking into consideration the shares to be issued to the Corporations.
As a result the two events summarized above, there will be significant
dilution with respect to the shareholders of record as of May 3, 1996. In
addition to these two transactions, pursuant to the Plan of Reorganization, the
Company has committed to issue Class A Common Stock to certain general unsecured
creditors who, at their election, may receive Class A Common Stock in lieu of
cash payments.
The Plan of Reorganization also provides that the Company intends to
affect a reverse stock split at least 20 days prior to the Effective Date of the
Plan of Reorganization. On the Effective Date of the Plan, the Company will
issue Class A Common Shares to certain creditors who have elected to accept
Class A Common Shares in lieu of cash or deferred cash payments, will issue
Class A Common Shares to the Corporations and will issue new Class A Common
Shares to the shareholders of record as of May 3, 1996 together with those
allowed shareholders who have filed an appropriate proof of interest.
On the Effective Date, the Company will also reserve a sufficient
number of treasury shares equal to 35% of the issued and outstanding Common
Stock for potential issuance to Mr. Wallace as earned pursuant to the DiegoTel
Acquisition Agreement.
Finally, 10 days after the Effective Date, the Company will recompute
the number of shares issued to the Corporations such that they will own, on a
pro rata basis, an amount to 50% of the issued and outstanding Class A Common
Stock of the Company.
The following table sets forth the anticipated capitalization of the
Company computed as pursuant to the Plan of Reorganization.
30
<PAGE> 36
Pro Forma Capitalization
------------------------
Class A Common Stock
Issued and Outstanding
<TABLE>
<S> <C> <C> <C>
Held by Shareholders of Record
on May 3, 1996 8,808,487 35.04%
Issued to Allowed Equity Claimants 2,483,008 9.88%
Issued to Directors 265,000 1.05%
Issued to Repurchase Series B 500,000 1.99%
Issued to Creditors pursuant to
Plan of Reorganization (N. 1) 512,000 .04%
Subtotal 12,568,495 12,568,495 50.00%
Issued to the 16 Bahamian
Corporations 12,568,495 50.00%
Subtotal 12,568,495 50.00%
Total Issued and Outstanding 25,136,990 100.00%
</TABLE>
31
<PAGE> 37
Assuming that Mr. Wallace were to receive 29,338,119 shares of Class A
Common Stock, the following would occur:
<TABLE>
<CAPTION>
Issued and Outstanding
<S> <C> <C> <C>
Held by Shareholders of Record
on May 3, 1996 8,808,487 10.51%
Issued to Allowed Equity Claimants 2,483,008 2.96%
Issued to Directors 265,000 0.32%
Issued to Repurchase Series B 500,000 0.60%
Issued to Mr. Wallace 29,338,119 35.00%
Issued to Creditors pursuant to
Plan of Reorganization (N. 1) 512,000 0.61%
Subtotal 41,906,614 49.99%
Issued to the 16 Bahamian
Corporations 41,911,599 50.00%
Subtotal 41,911,599 50.00%
Total Issued and Outstanding 83,823,198 100.00%
</TABLE>
The Company has issued Options to its Directors as compensation for
services rendered. As at January 18, 1999, options were issued which
authorize the three Directors to purchase a total of 7,500 shares per
Director per quarter of Class A Common Stock at $.10 per share. (See
Note 8 to the unaudited financial statements of the Company for the
nine months ended November 30, 1998.
Pursuant to the Plan of Reorganization, the Company is authorized to
effect a reverse stock split prior to the issuance of Class A Common
Stock to creditors or the Corporations, and the Board of Directors
adopted a resolution to effect a 1:15 reverse stock split at a date to
be established, currently predicted to be in March 1999.
<TABLE>
<CAPTION>
Assuming a 1:15 stock split, the results would be as follows:
Issued and Outstanding
<S> <C> <C> <C>
Held by Shareholders of Record
on May 3, 1996 587,232 10.37%
Issued to Allowed Equity Claimants 180,000 3.18%
Issued to Directors 17,667 0.31%
Issued to Repurchase Series B 33,333 0.59%
Issued to Mr. Antidel (N. 2) 0 0.00%
Issued to Creditors pursuant to
Plan of Reorganization (N. 1) 2,012,000 35.54%
Subtotal 2,830,232 50.00%
Issued to the 16 Bahamian
Corporations 2,830,232 50.00%
</TABLE>
32
<PAGE> 38
<TABLE>
<S> <C> <C> <C>
Subtotal 2,830,232 50.00%
Total Issued and Outstanding 5,660,465 100.00%
</TABLE>
Assuming that (1) Mr. Wallace were to be issued the maximum number of
shares possible pursuant to the Plan of Reorganization, (i.e.
29,338,119), and (2) the Company effects a 1:15 reverse stock split,
the results would be as follows:
<TABLE>
<CAPTION>
Issued and Outstanding
<S> <C> <C> <C>
Held by Shareholders of Record
on May 3, 1996 587,232 6.69%
Issued to Allowed Equity Claimants 165,534 1.89%
Issued to Directors 17,667 0.20%
Issued to Repurchase Series B 33,333 0.38%
Issued to Mr. Antisdel (N. 2) 0 0.00%
Issued to Mr. Wallace 3,070,000 35.0%
Issued to Creditors pursuant to
Plan of Reorganization (N. 1) 512,000 5.84%
Subtotal 4,385,766 50.00%
Issued to the 16 Bahamian
Corporations 4,385,766 50.00%
Subtotal 4,385,766 50.00%
Total Issued and Outstanding 18,728,199 100.00%
</TABLE>
Note 1: The Creditors holding claims totaling $64,000 have agreed to
accept Class A Common Stock valued at a price of $.25 per share pursuant to a
formula approved by the Court as part of the Plan of Reorganization. As of
January 18, 1999, trading in Class A Common Stock had been suspended at the
Company's request. The last trade was at $.06 per share. One shareholder will
receive warrants. In addition, Mr. Jeffrey Antisdel, the former President of the
Company has agreed to accept a promissory note in the principal amount of
$239,000 to be paid over a 60 month term without interest. The Company has the
right to prepay this note at any time without penalty. The note is convertible
into 1,500,000 of Class A Common Stock, pursuant to the Plan of Reorganization.
The Company has agreed upon meeting certain conditions to issue Class A
Common Stock to Mr. David Wallace as part of the consideration for the
acquisition of two corporations. (See EXHIBIT 10(C)). The amount of Class A
Common Stock to be issued to Mr. Wallace will be computed on the basis of a
formula approved by the Bankruptcy Court as part of the Plan of Reorganization.
Mr. Wallace could receive up to 35.0% of the issued and outstanding Class A
Common Stock. Based upon the table set forth above, Mr. Wallace could receive up
to 32,514,590 shares of Class A Common Stock. In the event that Class A Common
Stock is issued to Mr. Wallace, the 16 Bahamian Corporations are entitled to
receive additional shares of Class A Common Stock such that they continue to own
50.0% of the issued and outstanding Class A Common Stock. The nondilution clause
of the 16 Bahamian Corporations does not apply in the event that the Company
issues Class A Common Stock to any person or entity other than Mr. Wallace or
Mr. Antisdel.
Note 2: Mr. Antisdel owns additional shares of Class A Common Stock
which he acquired subsequent to the commencement of the Chapter 11 proceeding,
which shares are included in the 8,808,487 shares of Class A Common Stock issued
and outstanding as of May 3, 1996.
The Company, pursuant to the Plan of Reorganization, has also granted stock
options to the Directors, as follows:
2,500 per Director, per quarter @ $.10 per share for total issued to
date of 7,500.
Item 3. Defaults Upon Senior Securities.
--------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
On August 16, 1996, the Company held its annual meeting of
Shareholders. At that time, various matters were submitted for a vote of the
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<PAGE> 39
Shareholders. The Company's Certificate of Incorporation in effect as of that
date provided that certain matters required the affirmative vote of
shareholders of record entitled to vote at least 80% of the Class A Common
Stock. For purposes of this requirement, the Class B Common Stock at all times
had equal voting rights and was deemed to be converted into Class A Common
Stock with equal voting privileges.
Subsequent to the annual meeting, the Company reported that the
shareholders had approved various actions.
In or about January 1997, the then Board of Directors approved a filing
with the Secretary of State for the State of Delaware in which the Directors
voided the "supermajority" provision requirement set forth in the Company's
Articles of Incorporation had not been validly adopted and, therefore, a
majority of the issued and outstanding Class A Common Stock was sufficient to
amend the Articles of Incorporation and initiate certain actions. In reliance
upon this position, the then Board of Directors authorized the Company to
prepare and file various documents with the Secretary of State for the State of
Delaware increasing authorized number of shares and taking other corporate
action.
The Plan of Reorganization specifically provides that the action taken
for the Board of Directors in January, 1997 was inaccurate, illegal and rescinds
all such filings.
The Plan of Reorganization, as confirmed by the United States
Bankruptcy Court, authorized the Company to file Amended Articles of
Incorporation which, among other things, established a new class of stock, to be
known as "Special Shares." The Amended Articles of Incorporation authorize the
issuance of seven shares of Special Stock, of which, three have been issued. The
Shareholders owning the Special Stock are entitled to elect two members to the
Board of Directors, the remaining Directors to be elected by the Class A
Shareholders. The three shares of Special Stock elected Messrs. Richard
Cascarilla and Jeff Hartman as members of the Company's Board of Directors. The
remaining Director, was elected by the owners of the Class B Common Stock,
pursuant to certain preferential voting rights, which have since been rescinded.
Pursuant to the Amended Articles of Incorporation, the Board of
Directors, which is currently fixed at three, can be increased to no more than
seven members. The number of Directors can be increased only by the affirmative
vote of the Board of Directors.
The rights of the "Special Stock" can be modified only by consent of
the majority of the Directors.
Item 5. Other Information.
------------------
The Company's last filing with the Securities and Exchange Commission
was its quarterly report for the nine months ended November 30, 1996 on Form
10-QSB. As noted above, on February 13, 1997 an involuntary petition for
reorganization was filed pursuant to Section 1103 of the United States
Bankruptcy Code and a Trustee was appointed. Subsequent to the commencement of
the bankruptcy proceeding, no filings have been made with the Securities and
Exchange Commission. The Company is delinquent with respect to the filing of two
34
<PAGE> 40
annual reports (Form 10-KSB) for the fiscal years ended February 28, 1997 and
February 28, 1998 together with several quarterly reports (Form 10-QSB) for the
three, six and nine month periods ending May 30, August 30 and November 30,
1997 and for the three and six months ending May 30 and August 30, 1998.
The Company is in the process of preparing these reports and intends to
file them prior to the filing of its annual report for the fiscal year ending
February 28, 1999 on Form 10-KSB. In the interim, accompanying this quarterly
report as Exhibits are the monthly operating statements filed by the Company
with the United States Bankruptcy Court for the period February, 1997 to date.
The Company's management and Board of Directors are incurring
substantial difficulties in the preparation of the required SEC reports. As
disclosed in the Company's Quarterly Report for the three months ended May 30,
1996 on Form 10-QSB, on or about May 1, 1996 there was a change of control with
respect to the Company. The change of control occurred because the company sold
Series A Preferred Shares to Golden Chance, Limited, an Isle of Mann company
limited by shares, which served as nominee for Waterford Trust Company, an Irish
Corporation. As of that transaction, Golden Chance issued to the Company a
promissory note in the principal amount of approximately $5,000,000 ("the Golden
Chance Note") which was guaranteed by Waterford.
As of that transaction, there was a change in the Company's Board of
Directors by which all of the directors resigned and were replaced by three
representatives of Golden Chance, consisting of Messrs. Charles Cain, Peter J.
Cannell and John Goold. On September 26, 1996, Mr. Goold resigned as a director
and was replaced by Mr. Stefan Tevis.
The Golden Chance Note called for certain minimum payments commencing
in July, 1996. The directors appointed by Waterford took the position that
payments had been made by Golden Chance on a timely basis and, therefore,
released from escrow approximately 762,000 shares of Series A preferred stock,
which were immediately converted into more than 5,500,000 shares of Class A
Common Stock.
The then President and Secretary of the Company (Messrs. Jeffery
Antisdel and Richard Cascarilla, respectively) did not concur with the position
taken by the Golden Chance board. It was their position that a substantial
portion of the funds distributed by Golden Chance had not been received by the
Company and, therefore, Golden Chance was delinquent with respect to its payment
obligations pursuant to the Golden Chance Note.
On September 13, 1996, Messrs. Antisdel and Cascarilla tendered written
notice to Golden Chance and Waterford of their default on payments due to the
Company pursuant to the Golden Chance Note. Neither Waterford nor Golden Chance
responded to the Notices of Default; however, the Company's Board of Directors
terminated Messrs. Antisdel and Cascarilla on September 26, 1996 without cause
and solely because they filed a Notice of Default with the Securities and
Exchange Commission.
During the period September 26, 1996 through December 4, 1996 there
were continual confrontations among and between the then Board of Directors of
35
<PAGE> 41
the Company and Antisdel and Cascarilla, former officers of the Company who
continued to assert that Golden Chance was in default. On December 4, 1996, the
Series B Preferred Shareholders tendered a written notice of default and
invoked their right to elect a representative, Michael Kassouff, to the
Company's Board of Directors. At or about the same time, a Shareholders
derivative action was initiated (See discussion below) and litigation was
commenced on behalf of the Company against both Waterford and Golden
Chance.
On or about January 23, 1997, by majority vote of the Board of
Directors, Mr. Stefan Tevis was relieved as President of the Company. He
retained his position as a director pending negotiating agreement for his
resignation. Mr. Pattison Hayton, III commenced to act as President effective
January 23, 1997. Mr. Hayton had served as a consultant to the Company since May
3, 1996 and was also an advisor to the Company's Board of Directors, to
Waterford Trust Company, to Golden Chance Limited, and others.
During the course of the bankruptcy proceeding, the Company conducted
an investigation into the activities of Mr. Hayton and others. As a result of
this investigation, the Company has announced its intent to pursue the claims
against Mr. Hayton an others arising out of conduct which transpired during the
period May, 1996 through February 1997. (See Item 1. Legal Proceedings.)
During the Bankruptcy proceeding on or about May 9, 1997, Mr. Peter
Cannell and Charles Cain tendered resignations from their position on the Board
of Directors, which resignations were accepted by the sole remaining director,
Mr. Michael R. Kassouff. Immediately thereafter, Mr. Kassouff terminated Mr.
Pattison Hayton as President of the Company and Mr. Quinn as Secretary,
replacing him with Mr. Richard A. Cascarilla (as a Director and President) and
Mr. L. Herth (as Director and Corporate Secretary). Mr. Cascarilla had been
Secretary and Treasurer to the Company from November 20, 1990 until he was
terminated by the Board of Directors in September, 1996. Mr. Herth was the
founder and manager of Herth Printing and Business Supply in Reno, Nevada, which
had previously been acquired by the Company and was owned by the Company's
former subsidiary, Combustion Energy Company. Mr. Michael Kassouff remained as a
Director and Chairman of the Board.
Subsequent to confirmation of the Plan of Reorganization, Mr. Herth
resigned from the Board of Directors and was replaced by Mr. Jeffrey Hartman, a
former Director.
During the pendency of the bankruptcy, the Company's newly elected
Board of Directors evaluated the Company's activities and adopted a new business
strategy for the Company, as discussed in Section VI, The Reorganized Debtor's
Business Plan, at EXHIBIT (2)A of the Disclosure Statement. In summary, during
the period May 1990 through May 1996 the debtor functioned as a non-regulated
utility holding company primarily engaged in the development, financing,
construction and operation of geothermal, wind and biomass energy resources used
primarily to generate electric power. In 1994, the Company (through one of its
then subsidiaries) acquired by merger Herth Printing and Business Supply,
Inc., a custom printing and catalog based retail office supply business.
36
<PAGE> 42
In general, the Company's operations, were conducted through a variety
of joint ventures, partnerships and subsidiaries.
During the course of the Chapter 11 proceeding, the new Board of
Directors reevaluated the Company's previous business plan and determined it was
in the best interest of the Company to adopt a new business plan to consist of
three segments:
#1.) Functioning as a non-regulated utility holding company, the
Company will seek to identify and develop an application for its energy
co-generation units in the operation of geothermal, wind and biomass energy
projects, primarily through joint ventures and partnerships with third parties.
At this time, no specific project has been identified.
#2.) The development of its current printing and business supply
operation situated in Reno, Nevada, conducted under the name "Herth Printing and
Business Supply." The Company may consider a sale of this business if it is
determined that it is not consistent with the Company's overall business plan.
#3.) The creation, development and implementation of an international
long distance telecommunication business initially focusing exclusively upon the
sale of international long distance services from the United States on a
wholesale basis.
With respect to the development of an energy cogeneration business, the
Company is anticipated to have substantial physical resources, consisting of its
energy cogeneration units. Management believes that the Company will be
successful in negotiating joint venture or partnership relationships in which
the Company will contribute its energy cogeneration equipment, but it is also
likely that the Company will require additional working capital in order to
implement that line of business.
In the event that management is not successful in identifying an
application for its currently idle energy cogeneration equipment, the Board of
Directors may determine that it is in the best interest of the company to
liquidate those assets and to reapply the net sale proceeds into other business
ventures.
With respect to its printing and business supply operation, management
anticipates that the Company will continue to function largely as it has done in
the past. However, the Company will be mindful of opportunities to expand the
business and printing supply operation, perhaps through the acquisition of other
companies or operations. At this time, no such acquisition has been identified
or is under consideration. In the event the Board of Directors determines that
continued operation of the printing and supply business is not consistent with
the long-term objectives of the Company, consideration will be given to the sale
or disposition of that portion of the Company's business. At this time, the
Company has entered into negotiations with Mr. Lawrence Herth, a former director
and the founder of Herth Printing and Business Supply, in order to determine
whether a sale of that business segment to Mr. Herth is appropriate.
37
<PAGE> 43
With respect to its entry into the long distance telecommunication
market, the Company has done so through the acquisition of 100% of the issued
and outstanding stock of Viva Telecommunications, Inc. ("Viva Tel") and Diego
Telecommunications, Inc. ("Diego Tel"), as discussed in more detail in Section
VI, The Reorganized Debtor's Business Plan of the Disclosure Statement at
EXHIBIT (2)A. When acquired by the Company, VivaTel and DiegoTel had no revenue,
modest assets, no operating history and minimal debt. Each company owned, or had
rights to, a license issued by the Federal Communication Commission pursuant to
Section 214 of the Federal Communications Act.
A Section 214 authority permits the holder to market and sell long
distance telecommunication services in the United States on condition that the
ultimate destination of the long distance call is to a country which is outside
the United States. At this time, a Section 214 license permits long distance
telephone calls to over 100 countries. To the best of management's knowledge, no
additional license or permit is required in order to conduct such business
within the United States; however, licenses or permits may be required and
depending upon the country to which the long distance telephone call will be
made.
In addition, DiegoTel has leased or otherwise acquired fiber optic
cables suitable for the transmission of long distance telecommunication services
to its point of presence in California. In addition, according to Mr. Wallace,
former president of DiegoTel, the Company has purchased or leased appropriate
equipment in order that DiegoTel can function as aggregator of long distance
telecommunication services. Finally, DiegoTel has entered into a five-year
agreement with a Mexican carrier to provide services into Mexico. The Directors
of DiegoTel are Richard A. Cascarilla, Esq. and Michael Kassouff. Mr. Cascarill
also serves in the capacity of President and Mr. Kassouff serves as President.
The Mexican carrier (Servicios, S. de R.L. de CV, a corporation of the
State of Baha, California, Mexico) ("VSS"). VSS is owned or controlled by Mr.
Wallace. Under the terms of the agreement entered into between DiegoTel and VSS,
VSS is to receive approximately 80% of the gross revenue of all
telecommunication services sold by DiegoTel. In addition, depending upon the
gross revenue generated by the Company, Mr. Wallace is to receive Class A common
stock in an amount not in excess of 35% of the issued and outstanding common
stock of the Company following the Effective Date.
The Plan of Reorganization, as approved by the Court, has established
various classes for the claims of secured and unsecured creditors of the
Company. The certain classes of general unsecured creditors are entitled to
receive, at the election of each individual creditor, Class A common stock in
lieu of a cash payment.
The following table summarizes the allowed claims and the disposition
of such claims by class.
38
<PAGE> 44
<TABLE>
<CAPTION>
Class Amount Status
----- ------ ------
<S> <C> <C>
Class 1: Administrative Claims $250,000.00 45,000 paid in
Dec. 1998 -
Balance still
due
Class 2: Allowed Wage Claim $ -0- -0-
-----------
Class 3: Allowed Munson Priority Tax Claims $ 26,000.00 Pending
-----------
Class 4: Allowed Priority Tax Claims $ -0- -0-
------------
Class 5: Allowed Secured Creditors $ -0- -0-
------------
Class 6: Unsecured Claims of
less than $1,200.00 $ 30,000.00 Pending
-----------
Class 7: Unsecured Claims in $64,000 in claims
excess of $1,200.00 $607,876.95 choose all stock
payment option
and/or note
-----------
Class 8: NEP Claim $6,000,000.00 Settled
-----------
Class 9: Disputed Claim $ -0- -
------------
Class 10: Claims of Equity Interest 11,291,495 Claims recognized for
Number of shares of Class A approximately 170
Common Stock shareholders owning
2,700,000 shares of
Class A Common Stock
</TABLE>
- -----------------------
The Plan of Reorganization will have a significant impact upon the
Company, its financial statements and his future business operations.
Accordingly, interested shareholders are encouraged to read and review the Plan
of Reorganization together with the Disclosure Statement which discusses that
Plan. A copy of the Plan of Reorganization and Disclosure Statement is enclosed.
Risk Factors
- ------------
There are substantial risks associated with the business plan as
adopted by the new Board of Directors. These risk factors are discussed in
detail in the Disclosure Statement on pages 80-96, and
39
<PAGE> 45
shareholders are encouraged to review these pages carefully, which are hereby
incorporated by reference.
The Company has not been successful in fully implementing its Plan of
Reorganization as approved by the Court. Unexpected delays were incurred with
respect to installation of telecommunications cabling, lines and equipment.
At this time, however, management reports that:
- The Mexican carrier has reported the successful implementation of all
equipment needed to function as a telecommunications carrier, with dial
tone available at its principal point of contact,
- The Mexican carrier has received the appropriate license to conduct
business in Mexico,
- DiegoTel has ordered and paid for five T-1 telecommunication lines
which have been installed into a California facility,
- The Company has entered into a lease agreement for a DS-3 cable which
will give the Company access to 672 telephone lines,
- In January, 1999, the system was tested for the purpose of confirming
that the equipment installed in the United States has functional
capability to communicate long distance messages to Mexico. The test
was successfully completed.
In addition, DiegoTel has entered into negotiations to sell 1,500,000
minutes per month to a single user situated in California.
In the event that no further unanticipated delays occur, the Company
anticipates that it will be able to generate revenue from these
telecommunication services in the near future.
As noted above, the Company has not filed all of the periodic reports
required to be made pursuant to applicable provisions of the Federal Securities
Laws. The Company intends to bring these filings current in the near future. In
an attempt to provide updated information with respect to the affairs of the
Company, the following supplemental information is being provided.
February, 1996 - January, 1999
As noted above, the Company's last annual report was submitted for the
fiscal year ended February 28, 1996, as reported in Form 10KSB as filed with the
Securities and Exchange Commission. The following information is being submitted
as supplemental information. In order to discuss events which have transpired
subsequent to February 28, 1996.
40
<PAGE> 46
Description of Business
- -----------------------
PowerTel USA, Inc. n.k.a. WorldCall Corporation, a Delaware
corporation, (the "Company") has been an independent, non-regulated utility
holding company which had acquired and operated electric power facilities and
other non-related business enterprises. The Company is not encumbered by
internal rate of return regulation as are traditional retail electric utility
companies. The Company has historically focused on developing environmentally
sound electric power facilities which utilize geothermal energy and wind energy
resources as the primary source of fuel for such facilities.
Prior to October, 1996, the Company had been located in Reno, Nevada In
October, 1996 it was moved to Santa Barbara, California. Subsequently, the
Company relocated to Palm Desert, California, which was its location at the time
of the involuntary commencement of the Chapter 11 proceedings. The Company's
operations were placed under the control of a Court appointed Trustee in March
of 1997.
The Trustee took actions to liquidate assets to fund the operation of
the Company. On June 27,1997 the Trustee completed the sale of the Company's
50.01% ownership interest in one of it's subsidiary, San Jacinto Power
Corporation ("SJPC"), a Nevada corporation, in consideration of payment by a
third party of $200,000 in cash, plus the assumption of debts estimated to
exceed $175,000. On September 4, 1997, the Court approved an order allowing the
Company to operate as a "Debtor in Possession" ("DIP").
The Company owns idle geothermal power generating assets which include
10.7 MW of power generating plants, fixtures and equipment. As a component
element of the Company's Plan, the Company intends to deploy, sell, lease or
liquidate these currently idle binary cycle power generating assets as a of its
Reorganization Plan. These assets were originally acquired by the Company in
1984-85 for the purpose of developing the geothermal resources then controlled
by the Company at Brady's Hot Springs. They are currently stored in Fernley,
Nevada
In addition to the Company's energy related business assets, the
Company owns a non-energy related business known as Combustion Energy
Corporation ("CEC") which conducts its business as Herth Printing and Business
Supply, Inc. ("Herth"). Herth was acquired on November 30, 1994, by merger (see
Combustion Energy Company below). Herth, was established in 1983 in Reno,
Nevada and has historically averaged annual gross sales of approximately $1.0
million dollars. Herth is located in its own warehouse/office space on
approximately .67 acres of land near downtown Reno. The Company had engaged the
former proprietor to continue managing the business under a two year employment
agreement which has currently expired. The merger was accounted for as a pooling
of interests.
In addition to the Company's core assets, the Company has acquired the
business interests of two developmental international long distance carriers,
DiegoTel and VivaTel (see Managements Discussion and Analysis). DiegoTel and
VivaTel are the holders of a Section 214 authorization from the FCC which allows
it to sell international long distance services out of the United States.
Finally, the Company maintains extensive litigation rights against
certain individuals and professional firms, as well as a judgment in the
principal amount of $5,000,000 against Golden
41
<PAGE> 47
Chance Limited, an Isle of Man corporation limited by shares, and Waterford
Trust Company Limited, an Irish corporation. There can be no assurance that any
monetary recovery may will be obtained from the above mentioned judgments
parties (See Litigation).
COMPANY HISTORY
The Company was originally organized on December 2, 1982 under the laws
of the State of Delaware as "Munson Geothermal, Inc." ("Munson"). The Company
changed its name to Nevada Energy Company, Inc. on November 20, 1990. On January
21, 1997, the Company subsequently changed its name to PowerTel USA, Inc. (See
Disclosure Statement).
Historically, the Company had sought to develop geothermal power
projects. To accomplish this objective, the Company first acquired a known
geothermal resource area ("KGRA") approximately 60 miles east of Reno, Nevada
known as Brady's Hot Springs ("Brady") in 1983. The Brady site consisted of
leaseholds from Southern Pacific Land Company (now Catellus Development) and the
United States Dement of the Interior, Bureau of Land Management ("BLM"). The
leases were for long-term development with minimum annual lease payments and
production royalties. After acquiring the Brady leases, the Company expended
substantial funds to determine the potential of the resources on the Brady
leases in order to initiate their development.
Subsequent to initial development efforts, the Company secured several
long term contracts to sell electrical energy produced to Sierra Pacific Power
Company, a subsidiary of Sierra Pacific Resources and embarked upon a plan to
secure debt and equity financing sufficient to establish recurring revenue from
Brady. The Company invested significant capital investment in the development of
the Brady resources, however, the Company did not secure adequate project
development funding sufficient to establish recurring revenues from Brady.
Brady Hot Springs Geothermal Associates
---------------------------------------
In 1984, the Company identified a power project under development by
the United States Dement of Energy ("USDOE") at Raft River, Idaho. The site
included a binary cycle power plant with a generator nameplate rating of 7,200
kilowatts or 7.2 MW (the "Raft River Plant"). The project was sold at auction by
the USDOE. The Company was selected by the purchaser, a subsidiary of Niagra
Mohawk Power known as HydraCo Associates ("HydraCo") to move the Raft River
Plant to the Brady Hot Springs site.
On September 30,1985, the Company entered into a partnership agreement
with a group led by HydraCo whereby the Company became the partner of a single
purpose development entity known as Brady Hot Springs Geothermal Associates,
Ltd. ("BHSGA").
The Company executed and delivered to BHSGA an assignment of a 6.6 MW
Power Purchase Agreement ("PPA") with Sierra, (which was owned by the Company),
together with a sublease of geothermal resources which had an agreed value of
$1,400,000. BHSGA assumed responsibility for relocating the Raft River Plant to
the Brady Hot Springs property. On December 18, 1986, the Company entered into a
42
<PAGE> 48
second agreement with BHSGA to acquire the Raft River Plant, related equipment
and other tangible and intangible assets. In July 1991 the Company completed the
acquisition of the Raft River Plant which is currently idle and located in
Fernley, Nevada.
Brady Geo Park Power Partners 1996
----------------------------------
In 1986, the Company formed a Nevada Limited Partnership known as Brady
Geo Park Power Partners 1996 ("BGPPP") for the purpose of developing a small
scale power plant operation at the Brady site. As a component of forming BGPPP,
the Company sold 3.38 Ormat power plants to BGPPP in exchange for cash and a
non-recourse note in the amount of $584,000, which accrued interest at 9% per
annum (accelerating to 18% on default). BGPPP successfully initiated limited
operations of the power project but later discontinued operations in 1987.
To date, BGPPP has not made payment of principal or interest to the
Company and is in default of its promissory note to the Company, plus is in
arrears on moving fees and storage fees exceeding, in the aggregate, $1,000,000.
BGPPP's interest is to be terminated because of their default provided for in
the Plan. The Company had previously notified the owners of BGPPP of the need
for reimbursement and noticed payment for the non-recourse note. No response was
received. Since the note has been in default, the Company has recorded its
interest as though the equipment was owned. At present, the BGPPP Ormat power
generating plants in which BGPPP has an interest in are idle and are in storage
at Fernley, Nevada (at the Company's cost) with other Company power generating
assets.
In December 1995, the Company transferred all of its right title and
interest, except the limited and general partnership interests, in BGPPP,
together with its other idle power generating assets, to its wholly owned
subsidiary Yerington Acquisition Company, Inc. ("YAC") in exchange for shares of
YAC's no par Common stock (See Yerington Acquisition Company).
Brady Power Partners
--------------------
Brady Power Partners ("BPP"), a Nevada general partnership, was formed
by Nevada Geothermal Power Partners, Limited Partnership, ("NGPP") a Nevada
Limited Partnership, (see NEVADA GEOTHERMAL POWER PARTNERS) and ESI BH Limited
Partnership ("ESI-BH") in July, 1991, for purposes of developing the Brady KGRA.
In July, 1991, BPP agreed to purchase the assets of BHSGA, including
rights to a 6.6 MW Power Purchase Agreement with Sierra, and assume the
Company's debts with BHSGA.
BPP and the Company thereafter entered into an agreement ("BPP
Agreement") whereby the Company sold to BPP certain geothermal power assets in
exchange for BPP's payment of $2,000,000 to the Company, a Gross Revenue
Interest in the completed project assigned to creditors of the Company and
forgiveness of the claims BHSGA had against the Company. The BPP Agreement
provided the Company the means to complete financial reorganization of the
Company in 1991.
43
<PAGE> 49
Beginning on July 19, 1991, BPP developed, financed, constructed and
now operates the Brady Hot Springs Power Plant and services power purchase
agreements for 20.5 MW of power with Sierra.
On August 1991, the Company received cash consideration totaling
$2,000,000 and project construction commenced and BPP transferred a Gross
Revenue Interest ("GRI") in the Brady Hot Springs Power Plant Project to pay
certain indebtedness of the Company.
The revenues generated by the GRI are utilized to satisfy certain debts
payable prior to reorganization, until paid in full or until there is no further
revenue payable under the GRI. To date, the GRI services the indebtedness
previously accrued by the Company in accordance with the BPP Agreement.
Nevada Geothermal Power Partners
--------------------------------
Nevada Geothermal Power Partners ("NGPP") is a Nevada limited
partnership whose general partners are Hot Springs Power Company ("HSP") and
Nevada Energy Partners-I, LP ("NEP") and whose limited partners are certain cash
investors and contractors. NGPP previously owned a 50% interest in BPP until
May 1995, when NGPP interests in BPP were sold. NEP owned 31% of NGPP, and the
Company owned 60% of NEP (see Nevada Energy Partners-I, LP below).
Nevada Energy Partners-I, LP
----------------------------
Nevada Energy Partners I, Limited Partnership ("NEP") is a Nevada
limited partnership whose general partner is Nevada Electric Power Company, Inc.
("NEPC") (40% interest) and whose limited partner (60% interest) was the
Company. NEPC is a Nevada corporation wholly owned by Jeffrey E. Antisdel, the
Company's former president and chief executive officer. The Company obtained its
limited partnership interest in NEP through its issuance of 4,437,473 shares of
the Company's Class B Common Stock (representing 100% of all Class B Common
Stock issued and outstanding). As a result, NEP previously owned a fully diluted
ownership interest in Brady Power Partners project totaling 9%.
Through the sale by NGPP of its 50% interest in BPP in May 1995, NEP's
interest in BPP was liquidated. The Company realized a net gain of $585,511 in
May 1995 as a result of its interest in NEP. Cash in the amount of $508,018
was received in July 1995. The remaining $77,493 receivable has been charged as
uncollectible. Pursuant to the terms of a settlement agreement entered into
between NEP, NEPC and the Company in 1998, and ratified by the Bankruptcy Court
as part of the Plan or Reorganization, net gains resulting from the sale of BPP
were reallocated to the Company.
As a limited partner of NEP, the Company was entitled to sixty percent
(60%) of NEP's net distributable cash flow. Pursuant to the terms of the
settlement agreement between NEP, NEPC and the Company, the 60% allocation of
gain was reallocated to increase the gains to 99%. The Company
44
<PAGE> 50
received no cash flow from recurring revenues from its interest in NEP.
Distributable cash flow from NEP to the Company consisted of non-recurring
developer fees, cost reimbursements, litigation recoveries and proceeds
resulting from liquidation of NEP's BPP interest.
San Jacinto Power Corporation
-----------------------------
The Company formed San Jacinto Power Corporation, a Nevada Corporation,
("SJPC") on December 15, 1993. SJPC was formed for the purpose of acquiring,
holding and operating the Assets to be acquired from Smith and Triad. On
December 15, 1993, the Company contributed 222,267 shares of Class A Common
Stock and cash of $275,055 in exchange for its 50.01% Common Stock ownership
interest in SJPC. On December 15, 1993, The New World Power Corporation ("New
World") contributed 48,000 shares of its Common Stock to SJPC. On February 10,
1994, New World contributed cash of $149,970 to SJPC and contributed additional
cash of $124,975 on March 8, 1994. New World owns a 49.99% ownership interest in
SJPC.
SJPC acquired in July, 1994 the operating assets of Smith Wind Energy
Company ("Smith") and six affiliated limited partnerships operated by Smith
which are known as the Triad Partnerships (collectively "Triad"). As a result of
the acquisition, SJPC operated a wind turbine energy park in North Palm Springs,
California. Energy sales were pursuant to a contract with Southern California
Edison Company that had approximately 20 years remaining. A total of 64 wind
turbines were available for operation, together with associated infrastructure,
additional turbine sites, turbine towers, parts and service equipment and a
long-term land lease with the BLM.
In its last filed financial report, the Form 10-QSB for the nine months
ended November 30, 1996, the Company had reported consolidated San Jacinto Power
Corporation assets of approximately $1,105,986, consolidated liabilities of
approximately $159,287 and minority interest of $632,720. The transaction
resulted in a reported net loss of approximately $113,979.
At the time of the sale, San Jacinto Power Corporation was one of two
operating properties held by the Company. Results of SJPC operations have been
removed from the reported results in the accompanying financial reports.
Combustion Energy Company
-------------------------
The Company formed a wholly-owned subsidiary, Combustion Energy
Company, Inc. ("CEC"), a Nevada corporation, on February 12, 1993 for the
purpose of being a general partner of Oreana Power Partners ("OPP") (See Oreana
Power Partners below). The Company is also a limited partner in OPP.
On November 30, 1994, the Company caused CEC to merge with Herth, in
exchange for Class A Common Stock of the Company. The Company, through its
ownership of CEC, owned 100% of the post-merger business and consolidated the
financial results of CEC in its reported results. In an agreement entered into
on September 1, 1996, the Company exchanged its interest in CEC, and thereby
Herth, in a transaction which included the
45
<PAGE> 51
reacquisition of all right, title and interest in the Company's then outstanding
Class B Common shares, which was later the subject of a settlement agreement
between NEP, NEPC and the Company (See NEP Settlement Agreement at EXHIBIT
(10)A).
Oreana Power Partners
---------------------
On February 12, 1993, the Company formed a Nevada limited partnership
known as Oreana Power Partners ("OPP"). The partnership is currently equally
owned by CEC and Geothermal Development Associates ("GDA") subsidiary, Energy
Development Associates ("EDA"). OPP was formed for the purpose of developing,
financing and constructing a gas turbine electric generating facility to provide
power to Sierra pursuant to power sales contracts to be obtained. OPP's primary
development site is near Sierra's Oreana substation and electric transmission
lines. OPP has been dissolved.
CHANGE IN CONTROL
On February 29, 1996 the Company executed a binding letter of intent
(the "Waterford Agreement") with Waterford Trust Company, Limited, an Irish
corporation ("Waterford"), in which the Company agreed to sell to Waterford or
its nominee approximately 2,000,000 shares of Series A preferred shares. On May
1, 1996 the Company announced the completion of this transaction in which
Waterford's nominee, Golden Chance, Limited ("Golden Chance"), an Isle of Man
private company limited by shares, agreed to purchase 1,960,795 shares of Series
A Preferred stock at $2.50 per share and 152,381 shares of Class A common stock
at $0.643125 per share. The Company received a cash payment for the Class A
common shares in the amount of $100,000 and a $4,900,000 promissory note was
executed and delivered by Golden Chance. The promissory note was secured by the
corporate guarantee of Waterford Trust Company. The Series A Preferred shares
acquired by Golden Chance were held in escrow for the benefit of the registrant.
The promissory note was payable in monthly installments. The first
installment was payable July 1, 1996 in the amount of $400,000. Subsequent
installments of $500,000 were payable every thirty days thereafter until paid in
full. The total principal amount of the promissory note was due and payable on
April 1, 1997. Upon payment of each installment under the promissory note, a
portion of the Series A Preferred shares were to be converted to the registrants
class A common stock pursuant to the Certificate of Designation of the Series A
Preferred shares. The converted shares would then be released from escrow.
On or about May 3, 1996, the Company received a cash payment in the
amount of $100,000 for the first conversion of the Class A preferred common
stock which resulted in the issuance of 152,381 shares on May 7, 1996.
Additional monies were paid into a bank account in Palm Desert, California
opened in the Company's name; however, this account was never under the control
of the corporation or its officers. Under the direction and approval of the
Waterford Board of Directors, the Company improperly acknowledged receipt of as
much as $1,242,000 in additional funds, however, the Company never received
these funds. The Waterford Board authorized the issuance of approximately
9,327,844 additional shares of Class A common stock in conversion of the Series
A
46
<PAGE> 52
Preferred shares as more fully set forth below. The current Board of Directors
disputes the validity of all of the above share issuances and receipt of the
note payments. The rejection is based on the fact that the Company never had
control of the funds, which were directed to bank accounts not under the control
or care of Company officers. In addition, the substantial majority of the
funds were used for non-corporate purposes. Monies distributed from the Palm
Desert account were directed to persons and entities who had not performed
services or provided valid consideration to the benefit of the Company.
On or about October 1, 1996, Class A shares totaling 1,061,729 were
issued under an S-3 registration which had been originally filed in July 1996
and amended in August 1996. As a result, the shares were issued without
restrictive legend even though the original agreement with Waterford Trust
required that all shares carry a restrictive legend.
On July 30, 1996 a legal opinion pursuant to Regulation "S" of the
Securities Act of 1933, as amended, ("Reg S") was provided by Kevin J. Quinn.
The opinion was issued on behalf of Golden Chance Limited ("Golden Chance") and
resulted in the Company's transfer agent issuing 2,543,734 free trading shares
of Class A common stock. Mr. Quinn's license to practice law was suspended by
the State of California on April 17,1993 and he was subsequently disbarred on
April 25, 1997.
On or about January 24, 1997, Mr. Quinn prepared and issued to the
Company's stock transfer agent a Form S-8 Registration Statement which resulted
in the issuance of 1,330,000 shares of free trading Class A common stock on
February 3, 1997 and an additional 600,000 shares on February 18, 1997. The
shares were distributed to various attorneys, law firms, affiliates of the
Waterford Board and related parties. Mr. Quinn issued a legal opinion dated
December 17, 1996 representing that the shares to be issued under the S-8 were
legally and validly issued, fully paid and nonassessable.
The current board has disputed the validity of all shares issued to
Golden Chance and those resulting from legal opinions issued by Mr. Quinn for
the reason he was not a licensed attorney and the shares were not issued for
valid legal consideration.
On January 31, 1997, Mr. Quinn issued another "Reg S" opinion on behalf
of the Company authorizing the issuance of 2,508,040 free trading shares of
Class A common stock. The shares were issued on February 6, 1997 and returned to
the Company on February 13, 1997 when the Bankruptcy was filed.
In connection with the Waterford Agreement, pursuant to a letter
agreement ("Letter of Intent") dated February 29, 1996, and conditional to the
sale of Series A Preferred Shares, the former control group Chairman, Jeffrey
Antisdel, and Director, Richard Cascarilla, voluntarily resigned their
respective Board of Director positions, with nominee Directors, Charles Cain and
Peter Cannell becoming elected to the Board of Directors. The remaining former
members of the Board subsequently resigned and John Goold was nominated to the
Board. The active size of the Board was reduced from five directorships to three
directorships.
47
<PAGE> 53
FORMATION OF NEW SUBSIDIARIES
Under the Waterford Board, the Company announced the formation of two
wholly owned subsidiaries for purposes of increasing Company growth through
strategic acquisitions.
San Jacinto Energy Corporation
- ------------------------------
On May 9, 1996, the Board of Directors initiated the formation of San
Jacinto Energy Corporation ("SJEC") for purposes of controlling applicable
shareholdings, debt instruments, partnership interests and power generating
assets of the Company. SJEC was also formed for purposes of completing mergers
and acquisitions within the geothermal and wind energy sectors with the intent
of acquiring additional energy reserves.
Central Communications Corporation
- ----------------------------------
On May 9, 1996, the Board of Directors initiated the formation of
wholly owned subsidiary Central Communications Corporation ("CCC"). CCC was
formed for purposes of controlling applicable rights, shareholdings, debt
instruments, partnership interests and technologies to be acquired by the
Company. CCC was also formed for purposes of pursuing mergers and acquisitions
of telecommunication companies and business operating in related sectors.
On May 21, 1996, the Waterford Board announced that it had signed a
binding letter of intent to acquire, through CCC, all the outstanding shares of
Telecom Technologies, Inc. ("TTI," an Oregon corporation) and certain other
related assets. The agreement was with Telecom (AE), Limited ("TAE"), a
subsidiary of Wina Associates, an Isle of Man company limited by shares
("Wina").
TTI was a telephone service provider which operated twenty (20) retail
communications centers known as "Casetas." Casetas cater to the Latin American
community and provide customers the means to purchase telephone service debit
cards, complete money transfers, send and receive telecopier transmissions and
complete local and long distance telephone calls.
The agreement provided for payment of $500,000 cash and issuance of
2,000,000 shares of Class A common stock through CCC to TAE. The consideration
was paid and the transaction was reported as completed on May 21, 1996.
Subsequently, it was learned that the shares in TTI, held by TAE/Wina,
were previously purchased from the founders of TTI and had not been fully paid
for by TAE and Wina. In addition, it was learned that the only payment which had
been made was $45,000 from Company funds under the control of persons retained
and authorized by the Waterford Board which consisted of Charles A. Cain, Peter
J. Cannell and John C. Goold. The other related assets were not owned or
controlled by TTI, as was represented to the Company's officers.
48
<PAGE> 54
After receiving a qualified audit opinion review of the TTI
acquisition, the reported acquisition was incorrectly reported as reversed in
the Company's Form 10-QSB filed for the nine months ending November 30, 1996.
Also, in reports filed with the Securities and Exchange Commission, it was
incorrectly reported that the TTI acquisition had been rescinded. The
transaction consideration was not returned to the Company and the transaction
was therefore not voided. The TTI acquisition was subsequently recorded and
reported as a total loss.
Company shareholders filed a derivative lawsuit in Delaware against
former officers and directors in an effort to recover the Company's losses. (See
Item 1. Legal Proceedings.)
MANAGEMENT CHANGES
Subsequent to the change in control which occurred on May 1, 1996, a
series of management changes followed. Mr. John C. Goold resigned as director on
August 16, 1996 and was replaced by Mr. Stefan Tevis. Mr. Tevis was appointed by
the two remaining directors Charles Cain and Peter Cannell. Mr. Tevis had
previously been employed in the specialty magazine publishing business.
On September 26, 1996, directors Cain and Cannell authorized the
termination of the President, Mr. Jeffrey Antisdel and the secretary/treasurer,
Mr. Richard Cascarilla. Mr. Antisdel and Mr. Cascarilla had previously resigned
as directors in May of 1996. Mr. Antisdel and Mr. Cascarilla were in the process
of filing notices of default for non-payment of the note by Golden Chance (see
Change of Control, above) and were terminated without cause. Mr. Tevis was
appointed President and Mr. Kenton Bowers, was appointed secretary.
In December 1996, Mr. Michael R. Kassouff was appointed director
pursuant to the Certificate of Designations of the Series B Preferred stock.
This stock had no voting rights except in the event that Golden Chance failed to
pay $500,000 of the principal due under the Note issued in the change of control
transactions by Golden Chance and its Guarantor, Waterford Trust. In the event
of a Default the holders of a majority of the outstanding shares of Series B
Preferred stock then have the power and authority to elect, either at a meeting
or by written consent, one director to the Company's board of directors (the
"Series B Director"), to serve for so long as a Default exists.
On December 18, 1996, Mr. Kassouff authorized, on behalf of the
Company, the filing of a Complaint in the Superior Court of the State of
Delaware In and For New Castle County, C.A. No. 96C-12-150-JEB, against Golden
Chance and Waterford Trust Company. (See the Legal Proceedings section for
specific details.)
In December 1996, Mr. Bowers resigned as secretary, retaining his
position as controller. Mr. Kevin Quinn, then acting as legal and securities
counsel to the Company, was appointed secretary.
On January 23, 1997, Mr. Stefan Tevis was terminated as President of
the Company. He retained his position as Director pending a negotiated
settlement agreement.
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Mr. Pattison Hayton commenced acting as President effective January 23,
1997. Mr. Pattison Hayton had essentially been managing the Company since May
1, 1996 with the full approval of the Waterford Board in his capacity as advisor
to Waterford Trust Company and its Directors.
On February 3, 1997, pursuant to the terms of an "Agreement for
Settlement and General Mutual Release" of even date, Mr. Stefan Tevis resigned
as a director of the Company. The Company is unsure whether the Agreement was
ever finalized due to the lack of corporate records. The agreement allegedly
provided for:
1. Issuance of 41,666 post split Class A shares in settlement of his
employment agreement.
2. Indemnification of Mr. Tevis from claims by any third parties asserted
against Mr. Tevis, in connection with, or arising from, Mr. Tevis'
tenure as President and/or Director of the Company, including pending
lawsuits against the Company in which Mr. Tevis had been named as a
defendant.
3. Assumption of the remaining liability for Mr. Tevis' residential lease
by the Company's majority owned subsidiary, San Jacinto Power
Corporation and guaranteed by Mr. Pattison Hayton.
4. Payment of a finders fee to Mr. Tevis in event of completion of the
"Theme" acquisition.
5. Severance payment of $33,600 to $50,000 in the event that the "Theme"
acquisition was not completed.
6. Non-interference agreement by Mr. Tevis.
On February 7, 1997 Mr. Bowers was terminated due to allegations that
he was working with creditors and others to place the Company in involuntary
bankruptcy.
On May 9, 1997 Mr. Charles Cain and Mr. Peter Cannell resigned as
directors of the Company.
On May 19, 1997, Mr. Richard A. Cascarilla and H. Lawrence Herth were
appointed as Directors of the Company by Mr. Michael Kassouff.
On May 19,1997 Mr. Pattison Hayton, President and Mr. Kevin J. Quinn,
Secretary, were terminated from their respective positions by Mr. Michael R.
Kassouff in his capacity as director and on behalf of the board of directors of
the Company.
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INVOLUNTARY BANKRUPTCY
On February 13, 1997, three of the Company's creditors filed a petition
for involuntary bankruptcy under Chapter 11 in Federal Bankruptcy Court in Reno,
Nevada. The creditors were supported by affidavits filed by Mr. Jeffrey E.
Antisdel, former director, chairman and CEO of the Company and Mr. Kenton H.
Bowers, former controller. The creditors were represented by Mr. Jeffrey L.
Hartman, former and current director of the Company.
INTERVENING EVENTS
During the period May 1, 1996 to May 9, 1997, under the management
which controlled the Company as a result of the change of control which took
place on May 1, 1996, a series of events transpired which led to the Company's
current circumstance.
These include, among others; (1) failure of Golden Chance/Waterford to
make payments on the notes issued in the transaction,(2) issuance of shares
under direction of Directors, even though there was no evidence that payments
had been made, (3) sale of such shares in the open market in contravention of
the terms of the May 1, 1996 agreements and applicable law, (4) the attempted
issuance of Class B Common Shares for no valid consideration, (5) payments to
affiliates for non corporate debts, (6) failure to pay legitimate creditors, (7)
amendment to the certificate of incorporation on the basis of alleged missing
documents (later found to exist), (8) use of fraudulent legal opinions by an
unlicensed lawyer, (9) issuance of unrestricted shares without proper
registration, (10) subsequent sale in the market of those shares, and (11)
issuance of false or misleading news releases.
CORPORATE OBJECTIVES
The Company is in the process of restructuring itself as an
independent, non-regulated utility holding company. To be engaged in the
development, financing, construction and operation of electric power facilities
which generate electricity for sale to regulated utilities.
As an independent electric power producer serving the utility industry,
the Company hopes to specialize in the acquisition, development, financing,
construction and operation of electric power generating facilities which
utilize renewable energy resources such as geothermal, biomass or wind energy
resources.
In addition to the Company's expertise in geothermal and wind energy
development, the Company continues to actively seek the merger, acquisition,
development, financing and operation of various telecommunication companies and
related businesses for purposes of better positioning the Company for
accelerated growth.
The corporate objectives of the Company are to:
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(1) Acquire, develop, finance, construct and operate electric power
generating facilities and deploy Company owned power generating assets
where risks are lowest;
(2) Seek to expand Company owned print communications business;
(3) Seek litigation recoveries; and,
(4) Acquire telecommunication companies and related business operations
which offer the Company increased growth opportunities.
The Company must be considered a development stage company subject to
all risks inherent in the establishment of new lines of business which are
financed through equity financing, debt financing, partnership distributions,
asset sales, litigation recoveries and management fees.
In the past the Company has been unable to finance operations from cash
flow from operating revenues. The Company's only cash generating operating
activity is Herth Printing, however, management anticipates that the
telecommunications operations will commence operating in the near future.
Depending upon the extent of its operations, the Company may be required to sell
equity to finance operations, or, the Company may seek to raise additional
capital through debt financing(s) sufficient to satisfy its operational needs
over the next fiscal year. However, there can be no assurance that such
financing will be available on terms acceptable to the Company during the coming
twelve months of operation.
POWER MARKETS
Led by the California Public Utility Commission, over twenty (20)
utilities commissions and the Federal Energy Regulatory Commission are
considering the proposed restructuring and deregulation of electric power
production and deliveries of electric power to utility customers.
Today, electricity generation is no longer a monopoly in which the
cheapest power is generated by the most capital intensive plants. Moreover,
smaller, more fuel efficient technologies such as gas-fired combustion turbines
and wind turbines have effectively reduced the traditional barriers to entry
into markets dominated by coal fired and nuclear power production.
In addition, legislators, regulators and individual states are
increasing economic competition with adjacent states due to their realization of
the overall importance which electricity prices have in creating, or destroying,
regional competitive business advantages.
Secondary to these issues, are increasingly environmentally conscious
customers supporting "green power" options such as geothermal, wind, biomass or
solar energy producers otherwise legally known as Qualifying Facilities ("QF").
Presently, regulated electric utilities must purchase all power
produced by qualifying renewable energy producers which are essentially
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wholesale utilities, known as "Qualifying Facilities" or "QFs" (See
"Government Regulation"). These utilities must buy all power produced from
renewable energy sources at the retail utilities' highest incremental power
cost, known as "avoided costs." These are the costs retail utilities would have
to pay for the next future increment of power to go on-line. The avoided costs
are those not incurred or costs "avoided" by the utilities because of plants
constructed by renewable energy developers. The retail utilities avoid the
costs of building new power plants while reselling the power to their normal
customers at markups allowed by state regulatory agencies.
COMPETITION
Competitors of the Company include major oil companies, independent oil
and gas concerns, other independent power companies and power marketers. Most of
the major competitors are much larger and better capitalized than the Company
and have been in business from ten to fifteen years longer than the Company.
Competition for long-term power sales contracts has increased due to the
implementation of competitive bidding processes at most retail utilities.
GOVERNMENT REGULATION
The following is a summary of the regulatory requirements, permits and
approvals the Company must obtain, and other requirements that are relevant to
the operation of the Company's business.
FEDERAL ENERGY REGULATORY COMMISSION ("FERC") LAW
FERC legislation is enforced nationally, specifically to cause a shift
from retail utility reliance upon polluting forms of non-renewable fossil fuels
to more desirable domestic sources of clean power from renewable energy. This
legislation was enacted to reduce the previous trend toward ever larger,
centralized fossil and nuclear power plants and increasing reliance on foreign
energy sources. FERC also recognized that utility system overall reliability may
be increased by fuel and plant diversification of smaller size up to a desired
system-specific mix of small and large plants.
POWER CONTRACT REGULATIONS
The operations of the Company's developments will be directly affected
by federal and state statutes, regulations and rules relating to the ownership
of electrical generating facilities and the production and sale of electric
power. The primary federal law determining the extent to which the current and
future power plant projects will be subject to federal energy regulation is the
Public Utilities Regulatory Policies Act of 1978 ("PURPA"). If an electrical
power generating facility is a QF within the meaning of the regulations
promulgated pursuant to PURPA by the FERC, and within the meaning of rules
promulgated pursuant to both PURPA and the NPSC, then such facility and its
owners will be able to take advantage of provisions designed to encourage
alternative sources of electric power production. A facility will meet existing
standards for a QF if it produces electricity primarily from a "renewable
resource," such as geothermal, does not use oil, natural gas and coal for more
than 25% of its energy input, and is not owned more than 50% by an electric
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utility or electric utility holding company. Section 210 of PURPA provides the
framework for the promulgation of federal and state regulations, which would
exempt a QF from existing state and federal regulation, and would require an
electric utility to interconnect with a QF to purchase its power at a
prescribed rate.
EXEMPTIONS FROM FEDERAL AND STATE REGULATIONS
Regulations issued by FERC exempt (with certain exceptions) any QF
using geothermal energy as a primary source under the Federal Power Act from the
provisions of the Public Utility Holding Company Act of 1935 relating to
electric utilities and from state laws regulating electric utility rates and
financial organization. While the FERC regulations provide that FERC may limit
the applicability of this broad exemption from state laws, upon request of a
state regulatory authority or non-regulated electric utility, the NPSC has not
requested FERC to limit the applicability of the exemption.
While PURPA exempts certain QFs from federal and state laws regulating
electric utilities, such QFs are not exempt from environmental laws and must
comply with all applicable federal, state and local zoning, air and other
environmental quality laws. In addition, PURPA's exemption from state regulation
for QFs does not extend to exemption from state laws or regulations enacted to
implement the FERC rules on Co-generation and Small Power Production, such as
the SPP Rules provisions described above.
TELECOMMUNICATIONS MARKET, COMPETITION
AND GOVERNMENT REGULATION
The Company has no experience in the telecommunications marketplace but
has acquired two companies (DiegoTel and VivaTel) and is presently engaged in
evaluating several business opportunities related to the proposed merger and/or
acquisition of telecommunication companies and related businesses. The
telecommunication markets are competitive, with companies such as AT&T, MCI and
Sprint dominating the communications marketplace. However, the Company is
currently focused upon acquiring and developing smaller "niche" companies
engaged in providing specialty communications services and/or technologies
associated with long distance services, switching, telephone debit card
sales, retail service centers, and other related marketing services from the
United States to other countries.
Government regulation by the Federal Communications Commission and
regional Public Service Commissions regulate various facets of such
communications business. However, the Company is presently unable to fully
quantify the extent of regulation to which it will ultimately be subject until
such time operations as are established.
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RESEARCH AND DEVELOPMENT
The Company has not incurred any expense for research and development
activities in the last two fiscal years. The Company has focused its efforts on
the development of additional business opportunities.
EMPLOYEES
There are currently 12 employees working at the Herth printing business
in Reno, Nevada under Combustion Energy Company ("CEC"), its consolidated
subsidiary. The Company currently has two employees, Mr. Richard A. Cascarilla
and Mr. Michael R. Kassouff.
DESCRIPTION OF PROPERTY
ELECTRIC POWER GENERATING EQUIPMENT
-----------------------------------
BINARY-CYCLE POWER PLANTS
- -------------------------
In the mid-1980's, the Company acquired a total of ten Ormat power
plants with a gross nameplate rating of 3.7 MW. The Company owns six of these
binary-cycle power plants and holds a secured interest in the other four plants
(for financial statement purposes all ten units are treated as Company owned).
These units can be utilized with lower temperature geothermal or waste heat
energy sources. The Company has focused upon the profitable sale or deployment
of these currently idle power plants in geothermal, biomass or heat recovery
projects. These plants are presently located at Fernley, Nevada, awaiting sale
or field deployment. (See Brady Geo Park Power Partners above.)
RAFT RIVER POWER PLANT
- ----------------------
In the mid 1980's the Company acquired a 7.2 MW electric power
generator together with its associated geothermal turbine, gear box, generator,
fluid storage vessels, heat exchange vessels, pumps and other essential
accessories which are identified herein as the Raft River Power Plant. This
currently idle Raft River Power Plant is presently located at Fernley, Nevada,
awaiting sale or field deployment. (See Brady Hot Springs Geothermal Associates
above).
LEGAL PROCEEDINGS
MUNSON LAWSUIT
On October 5, 1992, the Company, as plaintiff, initiated litigation in
the Chancery Court of New Castle County, Delaware, (the "Munson
Lawsuit"), against former officers and directors of the Company. The Defendants
are Stephen Munson, Leland Mink, Walter MacKenzie, Frank Carigula and Donald
Selfridge, (the "Defendants"). The allegations against the Defendants include
numerous breaches of fiduciary duty, invalid issuance of Company shares,
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breaches of fiduciary duty arising out of improper issuance of Company stock,
and failure to value the services for which stock was awarded. (See page 28).
On October 13, 1992, a sequestrator was appointed and the shares of the
Company standing in the names of Leland Mink, Walter MacKenzie, Donald Selfridge
and Frank Carigula were seized by the Company until further order of the Court.
On or about June 9, 1994, the Delaware Court assessed sanctions against Stephen
Munson for his failure to attend for his deposition. A default judgment against
Frank Carigula has since been obtained in the amount of approximately $59,000.
The Company executed garnishments and attachments to satisfy the judgment.
The trial of the case against the remaining defendants Munson,
Selfridge and MacKenzie was completed in September of 1996. Post-trial briefs
were to be submitted to the Court by both parties on legal issues raised during
the trial. An advisor to the Waterford Board, Mr. Pattison Hayton, negotiated
with all the defendants. A settlement agreement was reached and dismissal
documents were filed with the Court. The Company is unaware of the settlement
terms due to the missing documents retained by the Waterford Board. During this
period, enforcement of the judgment against Carigula was suspended. The
agreement may have never been finalized. In the intervening period the Company
lost its opportunity to obtain a judgment against Munson, Selfridge and
MacKenzie. The legal disposition of the case is currently under review by the
Company. It is probable that legal time limits have expired and significant
litigation rights previously existing under the case may have been lost by the
Company as a result of these actions.
ANTISDEL LITIGATION
On October 28, 1996, Jeffrey E. Antisdel, former president of Nevada
Energy Company, filed suit in Washoe County, Nevada. The suit relates to various
matters of compensation, including the Company's default on a two year
employment agreement which was to take effect after Mr. Antisdel's termination
on September 26, 1996. The plaintiff obtained a default judgment which the
Company has set aside. Plaintiff filed a lien on the Company's idle geothermal
assets, which was later voluntarily removed.
CASCARILLA LITIGATION
On October 23,1996, Richard A. Cascarilla, former secretary, treasurer
and general counsel of Nevada Energy Company, filed suit in the Ingham County
Circuit Court, Case No. 96-84695-CK in Lansing, Michigan. The suit alleged
breach of contract based on a two year employment agreement which was to take
effect after Mr. Cascarilla's termination on September 26, 1996. The Company
failed to defend the suit and a default judgment was entered on November 21,
1996 in the amount of $143,078.39 plus statutory accrued interest until paid.
The Company never retained counsel in this matter. The Plaintiff filed a lien on
the Company's idle geothermal assets, which was later voluntarily removed.
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SMITH, KATZENSTEIN LITIGATION
On December 2, 1996, the Company's former Delaware law firm of Smith,
Katzenstein & Furlow, filed suit in New Castle County, Delaware against the
Company and Mr. Pattison Hayton alleging non-payment of fees in the approximate
amount of $70,000, breach of contract, fraud and tortious interference with
contractual relationship. The Plaintiff has obtained a default judgement. The
Company and Mr. Hayton failed to retain an attorney or take any steps, to date,
to set aside the judgment.
HARTMAN, KASSOUFF, MODESITT LITIGATION
On November 15, 1996, three former directors of the Company, Messrs.
Jeffrey L. Hartman, Michael R. Kassouff and Jeffrey E. Modesitt, filed suit in
Washoe County, Nevada alleging non-payment of directors' fees and accrued
interest under promissory notes in the amount of $10,000 each dated May 1, 1996.
The notes bear interest at the rate of 18% per annum. The Company has settled
this litigation.
NEVADA ENERGY PARTNERS I, LIMITED PARTNERSHIP LITIGATION
On August 16, 1996, Nevada Energy Company, Inc., ("NEC") executed an
agreement ("Agreement") with Nevada Energy Partners I, Limited Partnership, a
Nevada Limited Partnership, ("NEP") and Nevada Electric Power Company ("NEPC"),
a Nevada corporation. NEP is controlled by its General Partner, NEPC. NEPC is a
corporation wholly owned by NEC's president, Jeffrey E. Antisdel. Principals
utilized in determining the amount and type of consideration for the Agreement
were based upon an arms-length negotiation between members of NEC's Board of
Directors and legal counsel representing NEPC. The effective date ("Effective
Date") of the transaction(s) contemplated under the Agreement was scheduled for
September 1, 1996, with the Agreement and all related documentation to be held
in escrow pending completion of post-closing events. Terms of the Agreement
provide that NEC and NEP will exchange, in a non-cash transaction(s), an
exchange of common stock, assets and rights. The Agreement is summarized as
follows:
(i) NEC shall withdraw as a limited partner from NEP and waive all
present and future rights to all assets, litigation rights or other attributes
of NEP, (ii) NEC will transfer to NEP all rights and ownership to Combustion
Energy Corporation ("CEC"), a Nevada corporation and wholly owned subsidiary of
NEC, and (iii) NEC will redeem all 4,437,473 Class B Common Shares owned
by NEP, in exchange for an equal number of Class A Common Shares of NEC. Items
described in items (i), (ii), and (iii) above, are to be delivered in
consideration of NEP and NEPC's release of all ownership in 4,437,473 Class B
Common Shares and, NEP and NEPC's release of all present rights for the
issuance of 8,865,774 additional Class B Common Shares, and NEP and NEPC's
release of all future Class B Common Share issuances resulting from future
Class A Common Stock issued. In addition, NEP and NEPC agree to indemnify NEC
for any present or future litigation expenses, obligations or damages resulting
from litigation in which NEP is the plaintiff and counter defendant in the
Second District Court in Washoe County, State of Nevada, in Case No.
CV92-04609, Department 1. NEP is controlled by its General Partner, NEPC, a
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corporation wholly owned by NEC's former president, Jeffrey E. Antisdel. NEP
is a limited partnership in which its primary assets are NEC Class B Common
Stock, rights to future Class B Share issuances, and NEP's litigation (Case No.
CV92-04609) rights set forth above. The Company's wholly owned subsidiary, CEC,
conducts its business under the name of Herth Printing and Business Supplies, a
company engaged in the manufacture and sale of printed materials. A copy of the
Agreement is attached as Exhibit 10A.
Pursuant to this Agreement, on September 1, 1996, the Company's
interest in its wholly owned consolidated subsidiary, Combustion Energy Company,
Inc., dba Herth Printing and Business Supplies, together with a 60% limited
partnership interest in Nevada Energy Partners I, Limited Partnership ("NEP"), a
Nevada limited partnership, were transferred to NEP, an entity under the control
of Jeffrey E. Antisdel, former president and Chairman of the Company. The
Agreement was executed by a majority of the Company's Board of Directors
including then Chairman, Charles A. Cain and Director Peter J. Cannell.
On November 19, 1996, Nevada Energy Partners I-Limited Partnership
("NEP") filed suit against the Company to seek enforcement of the Agreement
entered into on August 16, 1996. The Company engaged counsel to defend its
position. Preliminary briefs and discovery were initiated. The case was
currently stayed due to the filing of the involuntary Bankruptcy Petition on
February 13, 1996.
SHAREHOLDER DERIVATIVE SUIT
The Company was nominally named in a shareholder derivative action
filed on December 12, 1996 in Delaware Chancery Court, Docket No.15421-NC. The
primary defendants are Stefan Tevis, John Goold, Charles Cain and Peter Cannell.
The lawsuit alleges Usurpation of Corporate Opportunities by defendants Cannell,
Cain and Goold; Misappropriation, Conversion and Breach of Duty of Loyalty
against defendants Tevis, Cannell, Cain and Goold. The plaintiffs were Richard
A. Cascarilla and Michael R. Kassouff, both former directors of the Company.
The litigation specifically alleges and requests in Count 1, that
judgements be entered against defendants Cannell, Cain and Goold for usurpation
of corporate opportunity in taking for themselves (through Telecom Limited and
Wina Associates, in which they had an ownership interest), a valuable corporate
opportunity. Specifically, the opportunity to acquire TTI and later selling TTI
to the Company at a vastly higher price; Count 2, damages for misappropriation,
conversion and breach of duty of loyalty against defendants, Tevis, Cannell,
Cain and Goold for the diversion of approximately $1,242,000 in Company funds to
non-corporate purposes, and Count 3, damages for breach of duty of loyalty
against defendants Tevis, Cannell and Cain for failure to take action against
Waterford and Golden Chance Limited with respect to their breaches of
contractual agreements to make payments to the Company under notes, subscription
agreements and other transaction documents relating the a change in control of
the Company on May 1, 1996.
The Company reached a settlement with Defendants Cain and Cannell. The
terms are confidential. The settling Defendants agreed to cooperate with the
Company in its continuing investigation and litigation. The case against
Defendants Goold and Tevis is still pending.
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SANTA BARBARA OFFICE SPACE
The Company's wholly owned subsidiary, Central Communications Company
("CCC") entered into a five year lease for an office space in Santa Barbara,
California which provided for monthly payments of $19,034, plus taxes. The
Company was compelled to vacate the property after a couple months when its
initial entry into telecommunications became unsuccessful. The landlord filed
suit in Santa Barbara County, California seeking compliance with the agreement.
The Company asserts that it had no legal obligations under the lease as a
guarantor and therefore no provision was made in the lease accounts, and the
claim relating to this lease was later withdrawn in its entirety by the lessor.
The case was ultimately dismissed without payment by the Company.
JUDGMENT AGAINST WATERFORD TRUST AND GOLDEN CHANCE, LTD.
The Company filed an action on December 18, 1996 in Delaware Chancery
Court, Docket No. 96C-12-150-JEB against Waterford Trust Company and its nominee
Golden Chance Limited seeking to recover moneys due the Company under a change
of control agreement, related notes and subscription agreements which had been
entered into in February 1996 and implemented on May 1, 1996.
A default judgment in the amount of $5,075,450.28 was entered on
January 21, 1997. The defendants have not contested the lawsuit to date.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On January 21, 1997 the Company notified its Shareholders, by mail,
pursuant to Section 228(d) of the Delaware General Corporation Law of certain
actions allegedly taken by written consent of the majority of the Shareholders
of the Company.
The notice stated that:
On January 21, 1997 by majority consent of the Shareholders,
the Shareholders of the Corporation approved a Restated Certificate of
Incorporation, which restated and amended the Certificate of
Incorporation of the Corporation. A copy of such Restated Certificate
of Incorporation, which will be filed with the Office of the Secretary
of State of Delaware shortly, is enclosed with this letter
A copy of the Restated Certificate of Incorporation of PowerTel USA,
Inc. is attached.
The significant changes were:
1. Change of the corporate name from Nevada Energy Company, Inc. to
PowerTel USA, Inc.
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2. Restatement of certificate to eliminate previous super-majority vote
requirement for certain amendments to the Certificate of Incorporation,
including super-majority vote requirement for approval to changes in
capital, including stock splits.
3. Added Class C Common Stock.
4. Added provision of Series A Convertible Preferred Stock, including
conversion details and terms of Certificate of Designations related
thereto.
5. Added provisions of Series B Convertible Preferred Stock including
conversion details and terms of Certificate of Designations related
thereto.
6. Incorporation of a one-for-six reverse split of shares of all classes
outstanding upon the date of filing of the restated certificate.
The basis of the filing was a decision by the Waterford Board, that the
previous requirement for a super-majority vote of shareholders to make all of
the above changes had not been properly approved. All items, except No.2 had
been voted upon at the annual shareholder meeting held in Santa Barbara on
August 16, 1996 and had received majority approval, but not the then required
80% super-majority approval. The Restated Certificate of Incorporation was used
as a basis for implementing a one-for-six reverse split of shares outstanding as
of January 21, 1997.
Subsequently, 2,508,040 Class A Common Shares were Registered for
issuance (on a post-reverse split basis) pursuant to the terms of an S-8
registration statement filed on or about December 17, 1996 without
applying the reverse split. This action, if completed in its entirety, would
have significantly diluted the interest of pre-split shareholders. The current
Board of Directors disputed the validity of these issuances on the grounds that
the Company never received the funds, that any funds were directed to
non-corporate uses by persons under the direction of or reporting to the
Directors and that payments were directed to persons who had not performed
services to the benefit of the Company. These shares were returned to the
Company on February 13, 1998.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
The Company's Class A Common Shares, thereafter listed under the symbol
PTUSA, were delisted from "The Nasdaq SmallCap Market" system on March 5, 1997.
Delisting was initiated as a result of Nasdaq's belief that the Company failed
to meet voting rights requirements as set forth in Rule 4310(c)(21), other
NASDAQ staff concerns raised in accordance with Rules 4330(a)(3) and 4330(f),
and the Company's failure to pay current annual fees.
Rule 4310(c)(21) sets forth the following voting rights criteria:
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"(21) Voting Rights -Voting rights of existing shareholders of publicly
traded common stock registered under Section 12 of the Act cannot be
disparately reduced or restricted through any corporate action or
issuance. Examples of such corporate action or issuance include, but
are not limited to, the adoption of time-phased voting plans, the
adoption of capped voting rights plans, the issuance of super-voting
stock, or the issuance of stock with voting rights less than the per
share voting rights of the existing common stock through an exchange
offer."
Rule 4330(a)(3) sets forth the following suspension or termination of
inclusion criteria:
"(a) The Association (NASDAQ) may, in accordance with Rule 9000 Series,
deny inclusion or apply additional or more stringent criteria for the
initial or continued inclusion of particular securities or suspend or
terminate the inclusion of an otherwise qualified security if: (3) the
Association deems it necessary to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
or to protect investors and the public interest."
Rule 4330(f) sets forth the following suspension or termination of
inclusion criteria:
"(f) Securities issued in connection with the merger, consolidation, or
other type of acquisition of at least one issuer of qualifying
securities shall be promptly included in Nasdaq, provided that the
conditions of Rule 4310(c) or Rule 4320(e) for securities that have
already been included are satisfied. The Association shall require a
Nasdaq SmallCap Market issuer to comply with all applicable
requirements for initial inclusion under this Rule 4330 Series and
shall require a Nasdaq National Market issuer to comply with all
applicable requirements for initial inclusion under the Rule 4300
Series and Rule 4400 Series in the event that such issuer enters into a
merger, consolidation, or other type of acquisition with a non-Nasdaq
entity (including domestic and foreign corporations and limited
partnerships), which results in a change of control and either a change
in business or change in the financial structure of the Nasdaq SmallCap
Market or Nasdaq National Market issuer."
The concerns raised by Nasdaq Market Listing Qualification staff
resulted largely from information provided by the Waterford Board and its
appointed officers, Stefan Tevis and Kenton Bowers.
Information provided included concerns relating to improper issuance of
unrestricted shares and extreme dilution of existing shareholders' interests
under Delaware corporate law, and subsequent issuance of shares on an unsplit
basis. In addition, shares which had been acquired for investment purposes and
were to be held for a two year period were being sold in alleged violation of
state and Federal securities laws, resulting in artificially depressed prices.
It was also believed that shares were being issued without required financial
consideration.
An oral hearing was scheduled for February 13, 1997 at Nasdaq offices
in Washington, DC. Current management has no knowledge as to the results of that
hearing or whether any of the then
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<PAGE> 67
management group of Pattison Hayton and Kevin Quinn actually attended such
meeting. It is known that the Company retained Mr. Joseph S. Allerhand of the
New York City law firm of Weil, Gotshal & Manges LLP. A response to the issues
raised by NASDAQ was addressed on the company's behalf in a letter dated
February 13, 1997.
The Company's listing had been effective from September 1, 1992. There
was, and remains, no established public trading market for the Company's Common
Stock, Series A Preferred stock or Series B Preferred stock.
The range of high and low bid information for the Company's Class A
Common Stock (adjusted for the one-for-six reverse split effective January 21,
1997) is set forth in the following table:
<TABLE>
<CAPTION>
HIGH BID LOW BID
<S> <C> <C>
1996 First Quarter 1.062 0.25
Second Quarter 2.75 0.6875
Third Quarter 1.875 0.4375
Fourth Quarter .5625 0.125
1997 First Quarter 1.25 0.062
Second Quarter .15 0.062
Third Quarter .062 0.062
Fourth Quarter .10 0.062
1998 First Quarter .10 0.062
Second Quarter .02 0.062
Third Quarter .05 0.062
Fourth Quarter .01 0.062
</TABLE>
The above trading data is provided on a calendar basis.
In or about December, 1998, the Company requested that trading in its
Class A Common Stock be suspended pending implementation of certain components
of its Plan of Reorganization. Management anticipates that trading will resume
in February, 1999.
HOLDERS
There were 970 holders of record of the Company's Class A Common Stock
as of February 28,1997, excluding holders in street name. Estimated shareholders
in street name as of February 28, 1997 are 1,300. There was one holder of the
Company's Class B Common Stock. In addition, there was one holder of the
Company's Series A Preferred Stock and 4 holders of the Company's Series B
62
<PAGE> 68
Preferred stock. The Series A Preferred, Class B Common and Series B Preferred
were all extinguished pursuant to the Plan.
The Plan of Reorganization materially changes the Company's
capitalization. See EXHIBIT (2)B.
DIVIDENDS
The Company has never paid cash dividends on any class of stock and has
no plans to do so in the foreseeable future. The payment of cash dividends by
the Company on the Company's Common Stock will continue to be restricted and
otherwise limited due to the Company's need to finance its on-going operations
and future growth.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
PLAN OF OPERATIONS
The Company has an asset base which includes several electric power
generating units (currently not in service and with a net book value of
$5,700,000), unencumbered by debt, from which the Company plans to develop
revenues and earnings. Management plans to deploy all of its idle power
generating assets in one or more projects which are currently under review. If
the Company is unable to sell or deploy these generating units there may be a
material negative impact on the financial position of the Company (See "Risk
Factors").
During the year ended February 28, 1997, financial liquidity for
on-going operations was provided primarily from the sale of Preferred Stock and
Class A Common Stock. Management fees received from San Jacinto Power Company
and cash liquidity resulting from the operation of Herth Printing and Business
Supply.
During the year ended February 29, 1996, financial liquidity for
on-going operations was provided primarily from sale of the Company's interest
in the Brady Power Project, sales of Class A Common Stock through private
placement and cash distributions and management fees received from San Jacinto
Power Company. Additionally, an increase in cash liquidity resulted from the
acquisition by merger of Herth Printing and Business Supplies, Inc.
Cash used in operating activities in the fiscal year ended February 28,
1997 was $2,727,396.
Cash used in operating activities in the fiscal year ended February 29,
1996 was $501,757. The after-tax loss from operations was $628,638, which
included $66,375 of non-cash charges for depreciation and amortization and
$462,527 in non-cash provisions for obsolescence on idle power generation
equipment.
Investing activities used $1,325,907 in cash in fiscal year ending
February 28, 1997.
63
<PAGE> 69
Investing activities provided $504,944 in cash in fiscal year ending
February 29, 1996, including asset sale proceeds of $585,512, proceeds of
$25,000 forfeited by a purchaser of certain wind power generating equipment from
SJPC and net of purchases of new equipment of $35,130 and advances to and
investments in partnerships.
Cash flow from financing activities in fiscal year ending February 28,
1997 provided net cash of $4,031,682.
Cash flow from financing activities in fiscal year ending February 29,
1996 provided net cash of $91,171, with receipts from cash sales of stock
totaling $149,752. Net proceeds from new financing borrowings were $41,182 and
related to insurance premium financing. Repayments on financing debt totaled
$99,763.
Investing activities provided $67,554 in cash in fiscal year ending
February 28, 1996, including asset purchases of $156,398 and asset sales
proceeds of $232,656.
As a result of the settlement with Nevada Energy Partners, the
allocation of taxable gains and losses was allocated 99% to the Company (as
general partner) and 1% to the limited partner, however, cash distributions were
allocated 60% to the General Partner and 40% to the limited partner. When tax
returns are filed, it is anticipated that the Company will incur taxable income
for calendar years 1995, 1996, 1997. It is management's opinion that the
Company's net operating losses will offset or reduce the tax impact of the
Nevada Energy Partners partnership. There is no assurance or guarantee that the
net operating losses remain valid or have not been adversely affected as a
result of the Internal Revenue Code.
RISK FACTORS
Historically, the Company has been unable to finance operations from
revenues and cash flow. The Company has been financing operations from the sale
of its Class A Common Stock, asset sales, litigation recoveries and management
fees. If such financing should not be available, for any reason, there would be
a material adverse effect on the 12 month operations of the Company.
Since the Company maintains a holding company structure, the Company
does not intend to enter into direct purchases of capital equipment at the
parent company level in order to complete the deployment of its idle power
equipment in any proposed project. However, any capital expenditures required
for project development will be completed at the subsidiary level and will most
likely require equity, debt or project financing for which the Company will need
to seek additional funding.
The Company seeks to evaluate, from time to time, prospective
acquisitions in the telecommunication industry. If such an acquisition were to
occur and the Company were to suffer a material negative event, the Company's
financial performance could be adversely and materially impacted. Significant
acquisitions outside the Company's primary energy business may have the effect
of reducing or eliminating certain tax benefits associated with prior net
operating losses, as well
64
<PAGE> 70
as negative financial impacts associated with possible accruals of goodwill and
potential increased depreciation charges against earnings.
Presently, there are no plans for product research and development at
the parent company level over the coming twelve (12) months.
The Company maintains offices at 321 W. Lake Lansing Rd., Asher Court,
Suite 100, E. Lansing, MI 48823. The telephone number is (517) 333-5277 and the
fax number is (517) 333-9869.
LIQUIDITY AND CAPITAL RESOURCES
Due to working capital constraints encountered during the course of the
fiscal year ended 1997, the Company has not yet met its goal of covering all of
its operational costs with internally generated cash flows.
As of February 28, 1997, the Company had $557,062 in current assets.
Cash was $110,622 and trade receivables of approximately $407,000 were available
for ongoing operations. Prepaids were $2,072.
To date, the Company's ownership stake in NEP had provided no recurring
equity returns, primarily due to costs associated with certain credit
enhancements and loan guarantee costs provided by ESI Energy, Inc. and NEP's
continuing litigation with HSP. During the year ending February 29, 1996, the
Company had received through NEP $508,018 in cash from the sale of NEP's
interest in the Brady Power Project (held by NEP through its 50% interest in
NGPP), plus an additional gain of $77,493 from NEP as a result of the above
referenced sale, and additional gains resulting from the settlement agreement
between NEP, NEPC and the Company.
The Company expects no further income from NEP and effective September
1, 1996, the Company disposed of its interest in NEP through a reacquisition of
the general partners interest in the Class B Common Shares held by NEP. The
August 16, 1996 Agreement was rescinded pursuant to a settlement reached and
deemed effective on December 1, 1997. (For the detailed discussion see the Legal
Proceedings Section, Nevada Energy Partners I - LP Litigation.)
As a result of the difficulties caused by the change in control which
was initiated on May 1, 1996, the Company has not timely met its debt
obligations during the year ending February 28, 1997. As a result, its creditors
initiated an involuntary Chapter 11 proceeding under which the Company is now
operating.
Currently, the majority of the Company's ongoing expenses are for
auditing fees, legal fees, trustee fees and consulting services.
65
<PAGE> 71
DEBT
At fiscal year end February 28, 1997, the Company's total actual liabilities
were $6,766,321.47. The liabilities subject to compromise represent the
long-term settlement amount for withholding taxes, related penalties and
interest due to the Internal Revenue Service, less payments made to date and
other amounts due creditors upon which settlement has not been agreed.
RESULTS OF OPERATIONS
GENERAL COMMENTS
- ----------------
The Company has, during fiscal year 1997 undergone a severe financial
crisis as a result of the now aborted change in control which took place early
in the fiscal year. As a result the Company was unable to look for and bid upon
opportunities to deploy its current core of idle power generating equipment. The
Company had previously sought to deploy the power generation plants and
equipment where little resource development risk was Present. Development
opportunities in the Philippines, the Caribbean and Central America had been
evaluated from the standpoint of seeking least risk opportunities. More
specifically, the Company had sought to either acquire a fully developed
geothermal resource or a fully developed geothermal plant to which its assets
could be deployed with reduced risk. These efforts were set aside this period.
New management expects to re-explore these opportunities with new vigor and
resolve.
REVENUES AND EXPENSES
As a result of the disposition of one of its two operating assets, the
print and office supply businesses held by Combustion Energy Company, the
Company's reported revenues for 1997 have been adjusted to eliminate the
previously reported power sales.
The Company had interest income of $8,198.00 and interest expense of
$19,767.00 for the fiscal year ending February 29, 1996.
Other income in the year ended February 29, 1996 included $585,299
received from Nevada Energy Partners I, Limited Partnership ("NEP") as a result
of the sale of its interest in the Brady Power Project and $25,000 from a
non-refundable deposit retained by SJPC in connection with the proposed sale of
some of its wind power generating equipment. Interest income was $8,198,
representing earnings on funds invested in money market accounts. Other income
was principally from scrap sales. Loss from partnership interests of $46,015
resulted from advances to NEP primarily to fund NEP's litigation with HSP,
NGPP's managing partner, relating to internal NGPP partnership disputes interest
expense of $19,767 related to insurance premium financing, the Herth mortgage
note and the settlement proceeds payable to the IRS.
66
<PAGE> 72
COSTS AND EXPENSES COMPARISON OF 1997 AND 1996
Costs and expenses of operations for fiscal year 1997 were $2,789,229
compared to $2,897,988 in fiscal year 1996.
Depreciation expense was $112,913 in 1997, versus $65,929 in fiscal
year 1996. Fiscal year 1996 included provisions for obsolescence on idle
company electric power generation equipment. These assets are carried at the
lower of cost, net of accumulated obsolescence charges, of $2.7 million, or
estimated appraised value as of February 28, 1997. An independent appraisal
completed in May of 1996 placed a value of $5,700,000 on these assets
and the obsolescence charges for 1997 included $83,288 of additional charges to
adjust the net value of the Ormat units to the fair market appraisal value.
Professional fees for fiscal year 1997 included $409,914 for general
legal expenses, accounting and audit fees of $40,501.75.
Professional fees for fiscal year 1996 were $372,148 (including
$109,426 for general legal expenses), accounting and audit fees of $67,995,
financial consulting services of $180,000 (principally related to a
non-competition agreement with the former owner of Smith Wind), other outside
professional services of $14,723 (including professional appraisal costs of
$9,500), engineering fees related to project development of $5,223, public
relations consulting fees of $21,000 and $25,722 in various other services.
General and administrative expenses for fiscal year ending February 29,
1996 were $758,015. This included $361,245 in salaries, wages and related
payroll taxes, $117,644 for public and shareholder relations, $182,521 in
general office expenses, $85,602 in directors fees and expenses, $23,313 in
travel and related expenses, a credit of $12,866 for various taxes and fees and
$555 for miscellaneous office expenses.
INCOME TAXES
The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standard No. 109, "Accounting for Income Taxes", which
requires tax computations different from those currently used by the Company.
The Company adopted this Statement in fiscal year 1994. The Company believes
that the adoption of this Statement will not have an impact on future financial
statements.
As of February 28, 1997, the Company had Federal income tax loss
carryforwards available to offset future taxable income for financial reporting
and tax purposes of $5,006,777 expiring in 2006 through 2010. There is no
assurance that the issue tax carryforwards have not been adversely affected due
to the Internal Revenue Code.
The Company has no remaining energy credit carryforwards as of
February 28, 1997.
67
<PAGE> 73
There can be no assurance that the available tax loss carryforwards
will be utilized by the Company or that such tax loss carryforwards will be
allowed by the Internal Revenue Service.
NET INCOME (LOSS)
The total operating loss for fiscal year 1997 was $1,335,049. The
operating loss for fiscal year 1996 was $628,638.
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements are filed to provide financial
information for the fiscal years ending February 29, 1996 and February 28, 1997.
Consolidated Balance Sheets as of February 28, 1997.
Consolidated Statements of Operations for the Years ended February 28,
1997, and February 29, 1996.
Consolidated Statements of Cash Flows for the Years ended February 28,
1997, and February 29, 1996.
Consolidated Statements of Shareholders' Equity for the Years ended
February 28, 1997, and February 29, 1996.
Notes To Consolidated Financial Statements.
The financial statements for the fiscal year ending February 29, 1996
have been audited. The financial statements for the fiscal year ending February
28, 1997 are unaudited.
68
<PAGE> 74
WORLDCALL CORPORATION
CONSOLIDATED BALANCE SHEET
February 28, 1997
(UNAUDITED)
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
Cash $ 110,622
Receivables (net of allowance for doubtful
accounts of $0) 407,291
Inventory
Deposits and prepaid expenses 37,077
Total Current Assets 577,062
PROPERTY AND EQUIPMENT, at cost - Note 1
Net Property and Equipment 6,740,365
OTHER ASSETS - Note 2
Investments in partnerships 2,975
Investments in subsidiaries 1,077,203
Other assets 1,080,178
----------
Total Assets $8,377,605
==========
</TABLE>
The accompanying notes are an integral of these consolidated statements.
69
<PAGE> 75
WORLDCALL CORPORATION
February 28, 1997
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
CURRENT LIABILITIES
Accounts payable $ 808,673
Short-term borrowing - Note 3 $ 278,053
Payable to related - Note 4 -
Accrued payroll -
Other liabilities $ 61,848
------------
Total Current Liabilities $ 1,148,574
------------
NON-CURRENT LIABILITIES
Mortgage payable - Note 3 $ 27,000
------------
Total Non-Current Liabilities $ 27,000
------------
COMMITMENTS AND CONTINGENT
LIABILITIES - Note 10 and Note 11 ------------
Total Liabilities $ 1,175,574
------------
MINORITY INTEREST IN SUBSIDIARY - Note 2 $ 673,073
------------
SHAREHOLDERS' EQUITY - Notes 1, 5, 6, and 7
Preferred stock, $.001 par value;
authorized 2,000,000 shares, issued
and outstanding February 28, 1997,
Series A,1,198,281 shares -
Series B, 5 shares -
Class A common stock, $.001 par value;
authorized 50,000,000 shares, issued
and outstanding 15,808,710 shares at
February 28, 1997
Class B common stock, $.001 par value;
authorized 50,000,000 shares, issued
and outstanding 4,437,473 shares at
February 28, 1997 4,071
Class C common stock, $.001 par value;
authorized 50,000,000 shares, issued
and outstanding at February 28, 1997,
none -
Additional paid-in capital $ 15,408,967
Accumulated deficit ($8,883,900)
Treasury stock, Class A,16,785 shares
at February 28, 1997; Class B,
16,785 shares at February 28,1997 (9,101)
------------
Total Shareholders' Equity $ 6,528,958
------------
Total Liabilities and
Shareholders' Equity $ 8,377,605
------------
</TABLE>
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<PAGE> 76
POWERTEL USA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED February 28, 1997 and February 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 29,
1997 1996
----------- -----------
<S> <C> <C>
REVENUES $ 1,452,867 $ 1,697,258
COSTS AND EXPENSES - Note 11
Cost of operations $ 1,009,163 543,149
Depreciation and amortization $ 112,913
- Note 1 66,375
Provision for obsolescence - Note 1 - 462,527
Professional fees 372,148
General and administrative $ 1,652,052 758,015
----------- -----------
Total Costs and Expenses $ 2,774,128 2,897,988
----------- -----------
OTHER INCOME AND (EXPENSES)
Interest income $ 1,313 8,198
Other income - 24,130
Gain on disposition of assets (1,783,300) 610,299
Loss from partnership interests - (46,015)
Interest expense (26,584) (19,767)
----------- -----------
Total Other Income and (Expenses) (1,808,571) 576,845
----------- -----------
(Loss) before Taxes (3,129,832) -
Provision for Income Taxes - Note 8 0 933
----------- -----------
Net (Loss) $(3,129,832) $(1,770,654)
=========== ===========
Net (Loss) Per Share-Notes 1 and 6 $ (0.07) $ (0.03)
=========== ===========
</TABLE>
The accompanying notes are an integral of these consolidated statements.
71
<PAGE> 77
POWERTEL USA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED February 28, 1997 AND February 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 29,
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $(3,129,832) $ (628,638)
Adjustments to reconcile:
Depreciation and amortization 115,410 66,375
Reserve for obsolescence - 462,527
(Gain) on disposition of
Assets, net - (610,299)
Equity in loss from partnership
interests - 46,015
Stock issued to
directors/officers/employee - 18,362
Stock issued for services - 50,000
Minority interest in subsidiary's
earnings and (losses) (32,357) (67,802)
Changes in assets and liabilities:
(Increase) decrease in receivables (270,017) 111,126
Decrease in receivables from
related - 37,500
(Increase) decrease in inventory (1,702) (10,312)
(Increase) decrease in deposits
and prepaids $ 114,549 6,437
Decrease in other assets - 10,035
Increase in accounts payable $ 621,218 42,314
Increase (decrease) in accounts
payable to related (37,965) (20,156)
Increase (decrease) in
other liabilities (63,493) 26,532
(Decrease) in liabilities subject
to compromise (43,207) (41,773)
----------- -----------
Net Cash Provided (Used) in
Operating Activities $(2,727,396) $ (501,757)
----------- -----------
</TABLE>
72
<PAGE> 78
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 29,
1997 1996
-------- --------
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property
and equipment - 585,512
Forfeited non-refundable deposit on
offer - 25,000
Purchase of property and equipment (323,149) (35,130)
Advances to and investments in
partnerships (2,731) (70,438)
-------- --------
Net Cash Provided (Used) in
Investing Activities (325,880) 504,944
-------- --------
</TABLE>
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<PAGE> 79
POWERTEL USA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED February 28, 1997 AND February 29, 1996
<TABLE>
<CAPTION>
FEBRUARY 28, FEBRUARY 29,
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on financing (99,763)
Proceeds from new financing 247,324 41,182
Proceeds from cash sales of
common stock 3,777,358 149,752
Contribution from (payment to)
minority interest 7,000 -
Cash dividends - Note 10 - -
----------- -----------
Net Cash Provided (Used) in
Financing Activities 4,031,682 91,171
----------- -----------
Net Increase (Decrease) in Cash (21,621) 94,358
CASH, Beginning of Year 132,243 37,885
----------- -----------
CASH, End of Year $ 110,622 $ 132,243
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid - Note 12 $(unknown) $ 19,737
----------- -----------
----------- -----------
Taxes paid through payments on liabilities
subject to compromise - Note 12 $(unknown) $ 41,773
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral of these consolidated statements.
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<PAGE> 80
POWERTEL USA, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED February 28, 1997 AND February 29, 1996
<TABLE>
<CAPTION>
CLASS A COMMON CLASS B COMMON PREFERRED STOCK
----------------------------------- -------------------- -----------------------
NUMBER NUMBER NUMBER
OF OF OF
SHARES AMOUNT SUBSCRIBED SHARES AMOUNT SHARES AMOUNT
----------- -------- ---------- ---------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES, February 28, 1995 5,558,798 $ 5,559 $ - 3,476,875 $3,477 - $ -
Shares issued for cash - Note 6 442,867 443 - - - - -
Shares issued for services - Note 6 612,573 612 - - - - -
Shares issued for asset
acquisition - Notes 2 and 6 - - - - - - -
Stock dividends at market
value - Note 6 895,243 895 - 548,043 548 - -
Transfer of surplus for stock
dividend - - - - - - -
Stock subscribed - Note 6 - - 250,000 - - - -
Cash dividend - Note 10 - - - - - - -
Net (loss) for the year ended
February 29, 1996 - - - - - - -
--------- ------- -------- --------- ------ -------- ------
BALANCES, February 29, 1996 7,509,481 7,509 250,000 4,024,918 4,025 - -
Shares issued for cash - Note 6 333,333 333 (250,000) - - - -
Shares issued for services - Note 6 145,842 146 - - - - -
Stock dividends at market
value - Note 6 819,829 820 - 412,555 412 - -
Transfer of surplus for stock
dividend - - - - - - -
Net (loss) for the year ended
February 28, 1997 - - - - - - -
--------- ------- -------- --------- ------ -------- ------
8,808,485 $ 8,808 $ - 4,437,473 $4,437 - $ -
--------- ------- -------- --------- ------ -------- ------
--------- ------- -------- --------- ------ -------- ------
</TABLE>
75
<PAGE> 81
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
PAID-IN ACCUMULATED TREASURY SHAREHOLDERS'
CAPITAL DEFICIT STOCK EQUITY
----------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
BALANCES, February 28, 1995 $10,060,347 $(3,252,174) $(230,789) $6,586,420
Shares issued for cash - Note 6 273,930 - - 274,373
Shares issued for services - Note 6 971,818 - - 972,430
Shares issued for asset
acquisition - Notes 2 and 6 - - 222,267 222,267
Stock dividends at market
value - Note 6 1,057,940 (1,059,383) (331) (331)
Transfer of surplus for stock
dividend (1,059,383) 1,059,383 - -
Stock subscribed - Note 6 - - - 250,000
Cash dividend - Note 10 (90,213) - - (90,213)
Net (loss) for the year ended
February 29, 1996 - (1,770,654) - (1,770,654)
------------- ------------ --------- ------------
BALANCES, February 29, 1996 11,214,439 (5,022,828) (8,853) 6,444,292
Shares issued for cash - Note 6 247,331 - - (2,336)
Shares issued for services - Note 6 68,216 - - 68,362
Stock dividends at market
value - Note 6 802,321 (803,553) (248) (248)
Transfer of surplus for stock
dividend (803,553) 803,553 - -
Net (loss) for the year ended
February 28, 1997 - (628,638) - (628,638)
------------- ------------ --------- ------------
$11,528,754 $(5,651,466) $ (9,101) $5,881,432
------------- ------------ --------- ------------
------------- ------------ --------- ------------
</TABLE>
The accompanying notes are an integral of these consolidated statements.
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<PAGE> 82
PowerTel USA, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
February 28, 1997 AND February 29, 1996
NOTE 1 - Organization and Summary of Significant Accounting Policies:
PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiary Yerington Acquisition Company,
Inc., a Nevada corporation and Combustion Energy Company, a Nevada company.
ORGANIZATION AND OPERATIONS:
PowerTel USA, Inc. ("the Company") was organized on December 2, 1982,
and incorporated under the laws of Delaware on December 20, 1982, under the name
Munson Geothermal, Inc. Pursuant to an action of the Board of Directors, the
Company's name was changed to Nevada Energy Company, Inc. on December 3,
1990. Subsequently, the Company's name was changed to PowerTel USA, Inc. on
January 21, 1997. The Company is currently in Chapter 11 bankruptcy, operating
under an order for debtor-in-possession. The Company is preparing a plan of
re-organization. (SEE, PLAN OF RE-ORGANIZATION)
IDLE POWER GENERATION EQUIPMENT:
Idle power generation equipment includes ten Ormat power plants capable
of producing up to an estimated maximum 3,700 KW average output and the
relocated Raft River Power Plant with an estimated capacity of up to 7,200 KW of
output. Total net book value of these assets is $5,226,063. A May 1996 appraisal
of these assets determined the fair market value to be $5.7 million.
DEPRECIATION AND AMORTIZATION:
The Company provides for depreciation of furniture and office equipment
utilizing straight-line and accelerated methods over the useful lives of three
to seven years beginning when assets are placed in service.
Idle geothermal power generation equipment was adjusted to the lower of
cost or appraisal value at February 29, 1992. Subsequently, provisions for
obsolescence have been provided based on the remaining economic life estimated
to be eighteen years at that time. Based on the May 1996 appraisal, an
additional $83,288 of obsolescence was provided on the Ormat power plants
reducing their net book value to the then appraisal value of $2,700,000.
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<PAGE> 83
NET INCOME (LOSS) PER COMMON SHARE:
The net income (loss) per common share is computed based upon the
weighted average number of shares of Class A Common Stock outstanding during
each period. Shares issued as dividends (Notes 6 and 12) have been treated as
issued at February 28, 1993. Weighted average shares of Class A Common Stock
outstanding were 8,808,485 in the year ended February 28, 1997 and 1,463,451 in
the year ended February 29, 1996. Shares issuable upon exercise of warrants or
options are excluded from the computation since the effect of their inclusion
would be antidilutive. Shares of Class B Common Stock are excluded from the
computation since Class B shareholders do not participate in the earnings of the
Company.
BUSINESS SEGMENT INFORMATION
COMBUSTION ENERGY COMPANY
The Company formed a wholly-owned subsidiary, Combustion Energy
Company, Inc. ("CEC"), a Nevada corporation, on February 12, 1993 for the
purpose of being a general partner of Oreana Power Partners ("OPP") (See OREANA
POWER PARTNERS below). The Company is also a limited partner in OPP.
On November 30, 1994, the Company caused CEC to merge with Herth
Printing and Business Supplies, Inc. ("Herth"), in exchange for Class A Common
Stock of the Company. The Company, through its ownership of CEC, owned 100% of
the post-merger business and consolidated the financial results of CEC in its
reported results. In an agreement entered into on September 1, 1996, the Company
exchanged its interest in CEC, and thereby Herth, in a transaction which
included the reacquisition of all right, title and interest in the Company's
then outstanding Class B Common shares, which was later the subject of a
settlement agreement between NEP, NEPC and the Company (see NEP Settlement
Agreement).
SAN JACINTO POWER CORPORATION
San Jacinto Power Corporation, a Nevada Corporation, ("SJPC") was
formed on December 15, 1993. The Company contributed 222,267 shares of its Class
A Common Stock, valued at $222,267, based on 50% of market price at the time of
issue due to resale restrictions imposed pursuant to Rule 144, and total cash of
$275,055 in exchange for its 50.01% ownership interest in SJPC. The New World
Power Corporation ("New World") contributed 48,000 shares of its Common Stock,
with market value of $516,000 at time of issue, to SJPC. On February 10, 1994,
New World contributed cash of $149,970 to SJPC and delivered a balance of cash
of $124,975 on March 8, 1994. New World's contribution of Common Stock and cash
of $274,945 to SJPC were in exchange for its 49.99% ownership interest in SJPC.
The Company and New World subsequently engaged in negotiations to
acquire, and did acquire, the operating assets of Smith Wind Energy Company and
six affiliated limited partnerships know collectively as Triad. The purchase
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<PAGE> 84
price of $1,038,029 was equal to the agreed value of the shares plus assumed
liabilities totaling approximately $293,957 for long-term secured debt and
certain delinquent property taxes.
The total cost was allocated based on managements estimate of fair
market value of assets acquired, except for prepaid BLM rent which was valued at
cost, as follows:
<TABLE>
<S> <C>
Field Equipment $ 21,177
Prepaid BLM Rent 46,892
Power Sales Contract 52,500
Power Generation Equipment 917,460
----------
Total $1,038,029
----------
</TABLE>
The Company managed the operations of San Jacinto Power Corporation
and the wind farm until June 27, 1997. On June 27, 1997 the sale of the
Company's 50.01% interest in its consolidated subsidiary, San Jacinto Power
Corporation, was completed by the court appointed bankruptcy trustee. The
Company's interest, represented by 50,010 shares of common stock, was sold at
bid for $200,000 cash. The successful bidder, SeaWest Corporation of San Diego,
CA also agreed to pay all outstanding debts of San Jacinto Power Corporation,
estimated in excess of $175,000.
In its most recently filed financial report, the 10-QSB for the quarter
ended November 30, 1996, the Company had reported consolidated San Jacinto Power
Company assets of approximately $1,105,986, consolidated liabilities of
approximately $159,287 and minority interest of $632,720. The transaction will
result in a reported net loss of approximately $113,979.
At the time of the sale, San Jacinto Power Corporation ("SJPC") was
one of two operating properties held by the Company. SJPC is not included in
the current financial statements.
MT. APO CORPORATION
Mount Apo Corporation, a Nevada corporation ("MAC") was formed on May
9, 1994. MAC is a joint venture of NEC and Geothermal Development Associates and
was formed for the purpose of submitting a competitive bid on a 40 MWe
geothermal project in the Philippines. The bid was unsuccessful. The Company's
investment in MAC is carried at cost of $590.
BRADY GEO PARK POWER PROJECT, 1986, LTD.
The Company's investment in Brady Geo Park Power Project, 1986, Ltd.,
("BGPPP") including note and related interest receivable and advances for
property taxes were written down to a combined book value substantially equal to
the appraised value of the Ormat energy converter interests held by the
partnership. Except for the residual partnership interest, the Company
transferred all of its interest in the assets of BGPPP to its wholly owned
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<PAGE> 85
subsidiary effective December 1, 1995. (See Note 2, YERINGTON ACQUISITION
COMPANY.) The Company has classified this asset as Idle Power Generation
Equipment in the accompanying consolidated balance sheet.
NEVADA ENERGY PARTNERS - I
In February 1991, the Company received a 60% interest as a limited
partner in Nevada Energy Partners 1, a Nevada limited partnership (NEP-I, LP),
which holds a 31.66% interest in the equity of Nevada Geothermal Power Partners
("NGPP"). NGPP is a Nevada limited partnership whose general partners are Hot
Springs Power Company and NEP-I LP. The Company issued a total of 3,476,875
shares of Class B Common Shares for this interest. The shares were valued at par
of $0.001 per share as there is no market for these shares and there was no
other basis for valuing the interest acquired. An additional 548,043 shares were
issued to NEP-I LP in conjunction with the Company's 5% stock dividends made in
July and October 1994 and January 1995. Class B Common Shares have full voting
rights, but have no cash dividend participation. In a transaction completed on
September 1, 1996, the Company exchanged its interest in NEP-I LP together with
its interest in Combustion Energy Company, Inc. (a previously wholly owned
subsidiary) for all right title and interest in the Company's Class B Common
Shares held by NEP-I, LP. Pursuant to a settlement agreement entered into
December 1, 1997, the 99% of all NEP gains resulting from the sale of NGPP's
interests in BPP from 1995 to date were allocated to the Company, together with
all outstanding Class B Common Stock and Class B Common Stock rights to future
issuances, in consideration of the Company's issuance of new common shares
pursuant to the Company's Plan of Reorganization.
The Company's interest in NEP-I LP was valued at $3,080 based on the
par value of the shares issued, less amounts recorded as treasury stock due to
the Company's then effective ownership of 60% of the Class B Shares held by
NEP-I LP, plus subsequent cash investments, less estimated partnership losses.
As a general partner of NGPP, NEP-I LP had been entitled to a share in
NGPP's distributable cash flow. As a general partner in Brady Power Partners
("BPP"), NGPP held a fifty percent (50%) ownership interest in the completed
Brady project and was also entitled to receive project development fees and a
share of BPP's distributable cash flow. BPP was a Nevada general partnership
whose general partners were NGPP and ESIBH Limited Partnership, a Delaware
limited partnership. The Company had been entitled to receive sixty percent
(60%) of NEP-I LP's distributable cash flow. There has been no cash available
for distribution through February 28, 1997.
On May 8, 1995, NGPP sold its 50% interest in the Brady Power Project
for approximately $5.5 million dollars. NGPP has received net cash distributions
of approximately $4.3 million dollars. The Company received $508,018 in July
1995 as a return of its share of the distribution of theses proceeds. The
balance due of $77,493 was recorded as a receivable. However, the receivable
has subsequently been charged to bad debts as it is believed to be
uncollectible. As a result of the Settlement Agreement with NEP, the Company
has adjusted its gains upward to reflect the assumption of 99% of all gains
from NEP, from January 1, 1995 to the present.
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<PAGE> 86
OREANA POWER PARTNERS
Oreana Power Partner ("OPP") is a limited partnership which was formed
in February 1993 for the purpose of developing and financing gas turbine
electricity generating facilities to provide power to Sierra Pacific Power
Company ("Sierra") pursuant to power sales contracts to be obtained. The Company
is a limited partner and its interest is valued at $46 based on its initial cash
investment, less expenses and returned capital. The general partners of OPP are
Energy Development Associates ("EDA", a Nevada corporation and a wholly-owned
subsidiary of Geothermal Development Associates) and CEC, a wholly-owned
subsidiary of the Company. EDA is the Managing General Partner and CEC is the
Financial General Partner. Geothermal Development Associates is a privately
owned Nevada company, not related to the Company. This company has been
dissolved.
YERINGTON ACQUISITION COMPANY, INC.
Yerington Acquisition Company, Inc. ("YAC"), a Nevada corporation was
formed on December 8, 1994 for the purpose of acquiring the assets of Tad's
Geothermal, a non-related owner/operator of a geothermal power generating
facility located near Yerington, Nevada. The acquisition was not completed. In
December 1995, the Company transferred all of its right title and interest in 10
Ormat power generating units (classified as idle power generating equipment in
the financial statements) to YAC. In April 1995, the Company entered into an
agreement through a non-binding letter of intent, to transfer, through merger
with YAC, to Pollution Controls International, all of its right title and
interest in the 10 Ormat units together with any remaining interest in acquiring
the assets of Tad's. Aggregate consideration to be received by the Company, in
the form of convertible preferred stock and convertible debt would exceed the
net book value of the assets.
CENTRAL COMMUNICATIONS CORPORATION
Central Communications Corporation ("CCC"), a Nevada corporation, was
formed for the purpose of acquiring interests in the telecommunications
business. On May 21, 1996, the Company announced that it had signed a binding
letter of intent to acquire, through CCC, all of the outstanding shares of
Telecom Technologies, Inc. ("TTI"), an Oregon corporation, and certain other
related assets. The terms of the acquisition provided for the payment of
$500,000 in cash and issuance of 2,000,000 Class A Common Shares. The Company
advanced to CCC $492,000 in cash in the quarter ended August 31, 1996 in
anticipation of the completion of the acquisition. The acquisition was completed
on June 21, 1996, however, it was subsequently reversed. Certain shareholders
have filed an action in Delaware in an attempt to recover some or all of the
Company's investment. There is no assurance that such recovery will occur.
NOTE 3 - Short-Term Borrowings and Mortgage Payable:
There is no short-term borrowing as of February 28, 1997. The Company's
subsidiary, Combustion Energy Company, which operates as Herth Printing and
Business Supply, has long term
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<PAGE> 87
debt (8 years) on the purchase of a printing press in May, 1996. Monthly
payments are $4,218 with an interest rate of 9.75%.
NOTE 4 - Related Transactions:
During the year ended February 29, 1996, San Jacinto Power Corporation
(then the Company's majority owned consolidated subsidiary) received services
under a maintenance agreement from The New World Grid Power Company. The New
World Grid Power Company is a wholly owned subsidiary of The New World Power
Company, the minority owner of San Jacinto Power Corporation. Services provided
included repair and maintenance, refurbishment and on-site operations oversight
and were valued at approximately $296,511. A balance of $37,965 was payable to
the New World Grid Power Company for the services as of February 28, 1997.
NOTE 5 - Preferred Stock:
On December 14, 1985, the stockholders of the Company authorized the
creation of 2,000,000 shares of $1.00 par value preferred stock. The Board of
Directors has the authority to issue the stock in series and to determine all
terms and preferences for each individual series. At the annual meeting, the
Company's shareholders approved an amendment of the Company's Certificate of
Incorporation reducing the par value of the preferred stock to $.001 per share.
On May 1, 1996, the Company entered into an agreement providing for the
issuance of 1,960,745 Series A Preferred Shares at $2.50 per share to Golden
Chance Limited ("Golden Chance"), an Isle of Man private company limited by
shares. The terms of the Series A Preferred Shares provide that no dividends of
any kind or nature shall be paid or declared. Series A Preferred Shares have a
right to convert to the Company's Class A Common Shares. Liquidation preference
rights of Series A Preferred Shares are limited to the par value of $.001 per
outstanding share. Voting rights for each Series A Preferred Share are equal to
all classes of common stock. The Company accepted a note in the amount of
$4,899,988 payable over a one year period as consideration for issuance of the
Series A Preferred Shares. The present value of this note has been offset
against paid-in equity in the accompanying financial statements. The Series A
Preferred Shares are to be held in escrow until payment is received. Golden
Chance retains the right to vote the escrowed shares. On May 1, 1996, the
Company also entered into an agreement providing for the issuance of 5 Series B
Preferred Shares at $2.50 per share to four of the five directors of the
Company. Terms of the Series B Preferred Shares provide that no dividends of any
kind or nature shall be paid or declared. Series B Preferred Shares have a right
to convert to the Company's class A Common Shares. Liquidation preference rights
of Series B Preferred Shares are limited to the par value of $.001 per
outstanding share. Holders of Series B Preferred Shares have the right to
appoint a temporary director in the event that Golden Chance defaults in the
payment of the first $500,000 on its purchase of Series A Preferred Shares.
Alleged payments totaling $1,320,745, net of related expenses for the
Series A Preferred Shares, had been received as of February 28, 1997 and under
the terms of the agreement 762,464 preferred shares had been converted to
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<PAGE> 88
4,847,844 Class A Common Shares. The balance of the shares were converted to
Class A Common Stock on the instruction of the Board of Directors. The payment
of the $1,960,745 is alleged to have been fraudulent.
At February 28, 1997, there were 16,058,715 Series A and 5 Series B
Preferred Shares issued and outstanding.
NOTE 6 - Class A and Class B Common Stock:
The Company issued 222,267 shares of Class A Common Stock to its
subsidiary San Jacinto Power Corporation to be used by San Jacinto in the
acquisition of certain Assets (see Note 2). The shares were valued at $222,267
and were recorded as treasury shares at February 28, 1994 as the proposed
acquisition had not been consummated at that time. Upon consummation of the
acquisition in June 1994, the shares were removed from treasury and issued.
In the year ended February 28, 1997, 333,333 shares of Class A Common
Stock were issued for cash in the amount of $250,000, and 145,842 shares of
Class A Common Stock were issued for services valued at $68,216, including
106,670 shares issued to directors in lieu of cash for annual fees and 39,172
shares issued to officers and an employee as bonuses.
In the year ended February 29, 1996, 442,867 shares of Class A Common
Stock were issued for cash in the amount of $274,373, and 612,573 shares of
Class A Common Stock were issued for services valued at $972,430, including
27,500 shares issued to directors in lieu of cash for annual fees and 18,230
shares issued to officers and an employee as bonuses.
Included in the shares issued for services on December 27, 1994, the
Company issued 500,000 shares of its Class A Common Stock registered under the
Form S-8 filed August 2, 1994, and having Registration No. 33-82318. The shares
were valued at $1.75 per share based upon the closing NASDAQ price of the
Company's common stock on June 24, 1994. These shares were for services provided
under an agreement dated June 27, 1994, and were later substantially voided
pursuant to the order of the Federal Bankruptcy Court entered September 15,1998.
In conjunction with its acquisition of Herth Printing and Business
Supply, the Company issued 641,784 shares of its Class A Common Stock during
the year ending February 29, 1996, in exchange for all of the outstanding
shares of HPBS. The Company's shares were valued at $.6582 per share based on
the value of the net assets acquired. These shares were treated as if issued on
February 28, 1993. The Company subsequently disposed of its interest in Herth
Printing and Business Supply in a transaction completed on September 1, 1996.
On February 16, 1995, the Company entered into an agreement for the
sale of 333,333 shares of restricted Class A Common Stock at a price of $0.75
per share for a total sale price of $250,000. Payment of $100,000 was received
prior to February 29, 1996, with the balance being received subsequent to that
date (Note 12).
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<PAGE> 89
On December 20, 1994, the Company entered into two (2) irrevocable
subscription agreements for the sale of 500,000 Class A Common shares at a
purchase price of $2.00 per share. The agreements, which provided for payment
within 60 days of the execution, were extended to September 20, 1995. The
subscribers subsequently failed to fulfill their obligation under the agreement.
In the year ending February 28, 1995, stock dividends of 5% on Class A
and Class B Common Stock were declared for shareholders of record as of July 11,
1994, October 3, 1994, and January 20, 1995. The aggregate shares issued are
895,243 Class A and 548,043 Class B, respectively.
The Company filed an S-3 (SEC File No. 333-7513) for the registration
of 9,194,282 shares of Class A Common Stock on July 26, 1996. The purpose of the
registration was for shares that had been previously purchased under private
placements over the preceding two years and to cover shares to be issued in
conjunction with the acquisition of TTI (Note 1, Central Communications
Corporation) and shares to be issued in conversion of Series A Preferred Shares
to be acquired by Golden Chance (Note 5, Preferred Stock). A total of 7,152,381
net new shares were issued under this registration.
The Company filed an S-8 registration (Number 333-18621) with the
Securities and Exchange Commission on December 23, 1996, which provided for the
issuance of up to 3,000,000 shares of Class A Common Stock pursuant to the
Company's informal consulting/compensation plan. Subsequently, at the
instruction of the Board of Directors, and after the implementation of the
one-for-six reverse split applied to shares outstanding at January 21, 1997,
the full number of shares were issued on an unrestricted basis.
In the year ending February 29, 1996, stock dividends of 5% on Class A
and Class B Common Stock were declared for shareholders of record as of April
20, 1995 and July 31, 1995. The aggregate shares issued are 819,829 Class A and
411,555 Class B, respectively.
Each share of Class B Common Stock is entitled to all of the rights and
privileges pertaining to Class A Common Stock without any limitations,
prohibitions, restrictions or qualifications except that each share of such
Class B Common Stock shall not be entitled to receive any cash dividends
declared and paid by the corporation and shall be entitled to share in the
distribution of assets of the corporation upon liquidation or dissolution,
either partial or final.
NOTE 7 - Stock Option Plans:
On December 29, 1993, the Company adopted the 1993 Directors' Stock
Option Plan for the Company's directors. Under the terms of this stock option
plan, each of the five directors of the Company was granted an option to
purchase 25,000 shares of the Company's Class A Common Stock or a total of
125,000 shares at a price of $2 per share, equal to the market price of the
stock at the date of grant. The option is exercisable until December 31, 2001.
No options have been exercised through February 28, 1995.
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<PAGE> 90
On June 27, 1994, the Company adopted the 1994 Directors' Stock Option
Plan for the Company's directors. Under the terms of this stock option plan,
each of the five directors of the Company was granted an option to purchase
12,500 shares of the Company's Class A Common Stock or a total of 62,500 shares
at a price of $1.625 per share, equal to the market price of the stock at the
date of grant. The option is exercisable until May 31, 2002. No options have
been exercised through February 29, 1996.
On January 14, 1995, the Company adopted an additional 1994 Directors'
Stock Option Plan for the Company's directors. Under the terms of this stock
option plan, each of the five directors of the Company was granted an option to
purchase 17,500 shares of the Company's Class A Common Stock or a total of
87,500 shares at a price of $0.9375 per share, equal to the market price of the
stock at the date of grant. The option is exercisable until December 31, 2002.
No options have been exercised through February 28, 1995.
On December 31, 1995, the Company adopted an additional 1994 Directors'
Stock Option Plan for the Company's directors. Under the terms of this stock
option plan, each of the five directors of the Company was granted an option to
purchase 30,000 shares of the Company's Class A Common Stock or a total of
150,000 shares at a price of $0.3125 per share, equal to the market price of the
stock at the date of grant. The option is exercisable until December 31, 2003.
No options have been exercised through February 28, 1997.
On June 28, 1994, the Company's Board of Directors adopted an Employee
and Consultant Stock Option Plan (the "Plan") and registered the shares
available under the Plan on Form S-8 in accordance with the Securities Act of
1933 filed August 2, 1994, having Registration No. 33-82318. The purpose of the
Plan is to provide compensation for services rendered to the Company and to
promote the success of the Company by providing "Eligible participants"
(employees and consultants) with incentives for performance on behalf of the
Company. The Plan is accomplished by providing for the granting of options to
purchase Class A Common Stock to eligible participants. The Board of Directors
may suspend or terminate the Plan at any time, but no such action shall
adversely affect the rights of any person granted an option under the Plan
prior to that date of suspension or termination. The maximum number of shares
available for option under the Plan are 1,125,000 Class A Common, subject to
adjustment by reason of reorganization, merger, consolidation,
recapitalization, dividends, stock split, changes in par value and the like
occurring or effective while any such shares of Class A Common Stock are
subject to the options under the Plan. During 1995, 500,000 shares were
exercised at a price of $1.75 per share. There were no options outstanding as
of February 29, 1996 under this Plan. This plan was voided pursuant to the
order of the Federal Bankruptcy Court entered September 15, 1998.
NOTE 8 - Income Taxes:
The Company adopted FASB 109 in the fiscal year 1994. Due to
uncertainty of realization in light of the Company's continuing operating
losses, no deferred tax asset has been recorded in the financial statements
because the Company has assessed a valuation account to the full
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extent of its potential deferred tax asset. The following is a summary of the
potential deferred tax asset and the valuation allowance:
<TABLE>
<S> <C>
Property and equipment due to differences
in depreciation and reserve for obsolescence $ 809,795
Net operating loss carry forward 2,637,611
Energy credit carry forward -
-----------
Total deferred tax asset 3,443,406
Valuation allowance (3,443,406)
-----------
Net deferred tax asset $ -
===========
</TABLE>
During the year ended February 28, 1997, the Company's potential
deferred tax asset has increased by $890,665 and the valuation account has been
increased accordingly.
No provision for Federal income taxes was recorded during the years
ended February 28, 1997 and February 29, 1996 due to the net losses of the
Company.
As of February 28, 1997, the Company had Federal income tax loss
carryforwards available to offset future taxable income for income tax purposes
of $6,140,428 which expire in 2006 through 2010.
The Company has no energy credit carryforwards as of February 28, 1997.
NOTE 9 - Supplemental Noncash Investing and Financing Activities:
During the year ended February 29, 1996, 145,842 shares of Class A
Common Stock were issued for compensation of $68,216 to certain officers,
directors and an employee.
NOTE 10 - Commitments and Contingencies:
The Company's wholly owned subsidiary CCC, has entered into a long-term
lease for office space in Santa Barbara, California. The Company occupied the
space for approximately three months in the fiscal year ended February
28,1997.The space has been vacated and the landlord had filed suit for recovery
of earned rents of $64,687, interest thereon, costs and damages. Estimated
payments on the original terms of the lease as of February 28, 1997 are as
follows:
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<TABLE>
<S> <C> <C>
1997 $ 228,408
1998 228,408
1999 228,408
2000 228,408
2001 152,272
-----------
Total $1,065,904
===========
</TABLE>
The claim for payment by the lessor against the Company has been withdrawn in
its entirety.
NOTE 11 - Chapter 11 Proceeding
On February 13, 1997, creditors of the Company, petitioned the Federal
Bankruptcy court to have the Company placed in involuntary Bankruptcy under
Chapter 11 of Federal Bankruptcy Law. Immediate injunctive relief was granted. A
preliminary hearing was held in Reno on March 3, 1997 and the court appointed
Mr. Barry L. Solomon as Trustee, which effectively transferred formal control
of the Company from the then management to the Trustee. A formal order
confirming the bankruptcy was issued on April 7, 1996.
Thereafter, the Company's Board of Directors was reconstituted and new
officers were reinstituted. A petition for Debtor-in-Possession was filed. The
hearing was held on September 4, 1997, and the court approved the petition. The
Company has been operating since that date as a Debtor-in-Possession and in
preparing a plan of reorganization.
CHANGES IN ACCOUNTANTS
The Company's accountants, Deloitte & Touche ("Deloitte") resigned on
March 23, 1994, and were replaced by Certified Public Accountants Kafoury
Armstrong & Company.
The change of independent auditors and the resignation of Deloitte &
Touche was not the result of any disagreements between the Company and the
former accountants on any matter of accounting principles or practices,
financial disclosures or auditing scope or procedures, and there have been no
such disagreements within the past two (2) fiscal years and any prior or
subsequent period. The audit opinions of Deloitte & Touche for fiscal years 1992
and 1993 did not contain any adverse opinion or disclaimer of opinion, and their
opinion was not qualified or modified as to uncertainty, audit or accounting
principles.
The Company has been advised that neither Kafoury, Armstrong & Company,
nor any of its partners hold any direct or indirect financial interest in the
securities of the Company, or its subsidiaries, nor have they had any connection
with the Company or its subsidiaries during the past three years.
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<PAGE> 93
NOTE 12 - Incomplete Records
The Company's Board of Directors appointed new independent accountants
on April 22, 1994, as follows:
Kafoury, Armstrong & Company
6140 Plumas Street
Reno, NV 89509
(702) 689-9100
Kafoury, Armstrong & Company is the largest statewide independent
accounting firm operating in the state of Nevada and is qualified under the
requirements of the SEC Practice Section Division of firms of the American
Institute of Certified Public Accountants.
The appointment of Kafoury, Armstrong & Company as auditors was
subsequently ratified by vote of the shareholders in 1994 and 1995 and 1996.
On February 20, 1997, the Company was notified by its auditors,
Kafoury, Armstrong and Company of Reno, NV that they were withdrawing as the
Company's independent auditors, a relationship which they had enjoyed since
April 1994. They simultaneously withdrew their consent to inclusion of their
audit report in the Company's financial statements as of and for the period
ended February 29, 1996, and in the S-8 Registration filed with the Securities
and Exchange Commission on December 23, 1996.
Their resignation expressed concern over pending litigations against
the Company as set forth in its quarterly report (10KSB November 30,1996) the
Company's apparent inability or unwillingness to meet its obligations to
Kafoury, and the Company's failure to pay its outstanding obligations to
Kafoury, including making good on a dishonored check in the amount of $23,850.
There were no disputes over accounting matters.
The Company has not appointed new auditors at this time.
The Company is unable to provide comparable financial information
regarding the amount of interest and taxes paid for years ended February 28,
1997, and February 29, 1996, due to the pendency of the Chapter 11 proceeding
and the absence of accurate and complete books and records for the period May 1,
1996, through February, 1997.
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DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS
The current Directors of the Company as of November 30, 1998, are as follows.
Richard A. Cascarilla
Director since May, 1997
Age 46
Jeffrey L. Hartman
Director since September 15, 1998
Age 45
Michael R. Kassouff
Director since December, 1996
Age 41
The Directors of the Company as of February 28, 1997, are listed below.
- --------------------------------------------------------------------------------
Name, Principal Occupation
During the Last Five Years
and Additional Information
- --------------------------------------------------------------------------------
Michael R. Kassouff Director
Chairman of the Board
Age 41
Director since 12/96
Mr. Kassouff is a former director of the Company having served from July 1991 to
May 1996. Mr. Kassouff is currently one of the owners of Guaranteed Builders Co.
in Houston, Texas.
- --------------------------------------------------------------------------------
Peter Cannell, BA Director
Director and Secretary of Directors
Director since 5/96
Resigned 5/9/97
Mr. Cannell is a graduate of the University of Glasgow and an Associate of the
Institute of Chartered Secretaries & Administrators.
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- --------------------------------------------------------------------------------
Charles Cain Director
Director since 5/96
Resigned 5/9/97
MA-ACIB, is a graduate of Cambridge University and was the founder of the
corporate and management trust firm formerly known as Charles Cain & Company.
Mr. Cain is an affiliate of the American Bar Association, member of the American
Tax Institute in Europe and member of the Offshore Institute.
- --------------------------------------------------------------------------------
John C. Goold Director
Director since 5/96
Resigned 9/26/96
Mr. Goold is a private investor specializing in research and
development with energy companies, computer technology and telecommunications in
Asian, European and United States capital markets.
The Company's Certificate of Incorporation was amended in 1990 to
provide that the number of directors will be no less than three (3) and no more
than seven (7), with a board size of five(5)until that number is changed by the
board of directors.
EXECUTIVE OFFICERS
Presented below are the names, ages and positions held during the past
five years of the Company's executive officers as of November 30,1998.
- --------------------------------------------------------------------------------
Name Age Position
- --------------------------------------------------------------------------------
Richard A. Cascarilla, Esq. 46 Secretary and Treasurer
11/20/90 to 9/26/96
5/19/97 to Present President
Michael Kassouff 41 Secretary
9/24/97 to Present
Jeffrey E. Antisdel 42 President
11/20/90 to 9/26/96
Stefan Tevis 44 President
9/26/96 to 1/23/97
90
<PAGE> 96
Kenton Bowers 57 Secretary
9/26/96 to 12/18/96
Pattison Hayton III 46 President
1/23/97 to 5/19/97
Kevin Quinn 51 Secretary
12/18 to 5/19/97
- --------------------------------------------------------------------------------
REPORTS UNDER SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires directors, officers and
persons who are beneficial owners of more than 10% of the Company's Common Stock
to file with the Securities and Exchange Commission (the "Commission") reports
of their ownership of the Company's securities and change in that ownership. To
the Company's knowledge, based upon review of the copies of reports filed with
the Commission with respect to the fiscal year ended February 28, 1997, all
reports required to be filed under Section 16(a) by the Company's directors,
officers and persons who are beneficial owners of more than 10% of the Company's
Common Stock have been timely filed.
EXECUTIVE COMPENSATION
DIRECTOR COMPENSATION
Directors are entitled to receive annual compensation of $10,000 paid
quarterly and $500 for each Board of Directors meeting attended in person, plus
related travel expenses to meetings.
On January 14, 1995, the Company adopted an additional 1994 Directors'
Stock Option Plan for the Company's directors. Under the terms of this stock
option plan, each of the five directors of the Company was granted an option to
purchase 17,500 shares of the Company's Class A Common Stock or a total of
87,500 shares at a price of $0.9375 per share, equal to the market price of the
stock at the date of grant. The option is exercisable until December 31, 2002,
and no options have been exercised through February 29, 1996.
On December 31, 1995, the Company adopted an additional 1994 Directors'
Stock Option Plan for the Company's directors. Under the terms of this stock
option plan, each of the five directors of the Company was granted an option to
purchase 30,000 shares of the Company's Class A Common Stock or a total of
150,000 shares at a price of $0.3125 per share, equal to the market price of the
stock at the date of grant. The option is exercisable until December 31, 2003,
and no options have been exercised through February 28, 1997.
Pursuant to the Order of Confirmation entered by the Reno Federal
Bankruptcy Court of September 15, 1998, the above option grants are rescinded.
91
<PAGE> 97
CHANGE-IN-CONTROL ARRANGEMENTS,
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
On February 29, 1996 the Company executed a binding letter of intent
with Waterford Trust Company, Limited an Irish corporation ("Waterford"), in
which the Company agreed to sell to Waterford or its nominee approximately
2,000,000 shares of Series A preferred shares. On May 1, 1996 the Company
announced the completion of this transaction in which Waterford's nominee,
Golden Chance, Limited ("Golden Chance"), an Isle of Man private company limited
by shares, agreed to purchase 1,960,795 shares of Series A Preferred stock at
$2.50 per share and 152,381 shares of Class A common stock at $0.643125 per
share. A cash payment for the Class A common shares in the amount of $100,000
and a $4,900,000 promissory note made and delivered by Golden Chance. The
promissory note is secured by the corporate guarantee of Waterford Trust
Company, Limited, an Irish corporation ("Waterford") and an escrow of the shares
of registrants series A preferred shares acquired by Golden Chance.
The promissory note is requires installment payments. The first
installment was payable July 1, 1996 in the amount of $400,000. Subsequent
installments of $500,000 are payable every thirty days thereafter until paid in
full. The total principal amount of the promissory note was due and payable on
April 1,1997. Waterford has guaranteed the obligation of Golden Chance. The
Series A Preferred shares acquired by Golden Chance are held in escrow with an
escrow agent for the benefit of the registrant. Upon payment of each installment
under the promissory note, a portion of the Series A Preferred shares will
convert to the registrants class A common stock pursuant to the certificate of
designation of the Series A Preferred shares, which is on file with the Delaware
Secretary of State. The converted shares will be released from escrow.
Subsequent to May 1, 1996, cash payments in the amount of $100,000 for
the Class A common stock and $780,255 in cash payment on the note secured by the
Series A preferred shares was deposited in accounts which were substantially
outside the control of the Company's officers. The money deposited in these
accounts was substantially diverted or paid to persons who had no legal right to
the funds.
In connection with this agreement, pursuant to a letter agreement
("Letter of Intent") dated February 29, 1996, and conditional to the sale of
series A preferred shares, the former control group Chairman, Jeffrey Antisdel,
and Director, Richard Cascarilla, voluntarily resigned their respective Board of
Director positions, with nominee Directors, Charles Cain and Peter Cannell
elected by the Board of Directors. The remaining former members of the Board
subsequently resigned and John Goold was nominated to the Board. The active size
of the board was reduced from five directorships to three directorships.
In conjunction with the agreements relating to the change in control,
the Company entered into prospective consulting agreements with Mr. Antisdel and
Mr. Cascarilla. These two year agreements were to take effect upon termination
from the Company as an employee. Mr. Antisdel and Mr. Cascarilla were terminated
without cause as President and Secretary respectively on September 26, 1996 due
to their intent to make public disclosures of the default by Waterford and
92
<PAGE> 98
Golden Chance Limited on payments owing to the Company. Subsequently, the
Company failed to make payments under the consulting agreements and both Mr.
Antisdel and Mr. Cascarilla filed suit with respect to their rights under the
agreements, including acceleration of payment. (See "Litigation")
[INTENTIONALLY LEFT BLANK.]
93
<PAGE> 99
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WORLDCALL CORPORATION
Date: March 19, 1999 /s/ Richard A. Cascarilla
------------------------------ ----------------------------------
Richard A. Cascarilla, Director
Date: March 19, 1999 /s/ Jeffrey L. Hartman
------------------------------ ----------------------------------
Jeffrey L. Hartman, Director
Date: March 19, 1999 /s/ Michael R. Kassouff
------------------------------ ----------------------------------
Michael R. Kassouff, Director
94
<PAGE> 100
PART II
EXHIBITS
<TABLE>
<S> <C>
(2) Plan of Acquisition, Reorganization,
Arrangement, Liquidation or Succession
A. Debtor's Second Amended Disclosure Statement,
filed with the United States Bankruptcy Court,
District of Nevada, July 24, 1998............................................. Page
B. Debtor's First Amended Plan of Reorganization
filed with the United States Bankruptcy Court,
District of Nevada, July 24, 1998............................................. Page
C. Order Approving and Confirming Debtor's First
Amended Plan of Reorganization, as Revised and
Amended, issued September 15, 1998............................................ Page
(3)(i) Articles of Incorporation
A. Certificate of Correction of the Restated Certificate
of Incorporation of Nevada Energy Company, Inc.,
filed November 25, 1998....................................................... Page
B. Certificate of Correction of the Certificate of Amendment
to the Certificate of Incorporation of PowerTel USA, Inc.,
filed November 25, 1998....................................................... Page
C. Certificate of Correction of the Certificate of
Correction of the Restated Certificate of Incorporation
of PowerTel USA, Inc., filed November 25, 1998................................ Page
D. Certificate of Correction of the Certificate of Correction
to the Certificate of Amendment of PowerTel USA, Inc.,
filed November 25, 1998....................................................... Page
E. Certificate of Correction of the Restated Certificate
of Incorporation of PowerTel USA, Inc.,
filed November 25, 1998....................................................... Page
</TABLE>
<PAGE> 101
<TABLE>
<S> <C>
F. Certificate of Correction of the Certificate of
Correction to the Restated Certificate of Incorporation
of PowerTel USA, Inc., filed November 25, 1998................................ Page
G. Certificate of Correction of the Restated Certificate
of Incorporation of PowerTel USA, Inc.,
filed November 25, 1998....................................................... Page
H. Certificate of Renewal, Restoration and
Revival of Certificate of Incorporation of
Nevada Energy Company, Inc., filed
November 25, 1998............................................................. Page
J. Restated Certificate of Incorporation of Nevada
Energy Company, Inc, filed December 15, 1998.................................. Page
(3)(ii) By-Laws
A. PowerTel USA, Inc. Amended and Restated
ByLaws, dated November 25, 1998. ............................................. Page
(4) Instruments Defining the Rights of Security Holders,
including Indentures
A. Stock Option and Purchase Agreement between
Richard A. Cascarilla and Nevada Energy
Company, Inc., dated December, 1998........................................... Page
B. Stock Option and Purchase Agreement between
Jeffrey Modesitt and Nevada Energy
Company, Inc., dated December, 1998........................................... Page
C. Stock Option and Purchase Agreement between
Michael Kassouff and Nevada Energy
Company, Inc., dated December, 1998........................................... Page
D. Stock Option and Purchase Agreement between
Jeffrey Hartman and Nevada Energy
Company, Inc., dated December, 1998........................................... Page
</TABLE>
<PAGE> 102
<TABLE>
<S> <C>
E. Stock Option Agreement between
Nevada Energy Company, Inc. and Richard
A. Cascarilla, dated December, 1998........................................... Page
F. Stock Option Agreement between
Nevada Energy Company, Inc. and Jeffrey
L. Hartman, dated December, 1998.............................................. Page
G. Stock Option Agreement between
Nevada Energy Company, Inc. and Michael
Kassouff, dated December, 1998................................................ Page
H. Stock Option Agreement between
Nevada Energy Company, Inc. and Richard
A. Cascarilla, dated December, 1998........................................... Page
I. Stock Option Agreement between
Nevada Energy Company, Inc. and Michael
Kassouff, dated December, 1998................................................ Page
J. Stock Option Agreement between
Nevada Energy Company, Inc. and Lawrence
Herth, dated December, 1998................................................... Page
(10) Material Contracts
A. First Amended and Restated Settlement and
Release Agreement among PowerTel USA, Inc.,
Nevada Energy Partners I, Nevada Electric Power
Company, and Sixteen Bahamian Corporations,
effective December 1, 1997.................................................... Page
i. Receipts by Sixteen Bahamian Corporations
of Class A Common Stock Pursuant to the
Plan of Reorganization of PowerTel,
dated March 16, 1998.................................................. .Page
B. Settlement and Mutual Release Agreement among
PowerTel USA, Inc., Viva Telecommunications, Inc.,
David L. Wallace, Jeffrey Antisdel, John Vogel, and
Dean Chamberlain, effective January 25, 1998.................................. Page
</TABLE>
<PAGE> 103
<TABLE>
<S> <C>
C. Amended and Restated Agreement for Exchange
of Stock between David Wallace and PowerTel,
USA, Inc. Regarding Viva Telecommunications, Inc.,
effective February 12, 1998................................................... Page
D. Amended and Restated Agreement for Exchange
of Stock between David Wallace and PowerTel
USA, Inc. Regarding Diego Tel, Inc.,
effective February 12, 1998................................................... Page
E. Employment Agreement between PowerTel USA,
Inc. and Richard Cascarilla, dated August 26, 1998............................ Page
F. Employment Agreement between PowerTel USA,
Inc. and Michael R. Kassouff, dated August 26, 1998........................... Page
G. Telecommunications Services Agreement between
Viva Servicos, S. de R.L. de C.V. and Diego Tel, Inc.
effective June 8, 1998 (a portion of this document
has been redacted because it contains confidential
information).................................................................. Page
(11) Statement re: Computation of Per Share Earnings...................................... Page
(15) Letter re: Unaudited Interim Financial Information................................... Not Applicable
(18) Letter re: Change in Accounting Principles........................................... Not Applicable
(19) Report Furnished to Security Holders................................................. Not Applicable
(22) Published Report Regarding Matters Submitted
to Vote of Security Holders.......................................................... Not Applicable
(23) Consents of Experts and Counsel...................................................... Not Applicable
(24) Power of Attorney.................................................................... Not Applicable
(26) Invitations for Competitive Bids..................................................... Not Applicable
(27) Financial Data Schedule.............................................................. Unavailable
</TABLE>
<PAGE> 104
<TABLE>
<S> <C>
(99) Additional Exhibits
A. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for April, 1997...................................... Page
B. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for May, 1997........................................ Page
C. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for June, 1997....................................... Page
D. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for July, 1997....................................... Page
E. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for August, 1997..................................... Page
F. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for September, 1997.................................. Page
G. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for October, 1997.................................... Page
H. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for November, 1997................................... Page
I. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for December, 1997................................... Page
J. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for January, 1998.................................... Page
K. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for February, 1998................................... Page
L. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for March, 1998...................................... Page
M. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for April, 1998...................................... Page
N. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for May, 1998........................................ Page
</TABLE>
<PAGE> 105
<TABLE>
<S> <C>
O. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for June, 1998....................................... Page
P. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for July, 1998....................................... Page
Q. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for August, 1998..................................... Page
R. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for September, 1998.................................. Page
S. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for October, 1998.................................... Page
T. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for November, 1998................................... Page
U. PowerTel USA, Inc., 97-30265, Chapter 11,
Monthly Operating Report for December, 1998................................... Page
</TABLE>
<PAGE> 1
Exhibit 2a
STEPHEN R. HARRIS, ESQ.
BELDING & HARRIS
Nevada Bar No. 001463
417 West Plumb Lane
Reno, Nevada 89509
Telephone: (702) 786-7600
Facsimile: (702) 786-7764
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEVADA
IN RE:
POWERTEL USA, INC.,
formerly known as Case No. BK-97-30265-BMG
NEVADA ENERGY COMPANY, INC., (Chapter 11)
also formerly known as
MUNSON GEOTHERMAL, INC.,
Debtor. Hrg. DATE: June 29, 1998
and TIME: 2:00 p.m.
DEBTOR'S SECOND AMENDED DISCLOSURE STATEMENT PURSUANT TO
11 U.S.C. Section 1125
IMPORTANT INFORMATION FOR CREDITORS AND SHAREHOLDERS
of
POWERTEL USA, INC.
(formerly known as
Munson Geothermal, Inc. and
Nevada Energy Company, Inc.)
IF YOU ARE A CREDITOR OR SHAREHOLDER OF POWERTEL USA, INC., DEBTOR
HEREIN, THIS Second Amended DISCLOSURE STATEMENT ("DISCLOSURE STATEMENT")
CONTAINS IMPORTANT INFORMATION THAT YOU SHOULD READ AND EVALUATE. AS YOU
REVIEW THIS DOCUMENT, REMEMBER:
1. THIS DISCLOSURE STATEMENT IS SUBMITTED TO ALL CREDITORS
AND SHAREHOLDERS OF POWERTEL USA, INC. ("DEBTOR" OR 'POWERTEL").
THIS STATEMENT CONTAINS IMPORTANT INFORMATION THAT MAY AFFECT
YOUR DECISION TO ACCEPT OR REJECT THE DEBTOR'S PLAN OF
REORGANIZATION ("PLAN").
2. THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT
IS INTENDED TO PROVIDE ADEQUATE DISCLOSURE REGARDING THE DEBTOR'S
<PAGE> 2
PLAN. ALL CREDITORS AND SHAREHOLDERS ARE URGED TO READ THE DISCLOSURE
STATEMENT WITH CARE AND IN ITS ENTIRETY.
3. ON JUNE 29, 1998, THE BANKRUPTCY COURT APPROVED THIS DISCLOSURE
STATEMENT AS CONTAINING ADEQUATE INFORMATION PURSUANT TO 11 U.S.C. Section
1125, FOR SOLICITATION OF ACCEPTANCES OR REJECTIONS OF THE PROPOSED PLAN. THE
BANKRUPTCY COURT, HOWEVER, IS AN IMPARTIAL TRIBUNAL; THEREFORE, THE COURT
NEVER OFFICIALLY ENDORSES ANY PLAN OF REORGANIZATION. IF YOU ARE ELIGIBLE TO
VOTE, A COPY OF THE PROPOSED PLAN ACCOMPANIES THIS DISCLOSURE STATEMENT. IF
YOU ARE NOT ELIGIBLE TO VOTE, A COPY OF THE PROPOSED PLAN IS AVAILABLE UPON
REQUEST.
4. IF YOU ARE ELIGIBLE TO VOTE YOU ARE URGED BY DEBTOR TO VOTE IN FAVOR
OF THE PLAN AND TO RETURN YOUR BALLOT NO LATER THAN JULY _, 1998. IN THE
OPINION OF THE BOARD OF DIRECTORS OF POWERTEL AND ITS MANAGEMENT, THE PLAN AS
SUBMITTED IS THE BEST AND MOST FEASIBLE MEANS TO REHABILITATE THE BUSINESS AND
ADDRESS THE CONCERNS OF CREDITORS AND SHAREHOLDERS.
5. THE PROPOSED PLAN ANTICIPATES THAT DEBTOR WILL ISSUE COMMON STOCK IN
THE IMPLEMENTATION OF THIS PLAN. THE COMMON STOCK HAS NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO 15 U.S.C. Section 77, THE
SECURITIES ACT OF 1933, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
REVIEWED OR APPROVED THE CONTENT OF THIS DISCLOSURE STATEMENT. ANY
REPRESENTATION OTHERWISE IS BOTH INCORRECT AND IN VIOLATION OF THE SECURITIES
ACT OF 1933.
6. THIS DISCLOSURE STATEMENT CONTAINS FORWARD LOOKING INFORMATION WITH
RESPECT TO THE ANTICIPATED FUTURE BUSINESS AND FINANCIAL AFFAIRS OF THE
DEBTOR. THESE FORWARD LOOKING STATEMENTS ARE NOT GUARANTEES OR ASSURANCES THAT
THE FORWARD LOOKING EVENTS WILL OCCUR AS DESCRIBED. THERE ARE SUBSTANTIAL
RISKS AND CONTINGENCIES WHICH CAN INFLUENCE, IMPEDE OR PROHIBIT THE ABILITY OF
THE DEBTOR TO ACHIEVE THESE FORWARD LOOKING STATEMENTS. THE RISKS AND
CONTINGENCIES ARE DISCUSSED IN SECTION XI OF THIS DISCLOSURE STATEMENT.
7. THE PLAN OF REORGANIZATION CONTEMPLATES THAT THE COURT WILL CONFIRM
(a) AN AGREEMENT BY WHICH THE DEBTOR'S WILL ACQUIRE UPON CONFIRMATION OF THE
PLAN 100.0% OF THE ISSUED AND OUTSTANDING COMMON STOCK OF DIEGO TEL, INC. IN
EXCHANGE FOR A COMMITMENT TO ISSUE SHARES OF CLASS A COMMON STOCK IN AN AMOUNT
UP TO 35.0% OF THE ISSUED AND OUTSTANDING CLASS A COMMON STOCK. THIS COMMON
STOCK WILL BE DISTRIBUTED WHEN DIEGO TEL ACHIEVES CERTAIN REVENUE
<PAGE> 3
PROJECTIONS; AND (b) THE TRANSFER OF 50.0% OF DEBTOR'S CLASS A COMMON STOCK
PURSUANT TO A SETTLEMENT AND RELEASE AGREEMENT IN ORDER TO RESOLVE LITIGATION,
DISPUTES AND CLAIMS BETWEEN THE DEBTOR, NEVADA ENERGY PARTNERS I (A NEVADA
LIMITED PARTNERSHIP), NEVADA ELECTRIC POWER COMPANY AND OTHERS. AS A RESULT OF
THESE TWO EVENTS, THE DEBTOR MAY ISSUE A LARGE QUANTITY OF ITS CLASS A COMMON
STOCK -- 85.0% -- TO A TOTAL OF SEVENTEEN ENTITIES OR PERSONS. PLEASE SEE PAGE
74 FOR SPECIFIC DETAILS. THIS MAY HAVE LONG TERM IMPLICATIONS FOR THE DEBTOR.
SPECIAL NOTICE
The Plan provides that the Reorganized Debtor will purchase Diego
Tel and have entered into two agreements. A copy of each of these
contracts is enclosed. Review them carefully. These contracts
contain important provisions which will effect the Reorganized
Debtor.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
1. INTRODUCTION AND SUMMARY OF PROPOSED
PLAN OF REORGANIZATION................................................................ 1
A. Introduction................................................................... 1
B. General Overview of PowerTel USA, Inc. and the Chapter 11 Case................. 1
C. Summary Information............................................................ 5
II. DEFINITIONS........................................................................... 12
III. INFORMATION ABOUT THE DEBTOR.......................................................... 17
A. Corporate Structure............................................................ 17
B. Summary of Debtor's Operations 1990-May 1996................................... 19
C. Change of Control (May 3,1996)................................................. 20
D. Summary of Pre-Petition Events from May 3, 1996 through the Petition Date...... 21
IV. INFORMATION ABOUT THE CHAPTER 11 CASE................................................. 28
A. The Involuntary Petition....................................................... 28
B. Actions by the Interim Trustee................................................. 29
C. The Debtor-in-Possession....................................................... 29
D. Summary of Activities of the Debtor-in-Possession.............................. 30
V. THE DEBTOR'S ESTATE................................................................... 32
A. Business Operations............................................................ 32
B. Assets and Financial Condition................................................. 32
C. Claims and Liabilities......................................................... 33
D. Business Affairs............................................................... 35
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
E. Litigation and Claims.......................................................... 35
VI. THE REORGANIZED DEBTOR'S BUSINESS PLAN................................................ 39
VII. THE PROPOSED PLAN..................................................................... 44
A. Designated Dates............................................................... 44
B. Classification of Claims and Interest.......................................... 44
C. Provisions for Payments of Claims.............................................. 46
VIII. DISCUSSION OF PROCEDURAL MATTERS COMMON TO ALL CLAIMS............................... 58
A. Acceptance or Rejection of Plan: Effect of Rejection By
One or More Classes of Claims.................................................. 58
B. Amendment to the Plan.......................................................... 59
C. Disallowance of Settled Claims and Post-Petition Additions..................... 59
D. Discharge of Debtor............................................................ 59
E. Disputed Claims Reserve........................................................ 59
F. Events of Default.............................................................. 61
G. Executory Contracts and Unexpired Leases....................................... 61
H. Means for Execution of the Plan................................................ 62
1. Multiple Claims................................................................ 64
J. Post-Confirmation Injunction and Automatic Stay................................ 64
K. Prohibition Against Discriminatory Treatment................................... 64
L. Provisions Covering Distributions.............................................. 65
M. Provisions for Execution and Supervision of the Plan........................... 65
N. Provisions for Treatment of Disputed Claims.................................... 66
0. Restriction on Transfer of Shares.............................................. 67
P. Set Offs....................................................................... 68
Q. Title to Assets; Discharge of Liabilities...................................... 69
R. Effect of Discharge on Rights Between Third Parties............................ 69
S. Filing of Additional Documents................................................. 70
T. Post Confirmation Acquisitions, Mergers and Stock Splits....................... 70
U. Class A Common Stock in Lieu of Cash........................................... 70
V. Settlement of Claims on Interests.............................................. 70
W. Ratification of Agreements..................................................... 71
X. Contested Claims............................................................... 71
IX. DISCUSSION OF MATTERS OF CORPORATE GOVERNANCE......................................... 72
A. Officers and Directors of Reorganized Debtor................................... 72
B. Compensation for Directors..................................................... 72
C. Cash Compensation for Officers and Employees................................... 72
D. Provisions for Management...................................................... 72
E. Capitalization................................................................. 73
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Page
<S> <C>
X. CERTAIN INCOME TAX CONSEQUENCES OF THE PLAN........................................... 74
A. General........................................................................ 74
B. Acquisition of DIEGO TEL....................................................... 78
C. Creditors...................................................................... 79
XI. MAJOR CONTINGENCIES AND RISK FACTORS.................................................. 79
A. General Business Matters....................................................... 79
B. Energy Cogeneration Related Matters............................................ 82
C. Telecommunications Related Operating Results Subject to Significant
Fluctuations................................................................................ 82
Significant Competition........................................................ 90
D. Other Matters.................................................................. 93
XII. LIQUIDATION ANALYSIS.................................................................. 95
XIII. VOTING PROCEDURES AND REQUIREMENTS.................................................... 97
A. Ballots and Voting Deadline.................................................... 97
B. Creditors and Shareholders Entitled to Vote.................................... 98
C. Definition of Impairment....................................................... 99
D. Classes Impaired Under the Plan................................................ 99
E. Identification of Claims and Equity Interest Not Impaired by the Plan.......... 99
F. Information on Voting and Ballots.............................................. 99
G. Vote Required for Class Acceptance............................................ 100
H. Confirmation of the Plan...................................................... 100
XIV. CONCLUSION........................................................................... 102
</TABLE>
<PAGE> 6
1. INTRODUCTION AND SUMMARY OF PROPOSED PLAN OF REORGANIZATION
A. Introduction.
You have been provided with this document (which is called a "Disclosure
Statement") (Note: capitalized terms are defined in Article 11 of this
Disclosure Statement) because you have been identified as having a potentially
legally recognized claim or interest in Debtor (referred to as either
"PowerTel" or "Debtor'), which is currently involved in a reorganization
pursuant to Chapter 11 of the Bankruptcy Code, 11 U.S.C. Sections
1101-1174. This Disclosure Statement is being made available to Creditors,
Equity Interest holders, and others in order that everyone who has an interest
in Debtor will have up-to-date information with respect to Debtor and its
proposed Plan of Reorganization ("Plan").
Depending upon the nature of your interest in the debtor, you may be
entitled to vote on the acceptance or rejection of the Plan, and this
Disclosure Statement will assist you in evaluating your course of action.
Therefore, you should read the Disclosure Statement carefully.
This Disclosure Statement is relatively complicated but every effort has
been made to organize it in a logical and straight forward fashion. To that
end, the Disclosure Statement will follow the sequence set forth:
History
New Business Plan
Plan of Reorganization
Legal, Corporate, and Judicial Matters Common to all Claims
Risk Factors
Liquidation Analysis
Voting Procedures
B. General Overview of PowerTel USA, Inc. and the Chapter 11 Case.
Debtor is a Delaware corporation established in 1983 which has largely
functioned as a
<PAGE> 7
nonregulated utility holding company during the period 1983 (the year of its
incorporation) through February 1997 (when this Chapter 11 case was
commenced). Its operations were mostly conducted through wholly owned
subsidiaries, partnerships, and/or joint ventures with third parties. During
this period, Debtor was known by various names (i.e., Munson Geothermal, Inc.
and Nevada Energy Company, Inc.). In 1997, the former Board of Directors and
President attempted to amend the Debtor's Articles of Incorporation to change,
among other things, the name of the Company from Nevada Energy Company to
PowerTel USA, Inc. Although the amendment was not valid because it was not
approved by the shareholders, the Company has functioned using the name
"PowerTel USA" and is referred to by that name in this reorganization.
The Class A Common Stock of Debtor is registered with the Securities and
Exchange Commission pursuant to Section 12 of the Securities Exchange Act of
1934, 15 U.S.C. Section 78, and prior to March 1997, the Class A Common Stock
was traded in the over-the-counter market through various members of the
National Association of Securities Dealers, Inc. ("NASD"). Debtor's Class A
Common Stock was listed as a "small cap" stock with the NASD, but that listing
was suspended in or about March 1997.
In addition to its Class A Common Stock, Debtor has the following Equity
Interests:
1) Class B Common Stock.
The Class B Common Stock was issued in conjunction with the Munson
Reorganization. The Class B is owned of record (100.0%) by Nevada Energy
Partners 1, a Nevada limited partnership ("NEP"), which has sold the Class B
to sixteen (16) business entities which owns equitable title. Pursuant to a
settlement agreement which resolves certain pending litigation (see Article
III), the Class B will be exchanged for Class A Common Stock in an amount
equal
<PAGE> 8
to 50.0% of the issued and outstanding Class A Common Stock computed as of ten
days after the Effective Date.
2) Series A. Series B, and Series C Preferred Shares.
The Series A (2,000,000 shares) was sold on May 3, 1996, to Golden
Chance, Ltd., nominee for Waterford Trust Company.
The Series B was sold on May 3, 1996, to four outgoing Directors of NEC,
Messrs. Richard Cascarilla (two shares), Jeff Hartman (one share), Michael
Kassouff (one share), and Jeffrey Modesitt (one share). The Series B had
special voting rights in the event that Waterford/Golden Chance defaulted with
respect to timely payments of its purchase obligations with respect to the
Series A.
The Series C was authorized but never issued.
On February 13, 1997, several Creditors of Debtor filed an Involuntary
Petition for Reorganization pursuant to section 303 of the United States
Bankruptcy Code (the "Bankruptcy Code"). Thereafter, the Court permitted
Debtor to resume operations functioning as a Debtor-in-Possession pursuant to
section 1107 of the Bankruptcy Code.
Debtor has filed a proposed Plan with the Court. The Plan is the only
Plan which is being submitted for consideration to its Creditors. Debtor has
also prepared this Disclosure Statement which has been reviewed by the Court
and found to contain the requisite information necessary to permit Creditors
and other interested parties to make an informed decision as to the proposed
Plan.
This Disclosure Statement is being made available to all known Creditors
of Debtor, Equity Interest holders, and other parties-in-
<PAGE> 9
interest in order to disclose important information pertaining to the proposed
Plan in order that each Creditor, Equity Interest holder and party-in-interest
will be reasonably informed before making a decision to accept or reject the
proposed Plan.
The purpose of this Introduction and Summary is to provide an overview
of selected information which most often is requested upon receipt of a
Disclosure Statement. ALL SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY THE
PLAN ITSELF, WHICH IS CONTROLLING IN THE EVENT OF ANY INCONSISTENCY.
The Plan as designed and proposed by Debtor sets forth a specific
proposal for the treatment of Debtor's Creditors and Equity Interest holders.
A copy of the Plan will be transmitted only to all "Impaired" Creditors and
Voting Shareholders because they are the only persons and entities who are
entitled to vote on acceptance or rejection of the Plan. Classes 4, 5, 7, and
8 are the only classes of Creditors deemed to be impaired.
This Disclosure Statement is not intended to replace a careful review
and analysis of the Plan. Rather, this Disclosure Statement is intended to
aide you in your independent review and analysis. While substantial effort has
been made to explain all of the terms and conditions of the Plan, you may have
additional questions or comments. If this is the situation, you are encouraged
to contact legal counsel to Debtor, and counsel will attempt to be of
assistance; it is important, however, to understand that the attorneys who are
representing Debtor are not permitted to provide legal representation to
individual Creditors or shareholders. Therefore, if you have questions
regarding your specific legal rights or remedies, you should confer with your
personal attorney. Moreover, neither this Disclosure Statement nor the Plan
are intended to provide legal, tax, investment, or accounting advice to
Creditors or shareholders.
To the extent that there are questions with respect to the information
set forth in this Disclosure Statement or the proposed Plan, questions should
be directed to:
<PAGE> 10
Van P. Carter, Esq.
Walter & Haverfield P.L.L.
1300 Terminal Tower
Cleveland, Ohio 44113
Telephone: (216) 348-8934 ext. 6032
Telefax: (216) 575-0911
e-mail: [email protected]
Counsel for PowerTel USA; or
or
Richard A. Cascarilla, President
PowerTel USA, Inc.
c/o 321 W. Lake Lansing Road
East Lansing, Michigan 48823
Telephone: (517) 333-5277
Telefax: (517) 333-9869
DEBTOR STRONGLY ENCOURAGES YOU TO VOTE IN FAVOR OF THE PROPOSED PLAN
WHICH IS THE ONLY MEANS (IN THE OPINION OF DEBTOR'S BOARD OF DIRECTORS AND
MANAGEMENT) TO ADDRESS THE CONCERNS OF CREDITORS AND SHAREHOLDERS.
On June 29, 1998, the United States Bankruptcy Court entered an order
approving this Disclosure Statement as containing information of a kind and in
sufficient detail to permit Creditors and Equity Interest holders who are
eligible to vote to make an informed decision as to acceptance or rejection of
the proposed Plan. A copy of the Order approving this Disclosure Statement is
available upon request.
This Disclosure Statement should be read in its entirety prior to
voting. No solicitation of votes may be made except pursuant to this
Disclosure Statement and section 1125 of the Bankruptcy Code, and no person
has been authorized to use any of the information set forth in this Disclosure
Statement or otherwise to solicit acceptances or rejections of the Plan other
than with the information contained in this Disclosure Statement. Creditors
should not rely
<PAGE> 11
upon any information pertaining to Debtor other than the information contained
in this Disclosure Statement with the attached Exhibits.
EXCEPT AS SET FORTH IN THIS DISCLOSURE STATEMENT AND ITS EXHIBITS, NO
REPRESENTATIONS CONCERNING DEBTOR, ITS ASSETS, ITS PAST OR FUTURE OPERATIONS,
OR THE PLAN ARE AUTHORIZED, NOR ARE ANY SUCH REPRESENTATIONS TO BE RELIED UPON
IN ARRIVING AT A DECISION TO ACCEPT OR REJECT THE PROPOSED PLAN.
THERE HAS NOT BEEN AN INDEPENDENT AUDIT OF THE FINANCIAL INFORMATION
CONTAINED IN THIS DISCLOSURE STATEMENT. THE DEBTOR IS UNABLE TO WARRANT OR
REPRESENT THAT THE FINANCIAL INFORMATION CONTAINED IN THIS DISCLOSURE
STATEMENT IS WITHOUT ANY INACCURACY.
THE APPROVAL BY THE BANKRUPTCY COURT OF DEBTOR'S DISCLOSURE STATEMENT
DOES NOT CONSTITUTE ANY ENDORSEMENT BY THE COURT OF THE DEBTOR'S PLAN OR A
GUARANTY OF THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED HEREIN.
C. Summary Information
1. Who is in Bankruptcy?
PowerTel USA, Inc. (which is sometimes referred to as "the Debtor" and
sometimes as "PowerTel") is the business entity which is the subject of the
pending bankruptcy case. The Debtor was incorporated in the State of Delaware
in 1983 under the name "Munson Geothermal, Inc." In 1990, the debtor was
renamed "Nevada Energy Company, Inc." An attempt was made to rename the Debtor
as "PowerTel USA, Inc." in January 1997 and the Company will be using that
name for purposes of this proceeding.
<PAGE> 12
2 What is the nature of this reorganization?
This reorganization is being conducted pursuant to Chapter 11 of the
Bankruptcy Code. In summary, Chapter 11 permits a business such as Debtor to
propose a plan by which its liabilities may be restructured in order to remain
in business. In this instance, on February 13, 1997, several of the creditors
of Debtor filed an Involuntary Petition for Reorganization pursuant to Section
303 of the United States Bankruptcy Code. After the proceeding was initiated,
the Bankruptcy Court appointed an interim trustee to manage the affairs of the
debtor.
At that time, Debtor's Board of Directors consisted of Messrs. Charles
Cain, Peter Cannell, and Michael Kassouff. Messrs. Cain and Cannell resigned,
and Mr. Kassouff (as the sole remaining Director), pursuant to applicable
Delaware law and Debtor's By-Laws, elected Messrs. Lawrence Herth and Richard
A. Cascarilla as replacement Directors. Mr. Cascarilla had been a Director of
NEC prior to May 3, 1996. The Board of Directors elected Mr. Cascarilla as
President and Mr. Herth as Secretary-Treasurer.
Following these events, the United States Trustee concurred in a request
that management of the Debtor be resumed by the Board of Directors of Debtor
and its Officers. Accordingly, on September 24, 1997, the United States
Bankruptcy Court permitted the company to resume management of its own affairs
and function as a "Debtor-in-Possession" pursuant to Section 1107 of the
Bankruptcy Code. As a Debtor-in-Possession, Debtor is permitted to conduct its
day-to-day business affairs but remains accountable to the Court.
3. Where is this taking Place?
The Chapter 11 case was filed in the United States Bankruptcy Court for
the State of Nevada. The presiding judge is the Honorable Bert M. Goldwater.
<PAGE> 13
Reno, Nevada was the principal place of business of Debtor at the time
of filing. The corporate offices were subsequently relocated to East Lansing,
Michigan, the Chapter 11 proceeding, however, remains in Reno and is subject
to the jurisdiction of that Court.
4. What is being submitted to the Creditors for their
Analysis?
Debtor has prepared a proposed Plan to address its financial
responsibilities. The Creditors are being asked to review and approve that
Plan. The purpose of this Disclosure Statement is to provide in-depth,
detailed information so Creditors may determine whether to accept or reject
the proposed Plan.
Also included with this Disclosure Statement is a ballot (Exhibit 1)
which will be used by Creditors and Equity Interest holders who are eligible
to vote in order to cast a vote in favor of or against the Plan. The
Disclosure Statement is also accompanied by various exhibits which contain
information of an operational, financial, or business nature. It is important
to read and examine the Disclosure Statement and all Exhibits.
5. When will this take place?
The Bankruptcy Court has reviewed this Disclosure Statement and has made
a determination that it meets the criteria established by the Bankruptcy Code,
in particular Section 1125. That determination was made on June 29, 1998.
The Court has also established a date by which ballots must be received
by the Court. That date is August 24, 1998. When you vote, depending upon the
nature of your Claim, it may be necessary for you to make an election with
respect to two or more alternative payment structures.
After the ballots are received, Debtor will submit a report to the
Bankruptcy Court with respect to outcome of the voting. If the Plan is
approved, the Bankruptcy Court will hold a
<PAGE> 14
hearing for the purpose of confirming the Plan. In the event that one or more
classes of Creditors should reject the Plan, the Court has the authority,
pursuant to section 1129 (b) of the Bankruptcy Code, to mandate the adoption
of the Plan. This requires at least one (1) impaired accepting class of
Creditors. This authority is sometimes referred to as the "cramdown" power of
the Court.
6. What is the nature of the Plan? Debtor has proposed a
Plan which has four main components:
a. Creditors.
Each Creditor will be assigned to one of eight classes of Creditors.
There is a ninth class for Disputed Claims of Creditors and a tenth class for
Equity Interest holders.
With the exception of four classes, all Creditors will be paid in full
in Cash on the Effective Date, which is one hundred twenty (120) days after
the Plan has been approved by the Court.
Four classes of Creditors (Class 4, Allowed Priority Tax Claims, Class
5, Allowed Claims of Secured Creditors, Class 7, Allowed Claims of general
Unsecured Creditors of Claims in Excess of $1,200, and Class 8, Claims of
Nevada Energy Partners, Ltd. and others) will be paid a percentage of their
Claim based upon the dollar amount of their Claim or will otherwise receive on
the Payment Date less than 100.0% of the amount of each Claim. Because
Creditors in Classes 4, 5, 7 and 8 will not receive 100.0% of their Claims in
Cash, the Creditors in these Classes are considered to be "Impaired" and,
therefore, Creditors in Classes 4, 5, 7 and 8 are the only Creditors who will
be allowed to vote on acceptance or rejection of the proposed Plan.
As to the Creditors in Class 4, the Plan provides that these Claims will
be paid in Cash in
<PAGE> 15
sixteen (16) equal quarterly installments over a four (4) year term with the
first payment being made on the Payment Date.
As to Creditors in Class 5, the Plan provides that these Claims will be
paid in full in Cash on the Effective Date or, alternatively, at the Debtor's
sole option, in equal monthly installments, the first installment to be made
on the Payment Date and continuing over a term consisting of thirty (30)
months, or upon such other terms as may be agreed upon between the Creditor
and Debtor.
As to the Creditors in Class 7, the Plan provides that the Creditor may
elect to receive either (1) a lump sum payment of $1,200 on the Effective
Date, (2) a combination of Cash and Class A Common Stock, or (3) all stock.
As to Class 8, which has multiple parties-in-interest, Debtor is
proposing the Court ratify its settlement of litigation and a compromise of
claims involving the Class 8 claimants.
As to Class 9, that class has been reserved for disputed claims.
b. Equity lnterest Holders
As to the Equity Interest Holders in Class 10, most shareholders owning
Class A Common Stock are also entitled to vote on acceptance of the Plan.
These shareholders entitled to vote are any shareholder of record holding
Class A Common Stock on May 21, 1998 except any shareholder who acquired Class
A Common Stock subsequent to May 3, 1996 and (a) who failed to file a Proof of
Interest or (b) filed a Proof of Interest which Proof of Interest has been
disputed by Debtor. The capitalization of Debtor will be significantly
effected as follows:
i. Class B Common Stock will be converted to Class A
Common Stock, and there will be a reverse stock split to reduce the number of
shares to no less than 500,000 and no more than 20,000,000. Thereafter, the
Series A and Series C Preferred Shares
<PAGE> 16
and the Class B Common Stock shall be deemed to be extinguished by Amendment
to the Articles of Incorporation;
ii. The Series B Preferred Shares shall be repurchased
by Debtor.
The Articles of Incorporation will be amended to extinguish Series B Preferred
Shares and to establish a new class of preferred shares called "Special
Stock."
iii. All Class A Common Stock issued after May 3, 1996
will be rescinded and deemed to be null and void ab initio. except as to
shareholders who are (i) bona fide purchasers for value, and (ii) filed a
Proof of Interest on or before November 10, 1997, which Proof of Interest was
not disputed by the Debtor.
iv. The reverse stock split effect by NEC in January
1997 will be deemed null and void ab initio.
v. By virtue of the conversion of the Class B Common
Stock to Class A Common Stock and the issuance of Class A Common Stock in
conjunction with the acquisition of Diego Tel, there will be substantial
dilution of the equity interest of the Class A Common Stock shareholders of
record as of May 3, 1996, whose interest will be diluted from 100% of the
issued and outstanding Class A Common Stock to 15.0%.
c. Judicial Actions
Promptly after the Confirmation Date, the Bankruptcy Court shall enter
an Order to the effect that:
i. All Common and Preferred Stock issued by Debtor
subsequent to May 3, 1996 is null and void ab initio, except as to
shareholders who (i) are bona fide purchasers for value, and (ii) have filed a
Proof of Interest on or before November 10, 1997, which Proof of Interest was
not contested by the Debtor;
<PAGE> 17
ii. The election of Michael Kassouff as a Director is
hereby ratified and all subsequent elections of officers are also ratified.
iii. The 1:6 reverse stock split effected by Debtor in
January 1997 is null and void ab initio;
iv. The amendments to Debtor's Articles of
Incorporation filed with the Secretary of State for the State of Delaware in
January 1997 are null and void ab initio,
v. Any claimed security interest of Brady Geothermal
Park Power Partners against any asset of Debtor is null and void.
vi. The following actions taken by the Debtor's Board
of Directors are null and void ab initio:
(a.) Proposal to Amend Corporate Name and Symbol
(b.) Proposal to Increase Authorized Shares
(c.) Proposal to Increase Authorized Class B
Shares
(d.) Proposal to Authorize Class C Stock
(e.) Proposal to Authorize Lease Guaranty for
Santa Barbara Property
(f.) Debtor reserves the right to amend,
supplement or modify this listing upon
further investigation of the corporate
records.
vii. The Debtor is authorized to retain and to enforce
any claims or interests which the Debtor has or may have pursuant to the
Bankruptcy Code, whether or not such claims or interests have been lodged in
an adversary proceeding commenced prior to the Confirmation of the Plan.
<PAGE> 18
viii. Debtor is granted 120 days from the Confirmation
Date to cure all defaults, if any, to National Union Fire Insurance Company,
pursuant to policy number 445- 53-00, renewal of policy number 443-38-50, and is
authorized to reserve all rights to pursue any and all remedies covered by said
policy.
ix. Debtor shall be authorized to take all necessary
steps to effect the above.
d. Litigation and Claims.
Debtor has entered into settlements with various creditors, litigants
and other parties, the most significant of which is the settlement with NEP. The
Court will (1) ratify those Settlements and (2) authorize the Debtor to retain
and to enforce any claims or interests which the Debtor has or may have pursuant
to the Bankruptcy Code.
7. How do I vote for or against the Plan?
Creditors who are eligible to vote and Voting Shareholders will be
entitled to cast a vote in favor of acceptance or rejection of the Plan. The
ballot is enclosed as Exhibit 1. Creditors who are eligible to vote and Voting
Shareholders should follow the procedures set forth in Article XII of this
Disclosure Statement.
In deciding whether to vote in favor of or against the Plan as proposed
by Debtor, Creditors and entitled to vote and Voting Shareholders should review
this Disclosure Statement carefully. Certain words and phrases have a specific
meaning, and these words and phrases are defined in Article II of this
Disclosure Statement.
8. How can I obtain a copy of documents referenced in the Plan or
Disclosure Statement?
The Plan and Disclosure Statement reference various agreements and
documents, some
<PAGE> 19
of which are not attached as Exhibits. For a copy of any document referenced
in either the Plan or the Disclosure Statement, please contact Debtor or its
legal counsel at the addresses and telephone numbers in Article 1, Section B
of this Disclosure Statement.
II. DEFINITIONS
As used in the Plan, the following special terms have the respective
meanings set forth below:
A. Administration Expense: Any cost or expense of administration of the
Chapter 11 case entitled to priority pursuant to section 507(a)(1) and allowed
pursuant to section 503(b) of the Bankruptcy Code, including without
limitation, any actual and necessary expenses of preserving the Debtor's
estate, and actual and necessary expenses of operating the business of the
Debtor (including the post-petition compensation of Officers and Directors of
Debtor), any indebtedness or obligations incurred by or assessed against the
Debtor in connection with the conduct of its business, or for the acquisition
or lease of property or for providing of services to the Debtor, and
allowances of compensation or reimbursement of expenses to the extent allowed
by the Bankruptcy Court under the Bankruptcy Code, and any fees or charges
assessed against the Debtor's estate pursuant to Title 28, Chapter 123, United
States Code.
B. Affiliates: Every other entity which is an "affiliate" of Debtor
within the meaning of section 101 (2) of the Bankruptcy Code.
C. Allowed Claim or Allowed Equity Interest: Any Claim against or Equity
Interest in the Debtor, proof of which was filed on or before the last date
designated by the Bankruptcy Court as the last date for filing Proofs of
Claims or Equity Interest or (if no Proof of Claim or Equity Interest is
filed) which has been or hereafter is listed by the Debtor as liquidated in
amount and not disputed or contingent and, in either case, a Claim or Equity
Interest as to
<PAGE> 20
which no objection to the allowance thereof has been interposed or such Claim
or Equity Interest has been allowed in whole or in part by a Final Order.
Unless otherwise specified in the Plan, "Allowed Claim" shall not, for the
purposes of computation or Distributions under the Plan, include post-petition
interest on the amount of such Claim.
D. Allowed Priority Tax Claim: A Priority Tax Claim to the extent that
it is or has become an Allowed Claim, which in any event shall be reduced by the
amount of any offsets, credits, or refunds to which the Debtor or
Debtor-in-Possession shall be entitled on the Confirmation Date.
E. Allowed Secured Claim: A Secured Claim to the extent it is or has
become an Allowed Claim.
F. Allowed Unsecured Claim: An Unsecured Claim to the extent it is or
has become an Allowed Claim.
G. Bankruptcy Code: The Bankruptcy Reform Act of 1978, as amended and
codified as Title 11, United States Code.
H. Bankruptcy Court: The unit of the United States District Court for
the District of Nevada having jurisdiction over the Chapter 11 case, or in the
event such court ceases to exercise jurisdiction over the Chapter 11 case, such
court or adjunct thereof that exercises jurisdiction over Chapter 11 cases in
lieu of the United States Bankruptcy Court for the District of Nevada.
J. Bankruptcy Rules: The Federal Rules of Bankruptcy Procedure (as
amended), as applicable to the Chapter 11 cases.
K. CEC: Combustion Energy Company, a Nevada corporation with its
<PAGE> 21
principal place of business in Reno, Nevada.
L. Cash: Cash, cash equivalents and other readily marketable securities
or instruments issued by a person other than Debtor, including, without
limitation, readily marketable direct obligations of the United States of
America, certificates of deposit issued by banks and commercial paper of any
entity, including interest accrued or earned thereon.
M. Chapter 11 Case: The case being conducted pursuant to Chapter 11 of
the United States Bankruptcy Code in which Debtor is the Debtor-in-Possession
and identified as Case No. 97-30265-BMG.
N. Claim: Any right to payment from the Debtor, which right arose on or
before the Petition Date, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
legal, equitable, secured or unsecured; or any right to an equitable remedy for
future performance if such breach gives rise to a right of payment from the
Debtor, whether or not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured, disputed, undisputed, secured or unsecured.
O. Class A Common Stock: The Class A Common Stock of Debtor.
P. Class B Common Stock: The Class B Common Stock of Debtor previously
issued by NEC pursuant to the Munson Reorganization.
Q. Confirmation Date: The Date upon which the Bankruptcy Court shall
enter the Confirmation Order; provided, however, that if on motion the
Confirmation Order
<PAGE> 22
or consummation of the Plan is stayed pending appeal, then the Confirmation
Date shall be the entry of the Final Order vacating such stay or the date on
which such stay expires and is no longer in effect.
R. Creditor: Any person that has a Claim against the Debtor that arose
on or before the Petition Date.
S. Debtor: PowerTel, USA, Inc. formerly known as Nevada Energy Company,
Inc. ("NEC") and also formally known as Munson Geothermal, Inc. ("Munson").
T. Debtor-in-Possession: PowerTel, as Debtor-in-Possession.
U. Declaration Date : The thirtieth (30th) day after the Confirmation
Date.
W. Diego Tel: Diego Tel, Inc. a Nevada corporation to be acquired by
Debtor.
Y. Disputed Claim. Claims or Equity Interests against the Debtor which
(a) are listed in a "Schedule of Unresolved Claims" which may be filed with the
Bankruptcy Court by the Debtor on or before the Confirmation Date, or (b) are
the subject of an objection which has been filed on or before the Effective Date
by a party-in-interest and which objection has not been withdrawn or resolved by
entry of a Final Order on or before the Effective Date or (c) are identified in
the Debtor's Schedules as contingent, unliquidated or disputed.
X. Distributions: The property required by the Plan to be distributed
to the holders of Allowed Claims and Allowed Equity Interests.
AA. Effective Date: Date upon which certain Distribution to be made
pursuant
<PAGE> 23
to the Plan will be effect, which date shall be on the first business day
following the expiration of one hundred twentieth (120th) day after the
Confirmation Date.
BB. Equity Interest: Any interest in the Debtor represented by
ownership of Common and/or Preferred Stock.
CC. Exchange Act: The Securities Exchange Act of 1934, as amended and
codified in 15 U.S.C. Section 78b, et. seq.
DD. Final Order: An order of judgment of the Bankruptcy Court which has
not been reversed, stayed, modified or amended and as to which (a) any appeal
that has been taken has been finally determined or dismissed, or (b) the time
for appeal has expired and no notice of appeal has been filed.
EE. Munson Reorganization: The 1988 Chapter 11 case involving Munson
Geothermal, Inc. and referenced as Case No. 88-278.
FF. NEP: Nevada Energy Partners I, Limited Partnership, a limited
partnership organized pursuant to the laws of the State of Nevada. The general
partner is Nevada Electric Power Company, which is wholly owned by Jeffrey
Antisdel, former president of the Debtor.
GG. NEP Agreement: The August 16, 1996 Agreement between NEP and
Debtor.
HH. NEP Settlement: The Settlement and Release Agreement dated as of
December 1, 1997 by and among Debtor, NEP and others.
JJ. NEPC Indemnification: The Indemnification Agreement dated as of
<PAGE> 24
December 1, 1997 by and among Nevada Electric Power Company, the Debtor and
others.
KK. Ownership Settlement: The Settlement and Release Agreement dated as
of February 10, 1998 by and among Mr. John Vogel, Mr. Dean Chamberlain, David
Wallace, the Debtor and others.
LL. Payment Date: Date upon which certain payments to be made pursuant
to the Plan will be effected, which date shall be the first business day
following expiration of three hundred sixty-five (365) days following the
Confirmation Date.
MM. Person: An individual, a corporation, a partnership, an
association, a joint stock company, a joint venture, an estate, a trust, an
unincorporated organization or a government or any particular subdivision
thereon or other entity.
NN. Petition Date: February 13, 1997, the date of filing of the
involuntary bankruptcy petition.
OO. Plan: The Plan of Reorganization, either in its present form or as
it may be altered, amended, or modified from time to time.
PP. PowerTel: PowerTel USA, Inc., the Debtor.
QQ. Pre 1990 Priority Tax Claim: Any Priority Tax Claim arising prior
to 1990 and which was the subject of the Plan of Reorganization adjusted in the
Munson Reorganization.
RR. Priority Non-Tax Claim: Any Claim other than (i) an Administrative
Expense or (ii) a Priority Tax Claim to the extent entitled to priority and
payment under section 507(a) of the Bankruptcy Code.
SS. Priority Tax Claim: Any Claim entitled to priority in payment under
section
<PAGE> 25
507(a)(8) of the Bankruptcy Code.
TT. Pro Rata: Proportionately so that the ratio of the amount of a
particular Claim or interest to the total amount of Allowed Claims or Allowed
Equity Interests of the class in which the particular Claim or interest is
included is the same as the ratio of the amount of consideration distributed on
account of such particular Claim or interest to the consideration distributed on
account of Allowed Claim or Allowed Equity Interest of the class in which the
particular Claim or interest is included.
UU. Reorganized Debtor: The Debtor subsequent to Confirmation of the
Plan.
VV. Secured Claim: A right to payment from the Debtor, other than an
Administration Expense or Priority Tax Claim, for a prepetition debt to the
extent that it is validly and properly secured, in accordance with applicable
law, by any form of collateral, real, personal, intangible or tangible, which is
evidenced by a timely filed Proof of Claim or by Debtor's Schedules.
WW. SEC: The United States Securities and Exchange Commission.
XX. Schedules: Schedules and Statement of Affairs, as amended, filed by
the Debtor with the Bankruptcy Court listing liabilities and assets.
YY. TTI: Telecom Technologies, Inc., a wholly owned subsidiary of the
Debtor.
ZZ. Unsecured Creditor: Any Creditor that holds a Claim which is not a
Secured Claim.
AAA. VivaTel: Viva Telecommunications, Inc., a Nevada corporation,
acquired by the Debtor.
BBB. Voting Shareholder: Any shareholder of record on May 21, 1998
holding Class
<PAGE> 26
A Common Stock except any shareholder who has filed a Proof of Interest for
which Proof of Interest was disputed by Debtor.
CCC. Wage Claim: A claim for wages due, payable, and earned prior to
the Petition Date.
III. INFORMATION ABOUT THE DEBTOR
A. Corporate Structure.
Debtor was incorporated in Delaware on December 20, 1983 under the name
"Munson Geothermal, Inc." In 1990, following confirmation of a Plan of
Reorganization pursuant to Chapter 11 of the Bankruptcy Code, the Debtor's name
was changed to "Nevada Energy Company." In January 1997, the Debtor's Articles
of Incorporation were refiled with the Secretary of State for Delaware in an
attempt to change the name of the Debtor to "PowerTel USA, Inc."
According to the Debtor's Articles of Incorporation, the Debtor has the
following classes of common and preferred stock:
* Class A Common Stock, par value of $.001 The Class A
Common Stock is publicly traded by members of the
National Association of Securities Dealers, Inc.
("NASD"). In March 1997, the Debtors Class A Common
Stock was listed by the NASD as a "small cap" stock,
but the Class A Common Stock was delisted. As of the
Petition Date, there were about 1,000 shareholders of
record owning Class A Common Stock.
* Class B Common Stock, par value of $.001 The Class B
Common Stock was initially created in 1990 when the
<PAGE> 27
Debtor's Articles of Incorporation were amended
following confirmation of a Plan of Reorganization in
the Munson bankruptcy. The Class B Common Stock pays
no dividend but is voting. The Class B Common Stock
has a right to be converted to Class A Common Stock
at any time.
When issued in 1990, the Class B Common Stock,
if converted, would be equal to 50.0% of the
issued and outstanding Class A Common Stock,
computed subsequent to the conversion. The
Class B Common Stock is vested with a
"non-dilution" provision, i.e. for every share
of Class A Common Stock which is issued, an
additional share of Class B Common Stock has a
right to be issued. As of the Petition Date,
the sole shareholder of record owning Class B
Common Stock was Nevada Energy Partnership I,
a Nevada limited partnership.
On or about August 1996, NEP converted Class B common stock to Class A
common stock and sold the Class A to 16 Bahamian corporations; however, the
shares certificates were never transferred. Accordingly, while NEP appears as
the shareholder of record, equitable title is owned by the 16 Bahamian
corporations
* Series A Preferred Shares
An amendment to the Debtor's Articles of
Incorporation in 1996 authorized the Debtor to issue
2,000,000 Series A Preferred Shares, which were
immediately sold to Golden Chance, Ltd., an Isle of
Man company limited by shares, as nominee per
Waterford Trust Company Limited, an Irish
corporation. The Series A Preferred Shares are
<PAGE> 28
nonvoting but are convertible into Class A Common
Stock at a 1:1 ratio. As of the Petition Date, the
sole shareholder of record of the Series A Preferred
Shares was Golden Chance, Ltd.
* Series B Preferred Shares
When the Debtor's Articles of Incorporation were
amended to authorize the issuance of Series A
Preferred Shares, the Articles of Incorporation were
also amended to authorize the Debtor to issue Series
B Preferred Shares. The Series B Preferred Shares do
not receive a dividend and are non-voting unless and
until there is a default with respect to the purchase
of Series A Preferred Shares by Golden Chance, Ltd.
As of the Petition Date, there were 5 shares of
Series B Preferred Shares issued and outstanding,
which were owned of record by Mr. Richard A.
Cascarilla (2 shares), Mr. Jeffrey Hartman (1 share),
Mr. Jeffrey Modesitt (1 share) and Mr. Michael
Kassouff (1 share).
* Series C Preferred Shares
The Debtor's Articles of Incorporation state that the
Debtor is authorized to issue 20,000,000 shares of
Series C Preferred. To the best of the Debtor's
information, no Series C Preferred Shares have been
issued.
B. Summary of Debtor's Operations 1990-May 1996.
1 . Operations. Commencing with the confirmation of the Plan of
Reorganization for the Debtor by the United States Bankruptcy Court for the
District of Nevada in Case No. 88-278 captioned In re: Munson Geothermal, Inc.
in December 1990 and continuing through May 3, 1996 the Debtor functioned as a
non-regulated utility holding company primarily
<PAGE> 29
engaged in the development, financing, construction and operation of geothermal,
wind and biomass energy resources which are used primarily to generate electric
power. In 1994, the Debtor (through one of its then subsidiaries) acquired by
merger Herth Printing and Business Supplies, Inc. As a result of that
acquisition, the Debtor also began to operate a custom printing and catalogue
based retail office supply business.
The Debtor's operations were conducted through a variety of joint
ventures, partnerships and subsidiaries and are discussed in detail in filings
made by the Debtor with the Securities and Exchange Commission. The latest SEC
filings by the Debtor include the following:
* An annual report for the twelve months ended February
28, 1996 as reported on Form 1 O-KSB, and
* Quarterly reports for the three months ended on May
30, August 30 and November 30, 1996 as reported on
Form 10-QSB. The Debtor believes that the financial
information contained in its quarterly reports for
the period ending May 30, August 30 and November 30,
1996 as reported on form 10- QSB and filed with the
FCC may have been inaccurate for, among other things,
failure to take into consideration the existence of
and disbursement from the Palm Desert Bank account.
A copy of any one or all of the foregoing reports are available upon
request, without charge, by contacting the Debtor or its legal counsel.
2. Financial Results. During the period 1990 through May 3, 1996, the
Debtor continuously generated revenue from operations and was able to meet its
financial obligations as they became due. The Debtor was also profitable on an
intermittent basis.
During this approximately six year period, the Debtor's Class A Common
Stock traded
<PAGE> 30
in the over-the-counter market in a range of $3.62/share (high) to $0.25/share
(low).
The Debtor's filings with the SEC referenced above contain detailed
financial. statements for the fiscal years ending February 28, 1990, 1991, 1992,
1993, 1994, 1995 and 1996. Interim (unaudited) financial statements also appear
in the Debtor's quarterly reports on Form 10-QSB for the three months ended May
30, August 30 and November 30, 1996.
3. Management. During the period 1990 through May 3, 1996, the Debtor's
Board of Directors and Officers consisted of:
<TABLE>
<CAPTION>
Name Position
---- --------
<S> <C>
Jeffrey Antisdel Director and President
Richard A. Cascarilla Director and Secretary
Jeffrey Modesitt Director
Jeffrey Hartman Director
Michael Kassouff Director
</TABLE>
Information on the professional experience, education and background of
each of the individuals identified above was contained in the Debtor's annual
Proxy solicitation, which are also available without charge upon request to
Debtor or its legal counsel.
C. Change of Control (May 3, 1996).
On or about May 3, 1996, the Debtor sold to Golden Chance, Ltd., an
Isle of Mann corporation limited by shares, 2,000,000 shares of the Debtor's
Series A Preferred Shares. The terms of sale, in summary, were (i) $100,000
cash, and (2) a promissory note to pay $4,900,000 together with interest over a
term not to exceed twelve (12) months. Golden Chance, Ltd. was obligated to pay
the Debtor the amount of $500,000 per month commencing in August 1996. The
promissory note did not allow for prepayment. The promissory note was guaranteed
by Waterford Trust Company Limited, an Irish corporation.
Simultaneously with the sale of the Series A Preferred Shares, the
Debtor sold 5 shares
<PAGE> 31
of its Series B Preferred Shares.
Upon the issuance of the Series A Preferred Shares to Golden Chance,
Ltd., the Board of Directors of the Debtor resigned and was replaced by
Directors designated by Golden Chance, Ltd. as follows:
<TABLE>
<CAPTION>
Name Position
---- --------
<S> <C>
Charles Cain Director
Charles Cannell Director
Robert Goold Director
</TABLE>
Messrs. Antisdel and Cascarilla agreed to remain as President and
Secretary (respectively) on an interim basis until new officers were appointed
by the Board of Directors.
The new Board of Directors and their "consultant"/advisor, Mr.
Pattinson Hayton III, assumed control of the Debtor on or about May 3, 1996.
Unknown to the Debtor and its former Board of Directors, Mr. Hayton had been
previously enjoined by the United States District Court for the District of
Columbia, Docket No. 88-305-NHJ on August 18, 1988, from violating certain
provisions of the federal securities laws and had been fined $60,000 for civil
contempt of that injunction.
D. Summary of Pre-Petition Events from May 3, 1996 through the Petition
Date.
During the period May 3, 1996 through the Petition Date, the
operational and financial affairs of the Debtor deteriorated significantly.
Among other things,
* Valuable assets were sold, transferred or conveyed
for little or no consideration,
* Large amounts of cash were wire transferred
off-shore, paid to third parties or converted into
travelers checks and released,
* False, misleading or inaccurate documents were filed
with the Securities
<PAGE> 32
and Exchange Commission,
* Litigation was commenced by various third parties
seeking restitution and/or specific performance of
contractual commitments involving the Debtor,
* One or more companies were acquired for substantial
cash and Class A Common Stock despite the fact that
the acquired company had no assets, no revenue, no
proprietary products and was unable to produce
audited or auditable financial statements,
* Golden Chance, Ltd. defaulted with respect to payment
of its $4,900,000 promissory note for the purchase of
Series A Preferred Shares, and Waterford failed to
fulfill its financial guarantee
* False, misleading or inaccurate press releases were
issued, and
* Massive amounts of Class A Common Stock were issued
for which the Debtor received little or no
consideration.
Several events warrant more detailed discussion, including the
following:
1 . Sale of Class B Common Stock.
In May 1996, when Waterford contracted to purchase the Series A
Preferred, Golden Chance contracted to purchase 100% of the issued and
outstanding Class B Common Stock from Nevada Energy Partners I ("NEP"), a Nevada
limited partnership. Under the contract, NEP retained the Class B Common Stock
until fully paid but Golden Chance received a proxy to vote the Class B stock
which was less than 20% of
<PAGE> 33
the outstanding voting shares of the Debtor. The General Partner for NEP was
Nevada Electric Power Company, a Nevada corporation which was owned 100.0% by
Mr. Jeffery Antisdel, the then President of the Debtor. The General Partner of
NEP owned 40.0%. Under the August 16, 1996 agreement the Class B Common Stock
owned by NEP was convertible into Class A Common Stock on a 1:1 ratio. As of
August 1996, the Class B Common Stock, if converted, was equal to 50.0% of the
issued and outstanding Class A Common Stock. Because the Class B Common Stock
had voting rights, whoever controlled the Class B Common Stock had a significant
impact on the resolution of issues submitted to the Shareholders for approval.
In May 1996, the Debtor's Articles of Incorporation provided that a
"supermajority" vote of 80.0% of the voting stock (i.e. the Class A and Class B
Common Stock) was required to amend the Debtor's Articles of Incorporation.
When Golden Chance purchased the Series A Preferred Stock, and they
subsequently entered into a separate agreement with NEPC. Although the Debtor
has not been provided with a copy of this Agreement, it is Debtor's
understanding that the Agreement provided, in substance, as follows:
* NEPC granted to Golden Chance a Power of Attorney to
vote the Class B Common Stock, and
* Golden Chance agreed to purchase 4,437,473 shares of
Class B Common Stock, from NEPC in exchange for
$1,200,000 to be paid at the rate of $50,000 per
month, and pursuant to the terms of a Promissory Note
given to NEPC by Golden Chance. No payments were ever
made.
<PAGE> 34
The Debtor's Annual Meeting of Shareholders was scheduled for August
16, 1996 in Santa Barbara, California. Prior to the meeting, David Wallace,
Esq., legal counsel for NEPC, declared an event of default with respect to the
$1,200,000 Promissory Note issued to NEPC and threatened to revoke the proxy
granted to Golden Chance to vote the Class B Common Shares. If the proxy were
revoked, NEP would have controlled less than 50.0% of the votes to be cast at
the annual meeting.
Immediately prior to the commencement of the Annual Meeting, a new
agreement was negotiated between the Debtor (whose Directors had been designated
by Golden Chance), and NEPC. The subject Agreement is attached hereto as Exhibit
2.
Subsequent to the execution of this revised agreement, Mr. Wallace
negotiated an agreement between NEPC and 16 Bahamian corporations. The Debtor
has learned that NEPC contracted to sell about 4,437,473 shares of Class A
Common Stock to the 16 Bahamian corporations for a total of about $1,200,000
which obligation was set forth in Promissory Notes issued to NEPC. Debtor has
been informed that no payments were ever made on this Note.
After the commencement of this Chapter 11 case and the entry of an
Order authorizing the Debtor to function as Debtor-in-Possession, the Debtor has
given notice of its intent to commence an adversary proceeding for the purposing
of setting aside the August 1996 agreement as being in violation of Section 547
and/or 548 of the Bankruptcy Code.
All of the parties to the August 1996 Agreement have entered into a
settlement agreement that is attached hereto as Exhibit 2.
2. The Palm Desert Bank Account.
On May 2, 1996 a bank account was opened in Palm Desert, California at
a branch office
<PAGE> 35
of Bank of America in the name of "Nevada Energy Company." The initial deposit
into that account consisted of $100,000, which was the initial payment to be
made by Golden Chance for the purchase of the Debtor's Series A Preferred
Stock.
Although this bank account was in the name of "Nevada Energy Company,"
no corporate officer of the Debtor controlled this account. The new Board of
Directors designated by Waterford, authorized the formation of this account and
placed it under the control of Mr. Pattinson Hayton's assistant, Darlene Ramos.
During the period May 2 through August 5, 1996, a total of $1,342,401
was wire transferred into this account. Of this sum, the Debtor received less
than $200,000. All of the balance (i.e. more than $1,100,000) was disbursed
without the prior knowledge or approval of any of Debtors officers, although Mr.
Antisdel (the then President of the Debtor) knew of this bank account and
demanded that the payments be deposited into the Debtor's bank account in Reno,
Nevada.
Prior to the 1996 Annual Meeting of Shareholders, Mr. Jeffery Antisdel
received an itemized schedule of disbursements from the Palm Desert bank
account. This schedule confirmed disbursements of large amount of money, but
detailed documentation was not provided. Mr. Antisdel and Mr. Cascarilla entered
into an agreement with the Debtor's auditors, Kafoury, Armstrong and Company, to
investigate this account. Darlene Ramos refused to turn over the necessary
documents at Pattinson Hayton's direction.
Following the Annual Meeting of Shareholders, there was a meeting
involving two of the Debtors three Directors, the officers, Mr. Antisdel, Mr.
Cascarilla, Mr. Hayton and. others. At that meeting, Mr. Hayton represented that
he would repay to the Debtor any proceeds which Mr. Antisdel determined had been
improperly disbursed. Mr. Antisdel was terminated by the
<PAGE> 36
Debtor's Board of Directors in September 1996 prior to making any determination
regarding disbursements from the Palm Desert account.
The Debtor is currently investigating these disbursements and the
accuracy of its filings with the SEC, and intends to seek disgorgement and/or
restitution where appropriate.
3. Telecom Technologies, Inc. ("TTI").
In August 1996, the Directors designated by Waterford authorized the
Debtor to acquire 100% of the issued and outstanding common stock of TTI in
exchange for (i) the payment of $500,000 cash, and (ii) 2,000,000 shares of
Class A Common Stock, which was then trading for about $1.00 per share. The
Debtor purchased TTI from WINA Associates.
Immediately prior to the 1996 Annual Meeting of Shareholders, Messrs.
Antisdel and Cascarilla learned that TTI had recently been sold by Mr. and Mrs.
Dean Chamberlain (its sole shareholders) to WINA Associates for (i) a promise to
pay $135,000 of which only $45,000 had been paid, and (ii) 100,000 shares of
Class A Common Stock. Mr. Chamberlain also confirmed his understanding that Mr.
Pattinson Hayton owned or controlled WINA Associates.
Mr. Antisdel then directed the Debtors auditors to examine the books
and records of TTI in anticipation of requisite SEC filings. The auditors
informed Mr. Antisdel that TTI did not maintain its financial records in
accordance with generally accepted accounting principles. According to the
auditors, TTI had little or no revenue or assets.
Messrs. Cascarilla and Antisdel objected to this transaction and asked
that the Golden Chance designated Board of Directors rescind the transaction.
The Board refused to do so. Debtor later filed a Form 8K indicating that the
transaction had been rescinded, but no consideration was returned to the Debtor.
The Debtor is in the process of investigating this transaction and
intends to seek
<PAGE> 37
restitution and/or disgorgement.
4. The Santa Barbara Lease.
In the fall of 1996, Mr. Hayton went to Santa Barbara and entered into
negotiations to lease 100.0% of a multistory building consisting of about 32,000
sq. ft. At that time, the Debtor had only four employees and nominal revenue,
which was not sufficient to pay the monthly rental. Although the exact purpose
for this transaction is not known, it is believed that Mr. Hayton wanted to
utilize the building as a vehicle to create the illusion that the Debtor's
business and operations were successful and growing, and operate his personal
business at the Debtor's expense.
Central Communications Corporation ("CCC"), a subsidiary of Debtor,
thereafter executed a lease agreement to rent the entire building. In order to
give CCC the illusion of stability, the Debtor (under the control of the Golden
Chance Board of Directors) caused financial statements to be prepared and filed
with the SEC which were inaccurate. Once acquired, Mr. Hayton occupied an
executive suite and conducted business on behalf of other companies and
enterprises at that facility.
The landlord demanded that the Debtor guarantee the leasehold
obligation. The Board of Directors never authorized this guarantee.
CCC never had any revenue. CCC ultimately defaulted with respect to its
lease payment obligations. The landlord has filed a Proof of Claim seeking to
rely upon the alleged guarantee of Debtor. The Debtor has objected to this Proof
of Claim and denies that its Board of Directors ever authorized the guarantee.
After the approval of the Disclosure Statement, the landlord withdrew
the claim.
<PAGE> 38
5. February 1997 Stock Issuance.
On February 6, 1997, just 7 days before the Petition Date, Mr.
Pattinson Hayton (the then President of the Debtor) arranged for 470,000 shares
of the Debtor's Class A Common Stock to be issued to three (3) entities. The
Class A common stock was to be distributed as follows:
<TABLE>
<CAPTION>
Name Number of Shares
- --------------------------------------------------------------------------------
<S> <C>
Pillsbury Madison & Sutro 150,000
Jones, McCloy and Peterson 220,000
Wilson, Elser, Moskowitz, Esselman and Dicker 100,000
</TABLE>
The Debtor received little or no consideration for the issuance of this stock.
At that time, the Debtor's Class A stock was traded at approximately $0.125 per
share. The Debtor is in the process of investigating these transactions and
intends to seek disgorgement and or restitution arising out of these events.
The plan of reorganization provides, among other things, that the
January, 1997 "amended" Articles of Incorporation are rescinded and withdrawn
and in place thereof new Articles of Incorporation will be filed with the
Secretary of State for the State of Delaware.
The Debtor is in the process of investigating the facts and
circumstances surrounding the attempt in 1997 to amend the Articles of
Incorporation. The Debtor anticipates that it will pursue claims for damages and
restitution arising out of such actions.
6. Attempt to Amend Articles of Incorporation.
In the Fall of 1996, the Debtor's then Board of Directors designed a
strategy to amend the Debtor's Articles of Incorporation in order to increase
the authorized number of shares of Class A common stock and to create a new
class of common stock, to be known as "Class C
<PAGE> 39
Common Stock". At that time, the Debtor's Articles of Incorporation contained
a "super majority" voting requirement. In other words, in order for the
Articles of' Incorporation to be amended, the affirmative vote of eighty
percent (80%) of the issued and outstanding Class A and Class B common shares
was required.
Without securing the affirmative vote of eighty percent (80%) of the
Class A and Class B common shares, the then Board of Directors of the Debtor,
working in conjunction with various attorneys, caused an affidavit to be filed
with the Secretary of State for the State of Delaware to the effect that the
super voting requirement had not been properly adopted and, therefore, the
Articles of Incorporation to be amended on the basis of the affirmative vote of
only fifty percent (50%) of the issued and outstanding Class A and Class B
common shares.
On the basis of that affidavit, the Secretary of State for the State of
Delaware permitted the Debtor to file Amended Articles of Incorporation.
The Debtor has determined that the affidavit as submitted to the
Secretary of State for the State of Delaware was false and inaccurate.
Accordingly, the attempt to amend the Articles of Incorporation was void.
7. Waterford Defaults.
In consideration of its purchase of the Series A Preferred Shares,
Golden Chance was contractually obligated to pay to Debtor a total of $4,950,000
to be paid in equal monthly installments of $500,000 per month commencing August
1996.
Prior to September 1996, Golden Chance was in default of its payment
obligations. At that time. Mr. Antisdel (as President) made demand for payment
upon Waterford Trust Company Limited, an Irish corporation, which had guaranteed
timely payment of the Golden Chance note. Waterford failed to fulfill its
guarantee commitment.
<PAGE> 40
Messrs. Antisdel (as President, and Richard Cascarilla, as Secretary to
the Debtor) prepared a special report on Form 8-K to be filed with the SEC
reporting the default. Messrs. Antisdel and Cascarilla were fired the day before
that Form 8-K could be filed.
Thereafter, the Debtor's Board of Directors adopted a resolution
waiving the default. At least two members of the Board of Directors (Messrs.
Cain and Cannel) were also Directors or affiliates of Waterford and/or Golden
Chance.
Subsequent to the default, to the best of Debtor's knowledge, Golden
Chance made no further payments on its promissory note and Waterford failed to
fulfill its guarantee.
As a result of these events, the Debtor's financial condition
deteriorated significantly subsequent to May 3, 1996, and Debtor failed to pay
its creditors' claims.
For this reason, several creditors filed a Petition for Involuntary
Reorganization pursuant to Section 303 of the Bankruptcy Code.
IV. INFORMATION ABOUT THE CHAPTER 11 CASE.
A. The Involuntary Petition.
Three of Debtor's creditors -- Mr. Richard Cascarilla, Unishippers and
Geothermal Development Associates -- filed an involuntary petition pursuant to
Section 303 of the Bankruptcy Code to reorganize the Debtor. The Petition was
filed on February 13, 1997 (the "Petition Date").
At that time, the Debtor's Board of Directors and Officers consisted of
the following individuals:
<PAGE> 41
<TABLE>
<CAPTION>
Name Position
---- --------
<S> <C>
Pattinson Hayton, III President
Kevin Quinn Secretary
Charles Cain Director
Charles Cannell Director
Michael Kassouff Director
</TABLE>
Mr. Kassouff had been elected by the Series B shareholders after Golden
Chance went into default with respect to its $4,900,000 promissory note
initially given for the purchase of the Series A Preferred Shares.
When the involuntary petition was filed, the Debtor opposed the
Petition. In summary, the Debtor asserted that it was generating revenue and,
therefore, the Petition was inappropriate. Mr. Kassouff was of the opinion that
the appointment of a Trustee was necessary and appropriate for the protection of
both creditors and shareholders.
After holding a hearing to consider the objections made on behalf of
the Debtor by Mr. Hayton, the Bankruptcy Court entered an Order (1) authorizing
the Petition to remain as filed, and (2) appointing an interim trustee. At this
hearing, the Debtor was represented by Mr. Kevin Quinn, an alleged attorney
hired by Pattinson Hayton, whose licence to practice law had been suspended by
the State Bar of California, and subsequently disbarred.
B. Actions by the Interim Trustee.
The Interim Trustee assumed control of the Debtor, began an analysis of
the Debtor's assets and liabilities and attempted to gain control over the
affairs of the Debtor. He was opposed in this process by Mr. Hayton who, among
other things, caused the Debtor to issue Class A Common Stock subsequent to the
appointment of the Interim Trustee but without the consent of the Bankruptcy
Court or the Interim Trustee.
Among other things, the Interim Trustee negotiated and completed a sale
of the Debtor's
<PAGE> 42
interest in San Jacinto Power Company, an energy cogeneration project. The sales
price was $200,000 cash and assumption of outstanding liabilities which exceeded
$300,000.
C. The Debtor-in-Possession.
While the Interim Trustee was attempting to secure control over the
affairs of the Debtor, Messrs. Cain and Cannell resigned as Directors. The sole
remaining Director (Mr. Michael Kassouff) elected as successor Directors Messrs.
Richard A. Cascarilla and Mr. Lawrence A. Herth.
Immediately thereafter, the Board of Directors terminated Messrs.
Hayton and Quinn and elected Mr. Richard A. Cascarilla as President and Mr.
Lawrence Herth as Secretary.
The new Board of Directors then filed a petition requesting that the
Court permit the Debtor to resume operations functioning as the
Debtor-in-Possession pursuant to 11 U.S.C. Section 1107. The Court approved that
Petition in September, 1997.
D. Summary of Activities of the Debtor-in-Possession.
Functioning as Debtor-in-Possession, Debtor concentrated its efforts in
the following arenas:
* The Trustee negotiated the sale of the Debtor's
partnership units in a California venture known as
San Jacinto Power Company.
* The Company engaged professionals to assist in the
investigation of claims and causes of action to be
initiated by or on behalf of Debtor in order to
recoup assets which had been dissipated in violation
of sections 547, 548 or 550 of the Bankruptcy Code.
* An evaluation was conducted of the pending litigation
in which Debtor was a defendant for the purpose of
determining the validity of defenses
<PAGE> 43
and exploring the feasibility of settlement.
* Management focused upon an evaluation of current
Debtor resources in order to design a new business
plan upon which a plan of reorganization would be
structured.
* Efforts were initiated for the purpose of identifying
and regaining possession of Debtor assets which had
been dissipated and/or conveyed to third parties.
* Negotiations were commenced with Debtor's largest
creditor and shareholder NEP for the purpose of
resolving open issues that would result in meaningful
support for a plan of reorganization.
* Working in conjunction with Mr. David Wallace,
management identified a specific strategy for the
penetration of international telecommunication
services, and commenced to implement that strategy
through the acquisition of two companies which had
been established by Mr. Wallace anticipated (VivaTel
and Diego Tel), which had recently developed
relationships for access to telecommunication
services as both as a vendor and supplier and had
secured one or more letters of credit which totaled
$270,000 and other equity funding.
As of result of these activities, several significant documents were
prepared and agreements were entered into:
1. Debtor, Diego Tel, VivaTel and Mr. Wallace entered into a
Share Exchange Agreement dated as of December 1, 1997,
pursuant to the terms of which Debtor acquired 100.0% of the
issued and outstanding Common Stock of VivaTel and
<PAGE> 44
Diego Tel. The agreement involving Diego Tel is predicted to
be superseded by an Amended and Restated Agreement for
Exchange of Stock (Debtor also entered into an "Ownership
Settlement" Agreement regarding VivaTel, see Article III,
Section G, "Litigation and Claims"). Both Agreements require
approval of the Bankruptcy Court.
2. Debtor, NEP, Nevada Energy Power Company ("NEPC") and others
entered into a "Settlement Agreement" with respect to claims
and assertions between them. As a result of this Settlement
Agreement, which was effective as of December 1, 1997, Debtor
recouped ownership of Combustion Energy Corporation and its
operations (Herth Printing & Business Supplies), as well as
title to a parcel of real estate situated in Reno, Nevada.
3. Debtor negotiated an "Indemnification Agreement" with Nevada
Electric Power Company and Mr. Jeffrey Antisdel, pursuant to
the terms of which NEPC and Mr. Antisdel guaranteed that net
operating losses recognized by Debtor during the tenure of Mr.
Antisdel were valid and would remain in full force and effect.
NEPC and Mr. Antisdel agreed to indemnify and hold Debtor
harmless from any and all expenses and damages which it might
incur in the event that there is any adjustment with respect
to these net operating losses.
4. A Plan of Reorganization and Disclosure Statement were
prepared, reviewed by the Debtor's Board of Directors, adopted
by the Board of Directors, submitted to the Court for review
and (with the permission of the Court) transmitted to the
Creditors for consideration.
In addition, as of December 1, 1997, Debtor resumed operations. Revenue
for the period
<PAGE> 45
December 1997 through May 1998 was attributable to Debtor's subsidiary CEC,
which owned Herth Printing and Business Supplies.
Substantial time, energy and resources have been expended in the
exploration and development of a new business plan. See Article III, Section E.
As part of this endeavor, management and professionals assisting the Debtor have
been involved in extensive, protracted and complex negotiations on various
facets of this new business plan, especially the acquisition of Viva Tel and
Diego Tel.
V. THE DEBTOR'S ESTATE.
A. Business Operations.
As of the petition date, the Debtor s operations consisted almost
exclusively of its interest in San Jacinto Power, which was subsequently sold by
the interim trustee.
In or about April, 1998, the Debtor entered into a Settlement and
Release Agreement with NEP, one which is discussed below in more detail. As a
result of this agreement, retroactively to December 1, 1997, Debtor regained
ownership of a revenue generating former subsidiary (Combustion Energy Corp.).
Through the reacquisition of this subsidiary, the Debtor currently receives
revenue which is reported to the Court in the Debtor's monthly reports, which
are available upon request.
B. Assets and Financial Condition.
As of the Petition Date, the Debtor's assets consisted of the
following:
* Ownership of the following subsidiaries:
San Jacinto Power Company
* Ownership of ten (10) energy cogeneration units
* Claims for damages arising out of transactions
involving consist of its
<PAGE> 46
former President and Directors
* Claims for damages against third parties set forth in
Section E below.
Financial statements for the period ending May 31, 1998 and pro forma
financial statements are enclosed as Exhibit 3.
C. Claims and Liabilities.
In addition to the pending litigation, the Debtor has various claims
and is investigating the following:
Among others, the Debtor investigation is focusing upon:
1. Banks and others which participated in the receipt and
transfer of monies belonging to Debtor;
2. Attorneys who issued legal opinions and/or assisted in the
design and implementation of transactions in violation of law;
3. CPA's who issued opinions with respect to financial statements
upon which Debtor relied to its detriment;
4. Corporations and individuals who received Cash, Class A Common
Stock or other assets from Debtor for which Debtor received
little, no or inadequate consideration; and
5. Individuals who participated or aided and abetted
participation by others in acts and practices which resulted
in damages to Debtor.
6. The administration of a bank account established in Palm
Desert, California allegedly on behalf of Debtor and the
disbursement of more than $1,000,000 from that account;
7. The purchase of 100.0% of the issued and outstanding common
stock of Telecom
<PAGE> 47
Technologies, Inc. by Debtor in 1996;
8. The formation and administration of Central Communications
Company and its operations including, but not limited to, the
lease of real property situated in Santa Barbara, California;
9. Whether Messrs. Cain, Cannell, Goold, Tevis, Hayton, Bowers
and Kevin Quinn fulfilled their statutory and fiduciary duties
as Officers and/or Directors of Debtor;
10. Whether Waterford Trust Co. or its nominee (Golden Chance,
Ltd.) violated Section 17(a) of the Securities Act of 1933,
Section 10(b) or Rule 10-b(5) of the Securities Exchange Act
of 1934 or any analogous state statute in conjunction with the
purchase of Series A Preferred Shares from Debtor in May 1996
and, if so, whether Debtor has the right to seek restitution
from persons controlling such entities;
11. Whether during the period May 3, 1996 through the Commencement
Date Debtor failed to file reports otherwise required to be
filed pursuant to the Securities Exchange Act of 1934 and, if
so, whether Debtor has a cause of action against the then
Officers and Directors of Debtor for damages and expenses
arising out of such failures;
12. Whether one or more individuals who are subject to section 16
of the Securities Exchange Act of 1934 purchased and sold
securities issued by the Debtor within a six (6) month period
in violation of section 16(b) of that statute;
13. Whether Cash, real property, contract rights, intellectual
property or other assets (real, personal or equitable) were
misappropriated, misused or wrongfully
<PAGE> 48
appropriated by third parties;
14. Whether Messrs. Cain, Cannell, Goold, Tevis, Hayton, Quinn or
Bowers, individually or acting in concert, directly or
indirectly usurped any corporate opportunity, contract or
asset of Debtor for personal gain;
15. Whether any person identified in the Securities Act of 1933 or
the Securities Exchange Act is liable to Debtor for violations
of either of these statutes;
16. Whether Debtor has a cause of action arising pursuant to the
Racketeer Influence and Corrupt Organizations Act;
17. Whether, subsequent to the Petition Date, any assets of the
estate of the Debtor was misappropriated to or wrongfully
taken by a third party;
18. Whether any underwriters, brokers, dealers, banks and stock
transfer agents participated in or aided and abetted in the
transfer of securities issued by Debtor; and
19. Whether Debtor has a claim for indemnification arising out of
a policy for Directors and Officers liability insurance in
effect for part of 1996.
While its investigation is not yet complete, on the basis of
information uncovered to date, the Board of Directors of Debtor anticipates that
Debtor will institute civil proceedings against multiple parties unless they
voluntarily settle with the Debtor.
The Plan provides, pursuant to section 1123 (b)(3) of the Bankruptcy
Code, for the retention and enforcement by the Debtor of any claim or interest
belonging to the estate of the Debtor including, but not limited to, the matters
summarized above.
Debtor has been contacted by the SEC with respect to an ongoing
investigation by the SEC into the activities of various individuals. Debtor has
offered to cooperate with the SEC in
<PAGE> 49
this matter.
The Board of Directors has also authorized the President (Mr.
Cascarilla) to confer with the United States Attorney for the District of Reno,
Nevada for the purpose of discussing potential criminal conduct of certain
individuals and entities.
In order to enact the new business plan, the Debtor has prepared and
submitted to the Court a Plan of Reorganization to resolve the claims of its
Creditors.
D. Business Affairs.
The Debtor's operations subsequent to the Petition Date are discussed
in periodic reports filed by the Debtor with the Court on a monthly basis. A
copy of the monthly reports are available upon request.
E. Litigation and Claims.
Debtor was both a plaintiff and a defendant in civil litigation pending
as of the commencement of the Chapter 11 case. When the Chapter 11 case was
initiated, all pending civil litigation, in which Debtor was a defendant, was
automatically stayed pursuant to section 362 of the Bankruptcy Code.
Civil litigation and the status of each matter is as follows:
Proceedings in which
Debtor is a Defendant
<TABLE>
<CAPTION>
Case Docket No. Nature of Claim Comment
- ---- ---------- --------------- -------
<S> <C> <C> <C>
Mary Kay Robinson, 216651 Breach of Lease-- 1. Case stayed
Trustee v. Central Superior Court Alleged Damages 2. Plaintiff filed
Central Communications Santa Barbara, of $1,200,000 Proof of Claim
Company and Nevada California 3. NEC denies
Energy Company disputed Proof of
Claim
</TABLE>
<PAGE> 50
<TABLE>
<S> <C> <C> <C>
Jeffrey Antisdel vs. CV96-07001 Breach of Contract Settlement
Nevada Energy Company County of Damages alleged negotiated
Washoe, to be approximately in amt of $384,500
Nevada $384,500
Jeffrey L. Hartman, CV96-07453 Breach of Contract Claims to be paid
Michael Kassouff and County of Damages alleged with interest
Jeffrey Modesitt vs. Washoe, to be about
Nevada Energy Company Nevada $13,200 for each Plaintiff
Nevada Energy Partners CV96-07487 Breach of Contract, Settled. See Article
vs. Nevada Energy Company County of Washoe Specific Performance and III Section I.
Nevada damages in excess of
$6,000,000
Smith, Katzenstein & Furlow 96-12-004-JEB Action on account, Settled, Stipulated
vs. Nevada Energy Company Superior Court, Damages of $78,731 judgment for
New Castle, DE $78,731
</TABLE>
Proceedings in Which
Debtor is a Plaintiff
<TABLE>
<S> <C> <C> <C>
Case Docket No. Nature of Claim Comment
Nevada Energy Company 216568 Rescission and Specific Dismissed per
vs. Nevada Energy Partners, Superior Court Performance settlement. See
Santa Barbara, CA Article II Section C
NEC v. Charles Cain 15421 NC Breach of fiduciary duty Pending in
Court of Chancery discovery stage
New Castle County,
DE
NEC v. Peter Cannell 15421 NC Breach of fiduciary duty Pending in
Court of Chancery discovery stage
New Castle County,
DE
NEC v. John Goold 15421 NC Breach of fiduciary duty Default obtained
Court of Chancery
New Castle County,
DE
</TABLE>
<PAGE> 51
<TABLE>
<S> <C> <C> <C>
NEC v. Stefan Tevis 15421 NC Breach of fiduciary duty Default obtained
Court of Chancery
New Castle County,
DE
NEC v. Waterford Trust 96C-12-150 Breach of contract Default Judgment
Company and Golden Chance Superior Court obtained for
New Castle County, approximately
DE $5,000,000
</TABLE>
Claims and Potential Claims by PowerTel U.S.A.
Charles Cain
Peter Cannell
John Goold
Stefan Tevis
Waterford Trust Co., judgment entered for $5,000,000
Golden Chance Limited, judgment entered for $5,000,000
1. Telecom (AE)
- an Isle of Man corporation which represented that it held
contract rights to telecommunication projects. Allegedly assigned rights to
Wina Associates, Ltd. which later sold these rights to NEC for 2,000,000
shares of Class A stock and $500,000 cash. Original contracts were from Dean
Chamberlain for $135,000 and 100,000 shares of Class A stock.
2. Roderick McCloy, Attorney
- Canadian attorney who is a director of Waterford Trust Co.,
attorney for Golden Chance, Telecom (AE), and personally for the NEC
directors. Never represented NEC, but received $500,000 cash by wire transfer
and check identified as attorneys' fees. Also was issued stock in an excess of
220,000 shares. Acted as escrow agent for various entities and worked with
Pacific International for distributing all the unrestricted stock issued by
the company under S-3, S-8, and Reg S opinions issued by Kevin Quinn, who has
not held a law license since 1993.
3. Kevin Quinn
- disbarred attorney who has been suspended since 1993. Issued
Reg S opinions for Telecom (AE), Golden Chance and PowerTel since May of 1996.
Also filed an S-8 registration in 1996 for 1.3 million shares of Class A
stock. Was secretary of the company. Has received in excess of 500,000 shares
of unrestricted stock.
<PAGE> 52
4. Mortlake Venture Capital Corporation.
- California corporation allegedly owned by Pattinson Hayton. Has
received over $370,000 and 300,000 shares of stock for little or no
consideration.
5. Pillsbury Madison & Sutro/Graham Taylor, Esq.
- Subsequent to the Petition Date, the Debtor's Board of
Directors initiated an internal investigation into the activities of the
Debtor during the period of May 1996 through the Petition Date. Among other
things, the Debtor has focused on the activities of the various attorneys,
accountants and financial advisors who had been engaged by the
Waterford-Golden Chance Board of Directors. One of the law firms so engaged
was Pillsbury, Madison & Sutro of San Francisco, California which was engaged
as "securities counsel" and "general counsel' to the company.
During the course of that investigation, the Debtor has identified
certain evidence which appears to indicate that Pillsbury, Madison & Sutro had
been legal counsel to Pattinson Hayton (and/or his affiliated companies and
associates), Waterford and Golden Chance, and that Pillsbury, Madison & Sutro
provided legal representation to Mr. Hayton regarding matters involving the
Securities and Exchange Commission. One of the partners of that firm, Graham
Taylor, has been a long time friend and associate of Mr. Hayton. The Debtor
has also traced funds and Class A Common Stock into the possession and/or
control of Pillsbury, Madison & Sutro. While Pillsbury, Madison & Sutro was
serving as "securities counsel," filings were made by debtor with the SEC
which appear to be inaccurate, false and/or misleading. The role and
involvement of Pillsbury, Madison & Sutro in these events is being
investigated.
In view of the foregoing, the Debtor is pursuing an investigation for
the purpose of confirming whether the Debtor has causes of action against
Pillsbury, Madison & Sutro and/or any of its partners. In addition, the Debtor
is in the process of evaluating whether Pillsbury, Madison & Sutro secured
written waivers of actual or potential conflicts of interest and/or engaged in
acts and practices by or on behalf of another client to the detriment of the
Debtor. Finally, Debtor is evaluating whether it has claims for damages to
itself and its shareholders arising out of the conduct of Pillsbury, Madison &
Sutro.
At this time, the Debtor's investigation is continuing. Pillsbury,
Madison & Sutro has cooperated by providing Debtor with access to almost 3700
pages of documents, but has declined an offer to meet with Debtor for the
purpose of discussing the firm's conduct
6. James Kaplan, Esq.
- Florida attorney at firm of Wilson, Elser, Moskowitz & Eselman,
who has worked with Hayton for many years. He also has represented Waterford.
Has received unrestricted stock in excess of 100,000 shares.
<PAGE> 53
7. Donald Davis, Esq.
- California attorney. Issued the S-3 opinion for $10,000.
8. Morris, Nichols, et al.
- Delaware firm which issued the legal opinion which NASDAQ
relied on to approve the reverse split of the company's common stock.
9. Weil, Gotchill & Manges
-New York law firm which wrote an eight-page letter to NASDAQ on
February 13, 1997, on behalf of the company which contained factual errors.
10. Paul Messina, C.P.A.
- located in Palm Springs are and has done auditing work for
Hayton, Waterford, and NEC. Did financial statements for Waterford which were
relied upon by NEC in finalizing the GCL deal. Also was the independent
auditor who counted the ballots at the August stockholder meeting.
11. Signature Transfer Company
- Texas stock transfer company hired by the Waterford board.
Issued Class A common stock without general ledgers held by former transfer
company, Corporate Stock Transfer in Colorado. Documents verify that the two
overlapped for approximately eight days while substantial stock was issued.
12. Claims
Stone Brothers (Disputed)
As discussed elsewhere in this Second Amended Disclosure
Statement, Debtor owns Ormats power generating equipment and related equipment
("Ormats"). The Ormats are located in Fernley, Nevada, at Stone Brothers
Nevada Machinery. There is a dispute with Stone Brothers regarding its
entitlement to rent for the storage of the Ormats. The Debtor believes that
the Independent Contractor Agreement between Stone Brothers Welding &
Equipment Sales and Nevada Energy Co. dated July 3, 1992, governs the
respective obligations of the parties. If the parties are unable to resolve
the dispute, the matter will be set for hearing for the Court to decide the
issues.
In some instances, Defendants have operated in foreign countries and the
potential for recovery is uncertain. In other instances, the credit worthiness
of the Defendants are unknown. In most instances, the Debtor is represented by
legal counsel who has agreed to pursue claims
<PAGE> 54
and collecting on a contingent fee basis. There is no assurance or guarantee
that Debtor will be successful in its attempt to collect on these judgments.
In addition to the foregoing, Debtor has initiated an investigation into
the acts and practices of its Directors and Officers during the period May 3,
1996 through February 1997. The investigation also focuses upon all business
transactions to which Debtor was a party during this time period. The
objective is to determine whether Debtor has a claim pursuant to the
Bankruptcy Code (Section 547 or 548) or otherwise (i.e., pursuant to Delaware
law, the Federal securities laws or the applicable common law) for damages
and/or disgorgement and return of assets.
VI. THE REORGANIZED DEBTOR'S BUSINESS PLAN
Upon confirmation of the Plan of Reorganization, the Debtor will be deemed
to be "reorganized."
The Reorganized Debtor's business plan will consist of three business
segments, viz:
1. Functioning as a non-regulated utility holding company, the
Reorganized Debtor will seek to identify and develop an application
for its ORMAT units in the operation of geothermal, wind and
biomass energy projects, primarily through joint ventures and
partnerships with third parties. At this time, no specific project
has been identified.
2. The exploitation of its current printing and business supply
operation situated in Reno, Nevada conducted under the name
"Herth Printing and Business Supply."
3. The creation, development and implementation of an international
long distance telecommunication business focusing exclusively
upon the sale of long distance services where the ultimate
destination is out of the United States.
<PAGE> 55
With respect to the development of an energy cogeneration business, the
Reorganized Debtor is anticipated to have substantial physical resources,
consisting of its ORMAT Units. Management believes that the Reorganized Debtor
will be successful in negotiating joint venture or partnership relationships
in which the Reorganized Debtor will contribute its Energy Cogeneration
equipment. It is also likely, however, that the Reorganized Debtor will
require additional working capital in order to implement that line of
business.
With respect to its printing and business supply operation, management
anticipates that the Reorganized Debtor will continue to function largely as
it has done in the past. However, the Reorganized Debtor will be mindful of
opportunities to expand the business and printing supply operation, perhaps
through the acquisition of other companies or operations. At this time, no
such acquisition has been identified or under consideration. In the event that
the Board of Directors of the Reorganized Debtor determine that continued
operation of the printing and business supply operation is not consistent with
the long term objectives of the Reorganized Debtor, consideration may be given
to a sale or disposition of that portion of the Reorganized Debtor's business.
With respect to its entry into the long distance telecommunication
market, the Reorganized Debtor intends to do so through the acquisition of
VivaTel and Diego Tel, which will be finalized upon confirmation of the Plan
of Reorganization.
The Reorganized Debtor will acquire VivaTel for a one-time payment of
$500. VivaTel is currently owned by Mr. David Wallace, who is its sole
shareholder, officer and director. Diego Tel currently holds an authorization
granted by the Federal Communications Commission pursuant to Section 214 of
the Federal Communications Act.
A Section 214 authority permits the holder to market and sell long
distance
<PAGE> 56
telecommunication services in the United States on condition that the ultimate
destination of the long distance telephone call is to a country which is
outside the United States. At this time, a Section 214 license permits long
distance telephone calls to over 100 countries. To the best of management's
knowledge, no additional license or permit is required in order to conduct
such business within the United States.
With respect to Diego Tel, the Reorganized Debtor has entered into a
contract to purchase 100.0% of the issued and outstanding common stock of
Diego Tel from Mr. David Wallace upon confirmation of the Plan. The terms of
the acquisition are as follows:
* Subject to receipt of certain cash payments arising out of
telecommunications operations as discussed below in more detail,
the Reorganized Debtor will issue to Mr, Wallace Class A Common
Stock in an amount not to exceed 35.0% of the issued and
outstanding Class A Common Stock computed as of a date ten (10)
days after the Effective Date of the Plan of Reorganization.
Under the terms of the contract, no Class A Common Stock will be
issued to Mr. Wallace unless and until the Reorganized Debtor
receives cash receipts arising from the telecommunications
operations. For each month that the Reorganized Debtor receives
cash receipts of at least $100,000 greater than the preceding
calendar month, an incremental 10.0% will be distributed to Mr.
Wallace.
* Mr. Wallace will have a total of 30 months commencing with the
Effective Date of the Plan within which to generate a minimum of
$4,500,000 in cash receipts to the Reorganized Debtor. Assuming
that the entire $4,500,000 in cash receipts is generated
pursuant to the formula set forth in the Purchase Agreement, Mr.
Wallace will be deemed to have earned and will receive Class A
Common Stock
<PAGE> 57
in an amount equal to 35.0% of the issued and outstanding common
stock of the Reorganized Debtor computed ten (10) days after the
Effective Date.
* In the event that the Reorganized Debtor does not receive any
cash receipts within the 30 month period or if the cash receipts
fail to achieve the minimum threshold of $100,000 per month, no
Class A Common Stock will be issued to Mr. Wallace.
* In the event that the first payment threshold is achieved (i.e.,
in the event that there is a minimum of $100,000 cash receipts
within a calendar month) but the total cash receipts of
$4,200,000 are not received, a prorata distribution will be made
to Mr. Wallace.
A copy of the contract, as amended and supplemented, is enclosed as
Exhibit 4.
Based upon the current market value of the Debtor's Class A Common
Stock, the Board of Directors has valued the Class A Common Stock to be earned
by Mr. Wallace to be less than $150,000. In the opinion of Debtor's Board of
Directors, the purchase price is quite reasonable.
Mr. Wallace has provided representations and warrants that Diego Tel has
been issued and has valid authority pursuant to Section 214 of the Federal
Communications Act.
In addition, Diego Tel has leased or otherwise acquired fiber optic
cables suitable for the transmission of long distance telecommunication services
to its point of presence in Southern California. In addition, according to Mr.
Wallace, Diego Tel has purchased or leased appropriate gateway switching
equipment in order that Diego Tel can function as a direct distributor of long
distance telecommunication services. Finally, Diego Tel has entered into a five
(5) year agreement with a Mexican carrier, to provide services into Mexico.
<PAGE> 58
As part, of its agreement with Mr. Wallace, the Reorganized Debtor will
be placing substantial reliance upon Mr. Wallace with respect to the
development, marketing and implementation of its long distance
telecommunications program. Mr. Wallace, a Board Certified Tax Attorney, has
prior experience in the organization and operation of a for-profit business.
Mr. Wallace will receive no compensation from the Debtor.
David Wallace is 50 years old and has known Richard Cascarilla, the
current president, since 1981. Mr. Wallace first became interested in the
telecommunication field at age 18 when he received a First Class Radio Telephone
Operator's License from the Federal Communications Commission. He then operated
a commercial radio station as the board engineer.
He attended the University of Michigan and received a B.S. in
Microbiology from the Literature, Science and Arts College. After graduation, he
became the supervisor of the Genesee County Public Health Department in Flint,
Michigan. Subsequently, he returned to school and received a law degree from the
Thomas M. Cooley law school in Lansing, Michigan. He was admitted to the
Michigan and Florida Bar in 1981. In 1989 he passed the tax certification
examination by the Florida Bar and was board certified as a tax attorney.
Mr. Wallace has operated an oil and gas drilling company in Michigan,
and owned a furniture business in Florida.
Since 1996 Mr. Wallace began devoting his time to the telecommunications
business. In 1997 this business was a substantial portion of his business
activities. He has developed a level of expertise that the Debtor believes will
benefit the company, its creditors and shareholders.
<PAGE> 59
Mr. Wallace has previously represented NEP and NEPC in 1996, and
negotiated the August 16, 1996 settlement between the Debtor, NEP and NEPC.
Mr. Wallace has fully cooperated with the Debtor in preparing its legal
case against the former Board and their affiliates. Mr. Wallace lives in
Sarasota, Florida, with his wife, Dr. Arlie Wallace and their three children.
The management and Board of Directors of the Debtor believe that Mr.
Wallace, who has invested substantial time and personal resources in the
exploration and examination of the telecommunications arena, has the knowledge,
ability and skill to develop this business.
The Reorganized Debtor's telecommunications business plan anticipates
that the Reorganized Debtor will seek to exploit a niche market for long
distance telecommunications needs among immigrant, minority and lower income
migrant workers who need access to long distance telecommunication services but
who might not otherwise have access to more traditional, conventional modes of
communication. In addition, the Reorganized Debtor intends to market its long
distance telecommunication services to businesses which utilize long distance
telecommunication services in large volumes for transmission of voice and data
to one or more of the countries served by Diego Tel.
The Business Plan anticipates that Diego Tel will operate as a "low
cost" provider retaining a small percentage of the gross revenue while having a
small overhead.
Proforma financial projections with respect to the Reorganized Debtor's
telecommunications operations are attached as Exhibit 5. These proforma
financial statements have been prepared by Mr. Wallace.
<PAGE> 60
VII. THE PROPOSED PLAN
A. Designated Dates
The Plan designates four dates which govern the Debtor's obligations
pursuant to the Plan. The dates are:
1. Confirmation Date, the date on which the Bankruptcy
Court confirms the Plan.
2. Declaration Date, which is the thirtieth (30th) day
after the Confirmation Date. Creditors must make certain
elections on or before the Declaration Date in order
that the Debtor can determine the amount of Cash and
Class A Common Stock to be issued or disbursed pursuant
to the Plan.
3. Effective Date which is one-hundred twenty (120) days
after the Confirmation Date. On the Effective Date, the
Debtor will distribute Class A Common Stock and certain
Cash Payments to those unimpaired Creditors eligible to
receive the same pursuant to the Plan.
4. Payment Date, which is three hundred sixty-five (365)
days after the Confirmation Date. On the Payment Date,
the Debtor will distribute additional Cash payments to
be made to impaired creditors pursuant to the Plan.
The four dates have been selected by the Debtor in order to allow
sufficient time (1) to implement the administrative components of the Plan (e.g.
to amend the Articles of Incorporation and to issue new stock certificates to
existing shareholders), (2) to allow Creditors a reasonable period of time to
evaluate the financial and operational performance of the Debtor in order to
determine whether to elect to accept Class A Common Stock in lieu of
<PAGE> 61
(or as partial payment for) Cash, (3) to effect a distribution of Class A
Common Stock to Creditors pursuant to the Plan, and (4) to generate Cash from
operations in order to disburse Cash payments to Creditors as provided in the
Plan.
B. Classification of Claims and Interest
For purposes of the Plan, Claims of Creditors and Equity Interest
holders are classified as either "Allowed" or "Disputed."
A Claim is "Allowed" if:
(a) Proof of Claim was filed on or before the last date designated by
the Bankruptcy Court as the last date for filing Proofs of Claims or (if no
Proof of Claim is filed) the Claim or Equity Interest has been listed by the
Debtor as liquidated in amount and not disputed; and
(b) Debtor has either (i) not filed an objection to the Claim. or (ii)
if an objection was filed by Debtor, the Court refused in a Final Order to
sustain the objection.
A Claim that is not "Allowed" is deemed to be Disputed.
The Plan focuses upon Allowed Claims and Equity Interests, with each
Claim or interest allocated into one of nine classes (one class is for Disputed
Claims).
* Class 1 - Allowed Claims for Administrative Expense.
* Class 2 - Allowed Wage Claims.
* Class 3 - Allowed Munson Reorganization Priority Tax Claims.
* Class 4 - Allowed Priority Tax Claims.
* Class 5 - Allowed Claims of Secured Creditors.
* Class 6 - Allowed Claims of Unsecured Creditors Not in Excess of
twelve hundred dollars ($1,200).
* Class 7 - Allowed Claims of Unsecured Creditors in Excess of
twelve hundred
<PAGE> 62
dollars ($1,200).
* Class 8 - Allowed Claims of Nevada Energy Partners, Ltd., NEPC,
and others.
* Class 9 - Disputed Claims.
* Class 10 -Allowed Equity Interests.
C. Provisions for Payments of Claims
1. Provisions for Payment of Allowed Administration Expenses
Claim (Class 1)
The first Class of Creditors to be paid (Class 1) consists of those
Creditors in possession of an Allowed Claim for Administrative Expenses. In
summary, Claim 1 Claims pertain to expenses incurred by the Debtor which are
actual and necessary expenses of preserving the estate of Debtor or operating
its business, any indebtedness or obligations incurred by or assessed against
the Debtor in connection with the conduct of its business or for the acquisition
or lease of property or for providing services to the Debtor, as well as
allowances for compensation or reimbursement of expenses to the extent allowed
by the Bankruptcy Court. Finally, administrative expenses include any fees or
charges assessed against the Debtor's estate pursuant to 28 U.S.C. Section 123.
The known and anticipated administrative expenses are estimated to be at least
$200,000.
The Plan provides that on the Effective Date each Allowed Administration
Expense shall be paid in full in Cash or upon such other terms as may be agreed
upon by and between the Creditor and Debtor. However, Administration Expenses
representing indebtedness or other obligations incurred or assumed by the Debtor
shall be assumed and paid or performed by the Debtor in accordance with the
specific terms and conditions of any agreement relating to such obligation.
Among other things, the Allowed Administrative Expenses include (but are
not limited
<PAGE> 63
to) the following:
* Post-petition compensation to the current Directors and Officers
of Debtor;
* Payments to attorneys and accountants for services rendered to
the Debtor; and
* Expenses incurred in conjunction with the ordinary and necessary
business expense incurred between February 13, 1997 and the
filing of the Plan.
The post-Confirmation Fees and Administrative Expenses shall be paid as
they are incurred and billed, without further approval of the Bankruptcy Court.
In addition, the Confirmation Order for the Plan shall designate a "Bar
Date" which is the date by which filing of Claims must be made by those entities
asserting Claims for compensation pursuant to sections 330 and/or 530 of the
Bankruptcy Code. In general, this encompasses Claims for compensation to
professionals (such as attorneys and accountants) providing services to Debtor.
2. Provisions for Payment of Allowed Wage Claims (Class 2)
Debtor has designated Class 2 as being for Allowed Wage Claims for
payment of pre Petition wages. Under the proposed Plan, on the Effective Date,
each Allowed Wage Claim shall be paid in full in Cash or upon such other terms
as may be agreed upon between any Allowed Wage Claimant and the Debtor. There
are no Allowed Wage Claims. There are Disputed Wage Claims totaling about
$24,000.
3. Provisions for Payment of Pre-1990 Allowed Priority Tax
Claims (Class 3)
The pre-1990 Priority Tax Claims (Class 3) consists of Tax Claims for
obligations arising prior to 1990 and which are the subject of a plan of
reorganization confirmed in 1990 by the United States Bankruptcy Court in a
proceeding involving Munson Geothermal, Inc.
<PAGE> 64
The pre 1990 Priority Tax Claims shall be paid in full in Cash on the Effective
Date, or upon such other terms and conditions as may be agreed upon between any
pre-1990 Allowed Priority Tax Claimant and the Debtor. The Allowed Class 3
claims total about $26,000.
4. Provisions for Treatment of Post-1990 Allowed Priority
Tax Claims (Class 4)
With respect to Allowed Priority Tax Claims arising after 1990 (i.e. the
Class 4 Claims), the Plan provides that such Allowed Claims shall be paid over
a term consisting of sixteen (16) consecutive quarterly payments ending four
years after the Payment Date, with the first payment to be made on the Payment
Date, or upon such other terms as may be agreed upon by and between any Class
4 Claimant and the Debtor. There are no Allowed Class 4 Claims.
There are Disputed Class 4 claims totaling about $550,000.
5. Provisions for Treatment of Allowed Secured Creditors
(Class 5)
The fifth Class of Creditors (Class 5) consists of Secured Creditors
whose Claim has been Allowed. Class 5 Creditors will be paid in full in Cash on
the Effective Date. Alternatively, at the sole election of Debtor, the Allowed
Secured Claim, together with interest at a rate to be determined by the
Bankruptcy Court, shall be paid in equal monthly installments, the first
installment to be made on the Payment Date, over a term consisting of thirty
(30) consecutive months, or upon such other terms as may be agreed upon by and
between the Secured Creditor(s) and Debtor. There are no Allowed Class 5 claims.
There are Disputed Class 5 claims which total about $25,000.
<PAGE> 65
6. Provisions for Payment of Allowed Unsecured Creditors
not Exceeding $1,200 per Claim (Class 6)
Class 6 consists of Allowed Unsecured Claims not in excess of $1,200 per
Claim. Pursuant to the terms of the proposed Plan, Class 6 Creditors will be
paid in full in Cash on the Effective Date, or upon such other terms and
conditions as may be agreed upon by and between any Class 6 Creditor and Debtor.
Each Class 6 Creditor has the right to receive Class A Common Stock in
lieu of Cash, with the number of shares computed as follows:
C6 x 120% = F
F/(divided by) AVP = NS
where:
C6 = The dollar amount of the Class 6 Claim.
F = Proceeds to be converted into Class A Common Stock.
AVP = An average of the closing price per share for the fifteen trading
days immediately preceding the Effective Date.
NS = Number of Shares of Class A Common Stock to be issued.
For example, if the Class 6 Allowed Claim was $1,000, the computation
would be as follows:
$1,000 x 120% = $1,200
$1,200/$1.00 = 1,200 Shares of Class A Common Stock (assuming $1.00 to
be the AVP)
The Class A Common Stock will be issued on the Effective Date, which is
after Debtor will have effected a reverse stock split. The Creditor's election
must be made on or before the Declaration Date. The reverse stock split will
occur after the Declaration Date but at least twenty trading days before the
Effective Date. The Allowed Claims of Class 6 total about
<PAGE> 66
$30,000. There are no Disputed Class 6 Claims.
7. Provisions for Payment of Allowed Unsecured Claims in
Excess of $1,200 per Claim (Class 7)
Class 7 consists of Allowed Claims which are (i) unsecured and (ii) in
excess of $1,200. Pursuant to the proposed Plan, each Creditor holding a Class 7
Claim must make an election to receive either:
Option A. A lump sum payment of $1,200 to be paid on the Effective
Date as a full, complete settlement of the Class 7 Claim,
or
Option B. To receive a combination of Cash and Class A Common Stock
of Debtor (claimants selecting Option B must make a further
election to receive either (i) cash or (ii) stock), or
Option C. To receive only Class A Common Stock.
The following example is intended to illustrate the proposed treatment
of Class 7 Creditors by the Plan. Assume, for purposes of illustration only,
that Class 7 Creditor has an Allowed Unsecured Claim in the amount of $10,000
and assume that the average closing price per share for the fifteen (15) trading
days immediately preceding the Effective Date ("AVP") is $1.00 per share.
The alternatives would be computed as follows pursuant to the Plan:
Option A:
Receive $1,200 in Cash on the Effective Date.
Option B:
Plan 1: Cash
1. 20.0% of the Allowed Claim paid in Cash on the Payment
Date
2. 80.0% of the Allowed Claim to be paid over sixteen (16)
consecutive
<PAGE> 67
quarters commencing on the Payment Date
3. Class A Common Stock issued on the Effective Date
computed pursuant to the following formula:
C7 X 80% = NP
NP x 20% = F
F/(divided by) AVP = NS
where
C7 = The dollar amount of the Class 7 Claim.
NP = The dollar amount of the Class 7 Allowed Claim that was not scheduled to
be paid in lump sum on the Payment Date.
F = Dollar amount of funds allocated for purchase of Class A Common Stock.
AVP = An average of the closing price per share of Class A Common Stock for
the 15 trading days immediately preceding the Effective Date.
NS = Number of Shares of Class A Common Stock to be issued.
Or, by way of example:
$10, 000 x 80. 0% = $8,000
20.0% x $8,000 = $1,600
$1,600/ $1.00 = 1,600 Shares of Class A Common Stock
Option B:
Plan 2: Cash
1. 20.0% of the Allowed Claim paid in Cash on the Payment Date
2. Class A Common Stock to be issued on the Effective Date computed
pursuant to the following formula:
C7 X 80% = NP
<PAGE> 68
NP x 120% = F
F/(divided by) AVP = NS
where
C7 = The dollar amount of the Class 7 Allowed Claim.
NP = The dollar amount of the Class 7 Allowed Claim that was not
scheduled to be paid in lump sum on the Payment Date.
F = Dollar amount of funds allocated for purchase of Class A Common
Stock.
AVP = An average of the closing price per share of Class A Common Stock
for the 15 trading days immediately preceding the Effective Date.
NS = Number of shares of Class A Common Stock to be issued.
Or, by way of example:
$10, 000 x 80. 0% = $8,000
$ 8,000 x 120.0% = $9,600
$ 9,600/ $1.00 = 9,600 Shares of Class A Common Stock
Option C: Receive all Stock.
If the Class 7 Creditor elects, the Creditor may receive on the
Effective Date Class A Common Stock computed as follows:
C7 X 200% = F
F/(divided by) AVP = NS
where
C7 = The dollar amount of the Class 7 Claim.
F = Dollar amount of funds allocated for purchase of Class A Common
Stock.
AVP= An average of the closing price per share of Class A Common Stock
for the 15
<PAGE> 69
trading days immediately preceding the Effective Date.
NS = Number of Shares of Class A Common Stock to be issued.
Or, by way of example:
$10, 000 x 200% = $20, 000
$20,000/$1.00 = 20,000 Shares of Class A Common Stock
The following table compares the various payment alternatives:
<TABLE>
<CAPTION>
Option A Option B Option C
Plan 1 Plan 2
-------- --------------------- --------
<S> <C> <C> <C> <C>
Claim $10,000 $10,000 $10,000 $10,000
Cash paid on
Effective
Date or $ 1,200 $ 2,000 $ 2,000 -0-
Payment Date
(As the case
may be)
Cash paid
over sixteen
Quarters -0- $ 8,000 -0- -0-
Class A
Common
Stock
(Shares) -0- 1,600 9,600 20,000
</TABLE>
In order to conserve its Cash, Debtor would prefer that Creditors elect
to accept Option C and thereby receive all stock.
The Class A Common Stock will be issued on the Effective Date, which is
after Debtor will have effected a reverse stock split. The Creditors election
must be made on or before the Declaration Date. The reverse stock split will
occur after the Declaration Date but at least twenty trading days before the
Effective Date. The Allowed Claims of Class 7 total about $1 million.
Class 7 Creditors are required to designate a payment mode when voting
on the Plan. If
<PAGE> 70
a Class 7 Creditor fails to select a payment mode, the Creditor will be deemed
to have selected Option C - all stock. A Creditor may revoke his/her/its
election by in writing at any time provided that Debtor receives the written
revocation prior to noon Cleveland, Ohio time on the Declaration Date with
notice to the Debtor in the manner set forth in Article XII, Section A of this
Disclosure Statement.
The Allowed Class 7 Claims total about $1,000,000. The Disputed Class 9
Claims total about $1,600,000. In the event a Class 9 claim is allowed, in part
or in full, it becomes a Class 7 claim and will be entitled to the same
treatment as provided for other members of that Class.**
8. Provisions for Payment of Claims of Nevada Energy
Partners, Ltd. (Class 8)
Class 8 consists of the Claims of Nevada Energy Partners, Ltd.. In
summary, NEP, its Partners and the Debtor have entered into a Settlement and
Release Agreement, a copy of which will be provided upon request, pursuant to
the terms of which the following will transpire:
1. Subject to approval of the Bankruptcy Court and confirmation of
the Plan, the NEP Agreement between NEP and Debtor will be
amended and restated. As a result of this rescission of
conveyances, the Debtor shall receive 100.0% of the issued and
outstanding Common Stock of Combustion Energy Company and title
to a parcel of real property situated in Reno, Nevada.
2. Debtor will stipulate that NEP shall be deemed to be the
shareholder of record of 13,245,958 shares of Class B Common
Stock, which is convertible into 13,245,958 shares of Class A
Common Stock on August 16, 1996. NEP, as of December 17 1997,
will be deemed to have converted Class B Common Stock
<PAGE> 71
into Class A Common Stock such that NEP owns 13,245,958 shares
of Class A Common Stock which is equal to 50.0% of the issued
and outstanding Class A Common Stock of Debtor as of August 16,
1996.
3. Debtor stipulates that the Class A Common Stock held of record
by NEP is beneficially owned by sixteen separate corporations
who are also deemed to be Creditors of the Debtor.
4. Debtor agrees to permit the transfer of the Class A Common Stock
to the sixteen beneficial owners and stipulates that these
sixteen corporate entities shall be issued (if necessary)
additional Class A Common Stock such that they own 50.0% of the
issued and outstanding Class A Common Stock of Power Tel
computed as of ten (10) business days after the Effective Date,
which will be subsequent to the reverse stock split to be
effected by the Debtor pursuant to the Plan, and subsequent to
the issuance of Class A Common Stock to Creditors pursuant to
the Plan. In the event, however, that Creditors with a Disputed
Claim receive Class A Common Stock pursuant to the Disputed
Claims Reserve, there will not be any additional distributions
of Class A Common Stock pursuant to the NEP Settlement.
5. The limited partnership agreement for NEP will be deemed to be
amended and modified such that 99.0% of all profits and losses
are allocated to the capital account of the limited partner
effective as of January 1, 1995. The general partner (NEPC)
stipulates that Debtor is the sole limited partner. Any and all
distributions of cash and property are to be allocated 60.0% to
the limited partner and 40.0% to the general partner.
<PAGE> 72
6. All parties to the NEC Settlement do forever settle, release and
compromise all Claims and causes of action which they have or
may bring against any other party as of the date of that
Agreement, and NEP specifically waives and extinguishes its
Proof of Claim for Six Million Dollars ($6,000,000.).
(A copy of the NEP Settlement is attached as Exhibit 2).
9. Treatment of Disputed Claims (Class 9)
With respect to Claims that are Disputed, contingent or unliquidated, as
such time as a Claim becomes Allowed, the Claim will be reclassified into the
class in which it would have been allocated in the event that it had been
Allowed. For example, in the event that a Disputed, contingent or unliquidated
Claim should become Allowed and the Claim is one which would otherwise
constitute a Claim pursuant to Class 5, at such time as the Claim becomes
Allowed it will be deemed to be a Claim and encompassed within Class 5 and will
be paid pursuant to the provisions of Article V, Section E (Disputed Claims
Reserve). To the extent any disputed claim allocated to Class 9 is deemed to be
allowed for purposes of voting on the Plan, the disputed claim will vote as a
member of the class to which it would be allocated if it were not disputed.
10. Equity Interests (Class 10)
The last class, Class 10, is designed for Allowed Claims of holders of
Equity Interests. Pursuant to the Plan:
1. The Series A and Series C Preferred Shares and the Class B Common
Stock shall be extinguished through amendment to the Debtor's Articles of
Incorporation (Series B Preferred will also be extinguished through amendment
following the actions described in paragraph 2, below).
<PAGE> 73
2. The five (5) shares of Series B, Preferred Shares shall be
repurchased by the Debtor for a per share price of (i) 100,000 shares of Class A
Common Stock; and (ii) a 24 month option to purchase an additional 100,000
shares of Class A Common Stock at an exercise price of $0.10 per share. These
shares are currently owned by Rick Cascarilla (two shares), and Messrs. Jeffrey
Modesitt, Jeffrey Hartman, and Michael Kassouff (one share each). After
repurchase, the Series B Preferred Shares shall be extinguished by amendment to
the Articles of Incorporation, which amendment, among other things, shall
establish a new class of preferred shares to be known as "Special Stock." The
Special Stock has the right to elect two (2) Directors of Debtor's Board of
Directors. One share each of Special Stock, as set forth in the amended Articles
of Incorporation, shall be issued to Richard Cascarilla, Jeffrey Hartman and
Michael Kassouff as partial consideration for their serving on the Board of
Directors. The Articles of Incorporation and By-Laws will be amended so that the
Board will be authorized to set the terms of the Special Stock.
3. All holders of Class A Common Stock will be reinstated to the exact
same share ownership which existed as of May 3, 1996, immediately prior to the
sale of the Series A Preferred Shares to Waterford/Golden Chance.
4. The Debtor will convert the Class B Common Stock to Class A Common
Stock and will issue Class A Common Stock in an amount not to exceed 85.0% of
the outstanding Class A Common Stock, pursuant to (i) the Share Exchange
Agreement for acquisition of Diego Tel, Inc. and (ii) the NEP Settlement.
5. Debtor will effect a reverse stock split at a ratio to be designated
by the Board of Directors such that the total number of shares of Class A Common
Stock outstanding subsequent to the reverse stock split is no less than 500,000
shares nor more than 20,000,000
<PAGE> 74
shares.
RATIFICATION OF AGREEMENTS
During the pendency of the Chapter 11 case, the Debtor has negotiated
the resolution of various disputes. These negotiations have resulted in the
execution of two Settlement and Release Agreements and one Indemnification
Agreement. The Plan provides that, upon confirmation, the Court shall ratify the
two Settlement Agreements.
The Settlement Agreements
One Settlement Agreement (the "NEP Settlement") resolves the issue of
the August 16 Agreement. A copy of this Agreement is enclosed as Exhibit 2. In
summary, the objective of the NEP Settlement is to amend the Agreement entered
into as of August 16, 1996 by and among the Debtor, NEP and NEPC and to settle
and permanently resolve the disputes which resulted in the commencement of two
lawsuits involving the Debtor and a 6 million dollar claim by NEP.
In negotiating this settlement, the Board of Directors of the Debtor
took into consideration numerous factors including, but not limited to, the
following:
* The Debtor has limited capital resources to utilize in the
prosecution of any claim against the parties.
* The Debtor has been informed by Mr. Antisdel that a substantial
portion of the consideration consists of multiple Promissory
Notes in the aggregate principal amount of approximately $1
million. In the opinion of the Debtor's Board of Directors, the
collectibility of any of the Promissory Notes is uncertain, and
therefore the Debtor does not believe that the pursuit of that
claim would likely result in meaningful assets to the creditors
or to the Debtor.
<PAGE> 75
* NEP and/or NEPC commands a lawsuit in which the Debtor is a
defendant. The defense of that litigation would be
time-consuming and expensive. Given the Debtor's limited capital
resources, the Board of Directors does not believe that the
allocation of funds to defend such litigation is appropriate.
* As of the execution of the Settlement and Release Agreement,
there was little market for the Debtors Class A Common Shares,
which were trading for approximately $.0l per share.
In negotiating and consenting to the Settlement Agreement, the Board of
Directors of the Debtor specifically recognized that the practical consequence
of this Agreement will be a substantial dilution with respect to the equity
interest of the shareholders who own Class A Common Stock, but the Board of
Directors also took into consideration the legal right of NEP (as the sole
shareholder of record of the Class B Common Stock) to convert the Class B Common
Stock to Class A Common Stock at anytime and the right of NEP to enter into and
complete a sale of the Class B Common Stock (or the Class A Common Stock, when
converted) at anytime.
The Board of Directors of the Debtor has specifically determined that
the Settlement and Release Agreement is in the best interest of the Debtor, its
shareholders and the creditors as a whole.
The second Settlement and Release Agreement involves the Debtor, Mr.
John Vogel and Mr. Dean Chamberlin. In summary, after the Debtor entered into a
contract to purchase from Mr. David Wallace 100.0% of the issued and outstanding
common stock of Viva Telecommunications, Inc., three individuals (Messrs. John
Vogel, Dean Chamberlin and Mark Snyder) alleged that they owned a portion of the
common stock of Viva Telecommunications.
<PAGE> 76
Subsequent to the execution of the contract to acquire VivaTel, three
individuals (Messrs. John Vogel, Dean Chamberlin and Mark Snyder) asserted that
they owned the equitable right to a portion of the common stock of Viva Tel. The
Debtor commenced an adversary proceeding in the Bankruptcy Court for the purpose
of securing a declaratory judgment to the effect that Mr. Wallace owned 100.0%
of the issued and outstanding common stock of VivaTel. Thereafter, the Debtor
entered into a Settlement and Release Agreement with Messrs. John Vogel and Dean
Chamberlin. Pursuant to the terms of this Settlement and Release Agreement,
Messrs. John Vogel and Dean Chamberlin abandoned their claim of an interest in
VivaTel. In consideration of that abandonment, the Debtor agreed to pay certain
expenses not to exceed $20,000.
With respect to the claim of Mr. Snyder, the Bankruptcy Court has
entered a default with respect to Mr. Snyder who failed to effect a timely
appearance in the adversary proceeding. On May 13, 1998, the Bankruptcy Court
entered an Order to the effect that Mr. Wallace owned 100.0% of the issued and
outstanding common stock of VivaTel. No appeal has been made with respect to
that Order.
The Indemnification Agreement
As part of the NEP Settlement between and among the Debtor, NEC, NEPC
and the 16 Bahamian corporations, the parties agreed to a retroactive
reallocation of partnership interest between the general partner and the limited
partner of NEP.
In agreeing to this course of action, the Board of Directors of the
Debtor took into consideration the existence as of February 28, 1996 of a net
operating loss which totaled approximately $5,500,000.
During these negotiations, NEPC and its sale shareholder, Mr. Jeffrey
Antisdel, agreed to
<PAGE> 77
represent and warrant that the Debtors cumulative net operating loss had not
been and would not be subject to an adverse determination or adjustment as a
result of (a) the confirmation of the Plan of Reorganization and implementation.
thereof, or (b) the issuance of securities by the Debtor prior to the Petition
Date. In addition, NEPC and Mr. Antisdel agreed to indemnify and hold the Debtor
harmless from any and 211 damages and expense which it might incur, including
legal fees, if any, in the event that the Debtor's net operating loss was to be
adversely effected as a result of the Settlement and Release Agreement.
The Plan of Reorganization proposes that the Bankruptcy Court will
confirm and ratify the two Settlement Agreements set forth above and the
Indemnification Agreement upon confirmation of the Plan.
VIII. DISCUSSION OF PROCEDURAL MATTERS COMMON TO ALL CLAIMS.
A. Acceptance or Rejection of Plan: Effect of Rejection by One or
More Classes of Claims
A Class of Creditors shall have accepted the Plan if the Plan is
accepted by at least 2/3 in amount and more than 1/2 in number of the Allowed
Claims of such class that have voted.
B. Amendment to the Plan
The Plan may be amended by the Debtor before or after the Effective Date
as provided in section 1127 of the Bankruptcy Code.
C. Disallowance of Settled Claims and Post-petition Additions
All Claims that have been settled and satisfied during the pendency of
the Chapter 11 Case will be deemed disallowed, without the necessity of filing
and prosecuting objections to such Claims. In addition, Debtor will not be
required to make any specific objection to Proofs of Claim alleging the right to
recover post-petition interest, penalties, fees and other accruals with respect
to repetition Claims (except secured Claims entitled to such accruals pursuant
to
<PAGE> 78
section 506(b) of the Bankruptcy Code) and any Proofs of Claim asserting a right
to such payment will be disallowed to the extent thereof. The disallowance
provided for with respect to such post-petition additions is subject to
reconsideration upon a motion by the claimant filed with the Bankruptcy Court
and properly served upon Debtor. Notwithstanding any other provisions of the
Plan, only whole numbers of shares of Class A Common Stock shall be issued.
D. Discharge of Debtor.
The rights afforded in the Plan and the treatment of all Creditors
therein shall be in exchange for and in complete satisfaction, discharge and
release of Claims or Equity Interests of any nature whatsoever, including any
interest accrued thereon from and after the Petition Date against the Debtor or
any of its assets or properties. Except as otherwise provided herein, upon the
Confirmation Date, in accordance with section 1141 of the Bankruptcy Code, all
such Claims or Equity Interests against the Debtor shall be satisfied,
discharged and released in full. All Creditors and holders of Equity Interests
shall be precluded from asserting against the Debtor or its respective assets or
properties any other or further Claims based upon any acts or omission,
transaction or other activity of any kind or nature that occurred prior to the
Confirmation Date.
E. Disputed Claims Reserve.
1. In determining the amount of the Distributions due the
holders of Allowed Claims, the appropriate Pro Rata calculations required by the
Plan shall be made as if all Disputed Claims were Allowed Claims in the full
amount claimed by the holders thereof. Debtor will presume, for purposes of the
Disputed Claims Reserve, that all Disputed Claim Creditors elect to receive
Class A Common Stock. If the claim is allowed and the Creditor elects to receive
cash, the treatment is as set forth in paragraph 4 of this section.
<PAGE> 79
2. On the Effective Date, the Debtor shall compute the number of shares
of Class A Common Stock to which the Disputed Claim Creditor may be entitled and
shall hold such shares in a segregated account (hereinafter the "Disputed Claims
Reserve") to be held in trust by the Debtor for the benefit of the holders of
Disputed Claims pending determination of their entitlement thereto under the
terms of the Plan. The Class A Common Stock held in the Disputed Claims Reserve
shall be deemed to be "treasury" stock of the Debtor and thus non-voting during
the period within which it is held in the Disputed Claims Reserve. The Disputed
Claims Reserve shall also be held in trust by the Debtor for the benefit of the
holders of Allowed Claims.
3. As soon as practicable after a Disputed Claim becomes an Allowed
Claim, the Class A Common Stock reserved for such Allowed Claim shall be
released by the Debtor from the Disputed Claims Reserve and delivered to the
holder of such Allowed Claim. In the event that the Disputed Claim is
disallowed, the Class A Common Stock provided for such Claim shall be released
to Debtor for use in the course of its business, as deemed appropriate by its
Board of Directors.
4. In the event that a Disputed Claim becomes an Allowed Claim and the
Creditor is entitled to receive Cash, the Debtor shall pay such Cash upon the
later of (i) the Payment Date, or (ii) ninety (90) days after the Disputed Claim
becomes an Allowed Claim. In the event any Class A Common Stock remains
unclaimed upon expiration of five years following the Effective Date, such Class
A Common Stock shall be released to the Debtor.
5. The release of Class A Common Stock from the Disputed Claims Reserve
shall not be a basis for or result in the issuance of additional Class A Common
Stock pursuant to the NEP Settlement or the Diego Tel Amended and Restated
Agreement for Exchange of Stock.
<PAGE> 80
F. Events of Default
In the event that Debtor defaults under the provisions of the Plan, any
Creditor or party-in-interest desiring to assert such a default shall provide
Debtor with written notice of the alleged default. Debtor shall have thirty days
from receipt of the written notice in which to cure the default. Such notice
shall be delivered by certified mail (return receipt requested) to the attorneys
for Debtor at the address stated on the final page hereof. If the default is not
cured within the thirty day cure period, any Creditor or party-in-interest may
thereafter file and serve upon counsel for Debtor a motion to compel compliance
with the applicable provision of the Plan. The Bankruptcy Court, upon finding a
material default, shall issue an order compelling compliance with the applicable
provisions of the Plan.
G. Executory Contracts and Unexpired Leases
1. Assumption of Executory Contract under Plan.
Upon Confirmation of the Plan, any executory contracts or unexpired
leases not rejected by the Debtor with the Bankruptcy Court prior to the
Confirmation Date, or within sixty (60) days thereafter, or which are not the
subject of a motion to reject the same pending as of the Confirmation Date shall
be deemed to have been assumed by the Debtor upon the Confirmation Date, in
accordance with section 365 of the Bankruptcy Code.
The Debtor is a party to what it believes is an executory contract with
Stone Brothers Welding & Equipment Sales, entitled Independent Contractor
Agreement, dated July 3, 1992. The Debtor will determine at or before
confirmation whether it intends to assume or reject the executory contract.
<PAGE> 81
2. Filing of Claims Arising out of Rejection or Assumption
of Contracts.
In the event the rejection or assumption of an existing contract
effected pursuant to the above gives rise to a Claim not otherwise provided for
herein, the holder of such Claim may file such Claim within thirty (30) days
following the Confirmation Date or if the contract is not rejected by Debtor
prior to the Confirmation Date, within thirty (30) days after the rejection or
assumption which gives rise to the Claim. Such Claim shall, in addition to its
filing with the Bankruptcy Court, be served upon the undersigned attorneys for
the Debtor. Any objection to Claims filed pursuant to this provision shall be
governed by the procedures provided in Article XIV of the Plan. In the event a
claim for rejection damages is allowed, it shall be entitled to treatment
available to all Class 7 claimants.
3. Executory Contracts of Indemnification with Directors.
Debtor has executory contracts in effect with its past and current Board
of Directors and Officers, some of which it is accepting and some of which are
being rejected as follows:
<TABLE>
<CAPTION>
Acceptance/Rejection
Name Position of Executory Contract
--------------------- ------------------ ---------------------
<S> <C> <C>
Jeffrey Antisdel Director/Officer Accept
Kenton Bowers Officer Reject
Peter Cannell Director Reject
Charles Cain Director Reject
Richard Cascarilla Director/Officer Accept
John Goold Director Reject
Jeffrey Hartman Director Accept
Lawrence Herth Director Accept
Pattinson Hayton, III Officer/Consultant Reject
Michael Kassouff Director Accept
Jeffrey Modesitt Director Accept
Stefan Tevis Director/Officer Reject
</TABLE>
By rejecting the executory contracts set forth above, it is Debtor's
specific intent to rescind any express or implied obligation (if any) which it
has or may have to such individuals to
<PAGE> 82
indemnify or to hold them harmless for damages or expenses which they may incur
as a result of claims of wrongdoing lodged against them from any source
whatsoever.
H. Means for Execution of the Plan
The Plan will be implemented utilizing the following resources:
1. Cash accrued from operations and Class A Common Stock will be
used to satisfy Claims of Classes 1 through 8 and Class 10.
2. The Debtor owns ten Ormats. Creditors in Classes 4, 5 and 7
shall be granted a secured interest in one Ormat Unit to secure
repayment of those obligations.
3. Promptly after the Confirmation Date, the Debtor shall take the
following action in the sequence presented:
a. File a notice with the Secretary of State for the State
of Delaware to the effect that the amendments) to NEC's
Articles of Incorporation as filed in January 1997, were
filed without requisite shareholder approval and are,
therefore, invalid and void ab initio;
b. File Amended and Restated Articles of Incorporation with
the Secretary of State for the State of Delaware which
Amended Articles of Incorporation shall (among other
things): (i) extinguish the existing Series A, Series B,
and Series C Preferred Shares and the Class B Common
Stock; (ii) create a new class of preferred stock to be
known as "Special Stock" which shall be entitled to
elect two (2) Directors to the Debtors Board of
Directors; (iii) provide that the affirmative vote of
65.0% of the issued and outstanding Class A Common Stock
is required to amend the Articles of Incorporation; and
(iv) change the name of the Debtor to WorldCall, Inc.
and thereafter
<PAGE> 83
issue new stock certificates.
c. Adopt amended and restated By-Laws.
4. The Debtor shall acquire 100% of the issued and outstanding
common stock of VivaTel in exchange for $500.00. Subject to
Court approval, the Debtor has acquired Diego Tel for $500.00.
The number of shares of Class A Common Stock is predicted to be
equal to 35.0% of the issued and outstanding Class A Common
Stock.
5. Subsequent to the Declaration Date, but at least twenty days
prior to the Effective Date, the Debtor shall effect a reverse
stock split such that the number of shares of Class A Common
Stock outstanding shall be no less than 500,000 shares nor more
than 20,000,000 shares, the exact ratio of the reverse stock
split to be set by the Debtor's Board of Directors.
6. All Class A Common Stock issued to a Creditor pursuant to the
Plan, shall be issued pursuant to section 1145 of the Bankruptcy
Code and shall be issued without a restrictive legend if the
Creditor establishes that the Creditor is not an "underwriter'
as defined in section 1145(b) of the Bankruptcy Code. If the
Creditor or recipient is deemed to be an "underwriter' as
defined in Section 1145(b) of the Bankruptcy Code, the Class A
Common Stock will be issued pursuant to Section 4(2) of the
Security Act of 1933, Regulation D or Rule 144 of that Act and,
therefore, will be restricted. The Class A Common Stock to be
issued to the exchanging shareholder of Diego Tel shall be
restricted and subject to significant restraints on transfer as
set forth in the Plan and in the acquisition agreements.
<PAGE> 84
I. Multiple Claims
If a claimant holds more than one Claim in any one class, all Claims of
the claimant in that class will be aggregated into one Claim and distribution
will be made with respect to each aggregated Claim. Furthermore, the Debtor will
be permitted to defer and accumulate distribution in amounts of less than $50
each. Once the Allowed Claim payment amount reaches $50, a distribution will be
made.
J. Post-confirmation Injunction and Automatic Stay.
The Confirmation Order will operate as an injunction against
discrimination against Debtor by governmental authorities because of the filing
of the Chapter 11 Case. The reorganized debtor retains all rights granted to it
pursuant to section 525 of the bankruptcy code. All pending lawsuits, with
certain exceptions, will be deemed dismissed and the automatic stay continued in
effect, and an injunction will be issued under sections 105 and 1141 of the
Bankruptcy Code discharging the Debtor and preventing the litigation of Claims
in any forum other than the Bankruptcy Court.
K. Prohibition Against Discriminatory Treatment.
As provided in Section 525 of the Bankruptcy Code, a governmental unit
may not deny, revoke, suspend, or refuse to renew any license or similar grant
to, condition such a grant to, or discriminate with respect to such a grant
against, Debtor or any of its subsidiaries, or any other person or entity with
whom Debtor has been associated, solely because of the existence of the Chapter
11 Case, any provisions in the Plan, or the legal effect of the Plan. The
Confirmation Order will contain an express injunction against any such
discrimination, effective except as otherwise limited by applicable law.
<PAGE> 85
L. Provisions Covering Distributions
1. Payments and Distributions to be Made on the Effective
Date or the Payment Date.
Payments and Distributions to be made by the Debtor on the Effective
Date pursuant to the Plan shall be made on the Effective Date or as soon as
practicable thereafter, except as otherwise provided for in the Plan, or as may
be ordered by the Bankruptcy Court.
Payments and Distributions to be made by the Debtor of the Payment Date
pursuant to the Plan shall be made on the Payment Date or as soon as practicable
thereafter, except as otherwise provided for in the Plan, or as may be ordered
by the Bankruptcy Court.
2. Method of Payment.
Payments to be made by the Debtor pursuant to the Plan shall be made by
check drawn on a domestic bank or by wire transfer from a domestic bank.
3. Payment to be Made by Debtor.
Distributions to be made to Creditors and Equity Interest holders under
the Plan shall be made by Debtor.
4. Class A Common Stock.
Distributions of Class A Common Stock shall be made through Corporate
Stock Transfer Company or the then Transfer Agent for Debtor.
M. Provisions for Execution and Supervision of the Plan
1. Retention of Jurisdiction
The Bankruptcy Court shall retain and have exclusive jurisdiction over
the Chapter 11 case for the following purposes:
a. to determine any and all objections to the
allowance of Claims or Equity Interests;
<PAGE> 86
b. to determine any and all pending applications
for the rejection or assumption of executory
contracts or unexpired leases to which the
Debtor is a party or with respect to which it
may be liable, and to hear and determine, and if
need be to liquidate, any and all Claims arising
therefrom;
c. to determine any and all applications, adversary
proceeding and contested or liquidated matters
that may be pending on the Confirmation Date,
except as provided in the Confirmation Order;
d. to consider any modifications to the Plan, any
defect or omission or reconcile any
inconsistency in any order of the Bankruptcy
Court, including the Confirmation Order, to the
extent authorized by the Bankruptcy Court;
e. to determine all controversies, suits and
disputes that may arise in connection with the
interpretation, enforcement or consummation of
the Plan, to include disputes between classes of
claimants under the Plan regarding allocations
or payment of Distributions hereunder;
f. to consider and act on the compromise and
settlement of any claim against or cause of
action by or against the Debtor's estate;
g. to issue such orders in aid of execution of the
Plan to the extent authorized by section 1142 of
the Bankruptcy Code; and
h. to determine such other matters which may be set
forth in the Confirmation Order or which may
arise in connection with the Plan
<PAGE> 87
or the Confirmation Order,, including, but not
limited to, extending deadlines and time limits
provided in the Plan.
N. Provisions for Treatment of Disputed Claims
1. Authority to Object.
The Debtor and any party-in-interest shall have the authority to object
to and contest the allowance of any Claim filed with the Bankruptcy Court in
respect of any Claim listed as disputed, contingent or unliquidated on the
Debtor's schedules, except as to any Claim otherwise treated by the Plan or
previously allowed or disallowed by final order of the Bankruptcy Court.
2. Objections to Claims to be Filed Within Sixty Days After
Confirmation Date.
Unless otherwise ordered by the Court, after notice and a hearing,
objections to Claims and Equity Interests shall be made and filed by the Debtor
or by any party-in-interest and shall be served upon each holder of the Claim or
Equity Interest to which objections are made (and upon the Debtor's attorney if
one of the Debtors is not the objecting party) and filed with the Bankruptcy
Court as soon as practicable, but in no event later than 60 days subsequent to
the Confirmation Date.
3. Prosecution of Objections to Claims.
All legal fees and expenses of the Debtor incurred in the prosecution of
Claim objections and in the consummation of the Plan shall be paid first by the
Debtor as a Post-Confirmation Administrative Expense pursuant to Article 4.2 of
the Plan.
<PAGE> 88
4. Final Order.
Except as may be otherwise agreed with respect to any Disputed Claim, no
payments or Distributions shall be made with respect to all or any portion of a
Disputed Claim unless and until all objections to such Disputed Claim have been
determined by a Final Order of the Bankruptcy Court. Payments and Distributions
to each holder of a Disputed Claim or Disputed Equity Interest to the extent
that it ultimately becomes an Allowed Claim or Allowed Equity Interest shall be
made in accordance with the provisions of the Plan with respect to the Class of
Creditors or Equity Interest to which the respective holder of an Allowed Claim
or Allowed Equity Interest belongs. Such payments and Distributions shall be
made as soon as practicable after the date that the order or judgment of the
Bankruptcy Court allowing such Claim or Equity Interest becomes a Final Order.
O. Restriction on Transfer of shares.
Unless otherwise set forth in this Article, all Class A Common Stock to
be issued by the Debtor shall be issued pursuant to section 1145 of the
Bankruptcy Code without registration pursuant to section 5 of the Securities Act
of 1933. The following Class A Common Stock shall be issued pursuant to Section
4(2) of the Securities Act of 1933, Regulation D or Rule 144 promulgated
thereunder, and therefore shall restricted from transfer:
1. All Class A Common Stock issued to acquire the Common
Stock Diego Tel.
2. The Class A common stock to be issued to the 16 Bahamian
corporations pursuant to the NEP settlement.
3. The Class A Common Stock issued to any person who is
deemed to be an "underwriter" for purposes of section
1145(b) of the Bankruptcy Code.
<PAGE> 89
4. All Class A Common Stock which is restricted pursuant to
Section 22.2 of the Plan shall bear the following
restrictive legend:
THE SECURITIES REPRESENTED -BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO SECTION 5 OF THE SECURITIES ACT OF 1933, NOR HAVE THESE
SECURITIES BEEN REGISTERED PURSUANT TO ANY COMPARABLE STATE SECURITIES
ACT OR REGULATION. ACCORDINGLY, TRANSFER, SALE, PLEDGE, HYPOTHECATION OR
CONVEYANCE OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS PROHIBITED
UNLESS AND UNTIL (1) THE SHARES REPRESENTED HEREBY HAVE BEEN REGISTERED
PURSUANT TO SECTION 5 OF THE SECURITIES ACT OF 1933 AND, AS REQUIRED,
PURSUANT TO A SIMILAR STATE STATUTE OR REGULATION, OR (2) THE
SHAREHOLDER SUBSTANTIATES THAT THERE IS A VALID EXEMPTION FROM THE
REGISTRATION REQUIREMENT PROVIDED BY SECTION 5 OF THE SECURITIES ACT OF
1933 AND SUBSTANTIATES SUCH EXEMPTION BY MEANS OF A LEGAL OPINION
ACCEPTABLE TO POWERTEL USA, INC. AND ITS LEGAL COUNSEL. THE SHARES
REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED IN CONJUNCTION WITH A
PLAN OF REORGANIZATION CONFIRMED BY THE UNITED STATES BANKRUPTCY COURT
FOR NEVADA AND THIS RESTRICTION ON TRANSFER HAS BEEN INCLUDED AS PART OF
THE TERMS AND CONDITIONS OF THE CONFIRMED PLAN OF REORGANIZATION. FOR
ADDITIONAL INFORMATION CONCERNING THIS RESTRICTION, INQUIRIES SHOULD BE
DIRECTED TO:
Van P. Carter, Esq.
Walter & Haverfield P.L.L.
1300 Terminal Tower
Cleveland, Ohio 44113
(216) 781-1212
P. Set Offs.
Debtor may, but shall not be required, to set off against any Claim and
the distributions to the holder under the Plan, claims of any nature that Debtor
may have against the holder of such Claim. Allowance of a Claim or failure to
exercise any right of set off with respect to a claim does not constitutes a
waiver or release by Debtor Of any rights or Class that Debtor may have against
the holder of such Claim. Debtor's rights of set off may be limited in the
manner
<PAGE> 90
provided for in the Plan if such rights are not exercised on or before the
Effective Date of the Plan. Debtor may exercise rights of set off with respect
to Claims for which it has payment responsibility.
Q. Title to Assets: Discharge of Liabilities.
Except as otherwise provided by the Plan, on the Confirmation Date,
title to all assets and properties dealt with by the Plan shall vest in Debtor
in accordance with section 1141 of the Bankruptcy Code, free and clear of all
Claims and Equity Interests; and the order confirming the Plan shall be a
judicial determination of discharge of the Debtor's liabilities except as
provided in the Plan.
R. Effect of Discharge on Rights Between Third Parties.
If the Plan is confirmed, the provisions of the Plan will bind the
Debtor and all Creditors and Equity Interest holders, whether or not they accept
the Plan. Confirmation will also discharge the Debtor from all debts that arose
before confirmation as of the Confirmation Date, including intercompany
obligations (if any) owing by the Debtor to an Affiliate, whether such Affiliate
is itself a debtor.
The classification and the manner of satisfying all Claims under the
Plan takes into consideration the existence of any guarantees by the Debtor Of
any obligation of any person and the fact that the Debtor may be a joint obligor
with another person or persons, with respect to the same obligation. The Plan
also takes into account any contentions by Creditors or holders of Equity
Interests that the Claims of other Creditors or other holders of Equity
Interests may be subordinated by contract or pursuant to the Articles of
Incorporation or ByLaws of the Debtor. All Claims against the Debtor based upon
any such guarantees will be discharged in the manner provided in the Plan. Each
Creditor and stockholder will receive the Distribution provided in
<PAGE> 91
the Plan, which will not be subject to any Claim of another Creditor or
stockholder by reason of any claimed contractual right of subordination based
upon any defaults occurring prior to the Confirmation Date.
The Distributions provided for in the Plan will be in exchange for and
in complete satisfaction, discharge and release of all Claims and Equity
Interests, including any Claim for interest after the Petition Date. On the
Confirmation Date, all Creditors and existing Equity Interest holders shall be
precluded form asserting any Claim against the Debtor or its assets or
properties based upon any transaction or other activity of any kind that
occurred prior to the Confirmation Date; provided, however, that nothing
contained in the Plan will alter the legal, equitable and contractual right of
the holder of any Claim or Equity Interest specifically designated as being
unimpaired in the Plan, it being specifically intended that all such rights are
to remain unaltered by the Plan.
S. Filing of Additional Documents.
On or before the Effective Date, the Debtor shall file with the
Bankruptcy Court such agreements, indentures, supplemental indentures and other
documents as may be necessary or appropriate to effectuate and further evidence
the terms and conditions of the Plan.
T. Post Confirmation Acquisitions, Mergers and Stock Splits.
In order to fulfill its financial obligations to Creditors and to expand
its operations, it is anticipated that the Debtor will effect one or more
acquisitions or mergers subsequent to the Confirmation Date. For a two (2) year
period commencing with the Effective Date, Debtor will be permitted pursuant to
the Plan to effect acquisitions and mergers, stock splits and reverse stock
splits. based solely upon the affirmative vote of its Board of Directors and
without the necessity of requesting and receiving the consent of the Debtor
shareholders.
<PAGE> 92
U. Class A Common Stock in Lieu of Cash.
Any Creditor entitled to receive Cash pursuant to the Plan may, by
mutual agreement of the Creditor and the Debtor, receive Class A Common Stock
with the number of shares to be issued and per share price to be agreed upon
between the Debtor and the Creditor.
V. Settlement of Claims on Interests.
Pursuant to section 1 1 23(b)(3)(A) of the Bankruptcy Code, upon
Confirmation of the Plan, the following settlements will be deemed to have been
ratified by the Bankruptcy Court and will be in full force and effect: (1) the
NEP Settlement, (2) Ownership Settlement Agreement, and (3) the settlements
entered into with respect to the claims set forth in Article III, Section G of
this Disclosure Statement.
W. Ratification of Agreements.
Upon Confirmation of the Plan, the Bankruptcy Court shall ratify the
Amended and Restated Agreement for the Exchange of Stock for the Acquisition of
DIEGO TEL and the Acquisition Agreement of VivaTel.
X. Contested Claims.
Except with respect to the Claims of Creditors whose Claims arise from
the rejection of an executory contract, which Claims must be filed no later than
(i) thirty days after the Confirmation Date, or (ii) if not rejected prior to
the Confirmation Date, thirty (30) days following the rejection or assumption
which gives rise to the Claim; the Debtor or any party-in-interest may object to
any Claims, within sixty (60) days after the Confirmation Date, by filing an
objection with the Bankruptcy Court and serving a copy on such claimant, in
which event the Claim shall be treated as a contested Claim under the Plans. If
and when a contested Claim is resolved by allowing the Claim in whole or in
part, the Debtor shall make distributions to the
<PAGE> 93
holder of the Claim in accordance with the provisions of the Plans applicable to
the Claims of that class, or in accordance with the provisions pertaining to the
Disputed Claims Reserve Section 14.5 of the Plan.
1. Disclosure of Information.
The information in this Disclosure Statement, and the Exhibits therein
regarding the Debtor, its business operations, the value of its assets or the
value of any benefits offered pursuant to the Plan, is expressly confined to the
context of this Disclosure Statement, and Debtor specifically rejects use of any
such information outside of consideration of the Disclosure Statement.
2. Termination of Committees.
On the Confirmation Date, all Committee of Creditors, if any, appointed
by the Bankruptcy Court in the Chapter 11 Cases of the Debtor, pursuant to
section 1102 of the Bankruptcy Code, shall be terminated.
IX. DISCUSSION OF MATTERS OF CORPORATE GOVERNANCE
A. Officers and Directors of Reorganized Debtor
The Reorganized Debtor's officers and directors will be as follows:
<TABLE>
<S> <C>
Richard A. Cascarilla Director and President
Michael Kassouff Director and President
Jeffrey Hartman Director
</TABLE>
B. Compensation for Directors.
Directors of Debtor will receive for attending duly called meetings of
the board of directors, plus reimbursement of actual out-of-pocket expenses
incurred in attending such meetings, whether telephonically or in person,
retroactive compensation for all services issued to the date of confirmation in
the form of stock options allowing for the purchase of 5,000 Class
<PAGE> 94
A Common Stock per Director per month at $.10 per share. Following confirmation,
directors shall receive annual Cash compensation of $10,000 per year (paid
quarterly), plus actual out-of-pocket expenses so incurred, plus Stock options
to purchase 2,500 shares of Class A Common Stock per Director per quarter at
$.l0 per share.
C. Cash Compensation for Officers and Employees.
Officers and employees will be paid standard wages as is normal and
customary in the marketplace for equivalent services rendered. The Board of
Directors of Debtor may adopt bonus, performance, and incentive plans as the
Board deems necessary and appropriate, including stock option plans.
D. Provisions for Management
1. Directors.
If the Plan is confirmed, subject to the Bankruptcy Court's approval
under Bankruptcy Code section 1129(a)(5), the Debtor shall have as directors of
Debtor Messrs. Cascarilla and Kassouff. Mr. Herth will resign, to be replaced by
Mr. Jeffrey Hartman, a former Director of Debtor. These directors shall serve as
directors of Debtor after the Confirmation Date until removed or replaced by the
post-confirmation stockholders of Debtor. The tenure and manner of selection of
directors of Debtor shall be as provided in the Articles of Incorporation and By
Laws. A summary of the education, business, experience and professional
qualifications of Messrs. Cascarilla, Kassouff and Hartman is included as
Exhibit 6.
2. Officers.
If the Plan is confirmed, subject to the Bankruptcy Court's approval
under Bankruptcy Code section 1129(a)(5), the officers of Debtor, as identified
in the Disclosure Statement, shall be Mr. Cascarilla (President) and Mr.
Kassouff (Secretary-Treasurer). The Board of Directors
<PAGE> 95
shall designate the officers of Debtor and shall specify the tenure of the
individuals holding those offices.
3. Ratification of Corporate Actions.
Debtor ratifies the election of Michael Kassouff as director and the
elections of any and all officers thereafter.
4. Employment Contracts.
Debtor will enter into employment contracts with its respective officers
which shall only be operative if the Plan is confirmed. Copies of the employment
contracts that will take effect immediately upon confirmation have been filed
with the Bankruptcy Court. The employment contracts shall contain sufficient
information to comply with Bankruptcy Code section 1129(a)(5)(B) as to
disclosure of compensation to be paid to insiders who are the subject of
contracts and are subject to the approval of the Bankruptcy Court and are
attached as Exhibit 7.
E. Capitalization.
As a result of the confirmation of the Plan, the Reorganized Debtor's
capitalization will be as follows:
CLASS A COMMON STOCK
Post-Confirmation and Post-Reverse Stock Split (but excluding any Disputed
Claimants who may be Entitled to Stock): assuming that the total number of
shares of Class A Common Stock is 10,000,000.
<PAGE> 96
<TABLE>
<CAPTION>
ESTIMATED
NAME NUMBER OF SHARES PERCENTAGES
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Mr. David Wallace* 3,500,000 35.00%
- ---------------------------------------------------------------------------------------
Parklane Mayfair, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Clermot and Annabelle, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Burke Douglas Holdings, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Clarendon Atlantic Holdings, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Macaulay Island Investments, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Young, Bayshore Investments, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Wilton Ashfield, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Greyshire House, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
August Lake Holdings, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Maitland Investments, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Berkeley Square Investments, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Whitestone Brooke Holdings, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Porterman Williams, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
North Oldenfield, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Blackstone Sterling Holdings, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Shepherd Market, Ltd.** 312,000 3.12%
- ---------------------------------------------------------------------------------------
Officer and Directors 20,000 0.20%
- ---------------------------------------------------------------------------------------
All Others 1,488,000 14.88%
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
TOTAL 10,000,000 100.00%
- ---------------------------------------------------------------------------------------
</TABLE>
* Pursuant to Amended and Restated Agreement for Exchange of Stock with Diego
Tel assuming that all financial performance standards have been satisfied and
the maximum number of shares have been earned by Mr. Wallace.
** Pursuant to NEP Settlement
<PAGE> 97
X. CERTAIN INCOME TAX CONSEQUENCES OF THE PLAN
A. General.
Certain significant federal income tax consequences of the Plan pursuant
to the Internal Revenue Code (the "Tax Code") are described below. The
discussion focuses on the net operating loss carryover ("NOL") rules and the
implications of the Plan upon the retention of a net operating loss in excess of
$4,500,000. In addition, there is discussion of the corporate alternative
minimum tax which may adversely effect corporations with NOLs and with
significant differences between income reported for tax purposes and income
reported for financial statement purposes.
Due to the complexity of the transactions contemplated by the Plan, the
differing facts and circumstances governing the Claims of Creditors and holders
of Equity Interests, differences in the nature of the Claims of the various
Creditors, their taxpayer status, residences, and methods of accounting
(including Creditors within the same Creditor Class) and prior actions taken by
Creditors with respect to their Claims, as well as the possibility that events
subsequent to the date hereof could change the federal tax consequences of the
transactions, the tax consequences described below are subject to significant
uncertainties.
CREDITORS AND STOCKHOLDERS ARE ADVISED TO CONSULT WITH THEIR INDIVIDUAL
TAX ADVISORS RESPECTING THE TAX CONSEQUENCES OF THE PLAN, INCLUDING STATE AND
LOCAL TAXES.
1. Net Operating Loss Carryovers.
For federal income tax purposes, Debtor has a substantial NOL carryover
that may be available to offset the future taxable income of the reorganized
company. These amounts are, however, subject to review and allowance upon audit
by the IRS. As of February 28, 1996, the
<PAGE> 98
NOL carryovers estimated to be reported on Debtor's consolidated tax return
aggregated approximately $4,500,000. These NOL carryovers may be reduced as a
result of the reduction in the indebtedness of Debtor, but may remain
substantial in amount.
Pursuant to the Tax Reform Act of 1986, complex, substantial changes
were made to sections 382 and 383 of the Tax Code. Thereafter, the Internal
Revenue Service issued lengthy, complicated new temporary Treasury Regulations
implementing new section 382. The temporary regulations were subsequently
adopted on a permanent basis.
Under section 382, for reorganizations occurring after May 5, 1986,
resulting in a change of ownership of more than 50% of the stock owned in a loss
corporation, the amount of the loss corporation's taxable income after the
change that can be offset by existing NOLs cannot in any one year exceed an
amount equal to the value of the loss corporation multiplied by the long-term
exempt rate of return prescribed by the IRS.
In addition, no NOL or tax credit carry forwards will survive if the
continuity of business enterprise requirement is not met during the two-year
period beginning on the date of the change in ownership of the loss corporation.
Under this continuity requirement, the loss corporation is required to continue
its historic business or to use a significant portion of its assets in such a
business. If the loss corporation has more than one line of business, continuity
of business enterprise requires only that it continue a significant line of
business. Any NOL that remains unused after fifteen years from the date incurred
will expire.
The limitations of section 382 arise upon the occurrence of an
"ownership change." An ownership change occurs if, following any change in stock
ownership affecting the percentage of stock owned by a "5% shareholder' (as
defined below) during a three-year testing period there is a more than fifty
percentage point increase in the percentage ownership of the loss corporation
<PAGE> 99
held at the close of the testing period by 5% shareholders over the lowest
percentage holdings by such shareholders during the "testing period." An owner
shift or equity structure shift may effect an ownership change. An owner shift
is a change in stock ownership that affects a 5% shareholder. In general, under
the Regulations any issuance of stock is also an owner shift. An equity
structure shift is a tax reorganization under the Tax Code. An equity structure
shift is also generally an owner shift. The Temporary Treasury Regulations
essentially make no distinction between an owner shift and an equity structure
shift. The term '5% shareholder' means any person holding 5% or more in value of
the stock of the corporation at any time during the testing period. As discussed
below, transactions affecting stock ownership can result in segregating groups
of shareholders (individually owning less than 5% of the stock) into groups
treated as 5% shareholders, including groups that in fact own less than 5% of
the stock of the loss company.
In general, stock includes all Equity Interests that participate in the
earnings of the corporation, that vote, or that are convertible into common
stock. After November 5, 1992, unexercised options will not be treated as stock.
Special attribution and aggregation rules are provided in Section 382.
The total percentage of the stock of a corporation held by persons who are not
5% shareholders is aggregated and is taken into account as if held by a single
5% shareholder and as if changes in their aggregate ownership were changes in
the percentage holdings of an individual 5% shareholder. Certain family members
are also aggregated for purposes of determining ownership changes and percentage
ownership for this purpose. Certain transactions can result in the segregation
of such less than 5% shareholders into separate groups. Thus, the less than 5%
shareholders of each corporation, a party to a tax reorganization, are each
segregated and treated
<PAGE> 100
as a separate 5% shareholder. Likewise, each issuance of stock by a corporation
is segregated and the persons receiving such stock are segregated and treated as
a separate 5% shareholder for purposes of determining whether an ownership
change has occurred. The loss corporation may combine separate-less-than-5%-
shareholder for purposes of determining whether an ownership change has
occurred. The loss corporation may combine separate less-than-5%-shareholder
groups, each holding an aggregate of less than 5% of the loss corporation's
stock, first identified during any year into a single less-than-5%-shareholder
group. Stock owned by a corporation or other entity is attributed to its
shareholders; under certain circumstances stock attributed to such shareholders
is also aggregated and treated as if it were held by a separate 5% shareholder.
Stock ownership reporting rules are provided by the Regulations.
Implementation of the Plan and the transactions therein contemplated
could therefore result in a substantial percentage of the Reorganized Debtor
Common Stock being held by persons who receive such instruments in an owner
shift or equity structure shift and who in the aggregate are treated as one or
more separate groups deemed to be a 5% shareholder for purposes of new Section
382.
Section 382 also contains a special provision which provides that in the
case of an exchange of debt for stock in a case under the jurisdiction of a
Bankruptcy Court brought under Title 11 of the United States Code (relating to
bankruptcy) (a "Title 11 Case"), the limitations of section 382 will not apply
to any ownership change resulting from such a proceeding if Creditors and
shareholders immediately before the exchange own, as a result of such exchange,
50% of the stock of the loss corporation. To qualify for this exception, only
Claims held by persons who were Creditors as of a date eighteen months prior to
the filing of the petition under Title 11 or whose Claims arose in the ordinary
course of trade or business of the debtor (and
<PAGE> 101
were at all times beneficially owned by such persons) are taken into account.
However, the Title 11 exception may result in the reduction of NOLs by some
percentage of the debt discharge amount deemed satisfied by stock and by
interest paid or accrued on indebtedness since the beginning of the third tax
year prior to the exchange of such indebtedness for stock.
2. Alternative Minimum Tax
The Corporate Alternative Minimum Tax (AMT) applies to all C
corporations whose average gross receipts for the prior three years are in
excess of $5 million. Once AMT becomes applicable, the corporation is required
to compute its taxable income and its tax under two separate systems. The first
is the regular tax system. As stated above, the corporation has a regular tax
NOL in excess of $4 million. If this loss is not limited or expired under the
above discussion, any taxable income of the corporation in the future will be
offset dollar for dollar by this NOL until it either is all utilized or expires.
However, for AMT purposes, there is a separate calculation of the AMT
NOL. This AMT NOL is usually smaller than the regular tax NOL. The amount of the
AMT NOL available to the corporation is unknown at this time. When the
corporation's taxable income is calculated for AMT purposes, the amount subject
to tax is reduced by the available AMT NOL as limited under the same rules
applicable to the regular tax NOLs under Section 382 as discussed above.
However, assuming that there is sufficient AMT NOL available to offset
taxable income and it is not limited or expired, there are still limitations on
the use of the AMT NOL against AMT Taxable income. As such, even if there is no
regular tax payable in a give corporate tax year, there may be AMT payable.
Thus, notwithstanding anything discussed above, the corporation may be required
to pay federal income tax. The amount of the potential tax is unknown at this
time.
<PAGE> 102
THIS DOCUMENT SHALL NOT BE CONSTRUED AS PROVIDING TAX ADVICE TO
CREDITORS, SHAREHOLDERS OR OTHER READERS OF THIS DOCUMENT. ALL PARTIES ARE URGED
TO SEEK ADVICE FROM THEIR OWN TAX ADVISORS.
B. Acquisition of DIEGO TEL.
The acquisition of DIEGO TEL will occur by means of an exchange of (a)
Class A Common Stock for (b) 100.0% of the issued and outstanding Common Stock
of DIEGO TEL. It is the objective of the parties that this transaction qualify
as a tax free reorganization pursuant to Section 382 of the Internal Revenue
Code.
C. Creditors.
No opinion is expressed with regard to the tax treatment of any Creditor
who elects to receive Class A Common Stock pursuant to this Plan.
Creditors are encouraged to seek advice from there personal attorney,
accountant or tax advisor.
XI. MAJOR CONTINGENCIES AND RISK FACTORS
A. General Business Matters.
1. Approval of the NEP Settlement.
NEP is the Debtor's largest single Creditor. Perhaps more importantly,
NEP controls assets (i.e., CEC d/b/a Herth Printing and Business Supplies and
certain real property situated in Reno, Nevada) which had been a core component
of the Company's asset base and revenue stream prior to August 1996.
In the event that the Court and Creditors should refuse to ratify the
NEP Settlement, the Company would incur substantial legal fees and expenses in
order to pursue its claims against
<PAGE> 103
NEP, and there is no guarantee or assurance that the Company would prevail.
Moreover, in the event that the NEP Settlement is not ratified, it is probable
that the acquisition of Diego Tel and VivaTel would also be challenged.
Accordingly, in the opinion of the Debtor, ratification of the NEP
Settlement is a key component to the Plan of Reorganization and implementation
of the Debtor's business plan.
2. Acquisition of VivaTel and Diego Tel.
Although VivaTel and Diego Tel are newly organized companies, Diego Tel
is already negotiating potentially substantial contracts for the resale of long
distance telecommunications services. These contracts represent an opportunity
for immediate revenue to the Debtor. More importantly, based upon the events of
the past year, it is the opinion of management that expansion and modification
of the Debtor's business plan is necessary and appropriate in order for the
Debtor to become commercially viable on a long term basis. The opportunity to
acquire a foothold into the rapidly expanding telecommunications industry is
consistent with the opinion of the Board of Directors that Debtor should
diversify its business into business segments which are not interdependent. The
Board of Directors believes telecommunications to be one of the core components.
Accordingly, in the event that the VivaTel and DIEGO TEL acquisitions
are not approved by the Bankruptcy Court, the Company's Plan will be
significantly handicapped.-
3. General Business Risks and Contingencies.
Both VivaTel and Diego Tel are recently organized entities without a
previous business history. Debtors business must be considered in light of the
risks faced by early stage companies in the rapidly evolving international
telecommunications market. Early stage companies must respond to external
factors, such as competition and changing regulations,
<PAGE> 104
without the resources, infrastructure and broader business base of more
established companies. Early stage companies also must respond to these risks
while simultaneously developing systems, adding personnel and entering new
markets. As a result, these risks can have a much greater effect on early stage
companies. If it does not successfully address such risks, Debtor's business,
operating results and financial condition would be materially adversely
affected.
4. Management of Changing Business.
a) Increased Demands on Management and Need to
Continue to Improve Systems.
Debtor hopes to experience revenue from the telecommunication business
that it will acquire upon confirmation. In such event will expand the number of
its employees and the geographic scope of its operations. These factors will
result in increased responsibilities for management personnel and place
increased demands upon Debtor's operating and financial systems. Debtor expects
that its sale of long distance communication services into foreign countries
will lead to increased financial and administrative demands, such as increased
operational complexity associated with expanded network facilities,
administrative burdens associated with managing an increasing number of
relationships with foreign partners and expanded treasury functions to manage
foreign currency risks. Accounting systems and policies will be developed as
Debtor experiences significant growth, and Debtor will require personnel,
systems and policies to comply with the reporting requirements of a publicly
held company. Although Debtor plans to acquire a financial accounting system in
1998, there can be no assurance that Debtor's personnel, systems, procedures and
controls will be adequate to support Debtor's future operations. Difficulties
encountered in Debtor's development of an accounting system or the failure to
implement and improve Debtor's operation, financial and management systems as
needed to accommodate any expansion of Debtor's business could have a material
<PAGE> 105
adverse effect on Debtor's business, operating results and financial condition.
b) Risks of Expansion into Commercial Market.
Debtor intends to expand into the commercial market and such expansion
will increase the risk of bad debt exposure and lead to higher operating costs.
Debtor also may be required to update and improve its billing systems and
procedures and/or hire new management personnel to handle the demands of the
commercial market. There can be no assurance that Debtor will be able to
effectively manage the costs of and risks associated with expansion into the
commercial market.
5. Dependence on Key Personnel.
Debtor's success, if any, will depend to a significant degree upon the
efforts of senior management personnel and a group of employees with
longstanding industry relationships and technical knowledge of Debtor's
operations. None are bound by the terms of Non-Compete Agreements, which would
restrict Debtor's ability to offer domestic interexchange products and services
and solicit certain customers. Debtor's management team has limited experience
working together and there can be no assurance that they can successfully
integrate as a management team. Debtor believes that its future success will
depend in large part upon its continuing ability to attract and retain highly
skilled personnel. Competition for qualified, high-level telecommunications
personnel is intense and there can be no assurance that Debtor will be
successful in attracting and retaining such personnel. The loss of the services
of one or more of Debtor's key individuals, or the failure to attract and retain
other key personnel, could materially adversely affect Debtor's business,
operating results and financial condition. See Article IV, Section F.
<PAGE> 106
B. Energy Cogeneration Related Matters.
In order to rehabilitate and develop the reorganized Debtor's energy
cogeneration business, the reorganized Debtor must identify and negotiate joint
venture or partnership relationships with energy cogeneration companies which
have both working capital and marketing presence. There is no assurance to
guaranty that the reorganized Debtor will be successful in that regard. In the
event that the reorganized Debtor is unable to establish joint venture or
partnership relationships, the reorganized Debtor must generate substantial
working capital in order to reenter the energy cogeneration arena. If that
should be the situation, it is likely that the reorganized Debtor would elect to
liquidate its format units rather than to seek investor capital for that
purpose.
The energy cogeneration business is extremely competitive, and the
development of revenue from such operations must be viewed as a long term,
speculative venture.
C. Telecommunications Related Operating Results Subject to
Significant Fluctuations.
Debtor's telecommunications related operating results are difficult to
forecast with any degree of accuracy because a number of factors subject these
results to significant fluctuations.
1. Factors Influencing Operating Results, including
Revenues, Costs and Margins.
In projecting future revenue from the newly acquired telecommunications
business, the following factors must be considered:
a) Call volume fluctuations, particularly in
regions with relatively high per-minute rates;
b) The addition or loss of major customers, whether
through competition, merger, consolidation or
otherwise;
<PAGE> 107
c) The loss of economically beneficial routing
options for the termination of Debtor's traffic;
d) Financial difficulties of major customers;
e) Pricing pressure resulting from increased
competition; and
f) Technical difficulties with or failures of
portions of the network that would impact
Debtor's ability to provide service to or bill
its customers.
In projecting future cost of services and operating expenses, the
following factors must be considered:
a) Fluctuations in rates charged by carriers to
terminate Debtor's traffic;
b) The timing of capital expenditures and other
costs associated with acquiring or obtaining
other rights to switching and other transmission
facilities;
c) Changes in Debtor's sales incentive plans; and
d) Costs associated with changes in staffing levels
of sales, marketing, technical support and
administrative personnel.
In projecting Debtor's operating results, the following factors must be
considered:
a) Changes in routing due to variations in the
quality of transmission capability;
b) The amount of, and the accounting policy for,
return traffic under operating agreements;
c) Actions by domestic or foreign regulatory
entities;
<PAGE> 108
d) The level, timing and pace of Debtor's
expansion. in international and commercial
markets; and
e) General domestic and international economic and
political conditions.
Since Debtor plans to have long term arrangements for the purchase or resale of
long distance services, and since historically rates fluctuate significantly
over short periods of time, Debtor's gross margins are subject to significant
fluctuations over short periods of time. Debtor's gross margins also may be
negatively impacted in the longer term by competitive pricing pressures.
If one of Debtor's major customers informed Debtor that it was
experiencing financial difficulties and would be unable to pay in full, on a
timely basis, then Debtor intends to increase its reserves to account for the
potential inability to collect the account receivable from the customer. There
can be no assurance that Debtor will be able to obtain adequate recourse from
the customer's assets, if necessary, or that Debtor's reserves will be adequate.
Debtor's ability to collect the outstanding amounts would be adversely affected
to the extent that a customers financial condition deteriorates further or the
customer commences bankruptcy proceedings. In such an instance, Debtor's revenue
would grow slowly if a major customer reduced traffic because of financial
difficulties. Such events could have a material adverse affect on Debtor's
business, operating results or financial condition.
2. No Assurance of Growth in the Telecommunications
Business.
Although Debtor expects certain significant revenue from its
telecommunications business, early results should not be considered indicative
of future revenue growth or operating results. If revenue levels fall below
expectations, net income is likely to be disproportionately adversely affected
because a proportionately smaller amount of Debtor's operating expenses will
<PAGE> 109
vary with its revenues. This effect is likely to increase as a greater
percentage of Debtor's cost of services are associated with telecommunications
facilities. There can be no assurance that Debtor will be able to achieve or
maintain profitability on a quarterly or annual basis.
Due to all of the foregoing factors, it is likely that in some future
quarter Debtor's operating results will be below the expectations of public
market analysts and investors. In such event, the price of Debtor's Class A
Common Stock could be materially adversely affected.
3. Risks of International Telecommunications Business.
Debtor will generate substantially all its revenues by providing
international telecommunications services to its customers on a wholesale basis.
The international nature of Debtor's operations involves certain risks, such as
changes in U.S. and foreign government regulations and telecommunications
standards, dependence on foreign partners, tariffs, taxes and other trade
barriers, the potential for nationalization and economic downturns and political
instability in foreign countries. In addition, Debtor's business could be
adversely affected by a reversal in the current trend toward deregulation of
telecommunications carriers.
4. Risk of Dependence on Foreign Partners.
Debtor will rely on foreign partners to terminate its traffic in foreign
countries and to assist in installing transmission facilities and network
switches, complying with local regulations, obtaining required licenses, and
assisting with customer and vendor relationships. Debtor may have limited
recourse if its foreign partners do not perform under their contractual
arrangements with Debtor. Debtor's arrangements with foreign partners may expose
Debtor to legal, regulatory or economic risks. One foreign partner will be a
Mexican company owned or controlled by Mr. David Wallace.
<PAGE> 110
5. Risks Associated with Foreign Government Control and
Highly Regulated Markets.
Governments of many countries exercise substantial influence over
various aspects of the telecommunications market. In some cases, the government
owns or controls companies that may become competitors of Debtor or companies
(such as national telephone companies) upon which Debtor and its foreign
partners may depend for required interconnections to local telephone networks
and other services. Accordingly, government actions could have a material
adverse effect on Debtor's operations. In highly regulated countries in which
Debtor will not be dealing directly with the dominant local exchange carrier,
the dominant carrier may have the ability to terminate service to Debtor or its
foreign partner and, if this occurs, Debtor may have limited or no recourse. In
countries where competition is not yet fully established and Debtor will be
dealing with an alternative carrier, foreign laws may prohibit or impede the
entry of such new carriers in the market. In situations in which the Debtor will
have a foreign-partner, there may be an increased risk to the Debtor in the
event that the foreign partner fails to comply with applicable foreign law.
6. Risks Associated with International Settlement Rates,
International Traffic and Foreign Currency Fluctuations.
Debtor's revenues and cost of long distance services may be sensitive to
changes in international settlement rates, imbalances in the ratios between
outgoing and incoming traffic and foreign currency fluctuations. International
rates charged to customers are likely to fluctuate for a variety of reasons,
including increased competition between existing long distance providers, new
entrants into the market and the consummation of joint ventures among large
international long distance providers that facilitate targeted pricing and cost
reductions. There can be no assurance that Debtor will be able to meet projected
traffic volume or operating
<PAGE> 111
costs to offset any possible rate decreases. In addition, Debtor expects that a
portion of Debtors net revenue and expenses may be denominated in currencies
other than U.S. dollars, and changes in exchange rates may have a significant
effect on Debtors results of operations. As Debtor continues to pursue a
strategy of entering into operating agreements where it is economically
advantageous to do so, Debtor's results of operations will be subject to the
risks of changes in international settlement rates and foreign currency
fluctuations.
7. Foreign Corrupt Practices Act.
Due to its acquisition of DIEGO TEL, Debtor may become subject to the
Foreign Corrupt Practices Act (FCPA), which generally prohibits U.S. companies
and their intermediaries from bribing foreign officials for the purpose of
obtaining or keeping business
8. Potential Effects of Government Regulation.
Debtors business will be subject to various Federal laws, regulations,
agency actions and court decisions. Debtors international facilities-based and
resale services are subject to regulation by the Federal Communications
Commission (the "FCC"). The FCC requires authorization prior to leasing
capacity, acquiring international facilities, and/or initiating international
service. Prior FCC approval is also required to transfer control of an
authorized carrier. Debtor is also subject to the FCC rules that regulate the
manner in which international services may be provided, including, for instance,
the circumstances under which carriers may provide international switched
services by using private lines or route traffic through third countries.
9. The FCC's Private Line Resale Policy.
The FCC's private line resale policy prohibits a carrier from reselling
international private leased circuits to provide switched services to a country
unless the FCC has found that the
<PAGE> 112
country affords U.S. carriers equivalent opportunities to engage in similar
activities in that country. Debtor may enter into arrangements with foreign
carriers may involve the transmission of switched services for termination in a
country that has not been found by the FCC to offer equivalent resale
opportunities. There can be no assurance that the FCC, upon viewing these
alternate carrier arrangements, would permit these arrangements under its
private line resale policy. If the FCC finds that these arrangements conflict
with its policy, among other measures, it may issue a cease and desist order or
impose fines on Debtor, which could have a material adverse effect on Debtor's
business, operating results and financial condition. It is also possible that
the regulatory agency of the foreign government would find that foreign law does
not permit the operation of alternate carriers or that the alternate carriers
have not met foreign law requirements for such operations. Such a finding could
have a material adverse effect on Debtor's business, operating results and
financial condition.
10. The FCC's International Settlements Policy.
Debtor is also required to conduct its international business in
compliance with the FCC's international settlements policy (the "ISP"). The ISP
establishes the permissible arrangements for U.S.-based carriers and their
foreign counterparts to settle the cost of terminating each other's traffic over
their respective networks.
11. Recent and Potential FCC Actions.
Regulatory action that has been and may be taken in the future by the FCC may
enhance the intense competition faced by Debtor. The FCC has enacted certain
changes in its rules designed to permit more flexibility in its ISP as a method
of achieving lower cost-based accounting rates as more facilities-based
competition is permitted in foreign markets. Specifically, the FCC has decided
to allow U.S. carriers, subject to certain competitive safeguards, to propose
methods to
<PAGE> 113
pay for international call termination that deviate from traditional bilateral
accounting rates and the ISP. The FCC has also proposed to establish lower
ceilings ("benchmarks") for the rates that U.S. carriers will pay foreign
carriers for the termination of international services. In separate proceedings,
the FCC is considering equivalency determinations for Australia, Chile, Denmark,
Finland, Hong Kong and Mexico. While these rule changes may provide more
flexibility to Debtor to respond more rapidly to changes in the global
telecommunications market, it will also provide similar flexibility to Debtor's
competitors.
12. Foreign Regulations.
Debtor may also be subject to regulation in foreign countries in
connection with certain of its business activities. For example, Debtor's use of
transit, international simple resale ("ISR") or other routing arrangements may
be affected by laws or regulations in either the transited or terminating
foreign jurisdiction. Foreign countries, either independently or jointly as
members of the ITU, may have adopted or may adopt laws or regulatory
requirements for which compliance would be difficult or expensive, that could
force Debtor to choose less cost-effective routing alternatives and that could
adversely affect Debtor's business, operating results and financial condition.
To the extent that it seeks to provide telecommunications services in other
non-U.S. markets, Debtor is subject to the developing laws and regulations
governing the competitive provision of telecommunications services in those
markets. Debtor currently plans to provide a limited range of services in the
Far East and Mexico, as permitted by regulatory conditions in those markets, and
to expand its operations as these markets implement scheduled liberalization to
permit competition in the full range of telecommunications services in the next
several years. The nature, extent and timing of the opportunity for Debtor to
compete in these markets will be determined, in part, by the actions taken by
the governments in these countries
<PAGE> 114
to implement competition and the response of incumbent carriers to these
efforts. There can be no assurance that these countries will implement
competition in the near future, or at all, or that Debtor will be able to take
advantage of any such liberalization in a timely manner.
13. Regulation of Target Customers.
Debtor's targeted customers may also be subject to actions taken by
domestic or foreign regulatory authorities that may affect the ability of
customers to deliver traffic to Debtor. Those actions could materially adversely
affect the volume of traffic received from a major customer, which could have a
material adverse effect on Debtor's business, financial condition and results of
operations.
14. Dependence on Availability of Transmission Capacity.
For fiscal 1998, Debtor predicts substantially all of its revenue to be
derived from the sale of international long distance services terminated through
resale arrangements with other long distance providers. There can be no
assurance that predicted resale arrangements will be available to Debtor on a
cost-effective basis or at all. Most transmission capacity that Debtor will be
using will be obtained on a variable, per minute basis, subjecting Debtor to the
possibility of unanticipated price increases and service cancellations. Debtor
will also require high voice quality transmission capacity, which may not always
be available at cost-effective rates. If Debtor is not able to enter into
cost-effective resale arrangements with its primary vendors, or is unable to
locate suitable replacement vendors that offer sufficient, high quality
alternative capacity, Debtor's business, operating results and financial
condition could be materially adversely affected. For instance, to the extent
that Debtor's variable costs increase, Debtor may experience reduced or, in
certain circumstances, negative margins for some services. As its traffic volume
increases on particular routes, Debtor expects to decrease its
<PAGE> 115
reliance on variable usage arrangements and enter into fixed monthly or
longer-term leasing or ownership arrangements, subject to obtaining any
requisite authorization. To the extent that Debtor does so, and incorrectly
projects traffic volume in a particular geographic area, Debtor would experience
higher fixed costs without a related increase in revenue. Debtor intends to
invest in developing its own global transmission and switching facilities, which
is a capital intensive and time-consuming process. There can be no assurance
that Debtor will successfully complete development of its global network in a
timely manner and within budget.
15. Risks Associated with Complex Switching and Information
Systems Hardware and Software.
Debtor's information systems and switching equipment are expensive to
purchase, complex to install and maintain, and subject to hardware defects and
software bugs. Debtor may experience technical difficulties with its hardware or
software which could adversely affect Debtor's ability to provide service to its
customers, manage its network, collect billing information, or perform other
vital functions. Such events could have a material adverse affect on Debtor's
business, operating results or financial condition.
16. Significant Competition.
The international telecommunications industry is intensely competitive
and subject to rapid change. Debtors competitors in the international wholesale
switched long distance market include large, facilities-based multinational
corporations and PTTS, smaller facilities-based providers in the U.S. and
overseas that have emerged as a result of deregulation, switched-based resellers
of international long distance services and international joint ventures and
alliances among such companies. International wholesale switched long distance
providers compete on the basis of price, customer service, transmission quality,
breadth of service offerings and value-added services. Debtor believes that
competition will continue to increase, placing downward
<PAGE> 116
pressure on prices. Such pressure could adversely affect Debtors gross margins
if Debtor is not able to reduce its costs commensurate with such price
reductions.
17. Competition from Domestic and International Companies
and Alliances.
The U.S.-based international telecommunications services market is
dominated by American Telephone & Telegraph Co. ("AT&T"), MCI Communications
Corp. ("MCI") and Sprint Communications Company L.P. ("Sprint"). Other
significant competitors include WorldCom, Inc., Pacific Gateway Exchange, Inc.,
TresCom International, Inc. and other U.S. based and foreign long distance
providers, many of which have considerably greater financial and other resources
and more extensive domestic and international communications networks than
Debtor. Debtor anticipates that it will encounter additional substantial
competition as a result of the formation of global alliances among large long
distance telecommunications providers. Many of Debtor's current competitors are
also Debtor's potential customers. Debtor's business would be materially
adversely affected to the extent that a significant number of such potential
customers limit or refuse to do business with Debtor for competitive or other
reasons.
18. Competition from New Technologies.
The telecommunications industry is in a period of rapid technological
evolution, marked by the introduction of new product and service offerings and
increasing satellite transmission capacity for services similar to those
provided by Debtor. Such technologies include satellite-based systems, such as
the proposed Iridium and GlobalStar systems, utilization of the Internet for
international voice and data communications and digital wireless communication
systems such as personal communications services ("PCS"). Debtor is unable to
predict which of many possible future product and service offerings will be
important to maintain its competitive
<PAGE> 117
position or what expenditures will be required to develop and provide such
products and services.
19. Increased Competition as a Result of a Changing
Regulatory Environment.
The FCC recently granted AT&T's petitions to be classified as a
non-dominant carrier in the domestic interstate and international markets, which
has allowed AT&T to obtain relaxed pricing restrictions and relief from other
regulatory constraints, including reduced tariff notice requirements. These
reduced regulatory requirements could make it easy for AT&T to compete with
Debtor. In addition, the Telecommunications Act of 1996 (the "Telecommunications
Act"), which substantially revises the Communications Act of 1934 (the
"Communications Act"), permits and is designed to promote additional competition
in the intrastate, interstate and international telecommunications markets by
both U.S.-based and foreign companies, including the Regional Bell Operating
Companies ("RBOCs"). As a result of these and other factors, there can be no
assurance that Debtor will compete favorably in the future.
20. Dependence on Other Long Distance Providers and Customer
Concentration.
Debtor's primary business as a wholesale long distance provider makes it
highly dependent upon traffic delivered to Debtor by other long distance
providers pursuant to arrangements that can generally be terminated by the
provider on short notice. Assuming that the Debtors customer develops a customer
base, Debtor could lose significant customer traffic for many reasons, including
the entrance into the market of significant new competitors with lower rates
than Debtor, downward pressure on the overall costs of transmitting
international calls, transmission quality problems, changes in U.S. or foreign
regulations, or unexpected increases in Debtor's cost structure as a result of
expenses related to installing a global network or otherwise. Any significant
loss of customer traffic would have a material adverse effect on
<PAGE> 118
Debtors business, operating results and financial condition.
Debtor's customer concentration could also amplify the risk of
non-payment by customers. Debtor's largest customers are anticipated to account
for a significant amount of Debtors gross accounts receivable. If one of
Debtor's major customers informed Debtor that it was experiencing financial
difficulties and would be unable to pay in full, on a timely basis, Debtor would
convert a portion of the account receivable into a note from the customer.
Debtor would increase its reserves to account for the potential inability to
collect on the note or the accounts receivable from this customer. There can be
no assurance that the note or the accounts receivable would be paid, that Debtor
would be able to obtain adequate recourse from the note, if necessary, or that
Debtor's reserves will be adequate. Debtors ability to collect these outstanding
amounts would be adversely affected to the extent that this customer's financial
condition deteriorates further or the customer commences bankruptcy proceedings.
While Debtor intends to perform ongoing credit evaluations of its customers, it
generally does not require collateral to support accounts receivable from its
customers, and there can be no assurance that reserves will be adequate in
future periods. The inability of Debtor to collect significant accounts
receivable in any given period could have a material adverse effect on Debtor's
Cash flow and financial condition.
21. Capital Expenditures: Potential Need for Additional
Financing.
Development of Debtor's network facilities will require a significant
investment in equipment and facilities. If Debtor believes that its assets,
combined with other sources of liquidity, are not sufficient to fund its capital
requirements for the next twelve (12) months, Debtor will be required to obtain
additional financing depending on factors such as the rate and extent of
Debtor's international expansion, increased investment in ownership rights in
fiber
<PAGE> 119
optic cable, and increased sales and marketing expenses to support international
wholesale and commercial operations. Issuance of additional equity securities
would result in dilution to stockholders. There can be no assurance that
additional financing will be available on terms acceptable to Debtor, or at all.
Debtor's inability to fund its capital requirements would have a material
adverse effect on Debtor's business, operating results and financial condition.
22. Effects of Natural Disasters and Other Catastrophic
Events.
Debtor's business is susceptible to natural disasters such as
earthquakes, as well as other catastrophic events such as fire, terrorism and
war. While Debtor has taken a number of steps such as building redundant systems
for power supply to the switching equipment, to prevent its network from being
affected by natural disasters, fire and the like, there can be no assurance that
any such systems will prevent Debtor's switches from becoming disabled in the
event of an earthquake, power outage or otherwise. The failure of Debtor's
network, or a significant decrease in telephone traffic resulting from effects
of a natural or man-made disaster, could have a material adverse effect on
Debtor's relationship with its customers, Debtor's business, operating results
and financial condition.
D. Other Matters.
1. Securities and Exchange Commission.
As of the filing of the Plan, the Company is not current with respect to
reports which it is required to file with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934. The delinquency in filing is
attributable to actions taken by the former Board of Directors, the former
President of the Company (Mr. Pattinson Hayton III), and various third parties
who were affiliated with the Board of Directors and Mr. Hayton.
The Company is currently unable to comply with the reporting
requirements established
<PAGE> 120
by the SEC because the Company does not have audited financial statements. It is
the Company's intention, prior to the Effective Date, to engage Kafoury,
Armstrong and Company as its independent auditors for the purpose of preparing
audited financial statements. Kafoury and Armstrong served as the Company's
auditors for the period 1993 through approximately September 1996, at which time
the firm resigned due to disputes with the then management and Board of
Directors.
In the event that the Company is unable to secure audited financial
statements, there will be substantial difficulty in complying with the reporting
requirements. In that event, the market value of the Company's stock may
decline.
2. NASD.
The Company's Class A Common Stock was previously classified as a
"SmallCap" stock eligible for trading on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"). The National Association of
Securities Dealers, Inc. ("NASD") subsequently delisted the Class A Common Stock
when the Company failed to file its required reports with the Securities and
Exchange Commission and when the market value of the Company's Common Shares
failed to meet the minimum listing criteria established by the NASD.
Currently, the Company's Common Stock is traded on an ad hoc basis in
the over-the-counter market; however, there is no active market for the
Company's stock.
The ability of the Company to establish and maintain a market demand for
its stock is directly dependent upon approval of the Plan (as submitted)
together with the preparation of audited financial statements and compliance
with the reporting obligations of the Company pursuant to the Securities and
Exchange Act of 1934. It is estimated that the costs associated
<PAGE> 121
with this effort will range from $40,000 to $100,000.
In the event that none of these events fail to occur, there will be an
adverse impact upon the market value of the Company's stock.
3. Market for Class A Common Stock.
Debtor's common stock is currently not traded in the NASDAQ Small Cap
Market, having been de-listed from such exchange. However, the Debtor's Class A
Common Stock does currently trade on the NASD Electronic Bulletin Board for
Over-The-Counter or "Pink Sheet" stocks. It is not anticipated that the Class A
Common Stock issued pursuant to the Plan will be immediately listed for trading
on any exchange. The inability of Debtor's ability to qualify for re-listing on
the NASD or an a national stock exchange could adversely affect marketability of
the Debtor's Class A Common Stock and otherwise impair its ability to raise new
capital.
4. No Dividends: Dilution
It is not anticipated that Debtor will pay any Cash dividends on its New
Class A Common Stock for the foreseeable future. However, the Plan does
contemplate distributions of securities undertaken in connection with one or
more merger transactions of either the Debtor or existing or newly formed
subsidiaries.
XII. LIQUIDATION ANALYSIS
Section 1129(a)(7) of the Bankruptcy Code requires, in pertinent part,
that the Debtor determine the amount of proceeds available for distribution to
Creditors in the event of a liquidation of the Debtor. This analysis is
conducted in order that Creditors may determine whether the proposed Plan is
likely to result in distributions in excess of the amount that would be received
in the event that the Debtor were to be liquidated.
In this context, Debtor's assets (in the event of a liquidation) would
be limited to (1) Cash
<PAGE> 122
on hand, and (2) the energy co-generation equipment previously acquired by
Debtor.
In other words, the common stock of CEC, VivaTel, and Diego Tel would
not be taken into consideration because these assets would not be owned by
Debtor in the event that the Plan is not confirmed and the Bankruptcy Court were
to order a liquidation of the Debtor.
As of May 30, 1998, Debtor's Cash on hand totaled approximately $22,000.
Based upon an appraisal secured in 1996, the energy co-generation equipment
owned by Debtor had an appraised fair market value as of approximately
$5,700,000, less accumulated depreciation and changes in the equipment.
For purposes of conducting the liquidation analysis, Debtor has computed
its Allowed liabilities to total $11,326,500 as follows:
<TABLE>
<CAPTION>
Allowed Claims Disputed
-------------- ----------
<S> <C> <C>
Class 1 $ 200,000 0
Class 2 $ 0 $ 24,000
Class 3 $ 26,000 0
Class 4 0 $ 550,000
Class 5 $ 0 0
Class 6 $ 30,000 0
Class 7 $1,000,000 $3,500,000
Class 8 $6,000,000 0
Class 10 $ 0 0
Total $7,326,000 $4,200,000*
</TABLE>
* Deemed to be Class 9 Claims.
With respect to the energy co-generation equipment, although this
equipment has an
<PAGE> 123
appraised value of $5,700,000, in the opinion of the Board of Directors of
Debtor and its management, in the event of a liquidation of Debtor, it is
unlikely that a third party would purchase the energy co-generation equipment at
its appraised value. In the opinion of Debtor's Board of Directors and
management, the Company's energy co-generation equipment, if sold at auction on
a liquidation basis, would likely generate less than $4,000,000 and may require
a substantial lead time to affect the transaction. The Board of Directors and
management have taken into consideration, at arriving at this figure, the facts
that (1) the energy co-generation equipment is currently in storage and,
therefore, a prospective buyer would have difficulty in confirming that the
equipment will function as designed, (2) the energy co-generation equipment is
currently stored in remote locations and not readily accessible to prospective
buyers, (3) there is limited application for the equipment in the commercial
environment and, therefore, the number of prospective purchasers is limited, (4)
if sold in a liquidating transaction, it is likely that purchasers would seek to
offer lower prices than would occur under other circumstances because there is
no surviving business entity against which recourse may be asserted. In other
words, the equipment would be purchased "AS IS" and "WHERE IS."
The opinions expressed above are subjective in nature. There is no
empirical mechanism by which Debtor may determine the actual purchase price
which would be paid by a third party. While the Board of Directors and
management believe that the 1996 appraisal (which is consistent with the
appraisals in a previously obtained in 1993, 1994 and 1995) represent a
reasonable estimate of the fair market value of the equipment if sold on an
arm's length basis to a ready, willing, and able buyer who is not motivated by
factors other than affective utilization of the equipment, there is no assurance
or guaranty that the equipment would generate a minimum of $4,000,000 if sold in
a liquidating transaction.
<PAGE> 124
Assuming, however, for the purposes of this analysis that the energy
cogeneration were to generate $4 million (net of transaction costs), Debtor
would have available approximately $3,700,000 to be distributed among creditors
whose claims total approximately $7,326,500. (Note: this is allowed claims only
and presumes 0.0% of the disputed claims are valid. If 100.0% of the disputed
claims were to be allowed, the allowed claims creditors would total
approximately $11,526,000.
(In this event a liquidation would result in the payment of
approximately 49.0% of the amount of each claim).
In contrast, the proposed plan affords creditors the opportunity to
secure (a) cash, (b) stock or (c) a combination of cash and stock. Depending
upon the combination which is elected, the creditor will receive an amount in
excess of the distribution which would occur in the event of liquidation, as set
forth in the following chart, which compares the distribution to a creditor
holding a claim in the amount of $10,000.00:
CLAIM = $10,000.00
Liquidation Plan
<TABLE>
<CAPTION>
Option A Option B1 Option B2 Option C
--------- ----------- ---------- --------
<S> <C> <C> <C> <C>
One time
cash payment $4,9000.00 $1,200.00 $ 2,000.00 $2,000.00 0
Cash 0 $ 8,000.00 0 0
Class A Stock 0 1,600.00 9,600.00 20,000
Total $4,900.00 $1,200.00 $10,000.00 $2,000.00 0
+ +
1,600 shares 9,600 shares 20,000 shares
</TABLE>
<PAGE> 125
Every general unsecured creditor holding an allowed claim has the right
to elect, pursuant to the Plan the payment option the creditor feels to be in
the creditor's best interest. As the above chart illustrates, if the creditor
elects Option B, Plan 1 the creditor will receive an amount in excess of the
cash distribution to be effected in the event of a liquidation. In contrast, if
the creditor elects Option C, the creditor will receive significantly less cash,
and in lieu thereof, will receive Class A Common Stock. There is no assurance of
guaranty that the Class A Common Stock has or will ever have any economic value.
At this time, the Debtor's board of directors places a de minimis value upon the
Class A Common Stock, and therefore, a Creditor who elects to receive Class A
Common Stock in lieu of or as partial payment for the Creditor's allowed claim,
is assuming a substantial risk as the Class A Common Stock may never have value.
If, on the other hand, the Class A Common Stock were to achieve value in the
marketplace, it is possible that the Class A Common Stock could have a value
substantially in excess of the amount of cash to be distributed under Option A,
Option B1, or Option B2 of the Plan.
All Creditors are treated equally. Every Creditor has the right to
select the payment plan which the Creditor believes to be in the individual
Creditor's best interest.
The proposed Plan would result in a significantly higher distribution to
the Debtor.
For this reason, the Board of Directors and management of Debtor believe
that the proposed Plan is in the best interests of all Creditors and encourage
its acceptance.
XIII. VOTING PROCEDURES AND REQUIREMENTS
A. Ballots and Voting Deadline.
A ballot to be used for voting to accept or reject the Plan is enclosed
with this Disclosure
<PAGE> 126
Statement and provided to Creditors and Equity Interest holders who are entitled
to vote. A Creditor or Equity Interest holder voting must (i) carefully review
the ballot and the instructions printed thereon, (ii) vote to accept or reject
the Plan, (iii) with respect to Creditors in Class 7 of the Plan, indicate under
which payment alternative you elect to receive in the event that the Plan is
confirmed by the Court, and (iv) return the ballot to the address indicated
thereon by the deadline in order to enable the ballot to be considered for
voting purposes.
The record date for determining which holders of Class A Common Stock
are entitled to vote on the Plan is the date on which the Bankruptcy Court
approves the Disclosure Statement.
DO NOT RETURN YOUR STOCK CERTIFICATE WITH YOUR BALLOT.
Bank and broker nominees will transmit a ballot, together with a copy of
this Disclosure Statement, to each beneficial owner of Class A Common Stock of
Debtor held in the name of such nominees. Instructions for returning ballots
will also be sent to beneficial owners by nominees. If your Class A Common Stock
is held in the name of a brokerage firm or bank, please return your ballot in
the envelope provided by that institution.
Debtor intends to make pre-solicitation inquiry to nominees in order to
determine (i) the number of beneficial owners of Debtor securities, and (ii) the
number of copies of the Disclosure Statement necessary to supply record or
nominee holders of the solicitation materials in sufficient time to make an
informed decision.
The Bankruptcy Court has directed that, in order to be counted for
voting purposes, ballots for the acceptance or rejection of the Plan must be
received by the Debtor no later than 5:00 p.m. (PST) on August 24, 1998 at the
following address:
<PAGE> 127
PowerTel, USA, Inc.
c/o Belding Harris & Petroni
Stephen R. Harris
417 W. Plumb Ln.
Reno, NV 89509
Counsel for Debtor
TO BE COUNTED, YOUR BALLOT MUST BE RECEIVED BY 5.00 P.M., PACIFIC
STANDARD TIME ON AUGUST 24,1998.
B. Creditors and Shareholders Entitled to Vote.
Any Creditor of Debtor whose Claim is "impaired" under the Plan is
entitled to vote if either (i) the Claim has been scheduled by the Debtor (and
such Claim is not scheduled as disputed, contingent or unliquidated), or (ii) it
has filed a Proof of Claim on or before the last date set by the Bankruptcy
Court for such filings. Any Claim as to which an objection has been filed (and
such objection is still pending) is not entitled to vote, unless the Bankruptcy
Court temporarily allows the Claim in an amount which it deems proper for the
purpose of accepting or rejecting the Plan, such authorization to be made upon
motion by a Creditor whose Claim has been the subject of an objection. Such
motions must be heard and determined by the Bankruptcy Court prior to the date
established by the Court to confirm the Plan. In addition, a Creditor's vote may
be disregarded if the Bankruptcy Court determines that the Creditor's acceptance
or rejection of the Plan was not solicited or procured in good faith or in
accordance with the provisions of the Bankruptcy Code.
C. Definition of Impairment.
Section 1124 of the Bankruptcy Code specifies certain terms and
conditions pursuant to which a class of Claims or Equity Interests are deemed to
be "impaired" under a plan of reorganization.
<PAGE> 128
D. Classes Impaired Under the Plan.
(i) Creditors holding Claims in Classes 4, 5, 7 and 8 and Equity
Interest holders in Class 10 are deemed to be "impaired" for purposes of section
1124 of the Bankruptcy Code and, therefore, are eligible to vote on acceptance
or rejection of the Plan.
(ii) Voting Shareholders are also eligible to vote.
E. Identification of Claims and Equity Interest Not Impaired by the
Plan.
1. Unimpaired Classes.
Claims of classes 1, 2, 3 and 6 are not impaired under the Plan.
2. Controversy Concerning Impairment.
In the event of a controversy as to whether any Creditors or holders of
Equity Interest or class of Creditors or class of holders of Equity Interest are
impaired under the Plan, the Bankruptcy Court shall, after notice and a hearing,
determine such controversy.
F. Information on Voting and Ballots
While ballots are being forwarded to all Creditors, unimpaired Creditors
under the Plan are conclusively deemed to have accepted their treatment under
the Plan and votes by those Creditors will not be considered by the Bankruptcy
Court.
G. Vote Required for Class Acceptance.
The Bankruptcy Code defines acceptance of a plan of reorganization by a
class of creditors to be the acceptance by holders of two-thirds (2/3) in dollar
amount and a majority in the number of Claims of that class which actually casts
ballots for acceptance or rejection of the plan of reorganization. In other
words, acceptance takes place only if the plan is approved by two-thirds (2/3)
an amount and a majority in number of the Creditors actually voting. DEBTOR
URGES YOU TO VOTE IN FAVOR OF ITS PLAN WHICH, IN THE OPINION OF ITS
<PAGE> 129
BOARD OF DIRECTORS AND MANAGEMENT, REPRESENTS THE BEST OPPORTUNITY FOR THE
CREDITORS AND EQUITY INTEREST HOLDERS TO RECEIVE COMPENSATION.
H. Confirmation of the Plan
Under the Bankruptcy Code, the following steps must be taken to confirm
the Plan:
1. Confirmation Hearing.
Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court,
after notice, to hold a hearing on confirmation of the Plan (the "Confirmation
Hearing"). Section 1128(b) provides that any party-in-interest may object to the
confirmation of the Plan.
By order of the Bankruptcy Court dated May 21, 1998, the Confirmation
Hearing has been scheduled for August 25, 1998 at 10:00 a.m. in Court Room
United States Federal Building, 300 Booth Street, Reno, Nevada. The Confirmation
Hearing may be adjourned from time to time by the Bankruptcy Court without
further notice except for an announcement made at the Confirmation Hearing or
any adjournment thereof. Any objection to the confirmation must be made in
writing and filed with the Bankruptcy Court with proof of service and served
upon the following parties on or before August 11, 1998:
PowerTel USA, Inc.
c/o Walter & Haverfield P. L. L.
1300 Terminal Tower
Cleveland, Ohio 44113
Attention: Van P. Carter, Esq., Counsel for Debtor
UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY SERVED AND FILED, IT WILL
NOT BE CONSIDERED BY THE BANKRUPTCY COURT.
<PAGE> 130
2. Requirements for Confirmation of the Plan.
At the Confirmation Hearing, the Bankruptcy Court shall determine
whether the requirements of section 1129 of the Bankruptcy Code have been
satisfied, in which event the Bankruptcy Court shall enter an order confirming
the Plan.
The Debtor believes that the Plan satisfies all of the statutory
requirements of Chapter 11 of the Bankruptcy Code, that the Debtor has complied
or will have complied with all of the requirements of Chapter 11 and that the
proposal set forth in the Plan is made in good faith.
The Debtor contends that holders of all Claims impaired under the Plan
will receive payments under the Plan having a present value as of the
Confirmation Date in amounts not less than the amounts likely to be received if
the Debtor was to be liquidated in a Chapter 7 proceeding pursuant to the
Bankruptcy Code. Included in Section X. of this Disclosure Statement is a
summary of the amounts estimated to be realized by the Creditors of Debtor in
the event of its liquidation pursuant to Chapter 7.
At the Confirmation Hearing, the Bankruptcy Court will determine whether
Creditors would receive greater Distributions pursuant to the Plan than would be
distributed in a liquidation pursuant to Chapter 7.
3. Cramdown.
In the event that any impaired class of Claims in the Plan does not
accept the Plan, the Bankruptcy Court may still confirm the Plan at the request
of the Debtor if, as to each impaired class which has not accepted the Plan, the
Plan "does not discriminate unfairly" and is "fair and equitable." A plan of
reorganization does not discriminate unfairly within the meaning of the
Bankruptcy Code if no class receives more than it is legally entitled to receive
for its claims or equity interest. The term "fair and equitable" has different
meanings for secured and unsecured
<PAGE> 131
claims and equity interests.
With respect to a secured claim, the term "fair and equitable" means
either: (a) the impaired secured creditor retains its liens to the extent of its
allowed claim and receives deferred cash payments at least equal in amount to
the allowed amount of its claim with a present value as of the effective date at
least equal to the value of such creditor's interest in the property securing
its liens; (ii) property subject to the lien of the impaired secured creditor is
sold free and clear of that lien, with that lien attaching to the proceeds of
the sale, and such lien proceeds must be treated in accordance with clauses (i)
and (iii) hereof; or (iii) the impaired secured creditor realizes the
"indubitable equivalent" of its claim under a plan of reorganization.
With respect to an unsecured claim, the term "fair and equitable" means
either: (i) each impaired unsecured creditor receives or retains property of a
value equal to the amount of its allowed claim; or (ii) the holders of claims in
interest that are junior to the claims of the dissenting class will not receive
any property under, a plan of reorganization.
With respect to a claim of equity interest, the term "fair and
equitable" means either: (i) each impaired equity interest receives or retains
on account of such interest property of a value equal to the greatest of the
allowed amount of any fixed liquidation preference to which such holder is
entitled, any fixed redemption price to which such holder is entitled, or the
value of such interest; or (ii) the holder of any interest that is junior to the
interest of such class will not receive or retain under the plan on account of
such junior interest any property.
In the event one or more classes of impaired claims of the Plan rejects
the Plan, the Bankruptcy Court will determine at the Confirmation Hearing
whether the Plan is fair and equitable and does not discriminate unfairly
against any rejecting impaired class of claims.
<PAGE> 132
XIV. CONCLUSION
For the foregoing reasons, the Board of Directors of Debtor recommends
adoption of the Plan as submitted.
Respectfully submitted,
/s/ Stephen R. Harris
-----------------------------------------
STEPHEN R. HARRIS, ESQ.
BELDING AND HARRIS
Nevada Bar No. 001463
417 W. Plumb Lane
Reno, NV 89509
<PAGE> 133
SCHEDULE OF EXHIBITS
Exhibit 1 - Ballot (to be provided)
Exhibit 2 - First Amended and Restated Setlement and Release Agreement
Exhibit 3 - Balance Sheet dated May 31, 1998
Exhibit 4 - Amended and Restated Agreement for Exchange of Stock
Exhibit 5 - Budget Report by Month: May 1, 1998 through December 31, 1998
Exhibit 6 - Summary of Directors (to be provided)
Exhibit 7 - Employment Contracts
<PAGE> 134
Stephen R. Harris, Esq.
BELDING & HARRIS, LTD.
417 West Plumb Lane
Reno, NV 89509
Telephone: (702) 786-7600
Attorneys for Debtor
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEVADA
IN RE: CASE NO. 97-30265-BMG
CHAPTER 11
PowerTel USA, INC., formerly known as
NEVADA ENERGY, INC., also formerly known BALLOT FOR ACCEPTING OR
as MUNSON GEOTHERMAL, INC., REJECTING DEBTOR'S FIRST AMENDED
PLAN OF REORGANIZATION
Debtor.
HEARING DATE:
_______________________________________/ HEARING TIME:
The undersigned acknowledges receipt of the Plan of Reorganization
("Plan") filed July 1998, and votes as follows:
[Check One Box]
Class of Creditor: ______ Accepts (_______) Rejects (_______)
Amount of Claim: $__________________
Name of Creditor: __________________ Address: __________________________
__________________________
By: __________________________
Title: __________________________
CLASS 6 CLAIMANTS ONLY
The undersigned, an unsecured creditor of PowerTel USA, Inc., in the
unpaid principal amount of $_____________,
[ ] Accepts
[ ] Rejects
the treatment for Class 6 claimants set forth in the Plan proposed by
Debtor PowerTel USA, Inc.
OR
CLASS 6 ALTERNATIVE TREATMENT ELECTION
The undersigned, an unsecured creditor of PowerTel USA, Inc. in the
unpaid principal amount of $_____________, elects
[ ] Cash
[ ] Stock
<PAGE> 135
CLASS 7 CLAIMANTS ONLY
The undersigned, an unsecured creditor of PowerTel USA, Inc., in the
unpaid principal amount of $____________,
[ ] Accepts
[ ] Rejects
the treatment for Class 7 claimants set forth in the Plan proposed by
Debtor PowerTel USA, Inc.
OR
CLASS 7 ALTERNATIVE TREATMENT ELECTION
If you hold a Class 7 Allowed Unsecured Claim and you vote to support
the First Amended Plan of Reorganization, you must make an election on
how your claim will be treated.
OPTION A: My Allowed Unsecured Claim exceeds $1,200.
[ ] I elect to accept $1,200 one the Effective Date in full
satisfaction of my Class 7 claim.
OPTION B: My Allowed Unsecured Claim exceeds $1,200.
[ ] I elect to accept a combination of Cash and Stock for my
Allowed Unsecured Claim.
[ ] I elect to accept Option B Plan 1
[ ] I elect to accept Option B Plan 2
OPTION C: My Allowed Unsecured Claim exceeds $1,200.
[ ] I elect to receive all stock for my Allowed Unsecured Claim.
NOTE: IN THE EVENT THAT THE HOLDER OF A CLASS 7 ALLOWED UNSECURED CLAIM
FAILS TO ELECT OPTION A, B OR C, IT WILL BE DEEMED TO HAVE ELECTED OPTION C.
The First Amended Plan of Reorganization referred to in this Ballot can
be confirmed by the Court only if two-thirds in amount and more than one-half in
number of creditors in each class of claims or interests voting on the Plan
accept the Plan, or, in the event of a rejection, the Court finds that the Plan
nonetheless conforms to the requirements of the law. See 11 U.S.C. Section
1129(a) and (b).
This Ballot must be returned on or before ____________, 1998 to:
Stephen R. Harris, Esq.
417 West Plumb Lane
Reno, NV 89509
DATED this _____ day of _________________, 1998
BELDING & HARRIS, LTD.
______________________________________
Stephen R. Harris, Esq.
Attorneys for Debtor
<PAGE> 136
Stephen R. Harris, Esq.
BELDING & HARRIS, LTD.
417 West Plumb Lane
Reno, NV 89509
Telephone: (702) 786-7600
Attorneys for Debtor
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEVADA
IN RE: CASE NO. 97-30265-BMG
CHAPTER 11
PowerTel USA, INC., formerly known as
NEVADA ENERGY, INC., also formerly known AMENDED ERRATA TO BALLOT
as MUNSON GEOTHERMAL, INC., AND TO DEBTOR'S SECOND
AMENDED DISCLOSURE STATEMENT
Debtor. PURSUANT TO 11 U.S.C.SECTION 1125
HEARING DATE: 8/25/98
_______________________________________/ HEARING TIME: 10:00 A.M.
PowerTel USA, Inc. hereby files this Errata to its Second Amended
Disclosure Statement Pursuant To 11 U.S.C. Section 1125 ("Disclosure
Statement").
Section IV D at page 30 is amended to include:
Working in conjunction with David Wallace, management identified a
specific strategy for the penetration of international telecommunication
services, and commenced to implement that strategy through the
acquisition of two companies, VivaTel and DiegoTel, both of which were
established by David Wallace. VivaTel was formed in 1997 of the purpose
of establishing a business in the international long distance service
with a primary emphasis on wholesale purchases and sales. VivaTel had in
place a $270,000 letter of credit to secure a contract with a wholesale
vendor of international long distance services. The letters of credit
were returned to the funding source in 1998 and the contract was
mutually rescinded. DiegoTel offered the opportunity to expand into the
wholesale international long distance telecommunications business. The
specific business plan of DiegoTel is set forth in Section VI. DiegoTel
is purchasing on a wholesale basis, telecommunication services from Viva
Servicios. Viva Servicios is purchasing telecommunication services from
Tier One and Tier Two carriers as well as other international carriers
on a best available price basis.
Section XI C 4. at page 88 should be amended to include:
One foreign partner is a Mexican company owned or controlled by David
Wallace.
Exhibit 3 is amended to include the following information regarding the
liabilities of PowerTel as a February, 1997 (exclusive of costs of
administration), which are being addressed by the plan of reorganization:
<PAGE> 137
<TABLE>
<S> <C> <C>
Class 1 Administrative Expenses $200,000 (est.)
Class 2 Wages 0
Class 3 Taxes (Munson Geo) 26,000
Class 4 Priority Taxes 16,000 (est.)
Class 5 Secured 0
Class 6 Unsecured Claims less than $1200 3,800
Class 7 Unsecured Claims greater than 1200 640,000
Class 8 NEP 0
Class 9 Disputed 303,000
Class 10 Equity Stock
------------
$988,000
</TABLE>
In the event that you decide, as a result of these amendments, to change
your ballot, please contact Stephen R. Harris, Esq., at (702) 786-7600 on or
before August 24, 1998.
DATED this ____ day of _____________, 1998.
BELDING & HARRIS, LTD.
By: ________________________________
Stephen R. Harris, Esq.
Attorneys for PowerTel USA, Inc.
<PAGE> 138
FIRST AMENDED AND RESTATED SETTLEMENT AND RELEASE AGREEMENT
This First Amended and Restated Settlement and Release Agreement
("Amended Agreement") is entered into by and among (1) PowerTel USA, Inc.
("PowerTel") a Delaware Corporation whose principal place of business is
situated in East Lansing, Michigan and formerly known as Munson Geothermal, Inc.
and also formerly known as Nevada Energy Company, Inc. ("NEC") (collectively
"Company"), (2) Nevada Energy Partners I, a Nevada Limited Partnership ("NEP"),
by Nevada Electric Power Company, its general partner, (3) Nevada Electric Power
Company, a Nevada corporation with its principal place of business situated in
Reno, Nevada ("NEPC"), and (4) the following sixteen (16) Corporations: Wilton
Ashfield, Ltd., Greyshire House, Ltd., August Lake Holdings, Ltd., Whitestone
Brooke Holdings, Ltd., Porterman Williams, Ltd., North Oldenfield, Ltd.,
Shepherd Market, Ltd., Parklane Mayfair, Ltd., Clermont & Annabel, Ltd.,
Berkeley Square Investments, Ltd., Blackstone Sterling Holdings, Ltd., Burke
Douglas Holdings, Ltd., Clarendon Atlantic Holdings, Ltd., Macaulay Island
Investments, Ltd., Young Bayshore Investments, Ltd., and Maitland Investments,
Ltd., (collectively referred to as "the Corporations"). "The Parties" referred
to in this Agreement refer to PowerTel, NEP, NEPC and the Corporations. This
Agreement is executed as of the day and year set forth below but is deemed to be
effective retroactive as of December 1, 1997 (the "Settlement Date").
RECITALS:
WHEREAS, the Parties to this Agreement have negotiated and executed an
Agreement (the "Initial Contract") addressing the subject of this Amended
Agreement but subsequent to the execution of the Initial Contract the Parties
have concluded that the Initial Contract did not reflect the intent of the
Parties;
WHEREAS, the Parties intend to amend and modify the Initial Contract by
this Amended Agreement and, therefore, declare the Initial Contract to be null
and void ab initio and further declare that this Amended Agreement to be the
only binding, enforceable contract between the parties with respect to the
subject matters set forth herein;
WHEREAS, prior to August 16, 1996, NEP owned 100.0% of the issued Class
B Common Stock of NEC; which Class B Common Stock was convertible into shares of
Class A Common Stock of NEC in an amount equal to 50.0% of the issued and
outstanding Class A Common Stock; and
WHEREAS, NEC and NEP entered into an Agreement dated August 16, 1996
(the "1996 Agreement") a copy of which is attached hereto as Exhibit 1; and
WHEREAS, pursuant to the terms of the 1996 Agreement various
transactions occurred between NEP and the Company, between NEP and NEPC and
thereafter between NEPC and/or NEP and the Corporations; and
<PAGE> 139
WHEREAS, in reliance upon the 1996 Agreement, NEP agreed to sell and
did in fact sell to the Corporations all of the Class A Common Stock of NEC
which was owned beneficially by NEP: and
WHEREAS, NEC allegedly refused to honor the terms of the 1996 Agreement
thereby precluding NEP from delivering the Class A Common Stock to the
Corporations; and
WHEREAS, on or about November 19, 1996 NEP beneficially on behalf of
the Corporations commenced litigation as Plaintiff against Company seeking
specific performance of the 1996 Agreement and alleging damages in excess of Six
Million Dollars ($6,000,000), such litigation being identified as Nevada Energy
Partners I vs. PowerTel USA, Inc. and being Case No. CV 96-07487, Second
Judicial District Court of the State of Nevada in and for the County of Washoe
(the "NEP Litigation"); and
WHEREAS, Company denies all liability in the NEP Litigation and intends
to vigorously contest NEP's claims if and when said litigation proceeds; and
WHEREAS, on or about February 13, 1997 multiple creditors of PowerTel
filed an involuntary petition for reorganization pursuant to Chapter 11 of the
United States Bankruptcy Code (the "Code") such application being filed pursuant
to Section 303 of the Code, and such case being styled In Re. PowerTel USA,
Inc.; United States Bankruptcy Court, District of Nevada, Case No. 97-30265-BMG;
and
WHEREAS, the filing of Case No. 97-30265-BMG automatically stayed
further prosecution of the NEP Litigation; and
WHEREAS, NEP filed a Proof of Claim in the Chapter 11 case; and
WHEREAS, the Corporations are the beneficiaries of the NEP Proof of
Claim and, therefore, are deemed to be creditors of PowerTel; and
WHEREAS, PowerTel has removed the NEP Litigation to the United States
Bankruptcy Court; and
WHEREAS, subsequent to the execution of the 1996 Agreement, NEC
conveyed to NEP 100.0% of the issued and outstanding Common Stock of Combustion
Energy Company ("CEC"), a Nevada corporation with its principal place of
business situated in Reno, Nevada together with title to a parcel of real
property also situated in Reno, Nevada (collectively the "1996 Assets").
Thereafter, NEP transferred the 1996 Assets to NEPC in two separate
transactions; and
WHEREAS, PowerTel has given notice to NEP, NEPC and the Corporations of
its intent to commence a proceeding pursuant to Sections 547 and 548 of the Code
for the purpose of voiding the 1996 Agreement and all transactions arising
therefrom between NEP, NEPC and the Corporations; and
<PAGE> 140
WHEREAS, NEPC and NEP have denied that Company has the right to rescind
the 1996 Agreement under any terms or conditions including, but not limited to,
alleged violations of Sections 547 and 548 of the Code; and
WHEREAS, the Parties to this Amended Agreement stipulate and
acknowledge that the prosecution of the multiple civil and administrative
proceedings recited above will be expensive, time consuming and difficult to
resolve and there is no assurance or guarantee that any party will prevail at
trial and, in the event of a favorable judgment, there is no assurance or
guarantee that the judgment will be sustained on appeal; and
WHEREAS, the Parties to this Amended Agreement desire to achieve a
final, complete resolution of all of their disputes and controversies by and
among them.
NOW THEREFORE, in consideration with the mutual covenants and
conditions set forth in this Agreement and other good and valuable
consideration, the receipt and sufficiency which is hereby acknowledged, the
Parties to this Amended Agreement, intending to be legally bound, do hereby
agree as follows:
1. The Recitals set forth above are true and correct and are incorporated
herein as if fully rewritten.
2. This Amended Agreement is subject to ratification by the United States
Bankruptcy Court for the District of Nevada by virtue of the pending
Chapter 11 Reorganization involving PowerTel in Case Number
97-30265-BMG. All Parties to this Amended Agreement hereby consent to
the authority and subject matter jurisdiction of the United States
Bankruptcy Court for all purposes, including ratification of this
Amended Agreement.
3. This Amended Agreement, when ratified by the United States Bankruptcy
Court, shall constitute a full, final and complete resolution of any and
all disputes by or among any one or more or all of the Parties hereto of
whatever cause or nature, including but not limited to any waiver for
damages of any kind, nature or amount, contingent or liquidated and each
party does hereby forever release, discharge, and waive each and every
cause of action which it has or may have against any other party as of
the Settlement date of this Agreement, except that Company retains and
does not waive or release any claim or cause of action, if any, which it
has or may have against NEPC arising out of actions performed by NEPC in
its capacity as the General Partners of NEP. NEPC represents and
warrants that the Corporations are the only entities who have any
equitable or beneficial rights in or to the Class A or Class B Common
Stock of NEC owned or received by NEP as of the Settlement Date.
4. PowerTel, NEP and NEPC acknowledge that the Corporations are domiciled
outside the United States and, in recognition of this, PowerTel, NEP and
NEPC, stipulate that this Amended Agreement will be executed by Mr.
Jeffrey Antisdel on their
<PAGE> 141
behalf. Mr. Antisdel represents and warrants to Company that (i) he has
the legal power and authority to execute this Amended Agreement on
behalf of each of the Corporations, and (ii) each of the Corporations
will ratify this Agreement by executing the Memorandum described in
Section 5.d of this Amended Agreement on or before July 15, 1998 (the
"Final Execution Date"). In the event that each and every one of the
Corporations have not ratified this Agreement by the Final Execution
Date, Company has the option of either (a) declaring this Amended
Agreement to be null and void, or (b) enforcing this Amended Agreement
as to all signatories. In order to expedite execution of this Amended
Agreement, PowerTel, NEP and NEPC stipulate that (i) this Amended
Agreement may be executed in multiple counterparts, and (ii) the receipt
of a facsimile signature page executed by any one of the Corporations
shall be deemed to be an original signature.
NEPC agrees to indemnify and hold Company harmless from any and all
damages and expenses (including legal fees) incurred by PowerTel in the
event that any of the Corporations refuse to execute this Agreement.
5. In consideration of the mutual releases as set forth herein and the
consideration as set forth in the Recitals, the Parties to this Amended
Agreement do hereby agree as follows:
1. The 1996 Agreement attached hereto as Exhibit 1 is hereby deemed
to be amended and restated in its entirety, except as set forth
in this Amended Agreement and, therefore, remains legally
binding upon all parties thereto. Notwithstanding the foregoing,
NEPC and NEP shall reconvey to PowerTel (i) 100% of the issued
and outstanding Common Stock of Combustion Energy Company, a
Nevada corporation, and (ii) title to a parcel of real property
situated at 403 Fourth Street, Reno, NV. 1.
2. The Company and NEPC do hereby modify, amend and revise the
Agreement of Limited Partnership of Nevada Energy Partners I, a
Nevada limited partnership, retroactively to January 1, 1995 to
provide that for the period January 1, 1995 through August 15,
1996 (i) any and all distributions of cash and property are to
be allocated 60.0% to the limited partner and 40.0% to the
general partner, and (ii) the allocations of profits and loses
to capital accounts shall be 99.0% of all profits and loses
accredited and charged to the capital account of the limited
partner and 1.0% of all profits and loses are charged and
credited to the capital account of the general partner. The
Parties stipulate that, commencing January 1, 1995 through
August 15, 1996, NEPC is and shall be the sole general partner
of NEP and the Company shall be the sole and exclusive limited
partner of NEP. As of August 16, 1996, the Company specifically
relinquishes, waives and forever abandons any claim or interest
which it has or may have in or to any partnership interest of
NEP. NEPC and the Company stipulate and acknowledge that,
subsequent to January 1, 1995, cash distributions were made to
NEPC and the Company pursuant to the 60/40 allocation set forth
above. In addition, NEPC and the Company stipulate that on or
about August 16, 1996 (after withdrawal of NEC from NEP), NEP
distributed to NEPC, as its general partner, Class B Common
Stock of the Company totaling 4,437,473
<PAGE> 142
shares which, thereafter NEPC sold to the corporations on a
prorata basis. NEPC and the Company also stipulate that, as of
August 16, 1996, NEP relinquished any and all rights which it
had pursuant to the Plan of Reorganization involving Munson
Geothermal, Inc. to receive additional Class A Common Stock and,
thereby, waived and forever relinquished its right to receive
additional Class B Common Stock in the amount of 8,808,485
shares.
3. The Company does specifically that on or about August 16, 1996
NEPC converted the Class B Common to Class A Common and, further
recognizes that NEPC sold to the Corporations the Class A Common
Stock owned by NEPC as set forth above. The Company does hereby
agree that NEPC shall retain any and all consideration paid or
to be paid by the Corporations. In order to effect a permanent,
common final and complete resolution of any and all disputes
among the parties to this Agreement, the Company stipulates that
the Class B Common Stock distributed to NEPC as of August 16,
1996 was convertible into Class A Common Stock at a ratio equal
to 50.0% of the issued and outstanding Class A Common Stock as
of August 16, 1996. Accordingly, the Company stipulates that the
Corporations, by virtue of their purchase of the Class A Common
Stock, are entitled to own Class A Common Stock. The Company
further stipulates that, ten days after the Effective Date of
the Plan of Reorganization, the Company shall adjust (i.e.,
increase or decrease) the number of shares of Class A Common
Stock to be distributed to the Corporations such that the
Corporations shall own 50.0% of the issued and outstanding Class
A Common Stock as of the close of business ten days after the
Effective Date of the Plan of Reorganization.
4. NEPC, as the General Partner of NEP shall wind up the affairs of
the partnership with all deliberate speed including but not
limited to the preparation and filing of all requisite tax
returns. The General Partner shall not charge the Limited
Partner for the expenses of winding up the Partnership and the
Limited Partner waives any right of reimbursement for any
distribution to the General Partner prior to the date of this
Agreement.
6. In the event that the United States Bankruptcy Court fails to ratify
this Agreement, this Agreement shall be voidable by any Party upon
prompt notice to Company and NEPC. If the Agreement is voided, then any
Property conveyed pursuant to this Agreement shall be returned to the
grantor from whom or which it was received.
7. Company shall have seventy-five (75) days from the Confirmation Date of
the Plan of Reorganization to conduct any "due diligence,"
investigation, inquiry and/or review ("Review") which it deems to be
necessary of appropriate concerning any statement of fact, warranty,
representation, consent and/or condition ("Represented Fact") made or
given to Company by any other party to this Amended Agreement and upon
which PowerTel has relied upon in the execution of this Amended
Agreement. If on the basis of the Review, PowerTel in its sole and
absolute discretion concludes that any Represented Fact is inaccurate,
false, misleading or
<PAGE> 143
deceptive, PowerTel has the right to revoke this Amended Agreement upon
providing all other written notice of such termination and the basis
therefor.
8. The Parties to this Amended Agreement stipulate and acknowledge that a
variety of supplemental documents may be necessary in order to
effectuate the objectives anticipated by this Amended Agreement or to
obtain ratification hereof by the United States Bankruptcy Court, and
every party to this Amended Agreement does irrevocably commit to act in
good faith to implement this Amended Agreement and to execute any
additional documents necessary or appropriate to achieve the objective
of this Amended Agreement and/or ratification hereof.
9. This Amended Agreement shall be governed by the laws of the State of
Nevada, without regard to its conflict of laws provision. Every party to
this Amended Agreement consents to the exclusive jurisdiction of the
United States Bankruptcy Court for the District of Nevada with regard to
the enforcement, interpretation, or any other issue or claim arising as
a result of this Amended Agreement.
10. It is the intention to the Parties to this Amended Agreement that the
1996 Agreement shall be amended and restated. Accordingly, to the extent
that any party to this Amended Agreement has any contractual rights,
causes of action, claims or other legal or equitable rights or remedies
(collectively "Rights") which existed prior to the 1996 Agreement and
were extinguished, waived, released or modified thereby, such Rights
shall be deemed to be fully and completely restored and each party to
this Amended Agreement does hereby agree that the Statute of
Limitations, if any, which would otherwise operate as a bar to the
prosecution of any cause of action or claim of any nature to enforce
such Rights is hereby tolled and each party does irrevocably waive and
agrees not to assert for a twelve (12) month term from the Settlement
Date of this Amended Agreement the Statute of Limitations as a defense
to the prosecution of any cause of action or claim of any nature to
enforce such Rights which is restored by virtue of this Agreement.
11. Each and every section of this Agreement shall survive execution,
delivery and performance of this Amended Agreement.
12. The "1996 Agreement," the form of the Memorandum attached hereto and the
Memorandums as executed by each of the Corporations are incorporated by
reference and are deemed to constitute material components of this
Amended Agreement:
13. Exhibits 1 and 2 are hereby incorporated herein by reference.
14. Unless otherwise directly set forth in this Amended Agreement, any
contract, agreement, memorandum of understanding or other legally
binding and enforceable agreement by or among the Parties to this
Amended Agreement shall remain in full force and effect and is not
amended, modified, superseded or otherwise affected by this Amended
Agreement.
<PAGE> 144
IN WITNESS WHEREOF, this The Parties have executed this Amended
Agreement as of the day and year set forth with their signatures.
NEVADA ENERGY PARTNERS I,
a Nevada Limited Partnership
By: Nevada Electric Power Company
Its: General Partner
Date : 6-25-98 By: /s/ Jeffrey Antisdel
------------------- --------------------------------
Jeffrey Antisdel, Its President
NEVADA ELECTRIC POWER COMPANY
Date : 6-25-98 By: /s/ Jeffrey Antisdel
------------------- ---------------------------------
Jeffrey Antisdel, Its President
POWERTEL USA, INC.
Date : 6-25-98 By: /s/ Richard A. Cascarilla
------------------- ---------------------------------
Richard Cascarilla, Its President
"THE CORPORATIONS"
Date : 6-25-98 By: /s/ Jeffrey Antisdel
------------------- ---------------------------------
Jeffrey Antisdel
<PAGE> 145
EXHIBIT 1
---------
AGREEMENT
THIS AGREEMENT, ("Agreement"), is entered into between Nevada Energy
Company, Inc., a Delaware corporation, ("NEC"), and Nevada Energy Partners I,
Limited Partnership, a Nevada Limited Partnership, ("NEP"), both having offices
at 401 East 4th Street, Reno, Nevada, USA, 89512.
RECITALS:
---------
A. Nevada Energy Partners I, Limited Partnership, ("NEP"), is a Nevada
partnership with one corporate limited partner and a corporate general partner.
B. Nevada Energy Company, Inc., ("NEC"), is the sole limited partner of
NEP, and owns 60% of the partnership interest in NEP.
C. Nevada Electric Power Company, Inc., ("NEPC"), is the general
partner of NEP, and owns the remaining 40% of the partnership interest of NEP.
D. As of July 25, 1996, the partnership NEP, currently owns 4,437,473
shares of Class B Common Stock of NEC, ("Class B Stock"), which represents all
the issued and outstanding shares of Class B Common Stock of NEC.
E. The owners of the Class B Stock of NEC have voting rights and
liquidation rights in the assets of NEC without the right to participate in
earnings or cash dividends, except on sale, liquidation or merger. In addition,
such owners have the right to pro rata issuance of one share of Class B Common
Stock for each share of Class A Common Stock, ("Class A Stock"), issued and
outstanding. The consideration for the issuance may be subject to a
determination by the board of directors of NEC.
F. As of July 25, 1996, there are 12,203,247 shares of Class A Common
Stock of NEC issued and outstanding.
G. Based upon the number of NEC's issued Class A Common shares, NEP has
the right to acquire an additional 8,865,774 shares of Class B Common Stock.
H. NEC desires to redeem the Class B Stock in exchange for Class A
Stock.
I. NEC currently owns 6,000 shares of common stock of Combustion Energy
Company, which represents all of the issued and outstanding common shares of
Combustion Energy Company, a Nevada Corporation, ("CEC").
<PAGE> 146
J. NEP is a plaintiff and a counter-defendant in litigation in the
Second District Court in Washoe County, State of Nevada, in case CV92-04609,
Dept. No. 1, ("Litigation").
K. For the past four years, NEC and NEPC have shared in the costs and
expenses of NEP, including without limitation, the costs and expenses of the
Litigation on a 60/40 basis respectively.
L. NEC does not wish to participate any further in the Litigation or
further business with NEP.
M. NEC wishes to withdraw from NEP.
N. NEP wishes to acquire the stock CEC.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, NEP and NEC, agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the terms set forth below
shall have the following meanings:
a. Agreement shall mean this agreement.
b. Class A Stock shall mean the Class A common shares of NEC.
c. Class B Stock shall mean the Class B common shares of NEC, all
of which are owned by NEP.
d. Herth Printing shall refer to the business known as Herth
Printing and Business Supplies, Inc., which was merged into
Combustion Energy Company, a Nevada Corporation, a wholly owned
subsidiary of NEC, in December 1994.
e. Knowledge means actual knowledge after reasonable investigation.
f. Law shall mean any statute, regulation, rule, judgment,
ordinance, order, decree, stipulation, injunction, charge, or
other restrictions of any federal, state or local government,
governmental agency, or court.
g. Liability means any liability (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and
whether due or to become due), including any liability for
taxes.
h. Litigation shall refer to the lawsuit filed in the Second
Judicial District Court of the State of Nevada, County of
Washoe, Case No. CV92-04609, Dept. No. 1, between NEP, as
plaintiff, and Hot Springs Power Company, a Nevada corporation,
Randy S. Goldenhersh and George W. Holbrook, Jr., as defendants
and counter-plaintiff, and NEP as counter-defendant.
i. Material Adverse Effect means an adverse effect of fifty
thousand dollars or more upon the business, operations,
properties, assets or condition of NEP.
j. NEC shall refer to Nevada Energy Company, Inc., a Delaware
corporation.
<PAGE> 147
k. NEP shall refer to Nevada Energy Partners I, Limited
Partnership, a Nevada Limited Partnership.
l. NEPC shall refer to Nevada Electric Power Company, a Nevada
corporation, and General Partner of NEP.
m. Securities Act means the Securities Act of 1933, as amended.
n. Securities Exchange Act means the Securities Exchange Act of
1934.
o. Security Interest means any mortgage, pledge, security
interest, encumbrance, charge or other lien, other than
i. construction, mechanic's materialmen's, and similar
liens,
ii. liens for taxes not yet due and payable,
iii. liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar
legislation,
iv. liens arising in connection with sales of foreign
receivables,
v. purchase money liens and liens securing rental payments
under capital lease arrangements, and,
vi. other liens arising in the ordinary course of business
and not incurred in connection with the borrowing of
money.
2. BASIC TRANSACTION
a. NEC shall exchange all of NEP's Class B Common Stock for an
equal number of NEC Class A Common Stock. The effective date
of the exchange shall be September 1, 1996.
b. NEC shall withdraw as a limited partner from NEP.
c. In general, NEPC, as general partner, will release NEC, as
limited partner, from NEP, the partnership. NEC will waive all
rights to any assets, litigation rights or other attributes of
the partnership.
d. In general, NEPC, as general partner, will agree to indemnify
NEC for any present and future litigation expenses,
obligations or damages arising out of the Litigation.
e. NEP will release any claims that NEP may have for additional
shares of Class B Stock pursuant to Amended Certificate of
incorporation under the Order of the Bankruptcy Court dated
November 20, 1990.
f. NEC shall transfer to NEP all of the shares of CEC.
g. This Agreement and other related documents shall be held in
escrow, ("Release Escrow"), pending the completion of the post
closing events.
3. EXCHANGE OF CLASS B SHARES FOR CLASS A SHARES. NEC desires to retire
all of the Class B shares as follows:
a. NEP as the owners of the Class B Stock of NEC have voting
rights and liquidation rights in the assets of NEC without the
right to participate in earnings or cash dividends, except on
sale, liquidation or merger. In addition, NEP has the right to
pro rata issuance of one share of Class B Common Stock for
each share of Class A Common Stock issued and outstanding. The
consideration for the issuance may be subject to a
determination by the board of directors of NEC.
<PAGE> 148
b. NEP has the right to an additional 8,808,485 shares of Class
B Common Stock of NEC.
c. NEP herewith exchanges 4,437,473 shares of Class B Common
Stock of NEC, which represents all the issued and outstanding
shares of Class B Common Stock of NEC for 4,437,473 shares of
Class A Common Stock of NEC which shall be free trading
without restrictions.
d. NEP herewith forbears forever from any and all claims for an
additional 8,808,485 shares of Class B Common Stock of NEC.
4. WITHDRAWAL OF NEC FROM NEP. NEC no longer desires to participate in the
partnership NEP and withdraws as follows:
a. NEC has participated in the Litigation since its inception.
The counter-plaintiffs claim damages in excess of one million
($1,000,000.00) dollars and further damages to be proved
against NEC.
b. NEC has contributed from time to time its pro rata share of
attorney fees, legal costs and expenses.
c. There appears to be no possibility of settlement or resolution
of the Litigation in the near future.
d. NEP was a partner with Hot Springs Power Company, a Nevada
corporation in Nevada Geothermal Power Partners, a Nevada
Limited Partnership. The Litigation arises out of the
partnership relationship. The plaintiff and counter-defendant
is NEP. The defendant and counter-plaintiff is Hot
Springs Power Company.
e. Nevada Geothermal Power Partners has ceased doing business and
has wound up its affairs. The only remaining relationship
between the partners is the Litigation.
f. NEC hereby withdraws as a limited partner in NEP and waives
further accounting except as necessary to prepare its federal
tax returns. The effective date of the withdrawal shall be
September 1, 1996.
5. RELEASE OF NEC FROM THE LITIGATION AND FURTHER OBLIGATIONS OF NEP.
NEPC, as general partner of NEP, hereby releases NEC from all further
partnership obligations and duties.
a. Pursuant to the partnership agreement, NEC was obligated to
contribute to the attorneys' fees, legal costs and expenses of
any litigation arising out of the partnership relationship.
b. Concurrent with the withdrawal of NEC as a limited partner,
NEP releases NEC from any further contributions for attorneys'
fees, legal costs or expenses with respect to the Litigation.
NEP agrees to indemnify NEC for any damages arising out of the
Litigation. NEC shall have the right to have its own
co-counsel at its own expense.
c. NEPC, as general partner of NEP, will hereby guaranty the
payment of attorneys' fees, legal costs and expenses by NEC
for counsel under NEP's guidance and employ who will defend
NEC's interests.
<PAGE> 149
d. NEC agrees to cooperate in the prosecution and defense of the
Litigation and to the extent possible, NEC waives its attorney
client privilege in favor of NEP.
6. NEP RELEASES ALL CLAIMS UNDER THE ORDER OF THE BANKRUPTCY COURT. As
the sole recipient of Class B shares under order from the Bankruptcy Court,
NEP waives any claims it may have for additional shares of Class B Stock without
consideration as follows:
a. Rights and Restrictions. The rights and restrictions of the
Class B Stock are as follows:
i. Federal Bankruptcy Court's Plan of Reorganization. On
November 20, 1990, the Bankruptcy Court of Nevada, by Order,
required the amendment of the Certificate of Incorporation. The
Order provided at page 25, "Class B Common Stock will have full
voting rights but will have no participation in dividends. The
terms of the Class B Common shares will also provide that, upon
the issuance of any share, or fraction thereof, of Class A
Common Stock, the owners of Class B Common Stock will
contemporaneously have issued to them, on a pro rata basis, a
number of shares of Class B Common Stock which is the same as
the number of Class A Common shares then being issued.
ii. Amendment of the Certificate of Incorporation. NEC (then
Munson Geothermal, Inc.) amended its Certificate of
Incorporation on November 20, 1990 (filed on December 3, 1990)
and submitted a new paragraph defining NEC's capital, paragraph
4-A. The new paragraph governed the description of all capital
stock. The new paragraph authorized Class A Common Stock and
Class B Common Stock. All Common Stock has a par value of $.001
per share. All common stockholders (either Class A or Class B)
received one vote for each whole share of stock. The Certificate
authorized that Class A and Class B Common Stock would not
participate in the earnings of the corporation through
dividends. A Class B Common Stockholder would only receive funds
from NEC by statute upon the sale, merger, or liquidation in the
form of a liquidating distribution.
iii. Voting Rights of the Class B Stock. Class B Stock shares do
not receive dividends but would participate in distribution of
proceeds if the NEC sells, merges or liquidates. Class B Stock
shares are entitled to vote. Because the Class B Stock shares
are entitled to fifty percent (50%) of the Common Stock, the
Class B Stock shares are entitled to 50% of the votes.
iv. Class B Stock and NEP. The Plan of Reorganization provided
that immediately after the reorganization that NEP would own
100% of the Class B Stock. According to the Plan of
Reorganization, any holder of Class B Stock through NEP at the
time of the reorganization was entitled to an additional share
of Class B Stock for each share of Class A Stock issued.
v. Conflict between the Plan of Reorganization and the
Certificate regarding Issuance of Class B Stock. The Certificate
provided that upon the issuance of any share of Class A Common
Stock, NEC shall issue a pro rata amount of Class B Common Stock
to Class B Stock holders. Only present shareholders of Class B
Stock shares would be eligible to receive additional Class B
Stock shares. Further, paragraph 4-D states, "such shares of
Class B Common Stock shall be issued for such
<PAGE> 150
CONSIDERATION as may be determined from time to time by the
Board of Directors". (Emphasis added.) The Plan of
Reorganization DOES NOT provide for payment of "consideration"
in exchange for newly issued shares of Class B Stock.
b. Concurrent with the exchange of shares, NEP forever waives and
gives up any rights for additional Class B Stock without payment
of consideration as provided in the Order of the Bankruptcy
Court dated November 20, 1990.
7. NEP TRANSFERS THE SHARES OF CEC. NEC herewith transfers to NEP all of
NEC's six thousand (6,000) shares of CEC as follows:
a. NEC merged its wholly owned subsidiary, CEC, with a business
known as Herth Printing and Business Supplies in 1994.
b. The business of CEC is not compatible with the general business
plan of NEC.
c. The shares of CEC are not registered as described in
section 8.d.
d. In consideration of the obligations assumed by NEP under this
agreement, NEC herewith transfers and assigns all rights,
title and interest to the shares and assets of CEC to NEP. The
effective date of the transfer shall be September 1, 1996.
8. REPRESENTATIONS AND WARRANTIES OF NEP. NEP represents and warrants to
NEC that the statements contained in this Section 8.d. are correct and
complete as of the date of this Agreement.
a. Organization of NEP. NEP is a limited partnership duly
organized, validly existing and in good standing under the
Laws of the State of Nevada and is in good standing and
qualified to do business under the laws of each jurisdiction
in which the nature of the business or the ownership or
leasing of its properties requires such qualification. NEP has
full power and authority to carry on the business in which it
is engaged and to own and use the properties owned, leased and
used by it.
b. Authorization of Transaction. NEP has full power under its
partnership agreement and authority to execute and deliver
this agreement and to perform its obligations hereunder.
Without limiting the generality of the foregoing, the General
Partner of NEP has fully authorized the execution, delivery
and performance of this Agreement by NEP. This Agreement
constitutes the valid and legally binding obligations of NEP,
enforceable in accordance with its terms and conditions,
subject to the effect of i. bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights and remedies of creditors generally, and ii. general
principles of equity.
c. Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby will (i) violate or (ii) conflict with,
result in a breach of, constitute a default under, result in
the require any notice of any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement
or mortgage for borrowed money, instrument or indebtedness,
Security Interest, or other arrangement to which NEP is a
party of by which it is bound or to which any of its assets is
subject,
<PAGE> 151
or result in the imposition of any Security Interest upon any
of its assets. NEP need not give any notice to, make any
filing with, or obtain any authorization, consent or approval
of any government or governmental agency to consummate the
transactions contemplated by this Agreement.
d. Acknowledgment of Unregistered Stock. In connection with this
Agreement, NEP represents and warrants, which representations
and warranties shall survive the transfer of CEC's shares to
NEP pursuant to this Agreement, as follows:
i. NEP is aware that no market may exist for the resale of
the CEC stock received under this Agreement.
ii. NEP is obtaining the shares for investment and not
for the further distribution of CEC stock.
iii. NEP is aware of any and all restrictions imposed on the
further distribution of the CEC stock, including, but not
limited to, any restrictive legends appearing on the
certificate(s).
e. Disclosure. The representations and warranties contained in
this Section 8.e. do not contain any untrue statements of a
material fact or omit to state any material fact necessary
in order to make the statements and information contained in
this Section 8.d. not misleading.
9. REPRESENTATIONS AND WARRANTIES OF NEC. NEC represents and warrants to
NEP that the statements contained in this Section 9 are correct and complete
as of the date of this Agreement.
a. Organization of NEC. NEC is a Company Incorporated in
Delaware duly organized, validly existing and in good
standing under the Laws of Delaware, and is in good standing
and qualified to do business under the laws of each
jurisdiction in which the nature of its business or the
ownership or leasing of its properties requires such
qualification. NEC has full power and authority to carry on
the business in which it is engaged and to own and use the
properties owned, leased and used by it.
b. Authorization of Transaction. NEC has full power under its
organization agreement and authority to execute and deliver
this Agreement and to perform its obligations hereunder.
Without limiting the generality of the foregoing, the
Directors of NEC have fully authorized the execution, delivery
and performances of this Agreement by NEC. This Agreement
constitutes the valid and legally binding obligation of NEC,
enforceable in accordance with its terms and conditions,
subject to the effect of;
i. bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights and remedies of
creditors generally, and ii. general principles of equity.
c. Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby will (i) violate or (ii) conflict with,
result in a breach of, constitute a default under, result in
the require any notice of any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement
or mortgage for borrowed money,
<PAGE> 152
instrument or indebtedness, Security Interest, or other
arrangement to which NEC is a party of by which it is bound or
to which any of its assets is subject, or result in the
imposition of any Security Interest upon any of its assets.
NEC need not give any notice to, make any filing with, or
obtain any authorization, consent or approval of any
government or governmental agency to consummate the
transactions contemplated by this Agreement.
d. Disclosure of Unregistered Securities. NEC hereby discloses
the following information to NEP in connection with the offer
and sale of CEC stock by NEP,
i. The CEC stock have not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), and were
acquired by NEC pursuant to a registration exemption contained
in Section 4(2) of the Securities Act and/or Securities and
Exchange Commission Rule 506, promulgated thereunder.
ii. The CEC stock have the status of securities acquired under
Section 4(2) of the Securities Act and cannot be resold
without registration under the Securities Act or the
availability of an exemption from registration.
iii. A legend has been, or will be, placed on each certificate
or other document evidencing the CEC stock in substantially
the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE RESOLD UNLESS REGISTERED
UNDER THE ACT OR UNLESS AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE.
iv. Prior to this transaction, stop transfer instructions to
the appropriate officers of NEC had been placed in NECs
records with respect to the CEC stock so as to restrict the
resale, pledge, hypothecation, or other transfer thereof.
v. The CEC stock have not been registered under the Nevada
Securities Act, set forth in the Nevada Revised Statutes, as
amended (the "Nevada Act"), and were acquired by NEC pursuant
to a exemption.
vi. NEC reasonably believes that NEP is obtaining the shares
for investment and has no information to the contrary.
e. Disclosure. The representations and warranties contained in
this Section 9.e do not contain any untrue statements of a
material fact or omit to state any material fact necessary in
order to make the statements and information contained in this
Section 9 not misleading.
10. CONDITIONS TO RELEASE OF THE ESCROW. This Agreement and all f the documents
related to this Agreement shall be held in escrow referred to as the Release
Escrow which shall be released upon the satisfaction of following conditions.
a. NEP and NEC shall have executed and delivered an escrow
agreement to and for the Release Escrow agent.
b. All actions to be taken by NEC in connection with consummation
of the transactions contemplated hereby and all
certifications, opinions, instruments, and other documents
required to effect the transactions contemplated hereby
<PAGE> 153
will be reasonably satisfactory in form and substance to the
General Partner of NEP who shall not unreasonably withhold
approval of the transactions contemplated by this Agreement.
c. NEC shall have received from counsel to NEP an opinion
addressed to NEC stating the legal organization of NEP and
that NEP has the authority to enter into this Agreement.
d. All actions to be taken by NEP in connection with consummation
of the transactions contemplated hereby and all
certifications, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to the
Directors of NEC who shall not unreasonably withhold approval
of the transactions contemplated by this Agreement.
e. NEP shall have received from counsel to NEC an opinion
addressed to NEP stating the legal organization of NEC and
that NEC has the authority to enter in this Agreement.
f. NEC shall have executed and delivered any additional agreement
or agreements necessary to withdrawing or liquidating its
interests in NEP in favor of NEP.
g. NEPC shall have executed and delivered a guaranty of all
payment of liability, including attorneys' fees, costs and
expenses, in favor of NEC regarding the Litigation.
h. NEP shall have executed and transferred all of the Class B
Stock to NEC.
i. NEC shall have issued free trading Class A Stock with
restrictions of any kind to NEP or its assigns.
j. NEC shall have executed and transferred all the common shares
of CEC to NEP.
k. In general, the obligation of NEP to consummate the
transactions to be performed by it after this agreement is
executed is subject to satisfaction that the representations
and warranties set forth in Section 9 above shall be true and
correct in all material respects at and as of the date of
execution of this Agreement and:
i. NEC shall have preformed and complied with all of its
covenants hereunder in all material respects at and as of the
date of execution of this Agreement;
ii. The Board of Directors of NEC shall have approved the
transactions contemplated by this Agreement;
iii. All actions to be taken by NEC in connection with
consummation of the transactions contemplated hereby and all
instruments and other documents required to effect the
transactions contemplated hereby will be reasonably
satisfactory in form and substance to NEP.
11. MISCELLANEOUS.
a. Notices. All notices or other communications required or
permitted hereunder, including notice of intent to arbitrate,
shall be in writing and shall be deemed to have been duly
given if delivered in person or sent by overnight delivery,
confirmed telecopy or prepaid first class registered or
certified mail, return receipt requested, to the following
addresses:
<PAGE> 154
If to NEP, to: with courtesy copies to:
Nevada Energy Partners I, L.L.P. David L. Wallace, Esq.
401 East Fourth Street 2055 Wood Street, Suite 220
Reno, Nevada 89512 Sarasota, Florida, USA 34237-7929
Telephone: (702) 786-7979 Telephone: (941) 364-9598
Facsimile: (702) 786-7989 Facsimile: (941) 364-9599
If to NEC, to: with courtesy copies to:
Roderick H. McCloy, Esq.
Roderick H. McCloy Law Corporation
Jones McCloy Peterson
1700 Three Bentail Centre
P.O. Box 49117
595 Burrard Street
Vancouver, B.C. V7X 1G4
Telephone: (604) 882-1851
Facsimile: (604) 682-7329
Any such notices shall be effective when delivered in person or sent by
telecopy, one business day after being sent by overnight deliver or three
business days after being be registered or certified mail. Any of the foregoing
addressed may be changed by giving notice of such change in the foregoing
manner, except that notices for changes of address shall be effective only upon
receipt.
b. Further Assurances. At any time, and from time to time, each
party will execute additional instruments and take such action
as may be reasonably requested by the other party to confirm
or perfect title to any property transferred hereunder or
otherwise to carry out the intent and purposes of this
Agreement.
c. Costs and Expenses. Each party hereto agrees to pay its own
costs and expenses, including legal, accounting, consultant,
and advisor fees, incurred in negotiation this Agreement and
consummating the transactions described herein.
d. Time. Time is of the essence.
e. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the
subject matter hereof.
f. Amendment. This Agreement may not be amended, supplemented or
modified in whole or in part except by an instrument in
writing signed by the party against whom enforcement of any
such amendment, supplement or modification is sought.
<PAGE> 155
g. Assignment. NEC may not assign this Agreement to any
affiliated entity or nominee or to any party hereto without
the prior written consent of the NEP
h. Choice of Law. This Agreement will be interpreted, construed
and enforced in accordance with the laws of the State of
Nevada, without regard to conflicts of law.
i. Dispute Arbitration. NEC and NEP intend to provide a speedy
and informal method for resolving all disputes and other
matters in question arising out of, or relating to, this
Agreement, which involves interstate commerce and is subject
to the Federal Arbitration Code. All disputes and other
matters in question, of any kind, between NEC and NEP arising
out of, or relating to this Agreement, shall be decided by
binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then
in effect. The decision of the arbitrator shall be binding.
The arbitrator is specifically granted authority and directed
to award reasonable attorneys' fees, expenses and costs to the
successful party. A court of competent jurisdiction may be
used to enforce, but not to appeal or challenge, the
arbitrators' decision including the award of attorneys' fees,
expenses and costs. If it becomes necessary to enforce the
arbitrators' decision at either the trial or appellate level,
a reasonable attorney fee for the enforcement of the
arbitrators' decision shall become an additional item of
damages. Any suit between NEC and NEP must be brought in
Washoe County, Nevada. NEC consents to personal jurisdiction
in Nevada.
j. Construction. NEC and NEP and their respective legal counsel
participated in the preparation of this Agreement, therefore,
this Agreement shall be construed neither against nor in favor
of any of the parties hereto, but rather in accordance with
the fair meaning thereof.
k. Effect of Waiver. The failure of any party at any time or
times to require performance of any provision of this
Agreement will in no manner affect the right to enforce the
same. The waiver by any party or any breach of any provision
of this Agreement will not be construed to be a waiver, by any
such party of any succeeding breach of that provision or a
waiver by such party or any breach of any other provision.
l. Severability. The invalidity, illegality or unenforceability
of any provision of this Agreement, which will remain in full
force and effect, nor will the invalidity, illegality or
unenforceability of a portion of any provision of this
Agreement affect the balance of such provision. In the event
that any one or more of the provisions contained in this
Agreement or any portion thereof shall for any reasons be held
to be invalid, illegal or unenforceable in any respect, this
Agreement shall be reformed, construed and enforced as if such
invalid, illegal or unenforceable provision had never been
contained herein.
m. Binding Nature. This Agreement, including the requirement to
arbitrate, will be binding upon and will enure to the benefit
of any successors of the parties hereto.
n. Counterparts. This Agreement is intended to be executed in
more than one counterpart, including facsimile counterparts.
Each counterpart shall be
<PAGE> 156
deemed an original on all of which shall constitute one and
the same instrument.
IN WITNESS WHEREOF, NEP and NEC have executed this Agreement.
Nevada Energy Company, Inc., a
Delaware corporation
August 16, 1996 By: Charles A. Cain
- ------------------------------ ----------------------------------
Date Charles A. Cain
Its: Director
----------------------------------
August 16, 1996 By: Peter J. Cannell
- ------------------------------ ----------------------------------
Date Peter J. Cannell
Its: Director
----------------------------------
Nevada Energy Partners, I, a Nevada
Limited Partnership, by Nevada Electric
Power Company, General Partner
August 16, 1996 By: David L. Wallace
- ------------------------------ ----------------------------------
Date David L. Wallace
Its: Attorney In Fact
----------------------------------
Power of Attorney attached.
<PAGE> 157
EXHIBIT 2
---------
M E M O R A N D U M
TO: PowerTel USA, Inc., A Delaware, USA, corporation
(Referred to as "PowerTel")
FROM: XXXXXXXXX, XXX., a Company Limited by Shares under the International
Business Companies Act of 1989, Commonwealth of the Bahamas (Referred
to as AXXXXXXX"), with mailing address at XXXXXXXXXXXXX.
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and XXXXXXX have entered into a First
Amended and Restated Settlement and Release Agreement effective as of December
1, 1997 (the "Agreement"), which Agreement was subsequently incorporated into
and made a part of a Plan of Reorganization (the "Plan") filed by PowerTel with
the United States Bankruptcy Court for the District of Nevada in a Chapter 11
proceeding identified as Case No 97-30265-BMG.
Pursuant to the Plan, XXXXXXX is to receive Class A Common Shares (the
"Shares") to be issued by PowerTel pursuant to Section 1145 of the United States
Bankruptcy Code. In consideration of the issuance of the Shares, XXXXXXX
represents and warrants to PowerTel and to the Court that XXXXXXX is not an
Aunderwriter@ as that term is defined in Section 1145(b) of the Bankruptcy Code.
XXXXXXX also acknowledges that the Shares which it will receive have not been
registered with the United States Securities and Exchange Commission pursuant to
Section 5 of the Securities Act of 1933 in reliance upon the exemption from
registration provided in Section 1145(a) of the Bankruptcy Code. XXXXXXX also
confirms that it has been advised that PowerTel has consented to the issuance of
the Shares based upon PowerTel=s understanding that XXXXXXX is experienced in
financial matters, has access to advisors who are experienced in evaluating
investments and is ready, willing and able to assume the risk of acquiring a
speculative, high risk investment, such as the Shares.
XXXXXXX also confirms that it has received and reviewed the FIRST
AMENDED DISCLOSURE STATEMENT PURSUANT TO 11 U.S.C. '1125 filed by PowerTel and
has been afforded an opportunity to make inquiry into the affairs of PowerTel,
including an opportunity to confer with the Directors and Officers of PowerTel.
XXXXXXX has been advised that, for the preceding three calendar years, PowerTel
has made various filings with the Securities and Exchange Commission (including
but not limited to annual reports on Form 10-KSB, quarterly reports on Form
10-QSB and at least one registration statement on Form S-8). XXXXXXX
acknowledges that a copy of these filings is available upon request or may be
procured from the United States Securities and Exchange Commission, Washington,
D.C.
XXXXXXX acknowledges that PowerTel has not made any representation or
warranty that (i) its Plan will be implemented successfully, (ii) there will be
a market for the Shares or (if there is a market) that the per Share price will
be maintained within any specific bid/ask range, or (iii) PowerTel will be
financially solvent or that its pro forma financial projections will materialize
as anticipated.
XXXXXXX is aware that there are various Federal and State statutes,
rules and regulations in the United States governing the offer and sale of
securities. XXXXXXX is also aware that the Securities Exchange Act of 1934
imposes duties and responsibilities upon certain shareholders, officers and
directors. XXXXXXX represents that it shall comply with all applicable statutes,
rules and regulations.
Except as set forth in the Agreement and the Plan, XXXXXXX acknowledges
that there is no agreement, contract or understanding (either oral or written)
by and between XXXXXXX and PowerTel. XXXXXXXXX further acknowledges the
authority and ratifies the signature of Jeffrey Antisdel on the First Amended
and Restated Settlement and Release Agreement on behalf of XXXXXXXXXXXXXXX.
XXXXXXX acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In Witness Whereof, XXXXXXXXX, XXX., has given its Common Seal this
date.
GIVEN UNDER THE COMMON SEAL XXXXXXXXX, XXX., a Company Limited by Shares
of XXXXXXXXX, XXX. under the International Business Companies
Act of 1989, Commonwealth of the Bahamas
Date: ____________________
Per:________________________________
Managing Director
<PAGE> 158
POWERTEL
BALANCE SHEET
MAY 31, 1998
Assets
<TABLE>
<S> <C>
Current Assets:
Cash $ 21,333.85
--------------
Accounts Receivable $
--------------
Allowance for Doubtful Accounts $
--------------
Accounts Receivable (Net) $
--------------
Inventory $
--------------
Prepaid Expenses $
--------------
Total Current Assets $ 21,333.85
--------------
Property and Equipment (Fair Market Value)
Real Property $
--------------
Machinery and Equipment $ 5,700,000.00
--------------
Furniture and Fixtures $
--------------
Office Equipment $
--------------
Leasehold Improvements $
--------------
Vehicles $
--------------
Other _____________ $
_____________ --------------
$
--------------
Total Property and Equipment $ 5,700,000.00
--------------
Investments:
Herth Printing and Business Supply
Stock (at Book Value) $ 374,875.00
--------------
Total Assets: $ 6,096,208.85
--------------
</TABLE>
<PAGE> 159
WILLIAM J. CRANDALL, CHARTERED
CERTIFIED PUBLIC ACCOUNTANTS
1885 SOUTH ARLINGTON, SUITE 105
RENO, NEVADA 89509
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
RENO, NEVADA
WE HAVE COMPILED THE ACCOMPANYING SPECIAL-PURPOSE STATEMENT OF ASSETS AND
LIABILITIES OF HERTH PRINTING AND BUSINESS SUPPLY (A DIVISION OF COMBUSTION
ENERGY CO.) AS OF MAY 31, 1998 AND THE RELATED SPECIAL-PURPOSE STATEMENTS OF
REVENUES AND EXPENSES, AND CASH FLOWS FOR THE ONE MONTH AND THREE MONTHS THEN
ENDED IN ACCORDANCE WITH STATEMENTS ON STANDARDS FOR ACCOUNTING AND REVIEW
SERVICES ISSUED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS.
A COMPILATION IS LIMITED TO PRESENTING IN THE FORM OF FINANCIAL STATEMENTS
INFORMATION THAT IS THE REPRESENTATION OF MANAGEMENT. WE HAVE NOT AUDITED OR
REVIEWED THE FINANCIAL STATEMENTS AND, ACCORDINGLY, DO NOT EXPRESS AN OPINION OR
ANY OTHER FORM OF ASSURANCE ON THEM.
THE ACCOMPANYING SPECIAL-PURPOSE STATEMENTS WERE PREPARED FOR THE PURPOSE OF
PRESENTING THE BRANCH OPERATION CF HERTH PRINTING AND BUSINESS SUPPLY (A
DIVISION OF COMBUSTION ENERGY CO.) WITHOUT ALL DISCLOSURES AND FOOTNOTES, AND
ARE NOT INTENDED TO BE A PRESENTATION IN CONFORMITY WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES.
THIS REPORT IS INTENDED SOLELY FOR THE INFORMATION AND USE OF THE BOARD OF
DIRECTORS AND MANAGEMENT OF COMBUSTION ENERGY COMPANY, AND SHOULD NOT BE USED
FOR ANY OTHER PURPOSE.
JUNE 9, 1998
<PAGE> 160
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
FINANCIAL STATEMENTS
FOR ONE MONTH AND THREE MONTHS ENDED
MAY 31, 1998
(WITH ACCOUNTANTS' COMPILATION REPORT)
<PAGE> 161
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF CASH FLOWS
ONE MONTH AND THREE MONTHS ENDED
MAY 31, 1998
(SEE ACCOUNTANTS' COMPILATION REPORT)
<TABLE>
<CAPTION>
CURRENT YEAR TO
MONTH DATE
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET LOSS (3,972) (9,345)
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
DEPRECIATION 5,770 17,318
DECREASE IN RECEIVABLES 9,401 16,482
(INCREASE) DECREASE IN INVENTORY (348) 1,345
(DECREASE) IN ACCOUNTS PAYABLE (325) (13,069)
(DECREASE) IN ACCRUED LIABILITIES (1,465) (3,616)
INCREASE IN CUSTOMER DEPOSITS 0 17,968
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 9,061 27,093
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES PAYMENTS
ON LONG TERM DEBT (2,337) (6,953)
------- -------
NET CASH (USED) BY FINANCING ACTIVITIES (2,337) (6,953)
------- -------
NET INCREASE
IN CASH & EQUIVALENTS 6,724 20,140
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 77,790 64,374
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD 84,514 84,514
======= =======
</TABLE>
<PAGE> 162
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF REVENUES AND EXPENSES
ONE MONTH AND THREE MONTHS ENDED
MAY 31, 1998
(SEE ACCOUNTANTS' COMPILATION REPORT)
<TABLE>
<CAPTION>
CURRENT YEAR TO
MONTH PERCENT DATE PERCENT
------- ------- ------- -------
<S> <C> <C> <C> <C>
OPERATING EXPENSES
(CONTINUED)
FREIGHT OUT 326 0.49 907 0.43
INSURANCE 797 1.19 2,534 1.20
INTEREST 1,881 2.80 5,701 2.71
JANITORIAL 0 0.00 180 0.09
LAUNDRY AND LINEN 168 0.25 394 0.19
LEGAL AND ACCOUNTING 740 1.10 4,165 1.98
MAINTENANCE & REPAIR 1,147 1.71 6,415 3.05
OFFICE EXPENSE 77 0.11 405 0.19
OFFICE AND ADMINISTRATIVE 2,052 3.06 5,138 2.44
SECURITY 0 0.00 105 0.05
TAXES AND LICENSES 211 0.31 211 0.10
TAXES-PAYROLL 2,981 4.41 10,442 4.98
TELEPHONE 279 0.42 542 0.26
UTILITIES 1,224 1.82 2,522 1.20
------- ------- ------- -------
12,034 17.92 39,995 19.02
------- ------- ------- -------
EXPENSES OVER REVENUES (3,972) 5.92 (9,345) 4.44
</TABLE>
<PAGE> 163
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF REVENUES AND EXPENSES
ONE MONTH AND THREE MONTHS ENDED
MAY 31, 1998
(SEE ACCOUNTANTS' COMPILATION REPORT)
<TABLE>
<CAPTION>
CURRENT YEAR TO
MONTH PERCENT DATE PERCENT
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
SALES
SALES-OFFICE SUPPLIES 1,384 2.06 5,141 2.44
SALES-PRINTING 67,615 100.71 209,022 99.38
SALES RETURNS AND ALLOW. (1,890) 2.82 (3,976) 1.89
OTHER INCOME 31 0.05 132 0.06
--------- --------- --------- ---------
67,140 100.00 210,319 100.00
--------- --------- --------- ---------
COST OF SALES
BEGINNING INVENTORY 11,029 12,722
PURCHASES 26,415 82,292
LABOR SALARIES 12,122 37,853
SALES SALARIES 11,425 36,161
SUPPLIES & FREIGHT 3,716 4,765
DEPRECIATION 5,748 17,253
ENDING INVENTORY (11,377) (11,377)
--------- ---------
59,078 87.99 179,669 85.43
--------- --------- --------- ---------
GROSS PROFIT 8,062 12.01 30,650 14.57
--------- --------- --------- ---------
OPERATING EXPENSES
ADVERTISING 0 0.00 32 0.02
AUTOMOBILE 56 0.08 144 0.07
CASH VARIANCE 9 0.01 9 0.00
DEPRECIATION 22 0.03 55 0.03
DUES AND SUBSCRIPTIONS 84 0.13 84 0.04
</TABLE>
<PAGE> 164
LIABILITIES AND STOCKHOLDER'S EQUITY
<TABLE>
<S> <C>
CURRENT LIABILITIES
ACCOUNTS PAYABLE 14,874
CUSTOMER DEPOSITS 18,343
CONTRACT - CURRENT PORTION 29,582
ACCRUED PAYROLL COSTS 5,746
ACCRUED PROFESSIONAL FEES 22,000
ACCRUED SALES TAX 2,323
--------
TOTAL CURRENT LIABILITIES 92,848
--------
LONG TERM DEBT
NET OF CURRENT PORTION 199,668
--------
HOME OFFICE EQUITY 384,220
CURRENT PERIOD REVENUE OVER EXPENSES (9,345)
--------
374,875
--------
667,391
========
</TABLE>
<PAGE> 165
HERTH PRINTING AND BUSINESS SUPPLY
(A DIVISION OF COMBUSTION ENERGY COMPANY)
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
(SEE ACCOUNTANTS' COMPILATION REPORT)
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
CASH 84,514
ACCOUNTS RECEIVABLE 100,199
INVENTORY 11,377
PREPAID EXPENSES 12,500
-------
TOTAL CURRENT ASSETS 208,590
-------
OTHER ASSETS
DEPOSITS 2,754
-------
PROPERTY AND EQUIPMENT
FURNITURE AND FIXTURES 17,433
MACHINERY AND EQUIPMENT 455,938
VEHICLES 4,700
BUILDING 253,156
LAND 70,000
-------
801,227
LESS ACCUMULATED DEPRECIATION 345,180
-------
TOTAL PROPERTY AND EQUIPMENT 456,047
-------
667,391
=======
</TABLE>
<PAGE> 166
POWERTEL USA, INC.
Forecasted Statements of Income
for years ended
February 28, 1999, February 29, 2000
and February 28, 2001
(With Accountants' Compilation Report)
<PAGE> 167
WILLIAM J. CRANDALL CHARTERED
Certified Public Accountants
William J. Crandall, C.P.A.
INCLINE VILLAGE RENO
761 Northwood Blvd. 1885 So. Arlington Ave., Ste. 105
Incline Village, Nevada 89451 Reno, Nevada 89509
Telephone 702-831-1787 Telephone 702-324-1787
FAX 702-831-3357 FAX 702-324-1791
Board of Directors
Powertel USA, Inc.
East Lansing, Michigan
We have compiled the accompanying forecasted statements of income of Powertel
USA, Inc. for the fiscal years ending February 28, 1999, February 29, 2000,
and February 28, 2001, in accordance with standards established by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of a forecast information
that is the representation of management and does not include evaluation of
the support for the assumptions underlying the forecast. We have not examined
the forecast and, accordingly, do not express an opinion or any other form of
assurance on the accompanying statements or assumptions. Furthermore, there
will usually be differences between the forecasted and actual results because
events and circumstances frequently do not occur as expected, and those
differences may be material. We have no responsibility to update this report
for events and circumstances occurring after the date of this report.
June 24, 1998
<PAGE> 168
2
POWERTEL USA, INC.
Forecasted Statements of Income
Years Ended February 28, 1999,
February 29, 2000 and February 28, 2001
(With Accountants' Compilation Report)
<TABLE>
<CAPTION>
February 28, February 29, February 28,
1999 2000 2001
------------ ------------ ------------
<S> <C> <C> <C>
Sales $ 11,572,600 $ 30,547,300 $ 33,542,700
Sales returns (1,100) (1,150) (1,200)
Other income 105,800 198,800 218,600
------------ ------------ ------------
11,677,300 30,744,950 33,760,100
------------ ------------ ------------
Cost of sales
Materials 364,400 375,300 386,600
Service 8,750,000 23,760,000 26,136,000
Equipment lease 136,000 224,400 246,800
Trunk line lease 60,000 99,000 108,900
Switching service 8,000 13,200 14,600
Carrier line 20,000 33,000 36,300
Wages 426,400 580,900 616,800
------------ ------------ ------------
9,764,800 25,085,800 27,546,000
------------ ------------ ------------
Gross profit 1,912,500 5,659,150 6,214,100
------------ ------------ ------------
General and administrative
Advertising 100 100 100
Automobile 3,500 5,600 6,100
Bank charges 250 300 300
Depreciation 69,200 47,700 49,100
Dues and publications 300 300 300
Freight and shipping 5,900 6,100 6,300
Insurance 16,800 20,300 21,500
Interest 22,100 18,800 19,400
Janitorial and laundry 2,000 2,100 2,200
Legal and accounting 16,600 17,600 18,200
Maintenance and repair 18,800 19,400 20,000
Office costs 2,800 2,900 3,000
Office wages 51,600 87,200 94,600
Rent 40,000 66,000 72,600
Taxes and licenses 14,400 21,700 23,400
Taxes - payroll 52,900 77,300 82,400
Telephone 28,300 44,500 48,800
Utilities 18,900 24,900 26,700
Other 24,000 26,400 29,000
------------ ------------ ------------
388,450 489,200 524,000
------------ ------------ ------------
Income before provision for
federal income tax 1,524,050 5,169,950 5,690,100
Federal income tax 235,950 1,934,600
------------ ------------ ------------
Net income $ 1,524,050 $ 4,934,000 $ 3,755,500
============ ============ ============
</TABLE>
See accompanying summary of significant forecast assumptions.
<PAGE> 169
3
POWERTEL USA, INC.
Note to Forecasted Statements
February 28, 1999, February 29, 2000 and
February 28, 2001
.(See Accountants, Compilation Report)
1. Summary of Significant Forecast Assumptions
The financial forecast presents, to the best of management's knowledge
and belief, the Company's expected results of operations. Accordingly,
the forecast reflects management's judgement as of June 24, 1998, the
date of this forecast, of the expected conditions and its expected
course of action. The assumptions disclosed herein are those that
management believes are significant to the forecast. There will usually
be differences between the forecasted and actual results, because events
and circumstances frequently do not occur as expected, and those
differences may be material.
Sales
Management developed sales forecasts from expected long distance line
use and available capacity, and known sales of its printing division
already in operation. Increases in sales year to year were estimated
using rates of increase of 10% and 3% for the long distance service and
printing sales respectively. Long distance service will be between
Southern California and Mexico.
Cost of Sales
Materials cost represents those items used in printing operation
including print brokerage and are forecasted using inventory costs and
past experience.
Service cost is the charge paid by the Company for long distance
service, which is 80% of sales amount.
Equipment lease, trunk line lease, switching service and carrier line
are costs directly associated with providing long distance phone service
and each is a fixed monthly amount by contract.
Wages are combined for both long distance service and printing
operation. The long distance services wages are for sales personnel only
which is not expected to be a material cost. Wages for the printing
operation includes both sales and production personnel and is forecasted
based on past experience.
<PAGE> 170
4
POWERTEL USA, INC.
Note to Forecasted Statements
February 28, 1999, February 29, 2000 and
February 28, 2001
(See Accountants' Compilation Report)
Note I (continued)
General and Administrative Expenses
General and administrative expenses are forecasted to be consistent
and relatively low from year to year. Office wages and payroll
taxes, rent, and telephone service account for the majority of long
distance service general and administrative costs. These are
estimated from known and estimated costs. Costs of the printing
operation are forecasted from past experience.
Income Taxes
Forecasted income taxes are based on statutory rates in effect at
the date of this forecast, after subtraction from operating income
of available net operating loss carryforwards.
2. Summary of Significant Accounting Policies
The financial forecast has been prepared on the basis of generally
accepted accounting principles expected to be used in the financial
statements covering the forecast periods.
Depreciation
Fixed assets are recorded at cost in the period acquired.
Depreciation is calculated using the declining balance method over
estimated useful lives of the assets.
<PAGE> 171
AMENDED AND RESTATED
--------------------
AGREEMENT FOR EXCHANGE OF STOCK
-------------------------------
This amended and restated agreement ("AGREEMENT") is entered into this
date and is effective as of February 12, 1998 by and among (i) POWERTEL USA,
INC., a corporation incorporated under the laws of Delaware with its principal
place of business situated in East Lansing, Michigan ("POWERTEL"), (ii) DIEGO
TEL, INC. a Nevada corporation with its principal place of business situated in
Sarasota, Florida ("DIEGOTEL"), and (iii) DAVID L. WALLACE, an individual
residing in Sarasota, Florida ("WALLACE"), who owns 100% of the issued and
outstanding Common Stock of DIEGOTEL.
RECITALS
--------
WHEREAS, WALLACE is the owner of 100% the issued and outstanding shares
of DIEGOTEL; and
WHEREAS, DIEGOTEL is engaged in the business of purchasing and
reselling long distance telecommunication services and related activities
("BUSINESS"); and
WHEREAS, WALLACE desires to exchange with POWERTEL common stock of
POWERTEL in exchange for 100% of the common stock of the DIEGOTEL and POWERTEL
desires to exchange stock as noted above; and
WHEREAS, for federal income tax purposes, it is intended that this
transaction shall qualify as a "reorganization" within the meaning of Section
368 of the Internal Revenue Code of 1986, as amended; and
WHEREAS, DIEGOTEL desires to guarantee the obligations of WALLACE
pursuant to this AGREEMENT; and
WHEREAS, this AGREEMENT is specifically contingent upon confirmation by
the Bankruptcy Court of the Plan of Reorganization to be filed by POWERTEL with
the Bankruptcy Court (the "CONFIRMATION"),
WHEREAS, the Parties to this Agreement have previously executed a
document entitled "Agreement for Exchange of Stock" executed February 12, 1997,
(the "Initial Agreement"); and
WHEREAS, the Parties have decided to amend and restate the Initial
Agreement in order to incorporate certain supplemental terms and modifications.
NOW, THEREFORE, in consideration of the foregoing, the payment of
$100,000.00 to POWERTEL by WALLACE in the form of a promissory note and the
exchange of stock pursuant
<PAGE> 172
to this AGREEMENT and the representations, warranties, covenants, and mutual
promises contained herein, the parties hereto, intending to be legally bound, do
agree as follows:
SECTION 1.
----------
EXCHANGE OF SHARES OF STOCK
---------------------------
1.1 EXCHANGE. At CLOSING as defined in Section 9 of this AGREEMENT,
WALLACE shall tender to POWERTEL 100% of the issued and outstanding shares of
common stock of DIEGOTEL ("SHARES") and a Promissory Note in the amount of
$100,000.00 in consideration of the tender by POWERTEL of the Class A Common
Stock of POWERTEL as provided in this AGREEMENT.
1.2 CONVEYANCE OF TITLE. The conveyance of title to the SHARES shall be
effective as of the CLOSING by the delivery of the stock certificates therefor
at the CONFIRMATION duly endorsed for transfer to POWERTEL.
1.3 EXCLUSIVE NATURE OF AGREEMENT. This AGREEMENT shall preclude and
restrict WALLACE from entertaining other offers of sale or exchange of the
SHARES.
SECTION 2.
----------
CONSIDERATION AND POST-CONFIRMATION ADJUSTMENT
----------------------------------------------
2.1 ADJUSTMENT. In consideration of the tender to POWERTEL of 100% of
the issued and outstanding common stock of DIEGOTEL, POWERTEL shall forthwith
tender to the escrow agent an amount of the issued and outstanding Class A
Common Stock of POWERTEL such that the escrow agent will hold Thirty-Five (35%)
percent of the issued and outstanding Class A Common Stock of POWERTEL. In the
event that POWERTEL, as a result of its Plan of Reorganization or any
settlements of any claims (except those of the disputed class) issues additional
Class A Common Stock or effects a reverse stock split at any time before the
tenth day following the Effective Date of the Plan of Reorganization, then the
number of shares of Class A Common Stock issued to the escrow agent shall be
adjusted to Thirty-Five 35.0% of the issued and outstanding Class A Common Stock
of POWERTEL subsequent to implementation of the Plan of Reorganization and
distribution to WALLACE on a pro rata basis.
2.2 ESCROW OF POWERTEL CLASS A COMMON STOCK AND POST CONFIRMATION
ADJUSTMENT OF PURCHASE PRICE. Because WALLACE has made certain representations
to POWERTEL respecting the business affairs of DIEGOTEL and its future financial
performance WALLACE agrees as follows:
a) The Class A Common Stock of POWERTEL to be issued pursuant to
Section 2.1 of this AGREEMENT shall be held in escrow as provided in Section
2.2(d) for up to a thirty month term after the Distribution Date in POWERTEL'S
Plan.
<PAGE> 173
b) The Class A Common Stock held in escrow shall be restricted
stock pursuant to the Securities Act of 1933 and shall be separated into 10
equal allotments, each of which shall be referred to as a 10 percent allotment.
The escrow agent shall release a 10 percent allotment at the end of the month in
which POWERTEL receives telecommunications revenue in excess of $100,000. The
escrow agent shall release an additional 10 percent allotment for each
additional incremental increase of $100,000 of telecommunications revenue more
than the month before. The 10 percent allotments shall be distributed to WALLACE
at no more than monthly intervals. To receive all ten allotments, POWERTEL must
receive telecommunications revenue in excess of 4.5 million dollars within
thirty months after the Distribution Date in POWERTEL'S Plan.
c) If shares remain in the escrow at the end of thirty months, than
the escrow shall release the remaining shares within 30 days. In no event shall
the escrow agent return the unissued shares to POWERTEL if the
telecommunications revenue exceeds 4.5 million dollars. If the total
telecommunications revenue is less that 4.5 million dollars then the remaining
shares shall be distributed on a pro rata basis among WALLACE and POWERTEL based
upon a formula for distribution set forth in Section 2.2.
d) All stock and transfer ledgers to be exchanged pursuant to this
AGREEMENT shall be held in escrow by Walter & Haverfield, P.L.L. of Cleveland,
Ohio, (the "Escrow Agent"), legal counsel to POWERTEL. In the event that either
(a) the Bankruptcy Court refuses to ratify this AGREEMENT, (b) the Plan of
Reorganization is not confirmed, or (c) POWERTEL elects to terminate this
AGREEMENT, this AGREEMENT shall be deemed to be null and void and the Escrow
Agent shall return the stock to the grantor from whom it was received, otherwise
the stock shall be exchanged and distributed by the Escrow Agent pursuant to the
terms of this AGREEMENT.
e) During the period of time that the stock is held in escrow,
POWERTEL shall have full power to vote all shares in escrow.
SECTION 3.
----------
REPRESENTATIONS AND WARRANTIES OF WALLACE
-----------------------------------------
Unless otherwise set forth in writing to POWERTEL, WALLACE represents
and warrants to the best of his knowledge as follows:
3.1 CORPORATE STATUS. DIEGOTEL is duly organized, validly existing, and
in good standing under the laws of the state of Nevada and has the power and
authority to own its properties and to conduct its business as now being
conducted. DIEGOTEL does not have any subsidiaries and does not own any stock in
any other corporation or have any investments in any partnerships or joint
ventures.
3.2 CAPITALIZATION. The authorized stock of DIEGOTEL consists solely of
25,000 shares of common stock with par value of $0.001 per share of which only
the SHARES are issued and
<PAGE> 174
outstanding. The SHARES constitute all of the issued and outstanding shares of
stock of DIEGOTEL. The SHARES are validly issued, fully paid and non-assessable.
3.3 OWNERSHIP OF SHARES. WALLACE is the owner of the 25,000 of SHARES
and in the aggregate owns 100% of the issued and outstanding SHARES of DIEGOTEL.
WALLACE has title to the SHARES free and clear of any and all liens and
encumbrances.
3.4 CONSENT OF THIRD PARTIES. This AGREEMENT is legally binding upon
WALLACE and the consummation of the transactions contemplated hereby in
accordance with the terms hereof does not require the consent of any third
party.
3.5 FINANCIAL STATEMENTS AND PRO FORM FINANCIAL PROJECTIONS. If
requested by POWERTEL, within sixty (60) days of the date of this AGREEMENT,
WALLACE shall cause DIEGOTEL to prepare balance sheets, income statements and
related schedules and footnotes for DIEGOTEL'S fiscal period commencing in 1997
with the date of incorporation and continuing through December 31, 1997
("FINANCIAL STATEMENT") which FINANCIAL STATEMENT shall accurately and fairly
reflect the financial condition of DIEGOTEL as of the dates indicated thereon,
and the results of the operations of DIEGOTEL for the respective fiscal periods
then ended. In addition to the foregoing, to the best of WALLACE'S knowledge,
the pro forma financial projections for DIEGOTEL previously provided to POWERTEL
and WALLACE accurately and fairly reflect the current and future financial
condition of DIEGOTEL as of the dates indicated thereon, and the results of the
operations of DIEGOTEL for the respective fiscal periods then ended, subject to
the assumptions and representations set forth therein.
3.6 ABSENCE OF CERTAIN CHANGES. The business operations of DIEGOTEL
have been conducted prudently and in the ordinary course of business and there
has been no material change in the financial condition, results of operations,
business, business prospects, capitalization or any increase in the compensation
of DIEGOTEL'S employees, if any.
3.7 LIABILITIES. To the best of WALLACE'S knowledge (i) as of the date
of the last FINANCIAL STATEMENT, DIEGOTEL did not have any liabilities, whether
absolute, accrued, contingent or otherwise, that are not disclosed in the
FINANCIAL STATEMENT attached hereto, and (ii) there was no basis upon which any
person could assert a liability against DIEGOTEL which was not disclosed on the
last FINANCIAL STATEMENT. Since the date of the last FINANCIAL STATEMENT,
DIEGOTEL has not incurred any liabilities not in the ordinary course of
business, and to the best of WALLACE'S knowledge there is presently no basis
upon which a person could assert such a liability, nor has any person asserted
the existence of such a liability.
3.8 TAX MATTERS. DIEGOTEL'S federal, state and local tax returns for
1997 have not been filed or audited. There are no pending tax examinations of,
or tax claims asserted against, DIEGOTEL and there are no known bases for any
such claims. DIEGOTEL has not granted any extension of any limitation period
applicable to tax claims which extension is still in effect and has not filed a
consent under Section 341(f) of the Internal Revenue Code of 1986. DIEGOTEL has
never filed an election to be taxed as a small business corporation pursuant to
IRC sec. 1361.
<PAGE> 175
DIEGOTEL is and has not been a member of a "control group" as defined in IRC
sec.1563 or an affiliated group as defined in IRC sec.1504.
3.9 TITLE TO PROPERTY. DIEGOTEL has good and marketable title to all of
its assets free and clear of all liens and encumbrances. DIEGOTEL'S use of
intangibles has not and will not infringe the rights of any other person. The
rights, properties and other assets presently owned, leased or licensed by
DIEGOTEL and described in this AGREEMENT include all rights, properties and
other assets necessary to permit DIEGOTEL to conduct its business in the same
manner as its business has been conducted.
3.10 RECEIVABLES. All of the receivables of DIEGOTEL are reflected on
the books of DIEGOTEL and are considered to be collectible or have been
collected as of the CLOSING.
3.11 INVENTORIES. The inventories of DIEGOTEL, if any, are of a quality
and quantity to be usable and salable in the ordinary course of DIEGOTEL'S
business.
3.12 CONDITION OF TANGIBLE PROPERTY. The equipment, and other tangible
property of DIEGOTEL are, to the best of WALLACE'S knowledge, in good condition
and repair, and are adequate for the uses to which such property is put in the
conduct of the BUSINESS. WALLACE has no knowledge of any defects in any of such
tangible property.
3.13 CONDEMNATION. No property owned or leased by DIEGOTEL is subject
to any governmental decree or order, or to the best of WALLACE'S knowledge,
threatened or proposed order to be sold or taken by any public authority.
3.14 SCHEDULE OF CONTRACTS. Upon request for POWERTEL, WALLACE shall
prepare a complete list of all contracts of any type, other than insurance
policies, to which DIEGOTEL is a party. All contracts to which DIEGOTEL is a
party are in full force and effect and DIEGOTEL and the other parties thereto
have performed all of the obligations required to be performed by them
thereunder and are not in default thereof. Neither the execution of this
AGREEMENT, nor the consummation of the transactions contemplated hereby, will
constitute a default under any of such contracts as to which the sale of the
shares contemplated by this AGREEMENT may or does constitute a default. None of
such contracts will result in a loss to DIEGOTEL upon the completion thereof and
none of the purchase commitments which are the subject thereof are in excess of
the normal requirements of the BUSINESS or establish a price in excess of that
customarily charged for the items which are the subject thereof. Full and
complete copies of all such contracts will be supplied to POWERTEL upon request.
3.15 EMPLOYMENT MATTERS. Upon request from POWERTEL, WALLACE shall
prepare a complete schedule of the compensation paid to all employees of
DIEGOTEL.
3.16 LABOR RELATIONS. To the best of WALLACE'S knowledge, DIEGOTEL has
complied with all laws, rules, and regulations relating to the employment of
labor and has no labor troubles in the sense that there are no strikes,
lockouts, work stoppages, or slow downs, pending or threatened against DIEGOTEL.
<PAGE> 176
3.17 LEGAL PROCEEDINGS. There are no legal or administrative
proceedings of any nature pending or, to the best of WALLACE'S knowledge,
threatened against or affecting DIEGOTEL. DIEGOTEL is not in default of any
judgment, writ, injunction, or order of any court or governmental agency.
3.18 COMPLIANCE WITH LAWS. DIEGOTEL has not received any notice from
any governmental entity asserting a violation by DIEGOTEL of any laws,
regulations, or governmental pronouncements of any type, including, without
limitation, zoning ordinances, and (i) there are no known claims or
investigations involving asserted violations thereof, and (ii) DIEGOTEL has duly
complied with all statutes, regulations and governmental pronouncements of all
types (including, without limitation, zoning ordinances) and has acquired all
licenses and permits required for the operation of its business.
3.19 LACK OF MARKET FOR POWERTEL SHARES. WALLACE represents that he has
had direct, continuing and first-hand experience with the business and operation
of POWERTEL and its financial condition and affairs. WALLACE acknowledges that
(i) POWERTEL is currently functioning as Debtor-in-Possession pursuant to
Chapter 11 of the United States Bankruptcy Code, (ii) there is little, if any,
market for POWERTEL's Class A Common Stock and there may never be any market for
such securities, (iii) the Class A Common Stock is deemed to be "high risk" and
"speculative," (iv) there is no assurance or guarantee that the Class A Common
Stock will ever have any economic value, and (v) the securities issued to
WALLACE will be restricted for not less than one year.
3.20 BANK ACCOUNTS. Upon request from POWERTEL, WALLACE shall prepare a
complete and accurate list of each bank or financial institution with which
DIEGOTEL has an account (including the account numbers) or safety deposit box
and the names of the persons authorized to draw thereon or have access thereto.
3.21 DISCLOSURE. WALLACE has disclosed to POWERTEL all facts material
to the business, assets, operations, financial condition, and prospects of
DIEGOTEL.
3.22 RELATED PARTIES' LOANS. Upon request from POWERTEL, WALLACE shall
prepare a list of all loans to or from DIEGOTEL.
3.23 DELIVERIES BY WALLACE. In connection with the proposed sale of the
SHARES, WALLACE will deliver to POWERTEL the corporate documents at
CONFIRMATION.
3.24 SECURITIES EXEMPTION. WALLACE's sophisticated and knowledgeable
individual who is an "accredited investor" as defined in Rule 501 of Regulation
D of the Securities Act of 1933. WALLACE has had an opportunity to conduct an
independent investigation into the affairs of DIEGOTEL. WALLACE represents that
he is acquiring the SHARES for his personal investment and not with an intention
to re-sell or distribute the SHARES to third parties who are not parties to the
AGREEMENT. WALLACE stipulates that the purchase of the SHARES is a speculative
transaction and that WALLACE is prepared to incur risk of loss of its
investment. WALLACE also stipulates that the sale of the SHARES pursuant to the
AGREEMENT has been effected pursuant
<PAGE> 177
to the provisions of Regulation D and Section 4(2) of the Securities Act of 1933
and comparable provisions of applicable state securities laws. WALLACE agrees to
file any documents reasonably required by POWERTEL to comply with applicable
securities laws.
SECTION 4.
----------
REPRESENTATIONS AND WARRANTIES OF POWERTEL
------------------------------------------
POWERTEL, represents and warrants as follows:
4.1 CONSENT OF THIRD PARTIES. Subject only to ratification of this
AGREEMENT by the United States Bankruptcy Court, this AGREEMENT is legally
binding upon POWERTEL and POWERTEL'S consummation of the transactions
contemplated hereby does not require the consent of any third party except for
approval by the Bankruptcy Court as referenced in Section 6.5.
4.2 SECURITIES EXEMPTION. POWERTEL is a sophisticated and knowledgeable
individual who is an "accredited investor" as defined in Rule 501 of Regulation
D of the Securities Act of 1933. POWERTEL has had an opportunity to conduct an
independent investigation into the affairs of DIEGOTEL. POWERTEL represents that
it is acquiring the SHARES for its personal investment and not with an intention
to re-sell or distribute the SHARES to third parties who are not parties to the
AGREEMENT. POWERTEL stipulates that the purchase of the SHARES is a speculative
transaction and that POWERTEL is prepared to incur risk of loss of its
investment. POWERTEL also stipulates that the sale of the SHARES pursuant to the
AGREEMENT has been effected pursuant to the provisions of Regulation D and
Section 4(2) of the Securities Act of 1933 and comparable provisions of
applicable state securities laws. POWERTEL agrees to file any documents
reasonably required by WALLACE to comply with applicable securities laws.
4.3 FINANCIAL STATEMENT AND PRO FORM FINANCIAL PROJECTIONS. Upon
request by WALLACE, POWERTEL will provide WALLACE with a copy of its FINANCIAL
STATEMENT as filed with the United States Bankruptcy Court. POWERTEL hereby
authorizes WALLACE (at WALLACE'S expense) to secure a credit report on POWERTEL.
POWERTEL represents that the final statements identified above fairly and
accurately reflect POWERTEL'S financial condition and that there are no adverse
facts not described to WALLACE in writing regarding POWERTEL'S financial
affairs.
SECTION 5.
----------
COVENANTS OF WALLACE
--------------------
Unless POWERTEL waives such performance in writing, WALLACE covenants
as follows:
5.1 CONVEYANCE OF TITLE TO SHARES. Pursuant to Section 2.2(d), at
CONFIRMATION (as defined in Section 9.1 hereinafter), WALLACE will convey good
and marketable title to the SHARES to POWERTEL free and clear of all security
interests, claims, liens, proxies, charges, or other encumbrances.
<PAGE> 178
5.2 WALLACE'S CONFIRMATION CERTIFICATE. WALLACE shall execute and
deliver to POWERTEL at the CONFIRMATION a certificate which shall certify that,
except as otherwise specifically provided therein: (a) all of the
representations and warranties made by WALLACE in this AGREEMENT are true and
accurate in all respects as of the CONFIRMATION with the same force and effect
as though made at such time; and (b) WALLACE have fully performed and/or
complied with all of his covenants and other obligations under this AGREEMENT
required to be performed and/or complied with by them as of the CONFIRMATION.
WALLACE shall describe in such certificate the circumstances concerning any
incorrect or inaccurate representations or warranties identified therein.
5.3 CONDUCT OF BUSINESS. To and through the date of CONFIRMATION,
subject to Section 5.8 hereof, DIEGOTEL shall conduct its business prudently and
in the ordinary course consistent with past practice.
5.4 NO AMENDMENTS. To and through the date of CONFIRMATION, no change
or amendment shall be made to the Articles of Incorporation of DIEGOTEL.
5.5 NO CAPITAL CHANGES. To and through the date of CONFIRMATION,
DIEGOTEL shall not issue or grant options, warrants, or rights to purchase or to
subscribe to any of its stock or any securities or obligations convertible into
its stock or make any other changes in its capital structure.
5.6 NO DIVIDENDS OR REDEMPTIONS. To and through the date of
CONFIRMATION, DIEGOTEL shall not declare or pay any dividend or other
distribution in respect of its stock or purchase any of its stock.
5.7 FORBEARANCE BY CORPORATION. To and through the date of
CONFIRMATION, except as otherwise specifically provided for or required herein,
DIEGOTEL shall not do, or agree to do, any of the following:
a) Mortgage, pledge, or otherwise encumber any of its
assets;
b) Incur liabilities in an aggregate amount greater than
$250,000 without the express written consent of
POWERTEL other than in the ordinary course of
business or pay any liability other than current
liabilities and current maturities of existing long
term debt;
c) Sell or transfer any of its assets other than sales
of inventory in the ordinary course of business;
d) Sell any of the inventory of DIEGOTEL other than in
the ordinary course of business;
e) Cancel, release, or assign any obligations owed to
DIEGOTEL or any claims held by it;
<PAGE> 179
f) Increase in any manner the compensation of any of
DIEGOTEL'S employees (including an increase in fringe
benefits or the provision of fringe benefits to
employees not previously entitled thereto) or pay or
agree to pay any pension or retirement allowance not
required by any existing plan or agreement to any
employees, or enter into any new pension, retirement,
or profit sharing plan or agreement or employment
agreement;
g) Hire or terminate any employee, except for just
cause;
h) Loan money or assets to any person; or
i) Adopt any new method of accounting;
5.8 ACCESS. To and through the date of CONFIRMATION, WALLACE shall
grant POWERTEL and its agents full access to all personnel records, assets,
records and documents of DIEGOTEL and shall furnish such financial and operating
information as POWERTEL may reasonably request. WALLACE shall provide, upon
POWERTEL'S request, verification of DIEGOTEL'S receivables and liabilities.
5.9 FILING OF TAX RETURNS. To and through the date of CONFIRMATION, any
tax returns required to be filed by DIEGOTEL on or prior to the CONFIRMATION
shall be submitted to POWERTEL for review.
SECTION 6.
----------
CONDITIONS PRECEDENT TO OBLIGATIONS OF POWERTEL
-----------------------------------------------
The obligations of POWERTEL to be performed hereunder shall be subject
to the satisfaction (or waiver by POWERTEL) on or before the CONFIRMATION of
each of the following conditions, absent which, at POWERTEL'S election, both
parties shall be relieved of any further obligation to one another and any funds
or securities deposited or paid by either party shall be returned to the party
so depositing or paying compensation:
6.1 REPRESENTATIONS AND WARRANTIES TRUE AND ACCURATE AS OF
CONFIRMATION. The representations and warranties of WALLACE contained herein
shall be true and accurate in all respects as of the CONFIRMATION with the same
force and effect as though made at such time.
6.2 PERFORMANCE OF OBLIGATIONS OF WALLACE. WALLACE shall have
completely performed all of his covenants and obligations hereunder.
6.3 EXCHANGE OF ASSETS. WALLACE and POWERTEL shall exchange all
securities in the amount and manner specified herein.
6.4 MATERIAL ADVERSE FACTS. POWERTEL shall not have discovered nor
shall there have occurred after the date hereof, any events, facts or
circumstances which reflect in any material
<PAGE> 180
adverse way on the financial condition, assets, liabilities, business, or
prospects of DIEGOTEL, in the event that POWERTEL discovers any such fact, event
or circumstance at any time prior to the Effective Date of the Plan of
Reorganization, POWERTEL, at its sole election, may declare this AGREEMENT to be
null and void. WALLACE may cause DIEGOTEL to pay out to WALLACE all cash, the
cash value of life insurance policies, and funds in bank accounts to satisfy
compensation and debt obligations owed to WALLACE by DIEGOTEL, and POWERTEL
consents thereto.
6.5 FORM OF DOCUMENTS. All certificates, opinions, and other documents
to be delivered by WALLACE to POWERTEL hereunder shall be in form and substance
satisfactory to POWERTEL.
6.6 RATIFICATION OF THE AGREEMENT AND CONFIRMATION OF THE PLAN OF
REORGANIZATION. POWERTEL is currently functioning as a Debtor-in-Possession
pursuant to Section 1107 of the United States Bankruptcy Code. The obligations
of POWERTEL to be performed pursuant to this AGREEMENT are specifically
contingent upon ratification of this AGREEMENT by the United States Bankruptcy
Court for the District of Nevada. In the event that the Bankruptcy Court
refuses, for any reason, to ratify this AGREEMENT, the AGREEMENT shall be null
and void and have no legal binding effect upon POWERTEL or WALLACE. In addition
to the foregoing, this AGREEMENT is specifically contingent upon confirmation by
the Bankruptcy Court of the Plan of Reorganization to be filed by POWERTEL with
the Bankruptcy Court, and in the event that the Bankruptcy Court refuses, for
any reason, to confirm the Plan of Reorganization as submitted by POWERTEL, this
AGREEMENT shall be null and void and have no further effect or impact upon
POWERTEL or WALLACE. WALLACE specifically and explicitly assumes the risk that
either (a) the Bankruptcy Court may refuse to ratify this AGREEMENT, or (b) the
Bankruptcy Court may refuse to confirm the Plan of Reorganization as submitted
by POWERTEL.
SECTION 7.
----------
COVENANTS OF POWERTEL
---------------------
From the date hereof to and including the CONFIRMATION, POWERTEL
covenants as follows (unless otherwise agreed in writing by WALLACE):
7.1 POWERTEL'S CONFIRMATION CERTIFICATE. POWERTEL shall execute and
deliver to WALLACE a certificate which shall certify that, except as otherwise
specifically provided therein: (a) all of the representations and warranties
made by POWERTEL in this AGREEMENT are true and accurate in all respects as of
the CONFIRMATION with the same force and effect as though made at such time; (b)
POWERTEL has performed and/or complied with all of its covenants and other
obligations under this AGREEMENT required to be performed and/or complied with
by it as of the CONFIRMATION; and (c) a statement showing the calculation used
by POWERTEL in determining that the escrow agent has received an amount equal to
Thirty-Five (35%) percent of the issued and outstanding Class A Common Stock of
POWERTEL subsequent to implementation of the Plan of Reorganization. From the
date hereof until the date of CONFIRMATION, POWERTEL shall notify WALLACE
immediately in writing if any of the representations and warranties made herein
should become untrue or inaccurate.
<PAGE> 181
SECTION 8.
----------
CONDITIONS PRECEDENT TO OBLIGATIONS OF WALLACE
----------------------------------------------
The obligations of WALLACE to be performed hereunder shall be subject
to the satisfaction (or waiver by WALLACE) on or before the CONFIRMATION of each
of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES TRUE AND ACCURATE AS OF
CONFIRMATION. The representations and warranties of WALLACE contained herein
shall be true and accurate in all respects as of the CONFIRMATION with the same
force and effect as though made at such time.
8.2 FORM OF DOCUMENTS AND PLAN OF REORGANIZATION. All certificates and
other documents to be delivered by POWERTEL to WALLACE hereunder shall be in
form and substance satisfactory to WALLACE. If the Plan of Reorganization as
confirmed by the Bankruptcy Court as referred to in Section 6.5, does not
conform or alters in any way this AGREEMENT, then this AGREEMENT shall be null
and void and have no further effect or impact upon POWERTEL or WALLACE. POWERTEL
specifically and explicitly assumes the risk that either (a) the Bankruptcy
Court may refuse to ratify this AGREEMENT, (b) the Bankruptcy Court may refuse
to confirm the Plan of Reorganization as submitted by POWERTEL, or (c) WALLACE
may determine that the Plan of Reorganization does not conform or alters this
AGREEMENT within ten days of receipt of a copy of the Plan or any amendments.
SECTION 9.
----------
CLOSING AND CONFIRMATION
------------------------
9.1 DATE. The CLOSING is deemed the date of CONFIRMATION. The
CONFIRMATION is date the Bankruptcy Court confirms the Plan.
9.2 OBLIGATIONS OF WALLACE. Within ten days of this AGREEMENT, WALLACE
and POWERTEL shall deliver, or cause to be delivered, to Escrow Agent the
following:
a) The certificates for the SHARES duly endorsed for
transfer to POWERTEL by WALLACE,
b) The certificates for the Class A Common Stock
deposited with the escrow agent shall be issued in
the name of POWERTEL and reissued to WALLACE at time
of distribution,
c) The corporate records, minute book and stock record
book of DIEGOTEL.
d) The Promissory Note from WALLACE to POWERTEL in the
amount of $100,000 at 9% per year interest with
payments to commence six months after the date of
DISTRIBUTION and to be paid over thirty monthly
<PAGE> 182
payments and in no event will the final shares be
distributed until the Note is paid in full.
9.3 ADDITIONAL ACTIONS. Each of the parties, individually and/or in
their corporate capacities, hereby agrees to execute and deliver all such
additional documents and take all actions necessary or appropriate to consummate
any and all of the transactions contemplated hereby.
SECTION 10.
-----------
INDEMNIFICATION AND POST CLOSING ADJUSTMENT IN PURCHASE PRICE
-------------------------------------------------------------
10.1 INDEMNIFICATION BY WALLACE. WALLACE agrees to indemnify and hold
POWERTEL and DIEGOTEL harmless from any liabilities or losses (including
attorneys' fees and all costs of defense) which are not otherwise covered by any
policy of insurance to which the DIEGOTEL was, or is, a party, resulting from:
a) The falsity or inaccuracy of any representations or warranties
made herein by WALLACE;
b) The failure of WALLACE to completely perform any of its
covenants or other obligations hereunder; or
c) Any liability or loss incurred or suffered by DIEGOTEL or
POWERTEL after the CLOSING which relates or is attributable to intentional acts
or omissions of WALLACE prior to the CONFIRMATION.
10.2 INDEMNIFICATION BY POWERTEL. POWERTEL agrees to indemnify and hold
WALLACE harmless from any liabilities or losses resulting from:
a) The falsity or inaccuracy of any representations or warranties
made herein by POWERTEL;
b) The failure of POWERTEL to completely perform any of his
covenants or other obligations hereunder; or
c) Any liability or loss incurred or suffered by WALLACE after the
CLOSING which relates or is attributable to acts or omissions of POWERTEL prior
to the CONFIRMATION.
10.3 DEFENSE. If an indemnified party or parties hereunder should
receive notice of any claim or proceeding against it or them made by a third
party that might result in an indemnification claim hereunder, the indemnified
party or parties shall promptly give the indemnifying party or parties written
notice of such claim or proceeding and shall permit the indemnifying party or
parties at their option, to conduct or participate in the defense of such claim
or proceeding by counsel of the indemnifying party's or parties' own choosing
and at their own expense. If the indemnifying party or parties accept the tender
of the defense of such claim, they shall be deemed to have accepted for
<PAGE> 183
their account any and all liability resulting from or relating to such claim. If
the indemnifying party or parties decline to conduct the defense of such claim
or proceeding, the indemnified party or parties shall assume the defense thereof
and may settle the same without the consent of the indemnifying party or
parties.
SECTION 11.
-----------
MISCELLANEOUS PROVISIONS
------------------------
11.1 SURVIVAL OF CLOSING. The provisions of Sections 2, 3, 4, 5.14,
5.15, 7, 10 and 11 shall survive the CLOSING and CONFIRMATION.
11.2 NOTICES. Any notices required or permitted hereby shall be deemed
given when sent by one party to the other, and to its counsel, in writing by
registered or certified U.S. mail, postage prepaid, addressed as follows:
WALLACE: David L. Wallace
5545 Shadow Lawn Drive
Sarasota, FL 34242
POWERTEL: POWERTEL USA, Inc.
c/o Mr. Richard Cascarilla, President
321 West Lake Lansing Rd., Suite 100
East Lansing, NH 48823
POWERTEL'S COUNSEL: Van P. Carter, Esq.
Walter & Haverfield
1300 Terminal Tower
Cleveland, Ohio 44113
DIEGO TEL: DIEGOTEL, Inc.
c/o David Wallace
5545 Shadow Lawn Drive
Sarasota, FL 34242
The above addresses may be changed from time to time by giving notice thereof in
the manner provided herein.
11.3 SUCCESSORS AND ASSIGNS. None of the parties hereto may assign
their rights or delegate their duties hereunder without the prior written
consent of all parties to this AGREEMENT, which consent will not be unreasonably
withheld. This AGREEMENT shall be binding upon and inure to the benefit of the
heirs, executors, administrators, and successors of the parties hereto.
<PAGE> 184
11.4 INTEGRATED AGREEMENT. This instrument and the exhibits attached
hereto constitute the complete and exclusive agreement of the parties. The terms
of this AGREEMENT may not be modified except in a writing signed by all of the
parties hereto.
11.5 RISK OF LOSS. Risk of loss of, or damage or destruction to, the
assets of DIEGOTEL shall be borne by WALLACE until the CONFIRMATION. In the
event of material damage or destruction to such property, WALLACE shall promptly
notify POWERTEL. POWERTEL shall thereupon have the right, at its option, to
elect to terminate this AGREEMENT without liability or to proceed to the
CONFIRMATION and accept any insurance proceeds received by DIEGOTEL as a result
of such damage or destruction. "Material damage" shall mean such damage as
prevents the CORPORATION from effectively conducting its business.
11.6 GOVERNING LAW. The rights and obligations of the parties hereunder
and the interpretation of this AGREEMENT shall be governed by the laws of the
state of Nevada (other than those relating to conflicts of laws).
11.7 NO FINDER'S FEES OR BROKERAGE COMMISSIONS. Each of the parties
hereto represents that it dealt with no brokers or finders with respect to the
sale of the SHARES hereunder and that there are no brokerage commissions,
finder's fees, or similar payments owed as a result thereof.
11.8 COUNTERPARTS. This AGREEMENT may be executed in two or more
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall constitute one and the same instrument. The receipt of a
telefax copy of any executed page shall be accepted as the original.
11.9 WAIVERS. Waiver of the benefit of any provision hereof must be in
writing to be effective. The waiver by any party of a breach of any provision of
this AGREEMENT shall not operate or be construed as a waiver of any subsequent
breach. No action taken pursuant to this AGREEMENT, including without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants, or other obligations contained herein.
11.10 BOOKS AND RECORDS AND TAX RETURNS. POWERTEL will during regular
business hours provide WALLACE with reasonable access to WALLACE'S financial and
accounting books and records which relate to the period prior to the
CONFIRMATION, provided, however, that WALLACE shall have similar access at if
audits of WALLACE'S individual federal, state or local income tax returns
necessitate access to DIEGOTEL'S records or in the event POWERTEL defaults in
the timely payment of any amounts due to WALLACE hereunder. For purposes hereof,
access to books and records shall include the right to make copies thereof. In
addition, neither DIEGOTEL nor POWERTEL shall file any federal, state or local
tax return or form for the fiscal year ending February 28, 1997 unless and until
such return is reviewed and approved by WALLACE.
11.11 INTERPRETATION. Except where otherwise required by the context,
words of any gender used herein shall be deemed to include any and all genders
and the singular and plural shall be interchangeable.
<PAGE> 185
11.12 NO THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied
is intended to confer or shall be construed as conferring upon or giving to any
person other than the parties hereto and DIEGOTEL any rights or benefits under
or by reason of this AGREEMENT.
11.13 INCORPORATION BY REFERENCE. Each Exhibit referenced in this
AGREEMENT is hereby incorporated by reference and deemed to be a material
component of this AGREEMENT as if fully set forth therein.
11.14 COMMITMENT TO ASSIST IN POST CLOSING MATTERS. The Parties to this
AGREEMENT acknowledge that it may be necessary to amend this AGREEMENT and/or to
execute additional documents in order to implement the understanding which has
been reached, and each Party to this AGREEMENT commits to cooperate and use
its/his best efforts in order that the objectives of this AGREEMENT may be
achieved.
11.16 ACCURACY OF RECITALS. The Recitals set forth above are true and
correct and are hereby incorporated herein by reference.
11.17 ENTIRE AGREEMENT. This AGREEMENT constitutes the entire agreement
by and among the Parties with respect to the exchange of shares and all other
agreements, oral or written shall be deemed to be null and void.
To evidence their consent to the foregoing, the parties executed this
instrument on the dates set opposite their signatures below.
POWERTEL USA, INC.
Dated: April 22, 1998 By: /s/ Richard A. Cascarilla
----------------------- ----------------------------------------
Its: President, Richard A. Cascarilla
DIEGO TEL, INC.
Dated: April 22, 1998 By: /s/ David L. Wallace
----------------------- -----------------------------------------
Its: President, David L. Wallace
Dated: April 22, 1998 By: /s/ David L. Wallace
----------------------- ---------------------------------------
David L. Wallace
<PAGE> 186
ADDENDUM TO AMENDED AND RESTATED AGREEMENT
------------------------------------------
FOR EXCHANGE OF STOCK
---------------------
THIS ADDENDUM TO AMENDED AND RESTATED AGREEMENT FOR EXCHANGE OF STOCK
(the "Addendum") is intended to and does by execution hereof amend, modify, and
alter the Amended and Restated Agreement for Exchange of Stock between David
Wallace and POWERTEL USA, Inc. dated April 22,1998 as follows:
Section 2.1 entitled "Adjustment' is hereby deleted in its entirety and
the new Section 2.1 will read:
2.1 ADJUSTMENT.
In consideration of the tender to POWERTEL of 100% of the issued and
outstanding common stock of DIEGO TEL, POWERTEL shall forthwith tender to the
Escrow Agent an amount of the issued and outstanding, Class A Common Stock of
POWERTEL such that the Escrow Agent will hold Thirty-Five Percent (35%) of the
issued and outstanding Class A Common Stock of POWERTEL. In the event that
POWERTEL, as a result of its Plan of Reorganization or any settlements of any
claims (except those of the disputed class) issues additional Class A Common
Stock or effects a reverse stock split at any time before the tenth day
following the Effective Date of the Plan of Reorganization, then the number of
shares of Class A Common Stock issued to the Escrow Agent shall be adjusted to
Thirty-Five Percent (35%) of the issued and outstanding Class A Common Stock of
POWERTEL subsequent to implementation of the Plan of Reorganization and
distributed to WALLACE in accordance with Section 2.2(b) of this Agreement.
<PAGE> 187
Section 2.2(b) is hereby deleted in its entirety and new Section 2.2(b)
will read:
The Class A Common Stock held in escrow shall be restricted stock
pursuant to the Securities Act of 1933 and shall be separated into ten (10)
equal allotments, each of which shall be referred to as a 10 percent allotment.
The Escrow Agent shall release a 10 percent allotment at the end of the month in
which POWERTEL receives "Telecommunications Revenue," which for purposes of this
Agreement means the cash receipts actually received by POWERTEL, in excess of
$100,000. The Escrow Agent shall release an additional 10 percent allotment for
each additional incremental increase of $100,000 of Telecommunications Revenue
more than the month before. The 10 percent allotments shall be distributed to
WALLACE at no more than monthly intervals. To receive all ten allotments,
POWERTEL must receive Telecommunications Revenue in excess of $4.5 Million
within thirty months after the Confirmation Date as defined in POWERTEL's Plan
of Reorganization.
Section 2.2(c) is hereby deleted in its entirety and the new Section
2.2(c) will read:
(c) If shares remain in the escrow at the end of the thirty months,
then the escrow shall release the remaining shares within thirty (30) days. In
no event shall the Escrow Agent return the unissued shares to POWERTEL if the
Telecommunications Revenue exceeds $4.5 Million and provided WALLACE has paid in
full the Promissory Note in the amount $100,000 held in escrow by the Escrow
Agent. If the total Telecommunications Revenue is less than $4.5 Million, then
the remaining, unearned and unissued shares shall be returned to POWERTEL and
the earned 10 percent allotments shall be distributed to WALLACE upon payment in
full of the $100,000 Promissory Note.
<PAGE> 188
IN WITNESS WHEREOF, the POWERTEL, DIEGO TEL and WALLACE have signed
duplicate copies of this Addendum on this 8th day of June , 1998.
Signed in the Presence of:
POWERTEL USA, INC.
/s/ Wendy S. Burhard By: /s/ Richard Cascarilla
- ----------------------------------- ------------------------------------
Richard Cascarilla
Title: President
---------------------------
DIEGO TEL, INC.
By: /s/ David L. Wallace
- ----------------------------------- --------------------------------
David L. Wallace
Title: President
---------------------------
/s/ David L. Wallace
- ----------------------------------- --------------------------------
David L. Wallace, Individually
<PAGE> 189
Budget Report by Month
5/1/98 Through 12/31/98
Month 1
<TABLE>
<CAPTION>
5/1/98 5/31/98
Category Description Actual Budget Difference
<S> <C> <C> <C>
INFLOWS
Other Inc 0.00 0.00 0.00
Sales:
Wholesale:
Mexico 0.00 0.00 0.00
TOTAL Wholesale 0.00 0.00 0.00
TOTAL Sales 0.00 0.00 0.00
TOTAL INFLOWS 0.00 0.00 0.00
OUTFLOWS
Admin Services:
Bookkeeping 0.00 0.00 0.00
TOTAL Admin Services 0.00 0.00 0.00
Aero Harris 0.00 0.00 0.00
Auto:
Fuel 0.00 0.00 0.00
Insurance 0.00 0.00 0.00
TOTAL Auto 0.00 0.00 0.00
Bank Charge 0.00 25.00 25.00
Cost of Service:
VIVA MEX 0.00 24,000.00 24,000.00
TOTAL Cost of Service 0.00 24,000.00 24,000.00
Insurance:
Ins office 0.00 0.00 0.00
Insurance - Other 0.00 0.00 0.00
TOTAL Insurance 0.00 0.00 0.00
LA DACS Lease 0.00 0.00 0.00
LA SD Line 0.00 0.00 0.00
LA SD Service 0.00 0.00 0.00
Payroll:
Bookkeeper 0.00 0.00 0.00
Off Mgr 0.00 0.00 0.00
Sales Staff 0.00 0.00 0.00
Secretary 0.00 0.00 0.00
TOTAL Payroll 0.00 0.00 0.00
SD AeroRent 0.00 0.00 0.00
SD TJ Line 0.00 0.00 0.00
SD TJ Service 0.00 0.00 0.00
Tax:
State 0.00 0.00 0.00
Tax - Other 0.00 0.00 0.00
TOTAL Tax 0.00 0.00 0.00
Telephone:
Phone cellular 0.00 0.00 0.00
Phone long 0.00 0.00 0.00
Phone office 0.00 0.00 0.00
Telephone - Other 0.00 0.00 0.00
TOTAL Telephone 0.00 0.00 0.00
TJ Trunk 0.00 0.00 0.00
Utilities:
Gas & Electric 0.00 0.00 0.00
Water 0.00 0.00 0.00
TOTAL Utilities 0.00 0.00 0.00
Uncategorized Outflows 16,087.50 0.00 -16,087.50
TOTAL OUTFLOWS 16,087.50 24,025.00 7,937.50
OVERALL TOTAL -16,087.50 -24,025.00 7,937.50
</TABLE>
<PAGE> 190
Budget Report by Month
5/1/98 Through 12/31/98
Month 2
<TABLE>
<CAPTION>
6/1/98 6/30/98
Category Description Actual Budget Difference
<S> <C> <C> <C>
INFLOWS
Other Inc 0.00 0.00 0.00
Sales:
Wholesale:
Mexico 0.00 0.00 0.00
TOTAL Wholesale 0.00 0.00 0.00
TOTAL Sales 0.00 0.00 0.00
TOTAL INFLOWS 0.00 0.00 0.00
OUTFLOWS
Admin Services:
Bookkeeping 0.00 0.00 0.00
TOTAL Admin Services 0.00 0.00 0.00
Aero Harris 0.00 0.00 0.00
Auto:
Fuel 0.00 0.00 0.00
Insurance 0.00 0.00 0.00
TOTAL Auto 0.00 0.00 0.00
Bank Charge 0.00 25.00 25.00
Cost of Service:
VIVA MEX 0.00 126,000.00 126,000.00
TOTAL Cost of Service 0.00 126,000.00 126,000.00
Insurance:
Ins office 0.00 0.00 0.00
Insurance - Other 0.00 0.00 0.00
TOTAL Insurance 0.00 0.00 0.00
LA DACS Lease 0.00 0.00 0.00
LA SD Line 0.00 0.00 0.00
LA SD Service 0.00 0.00 0.00
Payroll:
Bookkeeper 0.00 0.00 0.00
Off Mgr 0.00 0.00 0.00
Sales Staff 0.00 0.00 0.00
Secretary 0.00 0.00 0.00
TOTAL Payroll 0.00 0.00 0.00
SD AeroRent 0.00 0.00 0.00
SD TJ Line 0.00 0.00 0.00
SD TJ Service 0.00 0.00 0.00
Tax:
State 0.00 1,200.00 1,200.00
Tax - Other 0.00 0.00 0.00
TOTAL Tax 0.00 1,200.00 1,200.00
Telephone:
Phone cellular 0.00 0.00 0.00
Phone long 0.00 0.00 0.00
Phone office 0.00 0.00 0.00
Telephone - Other 0.00 0.00 0.00
TOTAL Telephone 0.00 0.00 0.00
TJ Trunk 0.00 0.00 0.00
Utilities:
Gas & Electric 0.00 0.00 0.00
Water 0.00 0.00 0.00
TOTAL Utilities 0.00 0.00 0.00
Uncategorized Outflows 0.00 0.00 0.00
TOTAL OUTFLOWS 0.00 127,225.00 127,225.00
OVERALL TOTAL 0.00 -127,225.00 127,225.00
</TABLE>
<PAGE> 191
Budget Report by Month
5/1/98 Through 12/31/98
Month 3
<TABLE>
<CAPTION>
7/1/98 7/31/98
Category Description Actual Budget Difference
<S> <C> <C> <C>
INFLOWS
Other Inc 0.00 0.00 0.00
Sales:
Wholesale:
Mexico 0.00 250,000.00 -250,000.00
TOTAL Wholesale 0.00 250,000.00 -250,000.00
TOTAL Sales 0.00 250,000.00 -250,000.00
TOTAL INFLOWS 0.00 250,000.00 -250,000.00
OUTFLOWS
Admin Services:
Bookkeeping 0.00 100.00 100.00
TOTAL Admin Services 0.00 100.00 100.00
Aero Harris 0.00 15,000.00 15,000.00
Auto:
Fuel 0.00 200.00 200.00
Insurance 0.00 200.00 200.00
TOTAL Auto 0.00 400.00 400.00
Bank Charge 0.00 25.00 25.00
Cost of Service:
VIVA MEX 0.00 200,000.00 200,000.00
TOTAL Cost of Service 0.00 200,000.00 200,000.00
Insurance:
Ins office 0.00 300.00 300.00
Insurance - Other 0.00 300.00 300.00
TOTAL Insurance 0.00 600.00 600.00
LA DACS Lease 0.00 2,000.00 2,000.00
LA SD Line 0.00 2,500.00 2,500.00
LA SD Service 0.00 500.00 500.00
Payroll:
Bookkeeper 0.00 0.00 0.00
Off Mgr 0.00 1,000.00 1,000.00
Sales Staff 0.00 5,000.00 5,000.00
Secretary 0.00 0.00 0.00
TOTAL Payroll 0.00 6,000.00 6,000.00
SD AeroRent 0.00 5,000.00 5,000.00
SD TJ Line 0.00 5,000.00 5,000.00
SD TJ Service 0.00 500.00 500.00
Tax:
State 0.00 0.00 0.00
Tax - Other 0.00 200.00 200.00
TOTAL Tax 0.00 200.00 200.00
Telephone:
Phone cellular 0.00 200.00 200.00
Phone long 0.00 2,000.00 2,000.00
Phone office 0.00 500.00 500.00
Telephone - Other 0.00 3,500.00 3,500.00
TOTAL Telephone 0.00 6,200.00 6,200.00
TJ Trunk 0.00 2,500.00 2,500.00
Utilities:
Gas & Electric 0.00 1,000.00 1,000.00
Water 0.00 100.00 100.00
TOTAL Utilities 0.00 1,100.00 1,100.00
Uncategorized Outflows 0.00 0.00 0.00
TOTAL OUTFLOWS 0.00 247,625.00 247,625.00
OVERALL TOTAL 0.00 2,375.00 -2,375.00
</TABLE>
<PAGE> 192
Budget Report by Month
5/1/98 Through 12/31/98
Month 4
<TABLE>
<CAPTION>
8/1/98 8/31/98
Category Description Actual Budget Difference
<S> <C> <C> <C>
INFLOWS
Other Inc 0.00 15,000.00 -15,000.00
Sales:
Wholesale:
Mexico 0.00 750,000.00 -750,000.00
TOTAL Wholesale 0.00 750,000.00 -750,000.00
TOTAL Sales 0.00 750,000.00 -750,000.00
TOTAL INFLOWS 0.00 765,000.00 -765,000.00
OUTFLOWS
Admin Services:
Bookkeeping 0.00 100.00 100.00
TOTAL Admin Services 0.00 100.00 100.00
Aero Harris 0.00 15,000.00 15,000.00
Auto:
Fuel 0.00 200.00 200.00
Insurance 0.00 200.00 200.00
TOTAL Auto 0.00 400.00 400.00
Bank Charge 0.00 25.00 25.00
Cost of Service:
VIVA MEX 0.00 600,000.00 600,000.00
TOTAL Cost of Service 0.00 600,000.00 600,000.00
Insurance:
Ins office 0.00 300.00 300.00
Insurance - Other 0.00 300.00 300.00
TOTAL Insurance 0.00 600.00 600.00
LA DACS Lease 0.00 2,000.00 2,000.00
LA SD Line 0.00 2,500.00 2,500.00
LA SD Service 0.00 500.00 500.00
Payroll:
Bookkeeper 0.00 500.00 500.00
Off Mgr 0.00 1,500.00 1,500.00
Sales Staff 0.00 10,000.00 10,000.00
Secretary 0.00 0.00 0.00
TOTAL Payroll 0.00 12,000.00 12,000.00
SD AeroRent 0.00 5,000.00 5,000.00
SD TJ Line 0.00 5,000.00 5,000.00
SD TJ Service 0.00 500.00 500.00
Tax:
State 0.00 0.00 0.00
Tax - Other 0.00 400.00 400.00
TOTAL Tax 0.00 400.00 400.00
Telephone:
Phone cellular 0.00 200.00 200.00
Phone long 0.00 2,000.00 2,000.00
Phone office 0.00 500.00 500.00
Telephone - Other 0.00 0.00 0.00
TOTAL Telephone 0.00 2,700.00 2,700.00
TJ Trunk 0.00 2,500.00 2,500.00
Utilities:
Gas & Electric 0.00 1,000.00 1,000.00
Water 0.00 100.00 100.00
TOTAL Utilities 0.00 1,100.00 1,100.00
Uncategorized Outflows 0.00 0.00 0.00
TOTAL OUTFLOWS 0.00 650,325.00 650,325.00
OVERALL TOTAL 0.00 114,675.00 -114,675.00
</TABLE>
<PAGE> 193
Budget Report by Month
5/1/98 Through 12/31/98
Month 5
<TABLE>
<CAPTION>
5/1/98 9/30/98
Category Description Actual Budget Difference
<S> <C> <C> <C>
INFLOWS
Other Inc 0.00 15,000.00 -15,000.00
Sales:
Wholesale:
Mexico 0.00 1,000,000.00 -1,000,000.00
TOTAL Wholesale 0.00 1,000,000.00 -1,000,000.00
TOTAL Sales 0.00 1,000,000.00 -1,000,000.00
TOTAL INFLOWS 0.00 1,015,000.00 -1,015,000.00
OUTFLOWS
Admin Services:
Bookkeeping 0.00 100.00 100.00
TOTAL Admin Services 0.00 100.00 100.00
Aero Harris 0.00 15,000.00 15,000.00
Auto:
Fuel 0.00 200.00 200.00
Insurance 0.00 200.00 200.00
TOTAL Auto 0.00 400.00 400.00
Bank Charge 0.00 25.00 25.00
Cost of Service:
VIVA MEX 0.00 800,000.00 800,000.00
TOTAL Cost of Service 0.00 800,000.00 800,000.00
Insurance:
Ins office 0.00 300.00 300.00
Insurance - Other 0.00 300.00 300.00
TOTAL Insurance 0.00 600.00 600.00
LA DACS Lease 0.00 2,000.00 2,000.00
LA SD Line 0.00 2,500.00 2,500.00
LA SD Service 0.00 500.00 500.00
Payroll:
Bookkeeper 0.00 1,000.00 1,000.00
Off Mgr 0.00 2,000.00 2,000.00
Sales Staff 0.00 10,000.00 10,000.00
Secretary 0.00 500.00 500.00
TOTAL Payroll 0.00 13,500.00 13,500.00
SD AeroRent 0.00 5,000.00 5,000.00
SD TJ Line 0.00 5,000.00 5,000.00
SD TJ Service 0.00 500.00 500.00
Tax:
State 0.00 0.00 0.00
Tax - Other 0.00 700.00 700.00
TOTAL Tax 0.00 700.00 700.00
Telephone:
Phone cellular 0.00 200.00 200.00
Phone long 0.00 2,000.00 2,000.00
Phone office 0.00 500.00 500.00
Telephone - Other 0.00 0.00 0.00
TOTAL Telephone 0.00 2,700.00 2,700.00
TJ Trunk 0.00 2,500.00 2,500.00
Utilities:
Gas & Electric 0.00 1,000.00 100.00
Water 0.00 100.00 100.00
TOTAL Utilities 0.00 1,100.00 1,100.00
Uncategorized Outflows 0.00 0.00 0.00
TOTAL OUTFLOWS 0.00 852,125.00 852,125.00
OVERALL TOTAL 0.00 162,875.00 -162,875.00
</TABLE>
<PAGE> 194
Budget Report by Month
5/1/98 Through 12/31/98
Month 6
<TABLE>
<CAPTION>
10/1/98 10/31/98
Category Description Actual Budget Difference
<S> <C> <C> <C>
INFLOWS
Other Inc 0.00 15,000.00 -15,00.00
Sales:
Wholesale:
Mexico 0.00 1,250,000.00 -1,250,000.00
TOTAL Wholesale 0.00 1,250,000.00 -1,250,000.00
TOTAL Sales 0.00 1,250,000.00 -1,265,000.00
TOTAL INFLOWS 0.00 1,265,000.00 -1,265,000.00
OUTFLOWS
Admin Services:
Bookkeeping 0.00 100.00 100.00
TOTAL Admin Services 0.00 100.00 100.00
Aero Harris 0.00 15,000.00 15,000.00
Auto:
Fuel 0.00 200.00 200.00
Insurance 0.00 200.00 200.00
TOTAL Auto 0.00 400.00 400.00
Bank Charge 0.00 25.00 25.00
Cost of Service:
VIVA MEX 0.00 1,000,000.00 1,000,000.00
TOTAL Cost of Service 0.00 1,000,000.00 1,000,000.00
Insurance:
Ins office 0.00 300.00 300.00
Insurance - Other 0.00 300.00 300.00
TOTAL Insurance 0.00 600.00 600.00
LA DACS Lease 0.00 2,000.00 2,000.00
LA SD Line 0.00 2,500.00 2,500.00
LA SD Service 0.00 500.00 500.00
Payroll:
Bookkeeper 0.00 1,000.00 1,000.00
Off Mgr 0.00 2,500.00 2,500.00
Sales Staff 0.00 19,000.00 10,000.00
Secretary 0.00 1,000.00 1,000.00
TOTAL Payroll 0.00 14,500.00 14,500.00
SD AeroRent 0.00 5,000.00 5,000.00
SD TJ Line 0.00 5,000.00 5,000.00
SD TJ Service 0.00 500.00 500.00
Tax:
State 0.00 0.00 0.00
Tax - Other 0.00 900.00 900.00
TOTAL Tax 0.00 900.00 900.00
Telephone:
Phone cellular 0.00 200.00 200.00
Phone long 0.00 2,000.00 2,000.00
Phone office 0.00 500.00 500.00
Telephone - Other 0.00 0.00 0.00
TOTAL Telephone 0.00 2,700.00 2,700.00
TJ Trunk 0.00 2,500.00 2,500.00
Utilities:
Gas & Electric 0.00 1,000.00 1,000.00
Water 0.00 100.00 100.00
TOTAL Utilities 0.00 1,100.00 1,100.00
Uncategorized Outflows 0.00 0.00 0.00
TOTAL OUTFLOWS 0.00 1,053,325.00 1,053,325.00
OVERALL TOTAL 0.00 211,675.00 -211,675.00
</TABLE>
<PAGE> 195
Budget Report by Month
5/1/98 Through 12/31/98
Month 7
<TABLE>
<CAPTION>
11/1/98 11/30/98
Category Description Actual Budget Difference
<S> <C> <C> <C>
INFLOWS
Other Inc 0.00 15,000.00 -15,000.00
Sales:
Wholesale:
Mexico 0.00 1,500,000.00 -1,500,000.00
TOTAL Wholesale 0.00 1,500,000.00 -1,500,000.00
TOTAL Sales 0.00 1,500,000.00 -1,500,000.00
TOTAL INFLOWS 0.00 1,515,000.00 -1,515,000.00
OUTFLOWS
Admin Services:
Bookkeeping 0.00 100.00 100.00
TOTAL Admin Services 0.00 100.00 100.00
Aero Harris 0.00 15,000.00 15,000.00
Auto:
Fuel 0.00 200.00 200.00
Insurance 0.00 200.00 200.00
TOTAL Auto 0.00 400.00 400.00
Bank Charge 0.00 25.00 25.00
Cost of Service:
VIVA MEX 0.00 1,200,000.00 1,200,000.00
TOTAL Cost of Service 0.00 1,200,000.00 1,200,000.00
Insurance:
Ins office 0.00 300.00 300.00
Insurance - Other 0.00 300.00 300.00
TOTAL Insurance 0.00 600.00 600.00
LA DACS Lease 0.00 2,000.00 2,000.00
LA SD Line 0.00 2,500.00 2,500.00
LA SD Service 0.00 500.00 500.00
Payroll:
Bookkeeper 0.00 1,000.00 1,000.00
Off Mgr 0.00 2,500.00 2,500.00
Sales Staff 0.00 10,000.00 10,000.00
Secretary 0.00 1,500.00 1,500.00
TOTAL Payroll 0.00 15,000.00 15,000.00
SD AeroRent 0.00 5,000.00 5,000.00
SD TJ Line 0.00 5,000.00 5,000.00
SD TJ Service 0.00 500.00 500.00
Tax:
State 0.00 0.00 0.00
Tax - Other 0.00 1,000.00 1,000.00
TOTAL Tax 0.00 1,000.00 1,000.00
Telephone:
Phone cellular 0.00 200.00 200.00
Phone long 0.00 2,000.00 2,000.00
Phone office 0.00 500.00 500.00
Telephone - Other 0.00 0.00 0.00
TOTAL Telephone 0.00 2,700.00 2,700.00
TJ Trunk 0.00 2,500.00 2,500.00
Utilities:
Gas & Electric 0.00 1,000.00 1,000.00
Water 0.00 100.00 100.00
TOTAL Utilities 0.00 1,100.00 1,100.00
Uncategorized Outflows 0.00 0.00 0.00
TOTAL OUTFLOWS 0.00 1,253,925.00 1,253,925.00
OVERALL TOTAL 0.00 261,075.00 -261,075.00
</TABLE>
<PAGE> 196
Budget Report by Month
5/1/98 Through 12/31/98
Month 8
<TABLE>
<CAPTION>
12/1/98 12/31/98
Category Description Actual Budget Difference
<S> <C> <C> <C>
INFLOWS
Other Inc 0.00 15,000.00 -15,000.00
Sales:
Wholesale:
Mexico 0.00 1,750,000.00 -1,750,000.00
TOTAL Wholesale 0.00 1,750,000.00 -1,750,000.00
TOTAL Sales 0.00 1,750,000.00 -1,750,000.00
TOTAL INFLOWS 0.00 1,750,000.00 -1,765,000.00
OUTFLOWS
Admin Services:
Bookkeeping 0.00 100.00 100.00
TOTAL Admin Services 0.00 100.00 100.00
Aero Harris 0.00 15,000.00 15,000.00
Auto:
Fuel 0.00 200.00 200.00
Insurance 0.00 200.00 200.00
TOTAL Auto 0.00 400.00 400.00
Bank Charge 0.00 25.00 25.00
Cost of Service:
VIVA MEX 0.00 1,400,000.00 1,400,000.00
TOTAL Cost of Service 0.00 1,400,000.00 1,400,000.00
Insurance:
Ins office 0.00 300.00 300.00
Insurance - Other 0.00 300.00 300.00
TOTAL Insurance 0.00 600.00 600.00
LA DACS Lease 0.00 2,000.00 2,000.00
LA SD Line 0.00 2,500.00 2,500.00
LA SD Service 0.00 500.00 500.00
Payroll:
Bookkeeper 0.00 1,000.00 1,000.00
Off Mgr 0.00 2,500.00 2,500.00
Sales Staff 0.00 20,000.00 20,000.00
Secretary 0.00 1,500.00 1,500.00
TOTAL Payroll 0.00 25,000.00 25,000.00
SD AeroRent 0.00 5,000.00 5,000.00
SD TJ Line 0.00 5,000.00 5,000.00
SD TJ Service 0.00 500.00 500.00
Tax:
State 0.00 0.00 0.00
Tax - Other 0.00 1,000.00 1,000.00
TOTAL Tax 0.00 1,000.00 1,000.00
Telephone:
Phone cellular 0.00 200.00 200.00
Phone long 0.00 2,000.00 2,000.00
Phone office 0.00 500.00 500.00
Telephone - Other 0.00 0.00 0.00
TOTAL Telephone 0.00 2,700.00 2,700.00
TJ Trunk 0.00 2,500.00 2,500.00
Utilities:
Gas & Electric 0.00 1,000.00 1,000.00
Water 0.00 100.00 100.00
TOTAL Utilities 0.00 1,100.00 1,100.00
Uncategorized Outflows 0.00 0.00 0.00
TOTAL OUTFLOWS 0.00 1,463,925.00 1,463,925.00
OVERALL TOTAL 0.00 301,075.00 -301,075.00
</TABLE>
<PAGE> 197
Budget Report by Month
5/1/98 Through 12/31/98
Year Total
<TABLE>
<CAPTION>
12/1/98 12/31/98
Category Description Actual Budget Difference
<S> <C> <C> <C>
INFLOWS
Other Inc 0.00 75,000.00 -75,000.00
Sales:
Wholesale:
Mexico 0.00 6,500,000.00 -6,500,000.00
TOTAL Wholesale 0.00 6,500,000.00 -6,500,000.00
TOTAL Sales 0.00 6,500,000.00 -6,500,000.00
TOTAL INFLOWS 0.00 6,575,000.00 -6,575,000.00
OUTFLOWS
Admin Services:
Bookkeeping 0.00 600.00 600.00
TOTAL Admin Services 0.00 600.00 600.00
Aero Harris 0.00 90,000.00 90,000.00
Auto:
Fuel 0.00 1,200.00 1,200.00
Insurance 0.00 1,200.00 1,200.00
TOTAL Auto 0.00 2,400.00 2,400.00
Bank Charge 0.00 200.00 200.00
Cost of Service:
VIVA MEX 0.00 5,350,000.00 5,350,000.00
TOTAL Cost of Service 0.00 5,350,000.00 5,350,000.00
Insurance:
Ins office 0.00 1,800.00 1,800.00
Insurance - Other 0.00 1,800.00 1,800.00
TOTAL Insurance 0.00 3,600.00 3,600.00
LA DACS Lease 0.00 12,000.00 12,000.00
LA SD Line 0.00 15,000.00 15,000.00
LA SD Service 0.00 3,000.00 3,000.00
Payroll:
Bookkeeper 0.00 4,500.00 4,500.00
Off Mgr 0.00 12,000.00 12,000.00
Sales Staff 0.00 65,000.00 65,000.00
Secretary 0.00 4,500.00 4,500.00
TOTAL Payroll 0.00 86,000.00 86,000.00
SD AeroRent 0.00 30,000.00 30,000.00
SD TJ Line 0.00 30,000.00 30,000.00
SD TJ Service 0.00 3,000.00 3,000.00
Tax:
State 0.00 1,200.00 1,200.00
Tax - Other 0.00 4,200.00 4,200.00
TOTAL Tax 0.00 5,400.00 5,400.00
Telephone:
Phone cellular 0.00 1,200.00 1,200.00
Phone long 0.00 12,000.00 12,000.00
Phone office 0.00 3,000.00 3,000.00
Telephone - Other 0.00 3,500.00 3,500.00
TOTAL Telephone 0.00 19,700.00 19,700.00
TJ Trunk 0.00 15,000.00 15,000.00
Utilities:
Gas & Electric 0.00 6,000.00 6,000.00
Water 0.00 600.00 600.00
TOTAL Utilities 0.00 6,600.00 6,600.00
Uncategorized Outflows 16,087.50 0.00 -16,087.50
TOTAL OUTFLOWS 16,087.50 5,672,500.00 5,656,412.50
OVERALL TOTAL -16,087.50 902,500.00 -918,587.50
</TABLE>
<PAGE> 198
RICHARD A. CASCARILLA, ESQ., has practiced law in the State of Michigan since
1981 and is a former partner in the law firm of Cascarilla & Brogan. He was
named Secretary and Treasurer of the PowerTel in November, 1990 and has served
as the PowerTel's General Counsel. Mr. Cascarilla was a director until May,
1996. From May until September 1996, Mr. Cascarilla served as an officer of the
PowerTel until he was terminated by the management of the PowerTel. As described
in the Disclosure Statement, in December, 1996, the Series B Preferred
Shareholders elected one director to take control of the PowerTel due to the
continuing default of Golden Chance. Mr. Kassouff was the director elected. Mr.
Kassouff then appointed two temporary directors to serve until further notice.
One of those directors was Mr. Cascarilla. After the order adjudicating PowerTel
a chapter 11 debtor, management filed a motion to restore the debtor to
possession which motion was granted. Since September, 1997, Mr. Cascarilla has
been serving as President of PowerTel and has been reporting to the bankruptcy
court on a regular basis regarding the reorganization effort.
MICHAEL KASSOUFF first became a director of PowerTel in June, 1992. Mr. Kassouff
is co-owner and operations manager of Guaranteed Builders, Inc., and has acted
as a professional real estate developer and investor for over a decade. Mr.
Kassouff is a limited partner of Nevada Geothermal Power Partners. Mr. Kassouff
resigned as a director in May, 1996. In December, 1996, Mr. Kassouff was named
by the Series B Preferred Shareholders to take control of the PowerTel due to
the continuing default of Golden Chance. Mr. Kassouff continues to serve as a
director and it is anticipated that he will be re-elected as a director at the
next annual meeting of PowerTel.
JEFFREY E HARTMAN was a director of the PowerTel from November 1, 1992 until
May, 1996. Hartman has practiced law in the State of Nevada since 1982 and is a
partner in the law firm of Hartman & Armstrong, Ltd. It is anticipated that Mr.
Hartman will be elected as a director at the next annual meeting of PowerTel.
<PAGE> 199
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into on the 26th day of August,
1998, by and between Powertel USA, Inc., a Delaware Corporation (the "Company")
and Richard Cascarilla, an individual residing in Mason, Michigan (the
"Executive").
WHEREAS, the Board of Directors of the Company (the "Board") desires to
secure for the Company the services of the Executive on the terms and conditions
set forth herein; and
WHEREAS, the Executive desires to provide such services on the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants, terms and conditions hereinafter set forth, and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Company and
the Executive hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Executive as its
President and Chief Executive Officer, and the Executive hereby accepts
employment from the Company in such position for the term set forth below and
upon conditions provided herein.
2. THE EXECUTIVE'S DUTIES.
(a) The Executive hereby agrees to perform competently and diligently
the duties of the office of President of the Company, including such executive
duties as may be reasonably required from time to time by the Board.
(b) The Executive agrees to observe and comply with all rules,
regulations, policies and practices adopted by the Company, either orally or in
writing, both as they now exist and as they may be adopted or modified from time
to time.
3. TERM. The term of this Employment Agreement shall commence as of
August 26, 1998 and shall end on August 25, 2001, unless earlier terminated
pursuant to Paragraph 6. or 7. below.
4. COMPENSATION. In consideration of the services to be rendered
hereunder by the Executive, the Company hereby agrees to pay compensation to the
Executive as follows:
(a) During the first contract year hereunder (i.e., from August 26,
1998 to August 26, 1999), a base salary in the amount of EIGHTY-FOUR THOUSAND
DOLLARS, ($84,000.00). During the second contract year hereunder (i.e., from
August 26, 1999 to August 26, 2000), a base salary in the amount of NINETY-TWO
THOUSAND DOLLARS, ($92,000.00). During the third contract year hereunder (i.e.,
from August 26, 2000 to August 26, 2001), a base salary in the amount of ONE
HUNDRED
<PAGE> 200
THOUSAND DOLLARS, ($100,000.00). Such a salary, less customary deductions for
withholding and other charges, shall be payable on the Company's customary pay
days.
(b) In addition, the Executive will receive a bonus, depending upon
the Company's operating results of $15,000.00 for each $1 million of earnings
before interest, taxes, depreciation, amortization and such bonuses ("EBITDAB")
as generated by the Company during any fiscal year beginning on August 26,
1998.
5. FRINGE BENEFITS.
(a) The Company agrees to reimburse the Executive for the expense
incurred by the Executive in connection with the performance of his
duties hereunder. (b) The Executive shall also be provided health
insurance and a life insurance policy of an amount not less than the
total amount of this contract. Executive shall also be entitled to
three (3) weeks of vacation each year.
6. TERMINATION. Notwithstanding anything to the contrary contained
herein, the Company may terminate this Employment Agreement, the Executive's
employment hereunder, and all compensation due to the Executive pursuant to
Paragraph 4. above at any time for "just cause". For purposes of this agreement,
termination for "just cause" shall mean: (a) a termination due to malfeasance or
nonfeasance by the Executive in the performance of this duties for which he is
employed, in either such instance so as to cause harm to the Company; (b) a
termination due to the Executive's committing fraud, misappropriation or
embezzlement in the performance of his duties as an employee of the Company; (c)
a termination due to the Executive's committing any felony for which he is
convicted and which, as determined in good faith by the Board, constitutes a
crime involving moral turpitude, which causes harm to the Company; or (d) a
substantial breach of any of the terms of this Employment Agreement.
7. TERMINATION UPON DEATH. If the Executive shall die before the
expiration of term hereof, this Employment Agreement shall terminate and the
Company shall have no further obligation hereunder to the Executive, except that
the Company shall pay to the Executive's estate the amount of any earned but
unpaid compensation pursuant to Paragraph 4. above to the date of death.
8. ENTIRE AGREEMENT. This Employment Agreement constitutes the entire
agreement of the parties with regard to the subject matter hereof, and contains
all of the covenants, promises, representations, warranties and agreements
between the parties with respect to the employment of the Executive by the
Company. Any modification of this Employment Agreement will be effective only if
it is in writing and signed by the party to be charged.
9. SEVERABILITY. Any determination by the court of competent
jurisdiction that any provision herein contained is invalid or unenforceable
shall not affect the validity or the enforceability of any other provision of
this Employment Agreement.
<PAGE> 201
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the day and year first above written.
POWERTEL USA, INC.
By: ________________________________________
Richard A. Cascarilla, President
By: ________________________________________
Michael R. Kassouff, Secretary/Treasurer
<PAGE> 202
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into on the 26th day of August,
1998, by and between Powertel USA, Inc., a Delaware Corporation (the "Company")
and Michael R. Kassouff, an individual residing in Houston, Texas (the
"Executive").
WHEREAS, the Board of Directors of the Company (the "Board") desires
to secure for the Company the services of the Executive on the terms and
conditions set forth herein; and
WHEREAS, the Executive desires to provide such services on the terms
and conditions set forth herein;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants, terms and conditions hereinafter set forth, and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Company
and the Executive hereby agree as follows:
1. Employment. The Company hereby employs the Executive as its
Secretary/Treasurer, and the Executive hereby accepts employment from the
Company in such position for the term set forth below and upon conditions
provided herein.
2 THE EXECUTIVE'S DUTIES.
(a) The Executive hereby agrees to perform competently and diligently
the duties of the office of Secretary/Treasurer of the Company, including such
executive duties as may be reasonably required from time to time by the Board.
(b) The Company acknowledges that, during the term hereof, the
Executive's duties will be performed on a part-time basis, and the Executive's
construction business will require considerable time and attention by the
Executive. Nevertheless, the Executive agrees to be reasonably available to the
Company and will comply with the Company's reasonable requests for his presence
in Reno, Nevada or any other places deemed necessary by the Corporation.
(c) The Executive agrees to observe and comply with all rules,
regulations, policies and practices adopted by the Company, either orally or in
writing, both as they now exist and as they may be adopted or modified from
time to time.
3. TERM. The term of this Employment Agreement shall commence as of
August 26, 1998 and shall end on August 25, 2001, unless earlier terminated
pursuant to Paragraph 6. or 7. below.
4. COMPENSATION. In consideration of the services to be rendered
hereunder by the Executive, the Company hereby agrees to pay compensation to
the Executive as follows:
<PAGE> 203
(a) During the first contract year hereunder (i.e., from August 26,
1998 to August 26, 1999), a base salary in the amount of EIGHTEEN THOUSAND
DOLLARS, ($18,000.00). During the second contract year hereunder (i.e., from
August 26, 1999 to August 26, 2000), a base salary in the amount of TWENTY-FOUR
THOUSAND DOLLARS, ($24,000.00). During the third contract year hereunder (i.e.,
from August 26, 2000 to August 26, 2001), a base salary in the amount of Thirty
Thousand Dollars, ($30,000.00). Such a salary, less customary deductions for
withholding and other charges, shall be payable on the Company's customary pay
days.
(b) In addition, the Executive will receive a bonus, depending upon
the Company's operating results of $10,000.00 for each $1 million of earnings
before interest, taxes, depreciation, amortization and such bonuses ("EBITDAB")
as generated by the Company during any fiscal year beginning on August 26,
1998.
5. FRINGE BENEFITS.
(a) The Company agrees to reimburse the Executive for the expense
incurred by the Executive in connection with the performance of his duties
hereunder.
(b) The Executive shall also be provided health insurance and a life
insurance policy of an amount not less than the total amount of this contract.
6. TERMINATION. Notwithstanding anything to the contrary contained
herein, the Company may terminate this Employment Agreement, the Executive's
employment hereunder, and all compensation due to the Executive pursuant to
Paragraph 4. above at any time for "just cause". For purposes of this
agreement, termination for "just cause" shall mean: (a) a termination due to
malfeasance or nonfeasance by the Executive in the performance of this duties
for which he is employed, in either such instance so as to cause harm to the
Company; (b) a termination due to the Executive's committing fraud,
misappropriation or embezzlement in the performance of his duties as an
employee of the Company; (c) a termination due to the Executive's committing
any felony for which he is convicted and which, as determined in good faith by
the Board, constitutes a crime involving moral turpitude, which causes harm to
the Company; or (d) a substantial breach of any of the terms of this Employment
Agreement.
7. TERMINATION UPON DEATH. If the Executive shall die before the
expiration of term hereof, this Employment Agreement shall terminate and the
Company shall have no further obligation hereunder to the Executive, except
that the Company shall pay to the Executive's estate the amount of any earned
but unpaid compensation pursuant to Paragraph 4. above to the date of death.
8. ENTIRE AGREEMENT. This Employment Agreement constitutes the entire
agreement of the parties with regard to the subject matter hereof, and contains
all of the covenants, promises, representations, warranties and agreements
between the parties with respect to the employment of the Executive by the
Company. Any modification of this Employment Agrement will be effective only if
it is in writing and signed by the party to be charged.
<PAGE> 204
9. SEVERABILITY. Any determination by the court of competent
jurisdiction that any provision herein contained is invalid or unenforceable
shall not affect the validity or the enforceability of any other provision of
this Employment Agrement.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the day and year first above written.
POWERTEL USA, INC.
By: ________________________________________
Richard A. Cascarilla, President
By: ________________________________________
Michael R. Kassouff, Secretary/Treasurer
<PAGE> 1
Exhibit 2b
STEPHEN R. HARRIS, ESQ.
BELDING, HARRIS & PETRONI, LTD.
Nevada Bar No. 001463
417 West Plumb Lane
Reno, Nevada 89509
Telephone: (702) 786-7600
Facsimile: (702) 786-7764
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEVADA
IN RE:
POWERTEL USA, INC.,
formerly known as Case No. BK-97-30265-BMG
NEVADA ENERGY COMPANY, INC., (Chapter 11)
also formerly known as
MUNSON GEOTHERMAL, INC.,
Debtor. Hrg. DATE: August 25,1998
and TIME: 10:00 a.m.
Est Time: 1 day
Set By: Judge Goldwater
________________________________/
DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION
PowerTel USA, Inc. (generally referred to as "Debtor" but sometimes
referred to as "PowerTel"), a Delaware corporation, currently operating as
Debtor-in-Possession pursuant to 11 U.S.C. Section 1107 of the United States
Bankruptcy Code (the "Bankruptcy Code"), does hereby propose the following
DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION ("Plan") for the resolution of
Debtor's outstanding Allowed Claims and Equity Interests.
NOTE: Capitalized terms are defined in Article 11 of this Plan.
<PAGE> 2
ARTICLE I: INTRODUCTION
Debtor is a Delaware corporation established in 1983. When
incorporated, the Debtor was known as Munson Geothermal, Inc. ("Munson"). In May
1988, Munson (together with its wholly owned subsidiary) filed a Petition for
Reorganization pursuant to Chapter 11 of the Bankruptcy Code (the "Munson
Reorganization"). The Munson Reorganization resulted in the confirmation of a
FIRST AMENDED PLAN OF REORGANIZATION submitted by Mr. Jeffrey Antisdel and Hot
Springs Power Company. The Plan was confirmed in or about November 1990, and the
Debtor's name was changed to Nevada Energy Company, Inc. ("Debtor").
From November 1990 through May 1996, Debtor conducted business under
the leadership of Mr. Antisdel. As of May 1996, Debtor existed as a publicly
traded company current with respect to all filings required to be made with the
Securities and Exchange Commission ("SEC") pursuant to the Securities Exchange
Act of 1934 ("Exchange Act"). In addition, Debtor was financially solvent with
net assets in excess of $4,000,000 and was intermittently profitable. In March
1996, Debtor entered into an agreement to sell preferred shares to Waterford
Trust Company, Ltd. As part of that transaction, the Shareholders and Directors
of Debtor consented to a change of control. As a result, in May 1996, the Board
of Directors of Debtor resigned and was replaced by Directors designated by
Waterford's nominee, Golden Chance, Ltd.
From May 1996 through February 13, 1997 (the day of the commencement of
this proceeding), the financial affairs of Debtor declined significantly. Among
other things, the Debtor Board, aided and abetted by various third parties,
entered into a series of contracts and transactions which dissipated corporate
assets; revenue declined significantly; the Company was unable to pay its debts
as they became due; and the Company failed to file reports mandated by the
Exchange Act.
<PAGE> 3
There was even an attempt to amend the Debtor's Articles of Incorporation
without securing requisite shareholder approval.
As a consequence of this decline in Debtor's financial condition,
pursuant to section 303 of the Bankruptcy Code, on February 13, 1997, multiple
creditors initiated a legal proceeding to cause the Debtor to be involuntarily
reorganized pursuant to Chapter 11 of the Bankruptcy Code. As a result of the
forced reorganization, the following events occurred:
1. On or about March 3, 1997, the Court appointed an interim Trustee to
administer the affairs of the Debtor.
2. There was a change of control with respect to the Debtor's Board of
Directors, and new management was elected.
3. On or about September 24, 1997, the Court authorized the Debtor to
function as a Debtor-in-Possession pursuant to section 1107 of the Bankruptcy
Code.
This FIRST AMENDED PLAN OF REORGANIZATION is submitted by the Debtor
and is intended to constitute a full and final resolution of Debtor's Allowed
Claims and Equity Interests. Each Claim and Equity Interest will be allocated
into one of ten separate Classes. Eight of the Classes will be for Allowed
Claims, four of which will be Impaired. One Class will be for Disputed Claims.
One Class will be for Equity Interests.
In developing this Plan, the Board of Directors of Debtor examined the
affairs of Debtor and its predecessor-in-name - Debtor. Based upon that
examination, the Board has concluded that Debtor must develop a new business
plan and this business plan should seek to develop the telecommunications
business opportunities initially brought to Debtor through its acquisition of
<PAGE> 4
Telecom Technologies, Inc. ("TTI") in August 1996. Debtor also plans to continue
exploring business opportunities or its cogeneration assets.
In designing its business plan, the Board took into consideration
various factors including, but not limited to, the substantial equity position
held by Nevada Energy Partners I, a Nevada limited partnership ("NEP") (which is
equal to 50.0% of the issued and outstanding Class A Common Stock of Debtor) and
the potential impact of the claim of $6,000,000 lodged by NEP upon the estate of
Debtor.
In negotiating with NEP and others, Debtor was not in a position of
economic strength and, therefore, some of the negotiations may not have been
conducted on an arm's length basis.
Nevertheless, on balance, taking all factors into consideration,
Debtor's Board has determined that the Plan, as presented, is reasonable and
fair and, in the business judgment of the Board, represents the best opportunity
for Debtor's Creditors and shareholders to recoup their investment.
The Plan is predicated upon several events transpiring as anticipated,
including (but not limited to) the following:
1. Successful implementation of the Debtor's new Business Plan,
which anticipates that the Debtor will shift emphasis from
energy co-generation to telecommunications. As part of this
new Business Plan, the Debtor anticipates that it may issue up
to 35.0% of its Class A Common Stock to one individual in
conjunction with a start-up telecommunications company;
2. Execution of the Settlement and Release Agreement by all
Parties to that Agreement, including the Debtor, NEP, Nevada
Electric Power Company and others (the "NEP Settlement");
<PAGE> 5
3. Ratification of the NEP Settlement by the Bankruptcy Court;
4. Confirmation of this Plan as submitted;
5. Utilization of the Debtor's cogeneration assets as collateral
for Letters of Credit or otherwise securing working capital to
fund or secure payment of the Debtor's current and future
business operations, especially the telecommunication
business;
6. Preparation and filing of all reports required to be filed
pursuant to the Exchange Act;
7. Approval of an application to be filed by the Debtor with the
National Association of Securities Dealers, Inc. ("NASD")
relisting the Debtor's Class A Common Stock as a "small cap"
security;
8. The resumption of an active secondary market through the NASD
for the Debtor's Class A Common Stock; and
9. The recision of all Common and Preferred Stock allegedly
issued subsequent to May 3, 1996 by Debtor and recision of the
1:6 reverse stock split attempted in January 1997.
Should any one or more of these events not transpire, DEBTOR'S FIRST
AMENDED PLAN OF REORGANIZATION will have to be reconsidered and, perhaps,
revised and amended. There is, of course, no assurance or guaranty that any one
or all of the above events will transpire as desired.
As a result of events 1 and 2 above, the Debtor will issue Class A
Common Stock to a total of 16 persons or entities in an amount equal to 50.0% of
the issued and outstanding Class A Common Stock on the Effective Date. An
additional 35.0% of the Class A Common Stock may be
<PAGE> 6
issued pursuant to the Diego Tel share exchange agreement. These events may have
long term implications for the remaining shareholders.
ARTICLE II: DEFINITIONS:
As used in the Plan, the following special terms have the respective
meanings set forth below:
2.1 Administration Claimant: Any Person entitled to payment of an
Administration Expense.
2.2 Administration Expense: Any cost or expense of administration of
the Chapter 11 case entitled to priority pursuant to section 507(a)(1) and
allowed pursuant to section 503(b) of the Bankruptcy Code, including without
limitation, any actual and necessary expenses of preserving the Debtor's estate,
and actual and Debtor expenses of operating the business of the Debtor
(including the post-petition compensation of Officers and Directors of Debtor),
any indebtedness or obligations incurred by or assessed against the Debtor in
Debtor with the conduct of its business, or for the acquisition or lease of
property or for providing of services to the Debtor, and allowances of
compensation or reimbursement of expenses to the extent allowed by the
Bankruptcy Court under the Bankruptcy Code, and any fees or charges assessed
against the Debtor's estate pursuant to Title 28, Chapter 123 United States
Code.
2.3 Affiliates: Every other entity which is an "affiliate" of Debtor
within the meaning of section 101(2) of the Bankruptcy Code.
2.4 Allowed Claim and/or Allowed Equity Interest: Any Claim against or
Equity Interest in the Debtor, proof of which was filed on or before the last
date designated by the Bankruptcy Court as the last date for filing Proofs of
Claims or Equity Interest or (if no proof of claim or Equity
<PAGE> 7
Interest is filed) which has been or hereafter is listed by the Debtor as
liquidated in amount and not disputed or contingent and, in either case, a Claim
or Equity Interest as to which no objection to the allowance thereof has been
interposed or such Claim or Equity Interest has been allowed in whole or in part
by a Final Order. Unless otherwise specified in the Plan, "Allowed Claim" shall
not, for the purposes of computation of Distributions under the Plan, include
post-petition interest on the amount of such Claim.
2.5 Allowed Priority Tax Claim: A Priority Tax Claim to the extent
that it is or has become an Allowed Claim, which in any event shall be reduced
by the amount of any offsets, credits, or refunds to which the Debtor or
Debtor-in-Possession shall be entitled on the Confirmation Date.
2.6 Allowed Secured Claim: A Secured Claim to the extent it is or has
become an Allowed Claim.
2.7 Allowed Unsecured Claim: An Unsecured Claim to the extent it is or
has become an Allowed Claim.
2.8 Bankruptcy Code: The Bankruptcy Reform Act of 1978, as amended and
codified as Title 11, United States Code.
2.9 Bankruptcy Court: The unit of the United States District Court for
the District of Nevada having jurisdiction over the Chapter 11 case, or in the
event such court ceases to exercise jurisdiction over the Chapter 11 case, such
court or adjunct thereof that exercises jurisdiction over Chapter 11 cases in
lieu of the United States Bankruptcy Court for the District of Nevada.
2.10 Bankruptcy Rules: The Federal Rules of Bankruptcy Procedure (as
amended), as applicable to the Chapter 11 cases.
<PAGE> 8
2.11 CEC: Combustion Energy Company, a Nevada corporation with its
principal place of business in Reno, Nevada.
2.12 Cash: Cash, cash equivalents and other readily marketable
securities or instruments issued by a person other than Debtor, including,
without limitation, readily marketable direct obligations of the United States
of America, certificates of deposit issued by banks and commercial paper of any
entity, including interest accrued or earned thereon.
2.13 Chapter 11 Case: The case being conducted pursuant to Chapter 11
of the United States Bankruptcy Code in which Debtor is the Debtor-in-Possession
and identified as Case No. 97-30265-BMG.
2.14 Claim: Any right to payment from the Debtor, which night arose on
or before the Petition Date, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
legal, equitable, secured or unsecured; or any right to an equitable remedy for
future performance if such breach gives rise to a right of payment from the
Debtor, whether or not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured, disputed, undisputed, secured or unsecured.
2.15 Class A Common Stock: The Class A Common Stock of Debtor.
2.16 Class B Common Stock: The Class B Common Stock of Debtor
previously issued by Debtor pursuant to the Munson Reorganization.
2.17 Confirmation Date: The Date upon which the Bankruptcy Court shall
enter the Confirmation Order; provided, however, that if on motion the
Confirmation Order or consummation of the Plan is stayed pending appeal, then
the Confirmation Date shall be the date of entry of the Final Order vacating
such stay or the date on which such stay expires and is no longer in effect.
<PAGE> 9
2.18 Creditor: Any person that has a Claim against the Debtor that
arose on or before the Petition Date.
2.19 Debtor: Debtor, formerly known as Nevada Energy Company, Inc.
("Debtor") and also formerly known as Munson Geothermal, Inc. ("Munson").
2.20 Debtor-in-Possession: Debtor, as Debtor-in-Possession.
2.21 "Debtor's First Amended Disclosure Statement" means the written
DEBTOR'S FIRST AMENDED DISCLOSURE STATEMENT with respect to this Second Amended
Plan which is approved by the Bankruptcy Court under Section 1125 of the
Bankruptcy Code.
2.22 Declaration Date: The thirtieth (30th) day after the Confirmation
Date.
2.23 Diego Tel: Diego Tel, Inc. a Nevada corporation to be acquired by
Debtor.
2.24 Disputed Claim: Equity Interests or Claims against the Debtor
which (a) are listed in a "Schedule of Unresolved Claims" which may be filed
with the Bankruptcy Court by the Debtor on or before the Confirmation Date, or
(b) are the subject of an objection which has been filed on or before the
Effective Date by a party-in-interest and which objection has not been withdrawn
or resolved by entry of a Final Order on or before the Effective Date or (c) are
identified in the Debtor's Schedules as contingent, unliquidated or disputed.
2.25 Distributions: The property required by the Plan to be distributed
to the holders of Allowed Claims and Allowed Equity Interests.
2.26 Effective Date: Date upon which certain Distributions to be made
pursuant to the Plan will be effected, which date shall be on the first business
day following the expiration of one hundred twenty (120) days following the
Confirmation Date.
<PAGE> 10
2.27 Equity Interest: Any interest in the Debtor represented by
ownership of Common and/or Preferred Stock.
2.28 Exchange Act: The Securities Exchange Act of 1934, as amended and
codified in 15 USC Section 78b, et. seq.
2.29 Final Order: An order of judgment of the Bankruptcy Court which
has not been reversed, stayed, modified or amended and as to which (a) any
appeal that has been taken has been finally determined or dismissed, or (b) the
time for appeal has expired and no notice of appeal has been filed.
2.30 Impaired: As defined by 28 U.S.C. Section 1124.
2.31 Munson Reorganization: The 1988 Chapter 11 case involving Munson
Geothermal, Inc. and referenced as Case No. 88-278.
2.32 NEP: Nevada Energy Partners I, Limited Partnership, a limited
partnership organized pursuant to the laws of the State of Nevada. The general
partner is Nevada Electric Power Company.
2.33 NEP Agreement: The August 16, 1996 Agreement between NEP and
Debtor.
2.34 NEP Settlement: The Settlement and Release Agreement dated as of
December 1, 1997 by and among the Debtor, NEP and others.
2.35 NEPC Indemnification: The Indemnification Agreement dated as of
December 1, 1997 by and among Nevada Electric Power Company, the Debtor and
others.
2.36 Ownership Settlement Agreement: The Settlement and Release
Agreement dated as of February 10, 1998 by and among Mr. John Vogel, Mr. Dean
Chamberlain, the Debtor, Mr. David Wallace and others.
<PAGE> 11
2.37 Payment Date: Date upon which certain payments to be made pursuant
to the Plan will be effected, which date shall be the first business day
following the expiration of the three hundred sixty five (365) days following
the Confirmation Date.
2.38 Person: An individual, a corporation, a partnership, an
association, a joint stock company, a joint venture, an estate, a trust, an
unincorporated organization or a government or any particular subdivision
thereon or other entity.
2.39 Petition Date: February 13, 1997, the date of filing of the
involuntary bankruptcy petition.
2.40 Plan: This Debtor's First Amended Disclosure Statement, either in
its present form or as it may be altered, amended, or modified from time to
time.
2.41 Debtor: PowerTel USA, Inc., the Debtor.
2.42 Pre 1990 Priority Tax Claim: Any Priority Tax Claim arising prior
to 1990 and which was the subject of the Debtor's First Amended Plan of
Reorganization adjusted in the Munson Reorganization.
2.43 Priority Tax Claim: Any Claim entitled to priority in payment
under section 507(a)(8) of the Bankruptcy Code.
2.44 Pro Rata: Proportionately so that the ratio of the amount of a
particular claim or interest to the total amount of Allowed Claims or Allowed
Equity Interests of the class in which the particular Claim or Interest is
included is the same as the ratio of the amount of consideration distributed on
account of such particular claim or interest to the consideration distributed on
account of Allowed Claim or Allowed Equity Interest of the class in which the
particular claim or interest is included.
<PAGE> 12
2.45 Secured Claim: A right to payment from the Debtor, other than an
Administration Expense or Priority Tax Claim, for a prepetition debt to the
extent that it is validly and property secured, in accordance with applicable
law, by any form of collateral, real, personal, intangible or tangible, which is
evidenced by a timely filed proof of claim or by Debtor's Schedules.
2.46 SEC: The United States Securities and Exchange Commission.
2.47 Schedules: Schedules and Statement of Affairs, as amended, filed
by the Debtor with the Bankruptcy Court listing liabilities and assets.
2.48 Unsecured Creditor: Any Creditor that holds a Claim which is not a
Secured Claim.
2.49 VivaTel: Viva Telecommunications, Inc., a Nevada corporation to be
acquired by the Debtor.
2.50 Voting Shareholder: Any shareholder of record on May 21, 1998
holding Class A Common Stock except any shareholder who acquired Class A Common
Stock subsequent to May 3, 1996 and who (a) failed to file a Proof of Interest;
or (b) has filed a Proof of Interest which Proof of Interest has been disputed
by Debtor.
2.51. Wage Claim: A claim for wages due, payable and earned prior to
the Petition Date.
ARTICLE III. CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS
Claims and Equity Interests are classified as follows:
Class 1 - Administration Expenses.
Class 2 - Allowed Wage Claims.
Class 3 - Allowed Munson Reorganization Priority Tax Claims.
Class 4 - Allowed Priority Tax Claims.*
Class 5 - Allowed Claims of Secured Creditors.*
<PAGE> 13
Class 6 - Allowed Unsecured Claims Not in Excess of $1,200.
Class 7 - Allowed Unsecured Claims in Excess of $1,200.*
Class 8 - Claims of NEP, NEPC and others.*
Class 9 - Disputed Claims.
Class 10 - Allowed Equity Interests.
* Denotes a class whose Claims are deemed to be "Impaired" pursuant to
section 1124 of the Bankruptcy Code.
ARTICLE IV. PROVISIONS FOR PAYMENT OF ADMINISTRATION EXPENSES CLAIM (CLASS 1)
4.1 100% Payment. On the Effective Date, each Allowed Administration
Expense shall be paid in full in Cash or upon such other terms as may be agreed
upon by and between any Administration Claimant and the Debtor, provided,
however, that Administration Expenses representing indebtedness or other
obligations incurred or assumed by the Debtor-in-Possession shall be assumed and
paid or performed by the Debtor in accordance with the terms and conditions of
any agreements relating thereto.
4.2 Post-Confirmation Administration Expenses. Debtor shall pay
post-confirmation Administration Expenses, including fees for professional
services, out of cash flow from operations and other assets without further
approval of the Bankruptcy Court.
4.3 Bar Date for Fee Claim. The Confirmation Order shall provide a Bar
Date for filing of claims by those entities asserting claims for compensation
pursuant to section 330 and/or section 503 of the Bankruptcy Code.
<PAGE> 14
ARTICLE V. PROVISIONS FOR PAYMENT OF ALLOWED WAGE CLAIMS (CLASS 2)
5.1 100% Payment. On the Effective Date, each Allowed Wage Claim shall
be paid in full in Cash or upon such other terms as may be agreed upon by and
between any Allowed Wage Claimant and the Debtor.
ARTICLE VI. PROVISIONS FOR PAYMENT OF ALLOWED MUNSON REORGANIZATION PRIORITY
TAX CLAIMS (CLASS 3)
6.1 100% Payment. On the Effective Date, each Munson Reorganization
Allowed Priority Tax Claim that arose prior to 1990 and which was Allowed in the
Munson DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION shall be paid in full in
Cash or upon such other terms as may be agreed upon by and between any Munson
Reorganization Allowed Priority Tax Claimant and the Debtor.
ARTICLE VII. PROVISIONS FOR PAYMENT OF ALLOWED PRIORITY TAX CLAIMS (CLASS 4)
7.1 Amortized Payment of Allowed Priority Tax Claims. The Allowed
Priority Tax Claims not included in Article VI of this Plan shall be paid in
full in Cash together with interest at a rate to be determined by the Bankruptcy
Court in equal quarterly installments, the first installment to be made on the
Payment Date over a term consisting of sixteen (16) consecutive quarters ending
four (4) years after the Payment Date or upon such other terms as may be agreed
upon by and between any Allowed Priority Tax Claimant and the Debtor.
ARTICLE VIII. PROVISIONS FOR PAYMENT OF ALLOWED SECURED CLAIMS (CLASS 5)
8.1 Payment to Allowed Secured Creditors. Each Allowed Secured Claim
will be paid in full in Cash on the Effective Date. Alternatively, at the
Debtor's sole option, any Allowed Secured
<PAGE> 15
Claim, together with interest at a rate to be determined by the Bankruptcy
Court, shall be paid in equal monthly installments, the first installment to be
made on the Payment Date and continuing over a term consisting of thirty (30)
months or upon such other terms as may be agreed upon by and between the Secured
Creditor(s) and the Debtor.
ARTICLE IX. PROVISIONS FOR PAYMENT OF ALLOWED UNSECURED CLAIMS NOT EXCEEDING
$1,200 (CLASS 6)
9.1 100% Payment. On the Effective Date, each Allowed Unsecured Claim
not in excess of $1,200 (a "Class 6 Claim") shall be paid in full in Cash or
upon such other terms as may be agreed upon by and between any Claimant holding
a Class 6 Claim and the Debtor.
9.2 Election to Receive Class A Common Stock. Each Claimant holding a
Class 6 Claim, in lieu of a Cash payment as provided in Section 9.1 of this
Plan, may elect in writing as provided in Article XII of the Disclosure
Statement on or before the Declaration Date to receive Class A Common Stock
computed as follows:
C6 x 120% = F
F/(divided by) AVP = NS
where:
C6 = The dollar amount of the Allowed Class 6 Claim
F = Proceeds to be converted into Class A Common Stock
AVP = An average of the closing price per share of Class A Common
Stock for the 15 trading days immediately preceding the
Effective Date
NS = Number of Shares of Class A Common Stock to be issued
The Class A Common Stock to be issued pursuant to this Article IX will
be issued on the Effective Date, but subsequent to a reverse stock split to be
effected by the Debtor pursuant to this Plan. Said reverse stock split will
occur on a date to be designated by the Debtor's Board of
<PAGE> 16
Directors, which date will be subsequent to the Declaration Date but at least
twenty (20) trading days prior to the Effective Date.
X. PROVISIONS FOR PAYMENT OF ALLOWED UNSECURED CLAIMS IN EXCESS OF $1,200
(CLASS 7)
10.1 Election of Payment Mode. Each Claimant holding an Allowed
Unsecured Claim in excess of $1,200 (i.e., a Class 7 Claim) shall elect to be
paid pursuant to one of the three following payment modes (Option A, B or C). If
Option B is selected, the Class 7 Claimant must elect between Plan #1 and Plan
#2.
Option A. The Allowed Unsecured Claim shall be reduced to $1,200
and shall be deemed to be a Class 6 Claim to be paid pursuant to
the provisions of Article IX of this Plan.
Option B. The Allowed Unsecured Claim shall be paid partly in Cash
and partly in Class A Common Stock pursuant to Plan #1 or Plan #2
below:
Plan 1: The Claimant will receive both Cash and Class A
Common Stock computed as follows:
1. On the Payment Date, the Claimant will receive a
Cash payment equal to 20.0% of the Class 7 Allowed
Unsecured Claim;
2. The balance of the Class 7 Allowed Unsecured Claim
(i.e. 80%) will be paid in Cash in sixteen (16)
quarterly payments with the first payment being
made on the Payment Date and
<PAGE> 17
the final payment being made four (4) years after
the Payment Date, but no interest shall be paid by
Debtor; and
3. On the Effective Date, the Claimant will receive
Class A Common Stock computed pursuant to the
following formula:
C7 x 80% = NP
NP x 20% = F
F/(divided by) AVP = NS
where
C7 = The dollar amount of the Class 7 Claim.
NP = The dollar amount of the Class 7
Allowed Claim that was not scheduled to
be paid in lump sum on the Payment
Date.
F = Dollar amount of funds allocated for
purchase of Class A Common Stock.
AVP = An average of the closing price per
share of Class A Common Stock for the
15 trading days immediately preceding
the Effective Date.
NS = Number of Shares of Class A Common
Stock to be issued.
Plan 2: The Claimant will receive both Cash and Class A
Common Stock computed as follows:
1. On the Payment Date, the Claimant will receive
a Cash payment equal to 20.0% of the Class 7
Allowed Unsecured Claim, and
2. On the Effective Date, the Claimant will
receive Class A Common Stock computed pursuant
to the following formula:
<PAGE> 18
C7 X 80% = NP
NP x 120% = F
F/(divided by) AVP = NS
where
C7 = The dollar amount of the Class 7
Allowed Claim.
NP = The dollar amount of the Class 7
Allowed Claim that was not scheduled to
be paid in lump sum on the Payment
Date.
F = Dollar amount of funds allocated for
purchase of Class A Common Stock.
AVP = An average of the closing price per
share of Class A Common Stock for the
15 trading days immediately preceding
the Effective Date.
NS = Number of shares of Class A Common
Stock to be issued.
Option C: On the Effective Date, the Claimant holding a Class 7
Allowed Unsecured Claim shall receive Class A Common Stock
computed as follows:
C7 x 200% = F
F/(divided by) AVP = NS
where:
C7 = Dollar amount of the Class 7 Allowed Unsecured Claim.
F = Dollar amount of funds allocated for purchase of Class
A Common Stock.
AVP = An average of the closing price per share of Class A
Common Stock for the 15 trading days immediately
preceding the Effective Date.
NS = Number of Shares of Class A Common Stock to be issued.
Option C does not provide for any Cash payment.
<PAGE> 19
10.2 Elect Alternative When Voting. When the Class 7 Claimant votes to
accept or reject the Plan, the Claimant shall elect which payment alternative
shall apply to his/her/its Class 7 Claim.
If no election is made, the Claimant shall be deemed to have consented
to receive payment pursuant to Option C. The Claimant may revoke the election in
writing at any time and effect a new election provided that the Debtor receives
the written revocation prior to noon Cleveland, Ohio time on the Declaration
Date with notice being sent to Debtor as provided in Article XII of the
Disclosure Statement.
10.3 Reverse Stock Split. The Class A Common Stock to be issued
pursuant to this Article X will be issued on the Effective Date, which will be
subsequent to a reverse stock split to be effected by the Debtor pursuant to
this Plan. The reverse stock split will occur on a date to be designated by the
Debtor's Board of Directors, which date will be after the Declaration Date, but
at least twenty (20) trading days prior to the Effective Date.
ARTICLE XI. FOR PAYMENT OF CLAIMS OF NEVADA ENERGY PARTNERS, LTD., NEVADA
ELECTRIC POWER COMPANY AND OTHERS (CLASS 8)
11.1 NEP, Nevada Energy Power Company ("NEPC"), the Debtor and others
have entered into a Settlement and Release Agreement ("NEP Settlement") pursuant
to the terms of which the following will transpire:
A. Subject to approval of the Bankruptcy Court and confirmation
of this Plan, the NEP Agreement between NEP and amended and
restated. As a result of this rescission of conveyances, the
Debtor shall receive 100% of the issued and outstanding
Common Stock of Combustion Energy Company and title to a
parcel of real property situated in Reno, Nevada.
B. Debtor will stipulate that NEP shall be deemed to be the
shareholder of record of 13,245,958 shares of Class B Common
Stock, which is convertible into 13,245,958 shares of Class A
Common Stock as of August 16, 1996.
<PAGE> 20
NEP, as of December 1, 1997, will be deemed to have converted
Class B Common Stock into Class A Common Stock such that NEP
owns 13,245,958 shares of Class A Common Stock which is equal
to 50.0% of the issued and outstanding Class A Common Stock
of Debtor as of August 16, 1996.
C. Debtor will stipulate that the Class A Common Stock held of
record by NEP is beneficially owned by sixteen (16) separate
corporations who are also deemed to be Creditors of the
Debtor.
D. Debtor will agree to permit the transfer of the Class A
Common Stock from NEP to the sixteen (16) beneficial owners
and will stipulate that these sixteen corporate entities
shall be issued (if Debtor) additional Class A Common Stock
such that they own 50.0% of the issued and outstanding Class
A Common Stock of Power Tel computed as of ten (10) business
days after the Effective Date, which will be subsequent to
the reverse stock split to be effected by the Debtor pursuant
to this Plan, subsequent to the issuance of Class A Common
Stock to Creditors pursuant to this Plan, and subsequent to
the issuance of Class A Common Stock to acquire Diego Tel. In
the event, however, that Creditors with a Disputed Claim
receive Class A Common Stock pursuant to the Disputed Claims
Reserve, there will not be any additional distributions of
Class A Common Stock pursuant to the NEP Settlement.
E. The limited partnership agreement for NEP is deemed to be
amended and modified such that 99.0% of all profits and
losses are allocated to the capital account of the limited
partner effective as of January 1, 1995. The general partner
(NEPC) will stipulate that Debtor is the sole limited
partner. Any and all distributions of cash and property are
to be allocated 60.0% to the limited partner and 40.0% to the
general partner.
F. All parties to the NEP Settlement do forever settle, release
and compromise all claims and causes of action which they
have or may bring against any other party as of the date of
that Agreement, and NEP specifically waives and commits to
extinguish its Proof of Claim for $6,000,000.00.
ARTICLE XII. PROVISIONS FOR ADJUDICATION OF DISPUTED CLAIMS (CLASS 9)
12.1 The Debtor has disputed certain Claims submitted by various
alleged Creditors. If and when any such disputed Claim becomes an Allowed Claim
or Equity Interest, such Allowed
<PAGE> 21
Claim or Equity Interest shall be treated as if it was an Allowed Claim or
Equity Interest with respect to the classification of Claims and Equity Interest
provided in Article III of this Plan.
ARTICLE XIII. PROVISIONS FOR TREATMENT OF ALLOWED EQUITY INTEREST (CLASS 10)
13.1 Upon Confirmation of the Plan, the Debtor will initiate various
actions which will affect the Equity Interests of Shareholder who own either (a)
Class A or Class B Common Stock, or (b) Series A, Series B or Series C Preferred
Stock.
13.2 It is the Debtor's position that certain actions taken by the
Board of Directors of Debtor subsequent to May 3, 1996 and prior to February 13,
1997 are void, illegal and/or invalid including, but not limited to, all offers
and sales of Common or Preferred Shares of Debtor. Accordingly, all Common and
Preferred Shares of Debtor issued subsequent to May 3, 1996 are deemed to be
void ab initio except as to any Shareholder who (i) is a bona fide purchaser for
value, and (ii) filed a Proof of Interest on or before November 10, 1997, which
Proof of Interest has not been disputed by the Debtor. In addition, the
attempted 1:6 reverse stock split purportedly implemented by the Debtor Board of
Directors in January 1997 is also void ab initio. It is the express intent of
this Plan to reinstate all Class A Common Stockholders of record to the same
share ownership which existed as of May 3, 1996 immediately prior to the sale of
the Series A Preferred Shares to Waterford/Golden Chance.
13.3 After the Confirmation Date, the Debtor shall effect the actions
set forth in Article XIX of this plan. As a consequence of such events, the
following shall occur:
A. The Series A and Series C Preferred Shares and the Class B
Common Stock shall be deemed to be extinguished through
amendment to the Debtor's Articles of Incorporation (Series B
Preferred and the Class B Common Stock
<PAGE> 22
will also be extinguished through amendment following the
actions described below).
B. The five (5) shares of Series B Preferred Shares owned by
Messrs. Rick Cascarilla (2 shares), Jeff Hartman, Michael
Kassouff and Jeff Modesitt (all former Directors of Debtor
who acquired the Series B as part of the May 1996 transaction
with Waterford/Golden Chance) shall be repurchased by the
Debtor for a per share price of (i) 100,000 shares of Class A
Common Stock; and (ii) a 24 month option to purchase an
additional 100,000 shares of Class A Common Stock at an
exercise price of $0.10 per share. The Series B Preferred
Shares thereafter shall be extinguished by means of an
amendment to the Articles of Incorporation, which amendment,
among other things, shall establish a new class of preferred
shares to be known as "Special Stock." The Special Stock has
the right to elect two (2) Directors of the Debtor's Board of
Directors. One share each of Special Stock, as set forth in
the amended Articles of Incorporation, shall be issued to
Richard Cascarilla, Jeffrey Hartman and Michael Kassouff as
partial consideration for their serving on the Board of
Directors. The Articles of Incorporation and By-Laws will be
amended so that the Board will be authorized to set
additional terms of the Special Stock.
C. All holders of Class A Common Stock will be reinstated to the
exact same share ownership which existed as of May 3, 1996,
immediately prior to the sale of the Series A Preferred
Shares to Waterford/Golden Chance.
D. The Debtor will convert the Class B Common Stock to Class A
Common Stock pursuant to the NEP Settlement (see Article XI
of this Plan) and will issue Class A Common Stock in an
amount equal to 50.0% of the outstanding Class A Common Stock
pursuant to the NEP Settlement.
E. Debtor will affect a reverse stock split at a ratio to be
designated by the Board of Directors such that the total
number of shares of Class A Common Stock outstanding
subsequent to the reverse stock split is no less than 500,00
shares nor more than 20,000,000 shares.
Subsequent to the reverse stock split and the issuance of
Class A Common Stock to creditors, the Debtor will adjust the
number of shares of Class A Common Stock issued per the NEP
settlement to maintain that figure at 50.0% of the issued and
outstanding Class A.
Up to a maximum of 35.0% of additional shares of Class A
Common Stock may be issued in conjunction with the
acquisition of Diego Tel.
<PAGE> 23
13.4 Reorganization of Class A Common Stock. In addition to consenting
to the transfer of Class A Common Stock from NEP to the sixteen entities as set
forth in Section 11.2, Debtor anticipates that it may issue additional shares of
Class A Common Stock in conjunction with its acquisition of Diego Tel. At this
time, based upon current negotiations, the Debtor anticipates that it may issue
Class A Common Stock equal to 35.0% of the issued and outstanding Class A Common
Stock. The Class A Common Stock will be issued by the Debtor once certain
revenue projections are satisfied. The Debtor and Mr. Wallace have executed an
Agreement which has been amended and restated. The amended Agreement will be
filed with the Court and ratified as part of the Plan.
ARTICLE XIV. PROVISIONS FOR TREATMENT OF DISPUTED CLAIMS
14.1 Authority to Object. The Debtor and any party-in-interest shall
have the authority to object to and contest the allowance of any Claim filed
with the Bankruptcy Court in respect of any Claim listed as disputed,
contingent, or unliquidated on the Debtor's schedules, except as to any Claim
otherwise treated by the Plan or previously allowed or disallowed by final order
of the Bankruptcy Court.
14.2 Objections to Claims to be Filed Within Sixty Days After
Confirmation Date. Unless otherwise ordered by the Court, after notice and a
hearing, objections to Claims and Equity Interests shall be made and filed by
the Debtor or by any party-in-interest and shall be served upon each holder of
the Claim or Equity Interest to which objections are made (and upon the Debtor's
attorney if the Debtor is not the objecting party) and filed with the Bankruptcy
Court as soon as practicable, but in no event later than sixty (60) days
subsequent to the Confirmation Date.
<PAGE> 24
14.3 Prosecution of Objections to Claims.
A. The objecting party shall litigate to judgment, settle, or
withdraw objections to Disputed Claims.
B. All legal fees and expenses of the Debtor incurred in the
prosecution of claim objections and in the consummation of
the Plan shall be paid first by the Debtor as a
Post-Confirmation Administrative Expense pursuant to Article
4.2 of this Plan.
14.4 Final Order. Except as may be otherwise agreed with respect to any
Disputed Claim, no payments or Distributions shall be made with respect to all
or any portion of a Disputed Claim unless and until all objections to such
Disputed Claim have been determined by a Final Order of the Bankruptcy Court.
Payments and Distributions to each holder of a Disputed Claim or Disputed Equity
Interest to the extent that it ultimately becomes an Allowed Claim or Allowed
Equity Interest shall be made in accordance with the provisions of the Plan with
respect to the Class of Creditors or Equity Interest to which the respective
holder of an Allowed Claim or Allowed Equity Interest belongs, unless otherwise
provided in Section 14.5 herein below.
14.5 Disputed Claims Reserve.
A. In determining the amount of Distributions due the holders of
Allowed Claims, the appropriate Pro Rata calculations
required by the Plan shall be made as if all Disputed Claims
were Allowed Claims in the full amount claimed by the holders
thereof. Debtor will presume, for purposes of the Disputed
Claims Reserve, that all Disputed Claim Creditors elect to
receive Class A Common Stock.
B. On the Effective Date, the Debtor shall compute the number of
shares of Class A Common Stock to which the Disputed Claim
Creditors may be entitled and shall disburse such shares
(hereinafter the "Disputed Claims Reserve") to be held in
trust by the Debtor for the benefit of the holders of Allowed
Claims whose Distributions are unclaimed and the holders of
Disputed Claims pending determination of their entitlement
thereto under the terms of the Plan. The Class A Common Stock
held in the Disputed Claims Reserve shall be deemed to be
"treasury" stock of the Debtor and thus non-
<PAGE> 25
voting during the period within which it is held in the
Disputed Claims Reserve.
C. As soon as practicable after a Disputed Claim becomes an
Allowed Claim, the Class A Common Stock reserved for such
Allowed Claim shall be released by the Debtor from the
Disputed Claims Reserve and delivered to the holder of such
Allowed Claim. In the event that the Disputed Claim is
disallowed, the Class A Common Stock provided for such claim
shall be released to Debtor for use in the course of its
business, as deemed appropriate by its Board of Directors.
In the event that a Disputed Claim becomes an Allowed Claim
and the Creditor is entitled to receive Cash, the Debtor
shall pay such Cash upon the later of (i) the Payment Date,
or (ii) ninety (90) days after the Disputed Claim becomes an
Allowed Claim.
D. In the event any Class A Common Stock held in the Disputed
Claims Reserve remain unclaimed upon expiration of five years
following the Effective Date, such Class A Common Stock shall
be released to Debtor.
If Class A Common Stock is issued pursuant to this Article
XIV, such action shall not be a basis for an adjustment with
respect to the number of shares of Class A Common Stock
issued pursuant to the NEP Settlement or for the acquisition
of Diego Tel.
ARTICLE XV. CRAMDOWN OF PLAN
15.1 In the event that any one or more classes of impaired Claims does
not approve the Plan by the requisite vote and the Plan is not confirmed, the
Debtor shall seek confirmation of the Plan pursuant to the provisions of section
1129(b) of the Bankruptcy Code. In the event that the Bankruptcy Court refuses
to approve the Plan pursuant to section 1129(b) of the Bankruptcy Code, the NEP
Settlement, the agreement for the acquisition of VivaTel and Diego Tel and the
Ownership Settlement Agreement shall be deemed null and void and the parties
thereto shall be returned to their respective positions, status quo ante.
<PAGE> 26
ARTICLE XVI. IDENTIFICATION OF CLAIMS AND EQUITY INTEREST NOT IMPAIRED BY THE
PLAN
16.1 Unimpaired Classes. Claims of classes 1, 2, 3 and 6 are not
impaired under the Plan.
16.2 Impaired Classes to Vote on Plan. Claims in the classes specified
in Classes 4, 5, 7 and 8 of the Plan are impaired and therefore Creditors
holding Claims in these classes are entitled to vote whether to accept or reject
the Plan. Voting Shareholders are also entitled to vote.
16.3 Controversy Concerning Impairment. In the event of a controversy
as to whether any Creditors or holders of Equity Interest or class of Creditors
or class of holders of Equity Interest are impaired under the Plan or otherwise
entitled to vote, the Bankruptcy Court shall, after notice and a hearing,
determine such controversy.
ARTICLE XVII. ACCEPTANCE OR REJECTION OF PLAN: EFFECT OF REJECTION BY ONE OR
MORE CLASSES OF CLAIMS
17.1 Acceptance by Class of Creditors. A Class of Creditors shall have
accepted the Plan if the Plan is accepted by at least 2/3 in amount and more
than 1/2 in number of the Allowed Claims of such class that have voted.
17.2 Cramdown. In the event that any impaired class of Creditors with
Claims against any of the Debtor's estate shall fail to accept the Plan, in
accordance with section 1129(a) of the Bankruptcy Code, the Debtors shall
request the Bankruptcy Court to confirm the Plan in accordance with section
1129(b) of the Bankruptcy Code.
<PAGE> 27
ARTICLE XVIII. JUDICIAL ACTIONS
18.1 Promptly after the Confirmation Date, the Bankruptcy Court shall
enter an Order to the effect that:
A. All Common and Preferred Stock issued by Debtor subsequent to
May 3, 1996 was issued in violation of the Company's Articles
of Incorporation or without requisite approval of the Board
of Directors and, therefore, is null and void ab initio
except as to Shareholders who (i) are bona fide purchasers
for value, and (ii) filed a Proof of Interest on or before
November 10, 1997, which Proof of Interest was not disputed
by the Debtor.
B. The election of Michael Kassouff as a Director by the Series
B Preferred Shareholders is ratified. The election by Michael
Kassouff, as the sole Director, of Messrs. Richard Cascarilla
and Lawrence Herth as Directors is ratified. Also ratified
are all elections of officers by the Debtor's Board of
Directors;
C. The 1:6 reverse stock split effected by Debtor in January
1997 was conducted without requisite shareholder approval and
is null and void ab initio;
D. The amendments to Debtor's Articles of Incorporation filed
with the Secretary of State for the State of Delaware in
January 1997 were not adopted by Debtor's shareholders and,
therefore, are null and void ab initio;
E. Any claimed security interest of Brady Geothermal Park Power
Partners against any assets of Debtor is null and void;
F. The following actions taken by the Debtor's Board of
Directors are null and void ab initio due to violations of
applicable provisions of Delaware law:
i. Proposal to Amend Corporate Name and Symbol,
ii. Proposal to Increase Authorized Shares,
iii. Proposal to Increase Authorized Class B Shares,
iv. Proposal to Authorize Class C Stock, and
v. Proposal to Authorize Lease Guaranty for Santa
Barbara Property;
G. Pursuant to section 1123(b)(3) of the Bankruptcy Code, Debtor
is authorized to amend, supplement or modify this listing
upon further investigation of the corporate records;
<PAGE> 28
H. Pursuant to section 1123(b)(3) the Debtor will have the
exclusive right to enforce any and all causes of action
against any person in rights of the Debtor that arose before
or after the petition date, including but not limited to the
rights and powers of a trustee and debtor in possession,
against any person whatsoever, including but not limited to
all avoidance powers granted to the debtor under the
Bankruptcy Code and all causes of actions and remedies
granted pursuant to sections 502, 510, 541, 544, 545, 547
through 551 and 533 of the Bankruptcy Code.
I. Pursuant to section 1123(a)(5)(g), the Debtor is granted a
120 day period commencing on the Confirmation Date within
which to cure the default(s) by Debtor, if any, with respect
to a policy of insurance previously issued by National Union
Fire Insurance Company, and identified as policy number
445-53-00 (being a renewal of policy number 443-38-50) and
the Debtor is authorized to reserve all rights to pursue any
and all remedies, benefits and contractual rights established
by said policy;
J. Debtor, through its Board of Directors, is authorized to take
all Debtor actions to effect the above as well as the actions
set forth in Article XIX;
K. The NEP indemnification, in which NEP and Mr. Jeff Antisdel
agree to indemnify Debtor against any tax penalties resulting
from the amended and restated NEP Settlement, shall be deemed
to be ratified and in full force and effect; and
L. The Ownership Settlement Agreement, in which Messrs. Vogel
and Chamberlain give up all claims, if any, to any interest
in VivaTel shall be deemed to be ratified and in full force
and effect.
ARTICLE XIX. MEANS FOR EXECUTION OF THE PLAN
19.1 The Plan will be implemented utilizing the following resources and
by means of the following events:
A. Cash accrued from operations and Class A Common Stock will be
used to satisfy Claims of Classes 1 through 8 and Class A
Common Stock will be used to satisfy Class 10.
B. The Debtor owns ten binary cycle energy co-generation units
("Ormats") and Classes 4, 5 and 7 shall be granted a secured
interest in one unit to secure repayment of those
obligations.
<PAGE> 29
C. Promptly after the Confirmation Date, the Debtor shall take
the following action;
1. File a notice with the Secretary of State for the State
of Delaware to the effect that the amendment(s) to
Debtor's Articles of Incorporation as filed in January
1997, were filed without requisite shareholder approval
and are, therefore, invalid and void ab initio;
2. Subsequent to its repurchase of the Series B Preferred,
file Amended and Restated Articles of Incorporation with
the Secretary of State for the State of Delaware which
Amended Articles of Incorporation shall (among other
things): (i) extinguish the existing Series A, Series B
and Series C Preferred Shares and the Class B Common
Stock; (ii) create a new class of preferred stock be
known as "Special Stock" which shall be entitled to
elect two (2) Directors to the Debtor's Board of
Directors; (iii) provide that the affirmative vote of
65.0% of the issued and outstanding Class A Common Stock
is required to amend the Articles of Incorporation , and
(iv) change the name of the Debtor to WorldCall, Inc.
Thereafter, new stock certificates will be issued; and
3. Adopt amended and restated By-Laws.
D. Subsequent to the Declaration Date but at least 20 trading
days prior to the Effective Date, the Debtor shall effect a
reverse stock split such that the number of shares of Class A
Common Stock outstanding shall be no less than 500,000 shares
nor more than 20,000,000 shares, the exact ratio to be set by
the Debtor's Board of Directors.
E. The Debtor shall acquire 100% of the issued and outstanding
Common Stock of VivaTel in exchange for $500.00. Debtor will
acquire Diego Tel for Class A Common Stock. The number of
Shares of Class A Common Stock is predicted to be equal to
35.0% of the issued and outstanding Class A Common Stock.
F. Debtor shall consent to the transfer of Class A Common Stock
in conjunction with the amended and restated NEP Settlement
Agreement such that sixteen (16) corporate entities shall
receive Class A Common Stock equal to 50.0% of the issued and
outstanding Class A Common Stock of Debtor computed ten (10)
days after the Effective Date.
G. All Class A Common Stock issued to a Creditor pursuant to
this Plan, shall be issued pursuant to section 1145 of the
Bankruptcy Code and shall be
<PAGE> 30
issued without a restrictive legend if the Creditor
establishes that the Creditor is not an "underwriter" as
defined in section 1145(b) of the Bankruptcy Code. The Class
A Common Stock to be issued to the exchanging shareholder of
Diego Tel shall be restricted and subject to significant
restraints on transfer as set forth in this Plan and in the
acquisition agreements.
ARTICLE XX. EXECUTORY CONTRACTS AND UNEXPIRED LEASES
20.1 Assumption of Executory Contracts under Primary Plan. Any
executory contracts or unexpired leases not rejected by the Debtor with the
Bankruptcy Court prior to the Confirmation Date or within sixty (60) days
thereafter or which are not the subject of a motion to reject the same pending
as of the Confirmation Date shall be deemed to have been assumed by the Debtor
upon the Confirmation Date, in accordance with section 365 of the Bankruptcy
Code.
20.2 Filing of Claims Arising out of Rejection or Assumption of
Contracts. In the event the rejection or assumption of an existing contract
effected pursuant to Section 20.1 above gives rise to a Claim not otherwise
provided for herein, the holder of such Claim may file such Claim within 30 days
following the Confirmation Date or if the contract is not rejected by Debtor
prior to the Confirmation Date, within thirty days after the rejection or
assumption which gives rise to the Claim. Such Claim shall, in addition to its
filing with the Bankruptcy Court, be served upon the undersigned attorneys for
the Debtor. Any objection to claims filed pursuant to this provision shall be
governed by the procedures provided in Article XIV hereof.
20.3 Executory Contracts of Indemnification with Directors. Debtor has
executory contracts in effect with its past and current Board of Directors and
Officers, some of which it is accepting and some of which are being rejected as
follows:
<PAGE> 31
<TABLE>
<CAPTION>
Acceptance or Rejection
Name Position of Executory Contract
---- -------- ---------------------
<S> <C> <C>
Jeffrey Antisdel Director/Officer Accept
Kenton Bowers Officer Reject
Peter Cannell Director Reject
Charles Cain Director Reject
Richard Cascarilla Director/Officer Accept
John Goold Director Reject
Jeffery Hartman Director Accept
Lawrence Herth Director/Officer Accept
Pattinson Hayton, III Officer/Consultant Reject
Michael Kassouff Director Accept
Jeffery Modesitt Director Accept
Stefan Tevis Director/Officer Reject
</TABLE>
By rejecting the executory contracts set forth above, it is Debtor's
specific intent to rescind any express or implied obligation (if any) which it
has or may have to such individuals to indemnify or to hold them harmless for
damages or expenses which they may incur as a result of Claims of wrongdoing
lodged against them from any source whatsoever.
ARTICLE XXI. PROVISIONS COVERING DISTRIBUTIONS
21.1 Payments To Be Made on Effective Date or Payment Date. Payments to
be made by the Debtor on the Effective Date or on the Payment Date pursuant to
the Plan shall be made on the Effective Date or on the Payment Date, as
applicable, except as otherwise provided for in the Plan, or as may be ordered
by the Bankruptcy Court.
21.2 Distributions Made on the Effective Date. Distributions of Class A
Common Stock to be made on the Effective Date shall be made on the Effective
Date, except as otherwise provided for in this Plan or as may be ordered by the
Bankruptcy Court.
21.3 Method of Payment. Cash payments to be made by the Debtor pursuant
to the Plan shall be made by check drawn on a domestic bank or by wire transfer
from a domestic bank.
<PAGE> 32
21.4 Payments to be Made by Debtor. Payments to be made to Creditors
and Equity Interests under the Plan shall be made by Debtor.
21.5 Class A Common Stock. Distributions of Class A Common Stock shall
be made through Corporate Stock Transfer Company or the then transfer agent for
Debtor.
ARTICLE XXII. ARTICLES OF INCORPORATION AND BY-LAWS OF THE DEBTOR
22.1 Amendment of Articles of Incorporation and By-Laws. The Articles
of Incorporation and By-Laws of the Debtor shall be amended after the
Confirmation Date in order to effectuate the provisions of the Plan and section
1123(a)(6) of the Bankruptcy Code.
22.2 Restriction on Transfer of Shares. Unless otherwise set forth in
this Article XXII, all Class A shares to be issued by the Debtor shall be issued
pursuant to section 1145(a) of the Bankruptcy Code, without registration
pursuant to Section 5 of the Securities Act of 1933. The following Class A
Common Shares shall be restricted from transfer:
A. All Class A Common Stock issued to acquire the common stock
Diego Tel; and
B. All Class A Common Stock to be issued pursuant to the amended
and restated NEP settlement, and
C. The Class A Common Stock issued to any person who is deemed
to be an "underwriter" for purposes of section 1145(b) of the
Bankruptcy Code.
22.3 Restrictive Legend: All Class A Common Shares which are restricted
pursuant to section 22.2 of this Plan shall bear the following restrictive
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO SECTION 5 OF THE SECURITIES ACT OF 1933,
NOR HAVE THESE SECURITIES BEEN REGISTERED PURSUANT TO ANY
COMPARABLE STATE SECURITIES ACT OR REGULATION.
<PAGE> 33
ACCORDINGLY, TRANSFER, SALE, PLEDGE, HYPOTHECATION OR CONVEYANCE
OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS PROHIBITED UNLESS
AND UNTIL (1) THE SHARES REPRESENTED HEREBY HAVE BEEN REGISTERED
PURSUANT TO SECTION 5 OF THE SECURITIES ACT OF 1933 AND, AS
REQUIRED, PURSUANT TO A SIMILAR STATE STATUTE OR REGULATION, OR
(2) THE SHAREHOLDER SUBSTANTIATES THAT THERE IS, A VALID EXEMPTION
FROM THE REGISTRATION REQUIREMENT PROVIDED BY SECTION 5 OF THE
SECURITIES ACT OF 1933 AND SUBSTANTIATES SUCH EXEMPTION BY MEANS
OF A LEGAL OPINION ACCEPTABLE TO THE ISSUER AND ITS LEGAL COUNSEL.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED IN
CONJUNCTION WITH A DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION
CONFIRMED BY THE UNITED STATES BANKRUPTCY COURT FOR NEVADA AND
THIS RESTRICTION ON TRANSFER HAS BEEN INCLUDED AS PART OF THE
TERMS AND CONDITIONS OF THE CONFIRMED DEBTOR'S FIRST AMENDED PLAN
OF REORGANIZATION. FOR ADDITIONAL INFORMATION CONCERNING THIS
RESTRICTION, INQUIRIES SHOULD BE DIRECTED TO:
Van P. Carter, Esq.
Walter & Haverfield P.L.L.
1300 Terminal Tower
Cleveland, Ohio 44113
(216) 781-1212
ARTICLE XXIII. PROVISIONS FOR EXECUTION AND SUPERVISION OF THE PLAN
23.1 Retention of Jurisdiction. The Bankruptcy Court shall retain and
have exclusive jurisdiction over the Chapter 11 case for the following purposes:
A. to determine any and all objections to the allowance of
Claims or Equity Interests;
B. to determine any and all pending applications for the
rejection or assumption of executory contracts or unexpired
leases to which the Debtor is a party or
<PAGE> 34
with respect to which it may be liable, and to hear and
determine, and if need be to liquidate, any and all Claims
arising therefrom;
C. to determine any and all applications, adversary proceedings
and contested or litigated matters that may be pending on the
Confirmation Date, except as provided in the Confirmation
Order;
D. to consider any modifications of the Plan, any defect or
omission or reconcile any inconsistency in any order of the
Bankruptcy Court, including the Confirmation Order, to the
extent authorized by the Bankruptcy Court;
E. to determine all controversies, suits and disputes that may
arise in connection with the interpretation, enforcement or
consummation of the Plan, to include disputes between classes
of claimants under the Plan regarding allocations or payment
of Distribution hereunder;
F. to consider and act on the compromise and settlement of any
Claim against or cause of action by or against the Debtor's
estate;
G. to issue such orders in aid of execution of the Plan to the
extent authorized by section 1142 of the Bankruptcy Code; and
H. to determine such other matters which may be set forth in the
Confirmation Order or which may arise in connection with the
Plan or the Confirmation Order, including, but not limited
to, extending deadlines and time limits provided in the Plan.
23.2 Amendment of Plan. The Plan may be amended by the Debtor before or
after the Effective Date as provided in section 1127 of the Bankruptcy Code.
ARTICLE XXIV. PROVISIONS FOR MANAGEMENT
24.1 Directors. Upon confirmation of the Plan, subject to the
Bankruptcy Court's approval under Bankruptcy Code section 1129(a)(5), the
reorganized Debtor shall have as directors of Debtor the directors for Debtor as
identified in the Disclosure Statement. These directors shall serve as directors
of Debtor after the Confirmation Date until removed or replaced by the
post-confirmation stockholders of Debtor. The tenure and manner of selection of
directors of Debtor shall be as
<PAGE> 35
provided in the Articles of Incorporation and By-Laws, as may be amended
pursuant to Article XXII hereof.
24.2 Officers. Upon confirmation of the Plan, subject to the Bankruptcy
Court's approval under Bankruptcy Code section 1129(a)(5), the officers of
reorganized Debtor, as identified in the Disclosure Statement, shall serve as
officers of Debtor after the Effective Date. The Board of Directors shall elect
the officers of Debtor and shall specify the tenure of the individuals holding
those offices.
24.3 Employment Contracts. Debtor may enter into employment contracts
with its respective officers, employees or others which shall only be operative
if the Plan is confirmed. Copies of any employment contracts that are to take
effect immediately after the Confirmation Date were filed with the bankruptcy
Court fifteen (15) days prior to the commencement of the hearing to consider the
Disclosure Statement. The employment contracts shall contain sufficient
information to comply with Bankruptcy Code section 1129(a)(5)(B) as to
disclosure of compensation to be paid to insiders who are the subject of
contracts and are subject to the approval of the Bankruptcy Court.
ARTICLE XXV. EVENTS OF DEFAULT
25.1 In the event that Debtor defaults under the provisions of the
Plan, any Creditor or party-in-interest desiring to assert such a default shall
provide Debtor with written notice of the alleged default. Debtor shall have 30
days from receipt of the written notice in which to cure the default. Such
notice shall be delivered by certified mail (return receipt requested) to the
attorneys for Debtor at the address stated on the final page hereof. If the
default is not cured within the 30-day cure period, any Creditor or
party-in-interest may thereafter file and serve upon counsel for Debtor a motion
to compel compliance with the applicable provision of the Plan. The Bankruptcy
Court,
<PAGE> 36
upon finding a material default, shall issue an order compelling compliance with
the applicable provisions of the Plan.
ARTICLE XXVI. MISCELLANEOUS PROVISIONS
26.1 Discharge of Debtors. The rights afforded in the Plan and the
treatment of all Creditors therein shall be in exchange for and in complete
satisfaction, discharge and release of all Claims or Equity Interests of any
nature whatsoever, including any interest accrued thereon from and after the
Petition Date against the Debtor or any of its assets or properties. Except as
otherwise provided herein, upon the Confirmation Date, in accordance with
section 1141 of the Bankruptcy Code, all such Claims or Equity Interests against
the Debtor shall be satisfied, discharged and released in full. All Creditors
and holders of Equity Interests shall be precluded from asserting against the
Debtor or its respective assets or properties any other or further Claims based
upon any acts or omission, transaction or other activity of any kind or nature
that occurred prior to the Confirmation Date.
26.2 Title to Assets: Discharge of Liabilities. Except as otherwise
provided by the Plan, on the Confirmation Date, title to all assets and
properties dealt with by the Plan shall vest in Debtor in accordance with
section 1141 of the Bankruptcy Code, free and clear of all Claims and Equity
Interests; and the order confirming the Plan shall be a judicial determination
of discharge of the Debtor's liabilities except as provided in the Plan.
26.3 Effect of Discharge on Rights Between Third Parties. If the Plan
is confirmed, the provisions of the Plan will bind the Debtor and all Creditors
and Equity Interest holders, whether or not they accept the Plan. Confirmation
will also discharge the Debtor from all debts that arose
<PAGE> 37
before confirmation as of the Confirmation Date, including intercompany
obligations (if any) owing by the Debtor to an affiliate, whether such affiliate
is itself a debtor.
The classification and the manner of satisfying all Claims under the
Plan takes into consideration the existence of any guarantees by the Debtor of
any obligation of any person and the fact that the Debtor may be a joint obligor
with another person or persons, with respect to the same obligation. The Plan
also takes into account any contentions by Creditors or holders of Equity
Interests that the Claims of other Creditors or other holders of Equity Interest
may be subordinated by contract or pursuant to the Articles of Incorporation or
ByLaws of the Debtor. All Claims against the Debtor based upon any such
guarantees will be discharged in the manner provided in the Plan. Each Creditor
and stockholder will receive the distribution provided in the Plan, which will
not be subject to any Claim of another Creditor or stockholder by reason of any
claimed contractual right of subordination based upon any defaults occurring
prior to the Confirmation Date.
The distributions of consideration provided for in the Plan will be in
exchange for and in complete satisfaction, discharge and release of all Claims
and Equity Interests, including any Claim for interest after the Petition Date.
On the Confirmation Date, all Creditors and existing Equity Interest holders
shall be precluded form asserting any Claim against the Debtor or its assets or
properties based upon any transaction or other activity of any kind that
occurred prior to the Confirmation Date; provided, however, that nothing
contained in the Plan will alter the legal, equitable and contractual right of
the holder of any Claim or Equity Interest specifically designated as being
unimpaired in the Plan, it being specifically intended that all such rights are
to remain unaltered by the Plan.
<PAGE> 38
26.4 Filing of Additional Documents. On or before the Effective Date,
the Debtor shall file with the Bankruptcy Court such agreements, indentures,
supplemental indentures and other documents as may be necessary or appropriate
to effectuate and further evidence the terms and conditions of the Plan.
26.5 Post Confirmation Acquisitions, Mergers and Stock Splits. In order
to fulfill its financial obligations to Creditors and to expand its operations,
it is anticipated that the Debtor will effect one or more acquisitions or
mergers subsequent to the Confirmation Date. For a two (2) year period
commencing with the Effective Date, Debtor will be permitted pursuant to this
Plan to effect acquisitions and mergers, additional stock splits and reverse
stock splits based solely upon the affirmative vote of its Board of Directors
and without the necessity of requesting and receiving the consent of the Debtor
shareholders.
26.6 Class A Common Stock in Lieu of Cash. Any Creditor entitled to
receive Cash pursuant to this Plan may, by mutual agreement of the Creditor and
the Debtor, receive Class A Common Stock pursuant to terms and conditions to be
negotiated between the Creditor and the Debtor and agreed to by the Debtor and
the Creditor.
26.7 Ratification of Settlements. Pursuant to Section 1123(b)(3)(A) of
the Bankruptcy Code, upon Confirmation of the Plan, the following settlements
are deemed to have been ratified by the Bankruptcy Court and are in full force
and effect: (1) the amended and restated NEP Settlement, (2) Ownership
Settlement Agreement, (3) the NEPC Indemnification, and (4) the settlements
entered into with respect to the claims set forth in Article III, Section G of
the Disclosure Statement.
26.8 Ratification of Agreements. Upon Confirmation of the Plan, the
following contracts and agreements will be deemed to have been ratified by the
Bankruptcy Court: (1) the Agreement
<PAGE> 39
for the Exchange of Stock for the acquisition of Viva Telecommunications, Inc.
and (2) the amended and restated Agreement for the Exchange of Stock for the
Acquisition of Diego Tel, Inc. if and when amended and filed with the Bankruptcy
Court.
26.9 Set Offs. Debtor may, but shall not be required, to set off
against any claim and the distribution to any holder under the Plan, claims of
any nature that Debtor may have against the holder of such claim. Allowance of a
claim or failure to exercise any right of set off with respect to a claim does
not constitute a waiver or release by Debtor of any rights or claims the Debtor
may have against the holder of such claim. Debtor's rights of set off may be
limited in the manner provided for in the Plan if such rights are not exercised
on or before the Effective Date. Debtor may exercise right of set off with
respect to claims for which it has payment responsibility.
26.10 Fractional Shares. Debtor will not issue fractional shares of
Class A Common Stock. In the event that a Claimant is entitled to receive
fractional shares, the fractional share will be deemed to have been repurchased
from the Creditor by the Debtor based upon a per share purchase price of $.l0
per share.
26.11. Section Headings. The section headings contained in the Plan are
for reference purposes only and shall not affect in any way the meaning or
interpretation of the Plan.
Respectfully submitted this 24th day of July, 1998.
BELDING, HARRIS & PETRONI, LTD.
/s/ Stephen R. Harris, Esq.
------------------------------------
Stephen R. Harris, Esq.
BELDING, HARRIS & PETRONI, LTD.
417 W. Plumb Lane
Reno, NV 89509
<PAGE> 40
CONSENT
On behalf of PowerTel USA, Inc., the undersigned represents that the
Board of Directors of PowerTel has read, reviewed, and approved the foregoing
DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION and authorizes the filing of this
Plan with the United States Bankruptcy Court for the District of Nevada.
PowerTel USA, Inc.
By: /s/ Richard Cascarilla
---------------------------------
Richard Cascarilla, President
<PAGE> 1
Exhibit 2c
STEPHEN R. HARRIS, ESQ.
BELDING, HARRIS & PETRONI, LTD.
NEVADA BAR NO. 001463
417 West Plumb Lane
Reno, Nevada 89509
Telephone: (702) 786-7600
Facsimile: (702) 786-7764
Attorney for Debtor
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEVADA
* * * * *
IN RE:
POWERTEL USA, INC. formerly known Case No. 97-30265-BMG
as NEVADA ENERGY, INC., also formerly (Chapter 11)
known as MUNSON GEOTHERMAL, INC.,
Debtor. Hrg. DATE: August 25, 1998
and TIME: 10:00 a.m.
E.I.N. 84-089777l /
- -----------------------------
ORDER APPROVING AND CONFIRMING DEBTOR'S FIRST AMENDED
PLAN OF REORGANIZATION, AS REVISED AND AMENDED
POWERTEL USA, INC., a Delaware corporation, formerly known as NEVADA
ENERGY, INC., also formerly known as MUNSON GEOTHERMAL, INC., the Debtor and
Debtor-in- Possession in this Chapter 11 bankruptcy reorganization case
("Debtor"), by and through its attorney, STEPHEN R. HARRIS, ESQ., of Belding,
Harris & Petroni, Ltd., having filed its DEBTOR'S FIRST AMENDED PLAN OF
REORGANIZATION (dated July 24, 1998), and commonly referred to herein as the
Plan; with the Plan being attached hereto as Exhibit "A" and incorporated herein
by that reference, and the Plan having been duly filed, served and noticed for
an 11 U.S.C. Section l129
<PAGE> 2
Confirmation Hearing, together with (1) the DEBTOR'S SECOND AMENDED DISCLOSURE
STATEMENT (dated July 24, 1998), and (2) the ORDER APPROVING DEBTOR'S FIRST
AMENDED DISCLOSURE STATEMENT, AS AMENDED, AS CONTAINING ADEQUATE INFORMATION (11
U.S.C. Section 1125), AND FIXING TIME FOR FILING ACCEPTANCES OR REJECTIONS OF
PLAN, on July 27, 1998, to all creditors and parties requesting notice thereof;
and having filed its ERRATA TO BALLOT AND TO DEBTOR'S SECOND AMENDED DISCLOSURE
STATEMENT PURSUANT TO 11 U.S.C. Section 1125, on August 17,1998, and its AMENDED
ERRATA TO BALLOT AND TO DEBTOR'S SECOND AMENDED DISCLOSURE STATEMENT PURSUANT TO
11 U.S.C. Section 1125, on August 17,1998, and served on August 18, 1998, with
the duly noticed hearing to consider confirmation of the Debtor's Plan,
conducted on August 25, 1998, at 10:00 a.m.; with STEPHEN R. HARRIS, ESQ., of
BELDING, HARRIS & PETRONI, LTD., appearing on behalf of the Debtor, POWERTEL
USA, INC., a Delaware corporation; and Richard Cascarilla, President of the
Debtor, also present; NICHOLAS STROZZA, Assistant U.S. Trustee, appearing on
behalf of the Office of the United States Trustee; and the Court also noting the
appearances of other attorneys for creditors, creditors and interested parties;
and the Court having considered all papers and pleadings on file; and no
opposition having been filed;
It having been determined after hearing on notice that:
1. The Plan has been accepted in writing by the creditors whose
acceptance is required by law;
2. The provisions of Chapter 11 of the Code have been complied with;
that the Plan has been proposed in good faith and not by any means forbidden by
law; and that the proponent of the Plan complies with the applicable provisions
of the Bankruptcy Code;
<PAGE> 3
3. Each holder of a claim has accepted the Plan or will receive or
retain under the Plan property of a value, on account of such claim, as of the
Effective Date of the Plan, that is not less than the amount that such holder
would receive or retain if the Debtor POWERTEL USA, INC., a Delaware
corporation, was liquidated under Chapter 7 of the Code on such date, and
further, the Plan does not discriminate unfairly, and is fair and equitable,
with respect to each class of claims that is impaired under, and had not
accepted the Plan;
4. All payments made or promised by the Debtor POWERTEL USA, INC., a
Delaware corporation, or by a person(s) issuing securities or acquiring property
under the Plan or by any other person for services or for costs and expenses in,
or in connection with, the Plan and incident to this case, have been fully
disclosed to the Court and are reasonable or, if to be fixed after confirmation
of the Plan, will be subject to the approval of the Court;
5. The identity, qualifications, and affiliations of the persons who
are to be directors or officers of the successor to the Debtor POWERTEL USA,
INC., a Delaware corporation, under the Plan, have been disclosed, if any;
6. The identity of any insider that will be employed or retained by the
Debtor and their compensation has been fully disclosed, if any;
7. Confirmation of the Plan is not likely to be followed by the need
for further financial reorganization of the Debtor or any successor to it under
the Plan, and the Plan is feasible;
8. At least one impaired class of claims has accepted the Plan,
determined without including any acceptances of the Plan by an insider holder of
a claim of such class; and
<PAGE> 4
9. That all creditors, by virtue of acceptance of the Plan by the
requisite number and amount of members in each class, those accepting classes
being the following: Class 6 General Unsecured Allowed Creditors' Claims of
$1,200.00 or Less (deemed to have accepted the Plan by their affirmative class
vote), Class 7 General Unsecured Allowed Creditors' Claims of More than
$1,200.00 (deemed to have accepted the Plan by their affirmative class vote),
Class 8 Claims of Nevada Energy Partners, Ltd. (affirmative class vote) and
Class 10 Equity Security Holders (deemed to have accepted the Plan by their
affirmative class vote); and those creditors in Class 6 and 7 (General Allowed
Unsecured Creditors) that have not voted to accept or reject the plan are deemed
to have accepted by reason of the class acceptance resulting from the majority
voting in number with two-thirds (2/3) the claims amount of the Class 6 and
Class 7 General Unsecured Creditors having voted for acceptance; and good cause
appearing,
IT IS HEREBY ORDERED that the DEBTOR'S FIRST AMENDED PLAN OF
REORGANIZATION (dated July 24, 1998), filed with the Court on July 24, 1998, and
attached hereto as EXHIBIT "A" and incorporated herein by that reference, be and
the same hereby is approved and confirmed, and its terms and conditions set
forth therein are binding on all Equity Interest Holders, Creditors and
parties-in-interest in the above-captioned bankruptcy case; and
IT IS FURTHER ORDERED that the interests of the Class 10 Equity
Interest Holders will be modified pursuant to the Plan, and further, Class 10
Equity Interest Holders shall not receive any dividends or monetary
distributions until all allowed creditors' claims are paid in full and/or
sufficient monies are on deposit with the Disbursing Agent to pay disputed
claims in the event of allowance of same; and
<PAGE> 5
IT IS FURTHER ORDERED that the Effective Date of the Plan shall be the
first business day occurring one-hundred and twenty (120) days after the date on
which the Order Confirming the Plan is entered by the Clerk's Office; and
IT IS FURTHER ORDERED that Debtor POWERTEL USA, INC., a Delaware
corporation, shall withhold payment to any Class of creditors until the
Effective Date, and thereafter paid as stated in the Plan, as amended and
revised herein, except Administrative Claims, which Administrative Claims shall
be paid by the Effective Date, unless otherwise agreed to in writing; and
IT IS FURTHER ORDERED that this Court shall retain jurisdiction to
adjudicate all matters (except to the extent contrary to the terms of the Plan)
pertinent to the administration of the Debtor and the Reorganized Debtor, and
enforcement of the Plan, including, but not limited to the discharge of any and
all claim(s) of Creditors and interest(s) of Equity Interest Holders, to the
extent provided by law and under the terms of the Plan; and
IT IS FURTHER ORDERED that the Reorganized and Revested Debtor is
authorized to take all actions necessary to effectuate the DEBTOR'S FIRST
AMENDED PLAN OF REORGANIZATION (dated July 24, 1998), as revised and amended
herein; and
IT IS FURTHER ORDERED that the assets of the bankrupt estate shall vest
in the Reorganized Debtor, as well as any remaining assets being liquidated
and/or distributed to the allowed secured and unsecured creditors' claims; and
IT IS FURTHER ORDERED that in accordance with 11 U.S.C. Section 1123
(b)(2), the Debtor rejects those executory contracts of indemnification
identified to be rejected in Article VIII, Section G(3) of the DEBTOR'S SECOND
AMENDED DISCLOSURE STATEMENT, and accepts those identified to be accepted, and
further, as to the Independent Contractor Agreement with Stone
<PAGE> 6
Brothers Welding and Equipment Sales, the Debtor shall have sixty (60) days from
the Confirmation Date within which to place that contract at issue with the
Bankruptcy Court; and
IT IS FURTHER ORDERED that in accordance with 11 U.S.C.
Section 1123(b)(3)(A), a plan of reorganization may provide for the settlement
of any claim(s) belonging to the estate, and in that regard, the Plan
contemplates the approval of four (4) settlement agreements detailed as follows:
(1) the Agreement between and among PowerTel, Nevada Electric Power Company and
Nevada Energy Partners, Ltd. ("the NEP Settlement"), specifically, the NEP
Settlement is described in detail at Section 11.1 of the Plan, which Plan was
sent to all creditors and to which no creditor had objected, and further, the
NEP Settlement resolves litigation and a $6 million claim against the Debtor
without any monetary obligation, and the Debtor receives 100% of the stock
ownership in Combustion Energy Company and the benefit of said corporation's
assets, and further, taking into consideration all of the factors of In re
A & C Properties, 784 F.2d 1377 (9th Cir. 1986), the Court finds and concludes
that the NEP Settlement is hereby ratified and approved, and is reasonable, fair
and equitable and in the best interest of creditors; (2) the Agreement with John
Vogel and Dean Chamberlain (the "VivaTel Settlement Agreement and Mutual
Release"), which VivaTel Settlement Agreement and Mutual Release previously has
been approved by the Court, in that certain Stipulated Judgment and Order, filed
in adversary proceeding 97-3151BMG, and entered on the docket on March 16, 1998,
which VivaTel Settlement Agreement and Mutual Release is hereby ratified and
approved; (3) the First Amended Agreement for the Exchange of Stock, dated April
22, 1998, between David Wallace and PowerTel USA, Inc., regarding DiegoTel,
Inc., is hereby ratified and approved; and (4) the First Amended Agreement for
the Exchange of Stock, dated February 19,
<PAGE> 7
1998, between David Wallace and PowerTel USA, Inc., regarding VivaTel, Inc., is
hereby ratified and approved; and
IT IS FURTHER ORDERED that in accordance with 11 U.S.C.
Section 1123(b)(3)(B), a plan may provide for the appointment of the debtor for
the retention and enforcement of any claim belonging to the estate. In
accordance with such provision, the Court hereby appoints PowerTel, the
Reorganized Debtor, as the entity to pursue all claims belonging to the estate,
as identified in Article V, Section E of the DEBTOR'S SECOND AMENDED DISCLOSURE
STATEMENT, including but not limited to Patttinson Hayton, his alter egos,
employees, affiliates, agents and attorneys-in-fact, first for the benefit of
the Reorganized Debtor's administrative and unsecured creditors and then for the
benefit of the Reorganized Debtor; and
IT IS FURTHER ORDERED that pursuant to 11 U.S.C. Section 1146(c) of
Title 11, the revesting, transfer and sale of any real or personal property of
the Debtor in accordance with the DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION,
as amended and revised herein, shall become vested of public record in any
purchaser/transferee, free from the imposition of any state or local tax, fee or
imposition, including transfer taxes pursuant to N.R.S. Section 357.090, and
IT IS FURTHER ORDERED that the confirmation of this DEBTOR'S FIRST
AMENDED PLAN OF REORGANIZATION, as revised and amended herein, constitutes a
discharge set forth in 11 U.S.C. Section 1141(d) of the Bankruptcy Code, except
as noted herein; and
IT IS FURTHER ORDERED that pursuant to 11 U.S.C. Section 1106(a)(7),
the Debtor shall file with the Clerk, not later than 180 days after the entry
of this order, a report of the action taken by the Reorganized Debtor and the
progress made toward consummation of its confirmed Plan, as
<PAGE> 8
amended and revised herein and further, said report shall include, as a minimum,
the following information:
(1) A schedule of any real property, and its cost, acquired
since confirmation of the plan, and a schedule of each item of personal
property acquired at a cost of more than $20,000.00 since confirmation
of the plan.
(2) A schedule of each debt and each class, listing the total
amount of the plan required to be paid, the amount required to be paid
to date, the amount actually paid to date, and the amount unpaid.
(3) A schedule of executory contracts entered into or assumed
after plan confirmation.
(4) A statement indicating that post-petition taxes of every
kind have been paid current, identifying each type of tax which has
been paid and is current (i.e., income, payroll, property, sales,
etc.), or a detailed explanation of any and all delinquencies, by type
of tax, and dollar amount.
(5) An estimate of the time for plan consummation and
application for final decree.
(6) Any other pertinent information needed to explain the
progress toward completion of the confirmed plan; and
IT IS FURTHER ORDERED that effective August 25, 1998, for professional
services rendered from that date forward, the Debtor's duly appointed
professionals do not need court approval, after notice and hearing, for payment
of professional fees and costs, and that the Reorganized Debtor may pay said
professionals for the times spent and costs incurred in the ordinary course of
its business; and
IT IS FURTHER ORDERED that the Debtor has sixty (60) days after the
Confirmation Date within which to file objection(s) to any disputed claims of
creditors; and
<PAGE> 9
IT IS FURTHER ORDERED that Debtor POWERTEL USA, INC., a Delaware
corporation, shall pay such fees to the Office of the United States Trustee as
are required by 28 U.S.C. Section 1930(a)(6) until such time a final decree is
entered closing its case; and
IT IS FURTHER ORDERED that the Debtor's stock transfer agent may rely
on this Order as a basis to establish shareholders of record ("Equity Interest
Holders"), and may compute a reconfigured shareholder ledger.
DATED: September 15, 1998
/s/ Bert M. Goldwater
------------------------------------
BERT M. GOLDWATER
UNITED STATES BANKRUPTCY JUDGE
Prepared by:
STEPHEN R. HARRIS, ESQ.
BELDING, HARRIS & PETRONI, LTD.
417 West Plumb Lane
Reno, NV 89509
(702) 786-7600
Attorneys for Debtor
Approved and accepted Approved as to form this ___ day of
this 9th day of September, 1998 September, 1998
/s/ Richard Cascarilla /s/ Nicholas Strozza, Esq.
- ------------------------------- -----------------------------------------
RICHARD CASCARILLA, President NICHOLAS STROZZA, ESQ.
POWERTEL USA, INC., Debtor Assistant U.S. Trustee
Office of the United States Trustee
<PAGE> 1
Exhibit 3(i)(a)
CERTIFICATE OF CORRECTION
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
NEVADA ENERGY COMPANY, INC.
NEVADA ENERGY COMPANY, INC., a Delaware corporation (the "Company"),
certifies pursuant to Section 103(f) of the General Corporation Law of the State
of Delaware that:
1. The Company filed on November 27, 1996, a Restated Certificate of
Incorporation of Nevada Energy Company, Inc. (SRV number 960348615) (the
"Restated Certificate").
2. The Restated Certificate was an inaccurate record of the corporate
action because the amendments purportedly effected by such filing were not
approved by the stockholders of the Company, and therefore, should not have been
filed with the Secretary of State of the State of Delaware. As a result of such
inaccuracy, said Restated Certificate is null and void AB INITIO and shall have
no further force or effect.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Correction to be executed by its duly authorized officer this 25th day of
November, 1998.
NEVADA ENERGY COMPANY, INC.
By: /s/ Richard A. Cascarilla
--------------------------------
Richard A. Cascarilla, President
<PAGE> 1
Exhibit 3(i)(b)
CERTIFICATE OF CORRECTION
OF THE
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
OF
POWERTEL USA, INC.
POWERTEL USA, INC., a Delaware corporation (the "Company"), certifies
pursuant to Section 103(f) of the General Corporation Law of the State of
Delaware that:
1. The Company filed on January 2, 1997, a Certificate of Amendment to
the Certificate of Incorporation of POWERTEL USA, INC., (SRV number 971000916)
(the "Certificate of Amendment").
2. The Certificate of Amendment was an inaccurate record of the
corporate action and is null and void AB INITIO as confirmed by an ORDER
APPROVING AND CONFIRMING DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION, AS
REVISED AND AMENDED of the U.S. Bankruptcy Court of the District of Nevada, Case
No: 97-30265-BMG, dated September 15, 1998.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Correction to be executed by its duly authorized officer this 25th day of
November, 1998.
POWERTEL USA, INC.
By: /s/ Richard A. Cascarilla
--------------------------------
Richard A. Cascarilla, President
<PAGE> 1
Exhibit 3(i)(c)
CERTIFICATE OF CORRECTION
OF THE
CERTIFICATE OF CORRECTION OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
POWERTEL USA, INC.
POWERTEL USA, INC., a Delaware corporation (the "Company"), certifies
pursuant to Section 103(f) of the General Corporation Law of the State of
Delaware that:
1. The Company filed on January 14, 1997, a Certificate of Correction
of the Restated Certificate of Incorporation of POWERTEL USA, INC., (SRV number
971013560) (the "Certificate of Correction").
2. The Certificate of Correction was an inaccurate record of the
corporate action and is null and void AB INITIO as confirmed by an ORDER
APPROVING AND CONFIRMING DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION, AS
REVISED AND AMENDED of the U.S. Bankruptcy Court of the District of Nevada, Case
No: 97-30265-BMG, dated September 15, 1998.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Correction to be executed by its duly authorized officer this 25th day of
November, 1998.
POWERTEL USA, INC.
By: /s/ Richard A. Cascarilla
--------------------------------
Richard A. Cascarilla, President
<PAGE> 1
Exhibit 3(i)(d)
CERTIFICATE OF CORRECTION
OF THE
CERTIFICATE OF CORRECTION TO THE
CERTIFICATE OF AMENDMENT
OF
POWERTEL USA, INC.
POWERTEL USA, INC., a Delaware corporation (the "Company"), certifies
pursuant to Section 103(f) of the General Corporation Law of the State of
Delaware that:
1. The Company filed on January 22, 1997, a Certificate of Correction
to the Certificate of Amendment of POWERTEL USA, INC., (SRV number 971021082)
(the "Certificate of Correction").
2. The Certificate of Correction was an inaccurate record of the
corporate action and is null and void AB INITIO as confirmed by an ORDER
APPROVING AND CONFIRMING DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION, AS
REVISED AND AMENDED of the U.S. Bankruptcy Court of the District of Nevada, Case
No: 97-30265-BMG, dated September 15, 1998.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Correction to be executed by its duly authorized officer this 25th day of
November, 1998.
POWERTEL USA, INC.
By: /s/ Richard A. Cascarilla
--------------------------------
Richard A. Cascarilla, President
<PAGE> 1
Exhibit 3(i)(e)
CERTIFICATE OF CORRECTION
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
POWERTEL USA, INC.
POWERTEL USA, INC., a Delaware corporation (the "Company"), certifies
pursuant to Section 103(f) of the General Corporation Law of the State of
Delaware that:
1. The Company filed on January 22, 1997, a Restated Certificate of
Incorporation of POWERTEL USA, INC., (SRV number 971021090) (the "Restated
Certificate").
2. The Restated Certificate was an inaccurate record of the corporate
action and is null and void AB INITIO as confirmed by an ORDER APPROVING AND
CONFIRMING DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION, AS REVISED AND AMENDED
of the U.S. Bankruptcy Court of the District of Nevada, Case No: 97-30265- BMG,
dated September 15, 1998.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Correction to be executed by its duly authorized officer this 25th day of
November, 1998.
POWERTEL USA, INC.
By: /s/ Richard A. Cascarilla
------------------------------------
Richard A. Cascarilla, President
<PAGE> 1
Exhibit 3(i)(f)
CERTIFICATE OF CORRECTION
OF THE
CERTIFICATE OF CORRECTION TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
POWERTEL USA, INC.
POWERTEL USA, INC., a Delaware corporation (the "Company"), certifies
pursuant to Section 103(f) of the General Corporation Law of the State of
Delaware that:
1. The Company filed on January 24, 1997, a Certificate of Correction
to the Restated Certificate of Incorporation of POWERTEL USA, INC., (SRV number
971024478) (the "Certificate of Correction").
2. The Certificate of Correction was an inaccurate record of the
corporate action and is null and void AB INITIO as confirmed by an ORDER
APPROVING AND CONFIRMING DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION, AS
REVISED AND AMENDED of the U.S. Bankruptcy Court of the District of Nevada, Case
No: 97-30265-BMG, dated September 15, 1998.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Correction to be executed by its duly authorized officer this 25th day of
November, 1998.
POWERTEL USA, INC.
By: /s/ Richard A. Cascarilla
--------------------------------
Richard A. Cascarilla, President
<PAGE> 1
Exhibit 3(i)(g)
CERTIFICATE OF CORRECTION
OF
THE
RESTATED CERTIFICATE OF INCORPORATION
OF
POWERTEL USA, INC.
POWERTEL USA, INC., a Delaware corporation (the "Company"), certifies
pursuant to Section 103(f) of the General Corporation Law of the State of
Delaware that:
1. The Company filed on January 27, 1997, a Restated Certificate of
Incorporation of POWERTEL USA, INC., (SRV number 971026370) (the "Restated
Certificate").
2. The Restated Certificate was an inaccurate record of the corporate
action and is null and void AB INITIO as confirmed by an ORDER APPROVING AND
CONFIRMING DEBTOR'S FIRST AMENDED PLAN OF REORGANIZATION, AS REVISED AND AMENDED
of the U.S. Bankruptcy Court of the District of Nevada, Case No: 97-30265- BMG,
dated September 15, 1998.
IN WITNESS WHEREOF, the Company has caused this Certificate of
Correction to be executed by its duly authorized officer this 25th day of
November, 1998.
POWERTEL USA, INC.
By: /s/ Richard A. Cascarilla
--------------------------------
Richard A. Cascarilla, President
<PAGE> 1
Exhibit 3(i)(h)
CERTIFICATE OF RENEWAL, RESTORATION AND REVIVAL
OF
CERTIFICATE OF INCORPORATION
OF
NEVADA ENERGY COMPANY, INC.
1. The name of the corporation is Nevada Energy Company, Inc.
2. Its registered office in the State of Delaware is located at 800
Delaware Avenue, City of Wilmington, County of New Castle 19801 and the name of
its registered agent at such address is Delaware Corporations Inc.
3. The date of the filing of the original Certificate of Incorporation
was December 20, 1982.
4. The date when restoration, renewal, and revival of the charter of
this company is to commence the 24th day of January, 1998 same being prior to
the date of the expiration of the charter. This renewal and revival of the
charter of this corporation is to be perpetual.
5. This corporation was duly organized and carried on the business
authorized by its charter until the 25th day of January, 1998, at such time its
charter became inoperative and forfeited for failure to obtain a registered
agent and this certificate for renewal and revival is filed by authority of the
duly elected directors of the corporation in accordance with the laws of the
State of Delaware.
IN WITNESS WHEREOF, and in compliance with the provisions of Section
312 of the Delaware General Corporation Law of the State of Delaware, as
amended, providing for the renewal, extension and restoration of charters,
Richard A. Cascarilla the last and acting authorized officer hereunto set his
hand to this Certificate this 25th day of November, 1998.
By: /s/ Richard A. Cascarilla
---------------------------
Authorized Officer
Name: Richard A. Cascarilla
-------------------------
Print or Type
Title: President
------------------------
<PAGE> 1
Exhibit 3(i)(j)
RESTATED CERTIFICATE OF INCORPORATION
OF
NEVADA ENERGY COMPANY, INC.
Nevada Energy Company, Inc., a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation") and the
undersigned authorized officer hereby certify that (i) the date of filing the
Corporation's original Certificate of Incorporation with the Secretary of State
of Delaware was December 20, 1982 and the Corporation's initial name was Munson
Geothermal, Inc., (ii) this Restated Certificate of Incorporation, as previously
amended, was duly approved and duly adopted in accordance with Section 303 of
the General Corporation Law of the State of Delaware, (iii) pursuant to Section
1129 under Chapter 11 of Title 11 of the United States Code, the Bankruptcy
Code, a plan of reorganization of the Corporation was confirmed on September 15,
1998 by Order of the United States Bankruptcy Court for the District of Nevada,
Case No. BK-97-30265-BMG (the "Order"), and (iv) the Order contains a provision
for the making of this Restated Certificate of Incorporation of the Corporation;
and in connection therewith the Corporation's Certificate of Incorporation is
amended and restated in its entirety to provide as follows:
FIRST: The name of the Corporation is WORLDCALL, CORPORATION.
SECOND: The registered office of the Corporation in the State of
Delaware is located at 800 Delaware Avenue, City of Wilmington, New Castle
County, 19801. The registered agent of the Corporation at that address is
Delaware Corporations Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: (a) The total number of shares of stock which the Corporation
is authorized to issue is (i) twenty-five million (25,000,000) shares of Class A
Common Stock, $.001 par value per share ("Common Stock") and (ii) seven (7)
shares of special stock, $.001 par value per share, designated as Special Stock.
(b) The Special Stock shall have the voting rights, preferences
and relative participating, optional or other special rights and qualifications,
limitations and restrictions as follows:
<PAGE> 2
(i) Dividends
No dividend of any kind or nature shall be paid or declared
on the Special Stock.
(ii) Liquidation Rights
Special Stock shall rank pari passu with the Common Stock
as to liquidation rights.
(iii) Voting Rights and Rights to Appoint a Director
(a) Except as expressly provided in this Certificate
of Incorporation or by law, holders of shares of Special Stock shall have no
voting rights and shall not be entitled to vote on any matter.
(b) The holders of a majority of the issued and
outstanding shares of Special Stock shall have the power and authority to and
shall, either at a meeting or by written consent, voting separately as a
separate series, elect two (2) director's to the Board of Directors of the
Corporation (individually, a "Special Director" and collectively, the "Special
Directors"). Each Special Director shall be elected for a term of one year. A
Special Director whose term has expired shall continue in office until such
Director's successor is elected and qualified, except as otherwise provided
herein or required by law. If the office of any Special Director becomes vacant
by reason of death, resignation, disqualification, removal or other cause, the
holders of a majority of the issued and outstanding shares of Special Stock
shall elect a successor for the unexpired term and until a successor is elected
and qualified. Each Special Director shall be entitled to one vote on any matter
to which a director of the Corporation is entitled to vote.
(iv) Amendment
The Corporation shall not take any action, whether by
amendment to the Certificate of Incorporation, merger, consolidation, sale of
assets or other corporate action of any kind (whether or not similar in kind or
nature to an amendment, merger, consolidation or sale of assets) that would
amend, alter, repeal or change, or have the effect of amending, altering,
repealing or changing, the authorized number of shares or Special Stock, or any
of the voting rights or other powers, preferences, or special rights of the
Special Stock without the affirmative vote of the holders of a majority of the
outstanding shares of Special Stock, voting as a single series.
FIFTH: (a) The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors, and the directors
need not be elected by ballot unless required by the By-Laws of the Corporation.
<PAGE> 3
(b) The number of directors constituting the entire Board of
Directors shall be not less than three (3) not more than seven (7) as fixed from
time to time by resolution adopted by the vote of a majority of the entire
Board, provided, however, that the number of directors shall not be reduced so
as to shorten the term of any director at the time in office, and provided
further, that the number of directors constituting the entire Board shall be
three (3) until otherwise fixed by resolution adopted by vote of a majority of
the entire Board.
SIXTH: In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the Board of Directors is expressly
authorized to make, amend or repeal the By-Laws.
SEVENTH: Every person who was or is a party or is threatened to be made
a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she,
or a person of whom he or she is the legal representative, is or was a director
or officer of the Corporation or is or was serving at the request of the
Corporation as a director or officer of another Corporation, or as its
representative in a partnership, joint venture, trust or other enterprise,
whether the basis of such action, suit or proceeding is any alleged action in an
official capacity as director, officer or representative, or in any other
capacity while serving as director, officer or representative, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended, against all expenses, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid or to be paid in settlement) reasonably incurred or suffered by
him or her in connection therewith; provided, however, that the Corporation
shall indemnify any such person in connection with any action, suit or
proceeding (or part thereof) was authorized by the Board of Directors of the
Corporation. Such right shall be a contract right and shall include the right to
be paid by the Corporation expenses incurred in defending any action, suit or
proceeding in advance of its final disposition upon delivery to the Corporation
of an undertaking, by or on behalf of such person, to repay all amounts so
advanced unless it should be determined ultimately that such person is not
entitled to be indemnified under this Article SEVENTH or otherwise.
The rights conferred by this Article SEVENTH shall not be exclusive of
any other right which such persons may have or hereafter acquire under any
statute, provision of the certificate of incorporation, bylaw, agreement, vote
of stockholders or disinterested directors or otherwise.
EIGHTH: A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (a) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (b) for acts of
omissions not in good faith or which involve intentional misconduct or knowing
violation law, (c) under Section 174 of the General Corporation Law of the State
of Delaware, or (d) for any transaction from which the director derived an
improper personal benefit, it being the intention of this Article EIGHTH that a
director of the Corporation shall, to the fullest extent permitted by the
General Corporation Law of the State of Delaware as the same exists or may
<PAGE> 4
hereafter be amended, not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director.
NINTH: Notwithstanding any other provision of this Certificate of
Incorporation or the By-Laws of the Corporation (and notwithstanding the fact
that some lesser percentage may be specified by law, this Certificate of
Incorporation or the By-Laws of the Corporation), any amendment of the
Certificate of Incorporation and any amendment to the By-Laws of the Corporation
adopted by the stockholder shall require the affirmative vote of the holders of
65% or more of the outstanding shares of capital stock of the Corporation
entitled to vote. The ByLaws may be amended by the Board of Directors by a
majority vote of the entire Board.
IN WITNESS WHEREOF, the Corporation and the undersigned duly authorized
officer have caused this Restated Certificate of Incorporation, to be executed
this 8 day of December, 1998.
NEVADA ENERGY COMPANY, INC.
By: /s/ Richard A. Cascarilla
--------------------------------
RICHARD A. CASCARILLA, PRESIDENT
<PAGE> 1
Exhibit 3(ii)(a)
POWERTEL USA, INC.
AMENDED AND RESTATED BYLAWS
ARTICLE I - STOCKHOLDERS
SECTION 1. ANNUAL MEETING.
An annual meeting of the stockholders, for the election of
directors to succeed those whose terms expire and for the transaction of such
other business as may properly come before the meeting, shall be held at such
place, on such date, and at such time as the Board of Directors shall each year
fix, which date shall be within thirteen months subsequent to the later of the
date of incorporation or the last annual meeting of stockholders.
SECTION 2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or
purposes prescribed in the notice of the meeting, may be called by the Board of
Directors or the chief executive officer and shall be held at such place, on
such date, and at such time as the persons or person calling the special
meeting shall fix.
SECTION 3. NOTICE OF MEETINGS.
Written notice of the place, date and time of all meetings of
the stockholders shall be given, not less than ten nor more than sixty days
before the date on which the meeting is to be held, to each stockholder entitled
to vote at such meeting, except as otherwise provided herein or required by law
(meaning, here and hereinafter, as required from time to time by the Delaware
General Corporation Law or the Certificate of Incorporation of the corporation).
When a meeting is adjourned to another place, date or time,
written notice need not be given of the adjourned meeting if the place, date and
time thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than thirty
days after the date
<PAGE> 2
for which the meeting was originally noticed, or if a new record date is fixed
for the adjourned meeting, written notice of the place, date and time of the
adjourned meeting shall be given in conformity herewith. At any adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting.
SECTION 4. QUORUM.
At any meeting of the stockholders, the holders of a majority
of all of the shares of the stock entitled to vote at the meeting, present in
person or by proxy, shall constitute a quorum for all purposes, unless or except
to the extent that the presence of a larger number may be required by law.
If a quorum shall fail to attend any meeting, the chairman of
the meeting or the holders of a majority of the shares of the stock entitled to
vote who are present, in person or by proxy, may adjourn the meeting to another
place, date, or time.
If a notice of any adjourned special meeting of stockholders
is sent to all stockholders entitled to vote thereat, stating that it will be
held with those present constituting a quorum, then except as otherwise required
by law, those present at such adjourned meeting shall constitute a quorum, and
all matters shall be determined by a majority of the votes cast at such meeting.
SECTION 5. ORGANIZATION.
Such person as the Board of Directors may have designated or,
in the absence of such a person, the chief executive officer of the corporation
or, in his absence, such person as may be chosen by the holders of a majority of
the shares entitled to vote who are present, in person or by proxy, shall call
to order any meeting of the stockholders and act as chairman of the meeting. In
the absence of the Secretary of the corporation, the secretary of the meeting
shall be such person as the chairman appoints.
SECTION 6. CONDUCT OF BUSINESS.
The chairman of any meeting of stockholders shall
<PAGE> 3
determine the order of business and the procedure at the meeting, including such
regulation of the manner of voting and the conduct of discussion as seem to the
chairman in order.
SECTION 7. PROXIES AND VOTING.
At any meeting of the stockholders, every stockholder entitled
to vote may vote in person or by proxy authorized by an instrument in writing
filed in accordance with the procedure established for the meeting.
Each stockholder shall have one vote for every share of stock
entitled to vote which is registered in such stockholder's name on the record
date for the meeting, except as otherwise provided herein or required by law.
All voting, including on the election of directors, but
excepting where otherwise required by law, may be by a voice vote; provided,
however, that upon demand therefor by a stockholder (or a person acting as proxy
for a stockholder) entitled to vote, a stock vote shall be taken. Every stock
vote shall be taken by ballot. Each ballot shall state the name of the
stockholder or proxy voting and such other information as may be required under
the procedure established for the meeting. Every vote taken by ballot shall be
counted by an inspector or inspectors appointed by the chairman of the meeting.
All elections shall be determined by a plurality of the votes
cast, and except as otherwise required by law, all other matters shall be
determined by a majority of the votes cast.
SECTION 8. STOCK LIST.
A complete list of stockholders entitled to vote at any
meeting of stockholders, arranged in alphabetical order for each class of stock
and showing the address of each such stockholder and the number of shares
registered in such stockholder's name, shall be open to the examination of any
such stockholder, for any purpose germane to the meeting, during ordinary
business hours for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held.
<PAGE> 4
The stock list shall also be kept at the place of the meeting
during the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the identity
of the stockholders entitled to vote at the meeting and the number of shares
held by each of them.
SECTION 9. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING.
Any action required to be taken at any annual or special
meeting of stockholders of the corporation, or any action which may be taken at
any annual or special meeting of the stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery to
the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. Every written consent shall bear the
date of signature of each stockholder who signs the consent.
<PAGE> 5
ARTICLE II - BOARD OF DIRECTORS
SECTION 1. NUMBER AND TERM OF OFFICE.
The number of directors who shall constitute the whole board
shall be such number as the Board of Directors shall at the time have
designated, except that in the absence of any such designation, such number
shall be three (3). A director whose term has expired and whose directorship has
not been eliminated by a decrease in the number of directors effective upon the
expiration of the director's term shall continue in office until such director's
successor is elected and qualified, except as otherwise provided herein or
required by law.
SECTION 2. REGULAR MEETINGS.
Regular meetings of the Board of Directors shall be held at
such place or places, on such date or dates, and at such time or times as shall
have been established by the Board of Directors and publicized in writing among
all directors. A separate written notice of each regular meeting shall not be
required.
SECTION 3. SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called by
one-third of the directors then in office (rounded up to the nearest whole
number) or by the chief executive officer and shall be held at such place, on
such date, and at such time as the person or persons calling the special meeting
shall fix. Notice of the place, date, and time of each such special meeting
shall be given each director by whom it is not waived by mailing written notice
not less than five days before the meeting or by providing written notice by
facsimile or other means of electronic transmission the same not less than
twenty-four hours before the meeting. Unless otherwise indicated in the notice
thereof, any and all business may be transacted at a special meeting.
SECTION 4. QUORUM.
At any meeting of the Board of Directors, a majority of the
total number of the whole board shall constitute a quorum for all purposes. If a
quorum shall fail to attend any meeting, a majority of those present may adjourn
the meeting to any place,
<PAGE> 6
date, or time, without further notice or waiver thereof.
SECTION 5. PARTICIPATION IN MEETINGS BY CONFERENCE TELEPHONE.
Members of the Board of Directors, or of any committee
thereof, may participate in a meeting of such board or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other and such participation
shall constitute presence in person at such meeting.
SECTION 6. CONDUCT OF BUSINESS.
At any meeting of the Board of Directors, business shall be
transacted in such order and manner as the board may from time to time
determine, and all matters shall be determined by the vote of a majority of the
directors present, except as otherwise provided herein or required by law.
Action may be taken by the Board of Directors without a meeting if all members
thereof consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board of Directors.
SECTION 7. POWERS.
The Board of Directors may, except as otherwise required by
law, exercise all such powers and do all such acts and things as may be
exercised or done by the corporation.
SECTION 8. COMPENSATION OF DIRECTORS.
Directors shall receive fees or other compensation for their
services as directors, including, without limitation, their services as members
of committees of the Board of Directors. Directors may be reimbursed for actual
out-of-pocket expenses incurred by them in the performance of their duties as
directors.
SECTION 9. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Every person who was or is a party or is threatened to be made
a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person, or a person of whom such person is the legal representative, is or was a
director or officer of the
<PAGE> 7
corporation or is or was serving at the request of the corporation as a director
or officer of another corporation, or as its representative in a partnership,
joint venture, trust or other enterprise, whether the basis of such action, suit
or proceeding is any alleged action in an official capacity as director, officer
or representative, or in any other capacity while serving as a director, officer
or representative, shall be indemnified and held harmless by the corporation to
the fullest extent authorized by the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended, against all expenses,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith; provided, however,
that the corporation shall indemnify any such person in connection with any
action, suit or proceeding (or part thereof) initiated by such person only if
such action, suit or proceeding (or part thereof) was authorized by the Board of
Directors of the corporation. Such right shall be a contract right and shall
include the right to be paid by the corporation expenses incurred in defending
any action, suit or proceeding in advance of its final disposition upon delivery
to the corporation of an undertaking, by or on behalf of such person, to repay
all amounts so advanced unless it should be determined ultimately that such
person is entitled to be indemnified under this Section 9 or otherwise.
The rights conferred by this Section 9 shall not be exclusive
of any other right to indemnification or advancement of expenses which a person
may have or hereafter acquire under any statute, provision of the certificate of
incorporation, bylaw, agreement, vote of stockholders or disinterested directors
or otherwise.
<PAGE> 8
ARTICLE III - COMMITTEES
SECTION 1. COMMITTEES OF THE BOARD OF DIRECTORS.
The Board of Director may from time to time designate
committees of the board, with such lawfully delegable powers and duties as it
thereby confers, to serve at the pleasure of the board and shall, for those
committees and any others provided for herein, elect a director or directors to
serve as the member or members, designating, if it desires, other directors as
alternate members who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of any member of
any committee and any alternate member in his place, the member or members of
the committee present at the meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may by unanimous vote appoint another
member of the Board of Directors to act at the meeting in the place of the
absent or disqualified member.
SECTION 2. CONDUCT OF BUSINESS.
Each committee may determine the procedural rules for meeting
and conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; one-third of the members shall constitute
a quorum unless the committee shall consist of one or two members, in which
event one member shall constitute a quorum; and all matters shall be determined
by a majority vote of the members present. Action may be taken by any committee
without a meeting if all members thereof consent thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of such
committee.
<PAGE> 9
ARTICLE IV - OFFICERS
SECTION 1. GENERALLY.
The officers of the corporation shall consist of a president,
a secretary, a treasurer and such other officers as may from time to time be
appointed by the Board of Directors. Officers shall be elected by the Board of
Directors which shall consider that subject at its first meeting after every
annual meeting of stockholders. Each officer shall hold office until his or her
successor is elected and qualified or until his or her earlier resignation or
removal. The president shall be a member of the Board of Directors. Any number
of offices may be held by the same person.
SECTION 2. PRESIDENT.
The president shall be the chief executive officer of the
corporation. Subject to the provisions of these bylaws and to the direction of
the Board of Directors, the president shall have the responsibility for the
general management and control of the business and affairs of the corporation
and shall perform all duties and have all powers which are commonly incident to
the office of chief executive or which are delegated to him by the Board of
Directors. The president shall have power to sign all stock certificates,
contracts and other instruments of the corporation which are authorized and
shall have general supervision and direction of all of the other officers,
employees and agents of the corporation.
SECTION 3. VICE PRESIDENT.
Each vice president, to the extent that there are any, shall
have such powers and duties as may be delegated to him or her by the Board of
Directors. One vice president shall be designated by the board to perform the
duties and exercise the powers of the president in the event of the president's
absence or disability.
SECTION 4. TREASURER.
The treasurer shall have the responsibility for
maintaining the financial records of the corporation and shall have
custody of all monies and securities of the corporation. The
<PAGE> 10
treasurer shall make such disbursements of the funds of the corporation as are
authorized and shall render from time to time an account of all such
transactions and of the financial condition of the corporation. The treasurer
shall also perform such other duties as the Board of Directors may from time to
time prescribe.
SECTION 5. SECRETARY.
The secretary shall issue all authorized notices for, and
shall keep minutes of, all meetings of the stockholders and the Board of
Directors. The secretary shall have charge of the corporate books and shall
perform such other duties as the Board of Directors may from time to time
prescribe.
SECTION 6. DELEGATION OF AUTHORITY.
The Board of Directors may from time to time delegate the
powers or duties of any officer to any other officer or agent, notwithstanding
any other provision of these bylaws.
SECTION 7. REMOVAL.
Any officer of the corporation may be removed at any time,
with or without cause, by the Board of Directors.
SECTION 8. ACTION WITH RESPECT TO SECURITIES OF OTHER
CORPORATIONS.
Unless otherwise directed by the Board of Directors, the
president shall have power to vote and otherwise act on behalf of the
corporation, in person or by proxy, at any meeting of stockholders of or with
respect to any action of stockholders of any other corporation in which this
corporation may hold securities and otherwise to exercise any and all rights and
powers which this corporation may possess by reason of its ownership of
securities in such other corporation.
<PAGE> 11
ARTICLE V - STOCK
SECTION 1. CERTIFICATES OF STOCK.
Each stockholder shall be entitled to a certificate signed by,
or in the name of the corporation by, the president or a vice president, and by
the secretary or an assistant secretary, or the treasurer or an assistant
treasurer, certifying the number of shares owned by such stockholder. Any of or
all the signatures on the certificate may be facsimile.
SECTION 2. TRANSFERS OF STOCK.
Transfers of stock shall be made only upon the transfer books
of the corporation kept at an office of the corporation or by transfer agents
designated to transfer shares of the stock of the corporation. Except where a
certificate is issued in accordance with Section 4 of Article V of these bylaws,
an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
SECTION 3. RECORD DATE.
In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting.
In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors.
<PAGE> 12
In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action.
SECTION 4. LOST, STOLEN OR DESTROYED CERTIFICATES.
In the event of the loss, theft or destruction of any
certificate of stock, another may be issued in its place pursuant to such
regulations as the Board of Directors may establish (or in the absence of such
regulations, pursuant to a resolution adopted by the Board of Directors)
concerning proof of such loss, theft or destruction and concerning the giving of
a satisfactory bond or bonds of indemnity.
SECTION 5. REGULATIONS.
The issue, transfer, conversion and registration of
certificates of stock shall be governed by such other regulations as the Board
of Directors may by resolution establish from time to time.
<PAGE> 13
ARTICLE VI - NOTICES
SECTION 1. NOTICES.
Except as otherwise specifically provided herein or required
by law, all notices required by these bylaws to be given to any stockholder,
director, officer, employee or agent, shall be in writing and may in every
instance be effectively given by hand delivery to the recipient thereof, by
depositing such notice in the mails, postage paid, by sending such notice by
prepaid telegram or mailgram, or by sending such notice by Federal Express or
other similar private carrier providing evidence of delivery. Any such notice
shall be addressed to such stockholder, director, officer, employee, or agent at
his or her last known address as the same appears on the books of the
corporation. The time when such notice is received, if hand delivered, or
dispatched, if delivered through the mails, by telegram or mailgram or by
private carrier, shall be the time of the giving of the notice.
SECTION 2. WAIVERS.
A written waiver of any notice, signed by a stockholder,
director, officer, employee or agent, whether before or after the time of the
event for which notice is to be given, shall be deemed equivalent to the notice
required to be given to such stockholder, director, officer, employee or agent.
Neither the business nor the purpose of any meeting need be specified in such a
waiver.
<PAGE> 14
ARTICLE VII - MISCELLANEOUS
SECTION 1. FACSIMILE SIGNATURES.
In addition to the provisions for use of facsimile signatures
elsewhere specifically authorized in these bylaws, facsimile signatures of any
officer or officers of the corporation may be used whenever and as authorized by
the Board of Directors or a committee thereof.
SECTION 2. CORPORATE SEAL.
The Board of Directors may approve and adopt a suitable seal,
containing the name of the corporation, which seal shall be in the charge of the
secretary. If and when so directed by the Board of Directors or a committee
thereof, duplicates of the seal may be kept and used by the treasurer or by an
assistant secretary or assistant treasurer.
SECTION 3. RELIANCE UPON BOOKS, REPORTS AND RECORDS.
Each director, each member of any committee designated by the
Board of Directors, and each officer of the corporation shall, in the
performance of his or her duties, be fully protected in relying in good faith
upon the books of account or other records of the corporation, and upon such
information, opinions, reports and statements made to the corporation by any of
its officers, employees, or committees of the board of directors, or by any
other person as to matters reasonably believed to be within such other person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the corporation.
SECTION 4. FISCAL YEAR.
The fiscal year of the corporation shall be as fixed by the
Board of Directors.
<PAGE> 15
SECTION 5. TIME PERIODS.
In applying any provision of these bylaws which requires that
an act be done or not done a specified number of days prior to an event or that
an act be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded,
and the day of the event shall be included.
<PAGE> 16
ARTICLE VIII - AMENDMENTS
SECTION 1. AMENDMENTS.
These bylaws may be amended or repealed by the Board of
Directors at any meeting or by the affirmative vote of 65% or more of the
outstanding shares of capital stock of the corporation entitled to vote at any
meeting.
<PAGE> 1
Exhibit 4a
STOCK OPTION AND PURCHASE AGREEMENT
THIS STOCK OPTION AND PURCHASE AGREEMENT (this "Agreement") is
made as of this 3 day of December, 1998 between Richard A. Cascarilla ("Seller")
and Nevada Energy Company, Inc. ("Buyer").
RECITALS
A. Pursuant to Section 1129 under Chapter 11 of Title 11 of
the United States Code, the Bankruptcy Code, a plan of reorganization of Buyer
(the "Plan") was confirmed on September 15, 1998 by Order of the United States
Bankruptcy Court for the District of Nevada, Case No. BK-97-30265-BMG.
B. The Plan contains a provision requiring Buyer to repurchase
the shares of Series B Preferred Stock of Buyer owned by Seller for a per share
price of 100,000 shares of Class A Common Stock and a twenty-four (24) month
option to purchase an additional 100,000 shares of Class A Common Stock at an
exercise price of $0.10 per share.
C. Seller owns two (2) shares of Series B Preferred Stock,
$0.01 par value per share (the "Stock"), of Buyer.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Stock Purchase. Seller shall sell, assign and transfer to
Buyer and Buyer shall purchase from Seller the Stock in exchange for a per share
price of 100,000 shares of Class A Common Stock of Buyer and a twenty-four (24)
month option to purchase an additional 100,000 shares of Class A Common Stock of
Buyer at an exercise price of $0.10 per share.
2. Payment. Buyer shall deliver certificates representing
200,000 shares of Class A Common Stock of Buyer in favor of Seller, concurrently
with the execution hereof, the receipt of which Seller hereby acknowledges. In
addition, Buyer hereby grants to Seller the right and option to purchase an
additional 200,000 shares of Class A Common Stock of Buyer subject to, and in
accordance with, the following terms and conditions (the "Option"):
<PAGE> 2
2.1. The purchase price at which Seller shall be entitled to
purchase shares of Class A Common Stock of Buyer upon exercise
of the Option shall be $0.10 per share.
2.2. The Option shall be exercisable to the extent and in the
manner provided herein for a period of twenty-four (24) months
from the date of this Agreement.
2.3. Subject to the terms and conditions of this Agreement,
including the limitation set forth in Section 2.2 above, the
Option may be exercised in whole at any time, or in part from
time to time, by delivery of written notice to the Buyer at
its principal executive office. Such notice shall state the
number of shares in respect of which the Option is being
exercised and shall be signed by Seller. If requested by
Buyer, Seller shall deliver this Agreement to the Secretary of
the Buyer who shall endorse thereon a notation of such
exercise.
2.4. The notice of exercise described in Section 2.3 above shall be
accompanied by the full purchase price for the shares in
respect of which the Option is being exercised, in cash or by
check.
2.5. Upon receipt of notice of exercise and full payment for the
shares in respect of which the Option is exercised, Buyer
shall take such action as may be necessary to effect the
transfer to Seller of the number of shares as to which such
exercise was effective.
2.6. Seller shall not be deemed to be the holder of, or to have any
of the rights of a holder with respect to any shares subject
to the Option until (i) the Option shall have been exercised
pursuant to the terms of this Agreement and Seller shall have
paid the full purchase price for the numbers of shares in
respect of
<PAGE> 3
which the Option is exercised, (ii) Buyer shall have issued
and delivered to Seller certificates evidencing the shares,
and (iii) Seller's name shall have been entered as a
stockholder of record on the books of Buyer, whereupon Seller
shall have full voting and other ownership rights with respect
to such shares.
2.7. Buyer shall take such action as is necessary to reserve a
sufficient number of shares of Class A Common Stock for
issuance upon exercise of the Option.
2.8. The Option shall not be transferable other than by will or by
the laws of descent and distribution. During the lifetime of
Seller, the Option shall be exercisable only by Seller. Any
shares that Seller acquires upon exercise of the Option may be
transferred freely upon registration under the Securities Act
and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act of 1933
and applicable state securities laws.
2.9. Subject to the terms and conditions of this Agreement, upon
the effective date of the liquidation or dissolution of Buyer,
the Option shall continue in effect in accordance with its
terms and Seller shall be entitled to receive in respect of
all shares subject to the Option, upon exercise of the Option,
the same number and kind of stock, securities, cash, property
or other consideration that each holder of shares was entitled
to receive in such transaction.
2.10 If there shall be any capital reorganization, or
consolidation, or merger of the Buyer with any other entity,
or any sale of all or substantially all of the Buyer's
property
<PAGE> 4
and assets to any other entity, Buyer shall take appropriate
action to enable Seller to receive upon any subsequent
exercise of the Option, in whole or in part, in lieu of any
common shares of Buyer, the share or shares, securities,
interest or interests, or other assets as were issuable or
payable upon such reorganization, consolidation, merger, or
sale in respect of or in exchange for such common shares.
2.11 Each certificate representing Common Stock initially issued
upon exercise of an Option, unless at the time of the exercise
the Company has completed an initial public offering of its
Common Stock and the sale of shares to Seller pursuant to the
exercise of the Option has been registered under the
Securities Act, shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY
BE OFFERED AND SOLD ONLY IF SO REGISTERED OR
IN A MANNER EXEMPT FROM REGISTRATION UNDER
SUCH ACT. IN ADDITION, THE TRANSFER OF THESE
SECURITIES IS SUBJECT TO THE CONDITIONS SET
FORTH IN A STOCK OPTION AGREEMENT DATED
DECEMBER__, 1998 BETWEEN RICHARD A.
CASCARILLA AND NEVADA ENERGY COMPANY, INC.
NO TRANSFER OF THESE SECURITIES SHALL BE
EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED.
Certificates issued upon the transfer of any
such shares of Class A Common Stock shall
also bear this legend, unless Buyer shall
have waived the requirement of such legend.
<PAGE> 5
2.12 Seller hereby represents and warrants to Buyer that Seller is
acquiring the Option and any Class A Common Stock acquired by
him pursuant to the exercise of the Option for his own
account, for investment and not with a view to the sale or
distribution thereof, nor with any present intention to
distribute or sell the Class A Common Stock.
3. Surrender of Shares. Concurrently with the execution hereof, Seller
shall deliver to Buyer Certificate No. ___ which represents the Stock duly
endorsed for transfer to Buyer, receipt of which Buyer hereby acknowledges.
Seller further covenants and agrees to take any and all reasonable steps
necessary to transfer legal ownership of the Stock to Buyer.
4. Representation of Seller. Seller represents and warrants that he is
the sole owner, both of record and beneficially, of the Stock and the Stock is
free and clear of all claims, liens, charges and assessments of any kind
whatsoever.
5. Survival of Representation and Warranties. All representations and
warranties made hereunder shall survive the delivery of the Stock sold
hereunder.
6. Closing. Closing for this transaction shall occur on December __,
1998.
7. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the respective parties hereto, their legal representatives,
successors and assigns.
8. Entire Agreement. This Agreement is intended by the parties hereto
as a final expression of their agreement with respect to the subject matter
hereof, and is intended as a complete and exclusive agreement of the terms and
conditions of that agreement. This Agreement may not be modified, rescinded or
terminated orally, and no modification, rescission, termination or attempted
waiver of any of the terms, provisions or conditions hereof (including this
paragraph) shall be valid unless in writing and signed by the party against whom
the same is sought to be enforced.
<PAGE> 6
9. Non-Waiver. No delay or failure by any party to exercise any right
under this Agreement, and no partial or single exercise of that right, shall
constitute a waiver of that or any other right, unless otherwise expressly
provided herein.
10. Payment of Legal Expenses. Buyer shall pay all fees and expenses of
counsel incurred with respect to this Agreement.
11. Headings. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe its provisions.
12. Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first set forth above.
SELLER:
Richard A. Cascarilla
/s/ (Illegible) /s/ Richard A. Cascarilla
- ------------------------------- -----------------------------
Witness
BUYER:
Nevada Energy Company, Inc.
/s/ (Illegible) /s/ Richard A. Cascarilla
- ------------------------------- -----------------------------
Witness By: President
<PAGE> 1
Exhibit 4b
STOCK OPTION AND PURCHASE AGREEMENT
THIS STOCK OPTION AND PURCHASE AGREEMENT (this "Agreement") is
made as of this 3rd day of December, 1998 between Jeffrey Modesitt ("Seller")
and Nevada Energy Company, Inc. ("Buyer").
RECITALS
A. Pursuant to Section 1129 under Chapter 11 of Title 11 of
the United States Code, the Bankruptcy Code, a plan of reorganization of Buyer
(the "Plan") was confirmed on September 15, 1998 by Order of the United States
Bankruptcy Court for the District of Nevada, Case No. BK-97-30265-BMG.
B. The Plan contains a provision requiring Buyer to repurchase
the shares of Series B Preferred Stock of Buyer owned by Seller for a per share
price of 100,000 shares of Class A Common Stock and a twenty-four (24) month
option to purchase an additional 100,000 shares of Class A Common Stock at an
exercise price of $0.10 per share.
C. Seller owns one (1) share of Series B Preferred Stock,
$0.01 par value per share (the "Stock"), of Buyer.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Stock Purchase. Seller shall sell, assign and transfer to
Buyer and Buyer shall purchase from Seller the Stock in exchange for a per share
price of 100,000 shares of Class A Common Stock of Buyer and a twenty-four (24)
month option to purchase an additional 100,000 shares of Class A Common Stock of
Buyer at an exercise price of $0.10 per share.
2. Payment. Buyer shall deliver certificates representing
100,000 shares of Class A Common Stock of Buyer in favor of Seller, concurrently
with the execution hereof, the receipt of which Seller hereby acknowledges. In
addition, Buyer hereby grants to Seller the right and option to purchase an
additional 100,000 shares of Class A Common Stock of Buyer subject to, and in
accordance with, the following terms and conditions (the "Option"):
<PAGE> 2
2.1. The purchase price at which Seller shall be entitled
to purchase shares of Class A Common Stock of Buyer
upon exercise of the Option shall be $0.10 per share.
2.2. The Option shall be exercisable to the extent and in
the manner provided herein for a period of
twenty-four (24) months from the date of this
Agreement.
2.3. Subject to the terms and conditions of this
Agreement, including the limitation set forth in
Section 2.2 above, the Option may be exercised in
whole at any time, or in part from time to time, by
delivery of written notice to the Buyer at its
principal executive office. Such notice shall state
the number of shares in respect of which the Option
is being exercised and shall be signed by Seller. If
requested by Buyer, Seller shall deliver this
Agreement to the Secretary of the Buyer who shall
endorse thereon a notation of such exercise.
2.4. The notice of exercise described in Section 2.3 above
shall be accompanied by the full purchase price for
the shares in respect of which the Option is being
exercised, in cash or by check.
2.5. Upon receipt of notice of exercise and full payment
for the shares in respect of which the Option is
exercised, Buyer shall take such action as may be
necessary to effect the transfer to Seller of the
number of shares as to which such exercise was
effective.
2.6. Seller shall not be deemed to be the holder of, or to
have any of the rights of a holder with respect to
any shares subject to the Option until (i) the Option
shall have been exercised pursuant to the terms of
this Agreement and Seller shall have paid the full
purchase price for the numbers of shares in respect
of
<PAGE> 3
which the Option is exercised, (ii) Buyer shall have
issued and delivered to Seller certificates
evidencing the shares, and (iii) Seller's name shall
have been entered as a stockholder of record on the
books of Buyer, whereupon Seller shall have full
voting and other ownership rights with respect to
such shares.
2.7. Buyer shall take such action as is necessary to
reserve a sufficient number of shares of Class A
Common Stock for issuance upon exercise of the
Option.
2.8. The Option shall not be transferable other than by
will or by the laws of descent and distribution.
During the lifetime of Seller, the Option shall be
exercisable only by Seller. Any shares that Seller
acquires upon exercise of the Option may be
transferred freely upon registration under the
Securities Act and any applicable state securities
laws, or pursuant to an exemption from registration
under the Securities Act of 1933 and applicable state
securities laws.
2.9. Subject to the terms and conditions of this
Agreement, upon the effective date of the liquidation
or dissolution of Buyer, the Option shall continue in
effect in accordance with its terms and Seller shall
be entitled to receive in respect of all shares
subject to the Option, upon exercise of the Option,
the same number and kind of stock, securities, cash,
property or other consideration that each holder of
shares was entitled to receive in such transaction.
2.10 If there shall be any capital reorganization, or
consolidation, or merger of the Buyer with any other
entity, or any sale of all or substantially all of
the Buyer's property
<PAGE> 4
and assets to any other entity, Buyer shall take
appropriate action to enable Seller to receive upon
any subsequent exercise of the Option, in whole or in
part, in lieu of any common shares of Buyer, the
share or shares, securities, interest or interests,
or other assets as were issuable or payable upon such
reorganization, consolidation, merger, or sale in
respect of or in exchange for such common shares.
2.11 Each certificate representing Common Stock initially
issued upon exercise of an Option, unless at the time
of the exercise the Company has completed an initial
public offering of its Common Stock and the sale of
shares to Seller pursuant to the exercise of the
Option has been registered under the Securities Act,
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY
BE OFFERED AND SOLD ONLY IF SO REGISTERED OR
IN A MANNER EXEMPT FROM REGISTRATION UNDER
SUCH ACT. IN ADDITION, THE TRANSFER OF THESE
SECURITIES IS SUBJECT TO THE CONDITIONS SET
FORTH IN A STOCK OPTION AGREEMENT DATED
DECEMBER__, 1998 BETWEEN JEFFREY MODESITT
AND NEVADA ENERGY COMPANY, INC. NO TRANSFER
OF THESE SECURITIES SHALL BE EFFECTIVE UNTIL
SUCH CONDITIONS HAVE BEEN FULFILLED.
Certificates issued upon the transfer of any
such shares of Class A Common Stock shall
also bear this legend, unless Buyer shall
have waived the requirement of such legend.
<PAGE> 5
2.12 Seller hereby represents and warrants to Buyer that
Seller is acquiring the Option and any Class A Common
Stock acquired by him pursuant to the exercise of the
Option for his own account, for investment and not
with a view to the sale or distribution thereof, nor
with any present intention to distribute or sell the
Class A Common Stock.
3. Surrender of Shares. Concurrently with the execution
hereof, Seller shall deliver to Buyer Certificate No. B3 which represents the
Stock duly endorsed for transfer to Buyer, receipt of which Buyer hereby
acknowledges. Seller further covenants and agrees to take any and all reasonable
steps necessary to transfer legal ownership of the Stock to Buyer.
4. Representation of Seller. Seller represents and warrants
that he is the sole owner, both of record and beneficially, of the Stock and the
Stock is free and clear of all claims, liens, charges and assessments of any
kind whatsoever.
5. Survival of Representation and Warranties. All
representations and warranties made hereunder shall survive the delivery of the
Stock sold hereunder.
6. Closing. Closing for this transaction shall occur on
December __, 1998.
7. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the respective parties hereto, their legal
representatives, successors and assigns.
8. Entire Agreement. This Agreement is intended by the parties
hereto as a final expression of their agreement with respect to the subject
matter hereof, and is intended as a complete and exclusive agreement of the
terms and conditions of that agreement. This Agreement may not be modified,
rescinded or terminated orally, and no modification, rescission, termination or
attempted waiver of any of the terms, provisions or conditions hereof (including
this paragraph) shall be valid unless in writing and signed by the party against
whom the same is sought to be enforced.
<PAGE> 6
9. Non-Waiver. No delay or failure by any party to exercise
any right under this Agreement, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right, unless otherwise expressly
provided herein.
10. Payment of Legal Expenses. Buyer shall pay all fees and
expenses of counsel incurred with respect to this Agreement.
11. Headings. Headings in this Agreement are for convenience
only and shall not be used to interpret or construe its provisions.
12. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first set forth above.
SELLER:
Jeffrey Modesitt
/s/ (Unknown) /s/ Jeffrey Modesitt
- ---------------------------------- -----------------------------------
Witness
BUYER:
Nevada Energy Company, Inc.
/s/ (Unknown) /s/ Richard Cascarilla
- ---------------------------------- -----------------------------------
Witness By:
<PAGE> 1
Exhibit 4c
STOCK OPTION AND PURCHASE AGREEMENT
THIS STOCK OPTION AND PURCHASE AGREEMENT (this "Agreement") is
made as of this 8th day of December, 1998 between Michael Kassouff ("Seller")
and Nevada Energy Company, Inc. ("Buyer").
RECITALS
A. Pursuant to Section 1129 under Chapter 11 of Title 11 of
the United States Code, the Bankruptcy Code, a plan of reorganization of Buyer
(the "Plan") was confirmed on September 15, 1998 by Order of the United States
Bankruptcy Court for the District of Nevada, Case No. BK-97-30265-BMG.
B. The Plan contains a provision requiring Buyer to repurchase
the shares of Series B Preferred Stock of Buyer owned by Seller for a per share
price of 100,000 shares of Class A Common Stock and a twenty-four (24) month
option to purchase an additional 100,000 shares of Class A Common Stock at an
exercise price of $0.10 per share.
C. Seller owns one (1) share of Series B Preferred Stock,
$0.01 par value per share (the "Stock"), of Buyer.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Stock Purchase. Seller shall sell, assign and transfer to
Buyer and Buyer shall purchase from Seller the Stock in exchange for a per share
price of 100,000 shares of Class A Common Stock of Buyer and a twenty-four (24)
month option to purchase an additional 100,000 shares of Class A Common Stock of
Buyer at an exercise price of $0.10 per share.
2. Payment. Buyer shall deliver certificates representing
100,000 shares of Class A Common Stock of Buyer in favor of Seller, concurrently
with the execution hereof, the receipt of which Seller hereby acknowledges. In
addition, Buyer hereby grants to Seller the right and option to purchase an
additional 100,000 shares of Class A Common Stock of Buyer subject to, and in
accordance with, the following terms and conditions (the "Option"):
<PAGE> 2
2.1. The purchase price at which Seller shall be entitled
to purchase shares of Class A Common Stock of Buyer
upon exercise of the Option shall be $0.10 per share.
2.2. The Option shall be exercisable to the extent and in
the manner provided herein for a period of
twenty-four (24) months from the date of this
Agreement.
2.3. Subject to the terms and conditions of this
Agreement, including the limitation set forth in
Section 2.2 above, the Option may be exercised in
whole at any time, or in part from time to time, by
delivery of written notice to the Buyer at its
principal executive office. Such notice shall state
the number of shares in respect of which the Option
is being exercised and shall be signed by Seller. If
requested by Buyer, Seller shall deliver this
Agreement to the Secretary of the Buyer who shall
endorse thereon a notation of such exercise.
2.4. The notice of exercise described in Section 2.3 above
shall be accompanied by the full purchase price for
the shares in respect of which the Option is being
exercised, in cash or by check.
2.5. Upon receipt of notice of exercise and full payment
for the shares in respect of which the Option is
exercised, Buyer shall take such action as may be
necessary to effect the transfer to Seller of the
number of shares as to which such exercise was
effective.
2.6. Seller shall not be deemed to be the holder of, or to
have any of the rights of a holder with respect to
any shares subject to the Option until (i) the Option
shall have been exercised pursuant to the terms of
this Agreement and Seller shall have paid the full
purchase price for the numbers of shares in respect
of
<PAGE> 3
which the Option is exercised, (ii) Buyer shall have
issued and delivered to Seller certificates
evidencing the shares, and (iii) Seller's name shall
have been entered as a stockholder of record on the
books of Buyer, whereupon Seller shall have full
voting and other ownership rights with respect to
such shares.
2.7. Buyer shall take such action as is necessary to
reserve a sufficient number of shares of Class A
Common Stock for issuance upon exercise of the
Option.
2.8. The Option shall not be transferable other than by
will or by the laws of descent and distribution.
During the lifetime of Seller, the Option shall be
exercisable only by Seller. Any shares that Seller
acquires upon exercise of the Option may be
transferred freely upon registration under the
Securities Act and any applicable state securities
laws, or pursuant to an exemption from registration
under the Securities Act of 1933 and applicable state
securities laws.
2.9. Subject to the terms and conditions of this
Agreement, upon the effective date of the liquidation
or dissolution of Buyer, the Option shall continue in
effect in accordance with its terms and Seller shall
be entitled to receive in respect of all shares
subject to the Option, upon exercise of the Option,
the same number and kind of stock, securities, cash,
property or other consideration that each holder of
shares was entitled to receive in such transaction.
2.10 If there shall be any capital reorganization, or
consolidation, or merger of the Buyer with any other
entity, or any sale of all or substantially all of
the Buyer's property
<PAGE> 4
and assets to any other entity, Buyer shall take
appropriate action to enable Seller to receive upon
any subsequent exercise of the Option, in whole or in
part, in lieu of any common shares of Buyer, the
share or shares, securities, interest or interests,
or other assets as were issuable or payable upon such
reorganization, consolidation, merger, or sale in
respect of or in exchange for such common shares.
2.11 Each certificate representing Common Stock initially
issued upon exercise of an Option, unless at the time
of the exercise the Company has completed an initial
public offering of its Common Stock and the sale of
shares to Seller pursuant to the exercise of the
Option has been registered under the Securities Act,
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY
BE OFFERED AND SOLD ONLY IF SO REGISTERED OR
IN A MANNER EXEMPT FROM REGISTRATION UNDER
SUCH ACT. IN ADDITION, THE TRANSFER OF THESE
SECURITIES IS SUBJECT TO THE CONDITIONS SET
FORTH IN A STOCK OPTION AGREEMENT DATED
DECEMBER__, 1998 BETWEEN MICHAEL KASSOUFF
AND NEVADA ENERGY COMPANY, INC. NO TRANSFER
OF THESE SECURITIES SHALL BE EFFECTIVE UNTIL
SUCH CONDITIONS HAVE BEEN FULFILLED.
Certificates issued upon the transfer of any
such shares of Class A Common Stock shall
also bear this legend, unless Buyer shall
have waived the requirement of such legend.
<PAGE> 5
2.12 Seller hereby represents and warrants to Buyer that
Seller is acquiring the Option and any Class A Common
Stock acquired by him pursuant to the exercise of the
Option for his own account, for investment and not
with a view to the sale or distribution thereof, nor
with any present intention to distribute or sell the
Class A Common Stock.
3. Surrender of Shares. Concurrently with the execution
hereof, Seller shall deliver to Buyer Certificate No. B4 which represents the
Stock duly endorsed for transfer to Buyer, receipt of which Buyer hereby
acknowledges. Seller further covenants and agrees to take any and all reasonable
steps necessary to transfer legal ownership of the Stock to Buyer.
4. Representation of Seller. Seller represents and warrants
that he is the sole owner, both of record and beneficially, of the Stock and the
Stock is free and clear of all claims, liens, charges and assessments of any
kind whatsoever.
5. Survival of Representation and Warranties. All
representations and warranties made hereunder shall survive the delivery of the
Stock sold hereunder.
6. Closing. Closing for this transaction shall occur on
December __, 1998.
7. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the respective parties hereto, their legal
representatives, successors and assigns.
8. Entire Agreement. This Agreement is intended by the parties
hereto as a final expression of their agreement with respect to the subject
matter hereof, and is intended as a complete and exclusive agreement of the
terms and conditions of that agreement. This Agreement may not be modified,
rescinded or terminated orally, and no modification, rescission, termination or
attempted waiver of any of the terms, provisions or conditions hereof (including
this paragraph) shall be valid unless in writing and signed by the party against
whom the same is sought to be enforced.
<PAGE> 6
9. Non-Waiver. No delay or failure by any party to exercise
any right under this Agreement, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right, unless otherwise expressly
provided herein.
10. Payment of Legal Expenses. Buyer shall pay all fees and
expenses of counsel incurred with respect to this Agreement.
11. Headings. Headings in this Agreement are for convenience
only and shall not be used to interpret or construe its provisions.
12. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first set forth above.
SELLER:
Michael Kassouff
/s/ (Unknown) /s/ Michael Kassouff
- --------------------------------- ------------------------------------
Witness
BUYER:
Nevada Energy Company, Inc.
/s/ (Unknown) /s/ Richard Cascarilla
- --------------------------------- ------------------------------------
Witness By:
<PAGE> 1
Exhibit 4d
STOCK OPTION AND PURCHASE AGREEMENT
THIS STOCK OPTION AND PURCHASE AGREEMENT (this "Agreement") is
made as of this 9th day of December, 1998 between Jeffrey Hartman ("Seller") and
Nevada Energy Company, Inc. ("Buyer").
RECITALS
A. Pursuant to Section 1129 under Chapter 11 of Title 11 of
the United States Code, the Bankruptcy Code, a plan of reorganization of Buyer
(the "Plan") was confirmed on September 15, 1998 by Order of the United States
Bankruptcy Court for the District of Nevada, Case No. BK-97-30265-BMG.
B. The Plan contains a provision requiring Buyer to repurchase
the shares of Series B Preferred Stock of Buyer owned by Seller for a per share
price of 100,000 shares of Class A Common Stock and a twenty-four (24) month
option to purchase an additional 100,000 shares of Class A Common Stock at an
exercise price of $0.10 per share.
C. Seller owns one (1) share of Series B Preferred Stock,
$0.01 par value per share (the "Stock"), of Buyer.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Stock Purchase. Seller shall sell, assign and transfer to
Buyer and Buyer shall purchase from Seller the Stock in exchange for a per share
price of 100,000 shares of Class A Common Stock of Buyer and a twenty-four (24)
month option to purchase an additional 100,000 shares of Class A Common Stock of
Buyer at an exercise price of $0.10 per share.
2. Payment. Buyer shall deliver certificates representing
100,000 shares of Class A Common Stock of Buyer in favor of Seller, concurrently
with the execution hereof, the receipt of which Seller hereby acknowledges. In
addition, Buyer hereby grants to Seller the right and option to purchase an
additional 100,000 shares of Class A Common Stock of Buyer subject to, and in
accordance with, the following terms and conditions (the "Option"):
<PAGE> 2
2.1. The purchase price at which Seller shall be entitled
to purchase shares of Class A Common Stock of Buyer
upon exercise of the Option shall be $0.10 per share.
2.2. The Option shall be exercisable to the extent and in
the manner provided herein for a period of
twenty-four (24) months from the date of this
Agreement.
2.3. Subject to the terms and conditions of this
Agreement, including the limitation set forth in
Section 2.2 above, the Option may be exercised in
whole at any time, or in part from time to time, by
delivery of written notice to the Buyer at its
principal executive office. Such notice shall state
the number of shares in respect of which the Option
is being exercised and shall be signed by Seller. If
requested by Buyer, Seller shall deliver this
Agreement to the Secretary of the Buyer who shall
endorse thereon a notation of such exercise.
2.4. The notice of exercise described in Section 2.3 above
shall be accompanied by the full purchase price for
the shares in respect of which the Option is being
exercised, in cash or by check.
2.5. Upon receipt of notice of exercise and full payment
for the shares in respect of which the Option is
exercised, Buyer shall take such action as may be
necessary to effect the transfer to Seller of the
number of shares as to which such exercise was
effective.
2.6. Seller shall not be deemed to be the holder of, or to
have any of the rights of a holder with respect to
any shares subject to the Option until (i) the Option
shall have been exercised pursuant to the terms of
this Agreement and Seller shall have paid the full
purchase price for the numbers of shares in respect
of
<PAGE> 3
which the Option is exercised, (ii) Buyer shall have
issued and delivered to Seller certificates
evidencing the shares, and (iii) Seller's name shall
have been entered as a stockholder of record on the
books of Buyer, whereupon Seller shall have full
voting and other ownership rights with respect to
such shares.
2.7. Buyer shall take such action as is necessary to
reserve a sufficient number of shares of Class A
Common Stock for issuance upon exercise of the
Option.
2.8. The Option shall not be transferable other than by
will or by the laws of descent and distribution.
During the lifetime of Seller, the Option shall be
exercisable only by Seller. Any shares that Seller
acquires upon exercise of the Option may be
transferred freely upon registration under the
Securities Act and any applicable state securities
laws, or pursuant to an exemption from registration
under the Securities Act of 1933 and applicable state
securities laws.
2.9. Subject to the terms and conditions of this
Agreement, upon the effective date of the liquidation
or dissolution of Buyer, the Option shall continue in
effect in accordance with its terms and Seller shall
be entitled to receive in respect of all shares
subject to the Option, upon exercise of the Option,
the same number and kind of stock, securities, cash,
property or other consideration that each holder of
shares was entitled to receive in such transaction.
2.10 If there shall be any capital reorganization, or
consolidation, or merger of the Buyer with any other
entity, or any sale of all or substantially all of
the Buyer's property
<PAGE> 4
and assets to any other entity, Buyer shall take
appropriate action to enable Seller to receive upon
any subsequent exercise of the Option, in whole or in
part, in lieu of any common shares of Buyer, the
share or shares, securities, interest or interests,
or other assets as were issuable or payable upon such
reorganization, consolidation, merger, or sale in
respect of or in exchange for such common shares.
2.11 Each certificate representing Common Stock initially
issued upon exercise of an Option, unless at the time
of the exercise the Company has completed an initial
public offering of its Common Stock and the sale of
shares to Seller pursuant to the exercise of the
Option has been registered under the Securities Act,
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY
BE OFFERED AND SOLD ONLY IF SO REGISTERED OR
IN A MANNER EXEMPT FROM REGISTRATION UNDER
SUCH ACT. IN ADDITION, THE TRANSFER OF THESE
SECURITIES IS SUBJECT TO THE CONDITIONS SET
FORTH IN A STOCK OPTION AGREEMENT DATED
DECEMBER__, 1998 BETWEEN JEFFREY HARTMAN AND
NEVADA ENERGY COMPANY, INC. NO TRANSFER OF
THESE SECURITIES SHALL BE EFFECTIVE UNTIL
SUCH CONDITIONS HAVE BEEN FULFILLED.
Certificates issued upon the transfer of any
such shares of Class A Common Stock shall
also bear this legend, unless Buyer shall
have waived the requirement of such legend.
<PAGE> 5
2.12 Seller hereby represents and warrants to Buyer that
Seller is acquiring the Option and any Class A Common
Stock acquired by him pursuant to the exercise of the
Option for his own account, for investment and not
with a view to the sale or distribution thereof, nor
with any present intention to distribute or sell the
Class A Common Stock.
3. Surrender of Shares. Concurrently with the execution
hereof, Seller shall deliver to Buyer Certificate No. ___ which represents the
Stock duly endorsed for transfer to Buyer, receipt of which Buyer hereby
acknowledges. Seller further covenants and agrees to take any and all reasonable
steps necessary to transfer legal ownership of the Stock to Buyer.
4. Representation of Seller. Seller represents and warrants
that he is the sole owner, both of record and beneficially, of the Stock and the
Stock is free and clear of all claims, liens, charges and assessments of any
kind whatsoever.
5. Survival of Representation and Warranties. All
representations and warranties made hereunder shall survive the delivery of the
Stock sold hereunder.
6. Closing. Closing for this transaction shall occur on
December __, 1998.
7. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the respective parties hereto, their legal
representatives, successors and assigns.
8. Entire Agreement. This Agreement is intended by the parties
hereto as a final expression of their agreement with respect to the subject
matter hereof, and is intended as a complete and exclusive agreement of the
terms and conditions of that agreement. This Agreement may not be modified,
rescinded or terminated orally, and no modification, rescission, termination or
attempted waiver of any of the terms, provisions or conditions hereof (including
this paragraph) shall be valid unless in writing and signed by the party against
whom the same is sought to be enforced.
<PAGE> 6
9. Non-Waiver. No delay or failure by any party to exercise
any right under this Agreement, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right, unless otherwise expressly
provided herein.
10. Payment of Legal Expenses. Buyer shall pay all fees and
expenses of counsel incurred with respect to this Agreement.
11. Headings. Headings in this Agreement are for convenience
only and shall not be used to interpret or construe its provisions.
12. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first set forth above.
SELLER:
Jeffrey Hartman
/s/ Jeffrey Hartman
- --------------------------------- -----------------------------------
Witness
BUYER:
Nevada Energy Company, Inc.
/s/ Richard Cascarilla
- --------------------------------- -----------------------------------
Witness By:
<PAGE> 1
Exhibit 4e
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is dated as of December
__, 1998 between Nevada Energy Company, Inc. (the "Company") and Richard A.
Cascarilla.
RECITALS
A. Pursuant to Section 1129 under Chapter 11 of Title 11 of the United
States Code, the Bankruptcy Code, a plan of reorganization of the Company (the
"Plan") was confirmed on September 15, 1998 by Order of the United States
Bankruptcy Court for the District of Nevada, Case No. BK-97-30265-BMG.
B. As set forth in the Company's Second Amended Disclosure Statement
Pursuant to 11 U.S.C. Section 1125 (the "Disclosure Statement"), which
Disclosure Statement was submitted to all creditors and shareholders of the
Company in connection with acceptance or rejection of the Plan, upon
confirmation of the Plan, directors of the Company are to receive compensation
in the form of, among other things, options to purchase 2,500 shares of Class A
Common Stock of the Company per director per quarter at $0.10 per share.
C. Richard A. Cascarilla was a director of the Company as of the date
of confirmation of the Plan and continues to serve in that capacity.
NOW, THEREFORE, in consideration of the premises, obligations and
agreements contained herein, and for other valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
As used herein, the following terms have the following respective
meanings. Capitalized terms not defined in this Section 1 shall have the
meanings assigned to them elsewhere in this Agreement.
a. "Stock" means the Class A Common Stock of the Company, par
value $.001 per share.
b. "Director's Shares" means the shares of Stock that Director
acquires by exercising the Option.
<PAGE> 2
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Securities Act" means the Securities Act of 1933, as amended.
2. Grant of Options.
a. For the quarter beginning September 1998 and ending December
1998 the Company hereby grants to Director the right and option to
purchase all or any part of 2,500 shares of Stock subject to, and
in accordance with, the terms and conditions set forth herein (the
"Option").
b. The Option is not intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.
c. The Company shall take such action as is necessary to reserve
a sufficient number of shares of Stock for issuance upon exercise
of the Option.
3. Purchase Price.
The purchase price per share at which Director shall be entitled to
purchase shares of Stock upon exercise of the Option shall be $0.10 per share.
4. Duration of Option.
The Option shall be exercisable to the extent and in the manner
provided herein for a period of twenty-four months (24) months from the date of
this Agreement.
5. Manner of Exercisability and Payment.
5.1 Subject to the terms and conditions of this Agreement, the Option
may be exercised in whole at any time, or in part from time to time, by delivery
of written notice to the Company at its principal executive office. Such notice
shall state the number of shares in respect of which the Option is being
exercised and shall be signed by Director. If requested by the Company, Director
shall deliver this Agreement to the Company for endorsement thereon a notation
of such exercise.
5.2 The notice of exercise described in Section 5.1 hereof shall be
accompanied by the full purchase price for the shares in respect of which the
Option is being exercised, in cash or by check.
5.3 Upon receipt of notice of exercise and full payment for the shares
in respect of which the Option is being exercised. the Company shall take such
action as may be
<PAGE> 3
necessary to effect the transfer to Director of the number of shares as to which
such exercise was effective.
5.4 Director shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to any shares subject to the Option until
(i) the Option shall have been exercised pursuant to the terms of this Agreement
and Director shall have paid the full purchase price for the number of shares in
respect of which the Option was exercised, (ii) the Company shall have issued
and delivered to Director certificates evidencing the shares, and (iii)
Director's name shall have been entered as a stockholder of record on the books
of the Company, whereupon Director shall have full voting and other ownership
rights with respect to such shares.
6. Nontransferability.
6.1 The Option shall not be transferable other than by will or by the
laws of descent and distribution. During the lifetime of Director, the Option
shall be exercisable only by Director. Director's Shares may be transferred
freely upon registration under the Securities Act and any applicable state
securities laws, or pursuant to an exemption from registration under the
Securities Act and any applicable state securities laws.
7. Effect of Liquidation, Dissolution, Reorganization, Consolidation or
Merger.
7.1. Subject to the terms and conditions of this Agreement, upon the
effective date of the liquidation or dissolution of the Company, the Option
shall continue in effect in accordance with its terms and Director shall be
entitled to receive in respect of all shares subject to the Option, upon
exercise of the Option, the same number and kind of stock, securities, cash,
property or other consideration that each holder of shares was entitled to
receive in such transaction.
7.2. If there shall be any capital reorganization, or consolidation, or
merger of the Company with any other entity, or any sale of all or substantially
all of the Company's property and assets to any other entity, Company shall take
appropriate action to enable Director to receive upon any subsequent exercise of
such Option, in whole or in part, in lieu of any common shares of the Company,
the share or shares, securities, interest or interests, or other assets as were
issuable or payable upon such reorganization, consolidation, merger, or sale in
respect of or in exchange for such commons shares.
8. Representations and Warranties of the Company.
The Company hereby represents and warrants to Director that:
a. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware.
<PAGE> 4
b. The Company has the requisite power and authority to
enter into and perform the terms of this Agreement. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly
authorized by the board of directors of the Company and no
other corporate approval or authorization or other action on
the part of the Company is necessary in order to permit the
Company to consummate the transactions contemplated by this
Agreement. This Agreement has been duly and validly executed
and delivered by the Company, and constitutes the legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms
c. Shares of Stock, when issued, delivered and paid for
upon exercise of any Option as described in this Agreement
will be validly issued, fully paid and non-assessable.
9. Representations and Warranties of Director.
Director hereby represents and warrants to the Company that
Director is acquiring the Option and any Stock acquired by him pursuant to the
exercise of the Option for his own account, for investment and not with a view
to the sale or distribution thereof, nor with any present intention to
distribute or sell the Stock.
10. Stock Legend.
Each certificate representing Stock initially issued upon
exercise of an Option, unless at the time of the exercise the Company has
completed an initial public offering of its Common Stock and the sale of shares
to Director pursuant to the exercise of the Option has been registered under the
Securities Act, shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR IN A
MANNER EXEMPT FROM REGISTRATION UNDER SUCH ACT. IN ADDITION,
THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SET FORTH IN A STOCK OPTION
AGREEMENT DATED DECEMBER __, 1998 BETWEEN RICHARD A.
CASCARILLA AND NEVADA ENERGY COMPANY, INC. NO TRANSFER OF
THESE SECURITIES SHALL
<PAGE> 5
BE EFFECTIVE UNTIL ALL SUCH CONDITIONS HAVE BEEN FULFILLED.
Certificates issued upon the transfer of any such shares of Common Stock shall
also bear this legend, unless the Company shall have waived the requirement of
such legend.
11. Notices.
All notices or other communications which may be or are
required to be given, served or sent by a party pursuant to this Agreement shall
be in writing and shall be hand delivered (including delivery by courier),
mailed by first-class, registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram, telex or facsimile transmission,
addressed as follows:
If to the Company:
NEVADA ENERGY COMPANY, INC.
321 West Lake Lansing Road
Asher Court, Suite 100
East Lansing, MI 48823
Attention: Richard A. Cascarilla, President
If to Director:
Richard A. Cascarilla
321 West Lake Lansing Road
Asher Court, Suite 100
East Lansing, MI 48823
or to such other address as may be provided in writing by party to the other
parties.
12. Modification of Agreement.
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only by a written
instrument executed by the parties hereto.
<PAGE> 6
13. Severability.
Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
14. Governing Law.
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware without
giving effect to the conflicts of laws principles thereof.
15. Successors in Interest.
This Agreement shall inure to the benefit of and be binding
upon any successor to the Company. This Agreement shall inure to the benefit of
Director's legal representatives. All obligations imposed upon Director and all
rights granted to the Company under this Agreement shall be final, binding and
conclusive upon Director's heirs, executors, administrators and successors.
16. Headings.
Headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
17. Counterparts.
This Agreement may be executed in ore or more counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.
[EXECUTION PAGE FOLLOWS]
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
NEVADA ENERGY COMPANY, INC.
/s/ Richard A. Cascarilla
----------------------------------
By: Richard A. Cascarilla
Title: President
OPTIONEE:
/s/ Richard A. Cascarilla
----------------------------------
Richard A. Cascarilla
<PAGE> 1
Exhibit 4f
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is dated as of December
9th, 1998 between Nevada Energy Company, Inc. (the "Company") and Jeffrey L.
Hartman.
RECITALS
A. Pursuant to Section 1129 under Chapter 11 of Title 11 of the United
States Code, the Bankruptcy Code, a plan of reorganization of the Company (the
"Plan") was confirmed on September 15, 1998 by Order of the United States
Bankruptcy Court for the District of Nevada, Case No. BK-97-30265-BMG.
B. As set forth in the Company's Second Amended Disclosure Statement
Pursuant to 11 U.S.C. Section 1125 (the "Disclosure Statement"), which
Disclosure Statement was submitted to all creditors and shareholders of the
Company in connection with acceptance or rejection of the Plan, upon
confirmation of the Plan, directors of the Company are to receive compensation
in the form of, among other things, options to purchase 2,500 shares of Class A
Common Stock of the Company per director per quarter at $0.10 per share.
C. Jeffrey L. Hartman was named a director of the Company as of the
date of confirmation of the Plan and continues to serve in that capacity.
NOW, THEREFORE, in consideration of the premises, obligations and
agreements contained herein, and for other valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
As used herein, the following terms have the following
respective meanings. Capitalized terms not defined in this Section 1 shall have
the meanings assigned to them elsewhere in this Agreement.
a. "Stock" means the Class A Common Stock of the
Company, par value $.001 per share.
b. "Director's Shares" means the shares of Stock that
Director acquires by exercising the Option.
c. "Code" means the Internal Revenue Code of 1986, as
amended.
<PAGE> 2
d. "Securities Act" means the Securities Act of 1933, as amended.
2. Grant of Options.
a. For the quarter beginning September 1998 and ending
December 1998 the Company hereby grants to Director the right
and option to purchase all or any part of 2,500 shares of
Stock subject to, and in accordance with, the terms and
conditions set forth herein (the "Option").
b. The Option is not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
c. The Company shall take such action as is necessary to
reserve a sufficient number of shares of Stock for issuance
upon exercise of the Option.
3. Purchase Price.
The purchase price per share at which Director shall be
entitled to purchase shares of Stock upon exercise of the Option shall be $0.10
per share.
4. Duration of Option.
The Option shall be exercisable to the extent and in the
manner provided herein for a period of twenty-four months (24) months from the
date of this Agreement.
5. Manner of Exercisability and Payment.
5.1 Subject to the terms and conditions of this Agreement, the Option
may be exercised in whole at any time, or in part from time to time, by delivery
of written notice to the Company at its principal executive office. Such notice
shall state the number of shares in respect of which the Option is being
exercised and shall be signed by Director. If requested by the Company, Director
shall deliver this Agreement to the Company for endorsement thereon a notation
of such exercise.
5.2 The notice of exercise described in Section 5.1 hereof shall be
accompanied by the full purchase price for the shares in respect of which the
Option is being exercised, in cash or by check.
5.3 Upon receipt of notice of exercise and full payment for the shares
in respect of which the Option is being exercised. the Company shall take such
action as may be
<PAGE> 3
necessary to effect the transfer to Director of the number of shares as to which
such exercise was effective.
5.4 Director shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to any shares subject to the Option until
(i) the Option shall have been exercised pursuant to the terms of this Agreement
and Director shall have paid the full purchase price for the number of shares in
respect of which the Option was exercised, (ii) the Company shall have issued
and delivered to Director certificates evidencing the shares, and (iii)
Director's name shall have been entered as a stockholder of record on the books
of the Company, whereupon Director shall have full voting and other ownership
rights with respect to such shares.
6. Nontransferability.
6.1 The Option shall not be transferable other than by will or by the
laws of descent and distribution. During the lifetime of Director, the Option
shall be exercisable only by Director. Director's Shares may be transferred
freely upon registration under the Securities Act and any applicable state
securities laws, or pursuant to an exemption from registration under the
Securities Act and any applicable state securities laws.
7. Effect of Liquidation, Dissolution, Reorganization, Consolidation or
Merger.
7.1. Subject to the terms and conditions of this Agreement, upon the
effective date of the liquidation or dissolution of the Company, the Option
shall continue in effect in accordance with its terms and Director shall be
entitled to receive in respect of all shares subject to the Option, upon
exercise of the Option, the same number and kind of stock, securities, cash,
property or other consideration that each holder of shares was entitled to
receive in such transaction.
7.2. If there shall be any capital reorganization, or consolidation, or
merger of the Company with any other entity, or any sale of all or substantially
all of the Company's property and assets to any other entity, Company shall take
appropriate action to enable Director to receive upon any subsequent exercise of
such Option, in whole or in part, in lieu of any common shares of the Company,
the share or shares, securities, interest or interests, or other assets as were
issuable or payable upon such reorganization, consolidation, merger, or sale in
respect of or in exchange for such commons shares.
8. Representations and Warranties of the Company.
The Company hereby represents and warrants to Director that:
a. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of
Delaware.
<PAGE> 4
b. The Company has the requisite power and authority to
enter into and perform the terms of this Agreement. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly
authorized by the board of directors of the Company and no
other corporate approval or authorization or other action on
the part of the Company is necessary in order to permit the
Company to consummate the transactions contemplated by this
Agreement. This Agreement has been duly and validly executed
and delivered by the Company, and constitutes the legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms
c. Shares of Stock, when issued, delivered and paid for
upon exercise of any Option as described in this Agreement
will be validly issued, fully paid and non-assessable.
9. Representations and Warranties of Director.
Director hereby represents and warrants to the Company that
Director is acquiring the Option and any Stock acquired by him pursuant to the
exercise of the Option for his own account, for investment and not with a view
to the sale or distribution thereof, nor with any present intention to
distribute or sell the Stock.
10. Stock Legend.
Each certificate representing Stock initially issued upon
exercise of an Option, unless at the time of the exercise the Company has
completed an initial public offering of its Common Stock and the sale of shares
to Director pursuant to the exercise of the Option has been registered under the
Securities Act, shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR IN A
MANNER EXEMPT FROM REGISTRATION UNDER SUCH ACT. IN ADDITION,
THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SET FORTH IN A STOCK OPTION
AGREEMENT DATED DECEMBER __, 1998 BETWEEN JEFFREY L. HARTMAN
AND NEVADA ENERGY COMPANY, INC. NO TRANSFER OF THESE
SECURITIES SHALL BE
<PAGE> 5
EFFECTIVE UNTIL ALL SUCH CONDITIONS HAVE BEEN FULFILLED.
Certificates issued upon the transfer of any such shares of Common Stock shall
also bear this legend, unless the Company shall have waived the requirement of
such legend.
11. Notices.
All notices or other communications which may be or are
required to be given, served or sent by a party pursuant to this Agreement shall
be in writing and shall be hand delivered (including delivery by courier),
mailed by first-class, registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram, telex or facsimile transmission,
addressed as follows:
If to the Company:
NEVADA ENERGY COMPANY, INC.
321 West Lake Lansing Road
Asher Court, Suite 100
East Lansing, MI 48823
Attention: Richard A. Cascarilla, President
If to Director:
Jeffrey L. Hartman, Esquire
Hartman & Armstrong, Ltd.
427 West Plumb Lane
Reno, NV 89509
or to such other address as may be provided in writing by party to the other
parties.
12. Modification of Agreement.
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only by a written
instrument executed by the parties hereto.
<PAGE> 6
13. Severability.
Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
14. Governing Law.
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware without
giving effect to the conflicts of laws principles thereof.
15. Successors in Interest.
This Agreement shall inure to the benefit of and be binding
upon any successor to the Company. This Agreement shall inure to the benefit of
Director's legal representatives. All obligations imposed upon Director and all
rights granted to the Company under this Agreement shall be final, binding and
conclusive upon Director's heirs, executors, administrators and successors.
16. Headings.
Headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
17. Counterparts.
This Agreement may be executed in ore or more counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.
[EXECUTION PAGE FOLLOWS]
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
NEVADA ENERGY COMPANY, INC.
/s/ Richard A. Cascarilla
-----------------------------------
By: Richard A. Cascarilla
Title: President
OPTIONEE:
/s/ Jeffrey L. Hartman
-----------------------------------
Jeffrey L. Hartman
<PAGE> 1
Exhibit 4g
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is dated as of December
10, 1998 between Nevada Energy Company, Inc. (the "Company") and Michael
Kassouff.
RECITALS
A. Pursuant to Section 1129 under Chapter 11 of Title 11 of the United
States Code, the Bankruptcy Code, a plan of reorganization of the Company (the
"Plan") was confirmed on September 15, 1998 by Order of the United States
Bankruptcy Court for the District of Nevada, Case No. BK-97-30265-BMG.
B. As set forth in the Company's Second Amended Disclosure Statement
Pursuant to 11 U.S.C. Section 1125 (the "Disclosure Statement"), which
Disclosure Statement was submitted to all creditors and shareholders of the
Company in connection with acceptance or rejection of the Plan, upon
confirmation of the Plan, directors of the Company are to receive compensation
in the form of, among other things, options to purchase 2,500 shares of Class A
Common Stock of the Company per director per quarter at $0.10 per share.
C. Michael Kassouff was a director of the Company as of the date of
confirmation of the Plan and continues to serve in that capacity.
NOW, THEREFORE, in consideration of the premises, obligations and
agreements contained herein, and for other valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
As used herein, the following terms have the following
respective meanings. Capitalized terms not defined in this Section 1 shall have
the meanings assigned to them elsewhere in this Agreement.
a. "Stock" means the Class A Common Stock of the
Company, par value $.001 per share.
b. "Director's Shares" means the shares of Stock that
Director acquires by exercising the Option.
c. "Code" means the Internal Revenue Code of 1986, as
amended.
<PAGE> 2
d. "Securities Act" means the Securities Act of 1933, as
amended.
2. Grant of Options.
a. For the quarter beginning September 1998 and ending
December 1998 the Company hereby grants to Director the right
and option to purchase all or any part of 2,500 shares of
Stock subject to, and in accordance with, the terms and
conditions set forth herein (the "Option").
b. The Option is not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
c. The Company shall take such action as is necessary to
reserve a sufficient number of shares of Stock for issuance
upon exercise of the Option.
3. Purchase Price.
The purchase price per share at which Director shall be
entitled to purchase shares of Stock upon exercise of the Option shall be $0.10
per share.
4. Duration of Option.
The Option shall be exercisable to the extent and in the
manner provided herein for a period of twenty-four months (24) months from the
date of this Agreement.
5. Manner of Exercisability and Payment.
5.1 Subject to the terms and conditions of this Agreement, the Option
may be exercised in whole at any time, or in part from time to time, by delivery
of written notice to the Company at its principal executive office. Such notice
shall state the number of shares in respect of which the Option is being
exercised and shall be signed by Director. If requested by the Company, Director
shall deliver this Agreement to the Company for endorsement thereon a notation
of such exercise.
5.2 The notice of exercise described in Section 5.1 hereof shall be
accompanied by the full purchase price for the shares in respect of which the
Option is being exercised, in cash or by check.
5.3 Upon receipt of notice of exercise and full payment for the shares
in respect of which the Option is being exercised. the Company shall take such
action as may be
<PAGE> 3
necessary to effect the transfer to Director of the number of shares as to which
such exercise was effective.
5.4 Director shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to any shares subject to the Option until
(i) the Option shall have been exercised pursuant to the terms of this Agreement
and Director shall have paid the full purchase price for the number of shares in
respect of which the Option was exercised, (ii) the Company shall have issued
and delivered to Director certificates evidencing the shares, and (iii)
Director's name shall have been entered as a stockholder of record on the books
of the Company, whereupon Director shall have full voting and other ownership
rights with respect to such shares.
6. Nontransferability.
6.1 The Option shall not be transferable other than by will or by the
laws of descent and distribution. During the lifetime of Director, the Option
shall be exercisable only by Director. Director's Shares may be transferred
freely upon registration under the Securities Act and any applicable state
securities laws, or pursuant to an exemption from registration under the
Securities Act and any applicable state securities laws.
7. Effect of Liquidation, Dissolution, Reorganization, Consolidation or
Merger.
7.1. Subject to the terms and conditions of this Agreement, upon the
effective date of the liquidation or dissolution of the Company, the Option
shall continue in effect in accordance with its terms and Director shall be
entitled to receive in respect of all shares subject to the Option, upon
exercise of the Option, the same number and kind of stock, securities, cash,
property or other consideration that each holder of shares was entitled to
receive in such transaction.
7.2. If there shall be any capital reorganization, or consolidation, or
merger of the Company with any other entity, or any sale of all or substantially
all of the Company's property and assets to any other entity, Company shall take
appropriate action to enable Director to receive upon any subsequent exercise of
such Option, in whole or in part, in lieu of any common shares of the Company,
the share or shares, securities, interest or interests, or other assets as were
issuable or payable upon such reorganization, consolidation, merger, or sale in
respect of or in exchange for such commons shares.
8. Representations and Warranties of the Company.
The Company hereby represents and warrants to Director that:
a. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of
Delaware.
<PAGE> 4
b. The Company has the requisite power and authority to
enter into and perform the terms of this Agreement. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly
authorized by the board of directors of the Company and no
other corporate approval or authorization or other action on
the part of the Company is necessary in order to permit the
Company to consummate the transactions contemplated by this
Agreement. This Agreement has been duly and validly executed
and delivered by the Company, and constitutes the legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms
c. Shares of Stock, when issued, delivered and paid for upon
exercise of any Option as described in this Agreement will be
validly issued, fully paid and non-assessable.
9. Representations and Warranties of Director.
Director hereby represents and warrants to the Company that
Director is acquiring the Option and any Stock acquired by him pursuant to the
exercise of the Option for his own account, for investment and not with a view
to the sale or distribution thereof, nor with any present intention to
distribute or sell the Stock.
10. Stock Legend.
Each certificate representing Stock initially issued upon
exercise of an Option, unless at the time of the exercise the Company has
completed an initial public offering of its Common Stock and the sale of shares
to Director pursuant to the exercise of the Option has been registered under the
Securities Act, shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR IN A
MANNER EXEMPT FROM REGISTRATION UNDER SUCH ACT. IN ADDITION,
THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SET FORTH IN A STOCK OPTION
AGREEMENT DATED DECEMBER __, 1998 BETWEEN MICHAEL KASSOUFF AND
NEVADA ENERGY COMPANY, INC. NO TRANSFER OF THESE SECURITIES
SHALL BE
<PAGE> 5
EFFECTIVE UNTIL ALL SUCH CONDITIONS HAVE BEEN FULFILLED.
Certificates issued upon the transfer of any such shares of Common Stock shall
also bear this legend, unless the Company shall have waived the requirement of
such legend.
11. Notices.
All notices or other communications which may be or are
required to be given, served or sent by a party pursuant to this Agreement shall
be in writing and shall be hand delivered (including delivery by courier),
mailed by first-class, registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram, telex or facsimile transmission,
addressed as follows:
If to the Company:
NEVADA ENERGY COMPANY, INC.
321 West Lake Lansing Road
Asher Court, Suite 100
East Lansing, MI 48823
Attention: Richard A. Cascarilla, President
If to Director:
Michael Kassouff
6421 W. Sam Houston Parkway N.
Houston, TX 77041
or to such other address as may be provided in writing by party to the other
parties.
12. Modification of Agreement.
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only by a written
instrument executed by the parties hereto.
<PAGE> 6
13. Severability.
Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
14. Governing Law.
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware without
giving effect to the conflicts of laws principles thereof.
15. Successors in Interest.
This Agreement shall inure to the benefit of and be binding
upon any successor to the Company. This Agreement shall inure to the benefit of
Director's legal representatives. All obligations imposed upon Director and all
rights granted to the Company under this Agreement shall be final, binding and
conclusive upon Director's heirs, executors, administrators and successors.
16. Headings.
Headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
17. Counterparts.
This Agreement may be executed in ore or more counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.
[EXECUTION PAGE FOLLOWS]
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
NEVADA ENERGY COMPANY, INC.
/s/ Richard Cascarilla
-----------------------------------
By: Richard A. Cascarilla
Title: President
OPTIONEE:
/s/ Michael Kassouff
-----------------------------------
Michael Kassouff
<PAGE> 1
Exhibit 4h
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is dated as of December
__, 1998 between Nevada Energy Company, Inc. (the "Company") and Richard A.
Cascarilla.
RECITALS
A. Pursuant to Section 1129 under Chapter 11 of Title 11 of the United
States Code, the Bankruptcy Code, a plan of reorganization of the Company (the
"Plan") was confirmed on September 15, 1998 by Order of the United States
Bankruptcy Court for the District of Nevada, Case No. BK-97-30265-BMG.
B. As set forth in the Company's Second Amended Disclosure Statement
Pursuant to 11 U.S.C. Section 1125 (the "Disclosure Statement"), which
Disclosure Statement was submitted to all creditors and shareholders of the
Company in connection with acceptance or rejection of the Plan, upon
confirmation of the Plan, directors of the Company are entitled to receive
retroactive compensation for all services issued to the date of confirmation of
the Plan in the form of stock options allowing for the purchase of 5,000 shares
of Class A Common Stock of the Company per director per month at $0.10 per
share.
C. Richard A. Cascarilla was a director of the Company as of the date
of the Disclosure Statement and has served in that capacity continuously from
May 19, 1997 through the present.
NOW, THEREFORE, in consideration of the premises, obligations and
agreements contained herein, and for other valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
As used herein, the following terms have the following
respective meanings. Capitalized terms not defined in this Section 1 shall have
the meanings assigned to them elsewhere in this Agreement.
a. "Stock" means the Class A Common Stock of the Company, par
value $.001 per share.
<PAGE> 2
b. "Director's Shares" means the shares of Stock that Director
acquires by exercising the Option.
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Securities Act" means the Securities Act of 1933, as amended.
2. Grant of Options.
a. The Company hereby grants to Director the right and
option to purchase all or any part of 80,000 shares of Stock,
subject to, and in accordance with, the terms and conditions
set forth herein (the "Option").
b. The Option is not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
c. The Company shall take such action as is necessary to
reserve a sufficient number of shares of Stock for issuance
upon exercise of the Option.
3. Purchase Price.
The purchase price per share at which Director shall be
entitled to purchase shares of Stock upon exercise of the Option shall be $0.10
per share.
4. Duration of Option.
The Option shall be exercisable to the extent and in the
manner provided herein for a period of twenty-four months (24) months from the
date of this Agreement.
5. Manner of Exercisability and Payment.
5.1 Subject to the terms and conditions of this Agreement, the Option
may be exercised in whole at any time, or in part from time to time, by delivery
of written notice to the Company at its principal executive office. Such notice
shall state the number of shares in respect of which the Option is being
exercised and shall be signed by Director. If requested by the Company, Director
shall deliver this Agreement to the Company for endorsement thereon a notation
of such exercise.
5.2 The notice of exercise described in Section 5.1 hereof shall be
accompanied by the full purchase price for the shares in respect of which the
Option is being exercised, in cash or by check.
<PAGE> 3
5.3 Upon receipt of notice of exercise and full payment for the shares
in respect of which the Option is being exercised. the Company shall take such
action as may be necessary to effect the transfer to Director of the number of
shares as to which such exercise was effective.
5.4 Director shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to any shares subject to the Option until
(i) the Option shall have been exercised pursuant to the terms of this Agreement
and Director shall have paid the full purchase price for the number of shares in
respect of which the Option was exercised, (ii) the Company shall have issued
and delivered to Director certificates evidencing the shares, and (iii)
Director's name shall have been entered as a stockholder of record on the books
of the Company, whereupon Director shall have full voting and other ownership
rights with respect to such shares.
6. Nontransferability.
6.1 The Option shall not be transferable other than by will or by the
laws of descent and distribution. During the lifetime of Director, the Option
shall be exercisable only by Director. Director's Shares may be transferred
freely upon registration under the Securities Act and any applicable state
securities laws, or pursuant to an exemption from registration under the
Securities Act and any applicable state securities laws.
7. Effect of Liquidation, Dissolution, Reorganization, Consolidation or
Merger.
7.1. Subject to the terms and conditions of this Agreement, upon the
effective date of the liquidation or dissolution of the Company, the Option
shall continue in effect in accordance with its terms and Director shall be
entitled to receive in respect of all shares subject to the Option, upon
exercise of the Option, the same number and kind of stock, securities, cash,
property or other consideration that each holder of shares was entitled to
receive in such transaction.
7.2. If there shall be any capital reorganization, or consolidation, or
merger of the Company with any other entity, or any sale of all or substantially
all of the Company's property and assets to any other entity, Company shall take
appropriate action to enable Director to receive upon any subsequent exercise of
such Option, in whole or in part, in lieu of any common shares of the Company,
the share or shares, securities, interest or interests, or other assets as were
issuable or payable upon such reorganization, consolidation, merger, or sale in
respect of or in exchange for such commons shares.
8. Representations and Warranties of the Company.
The Company hereby represents and warrants to Director that:
<PAGE> 4
a. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of
Delaware.
b. The Company has the requisite power and authority to
enter into and perform the terms of this Agreement. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly
authorized by the board of directors of the Company and no
other corporate approval or authorization or other action on
the part of the Company is necessary in order to permit the
Company to consummate the transactions contemplated by this
Agreement. This Agreement has been duly and validly executed
and delivered by the Company, and constitutes the legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms
c. Shares of Stock, when issued, delivered and paid for upon
exercise of any Option as described in this Agreement will be
validly issued, fully paid and non-assessable.
9. Representations and Warranties of Director.
Director hereby represents and warrants to the Company that
Director is acquiring the Option and any Stock acquired by him pursuant to the
exercise of the Option for his own account, for investment and not with a view
to the sale or distribution thereof, nor with any present intention to
distribute or sell the Stock.
10. Stock Legend.
Each certificate representing Stock initially issued upon
exercise of an Option, unless at the time of the exercise the Company has
completed an initial public offering of its Common Stock and the sale of shares
to Director pursuant to the exercise of the Option has been registered under the
Securities Act, shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR IN A
MANNER EXEMPT FROM REGISTRATION UNDER SUCH ACT. IN ADDITION,
THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SET FORTH IN A STOCK OPTION
AGREEMENT DATED DECEMBER __, 1998 BETWEEN RICHARD A.
CASCARILLA AND NEVADA ENERGY COMPANY,
<PAGE> 5
INC. NO TRANSFER OF THESE SECURITIES SHALL BE EFFECTIVE UNTIL
ALL SUCH CONDITIONS HAVE BEEN FULFILLED.
Certificates issued upon the transfer of any such shares of Common Stock shall
also bear this legend, unless the Company shall have waived the requirement of
such legend.
11. Notices.
All notices or other communications which may be or are
required to be given, served or sent by a party pursuant to this Agreement shall
be in writing and shall be hand delivered (including delivery by courier),
mailed by first-class, registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram, telex or facsimile transmission,
addressed as follows:
If to the Company:
NEVADA ENERGY COMPANY, INC.
321 West Lake Lansing Road
Asher Court, Suite 100
East Lansing, MI 48823
Attention: Richard A. Cascarilla, President
If to Director:
Richard A. Cascarilla
321 West Lake Lansing Road
Asher Court, Suite 100
East Lansing, MI 48823
or to such other address as may be provided in writing by party to the other
parties.
12. Modification of Agreement.
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only by a written
instrument executed by the parties hereto.
<PAGE> 6
13. Severability.
Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
14. Governing Law.
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware without
giving effect to the conflicts of laws principles thereof.
15. Successors in Interest.
This Agreement shall inure to the benefit of and be binding
upon any successor to the Company. This Agreement shall inure to the benefit of
Director's legal representatives. All obligations imposed upon Director and all
rights granted to the Company under this Agreement shall be final, binding and
conclusive upon Director's heirs, executors, administrators and successors.
16. Headings.
Headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
17. Counterparts.
This Agreement may be executed in ore or more counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.
[EXECUTION PAGE FOLLOWS]
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
NEVADA ENERGY COMPANY, INC.
/s/ Richard A. Cascarilla
-----------------------------------
By: Richard A. Cascarilla
Title: President
OPTIONEE:
/s/ Richard A. Cascarilla
-----------------------------------
Richard A. Cascarilla
<PAGE> 1
Exhibit 4i
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is dated as of December
10, 1998 between Nevada Energy Company, Inc. (the "Company") and Michael
Kassouff.
RECITALS
A. Pursuant to Section 1129 under Chapter 11 of Title 11 of the United
States Code, the Bankruptcy Code, a plan of reorganization of the Company (the
"Plan") was confirmed on September 15, 1998 by Order of the United States
Bankruptcy Court for the District of Nevada, Case No. BK-97-30265-BMG.
B. As set forth in the Company's Second Amended Disclosure Statement
Pursuant to 11 U.S.C. Section 1125 (the "Disclosure Statement"), which
Disclosure Statement was submitted to all creditors and shareholders of the
Company in connection with acceptance or rejection of the Plan, upon
confirmation of the Plan, directors of the Company are entitled to receive
retroactive compensation for all services issued to the date of confirmation of
the Plan in the form of stock options allowing for the purchase of 5,000 shares
of Class A Common Stock of the Company per director per month at $0.10 per
share.
C. Michael Kassouff was a director of the Company as of the date of the
Disclosure Statement and has served in that capacity continuously from January
1, 1997 through the present.
NOW, THEREFORE, in consideration of the premises, obligations and
agreements contained herein, and for other valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
As used herein, the following terms have the following
respective meanings. Capitalized terms not defined in this Section 1 shall have
the meanings assigned to them elsewhere in this Agreement.
a. "Stock" means the Class A Common Stock of the Company, par
value $.001 per share.
b. "Director's Shares" means the shares of Stock that Director
acquires by exercising the Option.
<PAGE> 2
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Securities Act" means the Securities Act of 1933, as amended.
2. Grant of Options.
a. The Company hereby grants to Director the right and
option to purchase all or any part of 105,000 shares of Stock,
subject to, and in accordance with, the terms and conditions
set forth herein (the "Option").
b. The Option is not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.
c. The Company shall take such action as is necessary to
reserve a sufficient number of shares of Stock for issuance
upon exercise of the Option.
3. Purchase Price.
The purchase price per share at which Director shall be
entitled to purchase shares of Stock upon exercise of the Option shall be $0.10
per share.
4. Duration of Option.
The Option shall be exercisable to the extent and in the
manner provided herein for a period of twenty-four months (24) months from the
date of this Agreement.
5. Manner of Exercisability and Payment.
5.1 Subject to the terms and conditions of this Agreement, the Option
may be exercised in whole at any time, or in part from time to time, by delivery
of written notice to the Company at its principal executive office. Such notice
shall state the number of shares in respect of which the Option is being
exercised and shall be signed by Director. If requested by the Company, Director
shall deliver this Agreement to the Company for endorsement thereon a notation
of such exercise.
5.2 The notice of exercise described in Section 5.1 hereof shall be
accompanied by the full purchase price for the shares in respect of which the
Option is being exercised, in cash or by check.
5.3 Upon receipt of notice of exercise and full payment for the shares
in respect of which the Option is being exercised. the Company shall take such
action as may be
<PAGE> 3
necessary to effect the transfer to Director of the number of shares as to which
such exercise was effective.
5.4 Director shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to any shares subject to the Option until
(i) the Option shall have been exercised pursuant to the terms of this Agreement
and Director shall have paid the full purchase price for the number of shares in
respect of which the Option was exercised, (ii) the Company shall have issued
and delivered to Director certificates evidencing the shares, and (iii)
Director's name shall have been entered as a stockholder of record on the books
of the Company, whereupon Director shall have full voting and other ownership
rights with respect to such shares.
6. Nontransferability.
6.1 The Option shall not be transferable other than by will or by the
laws of descent and distribution. During the lifetime of Director, the Option
shall be exercisable only by Director. Director's Shares may be transferred
freely upon registration under the Securities Act and any applicable state
securities laws, or pursuant to an exemption from registration under the
Securities Act and any applicable state securities laws.
7. Effect of Liquidation, Dissolution, Reorganization, Consolidation or
Merger.
7.1. Subject to the terms and conditions of this Agreement, upon the
effective date of the liquidation or dissolution of the Company, the Option
shall continue in effect in accordance with its terms and Director shall be
entitled to receive in respect of all shares subject to the Option, upon
exercise of the Option, the same number and kind of stock, securities, cash,
property or other consideration that each holder of shares was entitled to
receive in such transaction.
7.2. If there shall be any capital reorganization, or consolidation, or
merger of the Company with any other entity, or any sale of all or substantially
all of the Company's property and assets to any other entity, Company shall take
appropriate action to enable Director to receive upon any subsequent exercise of
such Option, in whole or in part, in lieu of any common shares of the Company,
the share or shares, securities, interest or interests, or other assets as were
issuable or payable upon such reorganization, consolidation, merger, or sale in
respect of or in exchange for such commons shares.
8. Representations and Warranties of the Company.
The Company hereby represents and warrants to Director that:
a. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware.
<PAGE> 4
b. The Company has the requisite power and authority to
enter into and perform the terms of this Agreement. The
execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly
authorized by the board of directors of the Company and no
other corporate approval or authorization or other action on
the part of the Company is necessary in order to permit the
Company to consummate the transactions contemplated by this
Agreement. This Agreement has been duly and validly executed
and delivered by the Company, and constitutes the legal, valid
and binding obligation of the Company, enforceable against the
Company in accordance with its terms
c. Shares of Stock, when issued, delivered and paid for upon
exercise of any Option as described in this Agreement will be
validly issued, fully paid and non-assessable.
9. Representations and Warranties of Director.
Director hereby represents and warrants to the Company that
Director is acquiring the Option and any Stock acquired by him pursuant to the
exercise of the Option for his own account, for investment and not with a view
to the sale or distribution thereof, nor with any present intention to
distribute or sell the Stock.
10. Stock Legend.
Each certificate representing Stock initially issued upon
exercise of an Option, unless at the time of the exercise the Company has
completed an initial public offering of its Common Stock and the sale of shares
to Director pursuant to the exercise of the Option has been registered under the
Securities Act, shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR IN A
MANNER EXEMPT FROM REGISTRATION UNDER SUCH ACT. IN ADDITION,
THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SET FORTH IN A STOCK OPTION
AGREEMENT DATED DECEMBER 10, 1998 BETWEEN MICHAEL KASSOUFF AND
NEVADA ENERGY COMPANY, INC. NO TRANSFER OF THESE SECURITIES
SHALL BE
<PAGE> 5
EFFECTIVE UNTIL ALL SUCH CONDITIONS HAVE BEEN FULFILLED.
Certificates issued upon the transfer of any such shares of Common Stock shall
also bear this legend, unless the Company shall have waived the requirement of
such legend.
11. Notices.
All notices or other communications which may be or are
required to be given, served or sent by a party pursuant to this Agreement shall
be in writing and shall be hand delivered (including delivery by courier),
mailed by first-class, registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram, telex or facsimile transmission,
addressed as follows:
If to the Company:
NEVADA ENERGY COMPANY, INC.
321 West Lake Lansing Road
Asher Court, Suite 100
East Lansing, MI 48823
Attention: Richard A. Cascarilla, President
If to Director:
Michael Kassouff
6421 W. Sam Houston Parkway N.
Houston, TX 77041
or to such other address as may be provided in writing by party to the other
parties.
12. Modification of Agreement.
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only by a written
instrument executed by the parties hereto.
13. Severability.
Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
<PAGE> 6
14. Governing Law.
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware without
giving effect to the conflicts of laws principles thereof.
15. Successors in Interest.
This Agreement shall inure to the benefit of and be binding
upon any successor to the Company. This Agreement shall inure to the benefit of
Director's legal representatives. All obligations imposed upon Director and all
rights granted to the Company under this Agreement shall be final, binding and
conclusive upon Director's heirs, executors, administrators and successors.
16. Headings.
Headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
17. Counterparts.
This Agreement may be executed in ore or more counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.
[EXECUTION PAGE FOLLOWS]
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
NEVADA ENERGY COMPANY, INC.
/s/ Richard A. Cascarilla
------------------------------------
By: Richard A. Cascarilla
Title: President
OPTIONEE:
/s/ Michael Kassouff
------------------------------------
Michael Kassouff
<PAGE> 1
Exhibit 4j
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is dated as of December
__, 1998 between Nevada Energy Company, Inc. (the "Company") and Lawrence Herth.
RECITALS
A. Pursuant to Section 1129 under Chapter 11 of Title 11 of the United
States Code, the Bankruptcy Code, a plan of reorganization of the Company (the
"Plan") was confirmed on September 15, 1998 by Order of the United States
Bankruptcy Court for the District of Nevada, Case No. BK-97-30265-BMG.
B. As set forth in the Company's Second Amended Disclosure Statement
Pursuant to 11 U.S.C. Section 1125 (the "Disclosure Statement"), which
Disclosure Statement was submitted to all creditors and shareholders of the
Company in connection with acceptance or rejection of the Plan, upon
confirmation of the Plan, directors of the Company are entitled to receive
retroactive compensation for all services issued to the date of confirmation of
the Plan in the form of stock options allowing for the purchase of 5,000 shares
of Class A Common Stock of the Company per director per month at $0.10 per
share.
C. Lawrence Herth was a director of the Company as of the date of the
Disclosure Statement and served in that capacity continuously from May 19, 1997
until September 15, 1998.
NOW, THEREFORE, in consideration of the premises, obligations and
agreements contained herein, and for other valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
As used herein, the following terms have the following
respective meanings. Capitalized terms not defined in this Section 1 shall have
the meanings assigned to them elsewhere in this Agreement.
a. "Stock" means the Class A Common Stock of the Company, par
value $.001 per share.
b. "Director's Shares" means the shares of Stock that Director
acquires by exercising the Option.
<PAGE> 2
c. "Code" means the Internal Revenue Code of 1986, as amended.
d. "Securities Act" means the Securities Act of 1933, as amended.
2. Grant of Options.
a. The Company hereby grants to Director the right and option to
purchase all or any part of 80,000 shares of Stock, subject
to, and in accordance with, the terms and conditions set forth
herein (the "Option").
b. The Option is not intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.
c. The Company shall take such action as is necessary to reserve
a sufficient number of shares of Stock for issuance upon
exercise of the Option.
3. Purchase Price.
The purchase price per share at which Director shall be
entitled to purchase shares of Stock upon exercise of the Option shall be $0.10
per share.
4. Duration of Option.
The Option shall be exercisable to the extent and in the
manner provided herein for a period of twenty-four months (24) months from the
date of this Agreement.
5. Manner of Exercisability and Payment.
5.1 Subject to the terms and conditions of this Agreement, the Option
may be exercised in whole at any time, or in part from time to time, by delivery
of written notice to the Company at its principal executive office. Such notice
shall state the number of shares in respect of which the Option is being
exercised and shall be signed by Director. If requested by the Company, Director
shall deliver this Agreement to the Company for endorsement thereon a notation
of such exercise.
5.2 The notice of exercise described in Section 5.1 hereof shall be
accompanied by the full purchase price for the shares in respect of which the
Option is being exercised, in cash or by check.
5.3 Upon receipt of notice of exercise and full payment for the shares
in respect of which the Option is being exercised. the Company shall take such
action as may be
<PAGE> 3
necessary to effect the transfer to Director of the number of shares as to which
such exercise was effective.
5.4 Director shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to any shares subject to the Option until
(i) the Option shall have been exercised pursuant to the terms of this Agreement
and Director shall have paid the full purchase price for the number of shares in
respect of which the Option was exercised, (ii) the Company shall have issued
and delivered to Director certificates evidencing the shares, and (iii)
Director's name shall have been entered as a stockholder of record on the books
of the Company, whereupon Director shall have full voting and other ownership
rights with respect to such shares.
6. Nontransferability.
6.1 The Option shall not be transferable other than by will or by the
laws of descent and distribution. During the lifetime of Director, the Option
shall be exercisable only by Director. Director's Shares may be transferred
freely upon registration under the Securities Act and any applicable state
securities laws, or pursuant to an exemption from registration under the
Securities Act and any applicable state securities laws.
7. Effect of Liquidation, Dissolution, Reorganization, Consolidation or
Merger.
7.1. Subject to the terms and conditions of this Agreement, upon the
effective date of the liquidation or dissolution of the Company, the Option
shall continue in effect in accordance with its terms and Director shall be
entitled to receive in respect of all shares subject to the Option, upon
exercise of the Option, the same number and kind of stock, securities, cash,
property or other consideration that each holder of shares was entitled to
receive in such transaction.
7.2. If there shall be any capital reorganization, or consolidation, or
merger of the Company with any other entity, or any sale of all or substantially
all of the Company's property and assets to any other entity, Company shall take
appropriate action to enable Director to receive upon any subsequent exercise of
such Option, in whole or in part, in lieu of any common shares of the Company,
the share or shares, securities, interest or interests, or other assets as were
issuable or payable upon such reorganization, consolidation, merger, or sale in
respect of or in exchange for such commons shares.
8. Representations and Warranties of the Company.
The Company hereby represents and warrants to Director that:
a. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware.
<PAGE> 4
b. The Company has the requisite power and authority to enter
into and perform the terms of this Agreement. The execution
and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by
the board of directors of the Company and no other corporate
approval or authorization or other action on the part of the
Company is necessary in order to permit the Company to
consummate the transactions contemplated by this Agreement.
This Agreement has been duly and validly executed and
delivered by the Company, and constitutes the legal, valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms
c. Shares of Stock, when issued, delivered and paid for upon
exercise of any Option as described in this Agreement will be
validly issued, fully paid and non-assessable.
9. Representations and Warranties of Director.
Director hereby represents and warrants to the Company that
Director is acquiring the Option and any Stock acquired by him pursuant to the
exercise of the Option for his own account, for investment and not with a view
to the sale or distribution thereof, nor with any present intention to
distribute or sell the Stock.
10. Stock Legend.
Each certificate representing Stock initially issued upon
exercise of an Option, unless at the time of the exercise the Company has
completed an initial public offering of its Common Stock and the sale of shares
to Director pursuant to the exercise of the Option has been registered under the
Securities Act, shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED OR IN A
MANNER EXEMPT FROM REGISTRATION UNDER SUCH ACT. IN ADDITION,
THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SET FORTH IN A STOCK OPTION
AGREEMENT DATED DECEMBER __, 1998 BETWEEN LAWRENCE HERTH AND
NEVADA ENERGY COMPANY, INC. NO TRANSFER OF THESE SECURITIES
SHALL BE
<PAGE> 5
EFFECTIVE UNTIL ALL SUCH CONDITIONS HAVE BEEN FULFILLED.
Certificates issued upon the transfer of any such shares of Common Stock shall
also bear this legend, unless the Company shall have waived the requirement of
such legend.
11. Notices.
All notices or other communications which may be or are
required to be given, served or sent by a party pursuant to this Agreement shall
be in writing and shall be hand delivered (including delivery by courier),
mailed by first-class, registered or certified mail, return receipt requested,
postage prepaid, or transmitted by telegram, telex or facsimile transmission,
addressed as follows:
If to the Company:
NEVADA ENERGY COMPANY, INC.
321 West Lake Lansing Road
Asher Court, Suite 100
East Lansing, MI 48823
Attention: Richard A. Cascarilla, President
If to Director:
Lawrence Herth
401 East 4th Street
Reno, NV 89509
or to such other address as may be provided in writing by party to the other
parties.
12. Modification of Agreement.
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only by a written
instrument executed by the parties hereto.
13. Severability.
Should any provision of this Agreement be held by a court of
competent jurisdiction to be unenforceable or invalid for any reason, the
remaining provisions of this Agreement shall not be affected by such holding and
shall continue in full force in accordance with their terms.
<PAGE> 6
14. Governing Law.
The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware without
giving effect to the conflicts of laws principles thereof.
15. Successors in Interest.
This Agreement shall inure to the benefit of and be binding
upon any successor to the Company. This Agreement shall inure to the benefit of
Director's legal representatives. All obligations imposed upon Director and all
rights granted to the Company under this Agreement shall be final, binding and
conclusive upon Director's heirs, executors, administrators and successors.
16. Headings.
Headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of this
Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
17. Counterparts.
This Agreement may be executed in ore or more counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.
[EXECUTION PAGE FOLLOWS]
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
NEVADA ENERGY COMPANY, INC.
/s/ Richard A. Cascarilla
------------------------------------
By: Richard A. Cascarilla
Title: President
OPTIONEE:
/s/ Lawrence Herth
------------------------------------
Lawrence Herth
<PAGE> 1
Exhibit 10a
FIRST AMENDED AND RESTATED SETTLEMENT AND RELEASE AGREEMENT
This First Amended and Restated Settlement and Release Agreement
("Amended Agreement") is entered into by and among (1) PowerTel USA, Inc.
("PowerTel") a Delaware Corporation whose principal place of business is
situated in East Lansing, Michigan and formerly known as Munson Geothermal, Inc.
and also formerly known as Nevada Energy Company, Inc. ("NEC") (collectively
"Company"), (2) Nevada Energy Partners I, a Nevada Limited Partnership ("NEP"),
by Nevada Electric Power Company, its general partner, (3) Nevada Electric Power
Company, a Nevada corporation with its principal place of business situated in
Reno, Nevada ("NEPC"), and (4) the following sixteen (16) Corporations: Wilton
Ashfield, Ltd., Greyshire House, Ltd., August Lake Holdings, Ltd., Whitestone
Brooke Holdings, Ltd., Porterman Williams, Ltd., North Oldenfield, Ltd.,
Shepherd Market, Ltd., Parklane Mayfair, Ltd., Clermont & Annabel, Ltd.,
Berkeley Square Investments, Ltd., Blackstone Sterling Holdings, Ltd., Burke
Douglas Holdings, Ltd., Clarendon Atlantic Holdings, Ltd., Macaulay Island
Investments, Ltd., Young Bayshore Investments, Ltd., and Maitland Investments,
Ltd., (collectively referred to as "the Corporations"). "The Parties" referred
to in this Agreement refer to PowerTel, NEP, NEPC and the Corporations. This
Agreement is executed as of the day and year set forth below but is deemed to be
effective retroactive as of December 1, 1997 (the "Settlement Date").
RECITALS:
WHEREAS, the Parties to this Agreement have negotiated and executed an
Agreement (the "Initial Contract") addressing the subject of this Amended
Agreement but subsequent to the execution of the Initial Contract the Parties
have concluded that the Initial Contract did not reflect the intent of the
Parties;
WHEREAS, the Parties intend to amend and modify the Initial Contract by
this Amended Agreement and, therefore, declare the Initial Contract to be null
and void ab initio and further declare that this Amended Agreement to be the
only binding, enforceable contract between the parties with respect to the
subject matters set forth herein;
WHEREAS, prior to August 16, 1996, NEP owned 100.0% of the issued Class
B Common Stock of NEC; which Class B Common Stock was convertible into shares of
Class A Common Stock of NEC in an amount equal to 50.0% of the issued and
outstanding Class A Common Stock; and
WHEREAS, NEC and NEP entered into an Agreement dated August 16, 1996
(the "1996 Agreement") a copy of which is attached hereto as Exhibit 1; and
WHEREAS, pursuant to the terms of the 1996 Agreement various
transactions occurred between NEP and the Company, between NEP and NEPC and
thereafter between NEPC and/or NEP and the Corporations; and
<PAGE> 2
WHEREAS, in reliance upon the 1996 Agreement, NEP agreed to sell and did
in fact sell to the Corporations all of the Class A Common Stock of NEC which
was owned beneficially by NEP: and
WHEREAS, NEC allegedly refused to honor the terms of the 1996 Agreement
thereby precluding NEP from delivering the Class A Common Stock to the
Corporations; and
WHEREAS, on or about November 19, 1996 NEP beneficially on behalf of the
Corporations commenced litigation as Plaintiff against Company seeking specific
performance of the 1996 Agreement and alleging damages in excess of Six Million
Dollars ($6,000,000), such litigation being identified as Nevada Energy Partners
I vs. PowerTel USA, Inc. and being Case No. CV 96-07487, Second Judicial
District Court of the State of Nevada in and for the County of Washoe (the "NEP
Litigation"); and
WHEREAS, Company denies all liability in the NEP Litigation and intends
to vigorously contest NEP's claims if and when said litigation proceeds; and
WHEREAS, on or about February 13, 1997 multiple creditors of PowerTel
filed an involuntary petition for reorganization pursuant to Chapter 11 of the
United States Bankruptcy Code (the "Code") such application being filed pursuant
to Section 303 of the Code, and such case being styled In Re. PowerTel USA,
Inc.; United States Bankruptcy Court, District of Nevada, Case No. 97-30265-BMG;
and
WHEREAS, the filing of Case No. 97-30265-BMG automatically stayed
further prosecution of the NEP Litigation; and
WHEREAS, NEP filed a Proof of Claim in the Chapter 11 case; and
WHEREAS, the Corporations are the beneficiaries of the NEP Proof of
Claim and, therefore, are deemed to be creditors of PowerTel; and
WHEREAS, PowerTel has removed the NEP Litigation to the United States
Bankruptcy Court; and
WHEREAS, subsequent to the execution of the 1996 Agreement, NEC conveyed
to NEP 100.0% of the issued and outstanding Common Stock of Combustion Energy
Company ("CEC"), a Nevada corporation with its principal place of business
situated in Reno, Nevada together with title to a parcel of real property also
situated in Reno, Nevada (collectively the "1996 Assets"). Thereafter, NEP
transferred the 1996 Assets to NEPC in two separate transactions; and
WHEREAS, PowerTel has given notice to NEP, NEPC and the Corporations of
its intent to commence a proceeding pursuant to Sections 547 and 548 of the Code
for the purpose of voiding the 1996 Agreement and all transactions arising
therefrom between NEP, NEPC and the Corporations; and
<PAGE> 3
WHEREAS, NEPC and NEP have denied that Company has the right to rescind
the 1996 Agreement under any terms or conditions including, but not limited to,
alleged violations of Sections 547 and 548 of the Code; and
WHEREAS, the Parties to this Amended Agreement stipulate and acknowledge
that the prosecution of the multiple civil and administrative proceedings
recited above will be expensive, time consuming and difficult to resolve and
there is no assurance or guarantee that any party will prevail at trial and, in
the event of a favorable judgment, there is no assurance or guarantee that the
judgment will be sustained on appeal; and
WHEREAS, the Parties to this Amended Agreement desire to achieve a
final, complete resolution of all of their disputes and controversies by and
among them.
NOW THEREFORE, in consideration with the mutual covenants and conditions
set forth in this Agreement and other good and valuable consideration, the
receipt and sufficiency which is hereby acknowledged, the Parties to this
Amended Agreement, intending to be legally bound, do hereby agree as follows:
1. The Recitals set forth above are true and correct and are incorporated
herein as if fully rewritten.
2. This Amended Agreement is subject to ratification by the United States
Bankruptcy Court for the District of Nevada by virtue of the pending
Chapter 11 Reorganization involving PowerTel in Case Number
97-30265-BMG. All Parties to this Amended Agreement hereby consent to
the authority and subject matter jurisdiction of the United States
Bankruptcy Court for all purposes, including ratification of this
Amended Agreement.
3. This Amended Agreement, when ratified by the United States Bankruptcy
Court, shall constitute a full, final and complete resolution of any and
all disputes by or among any one or more or all of the Parties hereto of
whatever cause or nature, including but not limited to any waiver for
damages of any kind, nature or amount, contingent or liquidated and each
party does hereby forever release, discharge, and waive each and every
cause of action which it has or may have against any other party as of
the Settlement date of this Agreement, except that Company retains and
does not waive or release any claim or cause of action, if any, which it
has or may have against NEPC arising out of actions performed by NEPC in
its capacity as the General Partners of NEP. NEPC represents and
warrants that the Corporations are the only entities who have any
equitable or beneficial rights in or to the Class A or Class B Common
Stock of NEC owned or received by NEP as of the Settlement Date.
4. PowerTel, NEP and NEPC acknowledge that the Corporations are domiciled
outside the United States and, in recognition of this, PowerTel, NEP and
NEPC, stipulate that this Amended Agreement will be executed by Mr.
Jeffrey Antisdel on their behalf. Mr. Antisdel represents and warrants
to Company that (i) he has
<PAGE> 4
the legal power and authority to execute this Amended Agreement on
behalf of each of the Corporations, and (ii) each of the Corporations
will ratify this Agreement by executing the Memorandum described in
Section 5.d of this Amended Agreement on or before July 15, 1998 (the
"Final Execution Date"). In the event that each and every one of the
Corporations have not ratified this Agreement by the Final Execution
Date, Company has the option of either (a) declaring this Amended
Agreement to be null and void, or (b) enforcing this Amended Agreement
as to all signatories. In order to expedite execution of this Amended
Agreement, PowerTel, NEP and NEPC stipulate that (i) this Amended
Agreement may be executed in multiple counterparts, and (ii) the receipt
of a facsimile signature page executed by any one of the Corporations
shall be deemed to be an original signature.
NEPC agrees to indemnify and hold Company harmless from any and all
damages and expenses (including legal fees) incurred by PowerTel in the
event that any of the Corporations refuse to execute this Agreement.
5. In consideration of the mutual releases as set forth herein and the
consideration as set forth in the Recitals, the Parties to this Amended
Agreement do hereby agree as follows:
a. The 1996 Agreement attached hereto as Exhibit 1 is hereby deemed to be
amended and restated in its entirety, except as set forth in this
Amended Agreement and, therefore, remains legally binding upon all
parties thereto. Notwithstanding the foregoing, NEPC and NEP shall
reconvey to PowerTel (i) 100% of the issued and outstanding Common Stock
of Combustion Energy Company, a Nevada corporation, and (ii) title to a
parcel of real property situated at 403 Fourth Street, Reno, NV.
b. The Company and NEPC do hereby modify, amend and revise the Agreement of
Limited Partnership of Nevada Energy Partners I, a Nevada limited
partnership, retroactively to January 1, 1995 to provide that for the
period January 1, 1995 through August 15, 1996 (i) any and all
distributions of cash and property are to be allocated 60.0% to the
limited partner and 40.0% to the general partner, and (ii) the
allocations of profits and loses to capital accounts shall be 99.0% of
all profits and loses accredited and charged to the capital account of
the limited partner and 1.0% of all profits and loses are charged and
credited to the capital account of the general partner. The Parties
stipulate that, commencing January 1, 1995 through August 15, 1996, NEPC
is and shall be the sole general partner of NEP and the Company shall be
the sole and exclusive limited partner of NEP. As of August 16, 1996,
the Company specifically relinquishes, waives and forever abandons any
claim or interest which it has or may have in or to any partnership
interest of NEP. NEPC and the Company stipulate and acknowledge that,
subsequent to January 1, 1995, cash distributions were made to NEPC and
the Company pursuant to the 60/40 allocation set forth above. In
addition, NEPC and the Company stipulate that on or about August 16,
1996 (after withdrawal of NEC from NEP), NEP distributed to NEPC, as its
general partner, Class B Common
<PAGE> 5
Stock of the Company totaling 4,437,473 shares which, thereafter NEPC
sold to the corporations on a prorata basis. NEPC and the Company also
stipulate that, as of August 16, 1996, NEP relinquished any and all
rights which it had pursuant to the Plan of Reorganization involving
Munson Geothermal, Inc. to receive additional Class A Common Stock and,
thereby, waived and forever relinquished its right to receive additional
Class B Common Stock in the amount of 8,808,485 shares.
c. The Company does specifically that on or about August 16, 1996 NEPC
converted the Class B Common to Class A Common and, further recognizes
that NEPC sold to the Corporations the Class A Common Stock owned by
NEPC as set forth above. The Company does hereby agree that NEPC shall
retain any and all consideration paid or to be paid by the Corporations.
In order to effect a permanent, common final and complete resolution of
any and all disputes among the parties to this Agreement, the Company
stipulates that the Class B Common Stock distributed to NEPC as of
August 16, 1996 was convertible into Class A Common Stock at a ratio
equal to 50.0% of the issued and outstanding Class A Common Stock as of
August 16, 1996. Accordingly, the Company stipulates that the
Corporations, by virtue of their purchase of the Class A Common Stock,
are entitled to own Class A Common Stock. The Company further stipulates
that, ten days after the Effective Date of the Plan of Reorganization,
the Company shall adjust (i.e., increase or decrease) the number of
shares of Class A Common Stock to be distributed to the Corporations
such that the Corporations shall own 50.0% of the issued and outstanding
Class A Common Stock as of the close of business ten days after the
Effective Date of the Plan of Reorganization.
d. NEPC, as the General Partner of NEP shall wind up the affairs of the
partnership with all deliberate speed including but not limited to the
preparation and filing of all requisite tax returns. The General Partner
shall not charge the Limited Partner for the expenses of winding up the
Partnership and the Limited Partner waives any right of reimbursement
for any distribution to the General Partner prior to the date of this
Agreement.
6. In the event that the United States Bankruptcy Court fails to ratify
this Agreement, this Agreement shall be voidable by any Party upon
prompt notice to Company and NEPC. If the Agreement is voided, then any
Property conveyed pursuant to this Agreement shall be returned to the
grantor from whom or which it was received.
7. Company shall have seventy-five (75) days from the Confirmation Date of
the Plan of Reorganization to conduct any "due diligence,"
investigation, inquiry and/or review ("Review") which it deems to be
necessary of appropriate concerning any statement of fact, warranty,
representation, consent and/or condition ("Represented Fact") made or
given to Company by any other party to this Amended Agreement and upon
which PowerTel has relied upon in the execution of this Amended
Agreement. If on the basis of the Review, PowerTel
<PAGE> 6
in its sole and absolute discretion concludes that any Represented Fact
is inaccurate, false, misleading or deceptive, PowerTel has the right to
revoke this Amended Agreement upon providing all other written notice of
such termination and the basis therefor.
8. The Parties to this Amended Agreement stipulate and acknowledge that a
variety of supplemental documents may be necessary in order to
effectuate the objectives anticipated by this Amended Agreement or to
obtain ratification hereof by the United States Bankruptcy Court, and
every party to this Amended Agreement does irrevocably commit to act in
good faith to implement this Amended Agreement and to execute any
additional documents necessary or appropriate to achieve the objective
of this Amended Agreement and/or ratification hereof.
9. This Amended Agreement shall be governed by the laws of the State of
Nevada, without regard to its conflict of laws provision. Every party to
this Amended Agreement consents to the exclusive jurisdiction of the
United States Bankruptcy Court for the District of Nevada with regard to
the enforcement, interpretation, or any other issue or claim arising as
a result of this Amended Agreement.
10. It is the intention to the Parties to this Amended Agreement that the
1996 Agreement shall be amended and restated. Accordingly, to the extent
that any party to this Amended Agreement has any contractual rights,
causes of action, claims or other legal or equitable rights or remedies
(collectively "Rights") which existed prior to the 1996 Agreement and
were extinguished, waived, released or modified thereby, such Rights
shall be deemed to be fully and completely restored and each party to
this Amended Agreement does hereby agree that the Statute of
Limitations, if any, which would otherwise operate as a bar to the
prosecution of any cause of action or claim of any nature to enforce
such Rights is hereby tolled and each party does irrevocably waive and
agrees not to assert for a twelve (12) month term from the Settlement
Date of this Amended Agreement the Statute of Limitations as a defense
to the prosecution of any cause of action or claim of any nature to
enforce such Rights which is restored by virtue of this Agreement.
11. Each and every section of this Agreement shall survive execution,
delivery and performance of this Amended Agreement.
12. The "1996 Agreement," the form of the Memorandum attached hereto and the
Memorandums as executed by each of the Corporations are incorporated by
reference and are deemed to constitute material components of this
Amended Agreement:
13. Exhibits 1 and 2 are hereby incorporated herein by reference.
14. Unless otherwise directly set forth in this Amended Agreement, any
contract, agreement, memorandum of understanding or other legally
binding and enforceable agreement by or among the Parties to this
Amended Agreement shall
<PAGE> 7
remain in full force and effect and is not amended, modified,
superseded or otherwise affected by this Amended Agreement.
IN WITNESS WHEREOF, this The Parties have executed this Amended
Agreement as of the day and year set forth with their signatures.
NEVADA ENERGY PARTNERS I,
a Nevada Limited Partnership
By: Nevada Electric Power Company
Its: General Partner
Date : 6-25-98 By: /s/ Jeffrey Antisdel
------- -------------------------------------
Jeffrey Antisdel, Its President
NEVADA ELECTRIC POWER COMPANY
Date : 6-25-98 By: /s/ Jeffrey Antisdel
------- -------------------------------------
Jeffrey Antisdel, Its President
POWERTEL USA, INC.
Date : 6-25-98 By: /s/ Richard A. Cascarilla
------- -------------------------------------
Richard Cascarilla, Its President
"THE CORPORATIONS"
Date : 6-25-98 By: /s/ Jeffrey Antisdel
------- -------------------------------------
Jeffrey Antisdel
<PAGE> 8
EXHIBIT 1
AGREEMENT
THIS AGREEMENT, ("Agreement"), is entered into between Nevada Energy
Company, Inc., a Delaware corporation, ("NEC"), and Nevada Energy Partners I,
Limited Partnership, a Nevada Limited Partnership, ("NEP"), both having offices
at 401 East 4th Street, Reno, Nevada, USA, 89512.
RECITALS:
A. Nevada Energy Partners I, Limited Partnership, ("NEP"), is a Nevada
partnership with one corporate limited partner and a corporate general partner.
B. Nevada Energy Company, Inc., ("NEC"), is the sole limited partner of
NEP, and owns 60% of the partnership interest in NEP.
C. Nevada Electric Power Company, Inc., ("NEPC"), is the general partner
of NEP, and owns the remaining 40% of the partnership interest of NEP.
D. As of July 25, 1996, the partnership NEP, currently owns 4,437,473
shares of Class B Common Stock of NEC, ("Class B Stock"), which represents all
the issued and outstanding shares of Class B Common Stock of NEC.
E. The owners of the Class B Stock of NEC have voting rights and
liquidation rights in the assets of NEC without the right to participate in
earnings or cash dividends, except on sale, liquidation or merger. In addition,
such owners have the right to pro rata issuance of one share of Class B Common
Stock for each share of Class A Common Stock, ("Class A Stock"), issued and
outstanding. The consideration for the issuance may be subject to a
determination by the board of directors of NEC.
F. As of July 25, 1996, there are 12,203,247 shares of Class A Common
Stock of NEC issued and outstanding.
G. Based upon the number of NEC's issued Class A Common shares, NEP has
the right to acquire an additional 8,865,774 shares of Class B Common Stock.
H. NEC desires to redeem the Class B Stock in exchange for Class A
Stock.
I. NEC currently owns 6,000 shares of common stock of Combustion Energy
Company, which represents all of the issued and outstanding common shares of
Combustion Energy Company, a Nevada Corporation, ("CEC").
<PAGE> 9
J. NEP is a plaintiff and a counter-defendant in litigation in the
Second District Court in Washoe County, State of Nevada, in case CV92-04609,
Dept. No. 1, ("Litigation").
K. For the past four years, NEC and NEPC have shared in the costs and
expenses of NEP, including without limitation, the costs and expenses of the
Litigation on a 60/40 basis respectively.
L. NEC does not wish to participate any further in the Litigation or
further business with NEP.
M. NEC wishes to withdraw from NEP.
N. NEP wishes to acquire the stock CEC.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, NEP and NEC, agree as follows:
1. Definitions. For purposes of this Agreement, the terms set forth below
shall have the following meanings:
a. Agreement shall mean this agreement.
b. Class A Stock shall mean the Class A common shares of NEC.
c. Class B Stock shall mean the Class B common shares of NEC, all
of which are owned by NEP.
d. Herth Printing shall refer to the business known as Herth
Printing and Business Supplies, Inc., which was merged into
Combustion Energy Company, a Nevada Corporation, a wholly owned
subsidiary of NEC, in December 1994.
e. Knowledge means actual knowledge after reasonable investigation.
f. Law shall mean any statute, regulation, rule, judgment,
ordinance, order, decree, stipulation, injunction, charge, or
other restrictions of any federal, state or local government,
governmental agency, or court.
g. Liability means any liability (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and
whether due or to become due), including any liability for
taxes.
h. Litigation shall refer to the lawsuit filed in the Second
Judicial District Court of the State of Nevada, County of
Washoe, Case No. CV92-04609, Dept. No. 1, between NEP, as
plaintiff, and Hot Springs Power Company, a Nevada corporation,
Randy S. Goldenhersh and George W. Holbrook, Jr., as defendants
and counter-plaintiff, and NEP as counter-defendant.
i. Material Adverse Effect means an adverse effect of fifty
thousand dollars or more upon the business, operations,
properties, assets or condition of NEP.
j. NEC shall refer to Nevada Energy Company, Inc., a Delaware
corporation.
<PAGE> 10
k. NEP shall refer to Nevada Energy Partners I, Limited
Partnership, a Nevada Limited Partnership.
l. NEPC shall refer to Nevada Electric Power Company, a Nevada
corporation, and General Partner of NEP.
m. Securities Act means the Securities Act of 1933, as amended.
n. Securities Exchange Act means the Securities Exchange Act of
1934.
o. Security Interest means any mortgage, pledge, security interest,
encumbrance, charge or other lien, other than
i. construction, mechanic's materialmen's, and similar liens,
ii. liens for taxes not yet due and payable,
iii. liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation,
iv. liens arising in connection with sales of foreign
receivables,
v. purchase money liens and liens securing rental payments under
capital lease arrangements, and,
vi. other liens arising in the ordinary course of business and
not incurred in connection with the borrowing of money.
2. Basic Transaction
a. NEC shall exchange all of NEP's Class B Common Stock for an
equal number of NEC Class A Common Stock. The effective date of
the exchange shall be September 1, 1996.
b. NEC shall withdraw as a limited partner from NEP.
c. In general, NEPC, as general partner, will release NEC, as
limited partner, from NEP, the partnership. NEC will waive all
rights to any assets, litigation rights or other attributes of
the partnership.
d. In general, NEPC, as general partner, will agree to indemnify
NEC for any present and future litigation expenses, obligations
or damages arising out of the Litigation.
e. NEP will release any claims that NEP may have for additional
shares of Class B Stock pursuant to Amended Certificate of
incorporation under the Order of the Bankruptcy Court dated
November 20, 1990.
f. NEC shall transfer to NEP all of the shares of CEC.
g. This Agreement and other related documents shall be held in
escrow, ("Release Escrow"), pending the completion of the post
closing events.
3. Exchange of Class B Shares for Class A Shares. NEC desires to retire all
of the Class B shares as follows:
a. NEP as the owners of the Class B Stock of NEC have voting rights
and liquidation rights in the assets of NEC without the right to
participate in earnings or cash dividends, except on sale,
liquidation or merger. In addition, NEP has the right to pro
rata issuance of one share of Class B Common Stock for each
share of Class A Common Stock issued and outstanding. The
consideration for the issuance may be subject to a determination
by the board of directors of NEC.
<PAGE> 11
b. NEP has the right to an additional 8,808,485 shares of Class B
Common Stock of NEC.
c. NEP herewith exchanges 4,437,473 shares of Class B Common Stock
of NEC, which represents all the issued and outstanding shares
of Class B Common Stock of NEC for 4,437,473 shares of Class A
Common Stock of NEC which shall be free trading without
restrictions.
d. NEP herewith forbears forever from any and all claims for an
additional 8,808,485 shares of Class B Common Stock of NEC.
4. Withdrawal of NEC from NEP. NEC no longer desires to participate in the
partnership NEP and withdraws as follows:
a. NEC has participated in the Litigation since its inception. The
counter-plaintiffs claim damages in excess of one million
($1,000,000.00) dollars and further damages to be proved against
NEC.
b. NEC has contributed from time to time its pro rata share of
attorney fees, legal costs and expenses.
c. There appears to be no possibility of settlement or resolution
of the Litigation in the near future.
d. NEP was a partner with Hot Springs Power Company, a Nevada
corporation in Nevada Geothermal Power Partners, a Nevada
Limited Partnership. The Litigation arises out of the
partnership relationship. The plaintiff and counter-defendant is
NEP. The defendant and counter-plaintiff is Hot Springs Power
Company.
e. Nevada Geothermal Power Partners has ceased doing business and
has wound up its affairs. The only remaining relationship
between the partners is the Litigation.
f. NEC hereby withdraws as a limited partner in NEP and waives
further accounting except as necessary to prepare its federal
tax returns. The effective date of the withdrawal shall be
September 1, 1996.
5. Release of NEC from the Litigation and further obligations of NEP. NEPC,
as general partner of NEP, hereby releases NEC from all further partnership
obligations and duties.
a. Pursuant to the partnership agreement, NEC was obligated to
contribute to the attorneys' fees, legal costs and expenses of
any litigation arising out of the partnership relationship.
b. Concurrent with the withdrawal of NEC as a limited partner, NEP
releases NEC from any further contributions for attorneys' fees,
legal costs or expenses with respect to the Litigation. NEP
agrees to indemnify NEC for any damages arising out of the
Litigation. NEC shall have the right to have its own co-counsel
at its own expense.
c. NEPC, as general partner of NEP, will hereby guaranty the
payment of attorneys' fees, legal costs and expenses by NEC for
counsel under NEP's guidance and employ who will defend NEC's
interests.
d. NEC agrees to cooperate in the prosecution and defense of the
Litigation and to the extent possible, NEC waives its attorney
client privilege in favor of NEP.
<PAGE> 12
6. NEP releases all claims under the Order of the Bankruptcy Court. As the
sole recipient of Class B shares under order from the Bankruptcy Court, NEP
waives any claims it may have for additional shares of Class B Stock without
consideration as follows:
a. Rights and Restrictions. The rights and restrictions of the
Class B Stock are as follows:
i. Federal Bankruptcy Court's Plan of Reorganization. On
November 20, 1990, the Bankruptcy Court of Nevada, by Order,
required the amendment of the Certificate of Incorporation. The
Order provided at page 25, "Class B Common Stock will have full
voting rights but will have no participation in dividends. The
terms of the Class B Common shares will also provide that, upon
the issuance of any share, or fraction thereof, of Class A
Common Stock, the owners of Class B Common Stock will
contemporaneously have issued to them, on a pro rata basis, a
number of shares of Class B Common Stock which is the same as
the number of Class A Common shares then being issued.
ii. Amendment of the Certificate of Incorporation. NEC (then
Munson Geothermal, Inc.) amended its Certificate of
Incorporation on November 20, 1990 (filed on December 3, 1990)
and submitted a new paragraph defining NEC's capital, paragraph
4-A. The new paragraph governed the description of all capital
stock. The new paragraph authorized Class A Common Stock and
Class B Common Stock. All Common Stock has a par value of $.001
per share. All common stockholders (either Class A or Class B)
received one vote for each whole share of stock. The Certificate
authorized that Class A and Class B Common Stock would not
participate in the earnings of the corporation through
dividends. A Class B Common Stockholder would only receive funds
from NEC by statute upon the sale, merger, or liquidation in the
form of a liquidating distribution.
iii. Voting Rights of the Class B Stock. Class B Stock shares do
not receive dividends but would participate in distribution of
proceeds if the NEC sells, merges or liquidates. Class B Stock
shares are entitled to vote. Because the Class B Stock shares
are entitled to fifty percent (50%) of the Common Stock, the
Class B Stock shares are entitled to 50% of the votes.
iv. Class B Stock and NEP. The Plan of Reorganization provided
that immediately after the reorganization that NEP would own
100% of the Class B Stock. According to the Plan of
Reorganization, any holder of Class B Stock through NEP at the
time of the reorganization was entitled to an additional share
of Class B Stock for each share of Class A Stock issued.
v. Conflict between the Plan of Reorganization and the
Certificate regarding Issuance of Class B Stock. The Certificate
provided that upon the issuance of any share of Class A Common
Stock, NEC shall issue a pro rata amount of Class B Common Stock
to Class B Stock holders. Only present shareholders of Class B
Stock shares would be eligible to receive additional Class B
Stock shares. Further, paragraph 4-D states, "such shares of
Class B Common Stock shall be issued for such consideration as
may be determined from time to time by the Board of Directors".
(Emphasis added.) The Plan of Reorganization does not provide
for payment of "consideration" in exchange for newly issued
shares of Class B Stock.
<PAGE> 13
b. Concurrent with the exchange of shares, NEP forever waives and
gives up any rights for additional Class B Stock without payment
of consideration as provided in the Order of the Bankruptcy
Court dated November 20, 1990.
7. NEP transfers the shares of CEC. NEC herewith transfers to NEP all of
NEC's six thousand (6,000) shares of CEC as follows:
a. NEC merged its wholly owned subsidiary, CEC, with a business
known as Herth Printing and Business Supplies in 1994.
b. The business of CEC is not compatible with the general business
plan of NEC.
c. The shares of CEC are not registered as described in section
8.d.
d. In consideration of the obligations assumed by NEP under this
agreement, NEC herewith transfers and assigns all rights, title
and interest to the shares and assets of CEC to NEP. The
effective date of the transfer shall be September 1, 1996.
8. Representations and Warranties of NEP. NEP represents and warrants to
NEC that the statements contained in this Section 8.d. are correct and complete
as of the date of this Agreement.
a. Organization of NEP. NEP is a limited partnership duly
organized, validly existing and in good standing under the Laws
of the State of Nevada and is in good standing and qualified to
do business under the laws of each jurisdiction in which the
nature of the business or the ownership or leasing of its
properties requires such qualification. NEP has full power and
authority to carry on the business in which it is engaged and to
own and use the properties owned, leased and used by it.
b. Authorization of Transaction. NEP has full power under its
partnership agreement and authority to execute and deliver this
agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the General Partner of
NEP has fully authorized the execution, delivery and performance
of this Agreement by NEP. This Agreement constitutes the valid
and legally binding obligations of NEP, enforceable in
accordance with its terms and conditions, subject to the effect
of
i. bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights and remedies of creditors
generally, and
ii. general principles of equity.
c. Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby will (i) violate or (ii) conflict with, result in a
breach of, constitute a default under, result in the require any
notice of any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument or indebtedness, Security Interest, or other
arrangement to which NEP is a party of by which it is bound or
to which any of its assets is subject, or result in the
imposition of any Security Interest upon any of its assets. NEP
need not give any notice
<PAGE> 14
to, make any filing with, or obtain any authorization, consent
or approval of any government or governmental agency to
consummate the transactions contemplated by this Agreement.
d. Acknowledgment of Unregistered Stock. In connection with this
Agreement, NEP represents and warrants, which representations
and warranties shall survive the transfer of CEC's shares to NEP
pursuant to this Agreement, as follows:
i. NEP is aware that no market may exist for the resale of the
CEC stock received under this Agreement.
ii. NEP is obtaining the shares for investment and not for the
further distribution of CEC stock.
iii. NEP is aware of any and all restrictions imposed on the
further distribution of the CEC stock, including, but not
limited to, any restrictive legends appearing on the
certificate(s).
e. Disclosure. The representations and warranties contained in this
Section 8.e. do not contain any untrue statements of a material
fact or omit to state any material fact necessary in order to
make the statements and information contained in this Section
8.d. not misleading.
9. Representations and Warranties of NEC. NEC represents and warrants to
NEP that the statements contained in this Section 9 are correct and
complete as of the date of this Agreement.
a. Organization of NEC. NEC is a Company Incorporated in Delaware
duly organized, validly existing and in good standing under the
Laws of Delaware, and is in good standing and qualified to do
business under the laws of each jurisdiction in which the nature
of its business or the ownership or leasing of its properties
requires such qualification. NEC has full power and authority to
carry on the business in which it is engaged and to own and use
the properties owned, leased and used by it.
b. Authorization of Transaction. NEC has full power under its
organization agreement and authority to execute and deliver this
Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the Directors of NEC
have fully authorized the execution, delivery and performances
of this Agreement by NEC. This Agreement constitutes the valid
and legally binding obligation of NEC, enforceable in accordance
with its terms and conditions, subject to the effect of;
i. bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights and remedies of creditors
generally, and
ii. general principles of equity.
c. Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby will (i) violate or (ii) conflict with, result in a
breach of, constitute a default under, result in the require any
notice of any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument or indebtedness, Security Interest, or other
arrangement to which NEC is a party of by which it is
<PAGE> 15
bound or to which any of its assets is subject, or result in the
imposition of any Security Interest upon any of its assets. NEC
need not give any notice to, make any filing with, or obtain any
authorization, consent or approval of any government or
governmental agency to consummate the transactions contemplated
by this Agreement.
d. Disclosure of Unregistered Securities. NEC hereby discloses the
following information to NEP in connection with the offer and
sale of CEC stock by NEP,
i. The CEC stock have not been registered under the Securities
Act of 1933, as amended (the "Securities Act"), and were
acquired by NEC pursuant to a registration exemption contained
in Section 4(2) of the Securities Act and/or Securities and
Exchange Commission Rule 506, promulgated thereunder.
ii. The CEC stock have the status of securities acquired under
Section 4(2) of the Securities Act and cannot be resold without
registration under the Securities Act or the availability of an
exemption from registration.
iii. A legend has been, or will be, placed on each certificate
or other document evidencing the CEC stock in substantially the
following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE RESOLD UNLESS REGISTERED
UNDER THE ACT OR UNLESS AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE.
iv. Prior to this transaction, stop transfer instructions to the
appropriate officers of NEC had been placed in NECs records with
respect to the CEC stock so as to restrict the resale, pledge,
hypothecation, or other transfer thereof.
v. The CEC stock have not been registered under the Nevada
Securities Act, set forth in the Nevada Revised Statutes, as
amended (the "Nevada Act"), and were acquired by NEC pursuant to
a exemption.
vi. NEC reasonably believes that NEP is obtaining the shares for
investment and has no information to the contrary.
e. Disclosure. The representations and warranties contained in this
Section 9.e do not contain any untrue statements of a material
fact or omit to state any material fact necessary in order to
make the statements and information contained in this Section 9
not misleading.
10. Conditions to Release of the Escrow. This Agreement and all of the
documents related to this Agreement shall be held in escrow referred to as the
Release Escrow which shall be released upon the satisfaction of following
conditions.
a. NEP and NEC shall have executed and delivered an escrow
agreement to and for the Release Escrow agent.
b. All actions to be taken by NEC in connection with consummation
of the transactions contemplated hereby and all certifications,
opinions, instruments, and other documents required to effect
the transactions contemplated hereby will be reasonably
satisfactory in form and substance
<PAGE> 16
to the General Partner of NEP who shall not unreasonably
withhold approval of the transactions contemplated by this
Agreement.
c. NEC shall have received from counsel to NEP an opinion addressed
to NEC stating the legal organization of NEP and that NEP has
the authority to enter into this Agreement.
d. All actions to be taken by NEP in connection with consummation
of the transactions contemplated hereby and all certifications,
opinions, instruments, and other documents required to effect
the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Directors of NEC who
shall not unreasonably withhold approval of the transactions
contemplated by this Agreement.
e. NEP shall have received from counsel to NEC an opinion addressed
to NEP stating the legal organization of NEC and that NEC has
the authority to enter in this Agreement.
f. NEC shall have executed and delivered any additional agreement
or agreements necessary to withdrawing or liquidating its
interests in NEP in favor of NEP.
g. NEPC shall have executed and delivered a guaranty of all payment
of liability, including attorneys' fees, costs and expenses, in
favor of NEC regarding the Litigation.
h. NEP shall have executed and transferred all of the Class B Stock
to NEC.
i. NEC shall have issued free trading Class A Stock with
restrictions of any kind to NEP or its assigns.
j. NEC shall have executed and transferred all the common shares of
CEC to NEP.
k. In general, the obligation of NEP to consummate the transactions
to be performed by it after this agreement is executed is
subject to satisfaction that the representations and warranties
set forth in Section 9 above shall be true and correct in all
material respects at and as of the date of execution of this
Agreement and:
i. NEC shall have preformed and complied with all of its
covenants hereunder in all material respects at and as of the
date of execution of this Agreement;
ii. The Board of Directors of NEC shall have approved the
transactions contemplated by this Agreement;
iii. All actions to be taken by NEC in connection with
consummation of the transactions contemplated hereby and all
instruments and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory
in form and substance to NEP.
11. Miscellaneous.
a. Notices. All notices or other communications required or
permitted hereunder, including notice of intent to arbitrate,
shall be in writing and shall be deemed to have been duly given
if delivered in person or sent by overnight delivery, confirmed
telecopy or prepaid first class registered or certified mail,
return receipt requested, to the following addresses:
<PAGE> 17
If to NEP, to: with courtesy copies to:
Nevada Energy Partners I, L.L.P. David L. Wallace, Esq.
401 East Fourth Street 2055 Wood Street, Suite 220
Reno, Nevada 89512 Sarasota, Florida, USA 34237-7929
Telephone: (702) 786-7979 Telephone: (941) 364-9598
Facsimile: (702) 786-7989 Facsimile: (941) 364-9599
If to NEC, to: with courtesy copies to:
Roderick H. McCloy, Esq.
Roderick H. McCloy Law Corporation
Jones McCloy Peterson
1700 Three Bentail Centre
P.O. Box 49117
595 Burrard Street
Vancouver, B.C. V7X 1G4
Telephone: (604) 882-1851
Facsimile: (604) 682-7329
Any such notices shall be effective when delivered in person or sent by
telecopy, one business day after being sent by overnight deliver or three
business days after being be registered or certified mail. Any of the foregoing
addressed may be changed by giving notice of such change in the foregoing
manner, except that notices for changes of address shall be effective only upon
receipt.
b. Further Assurances. At any time, and from time to time, each
party will execute additional instruments and take such action
as may be reasonably requested by the other party to confirm or
perfect title to any property transferred hereunder or otherwise
to carry out the intent and purposes of this Agreement.
c. Costs and Expenses. Each party hereto agrees to pay its own
costs and expenses, including legal, accounting, consultant, and
advisor fees, incurred in negotiation this Agreement and
consummating the transactions described herein.
d. Time. Time is of the essence.
e. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject
matter hereof.
f. Amendment. This Agreement may not be amended, supplemented or
modified in whole or in part except by an instrument in writing
signed by the party against whom enforcement of any such
amendment, supplement or modification is sought.
g. Assignment. NEC may not assign this Agreement to any affiliated
entity or nominee or to any party hereto without the prior
written consent of the NEP
<PAGE> 18
h. Choice of Law. This Agreement will be interpreted, construed and
enforced in accordance with the laws of the State of Nevada,
without regard to conflicts of law.
i. Dispute Arbitration. NEC and NEP intend to provide a speedy and
informal method for resolving all disputes and other matters in
question arising out of, or relating to, this Agreement, which
involves interstate commerce and is subject to the Federal
Arbitration Code. All disputes and other matters in question, of
any kind, between NEC and NEP arising out of, or relating to
this Agreement, shall be decided by binding arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect. The decision of the
arbitrator shall be binding. The arbitrator is specifically
granted authority and directed to award reasonable attorneys'
fees, expenses and costs to the successful party. A court of
competent jurisdiction may be used to enforce, but not to appeal
or challenge, the arbitrators' decision including the award of
attorneys' fees, expenses and costs. If it becomes necessary to
enforce the arbitrators' decision at either the trial or
appellate level, a reasonable attorney fee for the enforcement
of the arbitrators' decision shall become an additional item of
damages. Any suit between NEC and NEP must be brought in Washoe
County, Nevada. NEC consents to personal jurisdiction in Nevada.
j. Construction. NEC and NEP and their respective legal counsel
participated in the preparation of this Agreement, therefore,
this Agreement shall be construed neither against nor in favor
of any of the parties hereto, but rather in accordance with the
fair meaning thereof.
k. Effect of Waiver. The failure of any party at any time or times
to require performance of any provision of this Agreement will
in no manner affect the right to enforce the same. The waiver by
any party or any breach of any provision of this Agreement will
not be construed to be a waiver, by any such party of any
succeeding breach of that provision or a waiver by such party or
any breach of any other provision.
l. Severability. The invalidity, illegality or unenforceability of
any provision of this Agreement, which will remain in full force
and effect, nor will the invalidity, illegality or
unenforceability of a portion of any provision of this Agreement
affect the balance of such provision. In the event that any one
or more of the provisions contained in this Agreement or any
portion thereof shall for any reasons be held to be invalid,
illegal or unenforceable in any respect, this Agreement shall be
reformed, construed and enforced as if such invalid, illegal or
unenforceable provision had never been contained herein.
m. Binding Nature. This Agreement, including the requirement to
arbitrate, will be binding upon and will enure to the benefit of
any successors of the parties hereto.
n. Counterparts. This Agreement is intended to be executed in more
than one counterpart, including facsimile counterparts. Each
counterpart shall be
<PAGE> 19
deemed an original on all of which shall constitute one and the
same instrument.
IN WITNESS WHEREOF, NEP and NEC have executed this Agreement.
Nevada Energy Company, Inc., a
Delaware corporation
August 16, 1996 By: /s/ Charles A. Cain
- ----------------------------------- -----------------------------------
Date Charles A. Cain
Its: Director
--------------
August 16, 1996 By: /s/ Peter J. Cannell
- ----------------------------------- -----------------------------------
Date Peter J. Cannell
Its: Director
--------------
Nevada Energy Partners, I, a Nevada
Limited Partnership, by Nevada Electric
Power Company, General Partner
August 16, 1996 By: /s/ David L. Wallace
- ----------------------------------- -----------------------------------
Date David L. Wallace
Its: Attorney in Fact
-------------------------------
Power of Attorney attached.
<PAGE> 20
EXHIBIT 2
M E M O R A N D U M
TO: PowerTel USA, Inc., A Delaware, USA, corporation (Referred to as
"PowerTel")
FROM: XXXXXXXXX, XXX., a Company Limited by Shares under the International
Business Companies Act of 1989, Commonwealth of the Bahamas (Referred to
as "XXXXXXX"), with mailing address at XXXXXXXXXXXXX.
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and XXXXXXX have entered into a First
Amended and Restated Settlement and Release Agreement effective as of December
1, 1997 (the "Agreement"), which Agreement was subsequently incorporated into
and made a part of a Plan of Reorganization (the "Plan") filed by PowerTel with
the United States Bankruptcy Court for the District of Nevada in a Chapter 11
proceeding identified as Case No 97-30265-BMG.
Pursuant to the Plan, XXXXXXX is to receive Class A Common Shares (the
"Shares") to be issued by PowerTel pursuant to Section 1145 of the United States
Bankruptcy Code. In consideration of the issuance of the Shares, XXXXXXX
represents and warrants to PowerTel and to the Court that XXXXXXX is not an
"underwriter" as that term is defined in Section 1145(b) of the Bankruptcy Code.
XXXXXXX also acknowledges that the Shares which it will receive have not been
registered with the United States Securities and Exchange Commission pursuant to
Section 5 of the Securities Act of 1933 in reliance upon the exemption from
registration provided in Section 1145(a) of the Bankruptcy Code. XXXXXXX also
confirms that it has been advised that PowerTel has consented to the issuance of
the Shares based upon PowerTel's understanding that XXXXXXX is experienced in
financial matters, has access to advisors who are experienced in evaluating
investments and is ready, willing and able to assume the risk of acquiring a
speculative, high risk investment, such as the Shares.
XXXXXXX also confirms that it has received and reviewed the FIRST
AMENDED DISCLOSURE STATEMENT PURSUANT TO 11 U.S.C. Section 1125 filed by
PowerTel and has been afforded an opportunity to make inquiry into the affairs
of PowerTel, including an opportunity to confer with the Directors and Officers
of PowerTel. XXXXXXX has been advised that, for the preceding three calendar
years, PowerTel has made various filings with the Securities and Exchange
Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on
Form S-8). XXXXXXX acknowledges that a copy of these filings is available upon
request or may be procured from the United States Securities and Exchange
Commission, Washington, D.C.
XXXXXXX acknowledges that PowerTel has not made any representation or
warranty that (i) its Plan will be implemented successfully, (ii) there will be
a market for the Shares or (if there is a market) that the per Share price will
be maintained within any specific bid/ask range, or (iii) PowerTel will be
financially solvent or that its pro forma financial projections will materialize
as anticipated.
XXXXXXX is aware that there are various Federal and State statutes,
rules and regulations in the United States governing the offer and sale of
securities. XXXXXXX is also aware that the Securities Exchange Act of 1934
imposes duties and responsibilities upon certain shareholders, officers and
directors. XXXXXXX represents that it shall comply with all applicable statutes,
rules and regulations.
Except as set forth in the Agreement and the Plan, XXXXXXX acknowledges
that there is no agreement, contract or understanding (either oral or written)
by and between XXXXXXX and PowerTel. XXXXXXXXX further acknowledges the
authority and ratifies the signature of Jeffrey Antisdel on the First Amended
and Restated Settlement and Release Agreement on behalf of XXXXXXXXXXXXXXX.
XXXXXXX acknowledges that both PowerTel and the United States Bankruptcy
Court will rely upon this Memorandum in issuing the Shares.
In Witness Whereof, XXXXXXXXX, XXX., has given its Common Seal this
date.
GIVEN UNDER THE COMMON SEAL XXXXXXXXX, XXX., a Company Limited by Shares
of XXXXXXXXX, XXX. under the International Business Companies
Act of 1989, Commonwealth of the Bahamas
Date: _________________________
Per:________________________________
Managing Director
<PAGE> 21
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation
(Referred to as "PowerTel")
FROM: Maitland Investments, Ltd., a Company Limited by Shares under the
International Business Companies Act of 1989, Commonwealth of the
Bahamas (Referred to as "Maitland")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and Maitland have entered into a
Settlement and Release Agreement dated as of December 1, 1997 (the "Agreement"),
which Agreement was subsequently incorporated into and made a part of a Plan of
Reorganization (the "Plan") filed by PowerTel with the United States Bankruptcy
Court for the District of Nevada in a Chapter 11 proceeding identified as Case
No 97-30265-BMG, which Plan was subsequently confirmed by the Court.
Pursuant to the Plan, Maitland is to receive Class A Common Shares (the
"Shares") to be issued by PowerTel pursuant to Section 1145 of the United States
Bankruptcy Code. In consideration of the issuance of the Shares, Maitland,
acting through its duly authorized representative, represents and warrants to
PowerTel and to the Court that Maitland is not an "underwriter" as that term is
defined in Section 1145(b) of the Bankruptcy Code. Maitland also acknowledges
that the Shares which it will receive have not been registered with the United
States Securities and Exchange Commission pursuant to Section 5 of the
Securities Act of 1933 in reliance upon the exemption from registration provided
in Section 1145(a) of the Bankruptcy Code. Maitland also confirms that it has
been advised that PowerTel has consented to the issuance of the Shares based
upon PowerTel's understanding that Maitland is experienced in financial matters,
has access to advisors who are experienced in evaluating investments and is
ready, willing and able to assume the risk of acquiring a speculative, high risk
investment, such as the Shares.
Maitland also confirms that it has received and reviewed the Disclosure
Statement filed by PowerTel, approved by the Court and distributed to its
Creditors and has been afforded an opportunity to make inquiry into the affairs
of PowerTel, including an opportunity to confer with the Directors and Officers
of PowerTel. Maitland has been advised that, for the preceding three calendar
years, PowerTel has made various filings, with the Securities and Exchange
Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to Maitland, a
copy will be made available upon request or may be procured from the United
States Securities and Exchange Commission, Washington, D.C.
<PAGE> 22
Maitland acknowledges that PowerTel has not made any representation or
warranty that (i) its Plan will be Implemented successfully, (ii) there will be
a market for the Shares or (if there is a market) that the per Share price will
be maintained within any specific bid/ask range, or (iii) PowerTel will be
financially solvent or that its pro forma financial projections will materialize
as anticipated.
Maitland is aware that there are various Federal and State statutes,
rules and regulations in the United States governing the offer and sale of
securities. Maitland is also aware that the Securities Exchange Act of 1934
imposes duties and responsibilities upon certain shareholders, officers and
directors. Maitland represents that it shall comply with all applicable
statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Maitland
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Maitland and PowerTel.
Maitland acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional document(s) are required in order to
issue the Shares, Maitland hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Maitland and agrees that, in such event, all documents executed by Mr.
Wallace may be relied upon by the recipient as if fully executed by Maitland.
In Witness Whereof, Maitland Investments, Ltd., has given its Common
Seal this date.
GIVEN UNDER THE COMMON SEAL Maitland Investments, Ltd., a Company
of Maitland Investments, Ltd. Limited by Shares under the International
Business Companies Act of 1989,
Date: March 16, 1998 Commonwealth of the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
-------------------------------------
Managing Director
<PAGE> 23
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation (Referred to as
"PowerTel")
FROM: Shepherd Market, Ltd., a Company Limited by Shares under the
International Business Companies Act of 1989, Commonwealth of the
Bahamas (Referred to as "Shepherd Market")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and Shepherd Market have entered into a
Settlement and Release Agreement dated as of December 1, 1997 (the "Agreement"),
which Agreement was subsequently incorporated into and made a part of a Plan of
Reorganization (the "Plan") filed by PowerTel with the United States Bankruptcy
Court for the District of Nevada in a Chapter 11 proceeding identified as Case
No 97-30265-BMG, which Plan was subsequently confirmed by the Court.
Pursuant to the Plan, Shepherd Market is to receive Class A Common
Shares (the "Shares") to be issued by PowerTel pursuant to Section 1145 of the
United States Bankruptcy Code. In consideration of the issuance of the Shares,
Shepherd Market, acting through its duly authorized representative, represents
and warrants to PowerTel and to the Court that Shepherd Market is not an
"underwriter" as that term is defined in Section 1145(b) of the Bankruptcy Code.
Shepherd Market also acknowledges that the Shares which it will receive have not
been registered with the United States Securities and Exchange Commission
pursuant to Section 5 of the Securities Act of 1933 in reliance upon the
exemption from registration provided in Section 1145(a) of the Bankruptcy Code.
Shepherd Market also confirms that it has been advised that PowerTel has
consented to the issuance of the Shares based upon PowerTel's understanding that
Shepherd Market is experienced in financial matters, has access to advisors who
are experienced in evaluating investments and is ready, willing and able to
assume the risk of acquiring a speculative, high risk investment, such as the
Shares.
Shepherd Market also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. Shepherd Market has been advised that, for the preceding
three calendar years, PowerTel has made various filings with the Securities and
Exchange Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to Shepherd
Market, a copy will be made available upon request or may be procured from the
United States Securities and Exchange Commission, Washington, D.C.
<PAGE> 24
Shepherd Market acknowledges that PowerTel has not made any
representation or warranty that (i) its Plan will be implemented successfully,
(ii) there will be a market for the Shares or (if there is a market) that the
per Share price will be maintained within any specific bid/ask range, or (iii)
PowerTel will be financially solvent or that its pro forma financial projections
will materialize as anticipated.
Shepherd Market is aware that there are various Federal and State
statutes, rules and regulations in the United States governing the offer and
sale of securities. Shepherd Market is also aware that the Securities Exchange
Act of 1934 imposes duties and responsibilities upon certain shareholders,
officers and directors. Shepherd Market represents that it shall comply with all
applicable statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Shepherd Market
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Shepherd Market and PowerTel.
Shepherd Market acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional document(s) are required in order to
issue the Shares, Shepherd Market hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Shepherd Market and agrees that, in such event, all documents executed by Mr.
Wallace may be relied upon by the recipient as if fully executed by Shepherd
Market.
In Witness Whereof, Shepherd Market, Ltd., has given its Common Seal
this date.
GIVEN UNDER THE COMMON SEAL Shepherd Market, Ltd., a Company Limited
of Shepherd Market, Ltd. by Shares under the International Business
Companies Act of 1989, Commonwealth of
Date: March 16, 1998 the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
----------------------------------
Managing Director
<PAGE> 25
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation
(Referred to as "PowerTel")
FROM: Berkeley Square Investments, Ltd., a Company Limited by Shares under
the International Business Companies Act of 1989, Commonwealth of the
Bahamas
(Referred to as "Berkeley Square")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and Berkeley Square have entered into a
Settlement and Release Agreement dated as of December 1, 1997 (the "Agreement"),
which Agreement was subsequently incorporated into and made a part of a Plan, of
Reorganization (the "Plan") filed by PowerTel with the United States Bankruptcy
Court for the District of Nevada in a Chapter 11 proceeding identified as Case
No 97-30265-BMG, which Plan was subsequently confirmed by the Court.
Pursuant to the Plan, Berkeley Square is to receive Class A Common
Shares (the "Shares") to be issued by PowerTel pursuant to Section 1145 of the
United States Bankruptcy Code. In consideration of the issuance of the Shares,
Berkeley Square, acting through its duly authorized representative, represents
and warrants to PowerTel and to the Court that Berkeley Square is not an
"underwriter" as that term is defined in Section 1145(b) of the Bankruptcy Code.
Berkeley Square also acknowledges that the Shares which it will receive have not
been registered with the United States Securities and Exchange Commission
pursuant to Section 5 of the Securities Act of 1933 in reliance upon the
exemption from registration provided in Section 1145(a) of the Bankruptcy Code.
Berkeley Square also confirms that it has been advised that PowerTel has
consented to the issuance of the Shares based upon PowerTel's understanding that
Berkeley Square is experienced in financial matters, has access to advisors who
are experienced in evaluating investments and is ready, willing and able to
assume the risk of acquiring a speculative, high risk investment, such as the
Shares.
Berkeley Square also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. Berkeley Square has been advised that, for the preceding
three calendar years, PowerTel has made various filings with the Securities and
Exchange Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to Berkeley
Square, a copy will be made available upon request or may be procured from the
United States Securities and Exchange Commission, Washington, D.C.
<PAGE> 26
Berkeley Square acknowledges that PowerTel has not made any
representation or warranty that (i) its Plan will be implemented successfully,
(ii) there will be a market for the Shares or (if there is a market) that the
per Share price will be maintained within any specific bid/ask range, or (iii)
PowerTel will be financially solvent or that its pro forma financial projections
will materialize as anticipated.
Berkeley Square is aware that there are various Federal and State
statutes, rules and regulations in the United States governing the offer and
sale of securities. Berkeley Square is also aware that the Securities Exchange
Act of 1934 imposes duties and responsibilities upon certain shareholders,
officers and directors. Berkeley Square represents that it shall comply with all
applicable statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Berkeley Square
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Berkeley Square and PowerTel.
Berkeley Square acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional documents) are required in order to
issue the Shares, Berkeley Square hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Berkeley Square and agrees that, in such event, all documents executed by Mr.
Wallace may be relied upon by the recipient as if fully executed by Berkeley
Square.
In Witness Whereof, Berkeley Square Investments, Ltd., has given its
Common Seal this date.
GIVEN UNDER THE COMMON SEAL Berkeley Square Investments, Ltd., a
of Berkeley Square Investments, Ltd. Company Limited by Shares under the
International Business Companies Act
of 1989, Commonwealth of the Bahamas
Date: March 16, 1998 By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
----------------------------------
Managing Director
<PAGE> 27
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation
(Referred to as "PowerTel")
FROM: Clermont & Annabel, Ltd., a Company Limited by Shares under the
International Business Companies Act of 1989, Commonwealth of the
Bahamas
(Referred to as "Clermont Annabel")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and Clermont Annabel have entered into
a Settlement and Release Agreement dated as of December 1, 1997 (the
"Agreement"), which Agreement was subsequently incorporated into and made a part
of a Plan of Reorganization (the "Plan") filed by PowerTel with the United
States Bankruptcy Court for the District of Nevada in a Chapter 11 proceeding
identified as Case No 97-30265-BMG, which Plan was subsequently confirmed by the
Court.
Pursuant to the Plan, Clermont Annabel is to receive Class A Common
Shares (the "Shares") to be issued by PowerTel pursuant to Section 1145 of the
United States Bankruptcy Code. In consideration of the issuance of the Shares,
Clermont Annabel, acting through its duly authorized representative, represents
and warrants to PowerTel and to the Court that Clermont Annabel is not an
"underwriter" as that term is defined in Section 1145(b) of the Bankruptcy Code.
Clermont Annabel also acknowledges that the Shares which it will receive have
not been registered with the United States Securities and Exchange Commission
pursuant to Section 5 of the Securities Act of 1933 in reliance upon the
exemption from registration provided in Section 1145(a) of the Bankruptcy Code.
Clermont Annabel also confirms that it has been advised that PowerTel has
consented to the issuance of the Shares based upon PowerTel's understanding that
Clermont Annabel is experienced in financial matters, has access to advisors who
are experienced in evaluating investments and is ready, willing and able to
assume the risk of acquiring a speculative, high risk investment, such as the
Shares.
Clermont Annabel also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. Clermont Annabel has been advised that, for the preceding
three calendar years, PowerTel has made various filings with the Securities and
Exchange Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to Clermont
Annabel, a copy will be made available upon request or may be procured from the
United States Securities and Exchange Commission, Washington, D.C.
<PAGE> 28
Clermont Annabel acknowledges that PowerTel has not made any
representation or warranty that (i) its Plan will be implemented successfully,
(ii) there will be a market for the Shares or (if there is a market) that the
per Share price will be maintained within any specific bid/ask range, or (iii)
PowerTel will be financially solvent or that its pro forma financial projections
will materialize as anticipated.
Clermont Annabel is aware that there are various Federal and State
statutes, rules and regulations in the United States governing the offer and
sale of securities. Clermont Annabel is also aware that the Securities Exchange
Act of 1934 imposes duties and responsibilities upon certain shareholders,
officers and directors. Clermont Annabel represents that it shall comply with
all applicable statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Clermont Annabel
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Clermont Annabel and PowerTel.
Clermont Annabel acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional document(s) are required in order to
issue the Shares, Clermont Annabel hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Clermont Annabel and agrees that, in such event, all documents executed by
Mr. Wallace may be relied upon by the recipient as if fully executed by Clermont
Annabel.
In Witness Whereof, Clermont & Annabel, Ltd., has given its Common Seal
this date.
GIVEN UNDER THE COMMON SEAL Clermont & Annabel, Ltd., a Company
of Clermont & Annabel, Ltd. Limited by Shares under the International
Business Companies Act of 1989,
Date: March 16, 1998 Commonwealth of the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
-------------------------------------
Managing Director
<PAGE> 29
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation (Referred to as
"PowerTel")
FROM: Burke Douglas Holdings, Ltd., a Company Limited by Shares under the
International Business Companies Act of 1989, Commonwealth of the
Bahamas (Referred to as "Burke Douglas")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and Burke Douglas have entered into a
Settlement and Release Agreement dated as of December 1, 1997 (the "Agreement"),
which Agreement was subsequently incorporated into and made a part of a Plan of
Reorganization (the "Plan") filed by PowerTel with the United States Bankruptcy
Court for the District of Nevada in a Chapter 11 proceeding identified as Case
No 97-30265-BMG, which Plan was subsequently confirmed by the Court.
Pursuant to the Plan, Burke Douglas is to receive Class A Common Shares
(the "Shares") to be issued by PowerTel pursuant to Section 1145 of the United
States Bankruptcy Code. In consideration of the issuance of the Shares, Burke
Douglas, acting through its duly authorized representative, represents and
warrants to PowerTel and to the Court that Burke Douglas is not an "underwriter"
as that term is defined in Section 1145(b) of the Bankruptcy Code. Burke Douglas
also acknowledges that the Shares which it will receive have not been registered
with the United States Securities and Exchange Commission pursuant to Section 5
of the Securities Act of 1933 in reliance upon the exemption from registration
provided in Section 1145(a) of the Bankruptcy Code. Burke Douglas also confirms
that it has been advised that PowerTel has consented to the issuance of the
Shares based upon PowerTel's understanding that Burke Douglas is experienced in
financial matters, has access to advisors who are experienced in evaluating
investments and is ready, willing and able to assume the risk of acquiring a
speculative, high risk investment, such as the Shares.
Burke Douglas also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. Burke Douglas has been advised that, for the preceding
three calendar years, PowerTel has made various filings with the Securities and
Exchange Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to Burke Douglas,
a copy will be made available upon request or may be procured from the United
States Securities and Exchange Commission, Washington, D.C.
<PAGE> 30
Burke Douglas acknowledges that PowerTel has not made any
representation or warranty that (i) its Plan will be implemented successfully,
(ii) there will be a market for the Shares or (if there is a market) that the
per Share price will be maintained within any specific bid/ask range, or (iii)
PowerTel will be financially solvent or that its pro forma financial projections
will materialize as anticipated.
Burke Douglas is aware that there are various Federal and State
statutes, rules and regulations in the United States governing the offer and
sale of securities. Burke Douglas is also aware that the Securities Exchange Act
of 1934 imposes duties and responsibilities upon certain shareholders, officers
and directors. Burke Douglas represents that it shall comply with all applicable
statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Burke Douglas
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Burke Douglas and PowerTel.
Burke Douglas acknowledges that both PowerTel -and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional document(s) are required in order to
issue the Shares, Burke Douglas hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Burke Douglas and agrees that, in such event, all documents executed by Mr.
Wallace may be relied upon by the recipient as if fully executed by Burke
Douglas.
In Witness Whereof, Burke Douglas Holdings, Ltd., has given its Common
Seal this date.
GIVEN UNDER THE COMMON SEAL Burke Douglas Holdings, Ltd., a Company
of Burke Douglas Holdings, Ltd. Limited by Shares under the International
Business Companies Act of 1989,
Date: March 16, 1998 Commonwealth of the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
-------------------------------------
Managing Director
<PAGE> 31
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation (Referred to as
"PowerTel")
FROM: Parklane Mayfair, Ltd., a Company Limited by Shares under the
International Business Companies Act of 1989, Commonwealth of the
Bahamas (Referred to as "Parklane Mayfair")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and Parklane Mayfair have entered into
a Settlement and Release Agreement dated as of December 1, 1997 (the
"Agreement"), which Agreement was subsequently incorporated into and made a part
of a Plan, of Reorganization (the "Plan") filed by PowerTel with the United
States Bankruptcy Court for the District of Nevada in a Chapter 11 proceeding
identified as Case No 97-30265-BMG, which Plan was subsequently confirmed by the
Court.
Pursuant to the Plan, Parklane Mayfair is to receive Class A Common
Shares (the "Shares") to be issued by PowerTel pursuant to Section 1145 of the
United States Bankruptcy Code. In consideration of the issuance of the Shares,
Parklane Mayfair, acting through its duly authorized representative, represents
and warrants to PowerTel and to the Court that Parklane Mayfair is not an
"underwriter" as that term is defined in Section 1145(b) of the Bankruptcy Code.
Parklane Mayfair also acknowledges that the Shares which it will receive have
not been registered with the United States Securities and Exchange Commission
pursuant to Section 5 of the Securities Act of 1933 in reliance upon the
exemption from registration provided in Section 1145(a) of the Bankruptcy Code.
Parklane Mayfair also confirms that it has been advised that PowerTel has
consented to the issuance of the Shares based upon PowerTel's understanding that
Parklane Mayfair is experienced in financial matters, has access to advisors who
are experienced in evaluating investments and is ready, willing and able to
assume the risk of acquiring a speculative, high risk investment, such as the
Shares.
Parklane Mayfair also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. Parklane Mayfair has been advised that, for the preceding
three calendar years, PowerTel has made various filings with the Securities and
Exchange Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to Parklane
Mayfair, a copy will be made available upon request or may be procured from the
United States Securities and Exchange Commission, Washington, D.C.
<PAGE> 32
Parklane Mayfair acknowledges that PowerTel has not made any
representation or warranty that (i) its Plan will be implemented successfully,
(ii) there will be a market for the Shares or (if there is a market) that the
per Share price will be maintained within any specific bid/ask range, or (iii)
PowerTel will be financially solvent or that its pro forma financial projections
will materialize as anticipated.
Parklane Mayfair is aware that there are various Federal and State
statutes, rules and regulations in the United States governing the offer and
sale of securities. Parklane Mayfair is also aware that the Securities Exchange
Act of 1934 imposes duties and responsibilities upon certain shareholders,
officers and directors. Parklane Mayfair represents that it shall comply with
all applicable statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Parklane Mayfair
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Parklane Mayfair and PowerTel.
Parklane Mayfair acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional document(s) are required in order to
issue the Shares, Parklane Mayfair hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Parklane Mayfair and agrees that, in such event, all documents executed by
Mr. Wallace may be relied upon by the recipient as if fully executed by Parklane
Mayfair.
In Witness Whereof, Parklane Mayfair, Ltd., has given its Common Seal
this date.
GIVEN UNDER THE COMMON SEAL Parklane Mayfair, Ltd., a Company Limited
of Parklane Mayfair, Ltd. by Shares under the International Business
Companies Act of 1989, Commonwealth of
Date: March 16, 1998 the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
-----------------------------------------
Managing Director
<PAGE> 33
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation (Referred to as
"PowerTel")
FROM: Clarendon Atlantic Holdings, Ltd., a Company Limited by Shares under
the International Business Companies Act of 1989, Commonwealth of the
Bahamas (Referred to as "Clarendon Atlantic")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and Clarendon Atlantic have entered
into a Settlement and Release Agreement dated as of December 1, 1997 (the
"Agreement"), which Agreement was subsequently incorporated into and made a part
of a Plan of Reorganization (the "Plan") filed by PowerTel with the United
States Bankruptcy Court for the District of Nevada in a Chapter 11 proceeding
identified as Case No 97-30265-BMG, which Plan was subsequently confirmed by the
Court.
Pursuant to the Plan, Clarendon Atlantic is to receive Class A Common
Shares (the "Shares") to be issued by PowerTel pursuant to Section 1145 of the
United States Bankruptcy Code. In consideration of the issuance of the Shares,
Clarendon Atlantic, acting through its duly authorized representative,
represents and warrants to PowerTel and to the Court that Clarendon Atlantic is
not an "underwriter" as that term is defined in Section 1145(b) of the
Bankruptcy Code. Clarendon Atlantic also acknowledges that the Shares which it
will receive have not been registered with the United States Securities and
Exchange Commission pursuant to Section 5 of the Securities Act of 1933 in
reliance upon the exemption from registration provided in Section 1145(a) of the
Bankruptcy Code. Clarendon Atlantic also confirms that it has been advised that
PowerTel has consented to the issuance of the Shares based upon PowerTel's
understanding that Clarendon Atlantic is experienced in financial matters, has
access to advisors who are experienced in evaluating investments and is ready,
willing and able to assume the risk of acquiring a speculative, high risk
investment, such as the Shares.
Clarendon Atlantic also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. Clarendon Atlantic has been advised that, for the
preceding three calendar years, PowerTel has made various filings with the
Securities and Exchange Commission (including but not limited to annual reports
on Form 10-KSB, quarterly reports on Form 10-QSB and at least one registration
statement on Form S-8). While PowerTel has not provided a copy of these filings
to Clarendon Atlantic, a copy will be made available upon request or may be
procured from the United States Securities and Exchange Commission, Washington,
D.C.
<PAGE> 34
Clarendon Atlantic acknowledges that PowerTel has not made any
representation or warranty that (i) its Plan will be Implemented successfully,
(ii) there will be a market for the Shares or (if there is a market) that the
per Share price will be maintained within any specific bid/ask range, or (iii)
PowerTel will be financially solvent or that its pro forma financial projections
will materialize as anticipated.
Clarendon Atlantic is aware that there are various Federal and State
statutes, rules and regulations in the United States governing the offer and
sale of securities. Clarendon Atlantic is also aware that the Securities
Exchange Act of 1934 imposes duties and responsibilities upon certain
shareholders, officers and directors. Clarendon Atlantic represents that it
shall comply with all applicable statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Clarendon Atlantic
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Clarendon Atlantic and PowerTel.
Clarendon Atlantic acknowledges that both PowerTel and the United
States Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional documents) are required in order to
issue the Shares, Clarendon Atlantic hereby designates Mr. David Wallace, Esq.
of Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Clarendon Atlantic and agrees that, in such event, all documents executed by
Mr. Wallace may be relied upon by the recipient as if fully executed by
Clarendon Atlantic.
In Witness Whereof, Clarendon Atlantic Holdings, Ltd., has given its
Common Seal this date.
GIVEN UNDER THE COMMON SEAL Clarendon Atlantic Holdings, Ltd., a
of Clarendon Atlantic Holdings, Ltd. Company Limited by Shares under the
International Business Companies Act of
Date: March 16, 1998 1989, Commonwealth of the Bahamas
----------------
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
-----------------------------------
Managing Director
<PAGE> 35
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation (Referred to as
"PowerTel")
FROM: Macaulay Island Investments, Ltd., a Company Limited by Shares under
the International Business Companies Act of 1989, Commonwealth of the
Bahamas (Referred to as "Macaulay")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and Macaulay have entered into a
Settlement and Release Agreement dated as of December 1, 1997 (the "Agreement"),
which Agreement was subsequently incorporated into and made a part of a Plan of
Reorganization (the "Plan") filed by PowerTel with the United States Bankruptcy
Court for the District of Nevada in a Chapter 11 proceeding identified as Case
No 97-30265-BMG, which Plan was subsequently confirmed by the Court.
Pursuant to the Plan, Macaulay is to receive Class A Common Shares (the
"Shares") to be issued by PowerTel pursuant to Section 1145 of the United States
Bankruptcy Code. In consideration of the issuance of the Shares, Macaulay,
acting through its duly authorized representative, represents and warrants to
PowerTel and to the Court that Macaulay is not an "underwriter" as that term is
defined in Section 1145(b) of the Bankruptcy Code. Macaulay also acknowledges
that the Shares which it will receive have not been registered with the United
States Securities and Exchange Commission pursuant to Section 5 of the
Securities Act of 1933 in reliance upon the exemption from registration provided
in Section 1145(a) of the Bankruptcy Code. Macaulay also confirms that it has
been advised that PowerTel has consented to the issuance of the Shares based
upon PowerTel's understanding that Macaulay is experienced in financial matters,
has access to advisors who are experienced in evaluating investments and is
ready, willing and able to assume the risk of acquiring a speculative, high risk
investment, such as the Shares.
Macaulay also confirms that it has received and reviewed the Disclosure
Statement filed by PowerTel, approved by the Court and distributed to its
Creditors and has been afforded an opportunity to make inquiry into the affairs
of PowerTel, including an opportunity to confer with the Directors and Officers
of PowerTel. Macaulay has been advised that, for the preceding three calendar
years, PowerTel has made various filings with the Securities and Exchange
Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to Macaulay, a
copy will be made available upon request or may be procured from the United
States Securities and Exchange Commission, Washington, D.C.
Macaulay acknowledges that PowerTel has not made any representation or
warranty
<PAGE> 36
that (i) its Plan will be Implemented successfully, (ii) there will be a market
for the Shares or (if there is a market) that the per Share price will be
maintained within any specific bid/ask range, or (iii) PowerTel will be
financially solvent or that its pro forma financial projections will materialize
as anticipated.
Macaulay is aware that there are various Federal and State statutes,
rules and regulations in the United States governing the offer and sale of
securities. Macaulay is also aware that the Securities Exchange Act of 1934
imposes duties and responsibilities upon certain shareholders, officers and
directors. Macaulay represents that it shall comply with all applicable
statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Macaulay
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Macaulay and PowerTel.
Macaulay acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional document(s) are required in order to
issue the Shares, Macaulay hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Macaulay and agrees that, in such event, all documents executed by Mr.
Wallace may be relied upon by the recipient as if fully executed by Macaulay.
In Witness Whereof, Macaulay Island Investments, Ltd., has given its
Common Seal this date.
GIVEN UNDER THE COMMON SEAL Macaulay Island Investments, Ltd., a
of Macaulay Island Investments, Ltd. Company Limited by Shares under the
International Business Companies Act of
Date: March 16, 1998 1989, Commonwealth of the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
-------------------------------------
Managing Director
<PAGE> 37
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation (Referred to as
"PowerTel")
FROM: Young Bayshore Investments, Ltd., a Company Limited by Shares under the
International Business Companies Act of 1989, Commonwealth of the
Bahamas (Referred to as "Young Bayshore")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc, ("PowerTel") and Young Bayshore have entered into a
Settlement and Release Agreement dated as of December 1, 1997 (the "Agreement"),
which Agreement was subsequently incorporated into and made a part of a Plan of
Reorganization (the "Plan") filed by PowerTel with the United States Bankruptcy
Court for the District of Nevada in a Chapter 11 proceeding identified as Case
No 97-30265-BMG, which Plan was subsequently confirmed by the Court.
Pursuant to the Plan, Young Bayshore is to receive Class A Common
Shares (the "Shares") to be issued by PowerTel pursuant to Section 1145 of the
United States Bankruptcy Code. In consideration of the issuance of the Shares,
Young Bayshore, acting through its duly authorized representative, represents
and warrants to PowerTel and to the Court that Young Bayshore is not an
"underwriter" as that term is defined in Section 1145(b) of the Bankruptcy Code.
Young Bayshore also acknowledges that the Shares which it will receive have not
been registered with the United States Securities and Exchange Commission
pursuant to Section 5 of the Securities Act of 1933 in reliance upon the
exemption from registration provided in Section 1145(a) of the Bankruptcy Code.
Young Bayshore also confirms that it has been advised that PowerTel has
consented to the issuance of the Shares based upon PowerTel's understanding that
Young Bayshore is experienced in financial matters, has access to advisors who
are experienced in evaluating investments and is ready, willing and able to
assume the risk of acquiring a speculative, high risk investment, such as the
Shares.
Young Bayshore also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. Young Bayshore has been advised that, for the preceding
three calendar years, PowerTel has made various filings with the Securities and
Exchange Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to Young Bayshore,
a copy will be made available upon request or may be procured from the United
States Securities and Exchange Commission, Washington, D.C.
<PAGE> 38
Young Bayshore acknowledges that PowerTel has not made any
representation or warranty that (i) its Plan will be implemented successfully,
(ii) there will be a market for the Shares or (if there is a market) that the
per Share price will be maintained within any specific bid/ask range, or (iii)
PowerTel will be financially solvent or that its pro forma financial projections
will materialize as anticipated.
Young Bayshore is aware that there are various Federal and State
statutes, rules and regulations in the United States governing the offer and
sale of securities. Young Bayshore is also aware that the Securities Exchange
Act of 1934 imposes duties and responsibilities upon certain shareholders,
officers and directors. Young Bayshore represents that it shall comply with all
applicable statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Young Bayshore
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Young Bayshore and PowerTel.
Young Bayshore acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional document(s) are required in order to
issue the Shares, Young Bayshore hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Young Bayshore and agrees that, in such event, all documents executed by Mr.
Wallace may be relied upon by the recipient as if fully executed by Young
Bayshore.
In Witness Whereof, Young Bayshore Investments, Ltd., has given its
Common Seal this date.
GIVEN UNDER THE COMMON SEAL Young Bayshore Investments, Ltd., a
of Young Bayshore Investments, Ltd. Company Limited by Shares under the
International Business Companies Act of
Date: March 16, 1998 1989, Commonwealth of the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
-------------------------------------
Managing Director
<PAGE> 39
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation (Referred to as
"PowerTel")
FROM: Wilton Ashfield, Ltd., a Company Limited by Shares under the
International Business Companies Act of 1989, Commonwealth of the
Bahamas (Referred to as "Wilton Ashfield")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and Wilton Ashfield have entered into a
Settlement and Release Agreement dated as of December 1, 1997 (the "Agreement"),
which Agreement was subsequently incorporated into and made a part of a Plan of
Reorganization (the "Plan") filed by PowerTel with the United States Bankruptcy
Court for the District of Nevada in a Chapter 11 proceeding identified as Case
No 97-30265-BMG, which Plan was subsequently confirmed by the Court.
Pursuant to the Plan, Wilton Ashfield is to receive Class A Common
Shares (the "Shares") to be issued by PowerTel pursuant to Section 1145 of the
United States Bankruptcy Code. In consideration of the issuance of the Shares,
Wilton Ashfield, acting through its duly authorized representative, represents
and warrants to PowerTel and to the Court that Wilton Ashfield is not an
"underwriter" as that term is defined in Section 1145(b) of the Bankruptcy Code.
Wilton Ashfield also acknowledges that the Shares which it will receive have not
been registered with the United States Securities and Exchange Commission
pursuant to Section 5 of the Securities Act of 1933 in reliance upon the
exemption from registration provided in Section 1145(a) of the Bankruptcy Code.
Wilton Ashfield also confirms that it has been advised that PowerTel has
consented to the issuance of the Shares based upon PowerTel's understanding that
Wilton Ashfield is experienced in financial matters, has access to advisors who
are experienced in evaluating investments and is ready, willing and able to
assume the risk of acquiring a speculative, high risk investment, such as the
Shares.
Wilton Ashfield also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. Wilton Ashfield has been advised that, for the preceding
three calendar years, PowerTel has made various filings with the Securities and
Exchange Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to Wilton
Ashfield, a copy will be made available upon request or may be procured from the
United States Securities and Exchange Commission, Washington, D.C.
<PAGE> 40
Wilton Ashfield acknowledges that PowerTel has not made any
representation or warranty that (i) its Plan will be implemented successfully,
(ii) there will be a market for the Shares or (if there is a market) that the
per Share price will be maintained within any specific bid/ask range, or (iii)
PowerTel will be financially solvent or that its pro forma financial projections
will materialize as anticipated.
Wilton Ashfield is aware that there are various Federal and State
statutes, rules and regulations in the United States governing the offer and
sale of securities. Wilton Ashfield is also aware that the Securities Exchange
Act of 1934 imposes duties and responsibilities upon certain shareholders,
officers and directors. Wilton Ashfield represents that it shall comply with all
applicable statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Wilton Ashfield
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Wilton Ashfield and PowerTel.
Wilton Ashfield acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional document(s) are required in order to
issue the Shares, Wilton Ashfield hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Wilton Ashfield and agrees that, in such event, all documents executed by Mr.
Wallace may be relied upon by the recipient as if fully executed by Wilton
Ashfield.
In Witness Whereof, Wilton Ashfield, Ltd., has given its Common Seal
this date.
GIVEN UNDER THE COMMON SEAL Wilton Ashfield, Ltd., a Company Limited
of Wilton Ashfield, Ltd. by Shares under the International Business
Companies Act of 1989, Commonwealth of
Date: March 16, 1998 the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
----------------------------------------
Managing Director
<PAGE> 41
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation (Referred to as
"PowerTel")
FROM: Greyshire House, Ltd., a Company Limited by Shares under the
International Business Companies Act of 1989, Commonwealth of the
Bahamas (Referred to as "Greyshire")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and Greyshire have entered into a
Settlement and Release Agreement dated as of December 1, 1997 (the "Agreement"),
which Agreement was subsequently incorporated into and made a part of a Plan of
Reorganization (the "Plan") filed by PowerTel with the United States Bankruptcy
Court for the District of Nevada in a Chapter 11 proceeding identified as Case
No 97-30265-BMG, which Plan was subsequently confirmed by the Court.
Pursuant to the Plan, Greyshire is to receive Class A Common Shares
(the "Shares") to be issued by PowerTel pursuant to Section 1145 of the United
States Bankruptcy Code. In consideration of the issuance of the Shares,
Greyshire, acting through its duly authorized representative, represents and
warrants to PowerTel and to the Court that Greyshire is not an "underwriter" as
that term is defined in Section 1145(b) of the Bankruptcy Code. Greyshire also
acknowledges that the Shares which it will receive have not been registered with
the United States Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of 1933 in reliance upon the exemption from registration
provided in Section 1145(a) of the Bankruptcy Code. Greyshire also confirms that
it has been advised that PowerTel has consented to the issuance of the Shares
based upon PowerTel's understanding that Greyshire is experienced in financial
matters, has access to advisors who are experienced in evaluating investments
and is ready, willing and able to assume the risk of acquiring a speculative,
high risk investment, such as the Shares.
Greyshire also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. Greyshire has been advised that, for the preceding three
calendar years, PowerTel has made various filings with the Securities and
Exchange Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to Greyshire, a
copy will be made available upon request or may be procured from the United
States Securities and Exchange Commission, Washington, D.C.
<PAGE> 42
Greyshire acknowledges that PowerTel has not made any representation or
warranty that (i) its Plan will be Implemented successfully, (ii) there will be
a market for the Shares or (if there is a market) that the per Share price will
be maintained within any specific bid/ask range, or (iii) PowerTel will be
financially solvent or that its pro forma financial projections will materialize
as anticipated.
Greyshire is aware that there are various Federal and State statutes,
rules and regulations in the United States governing the offer and sale of
securities. Greyshire is also aware that the Securities Exchange Act of 1934
imposes duties and responsibilities upon certain shareholders, officers and
directors. Greyshire represents that it shall comply with all applicable
statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Greyshire
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Greyshire and PowerTel.
Greyshire acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional document(s) are required in order to
issue the Shares, Greyshire hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Greyshire and agrees that, in such event, all documents executed by Mr.
Wallace may be relied upon by the recipient as if fully executed by Greyshire.
In Witness Whereof, Greyshire House, Ltd., has given its Common Seal
this date.
GIVEN UNDER THE COMMON SEAL Greyshire House, Ltd., a Company Limited
of Greyshire House, Ltd. by Shares under the International Business
Companies Act of 1989, Commonwealth of
Date: March 16, 1998 the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
--------------------------------------
Managing Director
<PAGE> 43
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation (Referred to as
"PowerTel")
FROM: August Lake Holdings, Ltd., a Company Limited by Shares under the
International Business Companies Act of 1989, Commonwealth of the
Bahamas (Referred to as "August Lake")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and August Lake have entered into a
Settlement and Release Agreement dated as of December 1, 1997 (the "Agreement"),
which Agreement was subsequently incorporated into and made a part of a Plan of
Reorganization (the "Plan") filed by PowerTel with the United States Bankruptcy
Court for the District of Nevada in a Chapter 11 proceeding identified as Case
No 97-30265-BMG, which Plan was subsequently confirmed by the Court.
Pursuant to the Plan, August Lake is to receive Class A Common Shares
(the "Shares") to be issued by PowerTel pursuant to Section 1145 of the United
States Bankruptcy Code. In consideration of the issuance of the Shares, August
Lake, acting through its duly authorized representative, represents and warrants
to PowerTel and to the Court that August Lake is not an "underwriter" as that
term is defined in Section 1145(b) of the Bankruptcy Code. August Lake also
acknowledges that the Shares which it will receive have not been registered with
the United States Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of 1933 in reliance upon the exemption from registration
provided in Section 1145(a) of the Bankruptcy Code. August Lake also confirms
that it has been advised that PowerTel has consented to the issuance of the
Shares based upon PowerTel's understanding that August Lake is experienced in
financial matters, has access to advisors who are experienced in evaluating
investments and is ready, willing and able to assume the risk of acquiring a
speculative, high risk investment, such as the Shares.
August Lake also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. August Lake has been advised that, for the preceding three
calendar years, PowerTel has made various filings with the Securities and
Exchange Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to August Lake, a
copy will be made available upon request or may be procured from the United
States Securities and Exchange Commission, Washington, D.C.
<PAGE> 44
August Lake acknowledges that PowerTel has not made any representation
or warranty that (i) its Plan will be implemented successfully, (ii) there will
be a market for the Shares or (if there is a market) that the per Share price
will be maintained within any specific bid/ask range, or (iii) PowerTel will be
financially solvent or that its pro forma financial projections will materialize
as anticipated.
August Lake is aware that there are various Federal and State statutes,
rules and regulations in the United States governing the offer and sale of
securities. August Lake is also aware that the Securities Exchange Act of 1934
imposes duties and responsibilities upon certain shareholders, officers and
directors. August Lake represents that it shall comply with all applicable
statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, August Lake
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between August Lake and PowerTel.
August Lake acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional document(s) are required in order to
issue the Shares, August Lake hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of August Lake and agrees that, in such event, all documents executed by Mr.
Wallace may be relied upon by the recipient as if fully executed by August Lake.
In Witness Whereof, August Lake Holdings, Ltd., has given its Common
Seal this date.
GIVEN UNDER THE COMMON SEAL August Lake Holdings, Ltd., a Company
of August Lake Holdings, Ltd. Limited by Shares under the International
Business Companies Act of 1989,
Date: March 16, 1998 Commonwealth of the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
-------------------------------------
Managing Director
<PAGE> 45
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation (Referred to as
"PowerTel")
FROM: Whitestone Brooke Holdings, Ltd., a Company Limited by Shares under the
International Business Companies Act of 1989, Commonwealth of the
Bahamas (Referred to as "Whitestone Brooke")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and Whitestone Brooke have entered into
a Settlement and Release Agreement dated as of December 1, 1997 (the
"Agreement"), which Agreement was subsequently incorporated into and made a part
of a Plan of Reorganization (the "Plan") filed by PowerTel with the United
States Bankruptcy Court for the District of Nevada in a Chapter 11 proceeding
identified as Case No 97-30265-BMG, which Plan was subsequently confirmed by the
Court.
Pursuant to the Plan, Whitestone Brooke is to receive Class A Common
Shares (the "Shares") to be issued by PowerTel pursuant to Section 1145 of the
United States Bankruptcy Code. In consideration of the issuance of the Shares,
Whitestone Brooke, acting through its duly authorized representative, represents
and warrants to PowerTel and to the Court that Whitestone Brooke is not an
"underwriter" as that term is defined in Section 1145(b) of the Bankruptcy Code.
Whitestone Brooke also acknowledges that the Shares which it will receive have
not been registered with the United States Securities and Exchange Commission
pursuant to Section 5 of the Securities Act of 1933 in reliance upon the
exemption from registration provided in Section 1145(a) of the Bankruptcy Code.
Whitestone Brooke also confirms that it has been advised that PowerTel has
consented to the issuance of the Shares based upon PowerTel's understanding that
Whitestone Brooke is experienced in financial matters, has access to advisors
who are experienced in evaluating investments and is ready, willing and able to
assume the risk of acquiring a speculative, high risk investment, such as the
Shares.
Whitestone Brooke also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. Whitestone Brooke has been advised that, for the preceding
three calendar years, PowerTel has made various filings with the Securities and
Exchange Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to Whitestone
Brooke, a copy will be made available upon request or may be procured from the
United States Securities and Exchange Commission, Washington, D.C.
<PAGE> 46
Whitestone Brooke acknowledges that PowerTel has not made any
representation or warranty that (i) its Plan will be implemented successfully,
(ii) there will be a market for the Shares or (if there is a market) that the
per Share price will be maintained within any specific bid/ask range, or (iii)
PowerTel will be financially solvent or that its pro forma financial projections
will materialize as anticipated.
Whitestone Brooke is aware that there are various Federal and State
statutes, rules and regulations in the United States governing the offer and
sale of securities. Whitestone Brooke is also aware that the Securities Exchange
Act of 1934 imposes duties and responsibilities upon certain shareholders,
officers and directors. Whitestone Brooke represents that it shall comply with
all applicable statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Whitestone Brooke
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Whitestone Brooke and PowerTel.
Whitestone Brooke acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional documents) are required in order to
issue the Shares, Whitestone Brooke hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Whitestone Brooke and agrees that, in such event, all documents executed by
Mr. Wallace may be relied upon by the recipient as if fully executed by
Whitestone Brooke.
In Witness Whereof, Whitestone Brooke Holdings, Ltd., has given its
Common Seal this date.
GIVEN UNDER THE COMMON SEAL Whitestone Brooke Holdings, Ltd., a
of Whitestone Brooke Holdings, Ltd. Company Limited by Shares under the
International Business Companies Act of
Date: March 16, 1998 1989, Commonwealth of the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
-----------------------------------
Managing Director
<PAGE> 47
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation (Referred to as
"PowerTel")
FROM: Porterman Williams, Ltd., a Company Limited by Shares under the
International Business Companies Act of 1989, Commonwealth of the
Bahamas (Referred to as "Porterman Williams")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and Porterman Williams have entered
into a Settlement and Release Agreement dated as of December 1, 1997 (the
"Agreement"), which Agreement was subsequently incorporated into and made a part
of a Plan of Reorganization (the "Plan") filed by PowerTel with the United
States Bankruptcy Court for the District of Nevada in a Chapter 11 proceeding
identified as Case No 97-30265-BMG, which Plan was subsequently confirmed by the
Court.
Pursuant to the Plan, Porterman Williams is to receive Class A Common
Shares (the "Shares") to be issued by PowerTel pursuant to Section 1145 of the
United States Bankruptcy Code. In consideration of the issuance of the Shares,
Porterman Williams, acting through its duly authorized representative,
represents and warrants to PowerTel and to the Court that Porterman Williams is
not an "underwriter" as that term is defined in Section 1145(b) of the
Bankruptcy Code. Porterman Williams also acknowledges that the Shares which it
will receive have not been registered with the United States Securities and
Exchange Commission pursuant to Section 5 of the Securities Act of 1933 in
reliance upon the exemption from registration provided in Section 1145(a) of the
Bankruptcy Code. Porterman Williams also confirms that it has been advised that
PowerTel has consented to the issuance of the Shares based upon PowerTel's
understanding that Porterman Williams is experienced in financial matters, has
access to advisors who are experienced in evaluating investments and is ready,
willing and able to assume the risk of acquiring a speculative, high risk
investment, such as the Shares.
Porterman Williams also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. Porterman Williams has been advised that, for the
preceding three calendar years, PowerTel has made various filings with the
Securities and Exchange Commission (including but not limited to annual reports
on Form 10-KSB, quarterly reports on Form 10-QSB and at least one registration
statement on Form S-8). While PowerTel has not provided a copy of these filings
to Porterman Williams, a copy will be made available upon request or may be
procured from the United States Securities and Exchange Commission, Washington,
D.C.
<PAGE> 48
Porterman Williams acknowledges that PowerTel has not made any
representation or warranty that (i) its Plan will be implemented successfully,
(ii) there will be a market for the Shares or (if there is a market) that the
per Share price will be maintained within any specific bid/ask range, or (iii)
PowerTel will be financially solvent or that its pro forma financial projections
will materialize as anticipated.
Porterman Williams is aware that there are various Federal and State
statutes, rules and regulations in the United States governing the offer and
sale of securities. Porterman Williams is also aware that the Securities
Exchange Act of 1934 imposes duties and responsibilities upon certain
shareholders, officers and directors. Porterman Williams represents that it
shall comply with all applicable statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Porterman Williams
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Porterman Williams and PowerTel.
Porterman Williams acknowledges that both PowerTel and the United
States Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional document(s) are required in order to
issue the Shares, Porterman Williams hereby designates Mr. David Wallace, Esq.
of Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Porterman Williams and agrees that, in such event, all documents executed by
Mr. Wallace may be relied upon by the recipient as if fully executed by
Porterman Williams.
In Witness Whereof, Porterman Williams, Ltd., has given its Common Seal
this date.
GIVEN UNDER THE COMMON SEAL Porterman Williams, Ltd., a Company
of Porterman Williams, Ltd. Limited by Shares under the International
Business Companies Act of 1989,
Date: March 16, 1998 Commonwealth of the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
-------------------------------------
Managing Director
<PAGE> 49
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation
(Referred to as "PowerTel")
FROM: North Oldenfield, Ltd., a Company Limited by Shares under the
International Business Companies Act of 1989, Commonwealth of the
Bahamas
(Referred to as "North Oldenfield")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and North Oldenfield have entered into
a Settlement and Release Agreement dated as of December 1, 1997 (the
"Agreement"), which Agreement was subsequently incorporated into and made a part
of a Plan of Reorganization (the "Plan") filed by PowerTel with the United
States Bankruptcy Court for the District of Nevada in a Chapter 11 proceeding
identified as Case No 97-30265-BMG, which Plan was subsequently confirmed by the
Court.
Pursuant to the Plan, North Oldenfield is to receive Class A Common
Shares (the "Shares") to be issued by PowerTel pursuant to Section 1145 of the
United States Bankruptcy Code. In consideration of the issuance of the Shares,
North Oldenfield, acting through its duly authorized representative, represents
and warrants to PowerTel and to the Court that North Oldenfield is not an
"underwriter" as that term is defined in Section 1145(b) of the Bankruptcy Code.
North Oldenfield also acknowledges that the Shares which it will receive have
not been registered with the United States Securities and Exchange Commission
pursuant to Section 5 of the Securities Act of 1933 in reliance upon the
exemption from registration provided in Section 1145(a) of the Bankruptcy Code.
North Oldenfield also confirms that it has been advised that PowerTel has
consented to the issuance of the Shares based upon PowerTel's understanding that
North Oldenfield is experienced in financial matters, has access to advisors who
are experienced in evaluating investments and is ready, willing and able to
assume the risk of acquiring a speculative, high risk investment, such as the
Shares.
North Oldenfield also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. North Oldenfield has been advised that, for the preceding
three calendar years, PowerTel has made various filings with the Securities and
Exchange Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to North
Oldenfield, a copy will be made available upon request or may be procured from
the United States Securities and Exchange Commission, Washington, D.C.
<PAGE> 50
North Oldenfield acknowledges that PowerTel has not made any
representation or warranty that (i) its Plan will be implemented successfully,
(ii) there will be a market for the Shares or (if there is a market) that the
per Share price will be maintained within any specific bid/ask range, or (iii)
PowerTel will be financially solvent or that its pro forma financial projections
will materialize as anticipated.
North Oldenfield is aware that there are various Federal and State
statutes, rules and regulations in the United States governing the offer and
sale of securities. North Oldenfield is also aware that the Securities Exchange
Act of 1934 imposes duties and responsibilities upon certain shareholders,
officers and directors. North Oldenfield represents that it shall comply with
all applicable statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, North Oldenfield
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between North Oldenfield and PowerTel.
North Oldenfield acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional document(s) are required in order to
issue the Shares, North Oldenfield hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of North Oldenfield and agrees that, in such event, all documents executed by
Mr. Wallace may be relied upon by the recipient as if fully executed by North
Oldenfield.
In Witness Whereof, North Oldenfield, Ltd., has given its Common Seal
this date.
GIVEN UNDER THE COMMON SEAL North Oldenfield, Ltd., a Company
of North Oldenfield, Ltd. Limited by Shares under the International
Business Companies Act of 1989,
Date: March 16, 1998 Commonwealth of the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
------------------------------------
Managing Director
<PAGE> 51
MEMORANDUM
TO: PowerTel USA, Inc., A Delaware, USA, corporation
(Referred to as "PowerTel")
FROM: Blackstone Sterling Holdings, Ltd., a Company Limited by Shares under
the International Business Companies Act of 1989, Commonwealth of the
Bahamas
(Referred to as "Blackstone")
RE: Receipt of Class A Common Stock Pursuant to the Plan of Reorganization
of PowerTel
PowerTel USA, Inc. ("PowerTel") and Blackstone have entered into a
Settlement and Release Agreement dated as of December 1, 1997 (the "Agreement"),
which Agreement was subsequently incorporated into and made a part of a Plan of
Reorganization (the "Plan") filed by PowerTel with the United States Bankruptcy
Court for the District of Nevada in a Chapter 11 proceeding identified as Case
No 97-30265-BMG, which Plan was subsequently confirmed by the Court.
Pursuant to the Plan, Blackstone is to receive Class A Common Shares
(the "Shares") to be issued by PowerTel pursuant to Section 1145 of the United
States Bankruptcy Code. In consideration of the issuance of the Shares,
Blackstone, acting through its duly authorized representative, represents and
warrants to PowerTel and to the Court that Blackstone is not an "underwriter" as
that term is defined in Section 1145(b) of the Bankruptcy Code. Blackstone also
acknowledges that the Shares which it will receive have not been registered with
the United States Securities and Exchange Commission pursuant to Section 5 of
the Securities Act of 1933 in reliance upon the exemption from registration
provided in Section 1145(a) of the Bankruptcy Code. Blackstone also confirms
that it has been advised that PowerTel has consented to the issuance of the
Shares based upon PowerTel's understanding that Blackstone is experienced in
financial matters, has access to advisors who are experienced in evaluating
investments and is ready, willing and able to assume the risk of acquiring a
speculative, high risk investment, such as the Shares.
Blackstone also confirms that it has received and reviewed the
Disclosure Statement filed by PowerTel, approved by the Court and distributed to
its Creditors and has been afforded an opportunity to make inquiry into the
affairs of PowerTel, including an opportunity to confer with the Directors and
Officers of PowerTel. Blackstone has been advised that, for the preceding three
calendar years, PowerTel has made various filings with the Securities and
Exchange Commission (including but not limited to annual reports on Form 10-KSB,
quarterly reports on Form 10-QSB and at least one registration statement on Form
S-8). While PowerTel has not provided a copy of these filings to Blackstone, a
copy will be made available upon request or may be procured from the United
States Securities and Exchange Commission, Washington, D.C.
<PAGE> 52
Blackstone acknowledges that PowerTel has not made any representation
or warranty that (i) its Plan will be implemented successfully, (ii) there will
be a market for the Shares or (if there is a market) that the per Share price
will be maintained within any specific bid/ask range, or (iii) PowerTel will be
financially solvent or that its pro forma financial projections will materialize
as anticipated.
Blackstone is aware that there are various Federal and State statutes,
rules and regulations in the United States governing the offer and sale of
securities. Blackstone is also aware that the Securities Exchange Act of 1934
imposes duties and responsibilities upon certain shareholders, officers and
directors. Blackstone represents that it shall comply with all applicable
statutes, rules and regulations.
Except as set forth in the Agreement and the Plan, Blackstone
acknowledges that there is no agreement, contract or understanding (either oral
or written) by and between Blackstone and PowerTel.
Blackstone acknowledges that both PowerTel and the United States
Bankruptcy Court will rely upon this Memorandum in issuing the Shares.
In the event that any additional documents) are required in order to
issue the Shares, Blackstone hereby designates Mr. David Wallace, Esq. of
Sarasota, Florida as its Agent and hereby grants to Mr. Wallace its Power of
Attorney coupled with an interest in order to execute documents by or on behalf
of Blackstone and agrees that, in such event, all documents executed by Mr.
Wallace may be relied upon by the recipient as if fully executed by Blackstone.
In Witness Whereof, Blackstone Sterling Holdings, Ltd., has given its
Common Seal this date.
GIVEN UNDER THE COMMON SEAL Blackstone Sterling Holdings, Ltd., a
of Blackstone Sterling Holdings, Ltd. Company Limited by Shares under the
International Business Companies Act of
Date: March 16, 1998 1989, Commonwealth of the Bahamas
By: Rupert N. Folkard
Per: /s/ Rupert N. Folkard
----------------------------------
Managing Director
<PAGE> 1
Exhibit 10b
SETTLEMENT AND MUTUAL RELEASE AGREEMENT
This Settlement and Mutual Release Agreement ("Agreement") is entered
into by and among (1) PowerTel USA, Inc., a Delaware corporation with its
principal place of business situated in East Lansing, Michigan and formerly
known as Munson Geothermal, Inc. and also formerly known as Nevada Energy
Company ("PowerTel"), (2) Viva Telecommunications, Inc., a Nevada corporation
with its principal place of business situated in Sarasota, Florida ("VivaTel"),
(3) David L. Wallace, a resident of Sarasota, Florida ("Mr. Wallace"), (4)
Jeffrey Antisdel, a resident of Reno, Nevada ("Mr. Antisdel"), (5) John Vogel, a
resident of Tucson, Arizona ("Mr. Vogel"), and (6) Dean Chamberlain, a resident
of Portland, Oregon ("Mr. Chamberlain"), collectively referred to as "the
Parties". This Agreement is entered into and deemed to be effective as of
January 25, 1998.
R E C I T A L S
WHEREAS, in August, 1996, NEC purchased 100.0% of the issued and
outstanding Common Stock of Telecom Technologies, Inc. ("TTI"), which was
engaged at that time in the purchase and resale of long distance
telecommunication services; and
WHEREAS, subsequent to the purchase of TTI, the officers of NEC, former
members of the Board of Directors of NEC and representatives of major
shareholders of NEC began to focus on the telecommunications industry for the
purpose of determining whether the TTI acquisition had economic value and
whether NEC should consider additional acquisitions in that industry segment;
and
<PAGE> 2
WHEREAS, in 1997 Mr. Wallace incorporated Viva Telecommunications, Inc.
("VivaTel"), for the purpose of purchasing and selling telecommunication
services; and
WHEREAS, in or about December, 1997, PowerTel acquired 100.0% of the
issued and outstanding Common Stock of VivaTel from Mr. Wallace based upon Mr.
Wallace's representation that he was the sole shareholder of VivaTel; and
WHEREAS, Messrs. Vogel and Chamberlain have asserted that each of them
has a right in and to some or all of the Common Stock of VivaTel; and
WHEREAS, the assertions made by Messrs. Vogel and Chamberlain were
based upon their personal understanding of what is right or equitable and an
individual belief that they should receive part ownership in VivaTel because
they were to be employees of VivaTel; and
WHEREAS, upon further reflection Messrs. Vogel and Chamberlain are
aware that they were never VivaTel shareholders of record, there was never a
written contract indicating that they would receive VivaTel stock, nor was there
at any time a legal right for them to hold or own stock in VivaTel; and
WHEREAS, PowerTel has commenced a declaratory judgment action in the
United States Bankruptcy Court for the District of Nevada for the purpose of
confirming that it has acquired 100.0% of the issued and outstanding Common
Stock of VivaTel, said proceeding being identified as In re PowerTel, Inc. vs..
Messrs Snyder, Vogel and Wallace, ADV 97-3151 (U.S. Bankruptcy Court, NV) (the
"Declaratory Judgment Action"); and
WHEREAS, in the Declaratory Judgment Action, PowerTel has named as
Respondents, Messrs. Wallace and Vogel; and
<PAGE> 3
WHEREAS, PowerTel has provided written notice to Mr. Chamberlain of its
intent to add Mr. Chamberlain as an additional Respondent in the Declaratory
Judgment Action identified above; and
WHEREAS, the Clerk of the Court for the United States Bankruptcy Court
has entered a default because neither Mr. Wallace, nor Mr. Vogel has filed a
timely response to the declaratory judgment complaint filed by PowerTel; and
WHEREAS, Mr. Vogel has provided notice of his intention to file an
answer to the Declaratory Judgment Action and to initiate a Third-Party
complaint and cross-claim for damages; and
WHEREAS, Mr. Chamberlain has tendered notice of his intent to seek to
become a Party in the Declaratory Judgment Action; and
WHEREAS, Messrs. Chamberlain and Vogel now recognize that if they were
to pursue a Third-Party complaint and cross-claim for damages alleging that they
have a right to own shares of VivaTel stock, their claim would be without legal
support and would be solely based upon their emotional belief; and
WHEREAS, PowerTel has provided Mr. Chamberlain with notice that
PowerTel intends to seek disgorgement of certain proceeds totaling $45,000
received by Mr. Chamberlain in conjunction with the sale of TTI to NEC, such
disgorgement to be sought pursuant to Sections 547 and 548 of the United States
Bankruptcy Code; and
WHEREAS, Mr. Chamberlain objects to any claim that he has acted in
violation of Sections 547 or 548 of the United States Bankruptcy Code; and
<PAGE> 4
WHEREAS, the Parties to this Agreement desire to reach a full, final
and complete compromise and settlement of any and all disputes, claims and
causes of action (if any) which anyone of them may have arising out of the
transactions summarized above;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
set forth herein, the consideration paid and to be paid to Messrs. Vogel and
Chamberlain by PowerTel, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Parties to this Agreement,
having had the opportunity to confer with legal counsel, enter into this
Agreement intending to be legally bound and do hereby agree that:
1. The recitals set forth are true and correct and are incorporated
herein by reference for all purposes.
2. This Agreement shall be governed by the laws of the State of Nevada,
without regard to its conflicts of laws provisions.
3. Any communication required or permitted to be given to any Party to
this Agreement shall be transmitted to the addresses set forth below, which
address may be amended at anytime by providing written notice to all Parties to
this Agreement:
TO: PowerTel USA, Inc.
c/o Mr. Richard A. Cascarilla, President
321 West Lake Lansing Road, Suite 100
East Lansing, MI 48823
Telefax: 517/333-9869
With a copy to:
Walter & Haverfield P.L.L.
Legal Counsel to PowerTel
1300 Terminal Tower
Cleveland, OH 44113
c/o Van P. Carter, Esq.
Telefax: 216/575-0911
<PAGE> 5
TO: Viva Telecommunications, Inc.
c/o Mr. David Wallace, President
5545 Shadow Lawn Drive
Sarasota, FL 34242
TO: Mr. Jeffrey Antisdel
401 E. Fourth Street
Reno, NE 89512
TO: Mr. David L. Wallace
5545 Shadow Lawn Drive
Sarasota, FL 34242
TO: Mr. John Vogel
5845 N. Calle Tiburon
Tucson, AZ 85704
TO: Mr. Dean Chamberlain
18029 Fitch Dr.
Sherwood, OR 97140
4. This Agreement is intended to be a full, complete and final
compromise and settlement of each and every dispute, claim, cause of action or
grievance of any nature whatsoever, whether real or personal, contractual,
equitable or otherwise, whether arising in contract, statute or by common law
(the "Claims") and each Party does hereby waive and forever relinquish each and
every Claim which it has or may have (a) against each and every Party to this
Agreement and his/its successors, heirs, insurers, shareholders, assigns,
executors, estates and successors in interest, and (b) against each and every
officer, director, employee, attorney, accountant, financial advisor, consultant
to any Party to this Agreement, including, but not limited to, Ms. Trudi
Wilcox-Woods, Mr. Van P. Carter, Walter & Haverfield P.L.L., Mr. Michael
Kassouff, Mr. Richard A. Cascarilla, and each and every subsidiary of any Party
to this Agreement, collectively referred to as the "Non-Party Beneficiaries".
5. Messrs. Vogel and Chamberlain, individually and on behalf of their
heirs, assigns, executors, agents and representatives, do hereby represent and
warrant that they have not filed, transmitted or submitted and will not file,
transmit or submit any complaint, grievance, claim or allegation of wrongdoing,
whether made in writing or orally, in any court or with any federal, state or
local regulatory agency or disciplinary authority with respect to (a) the
transactions and events described in the Recitals to this Agreement, or (b) any
Party to this Agreement or Non-Party beneficiary as identified in Paragraph 4(b)
of this Agreement. Every Party and each Non-Party Beneficiary may rely upon the
representation and warranty set forth in this Paragraph 5.
<PAGE> 6
6. It is the specific intention of this Agreement that any and all
Claims by and among the Parties to this Agreement shall be permanently,
completely compromised and settled. To the extent, however, that Mr. Chamberlain
or Mr. Vogel retain, by operation of law or otherwise, any Claim whatsoever, Mr.
Chamberlain and Mr. Vogel in consideration of this Agreement, including but not
limited to Paragraphs 11 and 12 hereof, do hereby grant, bargain, sell and
convey all of their right, title and interest in and to any residual claim or
cause of action to PowerTel. Mr. Chamberlain and Mr. Vogel furthermore agree to
cooperate with PowerTel in any and all proceedings which may result or have
resulted from the transaction set forth herein, including, without limitation,
the Bankruptcy proceeding and any adversary proceeding filed therein.
7. This Agreement does not include any express or implied covenant of
noncompetition. Accordingly, every Party to this Agreement has the right to
engage in competitive business activities with any other Party to this
Agreement.
8. Messrs. Vogel, Chamberlain and Wallace do hereby agree to execute
and consent to the entry of the judgment in the form attached hereto as Exhibit
A, pursuant to which (a) PowerTel will be deemed to own 100.0% of the issued and
outstanding Common Stock of VivaTel, and (b) the United States Bankruptcy Court
for the District of Nevada pursuant to Section 107 of the United States
Bankruptcy Code and Rule 9018(2) of the Federal Rules of Bankruptcy Procedure
shall seal all documents in the Declaratory Judgment Action.
9. Messrs. Vogel and Chamberlain represent and warrant that they shall
immediately cease and desist from conducting any business utilizing the name
"VivaTel" or "Viva Telecommunications" and that they shall cease and desist and
shall forever refrain from holding themselves out as officers, directors or
shareholders of VivaTel. Messrs. Vogel and Chamberlain represent and warrant
that they shall, within five calendar days of the effective date of this
Agreement, deliver to PowerTel at the address set forth above any and all
documents or assets in their possession, custody or control which belong to, are
owned by, or pertain to VivaTel, its business, organization, operation or
structure, including but not limited to correspondence, memoranda, contracts,
bank statements, checks, canceled checks, corporate records, corporate minute
books, and any other written document of any nature whatsoever, whether or not
the document has been prepared by Mr. Chamberlain or Mr. Vogel. Messrs. Vogel
and Chamberlain represent and warrant that, upon request by PowerTel, they will
meet in person or telephonically with a designated representative of PowerTel
for the purpose of providing information with respect to the business affairs of
VivaTel, any actions which they undertook by or on behalf of or in the name of
VivaTel, including but not limited to, any contracts, marketing presentations,
sales presentations or negotiations which were held with third-parties. Messrs.
Vogel and Chamberlain represent and warrant that all information provided to
PowerTel pursuant to this Section 9 of this Agreement shall be true and accurate
in all material respects and that they shall not omit material information in
the course of such disclosure and PowerTel is and may rely upon the disclosures
addressed herein and such disclosures are material terms and conditions of this
Agreement.
10. Mr. Vogel represents and warrants that over a reasonable time
period he shall pay, cause to be paid or otherwise secure the release of all
debts and obligations of VivaTel as of the date of this Agreement such that
VivaTel shall have no financial obligation of any nature to any creditor,
<PAGE> 7
including but limited to the Internal Revenue Service and state or local
authorities for payment of taxes of any nature whatsoever, wages, rent, services
or products secured from JD Services of Salt Lake City, Utah and any and all
other accounts payable except that Mr. Vogel shall have no obligation toward any
debts incurred to or on behalf VivaTel by Mr. Mark Snyder. PowerTel agrees to
assume responsibility for the debts incurred by VivaTel as a result of actions
by Mr. Wallace.
11. In addition to the mutual covenants and conditions set forth in
this Agreement, as further and additional consideration, PowerTel hereby agrees
as follows:
A. Within 10 days of confirmation of the Plan of Reorganization
to be filed by PowerTel in the United States Bankruptcy Court
for the District of Nevada, PowerTel will issue a $20,000
check to Mr. Vogel as compensation for services rendered to
VivaTel, and PowerTel agrees that this payment will be
perfected in a security interest in the letter of credit
advanced to VivaTel in effect as of February 2, 1998.
B. PowerTel agrees that it shall not pursue its claim against
Mr. Chamberlain that Mr. Chamberlain disgorge pursuant to
Sections 547 or 548 of the United States Bankruptcy Code the
$45,000 previously paid to him by NEC and Mr. Chamberlain
hereby agrees that (i) he shall confirm in an affidavit that
he has received no consideration, directly or indirectly, for
the sale of TTI other than the $45,000 paid to him by NEC,
(ii) he shall assist PowerTel in its investigation into the
circumstances surrounding the acquisition of TTI and in
PowerTel's attempt to recoup the $500,000 cash and 2,000,000
shares of Common Stock which were transferred in exchange for
the TTI Common Stock, (iii) he hereby stipulates that
PowerTel owns 100.0% of the issued and outstanding Common
Stock of TTI and agrees to assist and cooperate with PowerTel
in its investigation into the business affairs of TTI; and,
(iv) he hereby stipulates that he is not entitled to any
further compensation from PowerTel arising out of the TTI
Agreement or otherwise.
12. As further and additional consideration for this Agreement, Mr.
Antisdel agrees to transfer $50,000 worth of PowerTel Class A Common stock to
Mr. Vogel (or his assigns) 6 months after the confirmation date for the Plan of
Reorganization to be submitted by PowerTel to the United States Bankruptcy Court
for the District of Nevada. The number of shares of stock shall be determined by
the per-share closing price for the trading date immediately preceding transfer
of the shares.
13. This Agreement is specifically contingent upon confirmation of the
Plan of Reorganization to be submitted by PowerTel to the United States
Bankruptcy Court for the District of Nevada. In the event that the Plan is not
confirmed as submitted, any Party to this Agreement has the right to declare
this Agreement to be null and void as to that Party, in which event the
Agreement shall remain operative with respect to those Parties which have not
elected to terminate the Agreement.
<PAGE> 8
14. Every Party to this Agreement represents and warrants that he/it
shall refrain from making disparaging, derogatory or inflammatory statements and
comments, whether orally or in writing regarding any other Party to this
Agreement.
15. Every Party to this Agreement shall be responsible for his/its own
expenses, including legal fees.
16. This Agreement may be executed by multiple counterpart and the
receipt of a telefaxed signature page shall be accepted as if it were an
originally executed signature page.
17. In the event that any Party to this Agreement breaches any
representation or warranty or fails to perform any covenant or obligation as set
forth in this Agreement, the damaged Party or Non-Party Beneficiary (as the case
may be) shall be entitled (1) to offset any payments due pursuant to this
Agreement by the the damages incurred, including attorney fees, and (2) to
reimbursement of actual and consequential damages, including attorneys fees. In
the event that any Party violates the terms of paragraphs 5, 9 or 14 of this
Agreement, the violating Party hereby consents to the entry of a temporary
restraining order, preliminary and permanent injunction to be issued by the
Second Judicial District Court, County of Washoe, State of Nevada and hereby
consents to the jurisdiction of that Court. The provisions of paragraphs 4, 5,
8, 9, 10, 11, 12, 14, 17 and 18 of this Agreement are perpetual and shall
survive performance of all other provisions of this Agreement.
18. To the extent that any supplemental documents are required to be
executed in order to implement the objectives of this Agreement, each Party to
this Agreement agrees to cooperate in good faith in order that such supplemental
documents may be prepared and executed.
IN WITNESS WHEREOF, this Agreement has been executed as of the
effective date set forth above.
WITNESSES: POWERTEL USA, INC.
/s/ (Unknown) By: /s/ Richard A. Cascarilla
- -------------------------------- ---------------------------------
Its: President
- -------------------------------- --------------------------------
VIVA TELECOMMUNICATIONS, INC.
By: /s/ David L. Wallace
- -------------------------------- ---------------------------------
Its: President
- -------------------------------- --------------------------------
<PAGE> 9
JEFFREY ANTISDEL, Individually
/s/ (Unknown) /s/ Jeffrey Antisdel
- -------------------------------- ---------------------------------
- -------------------------------- ---------------------------------
DAVID L. WALLACE, Individually
/s/ David L. Wallace
- -------------------------------- ---------------------------------
- -------------------------------- ---------------------------------
JOHN VOGEL, Individually
/s/ (Unknown) /s/ John Vogel
- -------------------------------- ---------------------------------
- -------------------------------- ---------------------------------
DEAN CHAMBERLAIN, Individually
/s/ (Unknown) /s/ Dean Chamberlain
- -------------------------------- ---------------------------------
- -------------------------------- ---------------------------------
<PAGE> 1
Exhibit 10c
AMENDED AND RESTATED AGREEMENT FOR EXCHANGE OF STOCK
BETWEEN
DAVID WALLACE
AND
POWERTEL USA, INC.
REGARDING
VIVA TELECOMMUNICATIONS, INC.
<PAGE> 2
AMENDED AND RESTATED AGREEMENT FOR EXCHANGE OF STOCK
This agreement ("AGREEMENT") is entered into as of February 12, 1998 by
and among (i) VIVA TELECOMMUNICATIONS, INC. ("VIVATEL"), a corporation
incorporated under the laws of Nevada (hereinafter referred to as "VIVATEL" or
"CORPORATION") with its principal place of business situated in Tucson, Arizona,
(ii) POWERTEL USA, INC., a corporation incorporated under the laws of Delaware
with its principal place of business situated in East Lansing, Michigan
("POWERTEL" or "BUYER"), and (iii) DAVID L. WALLACE, an individual residing in
Sarasota, Florida ("SELLER"), who owns 100% of the issued and outstanding Common
Stock of VIVATEL.
RECITALS
WHEREAS, SELLER is the owner of 100% the issued and outstanding shares
of the CORPORATION; and
WHEREAS, the CORPORATION is engaged in the business of purchasing and
reselling long distance telecommunication services and related activities
("BUSINESS"); and
WHEREAS, SELLER desires to exchange with BUYER common stock of BUYER in
exchange for 100% of the common stock of the CORPORATION and BUYER desires to
exchange stock as noted above; and
WHEREAS, for federal income tax purposes, it is intended that this
transaction shall qualify as a "reorganization" within the meaning of Section
368 of the Internal Revenue Code of 1986, as amended; and
WHEREAS, the CORPORATION desires to guarantee the obligations of SELLER
pursuant to this AGREEMENT; and
WHEREAS, BUYER and SELLER have previously entered into a written
agreement for the exchange of 100% of the issued and outstanding stock of
VIVATEL in exchange for common stock of the BUYER (the "Prior Agreement"); and
WHEREAS, BUYER and SELLER desire to amend and modify the Prior
Agreement;
NOW, THEREFORE, in consideration of the foregoing, the payment of
$100.00 to SELLER by POWERTEL, the receipt and sufficiency of which is hereby
acknowledged, the exchange of stock pursuant to this Agreement and the
representations, warranties, covenants, and mutual promises contained herein,
the parties hereto, intending to be legally bound, do agree as follows:
<PAGE> 3
SECTION 1.
EXCHANGE OF SHARES OF STOCK
1.1 Purchase. SELLER shall tender to BUYER 100% of the issued and
outstanding shares of common stock of the CORPORATION ("SHARES") in
consideration of the receipt of POWERTEL common stock as set forth in Section 2
of this AGREEMENT.
1.2 Conveyance of Title. The conveyance of title to the SHARES shall be
effected by the delivery of the stock certificates therefor at the closing duly
endorsed for transfer to BUYER or with duly executed stock powers attached.
1.3 Exclusive Nature of Agreement. This AGREEMENT shall preclude and
restrict SELLER from entertaining other offers of sale or exchange of the
SHARES.
SECTION 2.
CONSIDERATION TO BE PAID TO SELLER; SECURITY
2.1 Purchase Price for Shares. In consideration of the tender to the
BUYER of 100% of the issued and outstanding common stock of the CORPORATION,
BUYER shall tender to SELLER, Class A Common Stock of the BUYER in an amount
equal to One (1%) percent of the issued and outstanding common stock of the
BUYER computed as of the close of business on the date of CLOSING as set forth
in Section 9 of this AGREEMENT. In the event that POWERTEL, as a result of its
Plan of Reorganization, issues additional Class A Common Stock or effects a
reverse stock split, the number of shares of Class A Common Stock issued to
SELLER shall be adjusted such that SELLER own 1.0% of the issued and outstanding
Class A Common Stock of BUYER subsequent to implementation of the Plan of
Reorganization.
2.2 Prohibition on Transfer of Common Stock. The Common Stock to be
issued to the SELLER by the BUYER has not been registered pursuant to Section 5
of the Securities Act of 1933, and there is no duty or obligation on the part of
the BUYER to affect such registration. Each stock certificate shall bear the
following conspicuous legend:
THE COMMON STOCK REPRESENTED BY THE CERTIFICATE HAS NOT BEEN
REGISTERED PURSUANT TO SECTION 5 OF THE SECURITIES ACT OF 1933
OR ANY ANALYSIS STATE STATUTE. SALE, TRANSFER, HYPOTHECATION,
PLEDGE OR CONVEYANCE OF ANY OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS STRICTLY PROHIBITED UNLESS AND UNTIL EITHER (A)
THE SHARES REPRESENTED BY THE CERTIFICATE HAVE BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
SECTION 5 OF THE SECURITIES ACT OF 1933 AND, AS REQUIRED, BY
ANY ANALOGOUS STATE STATUTE, OR (B) THE SHAREHOLDER
SUBSTANTIATES THAT THERE IS A VALID EXEMPTION FROM THE
REGISTRATION REQUIREMENT AND
<PAGE> 4
SUBSTANTIATES SUCH EXEMPTION BY MEANS OF A LEGAL OPINION
SATISFACTORY IN FORM AND SUBSTANCE TO BOTH THE ISSUER
(POWERTEL USA, INC.) AND ITS LEGAL COUNSEL. IN ADDITION, THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND A CONTINGENT RECONVEYANCE
OBLIGATION TO THE ISSUER PURSUANT TO THE TERMS OF AN AGREEMENT
DATED DECEMBER 1, 1997. INFORMATION ABOUT THAT AGREEMENT MAY
BE OBTAINED ON A CONFIDENTIAL BASIS, FROM THE ISSUER.
QUESTIONS REGARDING THIS RESTRICTION ON TRANSFER SHOULD BE
DIRECTED TO:
PowerTel USA, Inc.
c/o Walter & Haverfield P.L.L.
1300 Terminal Tower
Cleveland, Ohio 44113
Attn: Van P. Carter, Esq.
SELLER specifically acknowledges that the Common Shares which SELLER
will receive are subject to significant transfer restrictions. In addition,
SELLER acknowledges that SELLER may be deemed to be an "insider" or "control
person" for purposes of the Securities Act of 1933 and/or the Securities
Exchange Act of 1934. SELLER represents and warrants that SELLER will comply
with all applicable provisions of the federal and state securities laws
including, but not limited to, the Securities Act of 1933 and the Securities
Exchange Act of 1934. BUYER represent that he is acquiring the POWERTEL Class A
Common Stock with the intent of holding such securities indefinitely and not
with the intention of distributing same.
SECTION 3.
REPRESENTATIONS AND WARRANTIES OF SELLER
Unless otherwise set forth in writing to BUYER, SELLER represents and
warrants to the best of his knowledge as follows:
3.1 Corporate Status. CORPORATION is duly organized, validly existing,
and in good standing under the laws of the state of Nevada and has the power and
authority to own its properties and to conduct its business as now being
conducted. The CORPORATION does not have any subsidiaries and does not own any
stock in any other corporation or have any investments in any partnerships or
joint ventures.
3.2 Capitalization. The authorized stock of CORPORATION consists solely
of 25,000 shares of common stock with par value of $0.0001 per share of which
only the SHARES are issued and outstanding. The SHARES constitute all of the
issued and outstanding shares of stock of CORPORATION. The SHARES are validly
issued, fully paid and nonassessable.
<PAGE> 5
3.3 Ownership of Shares. SELLER is the owner of the 25,000 of SHARES
and in the aggregate owns 100% of the issued and outstanding SHARES of
CORPORATION. The SELLER has title to the SHARES free and clear of any and all
liens and encumbrances.
3.4 Consent of Third Parties. This AGREEMENT is legally binding upon
SELLER and the consummation of the transactions contemplated hereby in
accordance with the terms hereof does not require the consent of any third
party.
3.5 Financial Statements and Pro Form Financial Projections. If
requested by BUYER, within sixty (60) days of the date of this AGREEMENT, SELLER
shall cause CORPORATION to prepare balance sheets, income statements and related
schedules and footnotes for the CORPORATION'S fiscal period commencing in 1997
with the date of incorporation and continuing through December 31, 1997
("FINANCIAL STATEMENT") which FINANCIAL STATEMENT shall accurately and fairly
reflect the financial condition of CORPORATION as of the dates indicated
thereon, and the results of the operations of the CORPORATION for the respective
fiscal periods then ended. In addition to the foregoing, to the best of SELLER'S
knowledge, the proforma financial projections for the CORPORATION previously
provided to BUYER and SELLER accurately and fairly reflect the current and
future financial condition of the CORPORATION as of the dates indicated thereon,
and the results of the operations of the CORPORATION for the respective fiscal
periods then ended, subject to the assumptions and representations set forth
therein.
3.6 Absence of Certain Changes. The business operations of CORPORATION
have been conducted prudently and in the ordinary course of business and there
has been no material change in the financial condition, results of operations,
business, business prospects, capitalization or any increase in the compensation
of the CORPORATION'S employees, if any.
3.7 Liabilities. To the best of SELLER'S knowledge (i) as of the date
of the last FINANCIAL STATEMENT, CORPORATION did not have any liabilities,
whether absolute, accrued, contingent or otherwise, that are not disclosed in
the Financial Statement attached hereto, and (ii) there was no basis upon which
any person could assert a liability against CORPORATION which was not disclosed
on the last FINANCIAL STATEMENT. Since the date of the last FINANCIAL STATEMENT,
CORPORATION has not incurred any liabilities not in the ordinary course of
business, and to the best of SELLER'S knowledge there is presently no basis upon
which a person could assert such a liability, nor has any person asserted the
existence of such a liability. SELLER shall be personally liable for, and shall
indemnify and hold CORPORATION and BUYER harmless from any and all liabilities
of CORPORATION in excess of $50,000 unless BUYER agrees in writing to waive this
duty of indemnification.
3.8 Tax Matters. CORPORATION'S federal, state and local tax returns for
1997 have not been filed or audited. There are no pending tax examinations of,
or tax claims asserted against, CORPORATION and there are no known bases for any
such claims. CORPORATION has not granted any extension of any limitation period
applicable to tax claims which extension is still in effect and has not filed a
consent under Section 341(f) of the Internal Revenue Code of 1986. CORPORATION
has never filed an election to be taxed as a small business corporation pursuant
<PAGE> 6
to IRC Section 1361. CORPORATION is and has not been a member of a "control
group" as defined in IRC Section 1563 or an affiliated group as defined in IRC
Section 1504.
3.9 Title to Property. CORPORATION has good and marketable title to all
of its assets free and clear of all liens and encumbrances. CORPORATION'S use of
intangibles has not and will not infringe the rights of any other person. The
rights, properties and other assets presently owned, leased or licensed by
CORPORATION and described in this AGREEMENT include all rights, properties and
other assets necessary to permit CORPORATION to conduct its business in the same
manner as its business has been conducted.
3.10 Receivables. All of the receivables of CORPORATION are reflected
on the books of CORPORATION and are considered to be collectible or have been
collected as of the CLOSING DATE.
3.11 Inventories. The inventories of CORPORATION, if any, are of a
quality and quantity to be usable and salable in the ordinary course of
CORPORATION'S business.
3.12 Condition of Tangible Property. The equipment, and other tangible
property of CORPORATION are, to the best of SELLER' knowledge, in good condition
and repair, and are adequate for the uses to which such property is put in the
conduct of the BUSINESS. SELLER have no knowledge of any defects in any of such
tangible property.
3.13 Condemnation. No property owned or leased by CORPORATION is
subject to any governmental decree or order, or to the best of SELLER'S
knowledge, threatened or proposed order to be sold or taken by any public
authority.
3.14 Schedule of Contracts. Upon request from BUYER, SELLER shall
prepare a complete list of all contracts of any type, other than insurance
policies, to which CORPORATION is a party. All contracts to which CORPORATION is
a party are in full force and effect and the CORPORATION and the other parties
thereto have performed all of the obligations required to be performed by them
thereunder and are not in default thereof. Neither the execution of this
AGREEMENT, nor the consummation of the transactions contemplated hereby, will
constitute a default under any of such contracts as to which the sale of the
shares contemplated by this AGREEMENT may or does constitute a default. None of
such contracts will result in a loss to CORPORATION upon the completion thereof
and none of the purchase commitments which are the subject thereof are in excess
of the normal requirements of the BUSINESS or establish a price in excess of
that customarily charged for the items which are the subject thereof. Full and
complete copies of all such contracts will be supplied to BUYER upon request.
3.15 Insurance Policies. Upon request from BUYER, SELLER shall prepare
a complete list of all of CORPORATION'S insurance policies and performance
bonds. All such insurance policies are in full force and effect and all premiums
due thereunder have been paid on a timely basis. CORPORATION has not been
notified by any representative of any insurer of the existence of any ground for
cancellation of said policies or for the reduction of coverages provided
thereby.
<PAGE> 7
3.16 Employment Matters. Upon request from BUYER, SELLER shall prepare
a complete schedule of the compensation paid to all employees of CORPORATION.
3.17 Labor Relations. To the best of SELLER'S knowledge, CORPORATION
has complied with all laws, rules, and regulations relating to the employment of
labor and has no labor troubles in the sense that there are no strikes,
lockouts, work stoppages, or slow downs, pending or threatened against
CORPORATION.
3.18 Legal Proceedings. There are no legal or administrative
proceedings of any nature pending or, to the best of SELLER'S knowledge,
threatened against or affecting CORPORATION. CORPORATION is not in default of
any judgment, writ, injunction, or order of any court or governmental agency.
3.19 Compliance with Laws. CORPORATION has not received any notice from
any governmental entity asserting a violation by CORPORATION of any laws,
regulations, or governmental pronouncements of any type, including, without
limitation, zoning ordinances and, to the best of SELLER'S knowledge, (i) there
are no known claims or investigations involving asserted violations thereof, and
(ii) CORPORATION has duly complied with all statutes, regulations and
governmental pronouncements of all types (including, without limitation, zoning
ordinances) and has acquired all licenses and permits required for the operation
of its business.
3.20 Environmental Matters.
a) CORPORATION has, to the best of SELLER'S knowledge: (i)
obtained all permits, licenses and other authorizations which are required to be
obtained by CORPORATION for the operation of its business under federal, state
and local laws relating to the environment; (ii) handled, stored, transported
and disposed of its wastes, toxic, hazardous or otherwise, in complete
compliance with all such laws; and (iii) complied with all terms and conditions
of all such required permits, licenses and authorizations.
b) SELLER is not aware of and has no knowledge of the presence on
or under real property leased by CORPORATION of any pollutants and/or
contaminants (by whatever name called) which are prohibited, restricted or
otherwise regulated by any federal, state or local governmental entity or
authority, including but not limited to the United States EPA, and/or any state,
municipal or county health department.
c) SELLER has not, during the period of time CORPORATION has
occupied such real property, knowingly caused or permitted any of such
pollutants and/or contaminants, as described above, to have been deposited,
placed or suffered to remain on or under the real property in violation of law.
d) SELLER shall not, following the date hereof, cause or permit
any of such pollutants and/or contaminants, as described above, to be deposited,
placed or suffered to remain on or under the real property in violation of law.
<PAGE> 8
e) Provided, further, however, that nothing described above shall
impose liability on SELLER in the event of the presence, unknown to SELLER, on
or under the real property of any such pollutants and/or contaminants which have
migrated to the real property from an outside third party source.
f) SELLER is not aware of and have no knowledge of any claim
having been made by or any classification having been made or determined by the
Department of the Army, Corps of Engineers, that all or any part of the real
property, has been, is, or should be classified as "wetlands".
3.21 Affiliations. SELLER does not have any direct or indirect interest
in any business enterprises which either compete with CORPORATION or have had
business dealings with CORPORATION that have not been disclosed in this
AGREEMENT or otherwise in writing to the BUYER.
3.22 Bank Accounts. Upon request from BUYER, the SELLER shall prepare a
complete and accurate list of each bank or financial institution with which
CORPORATION has an account (including the account numbers) or safety deposit box
and the names of the persons authorized to draw thereon or have access thereto.
3.23 Disclosure. SELLER has disclosed to BUYER all facts material to
the business, assets, operations, financial condition, and prospects of
CORPORATION.
3.24 Related Parties' Loans. Upon request from BUYER, the SELLER shall
prepare a list of all loans to or from CORPORATION and its officers, directors,
shareholders, employees, and members of their families.
3.25 Deliveries by SELLER. In connection with the proposed sale of the
SHARES, SELLER have delivered to BUYER or its counsel the documents, or true and
complete copies thereof, listed below:
a) The Articles of Incorporation of CORPORATION; and
b) The Code of Regulations of CORPORATION.
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF BUYER
BUYER represents and warrants as follows:
4.1 Consent of Third Parties. Subject only to ratification of this
AGREEMENT by the United States Bankruptcy Court, this AGREEMENT is legally
binding upon BUYER and BUYER'S consummation of the transactions contemplated
hereby does not require the consent of any third party.
<PAGE> 9
4.2 Securities Exemption. BUYER is a sophisticated and knowledgeable
individual who is an "accredited investor" as defined in Rule 501 of Regulation
D of the Securities Act of 1933. BUYER has had an opportunity to conduct an
independent investigation into the affairs of the CORPORATION. BUYER represents
that it is acquiring the SHARES for its personal investment and not with an
intention to re-sell or distribute the SHARES to third parties who are not
parties to the AGREEMENT. BUYER stipulates that the purchase of the SHARES is a
speculative transaction and that BUYER is prepared to incur risk of loss of his
investment. BUYER also stipulates that the sale of the SHARES pursuant to the
AGREEMENT has been effected pursuant to the provisions of Regulation D and
Section 4(2) of the Securities Act of 1933 and comparable provisions of
applicable state securities laws. BUYER agrees to file any documents reasonably
required by SELLER to comply with applicable securities laws. SELLER represents
that he has had direct, continuing and first-hand experience with the business
and operation of BUYER and its financial condition and affairs. SELLER
acknowledges that (i) BUYER is currently functioning as Debtor-in-Possession
pursuant to Chapter 11 of the United States Bankruptcy Code, (ii) there is
little, if any, market for the BUYER's Class A Common Stock and there may be
never be any market for such securities, (iii) the Class A Common Stock is
deemed to be "high risk" and "speculative," and (iv) there is no assurance or
guarantees that the Class A Common Stock will never have any economic value.
4.3 Financial Statement and Pro Form Financial Projections. Upon
request by SELLER, BUYER will provide SELLER with a copy of its financial
statement as filed with the United States Bankruptcy Court. BUYER hereby
authorizes SELLER (at SELLER'S expense) to secure a credit report on BUYER.
BUYER represents that the final statements identified above fairly and
accurately reflect BUYER'S financial condition and that there are no adverse
facts not described to SELLER in writing regarding BUYER'S financial affairs.
SECTION 5.
COVENANTS OF SELLER
Unless BUYER waives such performance in writing, SELLER covenants as
follows:
5.1 Conveyance of Title to Shares. At the CLOSING (as defined in
SECTION 9 hereinafter), SELLER will convey good and marketable title to the
SHARES to BUYER free and clear of all security interests, claims, liens,
proxies, charges, or other encumbrances.
5.2 SELLER'S Closing Certificate. SELLER shall execute and deliver to
BUYER at the CLOSING a certificate which shall certify that, except as otherwise
specifically provided therein: (a) all of the representations and warranties
made by SELLER in this AGREEMENT are true and accurate in all respects as of the
CLOSING with the same force and effect as though made at such time; and (b)
SELLER has fully performed and/or complied with all of his covenants and other
obligations under this AGREEMENT required to be performed and/or complied with
by them as of the CLOSING. SELLER shall describe in such certificate the
circumstances concerning any incorrect or inaccurate representations or
warranties identified therein. From the date hereof until
<PAGE> 10
the date of CLOSING, SELLER shall notify BUYER immediately in writing if any of
the representations and warranties made herein should become untrue or
inaccurate.
5.3 Conduct of Business. To and through the date of CLOSING, subject to
SECTION 5.8 hereof, CORPORATION shall conduct its business prudently and in the
ordinary course consistent with past practice.
5.4 No Amendments. To and through the date of CLOSING, no change or
amendment shall be made to the Articles of Incorporation or Code of Regulation
of CORPORATION.
5.5 No Capital Changes. To and through the date of CLOSING, CORPORATION
shall not issue or grant options, warrants, or rights to purchase or to
subscribe to any of its stock or any securities or obligations convertible into
its stock or make any other changes in its capital structure.
5.6 No Dividends or Redemptions. To and through the date of CLOSING,
CORPORATION shall not declare or pay any dividend or other distribution in
respect of its stock or purchase any of its stock.
5.7 Forbearance by Corporation. To and through the date of CLOSING,
except as otherwise specifically provided for or required herein, CORPORATION
shall not do, or agree to do, any of the following:
a) Incur any liability other than in the ordinary course of
business or pay any liability other than current liabilities and current
maturities of existing long term debt;
b) Incur any indebtedness for borrowed money or assume, guarantee
or otherwise become responsible for the obligations of any other person;
c) Mortgage, pledge, or otherwise encumber any of its assets;
d) Sell or transfer any of its assets other than sales of
inventory in the ordinary course of business;
e) Sell any of the inventory of CORPORATION other than in the
ordinary course of business;
f) Cancel, release, or assign any obligations owed to CORPORATION
or any claims held by it;
g) Enter into or terminate any leases or contracts or make any
material changes therein;
h) Increase in any manner the compensation of any of CORPORATION'S
employees (including an increase in fringe benefits or the provision of fringe
benefits to employees not previously entitled thereto) or pay or agree to pay
any pension or retirement allowance not
<PAGE> 11
required by any existing plan or agreement to any employees, or enter into any
new pension, retirement, or profit sharing plan or agreement or employment
agreement;
i) Hire or terminate any employee, except for just cause;
j) Grant or extend any power of attorney or appoint any agent;
k) Loan money or assets to any person;
l) Adopt any new method of accounting; or
m) Make any capital expenditures without BUYERS consent in
writing.
5.8 Insurance; Maintenance and Location of Property. To and through the
date of CLOSING, CORPORATION shall continue to insure its business, employees,
and assets against all insurable risks in the manner and to the extent such
items were insured on the date hereof and all assets of CORPORATION shall be
used, maintained, and repaired in a careful and reasonably prudent manner. On
the CLOSING DATE all of the assets of CORPORATION shall be located on premises
owned or leased by CORPORATION.
5.9 Access. To and through the date of CLOSING, SELLER shall grant
BUYER and its agents full access to all personnel records, assets, records and
documents of CORPORATION and shall furnish such financial and operating
information as BUYER may reasonably request. SELLER shall provide, upon BUYER'S
request, verification of CORPORATION'S receivables and liabilities.
5.10 Filing of Tax Returns. To and through the date of CLOSING, any tax
returns required to be filed by CORPORATION on or prior to the CLOSING shall be
submitted to BUYER for review.
5.11 Resignations. To and through the date of CLOSING, SELLER shall
cause CORPORATION'S statutory agent and all of its officers, directors, and
trustees of CORPORATION'S retirement plans to resign in writing from such
positions as of the CLOSING.
5.12 Professional Fees. As of CLOSING, all professional fees,
including, without limitation, all attorney or accountant fees, incurred by
SELLER as a result of the negotiation and preparation of the within AGREEMENT
and the consummation of the transactions contemplated hereby shall be paid by
BUYER.
5.13 Confidential Information. For a period of three (3) years after
the CLOSING, SELLER shall not disclose any confidential or proprietary
information or trade secrets of CORPORATION including, without limiting the
foregoing, the identity of any of CORPORATION'S customers or suppliers, and the
prices at which CORPORATION has sold or purchased products or services nor shall
SELLER use such information for their own purposes to the detriment of
CORPORATION.
<PAGE> 12
5.14 Noncompetition Covenant. For a period of three (3) years after the
CLOSING hereof, SELLER shall not within the United States of America, Canada or
Mexico directly or indirectly engage in any activity competitive with the
business of CORPORATION, including the business activities conducted by the
CORPORATION subsequent to its incorporation and prior to the CLOSING DATE. For
purposes hereof, indirect engagement shall be deemed to include involvement in,
or association with, any corporation, partnership, joint venture, or other
entity (whether as shareholder, director, officer, partner, investor, joint
venturer, employee, agent, or independent contractor) engaged in any activity in
competition with the business of CORPORATION. The foregoing shall not prohibit
SELLER from owning stock in any corporation whose stock is publicly-traded, from
owning shares in any mutual fund or from owning any life insurance, annuity or
variable annuity policy issued by a life insurance company. SELLER acknowledges
that money damages would be an inadequate remedy for a breach of this covenant
and that in addition to such money damages BUYER shall be entitled to injunctive
relief.
SECTION 6.
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of BUYER to be performed hereunder shall be subject to
the satisfaction (or waiver by BUYER) on or before the CLOSING of each of the
following conditions, absent which, at BUYER'S election, both parties shall be
relieved of any further obligation to one another and any funds or securities
deposited or paid by either party shall be returned to the party so depositing
or paying compensation:
6.1 Representations and Warranties True and Accurate as of Closing. The
representations and warranties of SELLER contained herein shall be true and
accurate in all respects as of the CLOSING with the same force and effect as
though made at such time.
6.2 Performance of Obligations of SELLER. SELLER shall have completely
performed all of his covenants and obligations hereunder.
6.3 Material Adverse Facts. BUYER shall not have discovered nor shall
there have occurred after the date hereof, any events, facts or circumstances
which reflect in any material adverse way on the financial condition, assets,
liabilities, business, or prospects of CORPORATION, in the event that BUYER
discovers any such fact, event or circumstance at any time prior to the
Effective Date of the Plan of Reorganization, the BUYER, at its sole election,
may declare this AGREEMENT to be null and void. SELLER may cause the CORPORATION
to pay out to SELLER all cash, the cash value of life insurance policies, and
funds in bank accounts to satisfy compensation and debt obligations owed to the
SELLER by the CORPORATION, and BUYER consents thereto.
6.4 Form of Documents. All certificates, opinions, and other documents
to be delivered by SELLER to BUYER hereunder shall be in form and substance
satisfactory to counsel for BUYER.
<PAGE> 13
6.5 Consulting and Employment Agreements. The key employees identified
by BUYER shall have executed and delivered Employment or Consulting Agreements
to the CORPORATION in form satisfactory to counsel for BUYER:
6.6 Ratification of the Agreement and Confirmation of the Plan of
Reorganization. BUYER is currently functioning as a Debtor-in-Possession
pursuant to Section 1107 of the United States Bankruptcy Code. The obligations
of BUYER to be performed pursuant to this AGREEMENT are specifically contingent
upon ratification of this AGREEMENT by the United States Bankruptcy Court for
the District of Nevada. In the event that the Bankruptcy Court refuses, for any
reason, to ratify this AGREEMENT, the AGREEMENT shall be null and void and have
no legal binding effect upon the BUYER or SELLER. In addition to the foregoing,
this AGREEMENT is specifically contingent upon confirmation by the Bankruptcy
Court of the Plan of Reorganization to be filed by the BUYER with the Bankruptcy
Court, and in the event that the Bankruptcy Court refuses, for any reason, to
confirm the Plan of Reorganization as submitted by the BUYER, this AGREEMENT
shall be null and void and have no further effect or impact upon the BUYER or
SELLER. SELLER specifically and explicitly assumes the risk that either (a) the
Bankruptcy Court may refuse to ratify this AGREEMENT, or (b) the Bankruptcy
Court may refuse to confirm the Plan of Reorganization as submitted by the
BUYER.
SECTION 7.
COVENANTS OF BUYER
From the date hereof to and including the CLOSING, BUYER covenants as
follows (unless otherwise agreed in writing by SELLER):
7.1 BUYER'S Closing Certificate. BUYER shall execute and deliver to
SELLER at the CLOSING a certificate which shall certify that, except as
otherwise specifically provided therein: (a) all of the representations and
warranties made by BUYER in this AGREEMENT are true and accurate in all respects
as of the CLOSING with the same force and effect as though made at such time;
and (b) BUYER has performed and/or complied with all of its covenants and other
obligations under this AGREEMENT required to be performed and/or complied with
by it as of the CLOSING. Such certificate shall describe in detail the
circumstances which caused it to identify the falsity or inaccuracy of any
representations or warranties or the failure to perform or comply with any
covenant or other obligation hereunder. From the date hereof until the date of
CLOSING, BUYER shall notify SELLER immediately in writing if any of the
representations and warranties made herein should become untrue or inaccurate.
SECTION 8.
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of SELLER to be performed hereunder shall be subject to
the satisfaction (or waiver by SELLER) on or before the CLOSING of each of the
following conditions:
<PAGE> 14
8.1 Representations and Warranties True and Accurate as of Closing. The
representations and warranties of BUYER contained herein shall be true and
accurate in all respects as of the CLOSING with the same force and effect as
though made at such time.
8.2 Payment of Purchase Price. BUYER shall pay the purchase price in
the amount and manner specified herein.
8.3 Escrow. All stock to be exchanged pursuant to this AGREEMENT shall
be held in escrow by Walter & Haverfield, P.L.L. of Cleveland, Ohio, (the
"Escrow Agent"), legal counsel to BUYER until the Effective Date of the Plan of
Reorganization. In the event that either (a) the Bankruptcy Court refuses to
ratify this AGREEMENT, (b) the Plan of Reorganization is not confirmed, or (c)
the BUYER elects to terminate this AGREEMENT, this AGREEMENT shall be deemed to
be null and void and the Escrow Agent shall return the stock to the grantor from
whom it was received, otherwise the stock shall be exchanged and distributed by
the Escrow Agent on the Effective Date of the Plan of Reorganization, pursuant
to the terms of this AGREEMENT.
SECTION 9.
CLOSING
9.1 Time and Place. The closing (CLOSING) of the sale of the SHARES
hereunder shall take place at a mutually agreeable location at 9:00 a.m. on the
Effective Date of the Plan of Reorganization as submitted by the BUYER, as the
term "Effective Date" is defined in the Plan.
9.2 Obligations of SELLER. Within thirty (30) days of the date of this
AGREEMENT, SELLER and BUYER shall deliver, or cause to be delivered, to Escrow
Agent the following:
a) The certificates for the SHARES duly endorsed for transfer to
BUYER or with duly executed stock powers attached and the shares to be exchanged
by SELLER to BUYER, duly endorsed;
b) The certificates attesting to the truth of SELLER'S
representations and warranties as of the CLOSING required hereby;
c) The resignations of CORPORATION'S statutory agent, officers,
directors, trustees and employees required hereby;
d) Any necessary supplements to the exhibits attached hereto; and
e) The minute book and stock record book of CORPORATION.
9.3 Additional Actions. Each of the parties, individually and/or in
their corporate capacities, hereby agrees to execute and deliver all such
additional documents and take all actions necessary or appropriate to consummate
any and all of the transactions contemplated hereby.
<PAGE> 15
SECTION 10.
INDEMNIFICATION AND POST CLOSING ADJUSTMENT IN PURCHASE PRICE
10.1 Indemnification by SELLER. SELLER agrees to indemnify and hold
BUYER and CORPORATION harmless from any liabilities or losses (including
attorneys' fees and all costs of defense) which are not otherwise covered by any
policy of insurance to which the CORPORATION was, or is, a party, resulting
from:
a) The falsity or inaccuracy of any representations or warranties
made herein by SELLER;
b) The failure of SELLER to completely perform any of its
covenants or other obligations hereunder; or
c) Any liability or loss incurred or suffered by CORPORATION or
BUYER after the CLOSING which relates or is attributable to intentional acts or
omissions of SELLER prior to the CLOSING or (ii) SELLER'S performance pursuant
to this AGREEMENT.
SELLER shall be required to hold BUYER and CORPORATION harmless from the cost of
defending a claim (which is the subject of indemnification hereunder) made by a
third party against CORPORATION and/or BUYER even if it is ultimately determined
that the claim is without merit.
10.2 Indemnification by Buyer. BUYER agrees to indemnify and hold
SELLER harmless from any liabilities or losses resulting from:
a) The falsity or inaccuracy of any representations or warranties
made herein by BUYER;
b) The failure of BUYER to completely perform any of his covenants
or other obligations hereunder; or
c) Any liability or loss incurred or suffered by SELLER after the
CLOSING which relates or is attributable to acts or omissions of BUYER prior to
or after the CLOSING.
10.3 Defense of Ownership in Chapter 11 Proceeding. BUYER acknowledges
that it is aware that one or more third parties may assert a claim of ownership
to some or all of the SHARES of VIVATEL. BUYER has informed SELLER that, BUYER
intends to commence an adversary proceeding in the United States Bankruptcy
Court for the purposes of confirming that it has acquired ownership (free and
clear of all liens and encumbrances) to the SHARES. BUYER agrees that is shall
be responsible for all expenses (including attorney fees) incurred by BUYER or
SELLER in this Chapter 11 adversary proceeding. BUYER has no duty or obligation
to indemnify or hold SELLER harmless with respect to (i) any expenses, attorney
fees or damages incurred by SELLER in any legal proceeding except as noted above
and (ii) any monetary judgment which may be entered against SELLER in the
Bankruptcy case or any other legal proceeding. If BUYER incurs any
<PAGE> 16
expenses in the defense of SELLER, BUYER, at its election, may retain a portion
of the Class A Common Stock as an offset against such expenses. In the event
that a court of complete jurisdiction should determine that SELLER does not own
the SHARES, SELLER shall reimburse BUYER for all costs and attorney fees
incurred in the prosecution of its claim.
10.4 Defense. If an indemnified party or parties hereunder should
receive notice of any claim or proceeding against it or them made by a third
party that might result in an indemnification claim hereunder, the indemnified
party or parties shall promptly give the indemnifying party or parties written
notice of such claim or proceeding and shall permit the indemnifying party or
parties at their option, to conduct or participate in the defense of such claim
or proceeding by counsel of the indemnifying party's or parties' own choosing
and at their own expense. If the indemnifying party or parties accept the tender
of the defense of such claim, they shall be deemed to have accepted for their
account any and all liability resulting from or relating to such claim. If the
indemnifying party or parties decline to conduct the defense of such claim or
proceeding, the indemnified party or parties shall assume the defense thereof
and may settle the same without the consent of the indemnifying party or
parties.
10.5 Escrow of POWERTEL Class A Common Stock and Post Closing
Adjustment of Purchase Price. SELLER has made certain representations to BUYER
respecting the business affairs of VIVATEL and its future financial performance.
SELLER has agreed as follows:
a) The Class A Common Stock of POWERTEL to be issued pursuant to
Section 2.1 of this AGREEMENT shall be held in escrow as provided in Section 8.3
for a 24 month term after CLOSING, except that 5/35th (14.3%) of the shares
shall be released to SELLER at CLOSING.
b) After the initial distribution of 5/35ths, the remaining
30/35th of the shares shall not be distributed from escrow until the occurrence
of one of the following three events. The first event shall be deemed to occur
at the end of the third consecutive month in which VIVATEL has collected
revenues from telecommunications operations in excess of $300,000 (U.S.) for
each of the preceding three months. Upon the occurrence of the first event,
10/30 of the remaining shares in escrow shall be released. The second event
shall be deemed to occur at the end of the third consecutive month in which
VIVATEL has collected revenues from telecommunications operations in excess of
$600,000 (U.S.) for each of the preceding three months. Upon the occurrence of
the second event, 1/2 of the remaining shares in escrow shall be released. The
Third event shall be deemed to occur at the end of the third consecutive month
in which VIVATEL has collected revenues from telecommunications operations in
excess of $900,000 (U.S.) for each of the preceding three months. Upon the
occurrence of the third event, the remaining shares in escrow shall be released.
In the event that VIVATEL fails to achieve the revenue targets within 24 months
after CLOSING, SELLER shall be deemed to have forfeited the remaining Class A
Common Stock and the Escrow Agent shall return the unissued shares to POWERTEL
USA. For purposes of this Section 10.5(b), the three breakpoints (i.e. the
$300,000, $600,000 and $900,000) must be achieved separately, not concurrently,
i.e. if the VIVATEL revenue is $900,000 per month for three consecutive months,
but VIVATEL has not previously satisfied the breakpoints of $300,000 and
$600,000, the $900,000 revenue is deemed to satisfy only the first breakpoint
and not all three breakpoints.
<PAGE> 17
SECTION 11.
MISCELLANEOUS PROVISIONS
11.1 Survival of Closing. The provisions of Sections 2, 3, 4, 5.14,
5.15, 7, 10 and 11 shall survive the CLOSING.
11.2 Notices. Any notices required or permitted hereby shall be deemed
given when sent by one party to the other, and to its counsel, in writing by
registered or certified U.S. mail, postage prepaid, addressed as follows:
SELLER: David L. Wallace
5545 Shadow Lawn Drive
Sarasota FL 34242
BUYER: PowerTel USA, Inc.
c/o Mr. Richard Cascarilla
President
321 West Lake Lansing Rd., Suite 100
East Lansing, MI 48823
BUYER'S COUNSEL: Van P. Carter, Esq.
Walter & Haverfield
1300 Terminal Tower
Cleveland, Ohio 44113
VIVATEL: VivaTel Telecommunications, Inc.
c/o David Wallace
5545 Shadow Lawn Drive
Sarasota, FL 34242
The above addresses may be changed from time to time by giving notice thereof in
the manner provided herein.
11.3 Successors and Assigns. None of the parties hereto may assign
their rights or delegate their duties hereunder without the prior written
consent of all parties to this AGREEMENT, which consent will not be unreasonably
withheld. This AGREEMENT shall be binding upon and inure to the benefit of the
heirs, executors, administrators, and successors of the parties hereto.
11.4 Integrated Agreement. This instrument and the exhibits attached
hereto constitute the complete and exclusive agreement of the parties. The terms
of this AGREEMENT may not be modified except in a writing signed by all of the
parties hereto.
11.5 Risk of Loss. Risk of loss of, or damage or destruction to, the
assets of CORPORATION shall be borne by SELLER until the CLOSING. In the event
of material damage
<PAGE> 18
or destruction to such property, SELLER shall promptly notify BUYER. BUYER shall
thereupon have the right, at its option, to elect to terminate this AGREEMENT
without liability or to proceed to the CLOSING and accept any insurance proceeds
received by CORPORATION as a result of such damage or destruction. "Material
damage" shall mean such damage as prevents the CORPORATION from effectively
conducting its business.
11.6 Governing Law. The rights and obligations of the parties hereunder
and the interpretation of this AGREEMENT shall be governed by the laws of the
state of Nevada (other than those relating to conflicts of laws).
11.7 No Finder's Fees or Brokerage Commissions. Each of the parties
hereto represents that it dealt with no brokers or finders with respect to the
sale of the SHARES hereunder and that there are no brokerage commissions,
finder's fees, or similar payments owed as a result thereof.
11.8 Counterparts. This AGREEMENT may be executed in two or more
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall constitute one and the same instrument. The receipt of a
telefax copy of any executed page shall be accepted as the original.
11.9 Waivers. Waiver of the benefit of any provision hereof must be in
writing to be effective. The waiver by any party of a breach of any provision of
this AGREEMENT shall not operate or be construed as a waiver of any subsequent
breach. No action taken pursuant to this AGREEMENT, including without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants, or other obligations contained herein.
11.10 Books and Records and Tax Returns. Prior to the CLOSING, BUYER
will during regular business hours provide SELLER with reasonable access to
SELLER'S financial and accounting books and records which relate to the period
prior to the CLOSING, provided, however, that SELLER shall have similar access
at if audits of the SELLER'S individual federal, state or local income tax
returns necessitate access to CORPORATION'S records or in the event BUYER
defaults in the timely payment of any amounts due to SELLER hereunder. For
purposes hereof, access to books and records shall include the right to make
copies thereof. In addition, neither the CORPORATION nor BUYER shall file any
federal, state or local tax return or form for the fiscal year ending August 30,
1997 unless and until such return is reviewed and approved by SELLER.
11.11 Interpretation. Except where otherwise required by the context,
words of any gender used herein shall be deemed to include any and all genders
and the singular and plural shall be interchangeable.
11.12 Public Announcement. The parties hereto shall make no public
announcement of the transactions which are the subject of this AGREEMENT until
after the CLOSING. Until such time, the parties shall use their best efforts to
prevent third persons (other than third persons whose consent must be obtained
in order to consummate such transactions) from learning of such transactions,
the negotiations concerning same, or the fact that the SELLER desire to sell the
SHARES.
<PAGE> 19
11.13 No Third Party Beneficiaries. Nothing herein expressed or implied
is intended to confer or shall be construed as conferring upon or giving to any
person other than the parties hereto and CORPORATION any rights or benefits
under or by reason of this AGREEMENT.
11.14 Incorporation by Reference. Each Exhibit referenced in this
AGREEMENT is hereby incorporated by reference and deemed to be a material
component of this AGREEMENT as if fully set forth therein.
11.15 Commitment to Assist in Post Closing Matters. The Parties to this
AGREEMENT acknowledge that it may be necessary to amend this AGREEMENT and/or to
execute additional documents in order to implement the understanding which has
been reached, and each Party to this AGREEMENT commits to cooperate and use
its/his best efforts in order that the objectives of this AGREEMENT may be
achieved.
11.16 Accuracy of Recitals. The Recitals set forth above are true and
correct and are hereby incorporated herein by reference.
11.17 Entire Agreement. This AGREEMENT constitutes the entire agreement
by and among the Parties with respect to the exchange of shares and all other
agreements, oral or written including but not limited to the Prior Agreement
shall be deemed to be null and void.
11.18 Effective Date. This AGREEMENT supersedes the Prior Agreement and
is effective retroactively to December 1, 1997, the effective date of this
AGREEMENT.
<PAGE> 20
To evidence their consent to the foregoing, the parties executed this
instrument on the dates set opposite their signatures below.
BUYER: POWERTEL USA, INC.
Dated: By: /s/ Richard A. Cascarilla
------------------- --------------------------------
Its: President
VIVA TELECOMMUNICATIONS, INC.
Dated: By: /s/ David L. Wallace
------------------- --------------------------------
Its: President
SELLER: DAVID L. WALLACE
Dated: /s/ David L. Wallace
------------------- ------------------------------------
<PAGE> 1
Exhibit 10d
AMENDED AND RESTATED AGREEMENT FOR EXCHANGE OF STOCK
BETWEEN
DAVID WALLACE
AND
POWERTEL USA, INC.
REGARDING
DIEGO TEL, INC.
<PAGE> 2
AMENDED AND RESTATED
AGREEMENT FOR EXCHANGE OF STOCK
This amended and restated agreement ("AGREEMENT") is entered into this
date and is effective as of February 12, 1998 by and among (i) POWERTEL USA,
INC., a corporation incorporated under the laws of Delaware with its principal
place of business situated in East Lansing, Michigan ("POWERTEL"), (ii) DIEGO
TEL, INC. a Nevada corporation with its principal place of business situated in
Sarasota, Florida ("DIEGOTEL"), and (iii) DAVID L. WALLACE, an individual
residing in Sarasota, Florida ("WALLACE"), who owns 100% of the issued and
outstanding Common Stock of DIEGOTEL.
RECITALS
WHEREAS, WALLACE is the owner of 100% the issued and outstanding shares
of DIEGOTEL; and
WHEREAS, DIEGOTEL is engaged in the business of purchasing and
reselling long distance telecommunication services and related activities
("BUSINESS"); and
WHEREAS, WALLACE desires to exchange with POWERTEL common stock of
POWERTEL in exchange for 100% of the common stock of the DIEGOTEL and POWERTEL
desires to exchange stock as noted above; and
WHEREAS, for federal income tax purposes, it is intended that this
transaction shall qualify as a "reorganization" within the meaning of Section
368 of the Internal Revenue Code of 1986, as amended; and
WHEREAS, DIEGOTEL desires to guarantee the obligations of WALLACE
pursuant to this AGREEMENT; and
WHEREAS, this AGREEMENT is specifically contingent upon confirmation by
the Bankruptcy Court of the Plan of Reorganization to be filed by POWERTEL with
the Bankruptcy Court (the "CONFIRMATION"),
WHEREAS, the Parties to this Agreement have previously executed a
document entitled "Agreement for Exchange of Stock" executed February 12, 1997,
(the "Initial Agreement"); and
WHEREAS, the Parties have decided to amend and restate the Initial
Agreement in order to incorporate certain supplemental terms and modifications.
<PAGE> 3
NOW, THEREFORE, in consideration of the foregoing, the payment of
$100,000.00 to POWERTEL by WALLACE in the form of a promissory note and the
exchange of stock pursuant to this AGREEMENT and the representations,
warranties, covenants, and mutual promises contained herein, the parties hereto,
intending to be legally bound, do agree as follows:
SECTION 1.
EXCHANGE OF SHARES OF STOCK
1.1 Exchange. At CLOSING as defined in Section 9 of this AGREEMENT,
WALLACE shall tender to POWERTEL 100% of the issued and outstanding shares of
common stock of DIEGOTEL ("SHARES") and a Promissory Note in the amount of
$100,000.00 in consideration of the tender by POWERTEL of the Class A Common
Stock of POWERTEL as provided in this AGREEMENT.
1.2 Conveyance of Title. The conveyance of title to the SHARES shall be
effective as of the CLOSING by the delivery of the stock certificates therefor
at the CONFIRMATION duly endorsed for transfer to POWERTEL.
1.3 Exclusive Nature of Agreement. This AGREEMENT shall preclude and
restrict WALLACE from entertaining other offers of sale or exchange of the
SHARES.
SECTION 2.
CONSIDERATION AND POST-CONFIRMATION ADJUSTMENT
2.1 Adjustment. In consideration of the tender to POWERTEL of 100% of
the issued and outstanding common stock of DIEGOTEL, POWERTEL shall forthwith
tender to the escrow agent an amount of the issued and outstanding Class A
Common Stock of POWERTEL such that the escrow agent will hold Thirty-Five (35%)
percent of the issued and outstanding Class A Common Stock of POWERTEL. In the
event that POWERTEL, as a result of its Plan of Reorganization or any
settlements of any claims (except those of the disputed class) issues additional
Class A Common Stock or effects a reverse stock split at any time before the
tenth day following the Effective Date of the Plan of Reorganization, then the
number of shares of Class A Common Stock issued to the escrow agent shall be
adjusted to Thirty-Five 35.0% of the issued and outstanding Class A Common Stock
of POWERTEL subsequent to implementation of the Plan of Reorganization and
distribution to WALLACE on a pro rata basis.
2.2 Escrow of POWERTEL Class A Common Stock and Post CONFIRMATION
Adjustment of Purchase Price. Because WALLACE has made certain representations
to POWERTEL respecting the business affairs of DIEGOTEL and its future financial
performance WALLACE agrees as follows:
<PAGE> 4
a) The Class A Common Stock of POWERTEL to be issued pursuant
to Section 2.1 of this AGREEMENT shall be held in escrow as provided in Section
2.2(d) for up to a thirty month term after the Distribution Date in POWERTEL'S
Plan.
b) The Class A Common Stock held in escrow shall be restricted
stock pursuant to the Securities Act of 1933 and shall be separated into 10
equal allotments, each of which shall be referred to as a 10 percent allotment.
The escrow agent shall release a 10 percent allotment at the end of the month in
which POWERTEL receives telecommunications revenue in excess of $100,000. The
escrow agent shall release an additional 10 percent allotment for each
additional incremental increase of $100,000 of telecommunications revenue more
than the month before. The 10 percent allotments shall be distributed to WALLACE
at no more than monthly intervals. To receive all ten allotments, POWERTEL must
receive telecommunications revenue in excess of 4.5 million dollars within
thirty months after the Distribution Date in POWERTEL'S Plan.
c) If shares remain in the escrow at the end of thirty months,
than the escrow shall release the remaining shares within 30 days. In no event
shall the escrow agent return the unissued shares to POWERTEL if the
telecommunications revenue exceeds 4.5 million dollars. If the total
telecommunications revenue is less that 4.5 million dollars then the remaining
shares shall be distributed on a pro rata basis among WALLACE and POWERTEL based
upon a formula for distribution set forth in Section 2.2.
d) All stock and transfer ledgers to be exchanged pursuant to
this AGREEMENT shall be held in escrow by Walter & Haverfield, P.L.L. of
Cleveland, Ohio, (the "Escrow Agent"), legal counsel to POWERTEL. In the event
that either (a) the Bankruptcy Court refuses to ratify this AGREEMENT, (b) the
Plan of Reorganization is not confirmed, or (c) POWERTEL elects to terminate
this AGREEMENT, this AGREEMENT shall be deemed to be null and void and the
Escrow Agent shall return the stock to the grantor from whom it was received,
otherwise the stock shall be exchanged and distributed by the Escrow Agent
pursuant to the terms of this AGREEMENT.
e) During the period of time that the stock is held in escrow,
POWERTEL shall have full power to vote all shares in escrow.
SECTION 3.
REPRESENTATIONS AND WARRANTIES OF WALLACE
Unless otherwise set forth in writing to POWERTEL, WALLACE represents
and warrants to the best of his knowledge as follows:
3.1 Corporate Status. DIEGOTEL is duly organized, validly existing, and
in good standing under the laws of the state of Nevada and has the power and
authority to own its properties and to conduct its business as now being
conducted. DIEGOTEL does not have any subsidiaries and
<PAGE> 5
does not own any stock in any other corporation or have any investments in any
partnerships or joint ventures.
3.2 Capitalization. The authorized stock of DIEGOTEL consists solely of
25,000 shares of common stock with par value of $0.001 per share of which only
the SHARES are issued and outstanding. The SHARES constitute all of the issued
and outstanding shares of stock of DIEGOTEL. The SHARES are validly issued,
fully paid and non-assessable.
3.3 Ownership of Shares. WALLACE is the owner of the 25,000 of SHARES
and in the aggregate owns 100% of the issued and outstanding SHARES of DIEGOTEL.
WALLACE has title to the SHARES free and clear of any and all liens and
encumbrances.
3.4 Consent of Third Parties. This AGREEMENT is legally binding upon
WALLACE and the consummation of the transactions contemplated hereby in
accordance with the terms hereof does not require the consent of any third
party.
3.5 Financial Statements and Pro Form Financial Projections. If
requested by POWERTEL, within sixty (60) days of the date of this AGREEMENT,
WALLACE shall cause DIEGOTEL to prepare balance sheets, income statements and
related schedules and footnotes for DIEGOTEL'S fiscal period commencing in 1997
with the date of incorporation and continuing through December 31, 1997
("FINANCIAL STATEMENT") which FINANCIAL STATEMENT shall accurately and fairly
reflect the financial condition of DIEGOTEL as of the dates indicated thereon,
and the results of the operations of DIEGOTEL for the respective fiscal periods
then ended. In addition to the foregoing, to the best of WALLACE'S knowledge,
the pro forma financial projections for DIEGOTEL previously provided to POWERTEL
and WALLACE accurately and fairly reflect the current and future financial
condition of DIEGOTEL as of the dates indicated thereon, and the results of the
operations of DIEGOTEL for the respective fiscal periods then ended, subject to
the assumptions and representations set forth therein.
3.6 Absence of Certain Changes. The business operations of DIEGOTEL
have been conducted prudently and in the ordinary course of business and there
has been no material change in the financial condition, results of operations,
business, business prospects, capitalization or any increase in the compensation
of DIEGOTEL'S employees, if any.
3.7 Liabilities. To the best of WALLACE'S knowledge (i) as of the date
of the last FINANCIAL STATEMENT, DIEGOTEL did not have any liabilities, whether
absolute, accrued, contingent or otherwise, that are not disclosed in the
FINANCIAL STATEMENT attached hereto, and (ii) there was no basis upon which any
person could assert a liability against DIEGOTEL which was not disclosed on the
last FINANCIAL STATEMENT. Since the date of the last FINANCIAL STATEMENT,
DIEGOTEL has not incurred any liabilities not in the ordinary course of
business, and to the best of WALLACE'S knowledge there is presently no basis
upon which a person could assert such a liability, nor has any person asserted
the existence of such a liability.
<PAGE> 6
3.8 Tax Matters. DIEGOTEL'S federal, state and local tax returns for
1997 have not been filed or audited. There are no pending tax examinations of,
or tax claims asserted against, DIEGOTEL and there are no known bases for any
such claims. DIEGOTEL has not granted any extension of any limitation period
applicable to tax claims which extension is still in effect and has not filed a
consent under Section 341(f) of the Internal Revenue Code of 1986. DIEGOTEL has
never filed an election to be taxed as a small business corporation pursuant to
IRC Section 1361. DIEGOTEL is and has not been a member of a "control group" as
defined in IRC Section 1563 or an affiliated group as defined in IRC
Section 1504.
3.9 Title to Property. DIEGOTEL has good and marketable title to all of
its assets free and clear of all liens and encumbrances. DIEGOTEL'S use of
intangibles has not and will not infringe the rights of any other person. The
rights, properties and other assets presently owned, leased or licensed by
DIEGOTEL and described in this AGREEMENT include all rights, properties and
other assets necessary to permit DIEGOTEL to conduct its business in the same
manner as its business has been conducted.
3.10 Receivables. All of the receivables of DIEGOTEL are reflected on
the books of DIEGOTEL and are considered to be collectible or have been
collected as of the CLOSING.
3.11 Inventories. The inventories of DIEGOTEL, if any, are of a quality
and quantity to be usable and salable in the ordinary course of DIEGOTEL'S
business.
3.12 Condition of Tangible Property. The equipment, and other tangible
property of DIEGOTEL are, to the best of WALLACE'S knowledge, in good condition
and repair, and are adequate for the uses to which such property is put in the
conduct of the BUSINESS. WALLACE has no knowledge of any defects in any of such
tangible property.
3.13 Condemnation. No property owned or leased by DIEGOTEL is subject
to any governmental decree or order, or to the best of WALLACE'S knowledge,
threatened or proposed order to be sold or taken by any public authority.
3.14 Schedule of Contracts. Upon request for POWERTEL, WALLACE shall
prepare a complete list of all contracts of any type, other than insurance
policies, to which DIEGOTEL is a party. All contracts to which DIEGOTEL is a
party are in full force and effect and DIEGOTEL and the other parties thereto
have performed all of the obligations required to be performed by them
thereunder and are not in default thereof. Neither the execution of this
AGREEMENT, nor the consummation of the transactions contemplated hereby, will
constitute a default under any of such contracts as to which the sale of the
shares contemplated by this AGREEMENT may or does constitute a default. None of
such contracts will result in a loss to DIEGOTEL upon the completion thereof and
none of the purchase commitments which are the subject thereof are in excess of
the normal requirements of the BUSINESS or establish a price in excess of that
customarily charged for the items which are the subject thereof. Full and
complete copies of all such contracts will be supplied to POWERTEL upon request.
<PAGE> 7
3.15 Employment Matters. Upon request from POWERTEL, WALLACE shall
prepare a complete schedule of the compensation paid to all employees of
DIEGOTEL.
3.16 Labor Relations. To the best of WALLACE'S knowledge, DIEGOTEL has
complied with all laws, rules, and regulations relating to the employment of
labor and has no labor troubles in the sense that there are no strikes,
lockouts, work stoppages, or slow downs, pending or threatened against DIEGOTEL.
3.17 Legal Proceedings. There are no legal or administrative
proceedings of any nature pending or, to the best of WALLACE'S knowledge,
threatened against or affecting DIEGOTEL. DIEGOTEL is not in default of any
judgment, writ, injunction, or order of any court or governmental agency.
3.18 Compliance with Laws. DIEGOTEL has not received any notice from
any governmental entity asserting a violation by DIEGOTEL of any laws,
regulations, or governmental pronouncements of any type, including, without
limitation, zoning ordinances, and (i) there are no known claims or
investigations involving asserted violations thereof, and (ii) DIEGOTEL has duly
complied with all statutes, regulations and governmental pronouncements of all
types (including, without limitation, zoning ordinances) and has acquired all
licenses and permits required for the operation of its business.
3.19 Lack of Market for POWERTEL Shares. WALLACE represents that he has
had direct, continuing and first-hand experience with the business and operation
of POWERTEL and its financial condition and affairs. WALLACE acknowledges that
(i) POWERTEL is currently functioning as Debtor-in-Possession pursuant to
Chapter 11 of the United States Bankruptcy Code, (ii) there is little, if any,
market for POWERTEL's Class A Common Stock and there may never be any market for
such securities, (iii) the Class A Common Stock is deemed to be "high risk" and
"speculative," (iv) there is no assurance or guarantee that the Class A Common
Stock will ever have any economic value, and (v) the securities issued to
WALLACE will be restricted for not less than one year.
3.20 Bank Accounts. Upon request from POWERTEL, WALLACE shall prepare a
complete and accurate list of each bank or financial institution with which
DIEGOTEL has an account (including the account numbers) or safety deposit box
and the names of the persons authorized to draw thereon or have access thereto.
3.21 Disclosure. WALLACE has disclosed to POWERTEL all facts material
to the business, assets, operations, financial condition, and prospects of
DIEGOTEL.
3.22 Related Parties' Loans. Upon request from POWERTEL, WALLACE shall
prepare a list of all loans to or from DIEGOTEL.
<PAGE> 8
3.23 Deliveries by WALLACE. In connection with the proposed sale of the
SHARES, WALLACE will deliver to POWERTEL the corporate documents at
CONFIRMATION.
3.24 Securities Exemption. WALLACE's sophisticated and knowledgeable
individual who is an "accredited investor" as defined in Rule 501 of Regulation
D of the Securities Act of 1933. WALLACE has had an opportunity to conduct an
independent investigation into the affairs of DIEGOTEL. WALLACE represents that
he is acquiring the SHARES for his personal investment and not with an intention
to re-sell or distribute the SHARES to third parties who are not parties to the
AGREEMENT. WALLACE stipulates that the purchase of the SHARES is a speculative
transaction and that WALLACE is prepared to incur risk of loss of its
investment. WALLACE also stipulates that the sale of the SHARES pursuant to the
AGREEMENT has been effected pursuant to the provisions of Regulation D and
Section 4(2) of the Securities Act of 1933 and comparable provisions of
applicable state securities laws. WALLACE agrees to file any documents
reasonably required by POWERTEL to comply with applicable securities laws.
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF POWERTEL
POWERTEL, represents and warrants as follows:
4.1 Consent of Third Parties. Subject only to ratification of this
AGREEMENT by the United States Bankruptcy Court, this AGREEMENT is legally
binding upon POWERTEL and POWERTEL'S consummation of the transactions
contemplated hereby does not require the consent of any third party except for
approval by the Bankruptcy Court as referenced in Section 6.5.
4.2 Securities Exemption. POWERTEL is a sophisticated and knowledgeable
individual who is an "accredited investor" as defined in Rule 501 of Regulation
D of the Securities Act of 1933. POWERTEL has had an opportunity to conduct an
independent investigation into the affairs of DIEGOTEL. POWERTEL represents that
it is acquiring the SHARES for its personal investment and not with an intention
to re-sell or distribute the SHARES to third parties who are not parties to the
AGREEMENT. POWERTEL stipulates that the purchase of the SHARES is a speculative
transaction and that POWERTEL is prepared to incur risk of loss of its
investment. POWERTEL also stipulates that the sale of the SHARES pursuant to the
AGREEMENT has been effected pursuant to the provisions of Regulation D and
Section 4(2) of the Securities Act of 1933 and comparable provisions of
applicable state securities laws. POWERTEL agrees to file any documents
reasonably required by WALLACE to comply with applicable securities laws.
4.3 Financial Statement and Pro Form Financial Projections. Upon
request by WALLACE, POWERTEL will provide WALLACE with a copy of its FINANCIAL
STATEMENT as filed with the United States Bankruptcy Court. POWERTEL hereby
authorizes WALLACE (at WALLACE'S expense) to secure a credit report on POWERTEL.
POWERTEL represents that the final statements identified above fairly and
accurately reflect POWERTEL'S financial condition and
<PAGE> 9
that there are no adverse facts not described to WALLACE in writing regarding
POWERTEL'S financial affairs.
SECTION 5.
COVENANTS OF WALLACE
Unless POWERTEL waives such performance in writing, WALLACE covenants
as follows:
5.1 Conveyance of Title to Shares. Pursuant to Section 2.2(d), at
CONFIRMATION (as defined in Section 9.1 hereinafter), WALLACE will convey good
and marketable title to the SHARES to POWERTEL free and clear of all security
interests, claims, liens, proxies, charges, or other encumbrances.
5.2 WALLACE'S CONFIRMATION Certificate. WALLACE shall execute and
deliver to POWERTEL at the CONFIRMATION a certificate which shall certify that,
except as otherwise specifically provided therein: (a) all of the
representations and warranties made by WALLACE in this AGREEMENT are true and
accurate in all respects as of the CONFIRMATION with the same force and effect
as though made at such time; and (b) WALLACE have fully performed and/or
complied with all of his covenants and other obligations under this AGREEMENT
required to be performed and/or complied with by them as of the CONFIRMATION.
WALLACE shall describe in such certificate the circumstances concerning any
incorrect or inaccurate representations or warranties identified therein.
5.3 Conduct of Business. To and through the date of CONFIRMATION,
subject to Section 5.8 hereof, DIEGOTEL shall conduct its business prudently and
in the ordinary course consistent with past practice.
5.4 No Amendments. To and through the date of CONFIRMATION, no change
or amendment shall be made to the Articles of Incorporation of DIEGOTEL.
5.5 No Capital Changes. To and through the date of CONFIRMATION,
DIEGOTEL shall not issue or grant options, warrants, or rights to purchase or to
subscribe to any of its stock or any securities or obligations convertible into
its stock or make any other changes in its capital structure.
5.6 No Dividends or Redemptions. To and through the date of
CONFIRMATION, DIEGOTEL shall not declare or pay any dividend or other
distribution in respect of its stock or purchase any of its stock.
5.7 Forbearance by Corporation. To and through the date of
CONFIRMATION, except as otherwise specifically provided for or required herein,
DIEGOTEL shall not do, or agree to do, any of the following:
<PAGE> 10
a) Mortgage, pledge, or otherwise encumber any of its
assets;
b) Incur liabilities in an aggregate amount greater than
$250,000 without the express written consent of
POWERTEL other than in the ordinary course of
business or pay any liability other than current
liabilities and current maturities of existing long
term debt;
c) Sell or transfer any of its assets other than sales
of inventory in the ordinary course of business;
d) Sell any of the inventory of DIEGOTEL other than in
the ordinary course of business;
e) Cancel, release, or assign any obligations owed to
DIEGOTEL or any claims held by it;
f) Increase in any manner the compensation of any of
DIEGOTEL'S employees (including an increase in fringe
benefits or the provision of fringe benefits to
employees not previously entitled thereto) or pay or
agree to pay any pension or retirement allowance not
required by any existing plan or agreement to any
employees, or enter into any new pension, retirement,
or profit sharing plan or agreement or employment
agreement;
g) Hire or terminate any employee, except for just
cause;
h) Loan money or assets to any person; or
i) Adopt any new method of accounting;
5.8 Access. To and through the date of CONFIRMATION, WALLACE shall
grant POWERTEL and its agents full access to all personnel records, assets,
records and documents of DIEGOTEL and shall furnish such financial and operating
information as POWERTEL may reasonably request. WALLACE shall provide, upon
POWERTEL'S request, verification of DIEGOTEL'S receivables and liabilities.
5.9 Filing of Tax Returns. To and through the date of CONFIRMATION, any
tax returns required to be filed by DIEGOTEL on or prior to the CONFIRMATION
shall be submitted to POWERTEL for review.
<PAGE> 11
SECTION 6.
CONDITIONS PRECEDENT TO OBLIGATIONS OF POWERTEL
The obligations of POWERTEL to be performed hereunder shall be subject
to the satisfaction (or waiver by POWERTEL) on or before the CONFIRMATION of
each of the following conditions, absent which, at POWERTEL'S election, both
parties shall be relieved of any further obligation to one another and any funds
or securities deposited or paid by either party shall be returned to the party
so depositing or paying compensation:
6.1 Representations and Warranties True and Accurate as of
CONFIRMATION. The representations and warranties of WALLACE contained herein
shall be true and accurate in all respects as of the CONFIRMATION with the same
force and effect as though made at such time.
6.2 Performance of Obligations of WALLACE. WALLACE shall have
completely performed all of his covenants and obligations hereunder.
6.3 Exchange of Assets. WALLACE and POWERTEL shall exchange all
securities in the amount and manner specified herein.
6.4 Material Adverse Facts. POWERTEL shall not have discovered nor
shall there have occurred after the date hereof, any events, facts or
circumstances which reflect in any material adverse way on the financial
condition, assets, liabilities, business, or prospects of DIEGOTEL, in the event
that POWERTEL discovers any such fact, event or circumstance at any time prior
to the Effective Date of the Plan of Reorganization, POWERTEL, at its sole
election, may declare this AGREEMENT to be null and void. WALLACE may cause
DIEGOTEL to pay out to WALLACE all cash, the cash value of life insurance
policies, and funds in bank accounts to satisfy compensation and debt
obligations owed to WALLACE by DIEGOTEL, and POWERTEL consents thereto.
6.5 Form of Documents. All certificates, opinions, and other documents
to be delivered by WALLACE to POWERTEL hereunder shall be in form and substance
satisfactory to POWERTEL.
6.6 Ratification of the Agreement and Confirmation of the Plan of
Reorganization. POWERTEL is currently functioning as a Debtor-in-Possession
pursuant to Section 1107 of the United States Bankruptcy Code. The obligations
of POWERTEL to be performed pursuant to this AGREEMENT are specifically
contingent upon ratification of this AGREEMENT by the United States Bankruptcy
Court for the District of Nevada. In the event that the Bankruptcy Court
refuses, for any reason, to ratify this AGREEMENT, the AGREEMENT shall be null
and void and have no legal binding effect upon POWERTEL or WALLACE. In addition
to the foregoing, this AGREEMENT is specifically contingent upon confirmation by
the Bankruptcy Court of the Plan of Reorganization to be filed by POWERTEL with
the Bankruptcy Court, and in the event that the Bankruptcy Court refuses, for
any reason, to confirm the Plan of Reorganization as submitted by
<PAGE> 12
POWERTEL, this AGREEMENT shall be null and void and have no further effect or
impact upon POWERTEL or WALLACE. WALLACE specifically and explicitly assumes the
risk that either (a) the Bankruptcy Court may refuse to ratify this AGREEMENT,
or (b) the Bankruptcy Court may refuse to confirm the Plan of Reorganization as
submitted by POWERTEL.
SECTION 7.
COVENANTS OF POWERTEL
From the date hereof to and including the CONFIRMATION, POWERTEL
covenants as follows (unless otherwise agreed in writing by WALLACE):
7.1 POWERTEL'S CONFIRMATION Certificate. POWERTEL shall execute and
deliver to WALLACE a certificate which shall certify that, except as otherwise
specifically provided therein: (a) all of the representations and warranties
made by POWERTEL in this AGREEMENT are true and accurate in all respects as of
the CONFIRMATION with the same force and effect as though made at such time; (b)
POWERTEL has performed and/or complied with all of its covenants and other
obligations under this AGREEMENT required to be performed and/or complied with
by it as of the CONFIRMATION; and (c) a statement showing the calculation used
by POWERTEL in determining that the escrow agent has received an amount equal to
Thirty-Five (35%) percent of the issued and outstanding Class A Common Stock of
POWERTEL subsequent to implementation of the Plan of Reorganization. From the
date hereof until the date of CONFIRMATION, POWERTEL shall notify WALLACE
immediately in writing if any of the representations and warranties made herein
should become untrue or inaccurate.
SECTION 8.
CONDITIONS PRECEDENT TO OBLIGATIONS OF WALLACE
The obligations of WALLACE to be performed hereunder shall be subject
to the satisfaction (or waiver by WALLACE) on or before the CONFIRMATION of each
of the following conditions:
8.1 Representations and Warranties True and Accurate as of
CONFIRMATION. The representations and warranties of WALLACE contained herein
shall be true and accurate in all respects as of the CONFIRMATION with the same
force and effect as though made at such time.
8.2 Form of Documents and Plan of Reorganization. All certificates and
other documents to be delivered by POWERTEL to WALLACE hereunder shall be in
form and substance satisfactory to WALLACE. If the Plan of Reorganization as
confirmed by the Bankruptcy Court as referred to in Section 6.5, does not
conform or alters in any way this AGREEMENT, then this AGREEMENT shall be null
and void and have no further effect or impact upon POWERTEL or WALLACE. POWERTEL
specifically and explicitly assumes the risk that either (a) the Bankruptcy
Court may refuse to ratify this AGREEMENT, (b) the Bankruptcy Court may refuse
to confirm the Plan of
<PAGE> 13
Reorganization as submitted by POWERTEL, or (c) WALLACE may determine that the
Plan of Reorganization does not conform or alters this AGREEMENT within ten days
of receipt of a copy of the Plan or any amendments.
SECTION 9.
CLOSING AND CONFIRMATION
9.1 Date. The CLOSING is deemed the date of CONFIRMATION. The
CONFIRMATION is date the Bankruptcy Court confirms the Plan.
9.2 Obligations of WALLACE. Within ten days of this AGREEMENT, WALLACE
and POWERTEL shall deliver, or cause to be delivered, to Escrow Agent the
following:
a) The certificates for the SHARES duly endorsed for
transfer to POWERTEL by WALLACE,
b) The certificates for the Class A Common Stock
deposited with the escrow agent shall be issued in
the name of POWERTEL and reissued to WALLACE at time
of distribution,
c) The corporate records, minute book and stock record
book of DIEGOTEL.
d) The Promissory Note from WALLACE to POWERTEL in the
amount of $100,000 at 9% per year interest with
payments to commence six months after the date of
DISTRIBUTION and to be paid over thirty monthly
payments and in no event will the final shares be
distributed until the Note is paid in full.
9.3 Additional Actions. Each of the parties, individually and/or in
their corporate capacities, hereby agrees to execute and deliver all such
additional documents and take all actions necessary or appropriate to consummate
any and all of the transactions contemplated hereby.
SECTION 10.
INDEMNIFICATION AND POST CLOSING ADJUSTMENT IN PURCHASE PRICE
10.1 Indemnification by WALLACE. WALLACE agrees to indemnify and hold
POWERTEL and DIEGOTEL harmless from any liabilities or losses (including
attorneys' fees and all costs of defense) which are not otherwise covered by any
policy of insurance to which the DIEGOTEL was, or is, a party, resulting from:
<PAGE> 14
a) The falsity or inaccuracy of any representations or
warranties made herein by WALLACE;
b) The failure of WALLACE to completely perform any of its
covenants or other obligations hereunder; or
c) Any liability or loss incurred or suffered by DIEGOTEL or
POWERTEL after the CLOSING which relates or is attributable to intentional acts
or omissions of WALLACE prior to the CONFIRMATION.
10.2 Indemnification by POWERTEL. POWERTEL agrees to indemnify and hold
WALLACE harmless from any liabilities or losses resulting from:
a) The falsity or inaccuracy of any representations or
warranties made herein by POWERTEL;
b) The failure of POWERTEL to completely perform any of his
covenants or other obligations hereunder; or
c) Any liability or loss incurred or suffered by WALLACE after
the CLOSING which relates or is attributable to acts or omissions of POWERTEL
prior to the CONFIRMATION.
10.3 Defense. If an indemnified party or parties hereunder should
receive notice of any claim or proceeding against it or them made by a third
party that might result in an indemnification claim hereunder, the indemnified
party or parties shall promptly give the indemnifying party or parties written
notice of such claim or proceeding and shall permit the indemnifying party or
parties at their option, to conduct or participate in the defense of such claim
or proceeding by counsel of the indemnifying party's or parties' own choosing
and at their own expense. If the indemnifying party or parties accept the tender
of the defense of such claim, they shall be deemed to have accepted for their
account any and all liability resulting from or relating to such claim. If the
indemnifying party or parties decline to conduct the defense of such claim or
proceeding, the indemnified party or parties shall assume the defense thereof
and may settle the same without the consent of the indemnifying party or
parties.
SECTION 11.
MISCELLANEOUS PROVISIONS
11.1 Survival of CLOSING. The provisions of Sections 2, 3, 4, 5.14,
5.15, 7, 10 and 11 shall survive the CLOSING and CONFIRMATION.
<PAGE> 15
11.2 Notices. Any notices required or permitted hereby shall be deemed
given when sent by one party to the other, and to its counsel, in writing by
registered or certified U.S. mail, postage prepaid, addressed as follows:
WALLACE: David L. Wallace
5545 Shadow Lawn Drive
Sarasota, FL 34242
POWERTEL: POWERTEL USA, Inc.
c/o Mr. Richard Cascarilla, President
321 West Lake Lansing Rd., Suite 100
East Lansing, NH 48823
POWERTEL'S COUNSEL: Van P. Carter, Esq.
Walter & Haverfield
1300 Terminal Tower
Cleveland, Ohio 44113
DIEGO TEL: DIEGOTEL, Inc.
c/o David Wallace
5545 Shadow Lawn Drive
Sarasota, FL 34242
The above addresses may be changed from time to time by giving notice thereof in
the manner provided herein.
11.3 Successors and Assigns. None of the parties hereto may assign
their rights or delegate their duties hereunder without the prior written
consent of all parties to this AGREEMENT, which consent will not be unreasonably
withheld. This AGREEMENT shall be binding upon and inure to the benefit of the
heirs, executors, administrators, and successors of the parties hereto.
11.4 Integrated Agreement. This instrument and the exhibits attached
hereto constitute the complete and exclusive agreement of the parties. The terms
of this AGREEMENT may not be modified except in a writing signed by all of the
parties hereto.
11.5 Risk of Loss. Risk of loss of, or damage or destruction to, the
assets of DIEGOTEL shall be borne by WALLACE until the CONFIRMATION. In the
event of material damage or destruction to such property, WALLACE shall promptly
notify POWERTEL. POWERTEL shall thereupon have the right, at its option, to
elect to terminate this AGREEMENT without liability or to proceed to the
CONFIRMATION and accept any insurance proceeds received by DIEGOTEL as a result
of such damage or destruction. "Material damage" shall mean such damage as
prevents the CORPORATION from effectively conducting its business.
<PAGE> 16
11.6 Governing Law. The rights and obligations of the parties hereunder
and the interpretation of this AGREEMENT shall be governed by the laws of the
state of Nevada (other than those relating to conflicts of laws).
11.7 No Finder's Fees or Brokerage Commissions. Each of the parties
hereto represents that it dealt with no brokers or finders with respect to the
sale of the SHARES hereunder and that there are no brokerage commissions,
finder's fees, or similar payments owed as a result thereof.
11.8 Counterparts. This AGREEMENT may be executed in two or more
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall constitute one and the same instrument. The receipt of a
telefax copy of any executed page shall be accepted as the original.
11.9 Waivers. Waiver of the benefit of any provision hereof must be in
writing to be effective. The waiver by any party of a breach of any provision of
this AGREEMENT shall not operate or be construed as a waiver of any subsequent
breach. No action taken pursuant to this AGREEMENT, including without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants, or other obligations contained herein.
11.10 Books and Records and Tax Returns. POWERTEL will during regular
business hours provide WALLACE with reasonable access to WALLACE'S financial and
accounting books and records which relate to the period prior to the
CONFIRMATION, provided, however, that WALLACE shall have similar access at if
audits of WALLACE'S individual federal, state or local income tax returns
necessitate access to DIEGOTEL'S records or in the event POWERTEL defaults in
the timely payment of any amounts due to WALLACE hereunder. For purposes hereof,
access to books and records shall include the right to make copies thereof. In
addition, neither DIEGOTEL nor POWERTEL shall file any federal, state or local
tax return or form for the fiscal year ending February 28, 1997 unless and until
such return is reviewed and approved by WALLACE.
11.11 Interpretation. Except where otherwise required by the context,
words of any gender used herein shall be deemed to include any and all genders
and the singular and plural shall be interchangeable.
11.12 No Third Party Beneficiaries. Nothing herein expressed or implied
is intended to confer or shall be construed as conferring upon or giving to any
person other than the parties hereto and DIEGOTEL any rights or benefits under
or by reason of this AGREEMENT.
11.13 Incorporation by Reference. Each Exhibit referenced in this
AGREEMENT is hereby incorporated by reference and deemed to be a material
component of this AGREEMENT as if fully set forth therein.
<PAGE> 17
11.14 Commitment to Assist in Post Closing Matters. The Parties to this
AGREEMENT acknowledge that it may be necessary to amend this AGREEMENT and/or to
execute additional documents in order to implement the understanding which has
been reached, and each Party to this AGREEMENT commits to cooperate and use
its/his best efforts in order that the objectives of this AGREEMENT may be
achieved.
11.16 Accuracy of Recitals. The Recitals set forth above are true and
correct and are hereby incorporated herein by reference.
11.17 Entire Agreement. This AGREEMENT constitutes the entire agreement
by and among the Parties with respect to the exchange of shares and all other
agreements, oral or written shall be deemed to be null and void.
To evidence their consent to the foregoing, the parties executed this
instrument on the dates set opposite their signatures below.
POWERTEL USA, INC.
Dated: April 22, 1998 By: /s/ Richard A. Cascarilla
------------------ ------------------------------------------
Its: President, Richard A. Cascarilla
DIEGO TEL, INC.
Dated: April 22, 1998 By: /s/ David L. Wallace
------------------ ------------------------------------------
Its: President, David L. Wallace
Dated: April 22, 1998 By: /s/ David L. Wallace
------------------ ------------------------------------------
David L. Wallace
<PAGE> 18
ADDENDUM TO AMENDED AND RESTATED AGREEMENT
FOR EXCHANGE OF STOCK
THIS ADDENDUM TO AMENDED AND RESTATED AGREEMENT FOR EXCHANGE
OF STOCK (the "Addendum") is intended to and does by execution hereof amend,
modify, and alter the Amended and Restated Agreement for Exchange of Stock
between David Wallace and POWERTEL USA, Inc. dated April 22,1998 as follows:
Section 2.1 entitled "Adjustment' is hereby deleted in its entirety and
the new Section 2.1 will read:
2.1 Adjustment.
In consideration of the tender to POWERTEL of 100% of the issued and
outstanding common stock of DIEGO TEL, POWERTEL shall forthwith tender to the
Escrow Agent an amount of the issued and outstanding, Class A Common Stock of
POWERTEL such that the Escrow Agent will hold Thirty-Five Percent (35%) of the
issued and outstanding Class A Common Stock of POWERTEL. In the event that
POWERTEL, as a result of its Plan of Reorganization or any settlements of any
claims (except those of the disputed class) issues additional Class A Common
Stock or effects a reverse stock split at any time before the tenth day
following the Effective Date of the Plan of Reorganization, then the number of
shares of Class A Common Stock issued to the Escrow Agent shall be adjusted to
Thirty-Five Percent (35%) of the issued and outstanding Class A Common Stock of
POWERTEL subsequent to implementation of the Plan of Reorganization and
distributed to WALLACE in accordance with Section 2.2(b) of this Agreement.
<PAGE> 19
Section 2.2(b) is hereby deleted in its entirety and new Section 2.2(b)
will read:
The Class A Common Stock held in escrow shall be restricted stock
pursuant to the Securities Act of 1933 and shall be separated into ten (10)
equal allotments, each of which shall be referred to as a 10 percent allotment.
The Escrow Agent shall release a 10 percent allotment at the end of the month in
which POWERTEL receives "Telecommunications Revenue," which for purposes of this
Agreement means the cash receipts actually received by POWERTEL, in excess of
$100,000. The Escrow Agent shall release an additional 10 percent allotment for
each additional incremental increase of $100,000 of Telecommunications Revenue
more than the month before. The 10 percent allotments shall be distributed to
WALLACE at no more than monthly intervals. To receive all ten allotments,
POWERTEL must receive Telecommunications Revenue in excess of $4.5 Million
within thirty months after the Confirmation Date as defined in POWERTEL's Plan
of Reorganization.
Section 2.2(c) is hereby deleted in its entirety and the new Section
2.2(c) will read:
(c) If shares remain in the escrow at the end of the thirty months,
then the escrow shall release the remaining shares within thirty (30) days. In
no event shall the Escrow Agent return the unissued shares to POWERTEL if the
Telecommunications Revenue exceeds $4.5 Million and provided WALLACE has paid in
full the Promissory Note in the amount $100,000 held in escrow by the Escrow
Agent. If the total Telecommunications Revenue is less than $4.5 Million, then
the remaining, unearned and unissued shares shall be returned to POWERTEL and
the earned 10 percent allotments shall be distributed to WALLACE upon payment in
full of the $100,000 Promissory Note.
<PAGE> 20
IN WITNESS WHEREOF, the POWERTEL, DIEGO TEL and WALLACE have signed
duplicate copies of this Addendum on this 8th day of June , 1998.
Signed in the Presence of:
POWERTEL USA, INC.
/s/ Wendy S. Burhard By: /s/ Richard Cascarilla
- ------------------------------- -----------------------------
Richard Cascarilla
Title: President
DIEGO TEL, INC.
By: /s/ David L. Wallace
- ------------------------------- -----------------------------
David L. Wallace
Title: President
/s/ David L. Wallace
- ------------------------------- -----------------------------
David L. Wallace, Individually
<PAGE> 1
Exhibit 10e
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into on the 26th day of August,
1998, by and between Powertel USA, Inc., a Delaware Corporation (the "Company")
and Richard Cascarilla, an individual residing in Mason, Michigan (the
"Executive").
WHEREAS, the Board of Directors of the Company (the "Board") desires to
secure for the Company the services of the Executive on the terms and conditions
set forth herein; and
WHEREAS, the Executive desires to provide such services on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants, terms and conditions hereinafter set forth, and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Company and
the Executive hereby agree as follows:
1. Employment. The Company hereby employs the Executive as its President
and Chief Executive Officer, and the Executive hereby accepts employment from
the Company in such position for the term set forth below and upon conditions
provided herein.
2 The Executive's Duties.
(a) The Executive hereby agrees to perform competently and diligently
the duties of the office of President of the Company, including such executive
duties as may be reasonably required from time to time by the Board.
(b) The Executive agrees to observe and comply with all rules,
regulations, policies and practices adopted by the Company, either orally or in
writing, both as they now exist and as they may be adopted or modified from time
to time.
3. Term. The term of this Employment Agreement shall commence as of
August 26, 1998 and shall end on August 25, 2001, unless earlier terminated
pursuant to Paragraph 6. or 7. below.
4. Compensation. In consideration of the services to be rendered
hereunder by the Executive, the Company hereby agrees to pay compensation to the
Executive as follows:
(a) During the first contract year hereunder (i.e., from August 26, 1998
to August 26, 1999), a base salary in the amount of Eighty-Four Thousand
Dollars, ($84,000.00). During the second contract year hereunder (i.e., from
August 26, 1999 to August 26, 2000), a base salary in the amount of Ninety-Two
Thousand Dollars, ($92,000.00). During the third contract year hereunder (i.e.,
from August 26, 2000 to August 26, 2001), a base salary in the amount of One
Hundred
<PAGE> 2
Thousand Dollars, ($100,000.00). Such a salary, less customary deductions for
withholding and other charges, shall be payable on the Company's customary pay
days.
(b) In addition, the Executive will receive a bonus, depending upon the
Company's operating results of $15,000.00 for each $1 million of earnings before
interest, taxes, depreciation, amortization and such bonuses ("EBITDAB") as
generated by the Company during any fiscal year beginning on August 26, 1998.
5. Fringe Benefits.
(a) The Company agrees to reimburse the Executive for the expense
incurred by the Executive in connection with the performance of his
duties hereunder. (b) The Executive shall also be provided health
insurance and a life insurance policy of an amount not less than the
total amount of this contract. Executive shall also be entitled to three
(3) weeks of vacation each year.
6. Termination. Notwithstanding anything to the contrary contained
herein, the Company may terminate this Employment Agreement, the Executive's
employment hereunder, and all compensation due to the Executive pursuant to
Paragraph 4. above at any time for "just cause". For purposes of this agreement,
termination for "just cause" shall mean: (a) a termination due to malfeasance or
nonfeasance by the Executive in the performance of this duties for which he is
employed, in either such instance so as to cause harm to the Company; (b) a
termination due to the Executive's committing fraud, misappropriation or
embezzlement in the performance of his duties as an employee of the Company; (c)
a termination due to the Executive's committing any felony for which he is
convicted and which, as determined in good faith by the Board, constitutes a
crime involving moral turpitude, which causes harm to the Company; or (d) a
substantial breach of any of the terms of this Employment Agreement.
7. Termination Upon Death. If the Executive shall die before the
expiration of term hereof, this Employment Agreement shall terminate and the
Company shall have no further obligation hereunder to the Executive, except that
the Company shall pay to the Executive's estate the amount of any earned but
unpaid compensation pursuant to Paragraph 4. above to the date of death.
8. Entire Agreement. This Employment Agreement constitutes the
entire agreement of the parties with regard to the subject matter hereof, and
contains all of the covenants, promises, representations, warranties and
agreements between the parties with respect to the employment of the Executive
by the Company. Any modification of this Employment Agreement will be effective
only if it is in writing and signed by the party to be charged.
9. Severability. Any determination by the court of competent
jurisdiction that any provision herein contained is invalid or unenforceable
shall not affect the validity or the enforceability of any other provision of
this Employment Agreement.
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this agreement
as of the day and year first above written.
POWERTEL USA, INC.
By: /s/ Richard A. Cascarilla
-----------------------------------------
Richard A. Cascarilla, President
By: /s/ Michael R. Kassouff
-----------------------------------------
Michael R. Kassouff, Secretary/Treasurer
<PAGE> 1
Exhibit 10f
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into on the 26th day of August,
1998, by and between Powertel USA, Inc., a Delaware Corporation (the "Company")
and Michael R. Kassouff, an individual residing in Houston, Texas (the
"Executive").
WHEREAS, the Board of Directors of the Company (the "Board") desires to
secure for the Company the services of the Executive on the terms and conditions
set forth herein; and
WHEREAS, the Executive desires to provide such services on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants, terms and conditions hereinafter set forth, and for other good and
valuable consideration, receipt of which is hereby acknowledged, the Company and
the Executive hereby agree as follows:
1. Employment. The Company hereby employs the Executive as its
Secretary/Treasurer, and the Executive hereby accepts employment from the
Company in such position for the term set forth below and upon conditions
provided herein.
2 The Executive's Duties.
(a) The Executive hereby agrees to perform competently and diligently
the duties of the office of Secretary/Treasurer of the Company, including such
executive duties as may be reasonably required from time to time by the Board.
(b) The Company acknowledges that, during the term hereof, the
Executive's duties will be performed on a part-time basis, and the Executive's
construction business will require considerable time and attention by the
Executive. Nevertheless, the Executive agrees to be reasonably available to the
Company and will comply with the Company's reasonable requests for his presence
in Reno, Nevada or any other places deemed necessary by the Corporation.
(c) The Executive agrees to observe and comply with all rules,
regulations, policies and practices adopted by the Company, either orally or in
writing, both as they now exist and as they may be adopted or modified from time
to time.
3. Term. The term of this Employment Agreement shall commence as of
August 26, 1998 and shall end on August 25, 2001, unless earlier terminated
pursuant to Paragraph 6. or 7. below.
4. Compensation. In consideration of the services to be rendered
hereunder by the Executive, the Company hereby agrees to pay compensation to the
Executive as follows:
<PAGE> 2
(a) During the first contract year hereunder (i.e., from August 26, 1998
to August 26, 1999), a base salary in the amount of Eighteen Thousand Dollars,
($18,000.00). During the second contract year hereunder (i.e., from August 26,
1999 to August 26, 2000), a base salary in the amount of Twenty-Four Thousand
Dollars, ($24,000.00). During the third contract year hereunder (i.e., from
August 26, 2000 to August 26, 2001), a base salary in the amount of Thirty
Thousand Dollars, ($30,000.00). Such a salary, less customary deductions for
withholding and other charges, shall be payable on the Company's customary pay
days.
(b) In addition, the Executive will receive a bonus, depending upon the
Company's operating results of $10,000.00 for each $1 million of earnings before
interest, taxes, depreciation, amortization and such bonuses ("EBITDAB") as
generated by the Company during any fiscal year beginning on August 26, 1998.
5. Fringe Benefits.
(a) The Company agrees to reimburse the Executive for the expense
incurred by the Executive in connection with the performance of his duties
hereunder.
(b) The Executive shall also be provided health insurance and a life
insurance policy of an amount not less than the total amount of this contract.
6. Termination. Notwithstanding anything to the contrary contained
herein, the Company may terminate this Employment Agreement, the Executive's
employment hereunder, and all compensation due to the Executive pursuant to
Paragraph 4. above at any time for "just cause". For purposes of this agreement,
termination for "just cause" shall mean: (a) a termination due to malfeasance or
nonfeasance by the Executive in the performance of this duties for which he is
employed, in either such instance so as to cause harm to the Company; (b) a
termination due to the Executive's committing fraud, misappropriation or
embezzlement in the performance of his duties as an employee of the Company; (c)
a termination due to the Executive's committing any felony for which he is
convicted and which, as determined in good faith by the Board, constitutes a
crime involving moral turpitude, which causes harm to the Company; or (d) a
substantial breach of any of the terms of this Employment Agreement.
7. Termination Upon Death. If the Executive shall die before the
expiration of term hereof, this Employment Agreement shall terminate and the
Company shall have no further obligation hereunder to the Executive, except that
the Company shall pay to the Executive's estate the amount of any earned but
unpaid compensation pursuant to Paragraph 4. above to the date of death.
8. Entire Agreement. This Employment Agreement constitutes the entire
agreement of the parties with regard to the subject matter hereof, and contains
all of the covenants, promises, representations, warranties and agreements
between the parties with respect to the employment of the Executive by the
Company. Any modification of this Employment Agreement will be effective only if
it is in writing and signed by the party to be charged.
<PAGE> 3
9. Severability. Any determination by the court of competent
jurisdiction that any provision herein contained is invalid or unenforceable
shall not affect the validity or the enforceability of any other provision of
this Employment Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the day and year first above written.
POWERTEL USA, INC.
By: /s/ Richard A. Cascarilla
-----------------------------------------
Richard A. Cascarilla, President
By: /s/ Michael R. Kassouff
-----------------------------------------
Michael R. Kassouff, Secretary/Treasurer
<PAGE> 1
Exhibit 10g
CONFIDENTIAL INFORMATION
TELECOMMUNICATIONS SERVICES AGREEMENT
This Telecommunications Services Agreement ("Agreement") is entered into this
8th day of June, 1998, by and between Viva Servicios, S.de R.L. de C.V., a
corporation of the state of Baja California in Mexico with its principal office
at Blvd Agua Calente 4558, 22420 Tijuana, B.C., Mexico, ("VIVA"), and Diego Tel,
Inc., a corporation of the state of Nevada in the United States of America with
its principal office at 5545 Shadow Lawn Drive, Sarasota, FL 34242 USA, ("Diego
Tel").
WITNESSETH:
VIVA agrees to provide and Diego Tel agrees to accept switched
telecommunications services and other associated services (collectively
"Service"), as described in Service Schedule(s) identified herewith, subject to
the terms of this Agreement.
1. EFFECTIVE DATE - MINIMUM SERVICE TERM.
(A) Effective Date This Agreement shall be effective between the parties as of
the date first written above.
(B) Start Of Service VIVA's obligation to provide and Diego Tel's obligation to
accept and pay for Service shall be binding to the extent provided for in this
Agreement upon the execution of a Service Schedule by both parties and shall
commence with respect to any Service as of the later of the Diego Tel's
designated "Requested Service Date" set forth on each Service Schedule or the
date Service becomes available ("Start of Service"). Start of Service for
particular Switched Services shall be further described in the relevant Service
Schedule(s).
(C) Minimum Service Term Except as otherwise provided herein, the parties'
obligations hereunder with respect to Switched Service shall continue from the
Start of Service Date and over the "Minimum Service Term" set forth in the
relevant Service Schedule. Upon the expiration of the Minimum Service Term
relevant to any Service, the Service in question will continue to be provided on
a month-to-month basis subject to termination by either party upon thirty (30)
days prior written notice to the other party. Diego Tel shall be liable to pay
VIVA-for all charges associated with the Service in question during the Minimum
Service Term and any month-to-month continuation thereof as well as any and all
charges for actual and/or Minimum Committed Monthly Usage Level of the Service
as set forth in the relevant Exhibit(s) whether such usage occurred during the
Minimum Service Term or otherwise. Any applicable Minimum Usage Charges as set
forth in Section 3 (B) and relevant Service Schedule(s) are in addition to
charges associated with actual and/or minimum Committed Usage.
<PAGE> 2
CONFIDENTIAL INFORMATION
2. TARIFFS AND SERVICE SCHEDULES.
(A) Tariffs Service shall be provided pursuant to this Agreement as supplemented
by applicable tariffs (including tariff revisions) filed by VIVA with the United
States Federal Communications Commission for international service and/or any
applicable tariff filed with the Mexico COFETEL ("Tariffs"). In the event of any
conflict between this Agreement and any Tariff, this Agreement shall control.
Additionally, the rates for service set forth in this Agreement shall prevail in
all cases, and such rates shall only be subject to change as provided in Section
5(B) of this agreement.
(B) Service Schedules Service requested by Diego Tel hereunder shall be
requested on VIVA Service Schedule forms and subscribed to by authorized
representatives of Diego Tel and VIVA (the "Service Schedule"). Each Service
Schedule shall reference this Agreement and shall become a part of this
Agreement to the extent that it describes the Service, Requested Service date,
Service Interconnection, if any, relevant to the Service in question, charges,
specific Service terms and other information necessary for VIVA to provide
Service to Diego Tel.
3. SERVICE INTERCONNECTIONS.
(A) Technical Requirements In order to utilize certain Switched Service, one or
more full time dedicated connections between Diego Tel's network ("Diego Tel
Location") and the VIVA Network at one or more VIVA designated locations ("VIVA
POP") must be established ("Service Interconnection"). Unless otherwise
indicated in a Service Schedule, Diego Tel shall be responsible for establishing
each Service Interconnection over facilities subject to VIVA's approval. Service
Interconnections shall only be comprised of DS- I facilities unless otherwise
provided for in the Service Schedule. If a Service Interconnection is proposed
to be made via an international exchange carrier, VIVA may direct Diego Tel to
utilize VIVA's entrance facilities or local serving arrangement ("LSA") with the
relevant local telephone operating company, and Diego Tel will be subject to a
non-discriminatory charges therefor from VIVA. The monthly recurring charge
relevant to Diego Tel's use of LSA capacity shall be subject to upward
adjustment by VIVA from time to time. Such adjustment, if any, shall not exceed
the rate that otherwise would be charged for the equivalent switched access
capacity between the same points by the relevant local telephone operating
company pursuant to its published charges I the type of service in question. If
other private line inter exchange facilities are necessary to establish a
Service Interconnection, and such facilities are requested from VIVA, such
facilities will be provided on an individual case basis.
Service Schedules are to be completed per DS-1 Connection order. The Diego Tel
is responsible for ordering the appropriate number of DS-1 connections within
the ninety (90) day ramp-up-period in order to accommodate the Minimum committed
Usage Level for all contracted Services.
(B) Interconnection Lodging Diego Tel must provide an average loading on each
DS-1 (or DS-1 equivalent) comprising the Service Interconnection at each VIVA
POP of not less than the number
<PAGE> 3
CONFIDENTIAL INFORMATION
of minutes of usage per calendar month of the Minimum Service Term (or any pro
rata portion thereof) set forth in the relevant Service Schedule ("Minimum
Monthly Usage") . In the event Diego Tel fails to deliver the required Minimum
Monthly Usage level in a given calendar month, Diego Tel shall pay to VIVA an
additional amount for the difference between the Minimum Monthly Usage level and
the actual usage of the Service Interconnection in question upon the charge set
forth in the relevant Service Schedule ("Minimum Usage Charge").
Example: Diego Tel has a Minimum Monthly Usage level of 100,000 minutes. Diego
Tel's actual monthly usage for 2 DS-1s comprising Diego Tel's Service
Interconnection at VIVA POP A is 180,000 minutes and Diego Tel's actual
monthly usage for 2 DS- 1s comprising Diego Tel's Service
Interconnection at VIVA POP B is 270,000 minutes. Diego Tel would be
subject to a Minimum Usage charge of $600 since Diego Tel's Minimum
Monthly Usage at VIVA POP A was below 200,000 [(2 x 100,000)- 180,000 x
$.03 $600] and no Minimum Monthly Usage Charge for the Service
Interconnection at VIVA POP B, because Diego Tel exceeded the required
minimum of 200,000 in actual minutes of use for the 2 DS-ls comprising
the Service Interconnection at VIVA POP B.
To the extent available as determined by VIVA and subject to VIVA's standard
terms, conditions and charges, VIVA will provide space at VIVA POPs for Service
Interconnections. Diego Tel will be responsible for the provision of echo
cancellation equipment at Diego Tel's end of the Service Interconnections.
4. DIEGO TEL RESPONSIBILITIES
(A) Diego Tel Facilities Diego Tel has sole responsibility for the installation,
testing, operation of and costs associated with facilities, services and
equipment other than that specifically to be provided by VIVA as described in a
Service Schedule ("Diego Tel Facilities"). In no event will the untimely
installation or non-operation of Diego Tel Facilities relieve Diego Tel of its
obligation to pay charges for Service provided by VIVA. If Diego Tel is
responsible for establishing a Service Interconnection over facilities other
than those controlled by VIVA, VIVA shall not be obligated to provide Service
relevant thereto if the Service Interconnection in question is not activated
within sixty (60) days following the Requested Service Date.
(B) Expedited Charges Should Diego Tel request expeditious Services and/or
changes to orders and VIVA agrees to such request VIVA will pass through the
charges assessed by any supplying parties involved at the same rate to Diego
Tel. VIVA may further condition its agreement with such request upon Diego Tel's
payment of additional charges to VIVA.
(C) Diego Tel Services Diego Tel shall not be relieved of any obligation under
this Agreement by virtue of the fact that Service is ultimately by a customer of
Diego Tel ("End User"). Diego Tel
<PAGE> 4
CONFIDENTIAL INFORMATION
shall be solely responsible for End User solicitation, service requests, credit
worthiness, Diego Tel service, billing and collection. Diego Tel shall be solely
liable for, and shall not be relieved of any obligation hereunder on account of
amounts it cannot collect from End Users for any reason, and billing adjustments
it grants End Users for any reason including adjustments for fraudulent charges,
directory assistance or any other form of credit.
(D) Fraudulent Calls Diego Tel shall indemnify and hold VIVA harmless from all
costs, expenses, claims or actions arising from fraudulent calls of any nature
which may comprise a portion of the Services to the extent that the party
claiming the calls(s) in question to be fraudulent is (or had been at the time
of the call) an End User of the Services through Diego Tel or an End User of the
Service through Diego Tel's Diego Tel distribution channels. Diego Tel shall not
be excused from paying VIVA for Services provided to Diego Tel or any portion
thereof on the basis that fraudulent calls comprised a corresponding portion of
the Services. In the event VIVA discovers fraudulent calls being made (or
reasonably believes fraudulent calls are being made), nothing contained herein
shall prohibit VIVA from taking immediate action (without notice to Diego Tel)
that is reasonably necessary to prevent such fraudulent calls from taking place,
including without limitation, denying Services to particular ANI's or
terminating Service to or from Specific locations. VIVA shall not, however, have
any obligation to monitor the Service or take any other action to detect
fraudulent calls.
(E) Licenses and State Certifications Diego Tel warrants that in all
jurisdictions in which it provides long distance services that require
licensing, registration or certification, it has obtained the necessary
authority from the appropriate governmental authority. Further, if requested by
VIVA, Diego Tel agrees to provide proof of such authority acceptable to VIVA. In
the event Diego Tel is prohibited, either on a temporary or permanent basis,
from continuing to conduct its telecommunications operations in any
jurisdiction, Diego Tel shall (i) immediately notify VIVA by facsimile or
E-mail, and (ii) send written notice to VIVA within twenty-four (24) hours of
such prohibition.
(F) Tax Exemption Diego Tel will provide VIVA, with a valid tax exemption form
to exempt VIVA, under applicable law, from taxes that would otherwise be paid by
VIVA. VIVA will invoice Diego Tel for taxes that are not covered by a tax
exemption certificate properly file with VIVA.
(G) Forecasts Before Diego Tel's initial order for Service, Diego Tel shall
provide VIVA with a forecast regarding the number of minutes expected to be
terminated or originated in various LATAs, tandems and/or international
destinations so as to enable VIVA to configure optimum network arrangements. If
applicable, forecast for international destinations must be provided by band of
service. Diego Tel will provide VIVA with additional forecasts from time to time
upon VIVAs request which shall not be more frequent than once every three (3)
months. Should the distribution of traffic change, VIVA reserves the right to
modify rates or eliminate service with thirty (30) days notice for domestic
locations and thirty (30) days notice for international locations.
<PAGE> 5
CONFIDENTIAL INFORMATION
(H) PIU Certification Absent the automatic number identification ("ANI") of the
calling party, Diego Tel shall provide VIVA with a written certification (the
"Certification") of the percentage of international minutes of use relevant to
the minutes of traffic to be terminated in the same Mexican state in which the
VIVA POP is located to which the Service Interconnection is made. This
Certification shall be provided by Diego Tel prior to Start of Service for any
Service Interconnection and may be modified from time to time by Diego Tel and
subject to recertification upon the request of VIVA which requests shall not be
made unilaterally by VIVA more than once each calendar quarter. Any such
modification(s) Certification(s) shall be effective as of the first day of any
calendar month and following at least forty-five (45) days notice from Diego
Tel. In the event Diego Tel fails to make such Certification, the relevant
minutes of use will be deemed to be subject to the International Rates provided
for in the pricing exhibit to Diego Tel's Service Schedule (or, if no such rates
are provided, at VIVA's tariffed international rates). Diego Tel agrees to
retain all records which support Diego Tells Certification for a period of one
(1) year or any longer period required by any applicable regulatory
requirements. In the event VIVA or any other third party requires an audit of
VIVA's international/international minutes of traffic, Diego Tel agrees to
cooperate in such audit at its expense and make its call detail records, billing
systems and other necessary information reasonably available to VIVA or any
third party solely for the purpose of verifying Diego Tel's
international/international minutes of traffic. Diego Tel agrees to indemnify
VIVA for any liability VIVA incurs in the event Diego Tel's Certification is
different than that determined by the audit.
5. CHARGES AND PAYMENT TERMS
(A) Taxes Diego Tel acknowledges and understands that all charges stated in
Service Schedules are computed by VIVA exclusive of any applicable use, excise,
gross receipts, sales and privilege taxes, duties, fees or other taxes or
similar liabilities (other than general income or property taxes), whether
charged to or against VIVA or Diego Tel because of the Service furnished to
Diego Tel ("Additional Charges"). Such additional Charges shall be paid by Diego
Tel in addition to all other charges provided for herein.
(B) Modification of Charges VIVA reserves the right to eliminate Services and/or
modify charges for Services, upon not less than thirty (30) days prior notice to
Diego Tel for international Services, which notice will state the effective date
for the elimination or modification.
(C) Charges and Payment Terms VIVA billings for Service are made on a weekly
basis (or such other basis as may be mutually agreed to by the parties)
following Start of Service. Service shall be billed at the rates set forth on
the Service Requests. Diego Tel will pay each VIVA invoice for Service within
five (5) business days of the invoice date set forth on each VIVA invoice to
Diego Tel ("Due Date"). All payments due hereunder shall be made in U.S. dollars
via wire transfer or other such method(s) as may be specified by VIVA from time
to time. If payment is not received by VIVA on or before the Due Date, Diego Tel
shall also pay a late fee in the amount of the lesser of one and one-half
percent (1 1/2%) of the unpaid balance of the Service charges per month or the
<PAGE> 6
CONFIDENTIAL INFORMATION
maximum lawful rate under applicable law.
(D) Billing Disputes Notwithstanding the foregoing, Diego Tel may deduct from
VIVA Service billings for amounts reasonably disputed by Diego Tel, provided
Diego Tel: (i) pays all undisputed charges on or before the Due Date, (ii)
presents a written statement of any billing discrepancies to VIVA in reasonable
detail on or before the Due Date of the invoice in question, and (iii)
negotiates in good faith with VIVA for the purpose of resolving such dispute. In
the event such dispute is resolved in favor of VIVA, Diego Tel agrees to pay
VIVA the disputed amounts together with any applicable late fees within five (5)
days of the resolution. VIVA and Diego Tel agree to make good faith efforts to
promptly resolve any billing disputes. In the event that any dispute cannot be
resolved between the parties, then it shall be settled by arbitration pursuant
to the provisions of Section 16(C) hereof. VIVA shall not be obligated to
consider any Diego Tel notice of billing discrepancies which are received by
VIVA more than ninety (90) days from the Due Date of the invoice in question. In
the event that Diego Tel fails to pay an invoice in full because of a billing
dispute, VIVA shall have the right after giving Diego Tel five (5) days prior
notice, to suspend all or any portion of the Service to Diego Tel until such
time as the dispute is resolved.
(E) Suspension of Services In the event payment in full is not received from
Diego Tel by the Due Date, VIVA shall also have the right, after giving Diego
Tel five (5) days prior notice, to suspend all or any portion of the Service to
Diego Tel until such time as Diego Tel has paid in full all charges then due,
including any late fees. Following such payment VIVA shall be required to
reinstated Service to Diego Tel only upon the provision by Diego Tel to VIVA of
satisfactory assurance (such as a deposit) of Diego Tel's ability to pay for
Service and Diego Tel's advance payment of the cost of reinstituting Service. If
Diego Tel fails to make such payment by a date determined by and acceptable to
VIVA, Diego Tel will be deemed to have canceled the Service suspended effective
as of the date of such suspension. Such cancellation shall not relieve Diego Tel
payment liability for the unexpired portion of the Minimum Service Term relevant
to the canceled Service in question.
(F) Credit Diego Tel's execution of this Agreement signifies Diego Tel's
acceptance of VIVA initial and continuing credit approval procedures and
policies. VIVA reserves the right to withhold initiation or full implementation
of Service under this Agreement pending initial satisfactory credit review and
approval thereof which may be conditioned upon terms specified by VIVA,
including, but not limited to, security for payments due hereunder in the form
of a cash deposit, guarantee, irrevocable letter of credit or other means. Upon
request by VIVA at any time, Diego Tel agrees to provide financial statements or
other indications of financial circumstances. In addition, as may be determined
by VIVA in its sole discretion at any time, if the financial circumstances,
payment history or credit exposure of Diego Tel is or becomes unacceptable, VIVA
may require a new or increased deposit, guarantee or irrevocable letter of
credit, at VIVA's option, to secure Diego Tel payments for the term of the
Agreement. Failure of Diego Tel to provide the requested security within five
(5) days after demand by VIVA shall permit VIVA to suspend service and/or
terminate
<PAGE> 7
CONFIDENTIAL INFORMATION
this Agreement without further notice.
6. WARRANTY. VIVA will use reasonable efforts under the circumstances to
maintain its overall network quality. The quality of Service provided hereunder
shall be consistent with other common carrier industry standards, government
regulations and sound business practices.
VIVA MAKES NO OTHER WARRANTIES ABOUT THE SERVICE PROVIDED HEREUNDER, EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE.
7. CONTINUING RELATIONSHIP AND TERMINATION. This Agreement and the relationship
of the Parties may be terminated in accordance with applicable provisions hereof
and/or the occurrence of any of the following events which shall constitute a
default:
(A) VIVA may terminate this Agreement in the event:
(1) Diego Tel fails to make any payment when due and fails to cure such default
within five (5) days after receipt of notice of such default; or
(2) Diego Tel fails to furnish security within five (5) days after demand by
VIVA pursuant to Section 5(F) hereof.
(B) A party may terminate this Agreement in the event of:
(1) A material breach of this Agreement by the other party (other than as
specified in Section 7(A) above) which is not cured by the breaching party
within fourteen (14) days after receipt of notice of such default;
(2) The adjudication of bankruptcy of the other party under army Federal, state
or municipal bankruptcy or insolvency act, or the appointment of a receiver
or any act or action constituting a general assignment by such other party
of its proprieties and interest for the benefit of its creditors; or
(3) The determination by any governmental entity having jurisdiction over the
Service provided under this Agreement that the relationship of the Parties
and/or Services provided hereunder are contrary to then existing laws.
8. LIABILITY AND INDEMNITY.
(A) Limited Liability. IN NO EVENT WILL ETHER PARTY HERETO BE LIABLE TO THE
OTHER PARTY FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL LOSSES OR
DAMAGES, INCLUDING WITHOUT LIMITATION,
<PAGE> 8
CONFIDENTIAL INFORMATION
LOSS OF REVENUE, LOSS OF DIEGO TEL'S OR CLIENTS, LOSS OF GOODWILL OR LOSS OF
PROFITS ARISING IN ANY MANNER FROM THIS AGREEMENT, THE SERVICE OR THE
PERFORMANCE OR NONPERFORMANCE OF OBLIGATIONS HEREUNDER.
(B) Indemnity In the event parties other than Diego Tel (e.g., End Users and/or
their Diego Tels) shall have use of the Service through Diego Tel, then Diego
Tel agrees to forever indemnify and hold VIVA, its affiliated companies and any
third-party provider or operator of facilities employed in provision of the
Service harmless from and against any and all claims, demand, suits, actions,
losses, damages, assessments or payments which may be asserted by said parties
arising out of or relating to any defect in the Service.
9. FORCE MAJEURE. If either party's performance of this Agreement or any
obligation hereunder is prevented, restricted or interfered with by causes
beyond its reasonable control including, but not limited to, acts of God, fire,
explosion, vandalism, cable out, storm or other similar occurrence, any law,
order, regulation, direction, action or request of the Mexico or United States
government or state or local government, or of any department, agency,
commission, court, bureau, corporation or other. instrumentality of any one or
more said governments, or of any civil or military authority, or by national
emergency, insurrection, riot, war, strike, lockout or work stoppage or other
labor difficulties, supplier failure, shortage, breach or delay, then such party
shall be excused from such performance on a day-to-day basis to the extent of
such restriction or interference. Such party shall use reasonable efforts under
the circumstances to avoid or remove such causes of nonperformance and shall
proceed to perform with reasonable dispatch whenever such causes are removed or
cease. Notwithstanding the foregoing, this provision may not be invoked with
respect to any event listed in Section 7 or to excuse or delay performance of
Sections 5(C), 5(E) or (F).
10. INTERNATIONAL SERVICE. Except with respect to Switched Service specifically
designated as interstate Service or intrastate Service, the rates provided to
Diego Tel in a Service Schedule are applicable only to Switched Service if such
Service is used for carrying international telecommunications (i.e., Service
subject to the jurisdiction of COFETEL and the Federal Communications
Commission). VIVA shall not be obligated to provide Switched Service with end
points within a single state or Switched Service which originates/terminates at
points both of which are situated within a single state. Where VIVA is
authorized to provide international service (i.e., telecommunications
transmission services subject to the jurisdiction of the international
regulatory authorities), VIVA will, at its option, provide international Service
pursuant to applicable state laws, regulations and applicable tariff, if any,
filed by VIVA with state regulatory authorities as required by applicable law.
11. NETWORK PROTECTION. In the event Diego Tel's Service traffic volumes result
in a lower than industry standard completion rate or otherwise adversely affect
the VIVA network (including, but not limited to a looping situation where Diego
Tel's traffic is delivered by VIVA to another carrier
<PAGE> 9
CONFIDENTIAL INFORMATION
for termination and ultimately returned to VIVA), VIVA reserves the right to
block and refuse to accept such adverse traffic at any time, without prior
notice or liability.
12. NOTICES. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be given by: (i) prepaid first class
mail, (ii) facsimile or other means of electronic communication or (iii)
delivery as hereafter provided. Any such notice or other communication, if
mailed by prepaid first-class mail at any time other than during a general
discontinuance of postal service due to strike, lockout or otherwise shall be
deemed to have been received on the fourth business day after the postmarked
date thereof, or if sent by facsimile or other means of electronic
communication, shall be deemed to have been received on the date of
transmission, provided that a hard copy is immediately sent by prepaid first
class mail as aforesaid; or if delivered by hand, shall be deemed to have been
received at the time it is delivered to the applicable address noted below
either to the individual designated below or to an individual at such address
having apparent authority to accept deliveries on behalf of the addressee.
Notice, of change of address shall also be governed by this Section. In the
event of a general discontinuance of postal service due to strike, lock-out, or
otherwise, notices or other communications shall be delivered by hand or sent by
facsimile or other means of electronic communication and shall be deemed to have
been received in accordance with this Second Notices and other communications
shall be addressed as follows:
a) In the case of VIVA
Viva Servicios, S. de R.L. de C.V.
Blvd Agua Calente 4558,
22420 Tijuana, B.C. Mexico
b) In the case of Diego Tel:
Diego Tel, Inc.
5545 Shadow Lawn Drive
Sarasota, FL 34242
Office: (941) 349-3542
Facsimile: (941) 349-3546
c) Billing Address of Diego Tel: Same as Above
13. NO-WAIVER. No term or provision of this Agreement shall be deemed waived and
no breach or default shall be deemed excused unless such waiver or consent shall
be in writing and signed by the party claimed to have waived or consented No
consent by any party to, or waiver of, a breach or default by the other, whether
express or implied, shall constitute a consent to, waiver of, or excuse
<PAGE> 10
CONFIDENTIAL INFORMATION
for any different or subsequent breach or default.
14. PARTIAL INVALIDITY: GOVERNMENT ACTION.
(A) Partial Invalidity If any term or provision of this Agreement shall be found
to be illegal or unenforceable, then, notwithstanding such illegality or
unenforceability, this Agreement shall remain in full force and effect and such
term or provision shall be deemed to be deleted.
(B) Government Action Upon thirty (30) days prior notice, either party shall
have the right, without liability to the other, to cancel an affected portion of
the Service if any material rate or term contained herein and relevant to the
affected Service is substantially changed or found to be unlawful or the
relationship between the parties hereunder is found to be unlawful by order of
the highest court of competent jurisdiction to which the matter is appealed, the
Communications Commission, or other local, state or federal government authority
of competent jurisdiction within any country.
15. USE OF SERVICE. Upon VIVA acceptance of a Service Schedule hereunder, VIVA
will provide the Service specified therein to Diego Tel upon condition that the
Service shall not be used for any unlawful purpose. The provision of Service
will not create a partnership or joint venture between the parties or result in
a joint communications service offering to the third parties.
16. CHOICE-OF LAW: FORUM AND ARBITRATION
(A) Law This Agreement shall be construed under the laws of the Bahamas without
regard to choice of law principles.
(B) Forum Any arbitration, civil action or other legal proceeding arising out of
or relating to this Agreement or any dealings between Diego Tel, on the one
hand, and VIVA and/or VIVA officers, directors, employees, or agents on the
other hand, whether brought before or after any termination of this Agreement,
shall be brought and heard only in Nassau in the Bahamas, and the parties hereto
expressly waive any right under any law or rule to cause any such proceeding to
be brought or heard in any other location. Diego Tel consents to jurisdiction in
any court located in Nassau in the Bahamas in any other legal proceeding arising
out of or relating to this Agreement.
(C) Arbitration Any claim or controversy arising out of or relating to this
Agreement or any dealings between Diego Tel, on one hand, and VIVA and/or VIVA's
officers, directors, employees or agents, on the other hand, shall be resolved
by final and binding arbitration before J.A.M.S./ENDISPUTE ("JAMS") in
accordance with the then obtaining Comprehensive Arbitration Pules and
Procedures of JAMS, as modified herein. The arbitrator may not limit, expand or
otherwise modify the terms of this Agreement and shall not have authority to
award punitive or other non-compensatory damages to either party. In order to
provide an expeditious resolution of any dispute, the parties agree that: (i) if
the parties have not agreed on an arbitrator within ten (10) days
<PAGE> 11
CONFIDENTIAL INFORMATION
after the date of commencement of the arbitration, JAMS shall designate a single
arbitrator and that designation shall be final and binding; and (ii) absent
extraordinary circumstances, the arbitration hearing shall begin within ninety
(90) days from the date of commencement of arbitration, and shall continue each
business day thereafter until completed. The award in such arbitration
proceeding may be entered in any Court specified in Section 16(B) of this
Agreement.
17. PROPRIETARY INFORMATION.
(A) Confidential Information The parties understand and agree that the terms and
conditions of this Agreement, all documents referenced (including invoices to
Diego Tel for Service provided hereunder) herein, communications between the
parties regarding this Agreement of the Service to be provided hereunder
(including price quotes to Diego Tel for any Service proposed to be provided or
actually provided hereunder) and all information regarding the Diego Tels of
Diego Tel, as well as such information relevant to any other agreement between
the parties (collectively "Confidential Information"), are confidential as
between Diego Tel and VIVA.
(B) Limited Disclosure A party shall not disclose Confidential Information
unless subject to discovery or disclosure. pursuant to legal process, or to any
other party other than the directors, officers, and employees of a party or
agents of a party including their respective brokers, lenders, insurance carries
or prospective purchasers who have specifically agreed in writing to
non-disclosure of the terms and conditions hereof. Any disclosure hereof
required by legal process shall only be made after providing the non-disclosing
party with notice thereof in order to permit the non-disclosing party to seek an
appropriate protective order or exemption. Violation by a party or its agents of
the foregoing provisions shall entitle the non-disclosing patty, at its option,
to obtain injunctive relief without a showing of irreparable harm or injury and
without bond.
(C) Press Release The parties further agree that any press release,
advertisement or publication generated by a party regarding this Agreement, the
Service provided hereunder or in which a party desires to mention the name of
the other party or the other party's parent or affiliated company(ies), will be
submitted to the non-publishing party for its written approval prior to
publication.
(D) Survival and Confidentiality The provisions of this Section 17 will be
effective as of the date of this Agreement and remain in full force and effect
for a period equal to the longer of (i) one (1) year following the effective
date of this Agreement; or (ii) one (1) year following the termination of all
Service hereunder.
18. SUCCESSORS AND ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto. and their respective successors or assigns,
provided, however, that Diego Tel shall not assign or transfer its rights or
obligations under this Agreement without the prior written consent of VIVA,
which shall not unreasonably be withheld, and further provided that any
assignment or transfer without such consent shall be void.
<PAGE> 12
CONFIDENTIAL INFORMATION
19. GENERAL.
(A) Survival of Terms The terms and provisions contained in this Agreement that
by their sense and context are intended to survive the performance thereof by
the parties hereto shall so survive the completion of performance and
termination of this Agreement, including without limitation, provisions for
arbitration, forum selection indemnification and the making of any and all
payments due hereunder.
(B) Headings Descriptive headings in the Agreement are for convenience only and
shall not affect the construction of this Agreement.
(C) Industry Terms Words having well-know technical or trade meanings shall be
so construed, and all listings of items shall not be taken to be exclusive, but
shall include other items, whether similar or dissimilar to those listed, as the
context reasonably requires.
(D) Rule of Construction No rule of construction requiring interpretation
against the draftsman hereof shall apply in the interpretation of this
Agreement.
(E) Legal Fees In any arbitration, civil action or other legal proceeding
arising out of or relating to this Agreement, the prevailing party shall be
awarded its costs and reasonable attorneys' fees.
(F) Place of Acceptance This Agreement shall be deemed to have been accepted and
entered into in Nassau in the Bahamas.
20. ENTIRE AGREEMENT. This Agreement consists of: (i) all the terms and
conditions contained herein; in executed Service Schedules that are identified
herewith; (ii) and all documents incorporated herein specifically by reference.
This Agreement constitutes the complete and exclusive statement of the
understandings between the parties and supersedes all proposals and prior
agreements (oral or written) between the parties relating to Service provided
hereunder. No subsequent agreement between the parties concerning the Service
shall be effective or binding unless it is made in writing and subscribed to by
authorized representatives of Diego Tel and VIVA.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
written above.
Viva Servicios, S. de R.L. de C. V., a Baja Diego Tel, Inc.,
California, Mexico, corporation a Nevada, USA, corporation
By: /s/ David L. Wallace By: /s/ David L. Wallace
---------------------------------- ----------------------------
David L. Wallace David L. Wallace
Its: President Its: President
<PAGE> 13
CONFIDENTIAL INFORMATION
SERVICE SCHEDULE
(VIVA TERMINATION SERVICE)
[THE CONFIDENTIAL PORTION OF THIS DOCUMENT
HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.]
<PAGE> 14
CONFIDENTIAL INFORMATION
THIS EXHIBIT A IS NOT TO BE DISCLOSED UNDER ANY CIRCUMSTANCES.
EXHIBIT A
[THE CONFIDENTIAL PORTION OF THIS DOCUMENT
HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION.]
<PAGE> 1
COMPUTATION OF PER SHARE EARNINGS
---------------------------------
The net Income (Loss) Per Share is computed based on the total number
of shares of Class A Common Stock issued and outstanding as of November 30,
1998. As of that date, there was a total of 9,573,487 shares of Class A Common
Stock outstanding. In October, 1998, the United States Bankruptcy Court approved
a Plan of Reorganization. Pursuant to that Plan, all Class A Stock issued
subsequently to May 3, 1996, was deemed to have been rescinded and voided,
except as to shareholders who filed a valid proof of interest on or before
November 10, 1997. In addition, the Plan of Reorganization reinstated all
shareholders of record as of May 3, 1996.
As of May 3, 1996, a total of 8,808,487 shares of Class A Common Stock
were issued and outstanding. Shareholders filed valid proofs of interest for an
additional 2,483,008 shares of Class A Common Stock, but as of November 30,
1998, these shares had not been reissued.
Pursuant to the Plan of Reorganization, the Company has issued a total
of 500,000 shares of Class A Common Stock to the shareholders owning Series B
Preferred Stock in exchange for 100% of the issued and outstanding Series B
Preferred Stock. In addition, 265,000 shares of Class A Common Stock had been
issued to directors for services rendered prior to and after confirmation of the
Plan of Reorganization.
The total number of shares of Class A. Common Stock deemed to be issued
and outstanding as of November 30, 1998 was as follows:
Shares
----------
8,808,487 May 3, 1996 ledger
265,000 Director shares
500,000 Purchase of Series B Stock
----------
9,573,487
The computation set forth above does not include the 2,483,008 shares
of Class A Common Stock to be issued to shareholders who file a valid proof of
interest because such shares had not been issued as of November 30, 1998.
As of November 30, 1998, a total of 12,568,495 shares of Class B Stock
were issued and outstanding. Pursuant to the Plan of Reorganization, these
shares are to be converted into Class A. Common Stock in an amount equal to
50.0% of the issued and outstanding Class A Common Stock subsequent to
implementation of the Plan of Reorganization. This conversion had not occurred
as of November 30, 1998.
The loss set forth in the unaudited Consolidated Statement of
Operations is $338,946. The loss was divided by the total number of shares of
Class A Common Stock issued and outstanding as of November 30, 1998 (9,573,487
shares) which results in a loss per share of $.04.
<PAGE> 1
Exhibit 99a
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
APRIL 1997
The Trustee is filing an incomplete Monthly Operating Report due to the lack of
complete records. The former officers of PowerTel, USA. Inc. have not cooperated
with the Trustee by providing the necessary information. The Books and Records
are missing. Therefore, it is impossible for the Trustee to file a complete
Monthly Operating Report.
/s/ Barry L. Solomon
------------------------------------
BARRY L. SOLOMON, TRUSTEE
<PAGE> 2
INCOME STATEMENT
(Accrual Basis)
(Month/Year)
4/97
<TABLE>
<CAPTION>
Current Year to
Month Date
------- -------
<S> <C> <C>
Income $40.00 $40.00
Cost of Goods Sold
Beginning Inventory $ $
Inventory Purchases $ $
Ending inventory $ $
Total Costs of Goods Sold $40.00 $40.00
Operating Expenses
Salaries and Wages $ $
Employee Benefits $ $
Equipment Lease Payments $ $
Rent $ $
Secured Debt Payments $ $
Utilities $ $
Telephone $ $
Repairs & Maintenance $ $
Misc $ $
Advertising $ $
Travel & Entertainment $ $
Professional Fees $ $
Depreciation $ $
Insurance: Liability $ $
Property $ $
Vehicle $ $
Worker's Compensation $ $
Other $ $
Taxes: Payroll $ $
Sales $ $
Income $ $
Real Property $ $
Personal Property $ $
Total Operating Expenses $ -0- $40.00
Total Profit (Loss) from Operations $40.00 $40.00
Other Income (Expense) $ $
Gain (Loss) on Sale of Assets $ $
Interest Expense $ $
Interest Income $ .08 $ .08
Dividend income $ $
Total $ .08 $ .08
Total Profit (Loss) for Month $40.08 $40.08
</TABLE>
(FORM NO. 2)
<PAGE> 3
INCOME STATEMENT
Schedule of Professional Fees
<TABLE>
<CAPTION>
Current Prepayment
Fees Balance
Accrued (If any)
<S> <C> <C>
Name of Professional:
Attorneys:
Accountants:
Other:
</TABLE>
<PAGE> 4
CASH FLOW STATEMENT
(Month/Year)
4/97
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
------- -----------
<S> <C> <C>
Receipts:
Sales (Cash Only) $ 40.00 $
Collections of Accounts Receivable $ $
Other Income $ .08 $
Total Receipts $ 40.08 $
Disbursements:
Purchases and Inventory $ $
Salaries and Wages $ $
Employee Benefits $ $
Equipment Lease Payments $ $
Rent $ $
Secured Debt Payments $ $
Utilities $ $
Telephone $ $
Repairs & Maintenance $ $
Misc. Office Expense $ $
Advertising $ $
Travel & Entertainment $ $
Professional Fees $ $
Depreciation $ $
Insurance: Liability $ $
Property $ $
Vehicle $ $
Worker's Compensation $ $
Other $ $
Taxes: Payroll $ $
Sales $ $
Income $ $
Real Property $ $
Personal Property $ $
Total Disbursements $ $
Cash Flow $ 40.08 $
</TABLE>
(FORM NO. 3)
<PAGE> 5
RECAPITULATION
4/97
<TABLE>
<S> <C>
Balance from Prior Month
General Account $ -0-
Bank CHASE
Branch New York
Account #:
Payroll Account $
Bank
Branch
Account #
Tax Account $
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account $ 40.08
Payroll Account: $
Tax Account: $
</TABLE>
(FORM NO. 3)
<PAGE> 6
PROJECTED CASH FLOW STATEMENT
(Month/Year)
<TABLE>
<CAPTION>
Next Following
Month Month
<S> <C> <C>
Projected Receipts:
Sales (Cash Only) $____________ $____________
Collections of Accounts Receivable $____________ $____________
Other Income $____________ $____________
Total Projected Receipts: $____________ $____________
Projected Disbursements:
Purchase and Inventory $____________ $____________
Salaries and Wages $____________ $____________
Employee Benefits $____________ $____________
Equipment Lease Payments $____________ $____________
Rent $____________ $____________
Secured Debt Payments $____________ $____________
Utilities $____________ $____________
Telephone $____________ $____________
Repairs & Maintenance $____________ $____________
Misc. Office Expense $____________ $____________
Advertising $____________ $____________
Travel & Entertainment $____________ $____________
Professional Fees $____________ $____________
Depreciation $____________ $____________
Insurance: Liability $____________ $____________
Property $____________ $____________
Vehicle $____________ $____________
Workers' Compensation $____________ $____________
Other _____________________ $____________ $____________
Taxes: Payroll $____________ $____________
Sales $____________ $____________
Income $____________ $____________
Real Property $____________ $____________
Personal Property $____________ $____________
Total Projected Disbursements $____________ $____________
Projected Cash Flow $____________ $____________
</TABLE>
(FORM NO. 4)
<PAGE> 7
BALANCE SHEET
(Month/Year)
4/97
<TABLE>
<CAPTION>
Assets
<S> <C> <C> <C>
Current Assets:
Cash $ 40.08
Accounts Receivable $
Allowance for Doubtful
Accounts $
Accounts Receivable (Net) $
Inventory $
Prepaid Expenses $
Total Current Assets $ 40.08
Property and Equipment (Fair Market Value)
Real Property $
Machinery and Equipment $
Furniture and Fixtures $
Office Equipment $
Leasehold Improvements $
Vehicles $
Other $
Total Property and Equipment -0-
Total Assets: $ 40.08
</TABLE>
(FORM NO. 5)
<PAGE> 8
LIABILITIES
4/97
Postpetition Liabilities (Accrued and Unpaid)
<TABLE>
<S> <C> <C>
Salaries & Wages $
Payroll Taxes $
Sales Taxes $
Income Taxes $
Real Property Taxes $
Personal Property Taxes $
Accounts Payable $
Postpetition Real Property
Lease Arrearages $
Postpetition Equipment
Lease Arrearages $
Accrued Professional Fees
Other $
$
Total Postpetition Liabilities $ -0-
Prepetition Liabilities
Priority Debt $
Secured Debt $
Unsecured Debt $
Total Prepetition Liabilities $ -0-
Shareholder's Equity
Common Stock $
Paid-In Capital $
Retained Earnings $ 40.08
Total Shareholder's Equity $ 40.08
Total Liabilities & Equity $ 40.08
</TABLE>
(FORM NO. 5)
<PAGE> 9
MONTHLY QUESTIONNAIRE
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying in
chronological (or reverse chronological) order every debt which came due after
the commencement of the bankruptcy case but has not been paid, and specifying
the creditor by name and address, the nature of the debt (e.g., rent,
advertising, wages, etc.), the amount owed and the date on which the obligation
came due. Provide summary information below for both accounts payable and
accounts receivable:
Accounts Payable Accounts Receivable
Less Than 31 Days Past Due ________________ ________________
31 to 60 Days Past Due ________________ ________________
61 to 90 Days Past Due ________________ ________________
91 to 120 Days Past Due ________________ ________________
Over 120 Days Past Due ________________ ________________
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and address, and provide the
requested information. Where there is a postpetition stipulation or court order
governing the creditor's treatment, respond on the basis of that stipulation or
order; otherwise, respond on the basis of the prepetition contract or lease.
<TABLE>
<CAPTION>
Post Petitions Payments
Made Missed
Payment Periodic Date of
Creditor Name Period Payment Last
Amount (mo/wk) Amount Payment # Amt. # Amt.
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(FORM NO. 6)
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III.TAX LIABILITY
Gross Payroll Expense for Report Month: $
Gross Sales Subject to Sales Tax for Report Month $
<TABLE>
<CAPTION>
Postpetition Taxes
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
<S> <C> <C> <C> <C>
Federal Payroll & Withholding
State Payroll & Withholding
State Sales & Use
</TABLE>
IV. INSURANCE COVERAGE
<TABLE>
<CAPTION>
Policy
Carrier/ Amount of Expiration Policy Paid
Agent Name Coverage Date Through Date
<S> <C> <C> <C> <C>
Worker's Compensation Liability
Fire & Extended Coverage
Property
Theft
Vehicle
Life (Beneficiary):
Other (specify):
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization under a
Bankruptcy Court order?
If the answer is yes, identify each person paid, the date and amount of such
payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case, made
any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court?
If the answer is yes, identify each person paid, the date and amount of such
payment(s) and the basis for each such payment.
VI. Narrative
Provide a brief narrative report of any significant events outside of the
ordinary course of business which occurred during the Report Month:
(FORM NO. 6)
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Total Total Quarterly
Quarter Disbursement Quarterly Amount Date Fees Due But
Ending During Quarter Fee Paid Paid Not Paid
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 12
DATE SUBMITTED: 06/26/97 PAGE 1
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
<TABLE>
<S> <C>
CASE : 97-30265 G POWERTEL USA, INC. TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 84-0897771, DEPOSITORY : CHEMICAL BANK
DATE FILED : 02/26/97 ACCOUNT : 312731324365 - MONEY MARKET ACCOUNT
PERIOD ENDING : 01/01/00 - 05/31/97 BOND AMOUNT : BLANKET BOND
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
TANS. {REF #}/ MONEY MARKET
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
03/28/97 SMITH, KATZENSTEIN & FURLOW CERTIFICATES OF STOCK 40.00 40.00
OWNERSHIP
04/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 0.08 40.08
MANHATTAN BANK on 4/30/97
Current Interest Rate is 2.6000%
05/29/97 {1} BANK OF AMERICA CLOSE BANK ACCOUNTS 11.42 51.50
05/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 0.08 51.58
MANHATTAN BANK on 05/30/97;
Current Interest Rate is 2.6000%
------ ----- -----
ACCOUNT TOTALS: $51.58 $0.00 $51.58
Less Bank Transfers: $ 0.00 $0.00
------ -----
NET RECEIPTS/DISBURSEMENTS: $51.58 $0.00
CASE TOTALS: $51.58 $0.00 $51.58
Less Bank Transfers $ 0.00 $0.00
------ -----
NET RECEIPTS/DISBURSEMENTS: $51.58 $0.00
</TABLE>
<TABLE>
<S> <C>
Gross Receipts: $51.58
Less Payments to Debtor: $ 0.00
------
Net Estates: $51.58
</TABLE>
<PAGE> 13
DATE SUBMITTED: 06/26/97 PAGE 1
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
<TABLE>
<S> <C>
CASE : 97-30265 A SAN JACINTO POWER CORP TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 88-0309701, DEPOSITORY : CHEMICAL BANK
DATE FILED : 02/26/97 ACCOUNT : 312750667865 - MONEY MARKET ACCOUNT
PERIOD ENDING : 01/01/00 - 05/31/97 BOND AMOUNT : BLANKET BOND
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TANS. {REF #}/ MONEY MARKET
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
05/06/97 SOUTHERN CALIFORNIA EDISON PURCHASED 330,000 KWH OF 5,919.31 5,919.31
P O BOX 700 ENERGY 3-1-97 TO 4-1-97
ROSEMEAD, CA 91770
05/16/97 101 DESERTRON ELECTRIC, INC CONTRACT -2,500.00 3,419.31
P O BOX 1060
N PALM SPRINGS, CA 92258-1060
05/27/97 102 CONTRACTORS CRANE SERVICES, LLC REPAIRS -210.00 3,209.31
P O BOX 1156
N PALM SPRINGS, CA 92258
05/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 8.53 3,217.84
MANHATTAN BANK on 05/30/97;
Current Interest Rate is 2.6000%
---- --------- ---------- ---------
ACCOUNT TOTALS: $5,927.84 $-2,710.00 $3,217.84
Less Bank Transfers: $ 0.00 $ 0.00
--------- ----------
NET RECEIPTS/DISBURSEMENTS: $5,927.84 $-2,710.00
CASE TOTALS: $5,927.84 $-2,710.00 $3,217.84
Less Bank Transfers $ 0.00 $ 0.00
--------- ----------
NET RECEIPTS/DISBURSEMENTS: $5,927.84 $-2,710.00
</TABLE>
<TABLE>
<S> <C>
Gross Receipts: $5,927.84
Less Payments to Debtor: $ 0.00
---------
Net Estates: $5,927.84
</TABLE>
<PAGE> 1
Exhibit 99b
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
MAY 1997
The Trustee is filing an incomplete Monthly Operating Report due to the lack of
complete records. The former officers of PowerTel USA, Inc. have not cooperated
with the Trustee by providing the necessary information. The books and Records
are missing. Therefore, it is impossible for the Trustee to file a complete
Monthly Operating Report.
/s/ Barry L. Solomon
--------------------------------------
BARRY L. SOLOMON, TRUSTEE
<PAGE> 2
INCOME STATEMENT
(Accrual Basis)
(Month/Year)
5/97
<TABLE>
<CAPTION>
Current Year to
Month Date
------------ ------------
<S> <C> <C>
Income $ 5930.73 $ 5970.53
------------ ------------
Cost of Goods Sold
Beginning Inventory $ $
------------ ------------
Inventory Purchases $ $
------------ ------------
Ending inventory $ $
------------ ------------
Total Costs of Goods Sold $ -0- $ -0-
------------ ------------
Operating Expenses
Salaries and Wages $ $
------------ ------------
Employee Benefits $ $
------------ ------------
Equipment Lease Payments $ $
------------ ------------
Rent $ $
------------ ------------
Secured Debt Payments $ $
------------ ------------
Utilities $ $
------------ ------------
Telephone $ $
------------ ------------
Repairs & Maintenance $ 2710.00 $ 2710.00
------------ ------------
Misc. Office Expense $ $
------------ ------------
Advertising $ $
------------ ------------
Travel & Entertainment $ $
------------ ------------
Professional Fees $ $
------------ ------------
Depreciation $ $
------------ ------------
Insurance: Liability $ $
------------ ------------
Property $ $
------------ ------------
Vehicle $ $
------------ ------------
Worker's Compensation $ $
------------ ------------
Other___________________ $ $
------------ ------------
Taxes: Payroll $ $
------------ ------------
Sales $ $
------------ ------------
Income $ $
------------ ------------
Real Property $ $
------------ ------------
Personal Property $ $
------------ ------------
Total Operating Expenses $ 2710.00 $ 2710.00
------------ ------------
Total Profit (Loss) from Operations $ 3220.73 $ 3260.73
------------ ------------
Other Income (Expense) $ $
------------ ------------
Gain (Loss) on Sale of Assets $ $
------------ ------------
Interest Expense $ $
------------ ------------
Interest Income $ 8.61 $ 8.69
------------ ------------
Dividend income $ $
------------ ------------
Total $ 8.61 $ 8.69
------------ ------------
Total Profit (Loss) for Month $ 3229.34 $ 3269.42
------------ ------------
</TABLE>
(Form No. 2)
<PAGE> 3
INCOME STATEMENT
SCHEDULE OF PROFESSIONAL FEES
<TABLE>
<CAPTION>
Current Prepayment
Fees Balance
Accrued (If any)
------------ ------------
<S> <C> <C>
Name of Professional:
Attorneys:
Accountants:
Other:
</TABLE>
(Form No. 2)
<PAGE> 4
CASH FLOW STATEMENT
(Month/Year)
5/97
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
------------ ------------
<S> <C> <C>
Receipts:
Sales (Cash Only) $ 5930.73 $
------------ ------------
Collections of Accounts Receivable $ $
------------ ------------
Other Income $ 8.61 $
------------ ------------
Total Receipts $ 5939.34 $
------------ ------------
Disbursements:
Purchases and Inventory $ $
------------ ------------
Salaries and Wages $ $
------------ ------------
Employee Benefits $ $
------------ ------------
Equipment Lease Payments $ $
------------ ------------
Rent $ $
------------ ------------
Secured Debt Payments $ $
------------ ------------
Outside Services $ $
------------ ------------
Telephone $ $
------------ ------------
Repairs & Maintenance $ 2710.00 $
------------ ------------
Misc. Office Expense $ $
------------ ------------
Advertising $ $
------------ ------------
Travel & Entertainment $ $
------------ ------------
Professional Fees $ $
------------ ------------
Court Costs $ $
------------ ------------
Insurance: Liability $ $
------------ ------------
Property $ $
------------ ------------
Vehicle $ $
------------ ------------
Worker's Compensation $ $
------------ ------------
Other $ $
------------ ------------
Taxes: Payroll $ $
------------ ------------
Sales $ $
------------ ------------
Income $ $
------------ ------------
Real Property $ $
------------ ------------
Personal Property $ $
------------ ------------
Total Disbursements $ 2710.00 $
------------ ------------
Cash Flow $ 3229.34 $
------------ ------------
</TABLE>
(Form No. 3)
<PAGE> 5
RECAPITULATION
5/97
<TABLE>
<S> <C>
Balance from Prior Month
General Account $ 40.08
--------
Bank: CHASE
Branch: New York
Account #: 312731324365
SAN JACINTO POWER $ .00
--------
Bank: CHASE
Branch: New York
Account #: 312750667865
Tax Account $
--------
Bank:
Branch:
Account #:
Balance to Carry Forward to Next Month:
General Account $ 51.58
--------
SAN JACINTO POWER $3217.84
--------
Tax Account: $
--------
</TABLE>
(Form No. 3)
<PAGE> 6
PROJECTED CASH FLOW STATEMENT
(Month/Year)
<TABLE>
<CAPTION>
Next Following
Month Month
------------ ------------
<S> <C> <S>
Projected Receipts:
Sales (Cash Only) $ $
------------ ------------
Collections of Accounts Receivable $ $
------------ ------------
Other Income $ $
------------ ------------
Total Projected Receipts $ $
------------ ------------
Projected Disbursements:
Purchases and Inventory $ $
------------ ------------
Salaries and Wages $ $
------------ ------------
Employee Benefits $ $
------------ ------------
Equipment Lease Payment $ $
------------ ------------
Rent $ $
------------ ------------
Secured Debt Payments $ $
------------ ------------
Utilities $ $
------------ ------------
Telephone $ $
------------ ------------
Repairs & Maintenance $ $
------------ ------------
Misc. Office Expense $ $
------------ ------------
Advertising $ $
------------ ------------
Travel & Entertainment $ $
------------ ------------
Professional Fees $ $
------------ ------------
Depreciation $ $
------------ ------------
Insurance: Liability $ $
------------ ------------
Property $ $
------------ ------------
Vehicle $ $
------------ ------------
Worker's Compensation $ $
------------ ------------
Other $ $
------------ ------------
Taxes: Payroll $ $
------------ ------------
Sales $ $
------------ ------------
Income $ $
------------ ------------
Real Property $ $
------------ ------------
Personal Property $ $
------------ ------------
Total Projected Disbursements $ $
------------ ------------
Projected Cash Flow $ $
------------ ------------
</TABLE>
(Form No. 4)
<PAGE> 7
BALANCE SHEET
(MONTH/YEAR)
5/97
Assets
<TABLE>
<S> <C> <C> <C>
Current Assets:
Cash $ 3269.42
-------------
Accounts Receivable $
-------------
Allowance for Doubtful
Accounts $
-------------
Accounts Receivable (Net) $
-------------
Inventory $
-------------
Prepaid Expenses $
-------------
Total Current Assets $ 3269.42
-------------
Property and Equipment (Fair Market Value)
Real Property $
-------------
Machinery and Equipment $
-------------
Furniture and Fixtures $
-------------
Office Equipment $
-------------
Leasehold Improvements $
-------------
Vehicles $
-------------
Other___________________ $
-------------
Total Property and Equipment $ -0-
-------------
Total Assets: $ 3269.42
-------------
</TABLE>
(Form No. 5)
<PAGE> 8
LIABILITIES
5/97
<TABLE>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
-------------
Payroll Taxes $
-------------
Sales Taxes $
-------------
Income Taxes $
-------------
Real Property Taxes $
-------------
Personal Property Taxes $
-------------
Accounts Payable $
-------------
Postpetition Real Property
Lease Arrearages $
-------------
Postpetition Equipment
Lease Arrearages $
-------------
Accrued Professional Fees
Other________________________ $
-------------
__________________________ $
-------------
Total Postpetition Liabilities $ -0-
-------------
Prepetition Liabilities
Priority Debt $
-------------
Secured Debt $
-------------
Unsecured Debt $
-------------
Total Prepetition Liabilities $
-------------
Shareholder's Equity
Common Stock $
-------------
Paid-In Capital $
-------------
Retained Earnings $ 3269.42
-------------
Total Shareholder's Equity $ 3269.42
-------------
Total Liabilities & Equity $ 3269.42
-------------
</TABLE>
(Form No. 5)
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying in
chronological (or reverse chronological) order every debt which came due
after the commencement of the bankruptcy case but has not been paid, and
specifying the creditor by name and address, the nature of the debt
(e.g., rent, advertising, wages, etc.), the amount owed and the date on
which the obligation come due. Provide summary information below for
both accounts payable and accounts receivable:
<TABLE>
<CAPTION>
Accounts Payable Accounts Receivable
---------------- -------------------
<S> <C> <C>
Less Than 31 Days Past Due
31 to 60 Days Past Due
61 to 90 Days Past Due
91 to 120 Days Past Due
Over 120 Days Past Due
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and address, and
provide the requested information. Where there is a postpetition
stipulation or court order governing the creditor's treatment, respond
on the basis of that stipulation or order; otherwise, respond on the
basis of the prepetition contract or lease.
<TABLE>
<CAPTION>
Payment Periodic Date of Post Petition Payments
Creditor Name Period Payment Last Made Missed
and Address (mo/wk) Amount Payment # Amt. # Amt.
- ---------------- ------- ------ ------- ------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(Form No. 6)
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C>
Gross Payroll Expense for Report Month: $
Gross Sales Subject to Sales Tax for Report Month $
</TABLE>
<TABLE>
<CAPTION>
Postpetition Taxes
Date Amount Due But Accrued But
Paid Paid Not Paid Not Due
---- ------ -------- -----------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding
State Payroll & Withholding
State Sales & Use
</TABLE>
IV. INSURANCE COVERAGE
<TABLE>
<CAPTION>
Policy
Carrier/ Amount of Expiration Policy Paid
Agent Name Coverage Date Through Date
---------- --------- ---------- ------------
<S> <C> <C> <C> <C>
Worker's Compensation Liability
Fire & Extended Coverage
Property
Theft
Vehicle
Life (Beneficiary):
Other (specify):
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization
under a Bankruptcy Court order?
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court?
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
VI. Narrative
Provide a brief narrative report of any significant events outside of
the ordinary course of business which occurred during the Report Month:
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Total Total Quarterly
Quarter Disbursement Quarterly Amount Date Fees Due But
Ending During Quarter Fee Paid Paid Not Paid
- ------- -------------- --------- ------ ---- ---------------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 12
DATE SUBMITTED: 06/26/97
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
<TABLE>
<CAPTION>
<S> <C>
CASE : 97-30265 G POWERTEL USA, INC. TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 84-0897771, DEPOSITORY : CHEMICAL BANK
DATE FILED : 02/26/97 ACCOUNT : 312731324365 - MONEY MARKET ACCOUNT
PERIOD ENDING : 01/01/00 - 05/31/97 BOND AMOUNT : BLANKET BOND
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TANS. {REF #}/ MONEY MARKET
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
03/28/97 SMITH, KATZENSTEIN & FURLOW CERTIFICATES OF STOCK 40.00 40.00
OWNERSHIP
04/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 0.08 40.08
MANHATTAN BANK on 4/30/97
Current Interest Rate is 2.6000%
05/29/97 {1} BANK OF AMERICA CLOSE BANK ACCOUNTS 11.42 51.50
05/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 0.08 51.58
MANHATTAN BANK on 05/30/97;
Current Interest Rate is 2.6000%
------ ----- ------
ACCOUNT TOTALS: $51.58 $0.00 $51.58
Less Bank Transfers: $ 0.00 $0.00
------ -----
NET RECEIPTS/DISBURSEMENTS: $51.58 $0.00
CASE TOTALS: $51.58 $0.00 $51.58
Less Bank Transfers $ 0.00 $0.00
------ -----
NET RECEIPTS/DISBURSEMENTS: $51.58 $0.00
Gross Receipts: $51.58
Less Payments to Debtor: $ 0.00
Net Estates: $51.58
</TABLE>
<PAGE> 13
DATE SUBMITTED: 06/26/97
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
<TABLE>
<S> <C>
CASE : 97-30265A G SAN JACINTO POWER CORP TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 88-0309701, DEPOSITORY : CHEMICAL BANK
DATE FILED : 02/26/97 ACCOUNT : 312750667865 - MONEY MARKET ACCOUNT
PERIOD ENDING : 01/01/00 - 05/31/97 BOND AMOUNT : BLANKET BOND
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
TANS. {REF #}/ MONEY MARKET
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
05/06/97 SOUTHERN CALIFORNIA EDISON PURCHASED 330,000 KWH OF 5,919.31 5,919.31
P O BOX 700 ENERGY 3-1-97 TO 4-1-97
ROSEMEAD, CA 91770
05/16/97 101 DESERTRON ELECTRIC, INC CONTRACT -2,500.00 3,419.31
P O BOX 1060
N PALM SPRINGS, CA 92258-1060
05/27/97 102 CONTRACTORS CRANE SERVICES, LLC REPAIRS -210.00 3,209.31
P O BOX 1156
N PALM SPRINGS, CA 92258
05/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 8.53 3,217.84
MANHATTAN BANK on 05/30/97;
Current Interest Rate is 2.6000%
--------- ---------- ---------
ACCOUNT TOTALS: $5,927.84 $-2,710.00 $3,217.84
Less Bank Transfers: $ 0.00 $ 0.00
--------- ----------
NET RECEIPTS/DISBURSEMENTS: $5,927.84 $-2,710.00
CASE TOTALS: $5,927.84 $-2,710.00 $3,217.84
Less Bank Transfers $ 0.00 $ 0.00
--------- ----------
NET RECEIPTS/DISBURSEMENTS: $5,927.84 $-2,710.00
Gross Receipts: $5,927.84
Less Payments to Debtor: $ 0.00
Net Estates: $5,927.84
</TABLE>
<PAGE> 1
Exhibit 99c
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
JUNE 1997
The Trustee is filing an incomplete Monthly Operating Report due to the lack of
complete records. The former officers of PowerTel USA., Inc. have not cooperated
with the Trustee by providing the necessary information. The Books and Records
are missing. Therefore, it is impossible for the Trustee to file a complete
Monthly Operating Report.
/s/ Barry L. Solomon
----------------------------------
BARRY L. SOLOMON, TRUSTEE
<PAGE> 2
INCOME STATEMENT
(Accrual Basis)
(Month/Year)
June 1997
<TABLE>
<CAPTION>
Current Year
Month to Date
----- -------
<S> <C> <C>
Income $ 208851.46 $ 214822.19
----------- -----------
Cost of Goods Sold
Beginning Inventory $ $
-------------- ------------
Inventory Purchases $ $
-------------- ------------
Ending inventory $ $
-------------- ------------
Total Costs of Goods Sold $ $
-------------- ------------
Operating Expenses
Salaries and Wages $ $
-------------- ------------
Employee Benefits $ $
-------------- ------------
Equipment Lease Payment $ $
-------------- ------------
Rent $ 153.00 $ 153.00
-------------- ------------
Secured Debt Payments $ $
-------------- ------------
Utilities $ $
-------------- ------------
Telephone $ $
-------------- ------------
Repairs & Maintenance $ $ 2710.00
-------------- ------------
Misc. Office Expense $ $
-------------- ------------
Advertising $ $
-------------- ------------
Travel & Entertainment $ $
-------------- ------------
Professional Fees $ $
-------------- ------------
Depreciation $ $
-------------- ------------
Insurance: Liability $ $
-------------- ------------
Property $ $
-------------- ------------
Vehicle $ $
-------------- ------------
Worker's Compensation $ $
-------------- ------------
Other - ______________ $ $
-------------- ------------
Taxes: Payroll $ $
-------------- ------------
Sales $ $
-------------- ------------
Income $ $
-------------- ------------
Real Property $ $
-------------- ------------
Personal Property $ $
-------------- ------------
Total Operating Expenses $ 153.00 $ 2863.00
-------------- ------------
Total Profit (Loss) from Operations $ 208698.46 $ 211959.19
-------------- ------------
Other Income (Expense)
Gain (Loss) on Sale of Assets $ $
-------------- ------------
Interest Expense $ 273.34 $ 282.03
-------------- ------------
Interest Income $ $
-------------- ------------
Dividend income $ $
-------------- ------------
Total $ 273.74 $ 282.03
-------------- ------------
Total Profit (Loss) for Month $ 208971.80 $ 212241.22
-------------- ------------
</TABLE>
(Form No. 2)
<PAGE> 3
INCOME STATEMENT
SCHEDULE OF PROFESSIONAL FEES
<TABLE>
<CAPTION>
CURRENT PREPAYMENT
FEES BALANCE
ACCRUED (IF ANY)
------- --------
<S> <C> <C>
Name of Professional:
Attorneys:
Accountants:
Other:
</TABLE>
(Form No. 2)
<PAGE> 4
CASH FLOW STATEMENT
(Month/Year)
June 1997
<TABLE>
<CAPTION>
Projected
Reported For Current
Month Month
----- -----
<S> <C> <C>
Receipts:
Sales (Cash Only) $ 208851.46 $
------------- ----------------
Collections of Accounts Receivable $ $
------------- ----------------
Other Income $ 273.34 $
------------- ----------------
Total Receipts $ 209124.80 $
------------- ----------------
Disbursements:
Purchases and Inventory $ $
------------- ----------------
Salaries and Wages $ $
------------- ----------------
Employee Benefits $ $
------------- ----------------
Equipment Lease Payments $ $
------------- ----------------
Rent $ 153.00 $
------------- ----------------
Secured Debt Payments $ $
------------- ----------------
Utilities $ $
------------- ----------------
Telephone $ $
------------- ----------------
Repairs & Maintenance $ $
------------- ----------------
Misc. Office Expense $ $
------------- ----------------
Advertising $ $
------------- ----------------
Travel & Entertainment $ $
------------- ----------------
Professional Fees $ $
------------- ----------------
Depreciation $ $
------------- ----------------
Insurance: Liability $ $
------------- ----------------
Property $ $
------------- ----------------
Vehicle $ $
------------- ----------------
Worker's Compensation $ $
------------- ----------------
Other _______________ $ $
------------- ----------------
Taxes: Payroll $ $
------------- ----------------
Sales $ $
------------- ----------------
Income $ $
------------- ----------------
Real Property $ $
------------- ----------------
Personal Property $ $
------------- ----------------
Total Disbursements $ 153.00 $
------------- ----------------
Cash Flow $ 208971.80 $
------------- ----------------
</TABLE>
(Form No. 3)
<PAGE> 5
RECAPITULATION
June 1997
<TABLE>
<S> <C>
Balance from Prior Month
General Account $ 51.58
--------------
Bank: CHASE
Branch: NEW YORK
Account #312731324365
San Jacinto Power Account $ 3217.84
--------------
Bank: Chase
Branch: New York
Account: #312750667865
San Jacinto Power Account $ .00
--------------
Bank: Chase
Branch: New York
Account: #312750667867
Balance to Carry Forward to Next Month:
General Account $ 76.97
--------------
San Jacinto Account $ 11911.94
--------------
San Jacinto Account $ 200252.31
--------------
</TABLE>
(Form No. 3)
<PAGE> 6
PROJECTED CASH FLOW STATEMENT
(Month/Year)
<TABLE>
<CAPTION>
Next Following
Month Month
----- -----
<S> <C> <C>
Projected Receipts:
Sales (Cash Only) $ $
------------- ------------
Collections of Accounts Receivable $ $
------------- ------------
Other Income $ $
------------- ------------
Total Projected Receipts: $ $
------------- ------------
Projected Disbursements:
Purchase and Inventory $ $
------------- ------------
Salaries and Wages $ $
------------- ------------
Employee Benefits $ $
------------- ------------
Equipment Lease Payments $ $
------------- ------------
Rent $ $
------------- ------------
Secured Debt Payments $ $
------------- ------------
Utilities $ $
------------- ------------
Telephone $ $
------------- ------------
Repairs & Maintenance $ $
------------- ------------
Misc. Office Expense $ $
------------- ------------
Advertising $ $
------------- ------------
Travel & Entertainment $ $
------------- ------------
Professional Fees $ $
------------- ------------
Depreciation $ $
------------- ------------
Insurance: Liability $ $
------------- ------------
Property $ $
------------- ------------
Vehicle $ $
------------- ------------
Worker's Compensation $ $
------------- ------------
Other _______________ $ $
------------- ------------
Taxes: Payroll $ $
------------- ------------
Sales $ $
------------- ------------
Income $ $
------------- ------------
Real Property $ $
------------- ------------
Personal Property $ $
------------- ------------
Total Projected Disbursements $ $
------------- ------------
Projected Cash Flow $ $
------------- ------------
</TABLE>
(Form No. 4)
<PAGE> 7
BALANCE SHEET
(MONTH/YEAR)
JUNE 1997
ASSETS
<TABLE>
<S> <C> <C>
Current Assets:
Cash $ 212241.22
-------------
Accounts Receivable $
-------------
Allowance for Doubtful
Accounts $
-------------
Accounts Receivable (Net) $
-------------
Inventory $
-------------
Prepaid Expenses $
-------------
Total Current Assets $ 212241.22
-------------
Property and Equipment (Fair Market Value)
Real Property $
-------------
Machinery and Equipment $
-------------
Furniture and Fixtures $
-------------
Office Equipment $
-------------
Leasehold Improvements $
-------------
Vehicles $
-------------
Other ________________ $
-------------
$
-------------
Total Property and Equipment $
-------------
Total Assets: $ 212241.22
-------------
</TABLE>
(Form No. 5)
<PAGE> 8
LIABILITIES
JUNE 1997
<TABLE>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
------------
Payroll Taxes $
------------
Sales Taxes $
------------
Income Taxes $
------------
Real Property Taxes $
------------
Personal Property Taxes $
------------
Accounts Payable $
------------
Postpetition Real Property
Lease Arrearages $
------------
Postpetition Equipment
Lease Arrearages $
------------
Accrued Professional Fees
Other ___________________ $
------------
___________________ $
------------
Total Postpetition Liabilities $ .00
------------
Prepetition Liabilities
Priority Debt $
------------
Secured Debt $
------------
Unsecured Debt $
------------
Total Prepetition Liabilities $ .00
------------
Shareholder's Equity
Common Stock $
------------
Paid-In Capital $
------------
Retained Earnings $ 212241.22
------------
Total Shareholder's Equity $ 212241.22
------------
Total Liabilities & Equity $ 212241.22
------------
</TABLE>
(Form No. 5)
<PAGE> 9
MONTHLY QUESTIONNAIRE
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying
in chronological (or reverse chronological) order every debt which
came due after the commencement of the bankruptcy case but has not
been paid, and specifying the creditor by name and address, the
nature of the debt (e.g., rent, advertising, wages, etc.), the amount
owed and the date on which the obligation came due. Provide summary
information below for both accounts payable and accounts receivable:
<TABLE>
<CAPTION>
Accounts Payable Accounts Receivable
---------------- -------------------
<S> <C> <C>
Less Than 31 Days Past Due
----------------- --------------------
31 to 60 Days Past Due
----------------- --------------------
61 to 90 Days Past Due
----------------- --------------------
91 to 120 Days Past Due
----------------- --------------------
Over 120 Days Past Due
----------------- --------------------
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and address, and
provide the requested information. Where there is a postpetition
stipulation or court order governing the creditor's treatment, respond
on the basis of that stipulation or order; otherwise, respond on the
basis of the prepetition contract or lease.
<TABLE>
<CAPTION>
Post Petitions Payments
Made Missed
Payment Periodic Date of
Creditor Name Period Payment Last
Amount (mo/wk) Amount Payment # Amt. # Amt.
- ------ ------- ------ ------- ------ ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(FORM NO. 6)
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. TAX LIABILITY
<TABLE>
<S> <C>
Gross Payroll Expense for Report Month: $
---------------
Gross Sales Subject to Sales Tax for Report Month $
---------------
</TABLE>
<TABLE>
<CAPTION>
Postpetition Taxes
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
<S> <C> <C> <C> <C>
Federal Payroll & Withholding
---------- ----------- ---------------- --------------------
State Payroll & Withholding
---------- ----------- ---------------- --------------------
State Sales & Use
---------- ----------- ---------------- --------------------
</TABLE>
IV. INSURANCE COVERAGE
<TABLE>
<CAPTION>
Policy
Carrier/ Amount of Expiration Policy Paid
Agent Name Coverage Date Through Date
---------- -------- ---- ------------
<S> <C> <C> <C> <C>
Worker's Compensation Liability
----------- ------------ ---------- -----------
Fire & Extended Coverage
----------- ------------ ---------- -----------
Property
----------- ------------ ---------- -----------
Theft
----------- ------------ ---------- -----------
Vehicle
----------- ------------ ---------- -----------
Life (Beneficiary):
----------- ------------ ---------- -----------
Other (specify):
----------- ------------ ---------- -----------
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization
under a Bankruptcy Court order?_____________
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court?
___________________________
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
(FORM NO. 6)
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VI. Narrative
Provide a brief narrative report of any significant events outside of
the ordinary course of business which occurred during the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Total Total Quarterly
Quarter Disbursement Quarterly Amount Date Fees Due But
Ending During Quarter Fee Paid Paid Not Paid
- ------ -------------- --- ---- ---- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 12
DATE SUBMITTED: 7/14/97 Page: 1
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
<TABLE>
<S> <C> <C>
CASE :97-30265 G POWERTEL USA, INC. TRUSTEE : BARRY SOLOMON (480141)
TAXPAYER I.D. :84-0897771, DEPOSITORY : CHEMICAL BANK
DATE FILED :02/26/97 ACCOUNT : 312731324365 - MONEY MARKET ACCOUNT
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TRANS. {REF #}/ MONEY MARKET
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C>
03/28/97 SMITH, KATZENSTEIN & FURLOW CERTIFICATES OF STOCK 40.00 40.00
OWNERSHIP
04/30/97 THE CHASE MANHATTAN BANK Interest Posting from THE CHASE 0.08 40.08
MANHATTAN BANK on 04/30/97;
Current Interest Rate is 2.6000%
05/29/97 {1} BANK OF AMERICA CLOSE BANK ACCOUNTS 11.42 51.50
05/30/97 THE CHASE MANHATTAN BANK Interest Posting from THE CHASE 0.08 51.58
Current Interest Rate is 2.6000%
06/02/97 {1} UNITED PARCEL SERVICE ERRONEOUSLY 25.25 76.83
CHARGED/REFUNDED
06/30/97 THE CHASE MANHATTAN BANK Interest Posting from THE CHASE 0.14 76.97
MANHATTAN BANK on 06/30/97
Current Interest Rate is 2.6000%
------ ----- ------
ACCOUNT TOTALS: $76.97 0.00 $76.97
Less Bank Transfers: $ 0.00 $0.00
------ -----
NET RECEIPTS/DISBURSEMENTS: $76.97 0.00
CASE TOTALS: $76.97 0.00
Less Bank Transfers: $ 0.00 $0.00
------ -----
NET RECEIPTS/DISBURSEMENTS: $76.97 0.00
</TABLE>
<TABLE>
<S> <C>
Gross Receipts: $76.97
Less Payments to Debtor: $ 0.00
------
Net Estate: $76.97
</TABLE>
<PAGE> 13
DATE SUBMITTED 7/14/97 Page: 1
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
<TABLE>
<S> <C> <C>
CASE :97-30265A G SAN JACINTO POWER CORP TRUSTEE : BARRY SOLOMON (480141)
TAXPAYER I.D. :84-0897771, DEPOSITORY : CHEMICAL BANK
DATE FILED :02/26/97 ACCOUNT : 312731324365 - MONEY MARKET ACCOUNT
PERIOD ENDING :01/01/00 - 06/30/97 BOND AMOUNT : BLANKET BOND
</TABLE>
<TABLE>
<CAPTION>
TRANS. {REF #}/ MONEY MARKET
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C>
05/06/97 SOUTHERN CALIFORNIA EDISON PURCHASED 330,000 KWH OF 5,919.31 5,919.31
P.O. BOX 700 ENERGY 3-1-97 TO 4-1-97
ROSEMEAD, CA 91770
05/16/97 101 DESERTON ELECTRIC, INC. CONTRACT -2,500.00 3,419.31
P.O. BOX 1060
N PALM SPRINGS, CA 92258-1060
05/27/97 102 CONTRACTORS CRANE SERVICES, LLC REPAIRS - 210.00 3,209.31
P.O. BOX 1156
N PALM SPRINGS, CA 92258
05/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 8.53 3,217.84
MANHATTAN BANK on 06/30/97;
Current Interest Rate is 2.6000%
06/03/97 SOUTHERN CALIFORNIA DIVISION ACCOUNTS RECEIVABLE 8,826.21 12,044.05
06/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 20.89 12,064.94
MANHATTAN BANK on 06/30/97;
Current Interest Rate is 2.6000%
06/30/97 103 SECURITY PUBLIC STORAGE STORAGE FEES - 153.00 11,911.94
39-505 BERKEY DR
PALM DESERT, CA 92211
---------- ---------- ----------
ACCOUNT TOTALS: $14,774.94 $-2,863.00 $11,911.94
Less Bank Transfers: 0.00 0.00
---------- ----------
NET RECEIPTS/DISBURSEMENTS: $14,774.94 $-2,863.00
</TABLE>
<PAGE> 14
DATE SUBMITTED 7/14/97 Page: 1
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
<TABLE>
<S> <C> <C>
CASE :97-30265A G SAN JACINTO POWER CORP TRUSTEE : BARRY SOLOMON (480141)
TAXPAYER I.D. :84-0897771, DEPOSITORY : CHEMICAL BANK
DATE FILED :02/26/97 ACCOUNT : 312750667867 - MONEY MARKET ACCOUNT
PERIOD ENDING :01/01/00 - 06/30/97
</TABLE>
<TABLE>
<CAPTION>
TRANS. {REF #}/ MONEY MARKET
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C>
06/11/97 {1} SAN GORGONI O FARMS, INC. SALE OF STOCK SAN 10,000.00 10,000.00
JACINTO POWER
06/11/97 {1} SAN GORGONI O FARMS, INC. SALE OF STOCK SAN 10,000.00 20,000.00
JACINTO POWER
06/13/97 {1} WIRE PURCHASE OF STOCK 180,000.00 200,000.00
06/30/97 THE CHASE MANHATTAN BANK Interest posting from THE
CHASE MANHATTAN 252.31 200,252.31
BANK on 06/30/97; Current
Interest Rate is 2.6000% ----------- --------- -----------
ACCOUNT TOTALS: 200,252.31 $ 0.00 $200,252.31
Less Bank Transfers: $ 0.00 0.00
----------- ----------
NET RECEIPTS/DISBURSEMENTS: $200,252.31 $ 0.00
CASE TOTALS: $215,027.25 $-2,683.00 $212,164.25
Less Bank Transfers: $ 0.00 $ 0.00
----------- ----------
NET RECEIPTS/DISBURSEMENTS: $215,027.25 $-2,683.00
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Gross Receipts: $215,027.25
Less Payments to Debtor: $ 0.00
-----------
Net Estate: $215,027.25
</TABLE>
<PAGE> 15
DATE SUBMITTED: 07/14/97 Page: 1
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
<TABLE>
<CAPTION>
CASE : 97-30265 G POWERTEL USA, INC. TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 84-0897771, DEPOSITORY : CHEMICAL BANK
DATE FILED : 02/26/97 ACCOUNT : 312731324365 - MONEY MARKET ACCOUNT
PERIOD ENDING : 01/01/00 - 06/30/97 BOND AMOUNT : BLANKET BOND
TRANS. {REF #}/ MONEY MARKET
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C>
03/28/97 SMITH, KATZENSTEIN & FURLOW CERTIFICATES OF STOCK 40.00 40.00
OWNERSHIP
04/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 0.08 40.08
MANHATTAN BANK on 4/30/97;
Current Interest Rate is 2.6000%
05/29/97 {1} BANK OF AMERICA CLOSE BANK ACCOUNTS 11.42 51.50
05/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 0.08 51.58
MANHATTAN BANK on 05/30/97;
Current Interest Rate is 2.6000%
06/02/97 {1} UNITED PARCEL SERVICE ERRONEOUSLY 25.25 76.83
CHARGED/REFUNDED
06/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 0.14 76.97
MANHATTAN BANK on 6/30/97;
Current Interest Rate is 2.6000%
------ ----- ------
ACCOUNT TOTALS: $76.97 $0.00 $76.97
Less Bank Transfers: $ 0.00 $0.00
------ -----
NET RECEIPTS/DISBURSEMENTS: $76.97 $0.00
CASE TOTALS: $76.97 $0.00 $76.97
Less Bank Transfers: $ 0.00 $0.00
------ -----
NET RECEIPTS/DISBURSEMENTS: $76.97 $0.00
</TABLE>
<TABLE>
<S> <C>
Gross Receipts: 76.97
Less Payments to Debtor: $ 0.00
------
Net Estates: 76.97
</TABLE>
<PAGE> 16
DATE SUBMITTED 7/14/97 Page: 1
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
<TABLE>
<S> <C> <C>
CASE :97-30265A G SAN JACINTO POWER CORP TRUSTEE : BARRY SOLOMON (480141)
TAXPAYER I.D. :84-0897771, DEPOSITORY : CHEMICAL BANK
DATE FILED :02/26/97 ACCOUNT : 312731324365 - MONEY MARKET ACCOUNT
PERIOD ENDING :01/01/00 - 06/30/97 BOND AMOUNT : BLANKET BOND
</TABLE>
<TABLE>
<CAPTION>
TRANS. {REF #}/ MONEY MARKET
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C>
05/06/97 SOUTHERN CALIFORNIA EDISON PURCHASED 330,000 KWH OF 5,919.31 5,919.31
P.O. BOX 700 ENERGY 3-1-97 TO 4-1-97
ROSEMEAD, CA 91770
05/16/97 101 DESERTON ELECTRIC, INC. CONTRACT -2,500.00 3,419.31
P.O. BOX 1060
N PALM SPRINGS, CA 92258-1060
05/27/97 102 CONTRACTORS CRANE SERVICES, LLC REPAIRS -210.00 3,209.31
P.O. BOX 1156
N PALM SPRINGS, CA 92258
05/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 8.53 3,217.84
MANHATTAN BANK on 06/30/97;
Current Interest Rate is 2.6000%
06/03/97 SOUTHERN CALIFORNIA DIVISION ACCOUNTS RECEIVABLE 8,826.21 12,044.05
06/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 20.89 12,064.94
MANHATTAN BANK on 06/30/97;
Current Interest Rate is 2.6000%
06/30/97 103 SECURITY PUBLIC STORAGE STORAGE FEES -153.00 11,911.94
39-505 BERKEY DR
PALM DESERT, CA 92211
---------- ---------- ----------
ACCOUNT TOTALS: $14,774.94 $-2,863.00 $11,911.94
Less Bank Transfers: 0.00 0.00
---------- ----------
NET RECEIPTS/DISBURSEMENTS: $14,774.94 $-2,863.00
</TABLE>
<PAGE> 17
DATE SUBMITTED: 07/14/97 Page: 2
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
<TABLE>
<S> <C> <C>
CASE : 97-30265A G SAN JACINTO POWER CORP TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 88-0309701, DEPOSITORY : CHEMICAL BANK
DATE FILED : 02/26/97 ACCOUNT : 312750667867 - MONEY MARKET ACCOUNT
PERIOD ENDING : 01/01/00 - 06/30/97 BOND AMOUNT : BLANKET BOND
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
TANS. {REF#}/ MONEY MARKET
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C>
06/11/97 {1} SAN GORGONIO FARMS, INC. SALE OF STOCK SAN 10,000.00 10,000.00
JACINTO POWER
06/11/97 {1} SAN GORGONIO FARMS, INC. SALE OF STOCK SAN 10,000.00 20,000.00
JACINTO POWER
06/13/97 {1} WIRE PURCHASE OF STOCK 180,000.00 200,000.00
06/30/97 THE CHASE MANHATTAN BANK Interest posting from THE 252.31 200,252.31
CHASE MANHATTAN BANK
on 6/30/97; Current
Interest Rate is 2.6000%
----------- ---------- -----------
ACCOUNT TOTALS: $200,252.31 $ 0.00 $200,252.31
Less Bank Transfers: $ 0.00 $ 0.00
----------- ----------
NET RECEIPTS/DISBURSEMENTS: $200,252.31 $0.00
CASE TOTALS: $215,027.25 $-2,863.00 $212,164.25
Less Bank Transfers: $ 0.00 $ 0.00
----------- ----------
NET RECEIPTS/DISBURSEMENTS: $215,027.25 $-2,863.00
</TABLE>
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Gross Receipts: $215,027.25
Less Payments to Debtor: $ 0.00
-----------
Net Estates: $215,027.25
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 99d
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
JULY 1997
The Trustee is filing an incomplete Monthly Operating Report due to the lack of
complete records. The former officers of PowerTel USA, Inc. have not cooperated
with the Trustee by providing the necessary information. The Books and Records
are missing. Therefore, it is impossible for the Trustee to file a complete
Monthly Operating Report.
/s/ Barry L. Solomon
----------------------------
BARRY L. SOLOMON, TRUSTEE
<PAGE> 2
INCOME STATEMENT
(Accrual Basis)
(Month/Year)
7/97
<TABLE>
<CAPTION>
Current Year to
Month Date
----- ----
<S> <C> <C>
Income $ 8,005.87 $222,828.06
------------ -----------
Cost of Goods Sold
Beginning Inventory $ $
------------ -----------
Inventory Purchases $ $
------------ -----------
Ending inventory $ $
------------ -----------
Total Costs of Goods Sold $ $
------------ -----------
Operating Expenses
Salaries and Wages $ $
------------ -----------
Employee Benefits $ $
------------ -----------
Equipment Lease Payments $ $
------------ -----------
Rent $ 78.00 $ 231.00
------------ -----------
Secured Debt Payments $ $
------------ -----------
Utilities $ $
------------ -----------
Telephone $ $
------------ -----------
Repairs & Maintenance $ $ 2,710.00
------------ -----------
Miscellaneous Office Expense $ $
------------ -----------
Advertising $ $
------------ -----------
Travel & Entertainment $ $
------------ -----------
Professional Fees $ 1,128.75 $ 1,128.75
------------ -----------
U.S. Trustee Fees $ 250.00 $ 250.00
------------ -----------
Insurance: Liability $ $
------------ -----------
Property $ $
------------ -----------
Vehicle $ $
------------ -----------
Worker's Compensation $ $
------------ -----------
Other _______________ $ $
------------ -----------
Taxes: Payroll $ $
------------ -----------
Sales $ $
------------ -----------
Income $ $
------------ -----------
Real Property $ $
------------ -----------
Personal Property $ $
------------ -----------
Total Operating Expenses $ 1,456.75 $ 4,319.75
------------ -----------
Total Profit (Loss) from Operations $ 6,549.12 $218,508.31
------------ -----------
Other Income (Expense) $ $
------------ -----------
Gain (Loss) on Sale of Assets $ $
------------ -----------
Interest Expense $ $
------------ -----------
Interest Income $ 476.11 $ 758.14
------------ -----------
Dividend Income $ $
------------ -----------
Total $ 476.11 $ 758.14
------------ -----------
Total Profit (Loss) for Month $ 7,025.23 $219,266.45
------------ -----------
</TABLE>
(Form No. 2)
<PAGE> 3
INCOME STATEMENT
SCHEDULE OF PROFESSIONAL FEES
<TABLE>
<CAPTION>
Current Prepayment
Fees Balance
Accrued (If any)
------- --------
<S> <C> <C>
Name of Professional:
Attorneys:
Accountants:
Other:
</TABLE>
(Form No. 2)
<PAGE> 4
CASH FLOW STATEMENT
(Month/Year)
7/97
<TABLE>
<CAPTION>
Projected
Current for Current
Month Month
----- -----
<S> <C> <C>
Receipts:
Sales (Cash Only) $ 8,005.87 $
----------- -------------
Collections of Accounts Receivable $ $
----------- -------------
Other Income $ 476.11 $
----------- -------------
Total Receipts $ 8,481.98 $
----------- -------------
Disbursements:
Purchases and Inventory $ $
----------- -------------
Salaries and Wages $ $
----------- -------------
Employee Benefits $ $
----------- -------------
Equipment Lease Payments $ $
----------- -------------
Rent $ 78.00 $
----------- -------------
Secured Debt Payments $ $
----------- -------------
Utilities $ $
----------- -------------
Telephone $ $
----------- -------------
Repairs & Maintenance $ $
----------- -------------
Miscellaneous Office Expense $ $
----------- -------------
Advertising $ $
----------- -------------
Travel & Entertainment $ $
----------- -------------
Professional Fees $ 1,128.75 $
----------- -------------
U.S. Trustee Fees $ 250.00 $
----------- -------------
Insurance: Liability $ $
----------- -------------
Property $ $
----------- -------------
Vehicle $ $
----------- -------------
Worker's Compensation $ $
----------- -------------
Other _________________ $ $
----------- -------------
Taxes: Payroll $ $
----------- -------------
Sales $ $
----------- -------------
Income $ $
----------- -------------
Real Property $ $
----------- -------------
Personal Property $ $
----------- -------------
Total Disbursements $ 1,456.75 $
----------- -------------
Cash Flow $ 7,025.23 $
----------- -------------
</TABLE>
(Form No. 3)
<PAGE> 5
RECAPITULATION
7/97
<TABLE>
<CAPTION>
Balance from Prior Month
<S> <C>
Account $ 76.97
-----------
Bank: Chase
Branch: New York
Account #: 312731324365
Account: San Jacino $ 11,911.94
-----------
Bank: Chase
Branch: New York
Account #: 312750667865
Stock Sale Account: San Jacinto $200,252.31
-----------
Bank: Chase
Branch: New York
Account #: 312750667866
San Jacinto Checking 312750667866
Balance to Carry Forward to Next Month: $ .00
-----------
General Account: $ 77.13
-----------
Account: San Jacinto $ 17,912.09
-----------
Stock Sale Account: San Jacinto $200,694.98
-----------
San Jacinto Checking $ 582.25
-----------
</TABLE>
(Form No. 3)
<PAGE> 6
PROJECTED CASH FLOW STATEMENT
(Month/Year)
7/97
<TABLE>
<CAPTION>
Next Following
Month Month
----- -----
<S> <C> <C>
Projected Receipts:
Sales (Cash Only) $ $
----------- ----------
Collections of Accounts Receivable $ $
----------- ----------
Other Income $ $
----------- ----------
Projected Receipts $ $
----------- ----------
Projected Disbursements:
Purchases and Inventory $ $
----------- ----------
Salaries and Wages $ $
----------- ----------
Employee Benefits $ $
----------- ----------
Equipment Lease Payments $ $
----------- ----------
Rent $ $
----------- ----------
Secured Debt Payments $ $
----------- ----------
Utilities $ $
----------- ----------
Telephone $ $
----------- ----------
Repairs & Maintenance $ $
----------- ----------
Misc. Office Expense $ $
----------- ----------
Advertising $ $
----------- ----------
Travel & Entertainment $ $
----------- ----------
Professional Fees $ $
----------- ----------
Depreciation $ $
----------- ----------
Insurance: Liability $ $
----------- ----------
Property $ $
----------- ----------
Vehicle $ $
----------- ----------
Workers' Compensation $ $
----------- ----------
Other $ $
----------- ----------
Taxes: Payroll $ $
----------- ----------
Sales $ $
----------- ----------
Income $ $
----------- ----------
Real Property $ $
----------- ----------
Personal Property $ $
----------- ----------
Total Projected Disbursements $ $
----------- ----------
Projected Cash Flow $ $
----------- ----------
</TABLE>
(Form No. 4)
<PAGE> 7
BALANCE SHEET
(MONTH/YEAR)
7/97
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash $ 219266.45
------------
Accounts Receivable $
-----------
Allowance for Doubtful
Accounts $
Accounts Receivable (Net) ----------- $
------------
Inventory $
------------
Prepaid Expenses $
------------
Total Current Assets $ 219266.45
------------
Property and Equipment (Fair Market Value)
Real Property $
------------
Machinery & Equipment $
------------
Furniture & Fixtures $
------------
Office Equipment $
------------
Leasehold Improvements $
------------
Vehicles $
------------
Other ____________________ $
------------
__________________________ $
------------
Total Property and Equipment $
------------
Total Assets: $ 219266.45
------------
</TABLE>
(Form No. 5)
<PAGE> 8
<TABLE>
<CAPTION>
LIABILITIES
7/97
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries and Wages $
------------
Payroll Taxes $
------------
Sales Taxes $
------------
Income Taxes $
------------
Real Property Taxes $
------------
Personal Property Taxes $
------------
Accounts Payable $
------------
Postpetition Real Property $
------------
Lease Arrearages $
------------
Postpetition Equipment $
------------
Lease Arrearages $
------------
Accrued Professional Fees $
------------
Other ____________________ $
------------
____________________ $
------------
Total Postpetition Liabilities $ .00
------------
Repetition Liabilities
Priority Debt $
------------
Secured Debt $
------------
Unsecured Debt $
------------
Total Repetition Liabilities $ .00
------------
Shareholders Equity
Common Stock $
------------
Paid-In Capital $
------------
Retained Earnings $ 219266.45
------------
Total Shareholder's Equity $ 219266.45
------------
Total Liabilities & Equity $ 219266.45
------------
</TABLE>
(Form No. 5)
<PAGE> 9
MONTHLY QUESTIONNAIRE
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying
in chronological (or reverse chronological) order every debt which came
due after the commencement of the bankruptcy case but has not been
paid, and specifying the creditor by name and address, the nature of
the debt (e.g., rent, advertising, wages, etc.), the amount owed and
the date on which the obligation come due. Provide summary information
below for both accounts payable and accounts receivable.
Accounts Payable Account Receivable
Less than 31 days past due ________________ __________________
31 to 60 days past due ________________ __________________
61 to 90 days past due ________________ __________________
91 to 120 days past due ________________ __________________
Over 120 days past due ________________ __________________
II. Payments to Secured Creditors and Lessors
Identify every secured creditor and lessor by name and address, and
provide the requested information. Where there is a postpetition
stipulation or court order governing the creditor's treatment, respond
on the basis of that stipulation or order; otherwise, respond on the
basis of the prepetition contract or lease.
<TABLE>
<CAPTION>
Post Petitions
Payments
Payment Periodic Date of Made Missed
Creditor Name Period Payment Last
and Address (mo/week) Amount Payment # Amt. # Amt.
- ----------- --------- ------ ------- - ---- - ----
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(Form No. 6)
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
Gross Payroll Expense for Report Month: $
----------
Gross Sales Subject to Sales Tax for Report Month: $
----------
<TABLE>
<CAPTION>
Postpetition Taxes
Date Amount Due But Accrued But
Paid Paid Not Paid Not Due
---- ---- -------- -------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding ______ _______ _________ _________
State Payroll & Withholding ______ _______ _________ _________
State Sales & Use ______ _______ _________ _________
</TABLE>
IV. Insurance Coverage
<TABLE>
<CAPTION>
Policy
Carrier/ Amount of Expiration Policy Paid
Agent Name Coverage Date Through Date
---------- -------- ----- ------------
<S> <C> <C> <C> <C>
Worker's Compensation __________ ________ __________ ____________
Liability __________ ________ __________ ____________
Fire & Extended Coverage __________ ________ __________ ____________
Property __________ ________ __________ ____________
Theft __________ ________ __________ ____________
Vehicle __________ ________ __________ ____________
Life (Beneficiary: __________ ________ __________ ____________
_____________________ )
Other (specify): __________ ________ __________ ____________
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals
or insider-employees or to professionals without specific
authorization under a Bankruptcy Court order? ______________
If the answer is yes, identify each person paid, the date and amount
of such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except
as specifically authorized by the Bankruptcy Court? ______________
If the answer is yes, identify each person paid, the date and amount
of such payment(s) and the basis for each such payment.
(Form No. 6)
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VI. Narrative
Provide a brief narrative report of any significant events
outside of the ordinary course of business which occurred during
the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Total Total Quarterly
Quarter Disbursements Quarterly Amount Date Fees Due But
Ending During Quarter Fee Paid Paid Not Paid
- ------ -------------- --- ---- ---- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 12
DATE SUBMITTED: 08/11/97 PAGE: 1
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORD
<TABLE>
<S> <C> <C> <C>
CASE : 97-30265 G POWERTEL USA, INC. TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 84-0897771, DEPOSITORY : CHEMICAL BANK
DATE FILED : 02/26/97 ACCOUNT : 312731324365 - MONEY MARKET ACCOUNT
PERIOD ENDING : 07/01/97 - 07/31/97 BOND AMOUNT : BLANKET BOND
</TABLE>
<TABLE>
<CAPTION>
TANS. {REF #}/ MONEY MARKET
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C>
101 KENTON H. BOWERS SERVICES VOIDED 0.00 76.97
78-365 HIGHWAY 111-#157
LAQUINTA, CA 92253
07/31/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 0.16 77.13
MANHATTAN BANK on 07/31/97;
Current Interest Rate is 2.6000%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
------ ----- ------
ACCOUNT TOTALS: $77.13 $0.00 $77.13
Less Bank Transfers: $ 0.00 $0.00
------ ----- ------
NET RECEIPTS/DISBURSEMENTS: $77.13 $0.00
CASE TOTALS: $77.13 $0.00
$77.13
Less Bank Transfers $ 0.00 $0.00
------ -----
NET RECEIPTS/DISBURSEMENTS: $77.13 $0.00
</TABLE>
<TABLE>
<S> <C>
Gross Receipts: $77.13
Less Payments to Debtor: $ 0.00
------
Net Estate: $77.13
</TABLE>
<PAGE> 13
DATE SUBMITTED: 08/11/97 PAGE: 1
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
<TABLE>
<S> <C> <C> <C> <C>
CASE : 97-30265A G SAN JACINTO POWER CORP TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 88-0309701, DEPOSITORY : CHEMICAL BANK
DATE FILED : 02/26/97 ACCOUNT : 312750667865 - MONEY MARKET ACCOUNT
PERIOD ENDING : 07/01/97 - 07/31/97 BOND AMOUNT : BLANKET BOND
</TABLE>
<TABLE>
<CAPTION>
TANS. {REF #}/ MONEY MARKET
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C>
07/07/97 104 SECURITY PUBLIC STORAGE BALANCE DUE -39.00 11,872.94
39-505 BERKEY DR
PALM DESERT, CA 92211
07/09/97 SO CAL EDISON ACCOUNTS RECEIVABLE 8,005.87 19,878.81
07/21/97 To Account #312750667866 TRANSFER FUNDS TO CHECKING -500.00* 19,378.81
07/29/97 To Account #312750667866 TRANSFER FUNDS TO CHECKING -1,500.00* 17,878.81
07/31/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 33.28 17,912.09
MANHATTAN BANK on 07/31/97;
Current Interest Rate is 2.6000%
</TABLE>
<TABLE>
<S> <C> <C> <C>
---------- ---------- ----------
ACCOUNT TOTALS: $22,814.09 $-4,902.00 $17,912.09
Less Bank Transfers: $ 0.00 $-2,000.00
---------- ----------
NET RECEIPTS/DISBURSEMENTS: $22,814.09 $-2,902.00
</TABLE>
<PAGE> 14
DATE SUBMITTED: 08/11/97 PAGE: 2
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
<TABLE>
<S> <C> <C> <C> <C>
CASE : 97-30265A G SAN JACINTO POWER CORP TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 88-0309701, DEPOSITORY : CHEMICAL BANK
DATE FILED : 02/26/97 ACCOUNT : 312750667866 - CHECKING ACCOUNT
PERIOD ENDING : 07/01/97 - 07/31/97 BOND AMOUNT : BLANKET BOND
</TABLE>
<TABLE>
<CAPTION>
TANS. {REF #}/ CHECKING ACCOUNT
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C>
07/21/97 From Account #312750667865 TRANSFER FUNDS TO CHECKING 500.00* 500.00
07/21/97 101 U S TRUSTEES PAYMENT CENTER 2ND QUARTER U S TRUSTEE -250.00 250.00
P O BOX 198246 FEES
ATLANTA, GA 30384-8246
07/21/97 102 SECURITY PUBLIC STORAGE STORAGE FEES - 39.00 211.00
39-505 BERKEY DRI
PALM DESERT, CA 92211
07/29/97 From Account #312750667865 TRANSFER FUNDS TO CHECKING 1,500.00* 1,711.00
07/29/97 103 KENTON H. BOWERS SERVICES -1,128.75 582.25
78-365 HIGHWAY 111 - #1587
LAQUINTA, CA 92253
</TABLE>
<TABLE>
<S> <C> <C> <C>
--------- ---------- -------
ACCOUNT TOTALS: $2,000.00 $-1,417.75 $582.25
Less Bank Transfers: $2,000.00 $ 0.00
--------- ----------
NET RECEIPTS/DISBURSEMENTS: $0.00 $-1,417.75
</TABLE>
<PAGE> 15
DATE SUBMITTED: 08/11/97 PAGE: 3
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORD
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CASE : 97-30265A G SAN JACINTO POWER CORP TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 88-0309701, DEPOSITORY : CHEMICAL BANK
DATE FILED : 02/26/97 ACCOUNT : 312750667866 - MONEY MARKET ACCOUNT
PERIOD ENDING : 07/01/97 - 07/31/97 BOND AMOUNT : BLANKET BOND
</TABLE>
<TABLE>
<CAPTION>
TANS. {REF #}/ MONEY MARKET
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
<S> <C> <C> <C> <C> <C> <C> <C>
07/31/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE 442.67 200,694.98
MANHATTAN BANK on 07/31/97;
Current Interest Rate is 2.6000%
</TABLE>
<TABLE>
<S> <C> <C> <C>
----------- ---------- -----------
ACCOUNT TOTALS: $200,694.98 $ 0.00 $200,694.98
Less Bank Transfers: $ 0.00 $ 0.00
----------- ----------
NET RECEIPTS/DISBURSEMENTS: $200,694.98 $ 0.00
CASE TOTALS: $225,509.07 $-6,319.75 $219.189.32
Less Bank Transfers: $ 2,000.00 $-2,000.00
----------- ----------
NET Receipts/Disbursements: $223,509.07 $-4,319.75
</TABLE>
<TABLE>
<S> <C>
Gross Receipts: $223.509.07
Less Payments to Debtor: $0.00
-----------
Net Estate: $223,509.07
</TABLE>
<PAGE> 1
EXHIBIT 99e
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
AUGUST 1997
The Trustee is filing an incomplete Monthly Operating Report due to the lack of
complete records. The former officers of PowerTel USA, Inc. have not cooperated
with the Trustee by providing the necessary Information. The Books and Records
are missing. Therefore, it is impossible for the Trustee to file a complete
Monthly Operating Report.
/s/ Barry L. Solomon
BARRY L. SOLOMON, TRUSTEE
<PAGE> 2
INCOME STATEMENT
(Accrual Basis)
(Month/Year)
8/97
<TABLE>
<CAPTION>
Current Year to
Month Date
--------------- ---------------
<S> <C> <C>
Income $ $ 222828.06
--------------- ---------------
Cost of Goods Sold
Beginning Inventory $ $
--------------- ----------------
Inventory Purchases $ $
--------------- ----------------
Ending Inventory $ $
--------------- ----------------
Total Costs of Goods Sold $ $
--------------- ----------------
Operating Expenses
Income from San Jacinto to new owner $ 24354.09 $ 24354.09
--------------- ----------------
Employee Benefits $ $
--------------- ----------------
Equipment Lease Payments $ $
--------------- ----------------
Rent $ 39.00 $ 270.00
--------------- ----------------
Secured Debt Payments $ $
--------------- ----------------
Utilities $ $
--------------- ----------------
Telephone $ $
--------------- ----------------
Repairs & Maintenance $ $ 2710.00
--------------- ----------------
Misc. Office Expense $ $ 32.00
--------------- ----------------
U. S. Trustee $ $ 250.00
--------------- ----------------
Travel & Entertainment $ $
--------------- ----------------
Professional Fees $ 12667.17 $ 13795.92
--------------- ----------------
Operating Fees $ 3500.00 $ 3500.00
--------------- ----------------
Insurance: Liability $ $
--------------- ----------------
Property $ $
--------------- ----------------
Vehicle $ $
--------------- ----------------
Worker's Compensation $ $
--------------- ----------------
Other Bond $ 1020.00 $ 1020.00
--------------- ----------------
Taxes: Payroll $ $
--------------- ----------------
Sales $ $
--------------- ----------------
Income $ $
--------------- ----------------
Real Property $ $
--------------- ----------------
Personal Property $ $
--------------- ----------------
Total Operating Expenses $ 41612.26 $ 45932.01
--------------- ----------------
Total Profit (Loss) from Operations $ (41612.26) $ $176896.05
--------------- ----------------
Other Income (Expense) $ $
--------------- ----------------
Gain (Loss) on Sale of Assets $ $
--------------- ----------------
Interest Expense $ $
--------------- ----------------
Interest Income $ 431.52 $ 1189.66
--------------- ----------------
Dividend Income $ $
--------------- ----------------
Total $ 431.52 $ 1189.66
--------------- ----------------
Total Profit (Loss) for Month $ (41180.74) $ $178085.71
--------------- ----------------
</TABLE>
(Form No. 2)
<PAGE> 3
CASH FLOW STATEMENT
(Month/Year)
8/97
<TABLE>
<CAPTION>
Projected
Reported For current
Month Month
-------------- --------------
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
-------------- --------------
Collections of Accounts Receivable $ $
-------------- --------------
Other Income $ 431.52 $
-------------- --------------
Total Receipts $ 431.52 $
-------------- --------------
Disbursements:
Transfer income from San Jacinto to New Owner $ 24354.09 $
-------------- --------------
Salaries and Wages $ $
-------------- --------------
Employee Benefits $ $
-------------- --------------
Equipment Lease Payments $ $
-------------- --------------
Rent $ 39.00 $
-------------- --------------
Secured Debt Payments $ $
-------------- --------------
Utilities $ $
-------------- --------------
Telephone $ $
-------------- --------------
Repairs & Maintenance $ $
-------------- --------------
Misc. Office Expense $ 32.00 $
-------------- --------------
Advertising $ $
-------------- --------------
Travel & Entertainment $ $
-------------- --------------
Professional Fees $ 12667.17 $
-------------- --------------
Operating Fees $ 3500.00 $
-------------- --------------
Insurance: Liability $ $
-------------- --------------
Property $ $
-------------- --------------
Vehicle $ $
-------------- --------------
Worker's Compensation $ $
-------------- --------------
Other Bond $ 1020.00 $
-------------- --------------
Taxes: Payroll $ $
-------------- --------------
Sales $ $
-------------- --------------
Income $ $
-------------- --------------
Real Property $ $
-------------- --------------
Personal Property $ $
-------------- --------------
Total Disbursements $ 41612.26 $
-------------- --------------
Cash Flow $ (41180.74) $
-------------- --------------
</TABLE>
(Form No. 3)
<PAGE> 4
RECAPITULATION
8/97
Balance from Prior Month
<TABLE>
<S> <C>
Money Market Account $ 77.13
---------------
Bank Chase
Branch New York
Account # 312731324365
Money Market San Jasinto Account $ 17912.09
---------------
Bank Chase
Branch New York
Account # 312750667865
M/M San Jacinto Account $ 200694.98
---------------
Bank Chase
Branch New York
Account # 312750667867
Checking San Jacinto 582.25
Balance to Carry Forward to Next Month:
Money Market Account $ 158757.94
---------------
Money Market Account: San Jacinto $ 17951.69
---------------
Checking S.J. Account $ 582.25
---------------
Checking 312731324366 793.83
Money Market S.J. 312750667867 $ 0.00
---------------
</TABLE>
(Form No. 3)
<PAGE> 5
BALANCE SHEET
(MONTH/YR)
8/97
Assets
Current Assets:
<TABLE>
<S> <C> <C> <C>
Cash $ 178085.71
--------------
Accounts Receivable $
--------------
Allowance for Doubtful
Accounts $
--------------
Accounts Receivable (Net) $
--------------
Inventory $
--------------
Prepaid Expenses $
--------------
Total Current Assets $ 178085.71
--------------
Property and Equipment (Fair Market Value)
Real Property $
--------------
Machinery and Equipment $
--------------
Furniture and Fixtures $
--------------
Office Equipment $
--------------
Leasehold Improvements $
--------------
Vehicles $
--------------
Other $
--------------
Total Property and Equipment $
--------------
Total Assets: $ 178085.71
--------------
</TABLE>
<PAGE> 6
LIABILITIES
8/97
Postpetition Liabilities (Accrued and Unpaid)
<TABLE>
<S> <C> <C>
Salaries & Wages $
-------------
Payroll Taxes $
-------------
Sales Taxes $
-------------
Income Taxes $
-------------
Real Property Taxes $
-------------
Personal Property Taxes $
-------------
Accounts Payable $
-------------
Postpetition Real Property
Lease Arrearages $
-------------
Postpetition Equipment
Lease Arrearages $
-------------
Accrued Professional Fees
Other ____________________ $
____________________ -------------
$
-------------
Total Postpetition Liabilities $
-------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
-------------
Secured Debt (Schedule A-2) $
-------------
Unsecured Debt (Schedule A-3) $
-------------
Total Prepetition Liabilities $
-------------
Shareholder's Equity
Common Stock $
-------------
Paid-In Capital $
-------------
Retained Earnings $ 178085.71
-------------
Total Shareholder's Equity $ 178085.71
-------------
Total Liabilities & Equity $
-------------
</TABLE>
<PAGE> 7
DATE SUBMITTED: 10/03/97
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
<TABLE>
<CAPTION>
CASE : 97-30265 G POWERTEL USA, INC. TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 84-0897771, DEPOSITORY : THE CHASE MANHATTAN BANK
DATE FILED : 02/26/97 ACCOUNT : 312731324365 - MONEY MARKET ACCOUNT
PERIOD ENDING : 08/01/97 - 08/31/97 BOND AMOUNT : BLANKET BOND
- --------------------------------------------------------------------------------------------------------------------------
TNS. {REF #}/
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
08/01/97 102 U.S. POSTMASTER 100 STAMPS TRUSTEE'S FIRST &
FINAL APPLICATION FOR
COMPENSATION AND
REIMBURSEMENT OF ACTUAL
EXPENSES
08/07/97 {1,2} SAN JANCINTO POWER TRANSFER FUNDS FROM SALE
TO POWERTEL ACCT.
08/07/97 103 INTERNATIONAL SURETIES, LTD. TRUSTEE BOND
210 BARONNE STREET
SUITE 1700
NEW ORLEANS, LA 70112
08/08/97 104 DESERTRON ELECTRIC INCC per invoice of 7-17-97
P O BOX 1060
N PALM SPRINGS, CA 92258-1060
08/14/97 To Account #312731324366 REGULAR TRANSFER
0814/97 To Account #312731324366 REGULAR TRANSFER
08/14/97 To Account #312731324366 SEE LETTER OF 8-13-97 SAN
JACINTO POWER INCOME FROM
OPERATIONS SOUTHERN CALIF
EDISON
08/29/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE
MANHATTAN BANK on 08/29/97;
Current Interest Rate is 2.6000%
ACCOUNT TOTALS:
Less Bank Transfers:
NET RECEIPTS/DISBURSEMENTS:
<CAPTION>
- --------------------------------------------------------------------------------
MONEY MARKET
MEMO RECEIPTS DISBURSEMENTS BALANCE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
08/01/97 -32.00 45.13
08/07/97 200,780.77 200,825.90
08/07/97 -1,020.00 199,805.90
08/08/97 -3,500.00 196,305.90
08/14/97 -500.00* 195,805.90
08/14/97 -13,000.00* 182,805.90
08/14/97 -24,354.09* 158,451.81
08/29/97 306.13 158.757.94
------------------------------------- -------------------
$201,164.03 $-42,406.09 $158,757.94
$ 0.00 $-37,854.09
-------------------------------------
$201,164.03 $-4,552.00
</TABLE>
{}Assets reference(s) * Denotes A Transfer Of Funds
<PAGE> 8
<TABLE>
<CAPTION>
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
CASE : 97-30265 G POWERTEL USA, INC TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 84-0897771, DEPOSITORY : THE CHASE MANHATTAN BANK
DATE FILED : 02/26/97 ACCOUNT : 312731324366 - CHECKING ACCOUNT
PERIOD ENDING : 08/01/97 - 08/31/97 BOND AMOUNT : BLANKET BOND
- ------------------------------------------------------------
TANS. {REF #}/
DATE CHECK # PAID TO/RECEIVED FROM
- ------------------------------------------------------------
<S> <C> <C>
08/14/97 From Account #312731324365
08/14/97 From Account #312731324365
08/14/97 From Account #312731324365
08/14/97 101 STEPHEN R. HARRIS, ESQ.
BELDING & HARRIS
417 WEST PLUMB LANE
RENO, NV 89509
08/14/97 102 STEPHAN R. HARRIS, ESQ.
BELDING & HARRIS
08/14/97 103 SECURITY PUBLIC STORAGE
39-505 BERKEY DR
PALM DESERT, CA
08/14/97 104 VENTURE PACIFIC, INC
C/O CHRISTOPHER LEE, ESQ
351 CALIFORNIA ST #800
SAN FRANCISCO, CA 94104
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
MONEY MARKET
DESCRIPTION OF TRANSACTION MEMO RECEIPTS DISBURSEMENTS BALANCE
- -------------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C>
08/14/97 REGULAR TRANSFER 500.00* 500.00
08/14/97 REGULAR TRANSFER 13,000.00* 13,000.00
08/14/97 SEE LETTER OF 8-13-97 SAN 24,354.09* 37,854.09
JACINTO POWER INCOME FROM
OPERATIONS SOUTHER CALIF
EDISON
08/14/97 ATTORNEY FEES -12,187.50 25,666.59
08/14/97 EXPENSES -479.67 25,186.92
08/14/97 SPACE E15-01 -39.00 25,147.92
08/14/97 SAN JANCINTO POWER INCOME -24,354.09 793.83
FROM OPERATIONS AND
ELECTRIC USAGE OF SO. CALIF.
EDISON
--------------- ------------------- -------------------
ACCOUNT TOTALS: $37,854.09 $-37,060.26 $793.83
Less Bank Transfers: $37,854.09 $0.00
--------------- -------------------
NET RECEIPTS/DISBURSEMENTS: $ 0.00 $-37,060.26
</TABLE>
{}Assets reference(s) * Denotes A Transfer Of Funds
<PAGE> 9
DATE SUBMITTED: 10/03/97
<TABLE>
<CAPTION>
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
CASE : 97-30265 G POWERTEL USA, INC TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 84-0897771, DEPOSITORY : THE CHASE MANHATTAN BANK
DATE FILED : 02/26/97 ACCOUNT : 312731324366 - CHECKING ACCOUNT
PERIOD ENDING : 08/01/97 - 08/31/97 BOND AMOUNT : BLANKET BOND
- -----------------------------------------------------------------------------------
TANS. {REF #}/
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION
- -----------------------------------------------------------------------------------
<S> <C>
CASE TOTALS:
Less Bank Transfers:
NET RECEIPTS/DISBURSEMENTS:
Gross Receipts:
Less Payments to Debtor:
Net Estate:
<CAPTION>
- ----------------------------------------------------------
MONEY MARKET
MEMO RECEIPTS DISBURSEMENTS BALANCE
- ----------------------------------------------------------
<S> <C> <C> <C> <C>
$239,018.12 $-79,466.35 $159,551.77
$ 37,854.09 $-37,854.09
------------ ------------
$201,164.03 $-41,612.26
$201,164.03
$0.00
-----------
$201,164.03
</TABLE>
{}Assets reference(s) * Denotes A Transfer Of Funds
<PAGE> 10
DATE SUBMITTED: 10/03/97
<TABLE>
<CAPTION>
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
CASE : 97-30265A G SAN JACINTO POWER GROUP TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 88-0309701, DEPOSITORY : THE CHASE MANHATTAN BANK
DATE FILED : 02/26/97 ACCOUNT : 312750667865 - MONEY MARKET ACCOUNT
PERIOD ENDING : 08/01/97 - 08/31/97 BOND AMOUNT : BLANKET BOND
- ------------------------------------------------------------------------------------------------------------------------
TANS. {REF #}/
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
8/29/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE
MANHATTAN BANK on 08/29/97;
Current Interest Rate is 2.6000%
ACCOUNT TOTALS:
Less Bank Transfers:
NET RECEIPTS/DISBURSEMENTS:
<CAPTION>
- ------------------------------------------------
MONEY MARKET
RECEIPTS DISBURSEMENTS BALANCE
- ------------------------------------------------
<S> <C> <C> <C>
8/29/97 39.60 17,951.69
------------ ------------ ----------
$ 22,853.69 $ -4,902.00 $17,951.69
$ 0.00 $ -2,000.00
------------ ------------
$ 22,853.69 $ -2,902.00
</TABLE>
{}Assets reference(s) * Denotes A Transfer Of Funds
<PAGE> 11
DATE SUBMITTED: 10/03/97
<TABLE>
<CAPTION>
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
CASE : 97-30265A G POWERTEL USA, INC TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 88-0309701, DEPOSITORY : THE CHASE MANHATTAN BANK
DATE FILED : 02/26/97 ACCOUNT : 312750667866 - CHECKING ACCOUNT
PERIOD ENDING : 08/01/97 - 08/31/97 BOND AMOUNT : BLANKET BOND
- ---------------------------------------------------------------------------------------------------------------------
TANS. {REF #}/
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
ACCOUNT TOTALS:
Less Bank Transfers:
NET RECEIPTS/DISBURSEMENTS:
<CAPTION>
- -------------------------------------------------
MONEY MARKET
RECEIPTS DISBURSEMENTS BALANCE
- -------------------------------------------------
<S> <C> <C> <C>
$ 2,000.00 $-1,417.75 $582.25
$ 2,000.00 $ 0.00
---------- -----------
$ 0.00 $-1,417.75
</TABLE>
{}Assets reference(s) * Denotes A Transfer Of Funds
<PAGE> 12
DATE SUBMITTED: 10/03/97
<TABLE>
<CAPTION>
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
CASE : 97-30265A G POWERTEL USA, INC TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 88-0309701, DEPOSITORY : THE CHASE MANHATTAN BANK
DATE FILED : 02/26/97 ACCOUNT : 312750667867 - MONEY MARKET ACCOUNT
PERIOD ENDING : 08/01/97 - 08/31/97 BOND AMOUNT : BLANKET BOND
- ----------------------------------------------------------------------------------------------------------
TANS. {REF #}/
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION MEMO RECEIPTS
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
08/07/97 POWERTEL TRANSFER FUNDS TO POWERTEL -200,780.77
08/07/97 CHASE BANK FINAL TRANSFER BEFORE 85.79
CLOSING ACCOUNT
-----------
ACCOUNT TOTALS: $0.00
Less Bank Transfers: $0.00
-----
NET RECEIPTS/DISBURSEMENTS: $0.00
CASE TOTALS: $24,853.69
Less Bank Transfers: $ 2,000.00
NET RECEIPTS/DISBURSEMENTS: $22,853.69
Gross Receipts: $22,853.69
Less Payments to Debtor: $0.00
----------
Net Estate: $22,853.69
<CAPTION>
- -----------------------------------
MONEY MARKET
DISBURSEMENTS BALANCE
- -----------------------------------
<S> <C> <C>
08/07/97 -85.79
08/07/97 0.00
----------- ----------
$0.00 $0.00
$0.00
-----
$0.00
$-6,319.75 $18,533.94
$-2,000.00
$-4,319.75
</TABLE>
{}Assets reference(s) * Denotes A Transfer Of Funds
<PAGE> 1
EXHIBIT 99f
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
SEPTEMBER 1997
The Trustee is filing an incomplete Monthly Operating Report due to the lack of
complete records. The former officers of PowerTel, USA. Inc. have not cooperated
with the Trustee by providing the necessary Information. The Books and Records
are missing. Therefore, it is impossible for the Trustee to file a complete
Monthly Operating Report.
/s/ Barry L. Solomon
BARRY L. SOLOMON, TRUSTEE
<PAGE> 2
INCOME STATEMENT
(Accrual Basis)
(Month/Year)
9/97
<TABLE>
<CAPTION>
Current Year to
Month Date
------------------ ----------------
<S> <C> <C>
Income $ $ 222828.06
------------------ ----------------
Cost of Goods Sold
Beginning Inventory $ $
------------------ ----------------
Inventory Purchases $ $
------------------ ----------------
Ending Inventory $ $
------------------ ----------------
Total Costs of Goods Sold $ $
------------------ ----------------
Operating Expenses
Income from San Jacinto to new owner $ $ 24354.09
------------------ ----------------
Employee Benefits $ $
------------------ ----------------
Equipment Lease Payments $ $
------------------ ----------------
Rent $ 39.00 $ 309.00
------------------ ----------------
Secured Debt Payments $ $
------------------ ----------------
Utilities $ $
------------------ ----------------
Telephone $ $
------------------ ----------------
Repairs & Maintenance $ $ 2710.00
------------------ ----------------
Misc. Office Expense $ 15.90 $ 47.90
------------------ ----------------
U.S. Trustee $ $ 250.00
------------------ ----------------
Travel & Entertainment $ $
------------------ ----------------
Professional Fees $ 14165.98 $ 27961.90
------------------ ----------------
Operation Fees $ $ 3500.00
------------------ ----------------
Insurance: Liability $ $
------------------ ----------------
Property $ $
------------------ ----------------
Vehicle $ $
------------------ ----------------
Worker's Compensation $ $
------------------ ----------------
Other - Bond $ $ 1020.00
------------------ ----------------
Taxes: Payroll $ $
------------------ ----------------
Sales $ $
------------------ ----------------
Income $ $
------------------ ----------------
Real Property $ $
------------------ ----------------
Personal Property $ $
------------------ ----------------
Total Operating Expenses $ 14220.88 $ 60152.89
------------------ ----------------
Total Profit (Loss) from Operations $ (14220.88) $ 162675.17
------------------ ----------------
Other Income (Expense) $ $
------------------ ----------------
Gain (Loss) on Sale of Assets $ $
------------------ ----------------
Interest Expense $ $
------------------ ----------------
Interest Income $ 260.38 $ 1450.04
------------------ ----------------
Dividend Income $ $
------------------ ----------------
Total $ 260.38 $ 1450.04
------------------ ----------------
Total Profit (Loss) for Month $ (13960.50) $ 164125.21
------------------ ----------------
</TABLE>
(FORM NO. 2)
<PAGE> 3
CASH FLOW STATEMENT
(Month/Year)
9/97
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
-------------- --------------
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
-------------- --------------
Collections of Accounts Receivable $ $
-------------- --------------
Other Income $ 260.38 $
-------------- --------------
Total Receipts $ $
-------------- --------------
Disbursements:
Purchases and Inventory $ $
-------------- --------------
Salaries and Wages $ $
-------------- --------------
Employee Benefits $ $
-------------- --------------
Equipment Lease Payments $ $
-------------- --------------
Rent $ 39.00 $
-------------- --------------
Secured Debt Payments $ $
-------------- --------------
Utilities $ $
-------------- --------------
Telephone $ $
-------------- --------------
Repairs & Maintenance $ $
-------------- --------------
Misc. Office Expense $ 15.90 $
-------------- --------------
Advertising $ $
-------------- --------------
Travel & Entertainment $ $
-------------- --------------
Professional Fees $ 14165.98 $
-------------- --------------
Court Costs $ $
-------------- --------------
Insurance: Liability $ $
-------------- --------------
Property $ $
-------------- --------------
Vehicle $ $
-------------- --------------
Worker's Compensation $ $
-------------- --------------
Other $ $
-------------- --------------
Taxes: Payroll $ $
-------------- --------------
Sales $ $
-------------- --------------
Income $ $
-------------- --------------
Real Property $ $
-------------- --------------
Personal Property $ $
-------------- --------------
Total Disbursements $ 14220.88 $
-------------- --------------
Cash Flow $ (13960.50) $
-------------- --------------
</TABLE>
(FORM NO. 3)
<PAGE> 4
RECAPITULATION
Balance from Prior Month
<TABLE>
<S> <C>
Powertel M/M Account $ 158757.94
-----------
Bank Chase
Branch New York
Account #: 312731324365
San Jacinto M/M Account $ 17951.69
-----------
Bank Chase
Branch New York
Account # 312750667865
SJP Checking Account $ 582.25
-----------
Bank Chase
Branch New York
Account # 312750667866
Powertel Checking Account $ 793.83
-----------
Bank
Branch
Account # 312731324366
Powertel M/M Account $ 2976.51
-----------
Bank
Branch
Account # 312731324365
Balance to Carry Forward to Next Month
General Account $
------------
Payroll Account: $
------------
Tax Account: $
------------
</TABLE>
(FORM NO. 3)
<PAGE> 5
BALANCE SHEET
(Month/Year)
9/97
Assets
Current Assets:
<TABLE>
<S> <C> <C> <C>
Cash $ 164125.21
-----------
Accounts Receivable $
-----------
Allowance for Doubtful
Accounts $
-----------
Accounts Receivable (Net) $
-----------
Inventory $
-----------
Prepaid Expenses $
-----------
Total Current Assets $ 164125.21
-----------
Property and Equipment (Fair Market Value)
Real Property $
-----------
Machinery and Equipment $
-----------
Furniture and Fixtures $
-----------
Office Equipment $
-----------
Leasehold Improvements $
-----------
Vehicles $
-----------
Other $
-----------
Total Property and Equipment $
-----------
Total Assets: $ 164125.21
-----------
</TABLE>
(FORM NO. 5)
<PAGE> 6
LIABILITIES
9/97
Postpetition Liabilities (Accrued and Unpaid)
<TABLE>
<S> <C> <C>
Salaries & Wages $
---------------------
Payroll Taxes $
---------------------
Sales Taxes $
---------------------
Income Taxes $
---------------------
Real Property Taxes $
---------------------
Personal Property Taxes $
---------------------
Accounts Payable $
---------------------
Postpetition Real Property
Lease Arrearages $
---------------------
Postpetition Equipment
Lease Arrearages $
---------------------
Accrued Professional Fees
Other $
---------------------
$
---------------------
Total Postpetition Liabilities $
---------------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
---------------------
Secured Debt (Schedule A-2) $
---------------------
Unsecured Debt (Schedule A-3) $
---------------------
Total Prepetition Liabilities $
---------------------
Shareholder's Equity
Common Stock $
---------------------
Paid-In Capital $
---------------------
Retained Earnings $ 164125.21
---------------------
Total Shareholder's Equity $
---------------------
Total Liabilities & Equity $ 164125.21
---------------------
</TABLE>
(FORM NO. 5)
<PAGE> 7
Page: 1
DATE SUBMITTED: 10/03/97
<TABLE>
<CAPTION>
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
CASE : 97-30265 G POWERTEL USA, INC. TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 84-0897771, DEPOSITORY : THE CHASE MANHATTAN BANK
DATE FILED : 02/26/97 ACCOUNT : 312731324365 - MONEY MARKET ACCOUNT
PERIOD ENDING : 09/01/97 - 09/30/97 BOND AMOUNT : BLANKET BOND
- -------------------------------------------------------------------------------------------------------------------------
TANS. {REF #}/
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
09/16/97 To Account #312731324366 TRANSFER FUNDS TO CHECKING
09/22/97 To Account #312731324366 TRANSFER FUNDS TO CHECKING
09/30/97 THE CHASE MANHATTAN BANK Interest posting from THE CHASE
MANHATTAN BANK on 09/30/97;
Current Interest Rate is 2.6000%
<CAPTION>
- -----------------------------------------------------------------------------------
MONEY MARKET
MEMO RECEIPTS DISBURSEMENTS BALANCE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
- 14,166.00* 144,591.94
-141,848.94* 2,743.00
233.51 2,976.51
----------- ------------ ----------
ACCOUNT TOTALS: $201,397.54 $-198,421.03 $ 2,976.51
LESS BANK TRANSFERS: 0.00 -193,869.03
NET RECEIPTS/DISBURSEMENTS: $201,397.54 $ -4,552.00
</TABLE>
{} Asset reference(s) * Denotes A Transfer Of Funds
<PAGE> 8
Page: 2
DATE SUBMITTED: 10/03/97
<TABLE>
<CAPTION>
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
CASE : 97-30265 G POWERTEL USA, INC. TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 84-0897771, DEPOSITORY : THE CHASE MANHATTAN BANK
DATE FILED : 02/26/97 ACCOUNT : 312731324366- CHECKING ACCOUNT
PERIOD ENDING : 09/01/97 - 09/30/97 BOND AMOUNT : BLANKET BOND
- -------------------------------------------------------------------------------------------------------------------
TANS. {REF #}/
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
09/02/97 105 GOLDEN STATE OVERNIGHT OVERNIGHT MAIL
2120 ADAMS AVE
SAN LEANDRO, CA 94577
09/03/97 106 GOLDEN STATE OVERNIGHT OVERNIGHT MAIL
2120 ADAMS AVENUE
SAN LEANDRO, CA 94577
09/10/97 107 SECURITY PUBLIC STORAGE STORAGE FEES
39-505 BERKEY DR
PALM DESERT, CA 92211
09/16/97 From Account #312731324365 TRANSFER FUNDS TO CHECKING
09/16/97 108 BARRY L SOLOMON FEES
09/16/97 109 BARRY L SOLOMON TRUSTEE EXPENSES
09/22/97 From Account #312731324365 TRANSFER FUNDS TO CHECKING
09/22/97 110 POWERTEL USA, INC. TURNOVER FUNDS TO POWERTEL
321 W. LAKE LANSING RD.
ASHER COURT, SUITE 100
E. LANSING, MI 48823
<CAPTION>
- ---------------------------------------------------------------------------------------
MONEY MARKET
MEMO RECEIPTS DISBURSEMENTS BALANCE
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
-6.95 786.88
-8.95 777.93
-39.00 738.93
14,166.00* 14,904.93
-13,905.63 999.30
-260.35 738.95
141,848.94* 142,587.89
-142,587.89 0.00
----------- ------------ -----------
ACCOUNT TOTALS: $193,869.03 $-193,869.03 $0.00
LESS BANK TRANSFERS: 193,869.03 0.00
----------- ------------
NET RECEIPTS/DISBURSEMENTS: $0.00 $-193,869.03
</TABLE>
{} Asset reference(s) * Denotes A Transfer Of Funds
<PAGE> 9
Page: 3
DATE SUBMITTED: 10/03/97
<TABLE>
<CAPTION>
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
CASE : 97-30265 G POWERTEL USA, INC. TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 84-0897771, DEPOSITORY : THE CHASE MANHATTAN BANK
DATE FILED : 02/26/97 ACCOUNT : 312731324366 - CHECKING ACCOUNT
PERIOD ENDING : 09/01/97 - 09/30/97 BOND AMOUNT : BLANKET BOND
- -------------------------------------------------------------------------------------------------------------------
TANS. {REF #}/
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gross Receipts: $201,397.54
Less Payments to Debtor: $0.00
-----------
Net Estate: $201,397.54
<CAPTION>
- ---------------------------------------------------------------------------------------------
MONEY MARKET
MEMO RECEIPTS DISBURSEMENTS BALANCE
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASE TOTALS: $395,266.57 $ -392,290.06 $2,976.51
LESS BANK TRANSFERS: 193,869.03 -193,869.03
NET RECEIPTS/DISBURSEMENTS: $201,397.54 $ -198,421.03
</TABLE>
{} Asset reference(s) * Denotes A Transfer Of Funds
<PAGE> 10
Page: 1
DATE SUBMITTED: 10/03/97
<TABLE>
<CAPTION>
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
CASE : 97-30265 G POWERTEL USA, INC. TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 88-0309701, DEPOSITORY : THE CHASE MANHATTAN BANK
DATE FILED : 02/26/97 ACCOUNT : 312750667865 - MONEY MARKET ACCOUNT
PERIOD ENDING : 09/01/97 - 09/30/97 BOND AMOUNT : BLANKET BOND
- -------------------------------------------------------------------------------------------------------------------
TANS. {REF #}/
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
09/22/97 Interest Posting Current Interest Rate is 2.6000%
09/22/97 To Account #312750667866 CLOSE OUT ACCOUNT
<CAPTION>
- --------------------------------------------------------------------------------------------
MONEY MARKET
MEMO RECEIPTS DISBURSEMENTS BALANCE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
26.87 17,978.56
-17,978.56* 0.00
------------- ----------- ---------
ACCOUNT TOTALS: $22,880.56 -22,880.56 $0.00
LESS BANK TRANSFERS: 0.00 -19,978.56
------------- -----------
NET RECEIPTS/DISBURSEMENTS: $22,880.56 $ -2,902.00
</TABLE>
{} Asset reference(s) * Denotes A Transfer Of Funds
<PAGE> 11
Page: 2
DATE SUBMITTED: 10/03/97
<TABLE>
<CAPTION>
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
CASE : 97-30265 G POWERTEL USA, INC. TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 88-0309701, DEPOSITORY : THE CHASE MANHATTAN BANK
DATE FILED : 02/26/97 ACCOUNT : 312750667866 - CHECKING ACCOUNT
PERIOD ENDING : 09/01/97 - 09/30/97 BOND AMOUNT : BLANKET BOND
- -------------------------------------------------------------------------------------------------------------------
TANS. {REF #}/
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
09/22/97 From Account #312750667865 CLOSE OUT ACCOUNT
09/22/97 104 POWERTEL USA, INC. CLOSE ACCOUNTS
321 W. LAKE LANSING RD
ASHER COURT, SUITE 100
E. LANSING , MI 48823
<CAPTION>
- --------------------------------------------------------------------------------------------
MONEY MARKET
MEMO RECEIPTS DISBURSEMENTS BALANCE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
17,978.56* 18,560.81
-18,560.81 0.00
---------- ------------ -----------
ACCOUNT TOTALS: $19,978.56 $ -19,978.56 $0.00
LESS BANK TRANSFERS: 19,978.56 0.00
---------- ------------
NET RECEIPTS/DISBURSEMENTS: $0.00 $ -19,978.56
</TABLE>
{} Asset reference(s) * Denotes A Transfer Of Funds
<PAGE> 12
Page: 3
DATE SUBMITTED: 10/03/97
<TABLE>
<CAPTION>
FORM 2
ESTATE CASH RECEIPTS AND DISBURSEMENTS RECORDS
CASE : 97-30265 G POWERTEL USA, INC. TRUSTEE : BARRY L. SOLOMON (480141)
TAXPAYER I.D. : 88-0309701, DEPOSITORY : THE CHASE MANHATTAN BANK
DATE FILED : 02/26/97 ACCOUNT : 312750667867 - MONEY MARKET ACCOUNT
PERIOD ENDING : 09/01/97 - 09/30/97 BOND AMOUNT : BLANKET BOND
- -----------------------------------------------------------------------------------------------------------------------
TANS. {REF #}/
DATE CHECK # PAID TO/RECEIVED FROM DESCRIPTION OF TRANSACTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross Receipts: $ 22,880.56
Less Payments to Debtor: $.000
------------
Net Estate: $ 22,880.56
<CAPTION>
- --------------------------------------------------------------------------------------------
MONEY MARKET
MEMO RECEIPTS DISBURSEMENTS BALANCE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ACCOUNT TOTALS: $0.00 0.00 $0.00
LESS BANK TRANSFERS: 0.00 0.00
----------- ------------
NET RECEIPTS/DISBURSEMENTS: $0.00 $ 0.00
CASE TOTALS: $42,859.12 $-42,859.12 $0.00
LESS BANK TRANSFERS: 19,978.56 -19,978.56
----------- ------------
NET RECEIPTS/DISBURSEMENTS: $22,880.56 $-22,880.56
</TABLE>
{} Asset reference(s) * Denotes A Transfer Of Funds
<PAGE> 1
EXHIBIT 99g
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
OCTOBER 1997
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA. Inc. have
not cooperated with the Debtor by providing the necessary information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard Cascarilla
----------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
<TABLE>
<CAPTION>
BALANCE SHEET
OCTOBER 1997
Assets
<S> <C> <C> <C>
Current Assets:
Cash $ 139,099.37
-------------
Accounts Receivable $
-------------
Allowance for Doubtful
Accounts $
-------------
Accounts Receivable (Net) $
-------------
Inventory $
-------------
Prepaid Expenses $
-------------
Total Current Assets $ 139,099.37
-------------
Property and Equipment (Fair Market Value)
Real Property $
-------------
Machinery and Equipment $5,700,000.00
-------------
Furniture and Fixtures $
-------------
Office Equipment $
-------------
Leasehold Improvements $
-------------
Vehicles $
-------------
Other $
-------------
Total Property and Equipment $5,700,000.00
-------------
Total Assets: $5,839,099.37
-------------
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
LIABILITIES
OCTOBER 1997
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
-------------
Payroll Taxes $ 2,767.70
-------------
Sales Taxes $
-------------
Income Taxes $
-------------
Real Property Taxes $
-------------
Personal Property Taxes $
-------------
Accounts Payable $
-------------
Postpetition Real Property
Lease Arrearages $
Postpetition Equipment
Lease Arrearages $
-------------
Accrued Professional Fees
Other LOAN SHAREHOLDER $
-------------
DIEGOTEL, INC STOCK-BOOK VALUE $
-------------
Total Postpetition Liabilities $ 2,767.70
-------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
-------------
Secured Debt (Schedule A-2) $
-------------
Unsecured Debt (Schedule A-3) $
-------------
Total Prepetition Liabilities $
-------------
Shareholder's Equity
Common Stock $
-------------
Paid-In Capital $5,700,000.00
-------------
Retained Earnings $ 136,331.67
-------------
Total Shareholder's Equity $ 5,836,331.67
--------------
Total Liabilities & Equity $ 5,839,099.37
--------------
</TABLE>
<PAGE> 4
RECAPITULATION
OCTOBER 1997
<TABLE>
<CAPTION>
<S> <C>
Balance from Prior Month
PowerTel M/M General Account $ 2,976.51
-----------
Bank Chase
Branch New York
Account #312731324365
PowerTel General Account $161,148.70
-----------
Bank First of America Bank, N.A. Michigan
Branch Okemos, Michigan 48864
Account # 62-3007936-7
Tax Account $
-----------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account #312731324365 $ 2,983.09
-----------
General Account #62-3007936-7 $136,116.28
-----------
Tax Account $
-----------
</TABLE>
<PAGE> 5
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUMMARIES
#97-30265
(PTELBANK.107)
OCTOBER 31, 1997
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA CHASE TOTALS
- ---- ----------- ------- ----- ------
<S> <C> <C> <C> <C>
09.22.97 BEGINNING BALANCE .00 2976.51 2976.51
------------ ------------ --------------
09.22.97 FUNDS TO OPEN ACCOUNT 100.00 100.00
09.29.97 TRANSFER FROM CHASE #312731324366 142587.89 142587.89
09.29.97 TRANSFER FROM CHASE #312750667866 18560.81 18560.81
09.29.97 INTEREST EARNED .17 .17
10.31.97 INTEREST EARNED 6.58 6.58
------------ ------------ --------------
10.31.97 TOTAL DEPOSITS 161248.87 6.58 161255.45
------------ ------------ --------------
10.31.97 CHECKS WRITTEN PER ATTACHED LISTING 25132.29 .00 25132.29
------------ ------------ --------------
10.31.97 BALANCE 136116.58 2983.09 139,099.67
============ ============ =============
</TABLE>
<PAGE> 6
RUN DATE: 11/10/97 POWERTEL USA, INC. PAGE: I
SYS DATE: 10/31/97 TRANSACTION JOURNAL TIME: 12:04 PM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
<S> <C> <C> <C> <C>
CD-0001 10/31/97 1020-000-00 25,132.01 DISBURSEMENTS
</TABLE>
<TABLE>
<CAPTION>
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- -------- ---- ------- ---------- ------------
<S> <C> <C> <C> <C>
0001001 10/02/97 CASEY & BOOG 6600-000-00 95.00
0001002 10/02/97 KNUTSONS TRAVEL PORT 7900-000-00 734.09
0001003 10/02/97 MCBEE SYSTEM 6500-000-00 206.01
0001004 10/02/97 HERTH PRINTING 6500-000-00 210.00
0001005 10/02/97 AMERITECH 7800-000-00 66.22
0001006 10/02/97 BANK OF AMERICA 6500-000-00 80.00
0001007 10/03/97 RICHARD A. CASCARILLA 8100-000-00 3,200.00
0001008 10/03/97 VOID 1020-000-00 .00
0001009 10/03/97 H. LAWRENCE HERTH 8100-000-00 991.20
0001010 10/03/97 VOID 1020-000-00 .00
0001011 10/03/97 UPS 6500-000-00 23.75
0001012 10/06/97 BYE GONE TRAVEL 7900-000-00 323.00
0001013 10/06/97 POSTMASTER E. LANSING 6500-000-00 160.00
0001014 10/07/97 KNUTSON TRAVEL PORT 7900-000-00 479.00
0001015 10/07/97 MBNA 6500-000-00 677.07
0001016 10/18/97 PEPPERMILL HOTEL 7900-000-00 575.73
0001016 10/18/97 PEPPERMILL HOTEL 6300-000-00 229.56
---------
CHECK 0001016 TOTALS 805.29
0001017 10/18/97 CASEY & BOOG 6600-000-00 95.00
0001018 10/26/97 UPS 6500-000-00 37.25
0001019 10/28/97 AMERITECH 7800-000-00 77.71
0001020 10/28/97 VOID 1020-000-00 .00
0001021 10/29/97 WALL STREET JOURNAL 5670-000-00 16,872.00
---------
JOURNAL CD-0001 TOTALS: 25,132.59
---------
SOURCE CD TOTALS: 25,132.59
---------
REPORT TOTALS: 25,132.59
=========
</TABLE>
<PAGE> 7
CASH FLOW STATEMENT
OCTOBER, 1997
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
----- -----
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
-------------- -------------
Collections of Accounts Receivable $ $
-------------- -------------
Other Income $ 6.75 $
-------------- -------------
Total Receipts $ 6.75 $
-------------- -------------
Disbursements:
Purchases and Inventory $ $
-------------- -------------
Salaries and Wages $ 4,091.20 $
-------------- -------------
Employee Benefits $ $
-------------- -------------
Equipment Lease Payments $ $
-------------- -------------
Rent $ $
-------------- -------------
Secured Debt Payments $ $
-------------- -------------
Outside Services $ 190.00 $
-------------- -------------
Telephone $ 143.43 $
-------------- -------------
Repairs & Maintenance $ $
-------------- -------------
Miscellaneous Office Expense $ 1,394.08 $
-------------- -------------
Advertising $ $
-------------- -------------
Travel & Entertainment $ 2,341.38 $
-------------- -------------
Professional Fees $ $
-------------- -------------
Court Costs $ 16,872.00 $
-------------- -------------
Insurance: Liability $ $
-------------- -------------
Property $ $
-------------- -------------
Vehicle $ $
-------------- -------------
Worker's Compensation $ $
-------------- -------------
Other $ $
-------------- -------------
Taxes: Payroll $ $
-------------- -------------
Sales $ $
-------------- -------------
Income $ $
-------------- -------------
Real Property $ $
-------------- -------------
Personal Property $ $
Total Disbursements $ 25,032.59 $
-------------- -------------
Cash Flow $ (25,025.84) $
-------------- -------------
</TABLE>
<PAGE> 8
INCOME STATEMENT
(Accrual Basis)
OCTOBER 1997
<TABLE>
<CAPTION>
Current Year to
Month Date
----- ----
<S> <C> <C>
Income $ $
--------------- -------------
Cost of Goods Sold
Beginning Inventory $ $
--------------- -------------
Inventory Purchases $ $
--------------- -------------
Ending Inventory $ $
--------------- -------------
Total Costs of Goods Sold $ $
--------------- -------------
Operating Expenses
Salaries and Wages $ 6,200.00 $ 6,200.00
--------------- -------------
Employee Benefits $ $
--------------- -------------
Equipment Lease Payments $ $
--------------- -------------
Rent $ $
--------------- -------------
Secured Debt Payments $ $
--------------- -------------
Outside Services $ 190.00 $ 190.00
--------------- -------------
Telephone $ 143.93 $ 143.93
--------------- -------------
Repairs & Maintenance $ $
--------------- -------------
Miscellaneous Office Expense $ 1,394.08 $ 1,394.08
--------------- -------------
Advertising $ $
--------------- -------------
Travel & Entertainment $ 2,341.38 $ 2,341.38
--------------- -------------
Professional Fees $ $
--------------- -------------
Court Costs $ 16,872.00 $ 16,872.00
--------------- -------------
Insurance: Liability $ $
--------------- -------------
Property $ $
--------------- -------------
Vehicle $ $
--------------- -------------
Worker's Compensation $ $
--------------- -------------
Other $ $
--------------- -------------
Taxes: Payroll $ 658.90 $ 658.90
--------------- -------------
Sales $ $
--------------- -------------
Income $ $
--------------- -------------
Real Property $ $
--------------- -------------
Personal Property $ $
--------------- -------------
Total Operating Expenses $ 27,800.29 $ 27,800.29
--------------- -------------
Total Profit (Loss) from Operations $ (27,800.29) $ (27,800.29)
--------------- -------------
Other Income (Expense) $ $
--------------- -------------
Gain (Loss) on Sale of Assets $ $
--------------- -------------
Interest Expense $ $
--------------- -------------
Interest Income $ 6.75 $ 6.75
--------------- -------------
Dividend income $ $
--------------- -------------
Herth Printing Income (loss) $ $
--------------- -------------
Total $ 6.75 $ 6.75
--------------- -------------
Total Profit (Loss) for Month $ (27,793.54) $ (27,793.54)
--------------- -------------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule,
identifying in chronological (or reverse chronological) order
every debt which came due after the commencement of the
bankruptcy case but has not been paid, and specifying the
creditor by name and address, the nature of the debt (e.g.,
rent, advertising, wages, etc.), the amount owed and the date
on which the obligation came due. Provide summary information
below for both accounts payable and accounts receivable:
Accounts Payable Accounts Receivable
---------------- -------------------
Less Than 31 Days Past Due -0- -0-
31 to 60 Days Past Due
61 to 90 Days Past Due
91 to 120 Days Past Due
Over 120 Days Past Due
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and address, and provide
the requested information. Where there is a postpetition stipulation or
court order governing the creditor's treatment, respond on the basis of
that stipulation or order; otherwise, respond on the basis of the
prepetition contract or lease.
<TABLE>
<CAPTION>
Creditor Name and Address Payment Periodic Date of Post Petition Payments
Period Payment Last Made Missed
---- ------
(mo/wk) Amount Payment
No. Amount No. Amount
--- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
<TABLE>
<CAPTION>
III. Tax Liability
<S> <C>
Gross Payroll Expense for Report Month: $6,200.00
---------
Gross Sales Subject to Sales Tax for Report Month $0.00
---------
</TABLE>
<TABLE>
<CAPTION>
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
--------- ----------- ---------------- -------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding 1,882.70
State Payroll & Withholding 885.00
State Sales & Use
</TABLE>
IV. Insurance Coverage
<TABLE>
<CAPTION>
Carrier/Agent Name Amount of Policy Policy Paid
Coverage Expiration Through Date
Date
<S> <C> <C> <C> <C>
Worker's Compensation
Liability
Fire & Extended Coverage
Property
Theft
Vehicle
Life (Beneficiary):
Other (specify):
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course
of business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization under
a Bankruptcy Court order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VI. Narrative
Provide a brief narrative report of any significant events outside of the
ordinary course of business which occurred during the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Quarter Total Quarterly Fee Amount Paid Date Paid Total Quarterly
Ending Disbursement Fees Due But
During Quarter Not Paid
<S> <C> <C> <C> <C> <C>
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and,- after making reasonable inquiry, believe
that these documents are accurate and correct.
DATED this 20th day of October, 1997.
By: /s/ Richard Cascarilla
-----------------------------
<PAGE> 1
EXHIBIT 99h
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
NOVEMBER 1997
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA. Inc. have
not cooperated with the Debtor by providing the necessary information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard Cascarilla
---------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
Assets
<S> <C> <C> <C>
Current Assets:
Cash $ 130,209.12
--------------
Accounts Receivable $
--------------
Allowance for Doubtful
Accounts $
--------------
Accounts Receivable (Net) $
--------------
Inventory $
--------------
Prepaid Expenses $
--------------
Total Current Assets $ 130,209.12
--------------
Property and Equipment (Fair Market Value)
Real Property $
--------------
Machinery and Equipment $ 5,700,000.00
--------------
Furniture and Fixtures $
--------------
Office Equipment $
--------------
Leasehold Improvements $
--------------
Vehicles $
--------------
Other $
--------------
Total Property and Equipment $ 5,700,000.00
--------------
Total Assets: $ 5,830,209.12
--------------
</TABLE>
<PAGE> 3
LIABILITIES
NOVEMBER 30, 1997
<TABLE>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
---------------
Payroll Taxes $ 3,602.30
---------------
Sales Taxes $
---------------
Income Taxes $
---------------
Real Property Taxes $
---------------
Personal Property Taxes $
---------------
Accounts Payable $
---------------
Postpetition Real Property
Lease Arrearages $
Postpetition Equipment
Lease Arrearages $
---------------
Accrued Professional Fees
Other ________________ $
---------------
________________ $
---------------
Total Postpetition Liabilities $ 3,602.30
---------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
---------------
Secured Debt (Schedule A-2) $
---------------
Unsecured Debt (Schedule A-3) $
---------------
Total Prepepetition Liabilities $
---------------
Shareholder's Equity
Common Stock $
---------------
Paid-In Capital $ 5,700,000.00
---------------
Retained Earnings $ 126,606.82
---------------
Total Shareholder's Equity $ 5,826,606.82
---------------
Total Liabilities & Equity $ 5,830,209.12
---------------
</TABLE>
<PAGE> 4
RECAPITULATION
NOVEMBER 30, 1997
<TABLE>
<S> <C>
Balance from Prior Month $
-----------
PowerTel M/M General Account $ 2,983.09
-----------
Bank Chase
Branch New York
Account #312731324365
PowerTel General Account $136,116.28
-----------
Bank First of America Bank, N.A. Michigan
Branch Okemos, Michigan
Account #62-3007936-7
Tax Account $
-----------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account #312731324365 $ 2,989.47
-----------
General Account #62-3007936-7 $127,219.65
-----------
Tax Account $
-----------
</TABLE>
<PAGE> 5
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUMMARIES
#97-30265
(PTELBANK.117)
NOVEMBER 30, 1997
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA CHASE TOTALS
- ---- ----------- ------- ----- ------
<S> <C> <C> <C> <C>
11.01.97 BEGINNING BALANCE 136116.28 2983.09 139099.37
11.30.97 DIVIDEND EARNED 6.38 6.38
.00
.00
.00
.00
--------- ------- ---------
11.30.97 TOTAL DEPOSITS 0.00 6.38 6.38
--------- ------- ---------
- --
11.30.97 CHECKS WRITTEN PER
ATTACHED LISTING 8896.63 .00 8896.63
--------- ------- ---------
11.30.97 BALANCE 127219.65 2989.47 130209.12
========== ======= =========
</TABLE>
<PAGE> 6
RUN DATE: 12/04/97 POWERTEL USA, INC. PAGE: 1
SYS DATE: 11/30/97 TRANSACTION JOURNAL TIME: 03:31 PM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
<S> <C> <C> <C> <C>
CD-0001 11/30/97 1020-000-00 8,896.63 DISBURSEMENTS
</TABLE>
<TABLE>
<CAPTION>
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- ---------- -------- ------------------------ ------------------ --------------------------
<S> <C> <C> <C> <C>
0001023 11/01/97 CASEY & BOOG 6600-000-00 95.00
0001024 11/01/97 H LAWRENCE HERTH 8100-000-00 991.20
0001025 11/01/97 RICHARD CASCARILLA 8100-000-00 3,200.00
0001026 11/11/97 SUNSHINE REPORTING 6600-000-00 1,044.93
0001027 11/12/97 FIRST OF AMERICA 2110-001-00 474.30
0001027 11/12/97 FIRST OF AMERICA 2110-002-00 884.50
0001027 11/12/97 FIRST OF AMERICA 2110-005-00 474.30
----------
CHECK 0001027 TOTALS: 1,833.10
0001028 11/12/97 CASEY & BOOG 6500-000-00 13.70
0001029 11/16/97 DOUBLETREE GUEST SUITES 7900-000-00 424.24
0001030 11/17/97 CORESTATES 7900-000-00 161.66
0001031 11/17/97 MIKE KASOUFF 7900-000-00 151.48
0001032 11/18/97 FISHER TRANSFER & STORAG 6000-000-00 959.32
0001033 11/19/97 UPS 6000-000-00 22.00
---------
JOURNAL CD-0001 TOTALS: 8,896.63
---------
SOURCE CD TOTALS: 8,896.63
---------
REPORT TOTALS: 8,896.63
=========
</TABLE>
<PAGE> 7
CASH FLOW STATEMENT
NOVEMBER, 1997
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
----- -----
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
-------------- -------------
Collections of Accounts Receivable $ $
-------------- -------------
Other Income $ 6.38 $
-------------- -------------
Total Receipts $ 6.38 $
-------------- -------------
Disbursements:
Purchases and Inventory $ $
-------------- -------------
Salaries and Wages $ 4,191.20 $
-------------- -------------
Employee Benefits $ $
-------------- -------------
Shipping & Freight $ 981.32 $
-------------- -------------
Rent $ $
-------------- -------------
Secured Debt Payments $ $
-------------- -------------
Outside Services $ 1,139.93 $
-------------- -------------
Telephone $ $
-------------- -------------
Repairs & Maintenance $ $
-------------- -------------
Miscellaneous Office Expense $ 13.70 $
-------------- -------------
Advertising $ $
-------------- -------------
Travel & Entertainment $ 737.38 $
-------------- -------------
Professional Fees $ $
-------------- -------------
Court Costs $ $
-------------- -------------
Insurance: Liability $ $
-------------- -------------
Property $ $
-------------- -------------
Vehicle $ $
-------------- -------------
Worker's Compensation $ $
-------------- -------------
Other $ $
-------------- -------------
Taxes: Payroll $ 1,833.10 $
-------------- -------------
Sales $ $
-------------- -------------
Income $ $
-------------- -------------
Real Property $ $
-------------- -------------
Personal Property $ $
-------------- -------------
Total Disbursements $ 8,896.63 $
-------------- -------------
Cash Flow $ (8,890.25) $
-------------- -------------
</TABLE>
<PAGE> 8
INCOME STATEMENT
(Accrual Basis)
October 1 to November 30, 1997
<TABLE>
<CAPTION>
Current Year to
Month Date
----- ----
<S> <C> <C>
Income $ $
-------------- -----------
Cost of Goods Sold
Beginning Inventory $ $
-------------- -----------
Inventory Purchases $ $
-------------- -----------
Ending Inventory $ $
-------------- -----------
Total Costs of Goods Sold $ $
-------------- -----------
Operating Expenses
Salaries and Wages $ 6,200.00 $ 12,400.00
-------------- -----------
Employee Benefits $ $
-------------- -----------
Shipping $ 981.32 $ 981.32
-------------- -----------
Rent $ $
-------------- -----------
Secured Debt Payments $ $
-------------- -----------
Outside Services $ 1,139.93 $ 1,139.93
-------------- -----------
Telephone $ $ 143.93
-------------- -----------
Repairs & Maintenance $ $
-------------- -----------
Miscellaneous Office Expense $ 13.70 $ 1,407.78
-------------- -----------
Advertising $ $
-------------- -----------
Travel & Entertainment $ 737.38 $ 3,078.76
-------------- -----------
Professional Fees $ $
-------------- -----------
Court Costs $ $ 16,872.00
-------------- -----------
Insurance: Liability $ $
-------------- -----------
Property $ $
-------------- -----------
Vehicle $ $
-------------- -----------
Worker's Compensation $ $
-------------- -----------
Other - Bond $ $
-------------- -----------
Taxes: Payroll $ 658.90 $ 1,317.80
-------------- -----------
Sales $ $
-------------- -----------
Income $ $
-------------- -----------
Real Property $ $
-------------- -----------
Personal Property $ $
-------------- -----------
Total Operating Expenses $ 9,731.23 $ 37,531.52
-------------- -----------
Total Profit (Loss) from Operations $ (9,731.23) $(37,531.52)
-------------- -----------
Other Income (Expense) $ $
-------------- -----------
Gain (Loss) on Sale of Assets $ $
-------------- -----------
Interest Expense $ $
-------------- -----------
Interest Income $ $
-------------- -----------
Dividend Income $ 6.38 $ 13.13
-------------- -----------
Total $ 6.38 $ 13.13
-------------- -----------
Total Profit (Loss) for Month $ (9,724.85) $(37,518.39)
-------------- -----------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying in
chronological (or reverse chronological) order every debt which came due after
the commencement of the bankruptcy case but has not been paid, and specifying
the creditor by name and address, the nature of the debt (e.g., rent,
advertising, wages, etc.), the amount owed and the date on which the obligation
came due. Provide summary information below for both accounts payable and
accounts receivable:
Accounts Payable Accounts Receivable
Less Than 31 Days Past Due -0- -0-
31 to 60 Days Past Due ________________ ___________________
61 to 90 Days Past Due ________________ ___________________
91 to 120 Days Past Due ________________ ___________________
Over 120 Days Past Due ________________ ___________________
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and address, and provide the
requested information. Where there is a postpetition stipulation or court order
governing the creditor's treatment, respond on the basis of that stipulation or
order; otherwise, respond on the basis of the prepetition contract or lease.
<TABLE>
<CAPTION>
Creditor Name and Address Payment Period Periodic Date of Post Petition Payments
(mo/wk) Payment Last Made Missed
Amount Payment
No. Amount No. Amount
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C> <C>
Gross Payroll Expense for Report Month: $6,200.00
---------
Gross Sales Subject to Sales Tax for Report Month $0.00
-----
</TABLE>
<TABLE>
<CAPTION>
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
--------- ----------- ---------------- -------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding 1,932.30
State Payroll & Withholding 1,670.00
State Sales & Use
</TABLE>
IV. INSURANCE COVERAGE
<TABLE>
<CAPTION>
Carrier/Agent Amount of Policy Expiration Policy Paid
Name Coverage Date Through Date
---- -------- ---- ------------
<S> <C> <C> <C> <C>
Worker's Compensation Liability
Fire & Extended Coverage
Property
Theft
Vehicle
Life (Beneficiary):
Other (specify):
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary
course of business to any officers, shareholders, directors, other
principals or insider-employees or to professionals without specific
authorization under a Bankruptcy Court order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy
case, made any payments on account of prepetition unsecured debts,
except as specifically authorized by the Bankruptcy Court? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
VI. Narrative
Provide a brief narrative report of any significant events outside of
the ordinary course of business which occurred during the Report Month:
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Quarter Ending Total Quarterly Fee Amount Paid Date Paid Total Quarterly
Disbursement Fees Due But
During Quarter Not Paid
<S> <C> <C> <C> <C> <C>
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and, after making reasonable inquiry, believe that
these documents are accurate and correct.
DATED this 19th day of November, 1997.
By: /s/ Richard Cascarilla
----------------------
<PAGE> 1
Exhibit 99i
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
DECEMBER 1997
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA. Inc. have
not cooperated with the Debtor by providing the necessary information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard Cascarilla
---------------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
DECEMBER 31, 1997
Assets
<TABLE>
<S> <C> <C> <C>
Current Assets:
Cash $ 91,964.13
--------------
Accounts Receivable $
--------------
Allowance for Doubtful
Accounts $
--------------
Accounts Receivable (Net) $
--------------
Inventory $
--------------
Prepaid Expenses $
--------------
Total Current Assets $ 91,964.13
-------------
Property and Equipment (Fair Market Value)
Real Property $
--------------
Machinery and Equipment $ 5,700,000.00
--------------
Furniture and Fixtures $
--------------
Office Equipment $
--------------
Leasehold Improvements $
--------------
Vehicles $
--------------
Other $
--------------
Total Property and Equipment $ 5,700,000.00
--------------
Investments:
Total Assets: $ 5,791,964.13
--------------
</TABLE>
<PAGE> 3
LIABILITIES
DECEMBER 31, 1997
<TABLE>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
--------------
Payroll Taxes $ 6,514.90
--------------
Sales Taxes $
--------------
Income Taxes $
--------------
Real Property Taxes $
--------------
Personal Property Taxes $
--------------
Accounts Payable $
--------------
Postpetition Real Property
Lease Arrearages $
--------------
Postpetition Equipment
Lease Arrearages $
--------------
Accrued Professional Fees
Other $
--------------
$
--------------
Total Postpetition Liabilities $ 6,514.90
--------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
--------------
Secured Debt (Schedule A-2) $
--------------
Unsecured Debt (Schedule A-3) $
--------------
Total Prepetition Liabilities $
--------------
Shareholder's Equity
Common Stock $
--------------
Paid-In Capital $ 5,700,000.00
--------------
Retained Earnings $ 85,449.23
--------------
Total Shareholder's Equity $ 5,785,449.23
--------------
Total Liabilities & Equity $ 5,791,964.13
--------------
</TABLE>
<PAGE> 4
RECAPITULATION
December 31, 1997
<TABLE>
<S> <C> <C>
Balance from Prior Month
General Account $ 2,989.47
------------
Bank CHASE
Branch NEW YORK
Account #312731324365
General Account $ 127,219.65
------------
Bank FIRST OF AMERICA BANK, N.A., MICHIGAN
Branch OKEMOS, MICHIGAN
Account # 62-3007936-7
Tax Account $
------------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account #312731324365 $ -0-
------------
General Account #62-3007936-7 $ 91,964.13
------------
Tax Account $
------------
</TABLE>
<PAGE> 5
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUYIWIES
#97-30265
(PTELBANK.127)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA CHASE TOTALS
- ---- ----------- ------- ----- ------
<S> <C> <C> <C> <C>
12.01.97 BEGINNING BALANCE 127219.65 2989.47 130209.12
--------- ------- ---------
12.31.97 DIVIDEND EARNED 3.21 3.21
12.31.97 TRANSFER FROM CHASE 267.43 267.43
12.31.97 BOND REFUND 920.00 920.00
--------- ------- ---------
12.31.97 TOTAL DEPOSITS 1187.43 3.21 1190.64
--------- ------- ---------
12.09.97 WALTERS & HAVERFIELD 15000.00 15000.00
12.09.97 SMITH, KATZNSTEN & FURLOW 10000.00 10000.00
12.09.97 S. HARRIS 2725.25 2725.25
12.09.97 TRANSFER TO FIRST OF AMERICA 267.43 267.43
12.09.97 WIRE TRANSFER FEES 30.00 30.00
12.31.97 CHECKS WRITTEN PER ATTACHED 11412.95 .00 11412.95
--------- ------- ---------
12.31.97 TOTAL DISBURSEMENTS 36442.95 2992.68 39435.63
--------- ------- ---------
12.31.97 BALANCE 91964.13 .00 91964.13
========= ======= =========
</TABLE>
<PAGE> 6
RUN DATE: 1/13/98 POWERTEL USA, INC. PAGE: I
SYS DATE: 12/31/97 TRANSACTION JOURNAL TIME: 10:32 AM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
CD-0001 12/31/97 1020-000-00 11,412.95 DISBURSEMENTS
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- -------- ---- ------- ---------- ------------
<S> <C> <C> <C> <C>
0001034 12/01/97 RICHARD CASCARILLA 8100-000-00 3,200.00
0001035 12/01/97 CASEY & BOOG 6600-000-00 95.00
0001036 12/01/97 AMERITECH 7800-000-00 87.50
0001037 12/10/97 FIRST OF AMERICA 2110-001-00 474.30
0001037 12/10/97 FIRST OF AMERICA 2110-002-00 884.50
0001037 12/10/97 FIRST OF AMERICA 2110-005-00 474.30
--------
CHECK 0001037 TOTALS 1,833.10
0001038 12/15/97 CASEY & BOOG 6600-000-00 95.00
0001039 12/19/97 ROBERT J. LINDBERG CPA 5050-000-00 661.50
0001040 12/25/97 KNUTSON TRAVEL PORT 7900-000-00 436.00
0001041 12/26/97 UPS 6000-000-00 11.00
0001042 12/26/97 RICHARD CASCARILLA 8100-000-00 3,200.00
0001043 12/26/97 H. LAWRENCE HEATH 8100-000-00 991.20
0001044 12/30/97 MIKE KASOUFF 7900-000-00 411.00
0001045 12/30/97 CORPORATE STOCK TRANSFER 7900-000-00 279.77
0001046 12/31/97 CORPORATE SERVICES 7800-000-00 93.27
0001047 12/31/97 AMERITECH 7800-000-00 18.61
--------
JOURNAL CD-0001 TOTALS: 11,412.95
---------
SOURCE CD TOTALS: 11,412.95
---------
REPORT TOTALS: 11,412.95
=========
</TABLE>
<PAGE> 7
INCOME STATEMENT
(Accrual Basis)
October 1, to December 31, 1997
<TABLE>
<CAPTION>
Current Year to
Month Date
----- ----
<S> <C> <C>
Income $ $
------------ ------------
Cost of Goods Sold
Beginning Inventory $ $
------------ ------------
Inventory Purchases $ $
------------ ------------
Ending Inventory $ $
------------ ------------
Total Costs of Goods Sold $ $
------------ ------------
Operating Expenses
Salaries and Wages $ 11,200.00 $ 23,600.00
------------ ------------
Employee Benefits $ $
------------ ------------
Shipping & Freight $ 11.00 $ 992.32
------------ ------------
Rent $ $
------------ ------------
Secured Debt Payments $ $
------------ ------------
Outside Services $ 190.00 $ 1,519.93
------------ ------------
Telephone $ 199.38 $ 343.31
------------ ------------
Repairs & Maintenance $ $
------------ ------------
Miscellaneous Office Expense $ 30.00 $ 1,437.78
------------ ------------
Advertising $ $
------------ ------------
Travel & Entertainment $ 1,126.77 $ 4,205.53
------------ ------------
Professional Fees $ 28,386.75 $ 28,386.75
------------ ------------
Court Costs $ $ 16,872.00
------------ ------------
Insurance: Liability $ $
------------ ------------
Property $ $
------------ ------------
Vehicle $ $
------------ ------------
Worker's Compensation $ $
------------ ------------
Other - Bond $ (920.00) $ (920.00)
------------ ------------
Taxes: Payroll $ 936.90 $ 2,254.70
------------ ------------
Sales $ $
------------ ------------
Income $ $
------------ ------------
Real Property $ $
------------ ------------
Personal Property $ $
------------ ------------
Total Operating Expenses $ 41,160.80 $ 78,692.32
------------ ------------
Total Profit (Loss) from Operations $ (41,160.80) $(78,692.32)
------------ ------------
Other Income (Expense) $ $
------------ ------------
Gain (Loss) on Sale of Assets $ $
------------ ------------
Interest Expense $ $
------------ ------------
Interest Income $ $
------------ ------------
Dividend income $ 3.21 $ 16.34
------------ ------------
Total $ 3.21 $ 16.34
------------ ------------
Total Profit (Loss) for Month $ (41,157.59) $ (78,675.98)
------------ ------------
</TABLE>
<PAGE> 8
CASH FLOW STATEMENT
December 31, 1997
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
------------ ------------
Collections of Accounts Receivable $ $
------------ ------------
Other Income - Bond Refund & Dividend $ 923.21 $
------------ ------------
Total Receipts $ 923.21 $
------------ ------------
Disbursements:
Purchases and Inventory $ $
------------ ------------
Salaries and Wages $ 7,391.20 $
------------ ------------
Employee Benefits $ $
------------ ------------
Shipping & Freight $ 11.00 $
------------ ------------
Rent $ $
------------ ------------
Secured Debt Payments $ $
------------ ------------
Outside Services $ 190.00 $
------------ ------------
Telephone $ 199.38 $
------------ ------------
Repairs & Maintenance $ $
------------ ------------
Miscellaneous Office Expense $ 30.00 $
------------ ------------
Advertising $ $
------------ ------------
Travel & Entertainment $ 1,126.77 $
------------ ------------
Professional Fees $ 28,386.75 $
------------ ------------
Court Costs $ $
------------ ------------
Insurance: Liability $ $
------------ ------------
Property $ $
------------ ------------
Vehicle $ $
------------ ------------
Worker's Compensation $ $
------------ ------------
Other $ $
------------ ------------
Taxes: Payroll $ 1,833.10 $
------------ ------------
Sales $ $
------------ ------------
Income $ $
------------ ------------
Real Property $ $
------------ ------------
Personal Property $ $
------------ ------------
Total Disbursements $ 39,168.20 $
------------ ------------
Cash Flow $ (38,244.99) $
------------ ------------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying
in chronological (or reverse chronological) order every debt which came
due after the commencement of the bankruptcy case but has not been
paid, and specifying the creditor by name and address, the nature of
the debt (e.g., rent, advertising, wages, etc.), the amount owed and
the date on which the obligation came due. Provide summary information
below for both accounts payable and accounts receivable:
<TABLE>
<CAPTION>
Accounts Payable Accounts Receivable
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Less Than 31 Days Past Due
---------------- -------------------
31 to 60 Days Past Due
---------------- -------------------
61 to 90 Days Past Due
---------------- -------------------
91 to 120 Days Past Due
---------------- -------------------
Over 120 Days Past Due
---------------- -------------------
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and address, and
provide the requested information. Where there is a postpetition
stipulation or court order governing the creditor's treatment, respond
on the basis of that stipulation or order; otherwise, respond on the
basis of the prepetition contract or lease.
<TABLE>
<CAPTION>
Creditor Name and Address Payment Periodic Date of Post Petition Payments
Period Payment Last Made Missed
(mo/wk) Amount Payment --------------------------------------
No. Amount No. Amount
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C>
Gross Payroll Expense for Report Month: $11,200.00
----------
Gross Sales Subject to Sales Tax for Report Month $ 0.00
----------
</TABLE>
<TABLE>
<CAPTION>
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding 3,450.40
State Payroll & Withholding 3,064.50
State Sales & Use
</TABLE>
IV. Insurance Coverage
<TABLE>
<CAPTION>
Amount of Policy Expiration Policy Paid
Carrier/Agent Name Coverage Date Through Date
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Worker's Compensation
Liability
Fire & Extended Coverage
Property
Theft
Vehicle
Life (Beneficiary):
Other (specify):
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization
under a Bankruptcy Court order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VI. Narrative
Provide a brief narrative report of any significant events outside of
the ordinary course of business which occurred during the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Quarter Ending Total Quarterly Fee Amount Paid Date Paid Total Quarterly
Disbursement Fees Due But
During Quarter Not Paid
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and, after making reasonable inquiry, believe that
these documents are accurate and correct.
DATED this 18th day of December, 1997.
By: /s/ Richard Cascarilla
----------------------
<PAGE> 1
EXHIBIT 99j
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
JANUARY 1998
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA. Inc. have
not cooperated with the Debtor by providing the necessary information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard Cascarilla
--------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
JANUARY 31, 1998
Assets
Current Assets:
<TABLE>
<S> <C>
Cash $ 78,051.73
------------------
Accounts Receivable $
------------------
Allowance for Doubtful
Accounts $
------------------
Accounts Receivable (Net) $
------------------
Inventory $
------------------
Prepaid Expenses $
------------------
Total Current Assets $ 78,051.73
------------------
Property and Equipment (Fair Market Value)
Real Property $
------------------
Machinery and Equipment $ 5,700, 000. 00
------------------
Furniture and Fixtures $
------------------
Office Equipment $
------------------
Leasehold Improvements $
------------------
Vehicles $
------------------
Other $
------------------
Total Property and Equipment $ 5,700,000.00
------------------
Total Assets: $ 5,778,051.73
------------------
</TABLE>
<PAGE> 3
LIABILITIES
JANUARY 31, 1998
Postpetition Liabilities (Accrued and Unpaid)
<TABLE>
<S> <C>
Salaries & Wages $
-----------------------
Payroll Taxes $ 2,166.30
-----------------------
Sales Taxes $
-----------------------
Income Taxes $
-----------------------
Real Property Taxes $
-----------------------
Personal Property Taxes $
-----------------------
Accounts Payable $
-----------------------
Postpetition Real Property
Lease Arrearages $
-----------------------
Postpetition Equipment
Lease Arrearages $
-----------------------
Accrued Professional Fees
Other $
-----------------------
$
-----------------------
Total Postpetition Liabilities $ 2,166.30
-----------------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
-----------------------
Secured Debt (Schedule A-2) $
-----------------------
Unsecured Debt (Schedule A-3) $
-----------------------
Total Prepetition Liabilities $
-----------------------
Shareholder's Equity
Common Stock $
-----------------------
Paid-In Capital $ 5,700,000.00
-----------------------
Retained Earnings $ 75,885.43
-----------------------
Total Shareholder's Equity $ 5,775.885.43
-----------------------
Total Liabilities & Equity $ 5,778,051.73
-----------------------
</TABLE>
<PAGE> 4
RECAPITULATION
JANUARY 31, 1998
Balance from Prior Month
<TABLE>
<S> <C>
General Account $ 91,964.13
-----------
Bank FIRST OF AMERICA BANK, N.A. MICHIGAN
Branch OKEMOS, MICHIGAN
Account #62-3007936-7
General Account $
-----------
Bank
Branch
Account #
Tax Account $
-----------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account $ 78,051.73
-----------
General Account $
-----------
Tax Account $
-----------
</TABLE>
<PAGE> 5
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUMMARIES
#97-30265
(PTELBANK.198)
JANUARY 31, 1998
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA
- ------------------ --------------------------- ------------
<S> <C> <C>
01.01.98 BEGINNING BALANCE $ 91,964.13
------------
01.31.98 TOTAL DEPOSITS $ 0.00
------------
01.31.98 CHECKS WRITTEN PER ATTACHED $ 13,912.40
------------
01.31.98 TOTAL DISBURSEMENTS $ 13,912.40
------------
01.31.98 BALANCE $ 78,051.73
============
</TABLE>
<PAGE> 6
RUN DATE: 2/13/98 POWERTEL USA, INC. PAGE: I
SYS DATE: 01/31/98 TRANSACTION JOURNAL TIME: 09:15 AM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
CD-0001 01/31/98 1020-000-00 13,912.40 DISBURSEMENTS
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- ---------- -------- ------------------------ ----------- -------------------
<S> <C> <C> <C> <C>
0001040 01/04/98 U.P.S. 6000-000-00 11.00
0001049 01/04/98 CASEY & BOOG 6600-000-00 95.00
0001050 01/05/98 POSTMASTER EL 6500-000-00 80.00
0001051 01/12/98 MICHALE KASOUFF 7900-000-00 704.00
0001052 01/13/98 FLEET CREDIT CORP. 7900-000-00 398.86
0001053 01/14/98 STATE OF MICHIGAN 2110-003-00 2,700.00
0001054 01/14/98 FIRST OF AMERICA 2110-001-00 856.80
0001054 01/14/98 FIRST OF AMERICA 2110-002-00 1,652.00
0001054 01/14/98 FIRST OF AMERCIA 2110-005-00 856.80
---------
CHECK 0001054 TOTALS: 3,365.60
---------
0001055 01/16/98 CASEY & BOOG 6600-000-00 95.00
0001056 01/19/98 BARB FELDKAMP 6600-000-00 100.00
0001057 01/25/98 U.P.S. 6000-000-00 22.00
0001058 01/25/98 CORPORATE SERVICES 7800-000-00 54.04
0001059 01/25/98 KNUTSON TRAVEL PORT 7900-000-00 1,056.00
0001060 01/25/98 RICHARD A. CASCARILLA 8100-000-00 3,723.00
0001061 01/27/98 ROBERT LINDBERG CPA 5050-000-00 170.40
0001062 01/28/98 INTERNAL REVENUE SERVICE 2110-005-00 84.80
0001063 01/28/98 MESC 2110-005-00 256.50
0001064 01/28/98 NEV. EMP. SEC. DIV. 2110-005-00 5.00
0001065 01/28/98 H. LAWRENCE HERTH 8100-000-00 991.20
---------
JOURNAL CD-0001 TOTALS: 13,912.40
---------
SOURCE CD TOTALS: 13,912.40
---------
REPORT TOTALS: 13,912.40
=========
</TABLE>
<PAGE> 7
INCOME STATEMENT
(Accrual Basis)
OCTOBER 1, 1997 TO OCTOBER 31, 1998
<TABLE>
<CAPTION>
Current Year to
Month Date
----------------- ------------------
<S> <C> <C>
Income $ $
----------------- ------------------
Cost of Goods Sold
Beginning Inventory $ $
----------------- ------------------
Inventory Purchases $ $
----------------- ------------------
Ending Inventory $ $
----------------- ------------------
Total Costs of Goods Sold $ $
----------------- ------------------
Operating Expenses
Salaries and Wages $ 6,200.00 $ 29,800.00
----------------- ------------------
Employee Benefits $ $
----------------- ------------------
Freight & Shipping $ 113.00 $ 1,105.32
----------------- ------------------
Rent $ $
----------------- ------------------
Secured Debt Payments $ $
----------------- ------------------
Outside Services $ 290.00 $ 1,809.93
----------------- ------------------
Telephone $ 54.04 $ 397.35
----------------- ------------------
Repairs & Maintenance $ $
----------------- ------------------
Miscellaneous Office Expense $ $ 1,437.78
----------------- ------------------
Advertising $ $
----------------- ------------------
Travel & Entertainment $ 2,158.86 $ 6,364.39
----------------- ------------------
Professional Fees $ 170.40 $ 28,557.15
----------------- ------------------
Court Costs $ $ 16,872.00
----------------- ------------------
Insurance: Liability $ $
----------------- ------------------
Property $ $
----------------- ------------------
Vehicle $ $
----------------- ------------------
Worker's Compensation $ $
----------------- ------------------
Other - Bond $ $ (920.00)
----------------- ------------------
Taxes: Payroll $ 577.50 $ 2,832.20
----------------- ------------------
Sales $ $
----------------- ------------------
Income $ $
----------------- ------------------
Real Property $ $
----------------- ------------------
Personal Property $ $
----------------- ------------------
Total Operating Expenses $ 9,563.80 $ 88,256.12
----------------- ------------------
Total Profit (Loss) from Operations $ (9,563.80) $ (88,256.12)
----------------- ------------------
Other Income (Expense) $ $
----------------- ------------------
Gain (Loss) on Sale of Assets $ $
----------------- ------------------
Interest Expense $ $
----------------- ------------------
Interest Income $ $
----------------- ------------------
Dividend Income $ $ 16.34
----------------- ------------------
Total $ $ (16.34)
----------------- ------------------
Total Profit (Loss) for Month $ (9,563.80) $ (88,239.78)
----------------- ------------------
</TABLE>
<PAGE> 8
CASH FLOW STATEMENT
JANUARY 31, 1998
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
----------------- -----------------
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
----------------- -----------------
Collections of Accounts Receivable $ $
----------------- -----------------
Other Income $ $
----------------- -----------------
Total Receipts $ $
----------------- -----------------
Disbursements:
Purchases and Inventory $ $
----------------- -----------------
Salaries and Wages $ 4,714.20 $
----------------- -----------------
Employee Benefits $ $
----------------- -----------------
Shipping & Freight $ 113.00 $
----------------- -----------------
Rent $ $
----------------- -----------------
Secured Debt Payments $ $
----------------- -----------------
Outside Services $ 290.00 $
----------------- -----------------
Telephone $ 54.04 $
----------------- -----------------
Repairs & Maintenance $ $
----------------- -----------------
Miscellaneous Office Expense $ $
----------------- -----------------
Advertising $ $
----------------- -----------------
Travel & Entertainment $ 2,158.86 $
----------------- -----------------
Professional Fees $ 170.40 $
----------------- -
Court Costs $ $
----------------- -----------------
Insurance: Liability $ $
----------------- -----------------
Property $ $
----------------- -----------------
Vehicle $ $
----------------- -----------------
Worker's Compensation $ $
----------------- -----------------
Other $ $
----------------- -----------------
Taxes: Payroll $ 6,411.90 $
----------------- -----------------
Sales $ $
----------------- -----------------
Income $ $
----------------- -----------------
Real Property $ $
----------------- -----------------
Personal Property $ $
----------------- -----------------
Total Disbursements $ 13,912.40 $
----------------- -----------------
Cash Flow $ (13,912.40) $
----------------- -----------------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule,
identifying in chronological (or reverse chronological) order
every debt which came due after the commencement of the
bankruptcy case but has not been paid, and specifying the
creditor by name and address, the nature of the debt (e.g.,
rent, advertising, wages, etc.), the amount owed and the date
on which the obligation came due. Provide summary information
below for both accounts payable and accounts receivable:
<TABLE>
<CAPTION>
Accounts Payable Accounts Receivable
---------------- -------------------
<S> <C> <C>
Less Than 31 Days Past Due
31 to 60 Days Past Due
61 to 90 Days Past Due
91 to 120 Days Past Due
Over 120 Days Past Due
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and
address, and provide the requested information. Where there is
a postpetition stipulation or court order governing the
creditor's treatment, respond on the basis of that stipulation
or order; otherwise, respond on the basis of the prepetition
contract or lease.
<TABLE>
<CAPTION>
Creditor Name and Address Payment Periodic Date of Post Petition Payments
Period Payment Last Made Missed
(mo/wk) Amount Payment ------------------------------------
No. Amount No. Amount
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
Gross Payroll Expense for Report Month: $
----------
Gross Sales Subject to Sales Tax for Report Month $
----------
<TABLE>
<CAPTION>
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
--------- ----------- ---------------- -------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding 1,808.20
State Payroll & Withholding 358.10
State Sales & Use
</TABLE>
IV. Insurance Coverage
<TABLE>
<CAPTION>
Policy
Amount of Expiration Policy Paid
Carrier/Agent Name Coverage Date Through Date
------------------ --------- ----------- ------------
<S> <C> <C> <C> <C>
Worker's Compensation
Liability
Fire & Extended Coverage
Property
Theft
Vehicle
Life (Beneficiary):
Other (specify):
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization
under a Bankruptcy Court order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
IV. Narrative
Provide a brief narrative report of any significant events outside of
the ordinary course of business which occurred during the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Quarter Total Quarterly Fee Amount Paid Date Paid Total Quarterly
Ending Disbursement Fees Due But
During Quarter Not Paid
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and,- after making reasonable inquiry, believe
that these documents are accurate and correct.
DATED this 19th day of January, 1998.
By: /s/ Richard Cascarilla
----------------------
<PAGE> 1
Exhibit 99K
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
FEBRUARY 1998
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA. Inc. have
not cooperated with the Debtor by providing the necessary information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard Cascarilla
---------------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
FEBRUARY 28, 1998
Assets
<TABLE>
<S> <C> <C> <C>
Current Assets:
Cash $ 69,824.13
---------------
Accounts Receivable $
---------------
Allowance for Doubtful
Accounts $
---------------
Accounts Receivable (Net) $
---------------
Inventory $
---------------
Prepaid Expenses $
---------------
Total Current Assets $ 69,824.13
---------------
Property and Equipment (Fair Market Value)
Real Property $
---------------
Machinery and Equipment $5,700, 000. 00
---------------
Furniture and Fixtures $
---------------
Office Equipment $
---------------
Leasehold Improvements $
---------------
Vehicles $
---------------
Other $
---------------
Total Property and Equipment $ 5,700,000.00
---------------
Investments:
Herth Printing and Business Supply
Stock (at Book Value) $ 384,218.00
---------------
Total Assets: $ 6,154,042.13
---------------
</TABLE>
<PAGE> 3
LIABILITIES
FEBRUARY 28, 1998
<TABLE>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
-------------
Payroll Taxes $ 2,536.50
-------------
Sales Taxes $
-------------
Income Taxes $
-------------
Real Property Taxes $
-------------
Personal Property Taxes $
-------------
Accounts Payable $
-------------
Postpetition Real Property
Lease Arrearages $
-------------
Postpetition Equipment
Lease Arrearages $
-------------
Accrued Professional Fees
Other $
-------------
$
-------------
Total Postpetition Liabilities $ 2,536.50
-------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
-------------
Secured Debt (Schedule A-2) $
-------------
Unsecured Debt (Schedule A-3) $
-------------
Total Prepetition Liabilities $
-------------
Shareholder's Equity
Common Stock $
-------------
Paid-In Capital $6,131,096.00
-------------
Retained Earnings $ 20,409.63
-------------
Total Shareholder's Equity $6,151,505.63
-------------
Total Liabilities & Equity $6,154,042.13
-------------
</TABLE>
<PAGE> 4
RECAPITULATION
FEBRUARY 28, 1998
<TABLE>
<CAPTION>
Balance from Prior Month
<S> <C> <C>
General Account $ 78,051.73
-----------
Bank FIRST OF AMERICA BANK, N.A. MICHIGAN
Branch OKEMOS, MICHIGAN
Account #62-3007936-7
General Account $
-----------
Bank
Branch
Account #
Tax Account $
-----------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account $
General Account $ 69,824.13
-----------
Tax Account $
-----------
</TABLE>
<PAGE> 5
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUYIWIES
#97-30265
(PRELBANK.298)
FEBRUARY, 1998
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA
- -------- ---------------------------- ----------
<S> <C> <C>
02.01.98 BEGINNING BALANCE $78,051.73
----------
02.28.98 TOTAL DEPOSITS $ 0.00
----------
02.28.98 CHECKS WRITTEN PER ATTACHED $ 8,227.60
----------
02.28.98 TOTAL DISBURSEMENTS $ 8,227.60
02.28.98 BALANCE $69,854.13
==========
</TABLE>
<PAGE> 6
RUN DATE: 03/11/98 POWERTEL USA, INC. PAGE: 1
SYS DATE: 02/28/98 TRANSACTION JOURNAL TIME: 04:59 PM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
CD-0001 02/28/98 1020-000-00 8,227.60 DISBURSEMENTS
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- -------- -------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
0001067 02/02/98 CASEY & BOOG PLC 6600-000-00 95.00
0001068 02/02/98 CASEY & BOOG 6500-000-00 5.90
0001069 02/03/98 AMERITECH 7800-000-00 18.90
0001070 02/06/98 U.P.S. 6000-000-00 13.50
0001071 02/17/98 CASEY & BOOG 6600-000-00 95.00
0001072 02/17/98 FIRST OF AMERICA 2110-001-00 474.30
0001072 02/17/98 FIRST OF AMERICA 2110-002-00 810.00
0001072 02/17/98 FIRST OF AMERICA 2110-005-00 474.30
--------
CHECK 0001072 TOTALS: 1,758.60
--------
0001073 02/23/98 CORPORATE SERVICES 7800-000-00 58.31
0001074 02/24/98 FLEET 7900-000-00 803.19
0001075 02/25/98 RICHARD CASCARILLA 8100-000-00 3,723.00
0001076 02/28/98 CASEY & BOOG 6600-000-00 95.00
0001077 02/28/98 U.P.S. 6000-000-00 24.00
0001078 02/28/98 H. LAWRENCE HEATH 8100-000-00 991.20
0001079 02/28/98 MICHAEL KASSOUFF 7900-000-00 369.00
0001080 02/28/98 JOHN VOGEL 7900-000-00 177.00
--------
JOURNAL CD-0001 TOTALS: 8,227.60
--------
SOURCE CD TOTALS: 8,227.60
--------
REPORT TOTALS: 8,227.60
========
</TABLE>
<PAGE> 7
CASH FLOW STATEMENT
FEBRUARY 28, 1998
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
---------- -----------
Receipts:
<S> <C> <C>
Sales (Cash Only) $ $
---------- -----------
Collections of Accounts Receivable $ $
---------- -----------
Other Income $ $
---------- -----------
Total Receipts $ $
---------- -----------
Disbursements:
Purchases and Inventory $ $
---------- -----------
Salaries and Wages $ 4,714.20 $
---------- -----------
Employee Benefits $ $
---------- -----------
Shipping & Freight $ 37.50 $
---------- -----------
Rent $ $
---------- -----------
Secured Debt Payments $ $
---------- -----------
Outside Services $ 285.00 $
---------- -----------
Telephone $ 77,21 $
---------- -----------
Repairs & Maintenance $ $
---------- -----------
Miscellaneous Office Expense $ 5.90 $
---------- -----------
Advertising $ $
---------- -----------
Travel & Entertainment $ 1,349.19 $
---------- -----------
Professional Fees $ $
---------- -----------
Court Costs $ $
---------- -----------
Insurance:Liability $ $
---------- -----------
Property $ $
---------- -----------
Vehicle $ $
---------- -----------
Worker's Compensation $ $
---------- -----------
Other $ $
---------- -----------
Taxes: Payroll $ 1,758.60 $
---------- -----------
Sales $ $
---------- -----------
Income $ $
---------- -----------
Real Property $ $
---------- -----------
Personal Property $ $
---------- -----------
Total Disbursements $ $
---------- -----------
Cash Flow $(8,227.60) $
---------- -----------
</TABLE>
<PAGE> 8
INCOME STATEMENT
(Accrual Basis)
OCTOBER 1, 1997 TO FEBRUARY 28, 1998
<TABLE>
<CAPTION>
Current Year to
Month Date
<S> <C> <C>
Income $ $
------------ -----------
Cost of Goods Sold
Beginning Inventory $ $
------------ -----------
Inventory Purchases $ $
------------ -----------
Ending inventory $ $
------------ -----------
Total Costs of Goods Sold $ $
------------ -----------
Operating Expenses
Salaries and Wages $ 6,200.00 $ 36,000.00
------------ -----------
Employee Benefits $ $
------------ -----------
Shipping & Freight $ 37.50 $ 1,142.82
------------ -----------
Rent $ $
------------ -----------
Secured Debt Payments $ $
------------ -----------
Outside Services $ 285.00 $ 2,094.93
------------ -----------
Telephone $ 77.21 $ 474.56
------------ -----------
Repairs & Maintenance $ $
------------ -----------
Miscellaneous Office Expense $ 5.90 $ 1,443.68
------------ -----------
Advertising $ $
------------ -----------
Travel & Entertainment $ 1,349.19 $ 7,713.58
------------ -----------
Professional Fees $ $ 28,557.15
------------ -----------
Court Costs $ $ 16,872.00
------------ -----------
Insurance:Liability $ $
------------ -----------
Property $ $
------------ -----------
Vehicle $ $
------------ -----------
Worker's Compensation $ $
------------ -----------
Other - Bond $ $ (920.00)
------------ -----------
Taxes: Payroll $ 643.00 $ 3,475.20
------------ -----------
Sales $ $
------------ -----------
Income $ $
------------ -----------
Real Property $ $
------------ -----------
Personal Property $ $
------------ -----------
Total Operating Expenses $ 8,597.80 $ 96,853.92
------------ -----------
Total Profit (Loss) from Operations $ (8,597.80) $(96,853.92)
------------ -----------
Other Income (Expense) $ $
------------ -----------
Gain (Loss) on Sale of Assets $ $
------------ -----------
Interest Expense $ $
------------ -----------
Interest Income $ $
------------ -----------
Dividend income $ $ 16.34
------------ -----------
Herth Printing Income (loss) $ (33,141.00) $(46,878.00)
------------ -----------
Total $ (33,141.00) $(46,861.66)
------------ -----------
Total Profit (Loss) for Month $ (41,738.80) $(143,715.58)
------------ -----------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying in
chronological (or reverse chronological) order every debt which came due
after the commencement of the bankruptcy case but has not been paid, and
specifying the creditor by name and address, the nature of the debt (e.g.,
rent, advertising, wages, etc.), the amount owed and the date on which the
obligation come due. Provide summary information below for both accounts
payable and accounts receivable:
<TABLE>
<CAPTION>
Accounts Payable Accounts Receivable
---------------- -------------------
<S> <C> <C>
Less Than 31 Days Past Due
31 to 60 Days Past Due
61 to 90 Days Past Due
91 to 120 Days Past Due
Over 120 Days Past Due
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and address, and provide
the requested information. Where there is a postpetition stipulation or
court order governing the creditor's treatment, respond on the basis of that
stipulation or order; otherwise, respond on the basis of the prepetition
contract or lease.
<TABLE>
<CAPTION>
Creditor Name and Address Payment Periodic Date of Post Petitions Payments
Period Payment Last Made Missed
(mo/wk) Amount Payment -------------------------------------
No. Amount No. Amount
- ------------------------- ------ -------- ------- --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C> <C>
Gross Payroll Expense for Report Month: $6,200.00
---------
Gross Sales Subject to Sales Tax for Report Month $ 0.00
---------
</TABLE>
<TABLE>
<CAPTION>
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
--------- ----------- ---------------- -------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding 1,833.80
State Payroll & Withholding 702.70
State Sales & Use
</TABLE>
IV. Insurance Coverage
<TABLE>
<CAPTION>
Carrier/Agent Name Amount of Policy Expiration Policy Paid
Coverage Date Through Date
------------------ --------- ----------------- ------------
<S> <C> <C> <C> <C>
Worker's Compensation
Liability
Fire & Extended Coverage
Property
Theft
Vehicle
Life (Beneficiary):
Other (specify):
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization under a
Bankruptcy Court order? /NO/
If the answer is yes, identify each person paid, the date and amount of such
payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case, made
any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court? /NO/
If the answer is yes, identify each person paid, the date and amount of such
payment(s) and the basis for each such payment.
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VI. Narrative
Provide a brief narrative report of any significant events outside of the
ordinary course of business which occurred during the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Quarter Total Quarterly Fee Amount Paid Date Paid Total Quarterly
Ending Disbursement Fees Due But
During Quarter Not Paid
- ------- -------------- ------------- ----------- --------- ---------------
<S> <C> <C> <C> <C> <C>
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and, after making reasonable inquiry, believe that
these documents are accurate and correct.
DATED this 19th day of February, 1998.
By: /s/ Richard Cascarilla
----------------------
<PAGE> 1
EXHIBIT 99l
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
MARCH 1998
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA. Inc. have
not cooperated with the Debtor by providing the necessary Information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard A. Cascarilla
------------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
MARCH 31, 1998
<TABLE>
<CAPTION>
Assets
<S> <C> <C> <C>
Current Assets:
Cash $ 61,741.46
-------------
Accounts Receivable $
-------------
Allowance for Doubtful
Accounts $
-------------
Accounts Receivable (Net) $
-------------
Inventory $
-------------
Prepaid Expenses $
-------------
Total Current Assets $ 61,741.46
-------------
Property and Equipment (Fair Market Value)
Real Property $
-------------
Machinery and Equipment $5,700,000.00
-------------
Furniture and Fixtures $
-------------
Office Equipment $
-------------
Leasehold Improvements $
-------------
Vehicles $
-------------
Other $
-------------
Total Property and Equipment $5,700,000.00
-------------
Investments:
Herth Printing and Business Supply
Stock (at Book Value) $ 393,253.00
-------------
Total Assets: $6,154,994.46
-------------
</TABLE>
<PAGE> 3
LIABILITIES
MARCH 31, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
---------------
Payroll Taxes $ 2,769.20
---------------
Sales Taxes $
---------------
Income Taxes $
---------------
Real Property Taxes $
---------------
Personal Property Taxes $
---------------
Accounts Payable $
---------------
Postpetition Real Property
Lease Arrearages $
---------------
Postpetition Equipment
Lease Arrearages $
---------------
Accrued Professional Fees
Other $
---------------
$
---------------
Total Postpetition Liabilities $ 2,769.20
---------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
---------------
Secured Debt (Schedule A-2) $
---------------
Unsecured Debt (Schedule A-3) $
---------------
Total Prepetition Liabilities $
---------------
Shareholder's Equity
Common Stock $
---------------
Paid-In Capital $ 6,131,096.00
---------------
Retained Earnings $ 21,129.26
---------------
Total Shareholder's Equity $ 6,152,225.26
---------------
Total Liabilities & Equity $ 6,154,994.46
---------------
</TABLE>
<PAGE> 4
RECAPITULATION
MARCH 31, 1998
<TABLE>
<CAPTION>
<S> <C>
Balance from Prior Month
General Account $69,824.13
----------
Bank FIRST OF AMERICA BANK, N.A. MICHIGAN
Branch OKEMOS, MICHIGAN
Account #62-3007936-7
General Account $
----------
Bank
Branch
Account #
Tax Account $
----------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account $61,741.46
----------
General Account $
----------
Tax Account $
----------
</TABLE>
<PAGE> 5
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUYIWIES
#97-30265
(PTELBANK. 398)
MARCH, 1998
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA
- ------------------ ---------------------------- ----------
<S> <C> <C>
03.01.98 BEGINNING BALANCE $69,824.13
03.31.98 TOTAL DEPOSITS $ 0.00
03.31.98 CHECKS WRITTEN PER ATTACHED $ 8,162.67
03.31.98 VOID CHECK #1006 (80.00)
----------
03.31.98 TOTAL DISBURSEMENTS 8,082.67
----------
03.31.98 BALANCE $61,741.46
==========
</TABLE>
<PAGE> 6
RUN DATE: 04/16/98 POWERTEL USA, INC. PAGE: I
SYS DATE: 03/31/98 TRANSACTION JOURNAL TIME: 10:54 AM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
<S> <C> <C> <C> <C>
CD-0001 03/31/98 1020-000-00 8,162.67 DISBURSEMENTS
</TABLE>
<TABLE>
<CAPTION>
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- -------- ---- ------- ---------- ------------
<S> <C> <C> <C> <C>
0001081 03/09/98 AMERITECH 7800-000-00 18.76
0001082 03/16/98 FIRST OF AMERICA 2110-001-00 474.30
0001082 03/16/98 FIRST OF AMERICA 2110-002-00 810.00
0001082 03/16/98 FIRST OF AMERICA 7200-001-00 474.30
--------
CHECK 0001082 TOTALS: 1,758.60
0001083 03/16/98 CASEY & BOOG 6600-000-00 95.00
0001084 03/24/98 CASEY & BOOG 6500-000-00 43.95
0001085 03/25/98 FLEET 6000-000-00 754.20
0001086 03/25/98 CORPORATE SERVICES 7000-000-00 61.96
0001087 03/24/98 BANK OF AMERICA 6500-000-00 82.00
0001088 03/25/98 RICHARD CASCARILLA 8100-000-00 3,723.00
0001089 03/25/98 EL POSTMASTER 6500-000-00 80.00
0001090 03/26/98 KNUTSON TRAVEL POST 7900-000-00 444.00
0001091 03/26/98 U.P.S. 6000-000-00 24.00
0001092 03/26/98 H. LAWRENCE HERTH 8100-000-00 991.20
0001093 03/31/98 CASEY & BOOG 6600-000-00 95.00
--------
JOURNAL CD-0001 TOTALS: 8,162.67
--------
SOURCE CD TOTALS: 8,162.67
--------
REPORT TOTALS: 8,162.67
========
</TABLE>
<PAGE> 7
INCOME STATEMENT
(Accrual Basis)
October 1, 1997 TO March 31, 1998
<TABLE>
<CAPTION>
Current Year to
Month Date
----- ----
<S> <C> <C>
Income $ $
----------------- ----------------
Cost of Goods Sold
Beginning Inventory $ $
----------------- ----------------
Inventory Purchases $ $
----------------- ----------------
Ending Inventory $ $
----------------- ----------------
Total Costs of Goods Sold $ $
----------------- ----------------
Operating Expenses
Salaries and Wages $ 6,200.00 $ 42,200.00
----------------- ----------------
Employee Benefits $ $
----------------- ----------------
Shipping & Freight $ 24.00 $ 1,166.82
----------------- ----------------
Rent $ $
----------------- ----------------
Secured Debt Payments $ $
----------------- ----------------
Outside Services $ 190.00 $ 2,284.93
----------------- ----------------
Telephone $ 80.72 $ 555.28
----------------- ----------------
Repairs & Maintenance $ $
----------------- ----------------
Miscellaneous Office Expense $ 125.95 $ 1,569.63
----------------- ----------------
Advertising $ $
----------------- ----------------
Travel & Entertainment $ 1,189.20 $ 8,902.78
----------------- ----------------
Professional Fees $ $ 28,557.15
----------------- ----------------
Court Costs $ $ 16,872.00
----------------- ----------------
Insurance: Liability $ $
----------------- ----------------
Property $ $
----------------- ----------------
Vehicle $ $
----------------- ----------------
Worker's Compensation $ $
----------------- ----------------
Other - Bond $ $ (920.00)
----------------- ----------------
Taxes: Payroll $ 505.00 $ 3,980.70
----------------- ----------------
Sales $ $
----------------- ----------------
Income $ $
----------------- ----------------
Real Property $ $
----------------- ----------------
Personal Property $ $
----------------- ----------------
Total Operating Expenses $ 8,315.37 $ 105,169.29
----------------- ----------------
Total Profit (Loss) from Operations $ (8,315.37) $ (105,169.29)
----------------- ----------------
Other Income (Expense) $ $
----------------- ----------------
Gain (Loss) on Sale of Assets $ $
----------------- ----------------
Interest Expense $ $
----------------- ----------------
Interest Income $ $
----------------- ----------------
Dividend Income $ $ 16.34
----------------- ----------------
Herth Printing Income (loss) $ 9035.00 $ (37,843.00)
----------------- ----------------
Total $ (9,035.00) $ (37,826.66)
----------------- ----------------
Total Profit (Loss) for Month $ 719.63 $ 142,995.95
----------------- ----------------
</TABLE>
<PAGE> 8
CASH FLOW STATEMENT
March, 1998
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
----- -----
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
--------------- ----------------
Collections of Accounts Receivable $ $
--------------- ----------------
Other Income $ $
--------------- ----------------
Total Receipts $ $
--------------- ----------------
Disbursements:
Purchases and Inventory $ $
--------------- ----------------
Salaries and Wages $ 4,714.20 $
--------------- ----------------
Employee Benefits $ $
--------------- ----------------
Shipping & Freight $ 24.00 $
--------------- ----------------
Rent $ $
--------------- ----------------
Secured Debt Payments $ $
--------------- ----------------
Outside Services $ 190.00 $
--------------- ----------------
Telephone $ 80.72 $
--------------- ----------------
Repairs & Maintenance $ $
--------------- ----------------
Miscellaneous Office Expense $ 125.95 $
--------------- ----------------
Advertising $ $
--------------- ----------------
Travel & Entertainment $ 1,189.20 $
--------------- ----------------
Professional Fees $ $
--------------- ----------------
Court Costs $ $
--------------- ----------------
Insurance: Liability $ $
--------------- ----------------
Property $ $
--------------- ----------------
Vehicle $ $
--------------- ----------------
Worker's Compensation $ $
--------------- ----------------
Other $ $
--------------- ----------------
Taxes: Payroll $ 1,758.60 $
--------------- ----------------
Sales $ $
--------------- ----------------
Income $ $
--------------- ----------------
Real Property $ $
--------------- ----------------
Personal Property $ $
--------------- ----------------
Total Disbursements $ 8,082.67 $
--------------- ----------------
Cash Flow $ (8,082.67) $
--------------- ----------------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying
in chronological (or reverse chronological) order every debt which came
due after the commencement of the bankruptcy case but has not been
paid, and specifying the creditor by name and address, the nature of
the debt (e.g., rent, advertising, wages, etc.), the amount owed and
the date on which the obligation came due. Provide summary information
below for both accounts payable and accounts receivable:
Accounts Payable Accounts Receivable
Less Than 31 Days Past Due
31 to 60 Days Past Due
61 to 90 Days Past Due
91 to 120 Days Past Due
Over 120 Days Past Due
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and address, and
provide the requested information. Where there is a postpetition
stipulation or court order governing the creditor's treatment, respond
on the basis of that stipulation or order; otherwise, respond on the
basis of the prepetition contract or lease.
<TABLE>
<CAPTION>
Creditor Name and Address Payment Periodic Date of Post Petition Payments
Period Payment Last Made Missed
(mo/wk) Amount Payment
No. Amount No. Amount
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C>
Gross Payroll Expense for Report Month: $
----------
Gross Sales Subject to Sales Tax for Report Month $
----------
</TABLE>
<TABLE>
<CAPTION>
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
--------- ----------- ---------------- -------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding 1,843.40
State Payroll & Withholding 952.80
State Sales & Use
</TABLE>
IV. Insurance Coverage
<TABLE>
<CAPTION>
Carrier/Agent Name Amount of Policy Policy Paid
Coverage Expiration Through Date
Date
<S> <C> <C> <C> <C>
Worker's Compensation
Liability
Fire & Extended Coverage
Property
Theft
Vehicle
Life (Beneficiary):
Other (specify):
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary
course of business to any officers, shareholders, directors, other
principals or insider-employees or to professionals without specific
authorization under a Bankruptcy Court order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy
case, made any payments on account of prepetition unsecured debts,
except as specifically authorized by the Bankruptcy Court? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VI. Narrative
Provide a brief narrative report of any significant events outside of
the ordinary course of business which occurred during the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Quarter Total Quarterly Fee Amount Paid Date Paid Total Quarterly
Ending Disbursement Fees Due But
During Quarter Not Paid
<S> <C> <C> <C> <C> <C>
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and,- after making reasonable inquiry, believe
that these documents are accurate and correct.
DATED this 23rd day of April, 1998.
By: /s/ Richard Cascarilla
-------------------------------
<PAGE> 1
Exhibit 99m
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
APRIL 1998
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA. Inc. have
not cooperated with the Debtor by providing the necessary information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard Cascarilla
---------------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
APRIL 30, 1998
Assets
<TABLE>
<S> <C> <C> <C>
Current Assets:
Cash $ 30,326.41
--------------
Accounts Receivable $
--------------
Allowance for Doubtful
Accounts $
--------------
Accounts Receivable (Net) $
--------------
Inventory $
--------------
Prepaid Expenses $
--------------
Total Current Assets $ 30,326.41
--------------
Property and Equipment (Fair Market Value)
Real Property $
--------------
Machinery and Equipment $ 5,700,000.00
--------------
Furniture and Fixtures $
--------------
Office Equipment $
--------------
Leasehold Improvements $
--------------
Vehicles $
--------------
Other $
--------------
Total Property and Equipment $ 5,700,000.00
--------------
Investments:
Herth Printing and Business Supply
Stock (at Book Value) $ 378,850.00
--------------
Total Assets: $ 6,109,176.41
--------------
</TABLE>
<PAGE> 3
LIABILITIES
APRIL 30, 1998
<TABLE>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
--------------
Payroll Taxes $ 2,046.70
--------------
Sales Taxes $
--------------
Income Taxes $
--------------
Real Property Taxes $
--------------
Personal Property Taxes $
--------------
Accounts Payable $
--------------
Postpetition Real Property
Lease Arrearages $
--------------
Postpetition Equipment
Lease Arrearages $
--------------
Accrued Professional Fees
Other ___________ $
--------------
___________ $
--------------
Total Postpetition Liabilities $ 2,046.70
--------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
--------------
Secured Debt (Schedule A-2) $
--------------
Unsecured Debt (Schedule A-3) $
--------------
Total Prepetition Liabilities $
--------------
Shareholder's Equity
Common Stock $
--------------
Paid-In Capital $ 6,131,096.00
--------------
Retained Earnings $ (23,966.29)
--------------
Total Shareholder's Equity $ 6,107,129.71
--------------
Total Liabilities & Equity $ 6,109,176.41
--------------
</TABLE>
<PAGE> 4
RECAPITULATION
APRIL 30, 1998
<TABLE>
<S> <C>
Balance from Prior Month
General Account $ 61,741.46
--------------
Bank First of America Bank, N.A. Michigan
Branch Okemos, Michigan
Account #62-30079367
General Account $
--------------
Bank
Branch
Account #
Tax Account $
--------------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account $ 30,326.41
--------------
General Account $
--------------
Tax Account $
--------------
</TABLE>
<PAGE> 5
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUMMARIES
#97-30265
(PTELBANK.498)
APRIL, 1998
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA
- -------- --------------------------------- -----------
<S> <C> <C>
04.01.98 BEGINNING BALANCE $ 61,746.41
-----------
-----------
04.30.98 TOTAL DEPOSITS -0-
-----------
04.30.98 CHECKS WRITTEN PER ATTACHED $ 11,400.05
04.07.98 WIRE TRANSFER-WALTER & HAVERFIELD 20,000.00
04.07.98 WIRE TRANSFER FEE 15.00
-----------
04.30.98 TOTAL DISBURSEMENTS 31,415.05
-----------
04.30.98 BALANCE $ 30,326.41
==========
</TABLE>
<PAGE> 6
RUN DATE: 05/11/98 POWERTEL USA, INC. PAGE: 1
SYS DATE: 04/30/98 TRANSACTION JOURNAL TIME: 01:39 PM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
<S> <C> <C> <C> <C>
CD-0001 04/30/98 1020-000-00 11,400.05 DISBURSEMENTS
</TABLE>
<TABLE>
<CAPTION>
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- -------- -------- ------------------------------ ----------- ------------
<S> <C> <C> <C> <C>
0001094 04/03/98 UNITED STATES TRUSTEE 6200-000-00 2,000.00
0001095 04/06/98 UPS 6000-000-00 36.00
0001096 04/06/98 AMERITECH 7800-000-00 18.85
0001097 04/09/98 CASEY & BOOG 6500-000-00 5.81
0001098 04/09/98 MIKE KASSTUFF 7900-000-00 299.00
0001099 04/13/98 UPS 6000-000-00 12.00
0001100 04/19/98 FIRST OF AMERICA 2110-001-00 474.30
0001100 04/19/98 FIRST OF AMERICA 2110-002-00 810.00
0001100 04/19/98 FIRST OF AMERICA 2110-005-00 474.30
------------
CHECK 0001100 TOTALS: 1,758.60
0001101 04/19/98 STATE OF MICHIGAN 2110-003-00 604.50
0001102 04/22/98 SPRINT 7800-000-00 123.79
0001103 04/20/98 CASEY & BOOG 6500-000-00 95.00
0001104 04/24/98 UPS 6000-000-00 24.00
0001105 04/24/98 STATE OF MICHIGAN MESC 2110-005-00 256.50
0001106 04/24/98 NEVADA EQUA. SEC. DEPART 2110-005-00 86.40
0001107 04/24/98 NEVADA DEPART. OF TAXAT. 2110-005-00 8.00
0001108 04/24/98 NEVADA DEPART. OF TAXAT. 2110-005-00 7.00
0001109 04/25/98 RICHARD A. CASCARILLA 8100-000-00 3,723.00
0001110 04/27/98 KNUTSON TRAVEL POST 7900-000-00 486.00
0001111 04/27/98 UPS 6000-000-00 18.00
0001112 04/28/98 FLEET 7900-000-00 846.40
0001113 04/28/98 H. LAWERENCE HERTH 8100-000-00 991.20
------------
JOURNAL CD-0001 TOTALS: 11,400.05
------------
SOURCE CD TOTALS: 11,400.05
------------
REPORT TOTALS: 11,400.05
</TABLE>
<PAGE> 7
INCOME STATEMENT
(Accrual Basis)
OCTOBER 1, 1997 TO APRIL 30, 1998
<TABLE>
<CAPTION>
Current Year to
Month Date
--------------- ------------
<S> <C> <C>
Income $ $
--------------- ------------
Cost of Goods Sold
Beginning Inventory $ $
--------------- ------------
Inventory Purchases $ $
--------------- ------------
Ending Inventory $ $
--------------- ------------
Total Costs of Goods Sold $ $
--------------- ------------
Operating Expenses
Salaries and Wages $ 6,200.00 $ 48,400.00
--------------- ------------
Employee Benefits $ $
--------------- ------------
Shipping & Freight $ 90.00 $ 1,256.82
--------------- ------------
Rent $ $
--------------- ------------
Secured Debt Payments $ $
--------------- ------------
Outside Services $ $ 2,284.93
--------------- ------------
Telephone $ 142.64 $ 697.92
--------------- ------------
Repairs & Maintenance $ $
--------------- ------------
Miscellaneous Office Expense $ 115.81 $ 1,685.44
--------------- ------------
Advertising $ $
--------------- ------------
Travel & Entertainment $ 1,631.40 $ 10,534.18
--------------- ------------
Professional Fees $ 20,000.00 $ 48,557.15
--------------- ------------
Court Costs $ 2,000.00 $ 18,872.00
--------------- ------------
Insurance: Liability $ $
--------------- ------------
Property $ $
--------------- ------------
Vehicle $ $
--------------- ------------
Worker's Compensation $ $
--------------- ------------
Other - Bond $ $ (920.00)
--------------- ------------
Taxes: Payroll $ 512.70 $ 4,493.40
--------------- ------------
Sales $ $
--------------- ------------
Income $ $
--------------- ------------
Real Property $ $
--------------- ------------
Personal Property $ $
--------------- ------------
Total Operating Expenses $ 30,692.55 $ 135,861.84
--------------- ------------
Total Profit (Loss) from Operations $ (30,692.55) $(135,861.84)
--------------- ------------
Other Income (Expense) $ $
--------------- ------------
Gain (Loss) on Sale of Assets $ $
--------------- ------------
Interest Expense $ $
--------------- ------------
Interest Income $ $
--------------- ------------
Dividend Income $ $ 16.34
--------------- ------------
Herth Printing Income (loss) $ (14,403.00) $ (52,246.00)
--------------- ------------
Total $ (14,403.00) $ (52,229.66)
--------------- ------------
Total Profit (Loss) for Month $ (45,095.55) $ 188,091.50
--------------- ------------
</TABLE>
<PAGE> 8
CASH FLOW STATEMENT
APRIL 30, 1998
<TABLE>
<CAPTION>
Projected
Current For Current
Month Month
------------ ------------
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
------------ ------------
Collections of Accounts Receivable $ $
------------ ------------
Other Income $ $
------------ ------------
Total Receipts $ $
------------ ------------
Disbursements:
Purchases and Inventory $ $
------------ ------------
Salaries and Wages $ 4,714.20 $
------------ ------------
Employee Benefits $ $
------------ ------------
Shipping & Freight $ 90.00 $
------------ ------------
Rent $ $
------------ ------------
Secured Debt Payments $ $
------------ ------------
Outside Services $ $
------------ ------------
Telephone $ 142.64 $
------------ ------------
Repairs & Maintenance $ $
------------ ------------
Miscellaneous Office Expense $ 115.81 $
------------ ------------
Advertising $ $
------------ ------------
Travel & Entertainment $ 1,631.40 $
------------ ------------
Professional Fees $ 20,000.00 $
------------ ------------
Court Costs $ 2,000.00 $
------------ ------------
Insurance: Liability $ $
------------ ------------
Property $ $
------------ ------------
Vehicle $ $
------------ ------------
Worker's Compensation $ $
------------ ------------
Other ___________ $ $
------------ ------------
Taxes: Payroll $ 2,721.00 $
------------ ------------
Sales $ $
------------ ------------
Income $ $
------------ ------------
Real Property $ $
------------ ------------
Personal Property $ $
------------ ------------
Total Disbursements $ 31,415.05 $
------------ ------------
Cash Flow $ (31,415.05) $
------------ ------------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying
in chronological (or reverse chronological) order every debt which came
due after the commencement of the bankruptcy case but has not been
paid, and specifying the creditor by name and address, the nature of
the debt (e.g., rent, advertising, wages, etc.), the amount owed and
the date on which the obligation came due. Provide summary information
below for both accounts payable and accounts receivable:
<TABLE>
<CAPTION>
Accounts Payable Accounts Payable
<S> <C> <C>
Less Than 31 Days Past Due
31 to 60 Days Past Due
61 to 90 Days Past Due
91 to 120 Days Past Due
Over 120 Days Past Due
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured creditor and lessor by name and address, and
provide the requested information. Where there is a postpetition
stipulation or court order governing the creditor's treatment, respond
on the basis of that stipulation or order; otherwise, respond on the
basis of the prepetition contract or lease.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Post Petition Payments
Periodic Made Missed
Creditor Name and Payment Period Payment Date of Last ---------------------------------
Address (mo/wk) Amount Payment No. Amount No. Amount
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C> <C>
Gross Payroll Expense for Report Month: $6,200.00
---------
Gross Sales Subject to Sales Tax for Report Month: $ -0-
---------
</TABLE>
<TABLE>
<CAPTION>
Postpetition Taxes
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding 1,843.40
State Payroll & Withholding 203.30
State Sales & Use
</TABLE>
IV. INSURANCE COVERAGE
<TABLE>
<CAPTION>
Carrier/Agent Amount of Policy Expiration Policy Paid
Name Coverage Date Through Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Worker's Compensation Liability
Fire & Extended Coverage
Property
Theft
Vehicle
Life (Beneficiary):
Other (specify):
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization
under a Bankruptcy Court order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VI. Narrative
Provide a brief narrative report of any significant events outside of
the ordinary course of business which occurred during the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Total Total Quarterly
Disbursement Fees Due But
Quarter Ending During Quarter Quarterly Fee Amount Paid Date Paid Not Paid
<S> <C> <C> <C> <C> <C>
3-31-98 2,000.00 2,000.00 4-3-98
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and, after making reasonable inquiry,
believe that these documents are accurate and correct.
DATED this 17th day of April, 1998.
By: /s/ Richard Cascarilla
----------------------
<PAGE> 1
Exhibit 99n
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
MAY 1998
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA. Inc. have
not cooperated with the Debtor by providing the necessary information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard A. Cascarilla
--------------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
MAY 31, 1998
Assets
<TABLE>
<S> <C> <C> <C>
Current Assets:
Cash $ 21,333.85
-------------
Accounts Receivable $
-------------
Allowance for Doubtful
Accounts $
-------------
Accounts Receivable (Net) $
-------------
Inventory $
-------------
Prepaid Expenses $
-------------
Total Current Assets $ 21,333.85
-------------
Property and Equipment (Fair Market Value)
Real Property $
-------------
Machinery and Equipment $5,700,000.00
-------------
Furniture and Fixtures $
-------------
Office Equipment $
-------------
Leasehold Improvements $
-------------
Vehicles $
-------------
Other $
Total Property and Equipment $5,700,000.00
-------------
Investments:
Herth Printing and Business Supply
Stock (at Book Value) $ 374,875.00
-------------
Total Assets: $6,096,208.85
-------------
</TABLE>
<PAGE> 3
LIABILITIES
MAY 31, 1998
<TABLE>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
-------------
Payroll Taxes $ 2,323.20
-------------
Sales Taxes $
-------------
Income Taxes $
-------------
Real Property Taxes $
-------------
Personal Property Taxes $
-------------
Accounts Payable $
-------------
Postpetition Real Property
Lease Arrearages $
-------------
Postpetition Equipment
Lease Arrearages $
-------------
Accrued Professional Fees
Other ___________ $
-------------
___________ $
-------------
Total Postpetition Liabilities $ 2,323.20
-------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
-------------
Secured Debt (Schedule A-2) $
-------------
Unsecured Debt (Schedule A-3) $
-------------
Total Prepetition Liabilities $
-------------
Shareholder's Equity
Common Stock $
-------------
Paid-In Capital $6,131,096.00
-------------
Retained Earnings $ (37,210.35)
-------------
Total Shareholder's Equity $6,093,885.65
-------------
Total Liabilities & Equity $6,096,208.85
-------------
</TABLE>
<PAGE> 4
RECAPITULATION
MAY 31, 1998
<TABLE>
<S> <C>
Balance from Prior Month
General Account $ 30,326.41
-------------
Bank FIRST OF AMERICA BANK, N.A. MICHIGAN
Branch OKEMOS, MICHIGAN
Account #62-30079367
General Account $
-------------
Bank
Branch
Account #
Tax Account $
-------------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account $ 21,333.85
-------------
General Account $
-------------
Tax Account $
-------------
</TABLE>
<PAGE> 5
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUMMARIES
#97-30265
(PTELBANK.598)
MAY, 1998
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA
- -------- --------------------------- -----------
<S> <C> <C>
05.01.98 BEGINNING BALANCE $ 30,326.41
-----------
-----------
05.31.98 TOTAL DEPOSITS -0-
-----------
05.31.98 CHECKS WRITTEN PER ATTACHED $ 8,992.56
-----------
05.31.98 BALANCE $ 21,333.85
===========
</TABLE>
<PAGE> 6
RUN DATE: 06/08/98 POWERTEL USA, INC. PAGE: 1
SYS DATE: 05/31/98 TRANSACTION JOURNAL TIME: 09:55 AM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
<S> <C> <C> <C> <C>
CD-0001 05/31/98 1020-000-00 8,992.56 DISBURSEMENTS
</TABLE>
<TABLE>
<CAPTION>
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- ---------- -------- ------------------------ ----------- ------------
<S> <C> <C> <C> <C>
0001114 05/02/98 AMERITECH 7800-000-00 18.85
0001115 05/02/98 CASEY & BOOG 6600-000-00 95.00
0001116 05/04/98 POSTMASTER-E. LANSING 6500-000-00 160.00
0001117 05/11/98 CASEY & BOOG 6500-000-00 20.55
0001118 05/12/98 UPS 6000-000-00 12.00
0001119 05/14/98 UPS 6000-000-00 24.00
0001120 05/14/98 FIRST OF AMERICA 2110-001-00 474.30
0001120 05/14/98 FIRST OF AMERICA 2110-002-00 810.00
0001120 05/14/98 FIRST OF AMERICA 2110-005-00 474.30
------------
CHECK 0001120 TOTALS: 1,758.60
0001121 05/26/98 RICHARD A. CASCARILLA 8100-000-00 3,723.00
0001122 05/25/98 KNUTSON TRAVEL POST 7900-000-00 842.75
0001123 05/26/98 CASEY & BOOG 6600-000-00 95.00
0001124 05/26/98 CORPORATE SERVICES 7800-000-00 108.66
0001125 05/26/98 UPS 6000-000-00 12.00
0001126 05/27/98 U.S. TRUSTEE 6200-000-00 500.00
0001127 05/27/98 H. LAWRENCE HERTH 8100-000-00 991.20
0001128 05/27/98 KNUTSON TRAVEL POST 7900-000-00 612.00
0001129 05/30/98 AMERITECH 7800-000-00 18.95
------------
JOURNAL CD-0001 TOTALS: 8,992.56
------------
SOURCE CD TOTALS: 8,992.56
------------
REPORT TOTALS: 8,992.56
============
</TABLE>
<PAGE> 7
INCOME STATEMENT
(Accrual Basis)
OCTOBER 1, 1997 TO MAY 31, 1998
<TABLE>
<CAPTION>
Current Year to
Month Date
-------------- ---------------
<S> <C> <C>
Income $ -0- $ -0-
-------------- ---------------
Cost of Goods Sold
Beginning Inventory $ $
-------------- ---------------
Inventory Purchases $ $
-------------- ---------------
Ending Inventory $ $
-------------- ---------------
Total Costs of Goods Sold $ $
-------------- ---------------
Operating Expenses
Salaries and Wages $ 6,200.00 $ 54,600.00
-------------- ---------------
Employee Benefits $ $
-------------- ---------------
Shipping & Freight $ 48.00 $ 1,304.82
-------------- ---------------
Rent $ $
-------------- ---------------
Secured Debt Payments $ $
-------------- ---------------
Outside Services $ 190.00 $ 2,474.93
-------------- ---------------
Telephone $ 146.46 $ 844.38
-------------- ---------------
Repairs & Maintenance $ $
-------------- ---------------
Miscellaneous Office Expense $ 180.55 $ 1,865.99
-------------- ---------------
Advertising $ $
-------------- ---------------
Travel & Entertainment $ 1,454.75 $ 11,988.93
-------------- ---------------
Professional Fees $ $ 48,557.15
-------------- ---------------
Court Costs $ 500.00 $ 19,372.00
-------------- ---------------
Insurance: Liability $ $
-------------- ---------------
Property $ $
-------------- ---------------
Vehicle $ $
-------------- ---------------
Worker's Compensation $ $
-------------- ---------------
Other - Bond $ $ (920.00)
-------------- ---------------
Taxes: Payroll $ 549.30 $ 5,042.70
-------------- ---------------
Sales $ $
-------------- ---------------
Income $ $
-------------- ---------------
Real Property $ $
-------------- ---------------
Personal Property $ $
-------------- ---------------
Total Operating Expenses $ 9,269.06 $ 145,130.90
-------------- ---------------
Total Profit (Loss) from Operations $ (9,269.06) $ (145,130.90)
-------------- ---------------
Other Income (Expense) $ $
-------------- ---------------
Gain (Loss) on Sale of Assets $ $
-------------- ---------------
Interest Expense $ $
-------------- ---------------
Interest Income $ $
-------------- ---------------
Dividend Income $ $ 16.34
-------------- ---------------
Herth Printing Income (loss) $ (3,975.00) $ (56,221.00)
-------------- ---------------
Total $ (3,975.00) $ (56,204.66)
-------------- ---------------
Total Profit (Loss) for Month $ (13,244.06) $ (201,335.56)
-------------- ---------------
</TABLE>
<PAGE> 8
CASH FLOW STATEMENT
MAY 1998
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
-------------- ---------------
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
-------------- ---------------
Collections of Accounts Receivable $ $
-------------- ---------------
Other Income $ $
-------------- ---------------
Total Receipts $ $
-------------- ---------------
Disbursements:
Purchases and Inventory $ $
-------------- ---------------
Salaries and Wages $ 4,714.20 $
-------------- ---------------
Employee Benefits $ $
-------------- ---------------
Shipping & Freight $ 48.00 $
-------------- ---------------
Rent $ $
-------------- ---------------
Secured Debt Payments $ $
-------------- ---------------
Outside Services $ 190.00 $
-------------- ---------------
Telephone $ 146.46 $
-------------- ---------------
Repairs & Maintenance $ $
-------------- ---------------
Miscellaneous Office Expense $ 180.55 $
-------------- ---------------
Advertising $ $
-------------- ---------------
Travel & Entertainment $ 1,454.75 $
-------------- ---------------
Professional Fees $ $
-------------- ---------------
Court Costs $ 500.00 $
-------------- ---------------
Insurance: Liability $ $
-------------- ---------------
Property $ $
-------------- ---------------
Vehicle $ $
-------------- ---------------
Worker's Compensation $ $
-------------- ---------------
Other ___________ $ $
-------------- ---------------
Taxes: Payroll $ 1,758.60 $
-------------- ---------------
Sales $ $
-------------- ---------------
Income $ $
-------------- ---------------
Real Property $ $
-------------- ---------------
Personal Property $ $
-------------- ---------------
Total Disbursements $ 8,992.56 $
-------------- ---------------
Cash Flow $ (8,992.56) $
-------------- ---------------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule,
identifying in chronological (or reverse chronological) order
every debt which came due after the commencement of the
bankruptcy case but has not been paid, and specifying the
creditor by name and address, the nature of the debt (e.g.,
rent, advertising, wages, etc.), the amount owed and the date
on which the obligation came due. Provide summary information
below for both accounts payable and accounts receivable:
<TABLE>
<CAPTION>
Accounts Payable Accounts Receivable
<S> <C> <C>
Less Than 31 Days Past Due
31 to 60 Days Past Due
61 to 90 Days Past Due
91 to 120 Days Past Due
Over 120 Days Past Due
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and
address, and provide the requested information. Where there is
a postpetition stipulation or court order governing the
creditor's treatment, respond on the basis of that stipulation
or order; otherwise, respond on the basis of the prepetition
contract or lease.
<TABLE>
<CAPTION>
Post Petitions Payments
Payment Periodic Date of Made Missed
Period Payment Last ---------------------------
Creditor Name and Address (mo/wk) Amount Payment No. Amount No. Amount
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C>
Gross Payroll Expense for Report Month: $6,200.00
---------
Gross Sales Subject to Sales Tax for Report Month: $ -0-
---------
</TABLE>
<TABLE>
<CAPTION>
Postpetition Taxes
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding 1,862.60
State Payroll & Withholding 460.60
State Sales & Use
</TABLE>
IV. INSURANCE COVERAGE
<TABLE>
<CAPTION>
Carrier/Agent Amount of Policy Expiration Policy Paid
Name Coverage Date Through Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Worker's Compensation Liability
Fire & Extended Coverage
Property
Theft
Vehicle
Life (Beneficiary):
Other (specify):
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization
under a Bankruptcy Court order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
V. Narrative
Provide a brief narrative report of any significant events outside of
the ordinary course of business which occurred during the Report Month:
VI. U.S. Trustee Fees
<TABLE>
<CAPTION>
Total Total Quarterly
Disbursement Fees Due But
Quarter Ending During Quarter Quarterly Fee Amount Paid Date Paid Not Paid
<S> <C> <C> <C> <C> <C>
3-31-98 500.00 500.00 500.00 5-27-98 -0-
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and, after making reasonable inquiry, believe that
these documents are accurate and correct.
DATED this 12 day of June, 1997.
By: /s/ Richard Cascarilla
------------------------------
<PAGE> 1
Exhibit 99o
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
JUNE 1998
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA. Inc. have
not cooperated with the Debtor by providing the necessary Information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard Cascarilla
---------------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
JUNE 30, 1998
Assets
<TABLE>
<S> <C> <C> <C>
Current Assets:
Cash $ 11,154.55
---------------
Accounts Receivable $
---------------
Allowance for Doubtful
Accounts $
---------------
Accounts Receivable (Net) $
---------------
Inventory $
---------------
Prepaid Expenses $
---------------
Total Current Assets $ 11,154.55
---------------
Property and Equipment (Fair Market Value)
Real Property $
---------------
Machinery and Equipment $ 5,700,000.00
---------------
Furniture and Fixtures $
---------------
Office Equipment $
---------------
Leasehold Improvements $
---------------
Vehicles $
---------------
Other $
---------------
Total Property and Equipment $ 5,700,000.00
---------------
Investments:
Herth Printing and Business Supply
Stock (at Book Value) $ 392,788.00
---------------
Total Assets: $ 6,103,942.55
---------------
</TABLE>
<PAGE> 3
LIABILITIES
JUNE 30, 1998
<TABLE>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
---------------
Payroll Taxes $ 2,561.50
---------------
Sales Taxes $
---------------
Income Taxes $
---------------
Real Property Taxes $
---------------
Personal Property Taxes $
---------------
Accounts Payable $
---------------
Postpetition Real Property
Lease Arrearages $
---------------
Postpetition Equipment
Lease Arrearages $
---------------
Accrued Professional Fees
Other LOAN SHAREHOLDER $
---------------
DIEGOTEL, INC STOCK-BOOK VALUE $
---------------
Total Postpetition Liabilities $ 2,561.50
---------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
---------------
Secured Debt (Schedule A-2) $
---------------
Unsecured Debt (Schedule A-3) $
---------------
Total Prepetition Liabilities $
---------------
Shareholder's Equity
Common Stock $
---------------
Paid-In Capital $ 6,131,096.00
---------------
Retained Earnings $ (29,714.95)
---------------
Total Shareholder's Equity $ 6,101,381.05
---------------
Total Liabilities & Equity $ 6,103,942.55
---------------
</TABLE>
<PAGE> 4
RECAPITULATION
JUNE 30, 1998
<TABLE>
<S> <C>
Balance from Prior Month
General Account $ 21,333.85
------------
Bank FIRST OF AMERICA BANK, N.A. MICHIGAN
Branch OKEMOS, MICHIGAN
Account #62-30079367
General Account $
------------
Bank
Branch
Account #
Tax Account $
------------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account $ 11,154.55
------------
General Account $
------------
Tax Account $
------------
</TABLE>
<PAGE> 5
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUMMARIES
#97-30265
(PTELBANK.698)
JUNE, 1998
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA
- -------- --------------------------- ------------
<S> <C> <C>
06.01.98 BEGINNING BALANCE $ 21,333.85
------------
------------
06.30.98 TOTAL DEPOSITS -0-
------------
06.30.98 CHECKS WRITTEN PER ATTACHED $ 10,179.30
------------
06.30.98 BALANCE $ 11,154.55
============
</TABLE>
<PAGE> 6
RUN DATE: 07/14/98 POWERTEL USA, INC. PAGE: 1
SYS DATE: 06/30/98 TRANSACTION JOURNAL TIME: 08:42 AM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
<S> <C> <C> <C> <C>
CD-0001 06/30/98 1020-000-00 10,179.30 DISBURSEMENTS
</TABLE>
<TABLE>
<CAPTION>
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- -------- -------- ------------------------ ------------------ ------------
<S> <C> <C> <C> <C>
0001130 06/01/98 CASEY & BOOG 6600-000-00 95.00
0001131 06/02/98 FLEET 7900-000-00 1,464.77
0001132 06/07/98 UPS 6000-000-00 12.00
0001133 06/08/98 KNUTSON TRAVEL PORT 7900-000-00 356.00
0001134 06/11/98 CASEY & BOOG PLC 6500-000-00 17.77
0001135 06/13/98 FIRST OF AMERICA 2110-001-00 474.30
0001135 06/13/98 FIRST OF AMERICA 2110-002-00 810.00
0001135 06/13/98 FIRST OF AMERICA 2110-005-00 474.30
---------
CHECK 0001135 TOTALS: 1,758.60
0001136 06/15/98 CASEY & BOOG 6600-000-00 95.00
0001137 06/18/98 UPS 6000-000-00 12.00
0001138 06/25/98 KNUTSON TRAVEL PORT 7900-000-00 437.00
0001139 06/25/98 RICHARD A CASCARILLA 8100-000-00 3,723.00
0001140 06/30/98 UPS 6000-000-00 36.00
0001141 06/30/98 AMERITECH 7800-000-00 18.96
0001142 06/30/98 ROBERT LINDBERG CPA 5050-000-00 1,162.00
0001143 06/30/98 H LAURENCE HERTH 8100-000-00 991.20
---------
JOURNAL CD-0001 TOTALS: 10,179.30
---------
SOURCE CD TOTALS: 10,179.30
---------
REPORT TOTALS: 10,179.30
=========
</TABLE>
<PAGE> 7
INCOME STATEMENT
(Accrual Basis)
OCTOBER 1, 1997 TO JUNE 30, 1998
<TABLE>
<CAPTION>
Current Year to
Month Date
-------------- ---------------
<S> <C> <C>
Income $ -0- $ -0-
-------------- ---------------
Cost of Goods Sold
Beginning Inventory $ $
-------------- ---------------
Inventory Purchases $ $
-------------- ---------------
Ending Inventory $ $
-------------- ---------------
Total Costs of Goods Sold $ $
-------------- ---------------
Operating Expenses
Salaries and Wages $ 6,200.00 $ 60,800.00
-------------- ---------------
Employee Benefits $ $
-------------- ---------------
Shipping & Freight $ 60.00 $ 1,364.82
-------------- ---------------
Rent $ $
-------------- ---------------
Secured Debt Payments $ $
-------------- ---------------
Outside Services $ 190.00 $ 2,664.93
-------------- ---------------
Telephone $ 18.96 $ 863.34
-------------- ---------------
Repairs & Maintenance $ $
-------------- ---------------
Miscellaneous Office Expense $ 17.77 $ 1,883.76
-------------- ---------------
Advertising $ $
-------------- ---------------
Travel & Entertainment $ 2,257.77 $ 14,246.70
-------------- ---------------
Professional Fees $ 1,162.00 $ 49,719.15
-------------- ---------------
Court Costs $ $ 19,372.00
-------------- ---------------
Insurance: Liability $ $
-------------- ---------------
Property $ $
-------------- ---------------
Vehicle $ $
-------------- ---------------
Worker's Compensation $ $
-------------- ---------------
Other - Bond $ $ (920.00)
-------------- ---------------
Taxes: Payroll $ 511.10 $ 5,553.80
-------------- ---------------
Sales $ $
-------------- ---------------
Income $ $
-------------- ---------------
Real Property $ $
-------------- ---------------
Personal Property $ $
-------------- ---------------
Total Operating Expenses $ 10,417.60 $ 155,548.50
-------------- ---------------
Total Profit (Loss) from Operations $ (10,417.60) $ (155,548.50)
-------------- ---------------
Other Income (Expense) $ $
-------------- ---------------
Gain (Loss) on Sale of Assets $ $
-------------- ---------------
Interest Expense $ $
-------------- ---------------
Interest Income $ $
-------------- ---------------
Dividend income $ $ 16.34
-------------- ---------------
Herth Printing Income (loss) $ 17,913.00 $ (38,308.00)
-------------- ---------------
Total $ 17,913.00 $ (38,291.66)
-------------- ---------------
Total Profit (Loss) for Month $ 7,495.40 $ (193,840.16)
-------------- ---------------
</TABLE>
<PAGE> 8
CASH FLOW STATEMENT
JUNE 1998
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
--------------- ------------
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
--------------- ------------
Collections of Accounts Receivable $ $
--------------- ------------
Other Income $ $
--------------- ------------
Total Receipts $ $
--------------- ------------
Disbursements:
Purchases and Inventory $ $
--------------- ------------
Salaries and Wages $ 4,714.20 $
--------------- ------------
Employee Benefits $ $
--------------- ------------
Shipping & Freight $ 60.00 $
--------------- ------------
Rent $ $
--------------- ------------
Secured Debt Payments $ $
--------------- ------------
Outside Services $ 190.00 $
--------------- ------------
Telephone $ 18.96 $
--------------- ------------
Repairs & Maintenance $ $
--------------- ------------
Miscellaneous Office Expense $ 17.77 $
--------------- ------------
Advertising $ $
--------------- ------------
Travel & Entertainment $ 2,257.77 $
--------------- ------------
Professional Fees $ 1,162.00 $
--------------- ------------
Court Costs $ $
--------------- ------------
Insurance: Liability $ $
--------------- ------------
Property $ $
--------------- ------------
Vehicle $ $
--------------- ------------
Worker's Compensation $ $
--------------- ------------
Other ___________ $ $
--------------- ------------
Taxes: Payroll $ 1,758.60 $
--------------- ------------
Sales $ $
--------------- ------------
Income $ $
--------------- ------------
Real Property $ $
--------------- ------------
Personal Property $ $
--------------- ------------
Total Disbursements $ 10,179.30 $
--------------- ------------
Cash Flow $ (10,179.30) $
--------------- ------------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying
in chronological (or reverse chronological) order every debt which came
due after the commencement of the bankruptcy case but has not been
paid, and specifying the creditor by name and address, the nature of
the debt (e.g., rent, advertising, wages, etc.), the amount owed and
the date on which the obligation came due. Provide summary information
below for both accounts payable and accounts receivable:
<TABLE>
<CAPTION>
Accounts Payable Accounts Payable
<S> <C> <C>
Less Than 31 Days Past Due
31 to 60 Days Past Due
61 to 90 Days Past Due
91 to 120 Days Past Due
Over 120 Days Past Due
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and address, and
provide the requested information. Where there is a postpetition
stipulation or court order governing the creditor's treatment, respond
on the basis of that stipulation or order; otherwise, respond on the
basis of the prepetition contract or lease.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Post Petition Payments
Periodic Made Missed
Creditor Name and Payment Period Payment Date of Last ---------------------------------
Address (mo/wk) Amount Payment No. Amount No. Amount
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C>
Gross Payroll Expense for Report Month: $6,200.00
---------
Gross Sales Subject to Sales Tax for Report Month: $ -0-
---------
</TABLE>
<TABLE>
<CAPTION>
Postpetition Taxes
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding 1,870.60
State Payroll & Withholding 690.00
State Sales & Use
</TABLE>
IV. INSURANCE COVERAGE
<TABLE>
<CAPTION>
Carrier/Agent Amount of Policy Expiration Policy Paid
Name Coverage Date Through Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Worker's Compensation Liability
Fire & Extended Coverage
Property
Theft
Vehicle
Life (Beneficiary):
Other (specify):
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization
under a Bankruptcy Court order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
VI. Narrative
Provide a brief narrative report of any significant events outside of
the ordinary course of business which occurred during the Report Month:
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Total Total Quarterly
Disbursement Fees Due But
Quarter Ending During Quarter Quarterly Fee Amount Paid Date Paid Not Paid
<S> <C> <C> <C> <C> <C>
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and, after making reasonable inquiry, believe that
these documents are accurate and correct.
DATED this 20 day of July, 1998.
By: /s/ Richard Cascarilla
---------------------------------------
<PAGE> 1
Exhibit 99p
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
JULY 1998
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA. Inc. have
not cooperated with the Debtor by providing the necessary information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard A. Cascarilla
--------------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
JULY 31, 1998
Assets
<TABLE>
<S> <C> <C> <C>
Current Assets:
Cash $ 6,882.64
-------------
Accounts Receivable $
-------------
Allowance for Doubtful
Accounts $
-------------
Accounts Receivable (Net) $
-------------
Inventory $
-------------
Prepaid Expenses $
-------------
Total Current Assets $ 6,882.64
-------------
Property and Equipment (Fair Market Value)
Real Property $
-------------
Machinery and Equipment $5,700,000.00
-------------
Furniture and Fixtures $
-------------
Office Equipment $
-------------
Leasehold Improvements $
-------------
Vehicles $
-------------
Other $
-------------
Total Property and Equipment $5,700,000.00
-------------
Investments:
Herth Printing and Business Supply
Stock (at Book Value) $ 381,585.00
-------------
Total Assets: $6,088,467.64
-------------
</TABLE>
<PAGE> 3
LIABILITIES
JULY 31, 1998
<TABLE>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
-------------
Payroll Taxes $ 1,988.90
-------------
Sales Taxes $
-------------
Income Taxes $
-------------
Real Property Taxes $
-------------
Personal Property Taxes $
-------------
Accounts Payable $
-------------
Postpetition Real Property
Lease Arrearages $
-------------
Postpetition Equipment
Lease Arrearages $
-------------
Accrued Professional Fees
Other ___________ $
-------------
___________ $
-------------
Total Postpetition Liabilities $ 1,988.90
-------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
-------------
Secured Debt (Schedule A-2) $
-------------
Unsecured Debt (Schedule A-3) $
-------------
Total Prepetition Liabilities $
-------------
Shareholder's Equity
Common Stock $
-------------
Paid-In Capital $6,131,096.00
-------------
Retained Earnings $ (44,617.26)
-------------
Total Shareholder's Equity $6,086,478.74
-------------
Total Liabilities & Equity $6,088,467.64
-------------
</TABLE>
<PAGE> 4
RECAPITULATION
JULY 31, 1998
<TABLE>
<S> <C>
Balance from Prior Month
General Account $ 11,154.55
-------------
Bank FIRST OF AMERICA BANK, N.A. MICHIGAN
Branch OKEMOS, MICHIGAN
Account #62-30079367
General Account $
-------------
Bank
Branch
Account #
Tax Account $
-------------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account $ 6,882.64
-------------
General Account $
-------------
Tax Account $
-------------
</TABLE>
<PAGE> 5
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUMMARIES
#97-30265
(PTELBANK.698)
JULY, 1998
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA
- -------- -------------------------------- -----------
<S> <C> <C>
06.01.98 BEGINNING BALANCE $ 11,154.55
-----------
07.28.98 HERTH PRINTING INC. DISTRIBUTION 7,000.00
-----------
07.31.98 TOTAL DEPOSITS 7,000.00
-----------
07.31.98 CHECKS WRITTEN PER ATTACHED $ 11,271.91
-----------
07.31.98 BALANCE $ 6,882.64
===========
</TABLE>
<PAGE> 6
RUN DATE: 08/07/98 POWERTEL USA, INC. PAGE: 1
SYS DATE: 07/31/98 TRANSACTION JOURNAL TIME: 11:25 AM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
<S> <C> <C> <C> <C>
CD-0001 07/31/98 1020-000-00 11,271.91 DISBURSEMENTS
</TABLE>
<TABLE>
<CAPTION>
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- ---------- -------- ------------------------ ----------- ------------
<S> <C> <C> <C> <C>
0001144 07/03/98 CASEY & BOOG 6600-000-00 95.00
0001145 07/05/98 CASEY & BOOG 6500-000-00 47.70
0001146 06/07/98 FLEET 7900-000-00 1,045.36
0001147 07/13/98 BELDING & HARRIS 6200-000-00 150.00
0001148 07/13/98 UPS 6000-000-00 12.00
0001149 07/15/98 STATE OF MICHIGAN 2110-003-00 604.50
0001150 07/15/98 FIRST OF AMERICA 2110-001-00 474.30
0001150 07/15/98 FIRST OF AMERICA 2110-002-00 810.00
0001150 07/15/98 FIRST OF AMERICA 2110-005-00 474.30
---------
CHECK 0001150 TOTALS: 1,758.60
0001151 07/16/98 E LANSING POSTMASTER 6500-000-00 128.00
0001152 07/16/98 UPS 6000-000-00 12.00
0001153 07/20/98 CASEY & BOOG 6600-000-00 95.00
0001154 07/20/98 CORPORATE 7800-000-00 802.03
0001155 07/24/98 UPS 6000-000-00 36.00
0001156 07/24/98 FIRST OF AMERICA 2110-005-00 112.00
0001157 07/24/98 NEVADA EMPL SECURITY COM 2110-005-00 86.40
0001158 07/24/98 NEVADA EMPL SECURITY COM 2110-005-00 7.00
0001159 07/29/98 RICHARD CASCARILLA 8100-000-00 3,723.00
0001160 07/29/98 H LAURENCE HERTH 8100-000-00 991.20
0001161 07/31/98 BELDING & HARRIS 6200-000-00 1,566.12
---------
JOURNAL CD-0001 TOTALS: 11,271.91
---------
SOURCE CD TOTALS: 11,271.91
---------
REPORT TOTALS: 11,271.91
=========
</TABLE>
<PAGE> 7
INCOME STATEMENT
(Accrual Basis)
OCTOBER 1, 1997 TO JULY 31, 1998
<TABLE>
<CAPTION>
Current Year to
Month Date
-------------- ---------------
<S> <C> <C>
Income $ -0- $ -0-
-------------- ---------------
Cost of Goods Sold
Beginning Inventory $ $
-------------- ---------------
Inventory Purchases $ $
-------------- ---------------
Ending Inventory $ $
-------------- ---------------
Total Costs of Goods Sold $ $
-------------- ---------------
Operating Expenses
Salaries and Wages $ 6,200.00 $ 67,800.00
-------------- ---------------
Employee Benefits $ $
-------------- ---------------
Shipping & Freight $ 60.00 $ 1,424.82
-------------- ---------------
Rent $ $
-------------- ---------------
Secured Debt Payments $ $
-------------- ---------------
Outside Services $ 190.00 $ 2,854.93
-------------- ---------------
Telephone $ $ 863.34
-------------- ---------------
Repairs & Maintenance $ $
-------------- ---------------
Miscellaneous Office Expense $ 175.70 $ 2,059.46
-------------- ---------------
Advertising $ $
-------------- ---------------
Travel & Entertainment $ 1,847.39 $ 16,094.09
-------------- ---------------
Professional Fees $ 1,716.12 $ 51,435.27
-------------- ---------------
Court Costs $ $ 19,372.00
-------------- ---------------
Insurance: Liability $ $
-------------- ---------------
Property $ $
-------------- ---------------
Vehicle $ $
-------------- ---------------
Worker's Compensation $ $
-------------- ---------------
Other - Bond $ $ (920.00)
-------------- ---------------
Taxes: Payroll $ 510.10 $ 6,063.90
-------------- ---------------
Sales $ $
-------------- ---------------
Income $ $
-------------- ---------------
Real Property $ $
-------------- ---------------
Personal Property $ $
-------------- ---------------
Total Operating Expenses $ 10,699.31 $ 166,247.81
-------------- ---------------
Total Profit (Loss) from Operations $ (10,699.31) $ (166,247.81)
-------------- ---------------
Other Income (Expense) $ $
-------------- ---------------
Gain (Loss) on Sale of Assets $ $
-------------- ---------------
Interest Expense $ $
-------------- ---------------
Interest Income $ $
-------------- ---------------
Dividend Income $ $ 16.34
-------------- ---------------
Herth Printing Income (loss) $ (4,203.00) $ (42,511.00)
-------------- ---------------
Total $ (4,203.00) $ (42,494.66)
-------------- ---------------
Total Profit (Loss) for Month $ (14,902.31) $ (208,742.47)
-------------- ---------------
</TABLE>
<PAGE> 8
CASH FLOW STATEMENT
JULY 1998
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
-------------- ---------------
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
-------------- ---------------
Collections of Accounts Receivable $ $
-------------- ---------------
Other Income - HERTH PRINTING DISTRIBUTION $ 7,000.00 $
-------------- ---------------
Total Receipts $ 7,000.00 $
-------------- ---------------
Disbursements:
Purchases and Inventory $ $
-------------- ---------------
Salaries and Wages $ 4,714.20 $
-------------- ---------------
Employee Benefits $ $
-------------- ---------------
Shipping & Freight $ 60.00 $
-------------- ---------------
Rent $ $
-------------- ---------------
Secured Debt Payments $ $
-------------- ---------------
Outside Services $ 190.00 $
-------------- ---------------
Telephone $ $
-------------- ---------------
Repairs & Maintenance $ $
-------------- ---------------
Miscellaneous Office Expense $ 175.70 $
-------------- ---------------
Advertising $ $
-------------- ---------------
Travel & Entertainment $ 1,847.39 $
-------------- ---------------
Professional Fees $ 1,716.12 $
-------------- ---------------
Court Costs $ $
-------------- ---------------
Insurance: Liability $ $
-------------- ---------------
Property $ $
-------------- ---------------
Vehicle $ $
-------------- ---------------
Worker's Compensation $ $
-------------- ---------------
Other ___________ $ $
-------------- ---------------
Taxes: Payroll $ 2,568.50 $
-------------- ---------------
Sales $ $
-------------- ---------------
Income $ $
-------------- ---------------
Real Property $ $
-------------- ---------------
Personal Property $ $
-------------- ---------------
Total Disbursements $ 11,271.91 $
-------------- ---------------
Cash Flow $ (4,271.91) $
-------------- ---------------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying
in chronological (or reverse chronological) order every debt which came
due after the commencement of the bankruptcy case but has not been
paid, and specifying the creditor by name and address, the nature of
the debt (e.g., rent, advertising, wages, etc.), the amount owed and
the date on which the obligation came due. Provide summary information
below for both accounts payable and accounts receivable:
<TABLE>
<CAPTION>
Accounts Payable Accounts Receivable
- ------------------------------------------------------------------------------
<S> <C> <C>
Less Than 31 Days Past Due
31 to 60 Days Past Due
61 to 90 Days Past Due
91 to 120 Days Past Due
Over 120 Days Past Due
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and address, and
provide the requested information. Where there is a postpetition
stipulation or court order governing the creditor's treatment, respond
on the basis of that stipulation or order; otherwise, respond on the
basis of the prepetition contract or lease.
<TABLE>
<CAPTION>
Post Petition Payments
Payment Periodic Date of Made Missed
Period Payment Last ---------------------------
Creditor Name and Address (mo/wk) Amount Payment No. Amount No. Amount
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C>
Gross Payroll Expense for Report Month: $6,200.00
---------
Gross Sales Subject to Sales Tax for Report Month $ 0.00
---------
</TABLE>
<TABLE>
<CAPTION>
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding 1,758.60
State Payroll & Withholding 230.30
State Sales & Use
</TABLE>
IV. Insurance Coverage
<TABLE>
<CAPTION>
Carrier/Agent Amount of Policy Expiration Policy Paid
Name Coverage Date Through Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Worker's Compensation Liability
Fire & Extended Coverage
Property
Theft
Vehicle
Life (Beneficiary):
Other (specify):
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization
under a Bankruptcy Court order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VI. Narrative
Provide a brief narrative report of any significant events outside of
the ordinary course of business which occurred during the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Total Total Quarterly
Disbursement Fees Due But
Quarter Ending During Quarter Quarterly Fee Amount Paid Date Paid Not Paid
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and, after making reasonable inquiry, believe that
these documents are accurate and correct.
DATED this 17th day of July, 1998.
By: /s/ Richard Cascarilla
----------------------
<PAGE> 1
Exhibit 99q
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
AUGUST 1998
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA. Inc. have
not cooperated with the Debtor by providing the necessary information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard A. Cascarilla
--------------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
AUGUST 31, 1998
Assets
<TABLE>
<S> <C> <C> <C>
Current Assets:
Cash $ 1,240.25
-------------
Accounts Receivable $
-------------
Allowance for Doubtful
Accounts $
-------------
Accounts Receivable (Net) $
-------------
Inventory $
-------------
Prepaid Expenses $
-------------
Total Current Assets $ 1,240.25
-------------
Property and Equipment (Fair Market Value)
Real Property $
-------------
Machinery and Equipment $5,700,000.00
-------------
Furniture and Fixtures $
-------------
Office Equipment $
-------------
Leasehold Improvements $
-------------
Vehicles $
-------------
Other $
-------------
Total Property and Equipment $5,700,000.00
-------------
Investments:
Herth Printing and Business Supply
Stock (at Book Value) $ 3,876.29
-------------
Total Assets: $6,088,869.25
-------------
</TABLE>
<PAGE> 3
LIABILITIES
AUGUST 31, 1998
<TABLE>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
-------------
Payroll Taxes $ 2,219.20
-------------
Sales Taxes $
-------------
Income Taxes $
-------------
Real Property Taxes $
-------------
Personal Property Taxes $
-------------
Accounts Payable $
-------------
Postpetition Real Property
Lease Arrearages $
-------------
Postpetition Equipment
Lease Arrearages $
-------------
Accrued Professional Fees
Other $
-------------
$
-------------
Total Postpetition Liabilities $ 2,219.20
-------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
-------------
Secured Debt (Schedule A-2) $
-------------
Unsecured Debt (Schedule A-3) $
-------------
Total Prepetition Liabilities $
-------------
Shareholder's Equity
Common Stock $
-------------
Paid-In Capital $6,131,096.00
-------------
Retained Earnings $ (44,445.95)
-------------
Total Shareholder's Equity $6,086,650.05
-------------
Total Liabilities & Equity $6,088,869.25
-------------
</TABLE>
<PAGE> 4
RECAPITULATION
AUGUST, 1998
<TABLE>
<S> <C>
Balance from Prior Month
General Account $ 6,882.64
-------------
Bank FIRST OF AMERICA BANK, N.A. MICHIGAN
Branch OKEMOS, MICHIGAN
Account #62-30079367
General Account $
-------------
Bank
Branch
Account #
Tax Account $
-------------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account $ 1,240.25
-------------
General Account $
-------------
Tax Account $
-------------
</TABLE>
<PAGE> 5
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUMMARIES
#97-30265
AUGUST, 1998
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA
- -------- --------------------------------- -----------
<S> <C> <C>
08.01.98 BEGINNING BALANCE $ 6,882.64
08.19.98 HERTH PRINTING INC. DISTRIBUTION $ 6,000.00
----------
08.31.98 TOTAL DEPOSITS $ 6,000.00
----------
08.31.98 CHECKS WRITTEN PER ATTACHED $11,642.39
----------
08.31.98 BALANCE $ 1,240.25
==========
</TABLE>
<PAGE> 6
RUN DATE: 09/14/98 POWERTEL USA, INC. PAGE: 1
SYS DATE: 08/31/98 TRANSACTION JOURNAL TIME: 12:03 PM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
<S> <C> <C> <C> <C>
CD-0001 08/31/98 1020-000-00 11,642.39 DISBURSEMENTS
</TABLE>
<TABLE>
<CAPTION>
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- ---------- -------- ------------------------ ------------------ -------------
<S> <C> <C> <C> <C>
0001162 08/03/98 CASEY & BOOG 6600-000-00 95.00
0001163 08/03/98 UPS 6000-000-00 78.25
0001164 08/04/98 KNUTSEN TRAVEL PORT 7900-000-00 550.00
0001165 08/04/98 AMERITECH 7800-000-00 18.82
0001166 08/06/98 STATE OF NEVADA 7600-000-00 389.96
0001167 08/07/98 CASEY & BOOG 6500-000-00 25.68
0001168 08/14/98 FIRST AMERICA 2110-001-00 474.30
0001168 08/14/98 FIRST AMERICA 2110-002-00 810.00
0001168 08/14/98 FIRST AMERICA 2110-005-00 474.30
----------
CHECK 0001168 TOTALS: 1,758.60
0001169 08/14/98 UPS 6000-000-00 12.00
0001170 08/14/98 FED EX 6000-000-00 44.75
0001171 08/18/98 MICHAEL KASSOUFF 7900-000-00 327.00
0001172 08/17/98 LAURIE WEBB & ASSOCIATES 6200-000-00 442.50
0001173 08/18/98 KNUTSEN TRAVEL PORT 7900-000-00 1,167.00
0001174 08/19/98 CORPORATE STOCK TRANSFER 7900-000-00 213.96
0001175 08/18/98 CASEY & BOOG 6600-000-00 90.00
0001176 08/18/98 US TRUSTEE 6200-000-00 250.00
0001177 08/18/98 AT&T 7800-000-00 4.91
0001178 08/27/98 H LAWRENCE HERTH 8100-000-00 991.20
0001179 08/27/98 RICHARD A. CASCARILLA 8100-000-00 3,723.00
0001180 08/28/98 AMERITECH 7800-000-00 18.82
0001181 08/28/98 UPS 6000-000-00 12.00
0001182 08/28/98 FLEET 7900-000-00 1,138.15
0001183 08/31/98 FIRST UNION 7900-000-00 290.79
----------
JOURNAL CD-0001 TOTALS: 11,642.39
----------
SOURCE CD TOTALS: 11,642.39
----------
REPORT TOTALS: 11,642.39
==========
</TABLE>
<PAGE> 7
INCOME STATEMENT
(Accrual Basis)
OCTOBER 1, 1997 TO AUGUST 31, 1998
<TABLE>
<CAPTION>
Current Year to
Month Date
-------------- ---------------
<S> <C> <C>
Income $ 0.00 $ 0.00
-------------- ---------------
Cost of Goods Sold
Beginning Inventory $ $
-------------- ---------------
Inventory Purchases $ $
-------------- ---------------
Ending inventory $ $
-------------- ---------------
Total Costs of Goods Sold $ $
-------------- ---------------
Operating Expenses
Salaries and Wages $ 6,200.00 $ 73,200.00
-------------- ---------------
Employee Benefits $ $
-------------- ---------------
Shipping & Freight $ 147.00 $ 1,571.82
-------------- ---------------
Rent $ $
-------------- ---------------
Secured Debt Payments $ $
-------------- ---------------
Outside Services $ 185.00 $ 3,039.93
-------------- ---------------
Telephone $ 42.55 $ 905.89
-------------- ---------------
Repairs & Maintenance $ $
-------------- ---------------
Miscellaneous Office Expense $ 25.68 $ 2,085.14
-------------- ---------------
Advertising $ $
-------------- ---------------
Travel & Entertainment $ 3,686.90 $ 19,780.99
-------------- ---------------
Professional Fees $ 692.50 $ 52,127.77
-------------- ---------------
Court Costs $ $ 19,372.00
-------------- ---------------
Insurance: Liability $ $
-------------- ---------------
Property $ $
-------------- ---------------
Vehicle $ $
-------------- ---------------
Worker's Compensation $ $
-------------- ---------------
Other - Bond $ $ (920.00)
-------------- ---------------
Taxes: Payroll $ 893.06 $ 6,956.96
-------------- ---------------
Sales $ $
-------------- ---------------
Income $ $
-------------- ---------------
Real Property $ $
-------------- ---------------
Personal Property $ $
-------------- ---------------
Total Operating Expenses $ 11,872.69 $ 178,120.50
-------------- ---------------
Total Profit (Loss) from Operations $ (11,872.69) $ (178,120.50)
-------------- ---------------
Other Income (Expense) $ $
-------------- ---------------
Gain (Loss) on Sale of Assets $ $
-------------- ---------------
Interest Expense $ $
-------------- ---------------
Interest Income $ $
-------------- ---------------
Dividend Income $ $ 16.34
-------------- ---------------
Herth Printing Income (loss) $ 12,044.00 $ (30,467.00)
-------------- ---------------
Total $ 12,044.00 $ (30,450.66)
-------------- ---------------
Total Profit (Loss) for Month $ 171.31 $ (208,571.16)
-------------- ---------------
</TABLE>
<PAGE> 8
CASH FLOW STATEMENT
AUGUST, 1998
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
-------------- ---------------
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
-------------- ---------------
Collections of Accounts Receivable $ $
-------------- ---------------
Other Income - HERTH PRINTING DIVIDEND $ 6,000.00 $
-------------- ---------------
Total Receipts $ 6,000.00 $
-------------- ---------------
Disbursements:
Purchases and Inventory $ $
-------------- ---------------
Salaries and Wages $ 4,714.20 $
-------------- ---------------
Employee Benefits $ $
-------------- ---------------
Shipping & Freight $ 147.00 $
-------------- ---------------
Rent $ $
-------------- ---------------
Secured Debt Payments $ $
-------------- ---------------
Outside Services $ 185.00 $
-------------- ---------------
Telephone $ 42.55 $
-------------- ---------------
Repairs & Maintenance $ $
-------------- ---------------
Miscellaneous Office Expense $ 25.68 $
-------------- ---------------
Advertising $ $
-------------- ---------------
Travel & Entertainment $ 3,686.90 $
-------------- ---------------
Professional Fees $ 692.50 $
-------------- ---------------
Court Costs $ $
-------------- ---------------
Insurance: Liability $ $
-------------- ---------------
Property $ $
-------------- ---------------
Vehicle $ $
-------------- ---------------
Worker's Compensation $ $
-------------- ---------------
Other $ $
-------------- ---------------
Taxes: Payroll $ 2,148.56 $
-------------- ---------------
Sales $ $
-------------- ---------------
Income $ $
-------------- ---------------
Real Property $ $
-------------- ---------------
Personal Property $ $
-------------- ---------------
Total Disbursements $ 11,642.39 $
-------------- ---------------
Cash Flow $ (5,642.39) $
-------------- ---------------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying
in chronological (or reverse chronological) order every debt which came
due after the commencement of the bankruptcy case but has not been
paid, and specifying the creditor by name and address, the nature of
the debt (e.g., rent, advertising, wages, etc.), the amount owed and
the date on which the obligation come due. Provide summary information
below for both accounts payable and accounts receivable:
<TABLE>
<CAPTION>
Accounts Payable Accounts Receivable
- ------------------------------------------------------------------------------
<S> <C> <C>
Less Than 31 Days Past Due
31 to 60 Days Past Due
61 to 90 Days Past Due
91 to 120 Days Past Due
Over 120 Days Past Due
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and address, and
provide the requested information. Where there is a postpetition
stipulation or court order governing the creditor's treatment, respond
on the basis of that stipulation or order; otherwise, respond on the
basis of the prepetition contract or lease.
<TABLE>
<CAPTION>
Payment Periodic Date of Post Petitions Payments
Period Payment Last Made Missed
Creditor Name and Address (mo/wk) Amount Payment No. Amount No. Amount
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C> <C>
Gross Payroll Expense for Report Month: $6,200.00
---------
Gross Sales Subject to Sales Tax for Report Month: $ 0.00
---------
</TABLE>
<TABLE>
<CAPTION>
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding 1,758.60
State Payroll & Withholding 460.60
State Sales & Use
</TABLE>
IV. INSURANCE COVERAGE
<TABLE>
<CAPTION>
Carrier/Agent Amount of Policy Expiration Policy Paid
Name Coverage Date Through Date
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Worker's Compensation Liability
Fire & Extended Coverage
Property
Theft
Vehicle
Life (Beneficiary):
Other (specify):
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization
under a Bankruptcy Court Order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VI. Narrative
Provide a brief narrative report of any significant events outside of
the ordinary course of business which occurred during the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
Total Total Quarterly
Disbursement Fees Due But
Quarter Ending During Quarter Quarterly Fee Amount Paid Date Paid Not Paid
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and, after making reasonable inquiry, believe that
these documents are accurate and correct.
DATED this 18th day of September , 1997.
By: /s/ Richard A. Cascarilla
----------------------------------------
<PAGE> 1
Exhibit 99r
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
SEPTEMBER 1998
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA. Inc. have
not cooperated with the Debtor by providing the necessary information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard Cascarilla
-----------------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
SEPTEMBER 30, 1998
Assets
<TABLE>
<S> <C> <C> <C>
Current Assets:
Cash $ 5,555.18
---------------
Accounts Receivable $
---------------
Allowance for Doubtful
Accounts $
---------------
Accounts Receivable (Net) $
---------------
Inventory $
---------------
Prepaid Expenses $
---------------
Total Current Assets $ 5,555.18
---------------
Property and Equipment (Fair Market Value)
Real Property $
---------------
Machinery and Equipment $ 5,700, 000.00
---------------
Furniture and Fixtures $
---------------
Office Equipment $
---------------
Leasehold Improvements $
---------------
Vehicles $
---------------
Other $
---------------
Total Property and Equipment $ 5,700,000.00
---------------
Investments:
Herth Printing and Business Supply
Stock (at Book Value) $ 388,747.00
---------------
Total Assets: $ 6,0942,302.18
---------------
</TABLE>
<PAGE> 3
LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
--------------
Payroll Taxes $ 460.60
--------------
Sales Taxes $
--------------
Income Taxes $
--------------
Real Property Taxes $
--------------
Personal Property Taxes $
--------------
Accounts Payable $
--------------
Postpetition Real Property
Lease Arrearages $
Postpetition Equipment
Lease Arrearages $
--------------
Accrued Professional Fees
Other LOAN SHAREHOLDER $ 4,000.00
--------------
DIEGOTEL, INC. STOCK-BOOK VALUE $ 7,500.00
--------------
Total Postpetition Liabilities $ 11,960.60
--------------
Repetition Liabilities
Priority Debt (Schedule A-1) $
--------------
Secured Debt (Schedule A-2) $
--------------
Unsecured Debt (Schedule A-3) $
--------------
Total Prepetition Liabilities $
--------------
Shareholder's Equity
Common Stock $
--------------
Paid-In Capital $ 6,131,096.00
--------------
Retained Earnings $ (48,754.42)
--------------
Total Shareholder's Equity $ 6,082,341.58
--------------
Total Liabilities & Equity $ 6,094,302.18
--------------
</TABLE>
<PAGE> 4
RECAPITULATION
SEPTEMBER, 1998
<TABLE>
<S> <C>
Balance from Prior Month
General Account $ 1,240.25
----------
Bank FIRST OF AMERICA BANK, N.A. MICHIGAN
Branch OKEMOS, MICHIGAN
Account #62-30079367
General Account $
----------
Bank
Branch
Account #
Tax Account $
----------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account $ 5,555.18
----------
General Account $
----------
Tax Account $
----------
</TABLE>
<PAGE> 5
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUMMARIES
#97-30265
SEPTEMBER, 1998
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA
- -------- ---------------------------- ----------
<S> <C> <C>
09.01.98 BEGINNING BALANCE $ 1,240.25
----------
09.08.98 SHAREHOLDER LOANS $ 4,000.00
09.25.98 TRANSFER FROM DIEGOTEL, INC. $ 7,500.00
----------
09.30.98 TOTAL DEPOSITS $11,500.00
09.30.98 CHECKS WRITTEN PER ATTACHED $ 7,185.07
----------
09.30.98 BALANCE $ 5,555.18
==========
</TABLE>
<PAGE> 6
RUN DATE: 10/09/98 POWERTEL USA, INC. PAGE: 1
SYS DATE: 09/30/98 TRANSACTION JOURNAL TIME: 09:30 AM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
<S> <C> <C> <C> <C>
CD-0001 09/30/98 1020-000-00 7,185.07 DISBURSEMENTS
</TABLE>
<TABLE>
<CAPTION>
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- ---------- -------- ------------------------ ----------- ------------
<S> <C> <C> <C> <C>
0001184 09/01/98 CASEY & BOOG 6600-000-00 95.00
0001185 09/01/98 CABO 6900-000-00 500.00
0001186 09/04/98 MIKE KASSOUFF 6500-000-00 199.23
0001187 09/04/98 JEFFREY ANTISDEL 6000-000-00 42.20
0001188 09/04/98 CASEY & BOOG 6600-000-00 167.00
0001189 09/10/98 CASEY & BOOG 6600-000-00 167.00
0001190 09/11/98 CASEY & BOOG 6500-000-00 29.79
0001191 09/15/98 FIRST OF AMERICA 2110-001-00 474.30
0001191 09/15/98 FIRST OF AMERICA 2110-002-00 810.00
0001191 09/15/98 FIRST OF AMERICA 2110-005-00 474.30
---------
CHECK 0001191 TOTALS: 1,758.60
0001192 09/19/98 KNUTSEN TRAVEL REPORT 7900-000-00 93.00
0001193 09/19/98 CORPORATE SERVICES 7800-000-00 263.76
0001194 09/19/98 CASEY AND BOOG 6600-000-00 95.00
0001195 09/19/98 KNUTSEN TRAVEL REPORT 7900-000-00 133.00
0001196 09/19/98 CASEY & BOOG 6600-000-00 167.00
0001197 09/24/98 ROBERT LINDBERG CPA 5050-000-00 1,041.90
0001198 09/24/98 PAUL GOEBEL GROUP 6110-000-00 530.02
0001199 09/24/98 UPS 6000-000-00 24.00
0001200 09/25/98 ENDS CHRISTIE 6600-000-00 500.00
0001201 09/25/98 CASEY & BOOG 6600-000-00 167.00
0001202 09/25/98 CORPORATE STOCK TRANSFER 7900-000-00 51.94
0001203 09/29/98 FLEET CREDIT CARD 7900-000-00 1,159.63
--------
JOURNAL CD-0001 TOTALS: 7,185.07
--------
SOURCE CD TOTALS: 7,185.07
--------
REPORT TOTALS: 7,185.07
--------
</TABLE>
<PAGE> 7
INCOME STATEMENT
(Accrual Basis)
OCTOBER 1, 1997 TO SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
Current Year to
Month Date
------------ -------------
<S> <C> <C>
Income $ $
------------ -------------
Cost of Goods Sold
Beginning Inventory $ $
------------ -------------
Inventory Purchases $ $
------------ -------------
Ending inventory $ $
------------ -------------
Total Costs of Goods Sold $ $
------------ -------------
Operating Expenses
Salaries and Wages $ $ 73,200.00
------------ -------------
Employee Benefits $ 530.02 $ 530.02
------------ -------------
Shipping & Freight $ 66.20 $ 1,638.02
------------ -------------
Rent $ 500.00 $ 500.00
------------ -------------
Secured Debt Payments $ $
------------ -------------
Outside Services $ 1,358.00 $ 4,397.93
------------ -------------
Telephone $ 263.76 $ 1,169.65
------------ -------------
Repairs & Maintenance $ $
------------ -------------
Miscellaneous Office Expense $ 229.02 $ 2,314.16
------------ -------------
Advertising $ $
------------ -------------
Travel & Entertainment $ 1,437.57 $ 21,218.56
------------ -------------
Professional Fees $ 1,041.90 $ 53.169.67
------------ -------------
Court Costs $ $ 19,372.00
------------ -------------
Insurance: Liability $ $
------------ -------------
Property $ $
------------ -------------
Vehicle $ $
------------ -------------
Worker's Compensation $ $
------------ -------------
Other - Bond $ $ (920.00)
------------ -------------
Taxes: Payroll $ $ 6,956.96
------------ -------------
Sales $ $
------------ -------------
Income $ $
------------ -------------
Real Property $ $
------------ -------------
Personal Property $ $
------------ -------------
Total Operating Expenses $ 5,426.47 $ 183,546.97
------------ -------------
Total Profit (Loss) from Operations $ (5,426.47) $ (183,546.97)
------------ -------------
Other Income (Expense) $ $
------------ -------------
Gain (Loss) on Sale of Assets $ $
------------ -------------
Interest Expense $ $
------------ -------------
Interest Income $ $
------------ -------------
Dividend Income $ $ 16.34
------------ -------------
Herth Printing Income (loss) $ 1,118.00 $ (29,349.00)
------------ -------------
Total $ 1,118.00 $ (29,332.66)
------------ -------------
Total Profit (Loss) for Month $ (4,308.47) $ (212,879.63)
------------ -------------
</TABLE>
<PAGE> 8
CASH FLOW STATEMENT
SEPTEMBER, 1998
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
------------ ------------
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
------------ ------------
Collections of Accounts Receivable $ $
------------ ------------
Other Income - DIEGTOTEL INC. TRANSFER $7,500 $ 11,500.00 $
------------ ------------
LOAN - SHAREHOLDERS $4,000
Total Receipts $ 11,500.00 $
------------ ------------
Disbursements:
Purchases and Inventory $ $
------------ ------------
Salaries and Wages $ $
------------ ------------
Employee Benefits $ 530.02 $
------------ ------------
Shipping & Freight $ 66.20 $
------------ ------------
Rent $ 500.00 $
------------ ------------
Secured Debt Payments $ $
------------ ------------
Outside Services $ 1,358.00 $
------------ ------------
Telephone $ 263.76 $
------------ ------------
Repairs & Maintenance $ $
------------ ------------
Miscellaneous Office Expense $ 229.02 $
------------ ------------
Advertising $ $
------------ ------------
Travel & Entertainment $ 1,437.57 $
------------ ------------
Professional Fees $ 1,041.90 $
------------ ------------
Court Costs $ $
------------ ------------
Insurance: Liability $ $
------------ ------------
Property $ $
------------ ------------
Vehicle $ $
------------ ------------
Worker's Compensation $ $
------------ ------------
Other $ $
------------ ------------
Taxes: Payroll $ 1,758.60 $
------------ ------------
Sales $ $
------------ ------------
Income $ $
------------ ------------
Real Property $ $
------------ ------------
Personal Property $ $
------------ ------------
Total Disbursements $ 7,185.07 $
------------ ------------
Cash Flow $ 4,314.93 $
------------ ------------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule,
identifying in chronological (or reverse chronological) order
every debt which came due after the commencement of the
bankruptcy case but has not been paid, and specifying the
creditor by name and address, the nature of the debt (e.g.,
rent, advertising, wages, etc.), the amount owed and the date
on which the obligation come due. Provide summary information
below for both accounts payable and accounts receivable:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Accounts Payable Accounts Receivable
<S> <C> <C>
- --------------------------------------------------------------------------------
Less Than 31 Days Past Due
- --------------------------------------------------------------------------------
31 to 60 Days Past Due
- --------------------------------------------------------------------------------
61 to 90 Days Past Due
- --------------------------------------------------------------------------------
91 to 120 Days Past Due
- --------------------------------------------------------------------------------
Over 120 Days Past Due
- --------------------------------------------------------------------------------
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and
address, and provide the requested information. Where there is
a postpetition stipulation or court order governing the
creditor's treatment, respond on the basis of that stipulation
or order; otherwise, respond on the basis of the prepetition
contract or lease.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Creditor Name and Address Payment Period Periodic Date of Post Petition Payments
(mo/wk) Payment Last Made Missed
Amount Payment No. Amount No. Amount
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C>
Gross Payroll Expense for Report Month: $0.00
-----
Gross Sales Subject to Sales Tax for Report Month: $0.00
-----
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding
- -----------------------------------------------------------------------------------------------------------
State Payroll & Withholding 460.60
- -----------------------------------------------------------------------------------------------------------
State Sales & Use
- -----------------------------------------------------------------------------------------------------------
</TABLE>
IV. INSURANCE COVERAGE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Carrier/Agent Amount of Policy Expiration Policy Paid
Name Coverage Date Through Date
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Worker's Compensation Liability
- ------------------------------------------------------------------------------------------------------
Fire & Extended Coverage
- ------------------------------------------------------------------------------------------------------
Property
- ------------------------------------------------------------------------------------------------------
Theft
- ------------------------------------------------------------------------------------------------------
Vehicle
- ------------------------------------------------------------------------------------------------------
Life (Beneficiary):
- ------------------------------------------------------------------------------------------------------
Other (specify):
- ------------------------------------------------------------------------------------------------------
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization
under a Bankruptcy Court Order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court? NO
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
If the answer is yes, identify each person paid, the date and amount
of such payment(s) and the basis for each such payment.
VI. Narrative
Provide a brief narrative report of any significant events outside of
the ordinary course of business which occurred during the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Quarter Ending Total Quarterly Fee Amount Paid Date Paid Total Quarterly
Disbursement Fees Due But
During Quarter Not Paid
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and after making reasonable inquiry, believe that
these documents are accurate and correct.
DATED this 18 day of September, 1998.
By: /s/ Richard Cascarilla
<PAGE> 1
Exhibit 99s
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
OCTOBER 1998
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA. Inc. have
not cooperated with the Debtor by providing the necessary information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard A. Cascarilla
-----------------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
OCTOBER 31, 1998
Assets
<TABLE>
<S> <C> <C> <C>
Current Assets:
Cash $ 654.32
--------------
Accounts Receivable $
--------------
Allowance for Doubtful
Accounts $
--------------
Accounts Receivable (Net) $
--------------
Inventory $
--------------
Prepaid Expenses $
--------------
Total Current Assets $ 654.32
--------------
Property and Equipment (Fair Market Value)
Real Property $
--------------
Machinery and Equipment $ 5,700,000.00
--------------
Furniture and Fixtures $
--------------
Office Equipment $
--------------
Leasehold Improvements $
--------------
Vehicles $
--------------
Other $
--------------
Total Property and Equipment $ 5,700,000.00
--------------
Investments:
Herth Printing and Business Supply
Stock (at Book Value) $ 381,680.00
--------------
Total Assets: $ 6,082,334.32
--------------
</TABLE>
<PAGE> 3
LIABILITIES
OCTOBER 31, 1998
<TABLE>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
-------------
Payroll Taxes $ 57.60
-------------
Sales Taxes $
-------------
Income Taxes $
-------------
Real Property Taxes $
-------------
Personal Property Taxes $
-------------
Accounts Payable $
-------------
Postpetition Real Property
Lease Arrearages $
-------------
Postpetition Equipment
Lease Arrearages $
-------------
Accrued Professional Fees
Other LOAN SHAREHOLDER $ 4,000.00
-------------
DIEGOTEL, INC STOCK-BOOK VALUE $ 7,500.00
-------------
Total Postpetition Liabilities $ 11,557.60
-------------
Repetition Liabilities
Priority Debt (Schedule A-1) $
-------------
Secured Debt (Schedule A-2) $
-------------
Unsecured Debt (Schedule A-3) $
-------------
Total Prepetition Liabilities $
-------------
Shareholder's Equity
Common Stock $
-------------
Paid-In Capital $6,131,096.00
-------------
Retained Earnings $ (60,319.28)
-------------
Total Shareholder's Equity $6,070,776.72
-------------
Total Liabilities & Equity $6,082,334.32
-------------
</TABLE>
<PAGE> 4
RECAPITULATION
OCTOBER, 1998
<TABLE>
<S> <C>
Balance from Prior Month
General Account $ 5,555.18
----------
Bank FIRST OF AMERICA BANK, N.A. MICHIGAN
Branch OKEMOS, MICHIGAN
Account #62-30079367
General Account $
----------
Bank
Branch
Account #
Tax Account $
----------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account $ 654.32
----------
General Account $
----------
Tax Account $
----------
</TABLE>
<PAGE> 5
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUMMARIES
#97-31265
OCTOBER, 1998
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA
- -------- --------------------------- ----------
<S> <C> <C>
10.01.98 BEGINNING BALANCE $ 5,555.18
10.31.98 TOTAL DEPOSITS $ 0.00
10.30.98 BANK SERVICE CHARGE $ 7.85
10.31.98 CHECKS WRITTEN PER ATTACHED $ 4,893.01
----------
10.31.98 BALANCE $ 4,900.86
==========
</TABLE>
<PAGE> 6
RUN DATE: 11/04/98 POWERTEL USA, INC. PAGE: I
SYS DATE: 10/31/99 TRANSACTION JOURNAL TIME: 02:33 PM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
<S> <C> <C> <C> <C>
CD-0001 10/31/98 1020-000-00 4,893.01 DISBURSEMENTS
</TABLE>
<TABLE>
<CAPTION>
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- ---------- -------- ------------------------ ----------- ------------
<S> <C> <C> <C> <C>
0001204 10/02/98 CASEY & BOOG 6600-000-00 167.00
0001205 10/02/98 CASEY & BOOG 6600-000-00 95.00
0001206 10/02/98 UPS 6000-000-00 12.00
0001207 10/02/98 CABO 6900-000-00 500.00
0001208 10/09/98 US POSTMASTER 6500-000-00 180.00
0001209 10/09/98 CASEY & BOOG 6500-000-00 21.59
0001210 10/09/98 CORPORATE SERVICES 7800-000-00 102.63
0001211 10/09/98 BILL STEPHENS PRODUCTION 6600-000-00 544.63
0001212 10/09/98 CASEY & BOOG 6600-000-00 167.00
0001213 10/12/98 KNUTSON TRAVEL PORT 7900-000-00 302.00
0001214 10/12/98 PAUL GOEBEL GROUP 6100-000-00 407.70
0001215 10/15/99 NEVADA DEPARTMENT OF
TAXATION 2110-005-00 5.00
0001216 10/15/98 STATE OF MICHIGAN 2110-003-00 403.00
0001217 10/15/98 UPS 6000-000-00 48.00
0001218 10/18/98 CASEY & BOOG 6600-000-00 95.00
0001219 10/21/98 AT&T 7800-000-00 13.08
0001220 10/21/98 SPRINT 7800-000-00 133.12
0001221 10/21/98 CORPORATE STOCK TRANSFER 7900-000-00 54.85
0001222 10/21/98 ROBERT LINDBERG CPA 5050-000-00 198.90
0001223 10/22/98 ELLIE SOPER 6600-000-00 50.00
0001224 10/22/98 CASEY 4 BOOG 6600-000-00 150.00
0001225 10/22/98 ENOS CHRISTIE 6600-000-00 500.00
0001226 10/26/99 PAUL GOEBEL GROUP 6110-000-00 529.84
0001227 10/28/98 UPS 6000-000-00 12.00
0001228 10/29/90 AMERITECH 7800-000-00 38.67
0001229 10/30/98 CASEY & BOOG 6600-000-00 150.00
0001230 10/30/98 UPS 6000-000-00 12.00
---------
JOURNAL CD-0001 TOTALS: 4,893.01
---------
SOURCE CD TOTALS: 4,893.01
---------
REPORT TOTALS: 4,893.01
=========
</TABLE>
<PAGE> 7
INCOME STATEMENT
(Accrual Basis)
OCTOBER 1, 1997 TO OCTOBER 31, 1998
<TABLE>
<CAPTION>
Current Year to
Month Date
------------ -------------
<S> <C> <C>
Income $ $
------------ -------------
Cost of Goods Sold
Beginning Inventory $ $
------------ -------------
Inventory Purchases $ $
------------ -------------
Ending inventory $ $
------------ -------------
Total Costs of Goods Sold $ $
------------ -------------
Operating Expenses
Salaries and Wages $ $ 73,200.00
------------ -------------
Employee Benefits $ 529.84 $ 1,059.86
------------ -------------
Shipping & Freight $ 84.00 $ 1,722.02
------------ -------------
Rent $ 500.00 $ 1,000.00
------------ -------------
Secured Debt Payments $ $
------------ -------------
Outside Services $ 1,198.63 $ 6,316.56
------------ -------------
Telephone $ 287.50 $ 1,457.15
------------ -------------
Repairs & Maintenance $ $
------------ -------------
Miscellaneous Office Expense $ 209.44 $ 2,523.60
------------ -------------
Advertising $ $
------------ -------------
Travel & Entertainment $ 356.85 $ 21,575.41
------------ -------------
Professional Fees $ 198.90 $ 53,368.57
------------ -------------
Court Costs $ $ 19,372.00
------------ -------------
Insurance: Liability $ $
------------ -------------
Property $ 407.70 $ 407.70
------------ -------------
Vehicle $ $
------------ -------------
Worker's Compensation $ $
------------ -------------
Other - Bond $ $ (920.00)
------------ -------------
Taxes: Payroll $ 5.00 $ 6,961.96
------------ -------------
Sales $ $
------------ -------------
Income $ $
------------ -------------
Real Property $ $
------------ -------------
Personal Property $ $
------------ -------------
Total Operating Expenses $ 4,497.86 $ 188,044.83
------------ -------------
Total Profit (Loss) from Operations $ (4,497.86) $ (188,044.83)
------------ -------------
Other Income (Expense) $ $
------------ -------------
Gain (Loss) on Sale of Assets $ $
------------ -------------
Interest Expense $ $
------------ -------------
Interest Income $ $
------------ -------------
Dividend Income $ $ 16.34
------------ -------------
Herth Printing Income (loss) $ (7,067.00) $ (36,416.00)
------------ -------------
Total $ (7,067.00) $ (36,399.66)
------------ -------------
Total Profit (Loss) for Month $ (11,564.86) $ (224,444.49)
------------ -------------
</TABLE>
<PAGE> 8
CASH FLOW STATEMENT
OCTOBER, 1998
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
----------- -----------
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
----------- -----------
Collections of Accounts Receivable $ $
----------- -----------
Other Income $ $
----------- -----------
Total Receipts $ $
----------- -----------
Disbursements:
Purchases and Inventory $ $
----------- -----------
Salaries and Wages $ $
----------- -----------
Employee Benefits $ 529.84 $
----------- -----------
Shipping & Freight $ 84.00 $
----------- -----------
Rent $ 500.00 $
----------- -----------
Secured Debt Payments $ $
----------- -----------
Outside Services $ 1,918.63 $
----------- -----------
Telephone $ 287.50 $
----------- -----------
Repairs & Maintenance $ $
----------- -----------
Miscellaneous Office Expense $ 209.44 $
----------- -----------
Advertising $ $
----------- -----------
Travel & Entertainment $ 356.85 $
----------- -----------
Professional Fees $ 198.90 $
----------- -----------
Court Costs $ $
----------- -----------
Insurance: Liability $ $
----------- -----------
Property $ 407.70 $
----------- -----------
Vehicle $ $
----------- -----------
Worker's Compensation $ $
----------- -----------
Other $ $
----------- -----------
Taxes: Payroll $ 408.00 $
----------- -----------
Sales $ $
----------- -----------
Income $ $
----------- -----------
Real Property $ $
----------- -----------
Personal Property $ $
----------- -----------
Total Disbursements $ 4,900.86 $
----------- -----------
Cash Flow $ (4,900.86) $
----------- -----------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying
in chronological (or reverse chronological) order every debt which came
due after the commencement of the bankruptcy case but has not been
paid, and specifying the creditor by name and address, the nature of
the debt (e.g., rent, advertising, wages, etc.), the amount owed and
the date on which the obligation came due. Provide summary information
below for both accounts payable and accounts receivable:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Accounts Payable Accounts Receivable
<S> <C> <C>
- --------------------------------------------------------------------------------
Less Than 31 Days Past Due
- --------------------------------------------------------------------------------
31 to 60 Days Past Due
- --------------------------------------------------------------------------------
61 to 90 Days Past Due
- --------------------------------------------------------------------------------
91 to 120 Days Past Due
- --------------------------------------------------------------------------------
Over 120 Days Past Due
- --------------------------------------------------------------------------------
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and address, and
provide the requested information. Where there is a postpetition
stipulation or court order governing the creditor's treatment, respond
on the basis of that stipulation or order; otherwise, respond on the
basis of the prepetition contract or lease.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Creditor Name and Address Payment Period Periodic Date of Post Petition Payments
(mo/wk) Payment Last Made Missed
Amount Payment No. Amount No. Amount
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C>
Gross Payroll Expense for Report Month: $ -0-
-----
Gross Sales Subject to Sales Tax for Report Month: $ -0-
-----
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding
- -----------------------------------------------------------------------------------------------------------
State Payroll & Withholding 57.60
- -----------------------------------------------------------------------------------------------------------
State Sales & Use
- -----------------------------------------------------------------------------------------------------------
</TABLE>
IV. Insurance Coverage
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Carrier/Agent Amount of Policy Expiration Policy Paid
Name Coverage Date Through Date
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Worker's Compensation
Liability
- -------------------------------------------------------------------------------------------------
Fire & Extended Coverage
- -------------------------------------------------------------------------------------------------
Property
- -------------------------------------------------------------------------------------------------
Theft
- -------------------------------------------------------------------------------------------------
Vehicle
- -------------------------------------------------------------------------------------------------
Life (Beneficiary):
- -------------------------------------------------------------------------------------------------
Other (specify):
- -------------------------------------------------------------------------------------------------
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization under
a Bankruptcy Court order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VI. Narrative
Provide a brief narrative report of any significant events outside of the
ordinary course of business which occurred during the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Quarter Ending Total Quarterly Fee Amount Paid Date Paid Total Quarterly
Disbursement Fees Due But
During Quarter Not Paid
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and, after making reasonable inquiry, believe that
these documents are accurate and correct.
DATED this 16 day of November, 1998.
By: /s/ Richard Cascarilla
<PAGE> 1
Exhibit 99t
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
NOVEMBER 1998
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel, USA, Inc. have
not cooperated with the Debtor by providing the necessary information. The Books
and Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard A. Cascarilla
-----------------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
NOVEMBER 30, 1998
Assets
<TABLE>
<S> <C>
Current Assets:
Cash $ 2,439.04
--------------
Accounts Receivable $
--------------
Allowance for Doubtful Accounts $
--------------
Accounts Receivable (Net) $
--------------
Inventory $
--------------
Prepaid Expenses $
--------------
Total Current Assets $ 2,439.04
--------------
Property and Equipment (Fair Market Value)
Real Property $
--------------
Machinery and Equipment $ 5,700,000.00
--------------
Furniture and Fixtures $
--------------
Office Equipment $
--------------
Leasehold Improvements $
--------------
Vehicles $
--------------
Other $
--------------
Total Property and Equipment $ 5,700,000.00
--------------
Investments:
Herth Printing and Business Supply
Stock (at Book Value) $ 383,235.00
--------------
Total Assets: $ 6,085,674.04
--------------
</TABLE>
<PAGE> 3
LIABILITIES
NOVEMBER 30, 1998
<TABLE>
<S> <C> <C>
Postpetition Liabilities (Accrued and Unpaid)
Salaries & Wages $
--------------
Payroll Taxes $ 57.60
--------------
Sales Taxes $
--------------
Income Taxes $
--------------
Real Property Taxes $
--------------
Personal Property Taxes $
--------------
Accounts Payable $
--------------
Postpetition Real Property
Lease Arrearages $
--------------
Postpetition Equipment
Lease Arrearages $
--------------
Accrued Professional Fees
Other LOAN SHAREHOLDER $ 4,000.00
--------------
DIEGOTEL, INC STOCK-BOOK VALUE $ 14,500.00
--------------
Total Postpetition Liabilities $ 18,557.60
--------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
--------------
Secured Debt (Schedule A-2) $
--------------
Unsecured Debt (Schedule A-3) $
--------------
Total Prepetition Liabilities $
--------------
Shareholder's Equity
Common Stock $
--------------
Paid-In Capital $ 6,131,096.00
--------------
Retained Earnings $ (63,979.56)
--------------
Total Shareholder's Equity $ 6,067,116.44
--------------
Total Liabilities & Equity $ 6,085,674.04
--------------
</TABLE>
<PAGE> 4
INCOME STATEMENT
(Accrual Basis)
OCTOBER 1, 1997 TO NOVEMBER 30, 1998
<TABLE>
<CAPTION>
Current Year to
Month Date
----------- -------------
<S> <C> <C>
Income $ $
----------- -------------
Cost of Goods Sold
Beginning Inventory $ $
----------- -------------
Inventory Purchases $ $
----------- -------------
Ending Inventory $ $
----------- -------------
Total Costs of Goods Sold $ $
----------- -------------
Operating Expenses
Salaries and Wages $ $ 73,200.00
----------- -------------
Employee Benefits $ 529.84 $ 1,589.70
----------- -------------
Shipping & Freight $ 12.00 $ 1,734.02
----------- -------------
Rent $ 500.00 $ 1,500.00
----------- -------------
Secured Debt Payments $ $
----------- -------------
Outside Services $ 1,679.18 $ 7,995.74
----------- -------------
Telephone $ 115.97 $ 1,573.12
----------- -------------
Repairs & Maintenance $ $
----------- -------------
Miscellaneous Office Expense $ 254.81 $ 2,778.41
----------- -------------
Advertising $ $
----------- -------------
Travel & Entertainment $ 1,369.18 $ 22,944.59
----------- -------------
Professional Fees $ 754.30 $ 54,122.87
----------- -------------
Court Costs $ $ 19,372.00
----------- -------------
Insurance: Liability $ $
----------- -------------
Property $ 407.70 $ 407.70
----------- -------------
Vehicle $ $
----------- -------------
Worker's Compensation $ $
----------- -------------
Other - Bond $ $ (920.00)
----------- -------------
Taxes: Payroll $ $ 6,961.96
----------- -------------
Sales $ $
----------- -------------
Income $ $
----------- -------------
Real Property $ $
----------- -------------
Personal Property $ $
----------- -------------
Total Operating Expenses $ 5,215.28 $ 193,260.11
----------- -------------
Total Profit (Loss) from Operations $ (5,215.28) $ (193,260.11)
----------- -------------
Other Income (Expense) $ $
----------- -------------
Gain (Loss) on Sale of Assets $ $
----------- -------------
Interest Expense $ $
----------- -------------
Interest Income $ $
----------- -------------
Dividend Income $ $ 16.34
----------- -------------
Herth Printing Income (loss) $ (1,555.00) $ (34,861.00)
----------- -------------
Total $ (1,555.00) $ (34,844.66)
----------- -------------
Total Profit (Loss) for Month $ (3,660.28) $ (228,104.77)
----------- -------------
</TABLE>
<PAGE> 5
RECAPITULATION
NOVEMBER 30, 1998
<TABLE>
<S> <C>
Balance from Prior Month
General Account $ 654.32
----------
Bank FIRST OF AMERICA BANK, N.A. MICHIGAN
Branch OKEMOS, MICHIGAN
Account #62-30079367
General Account $
----------
Bank
Branch
Account #
Tax Account $
----------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account $ 2,439.04
----------
General Account $
----------
Tax Account $
----------
</TABLE>
<PAGE> 6
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUMMARIES
#97-30265
NOVEMBER, 1998
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA
- -------- --------------------------- ----------
<S> <C> <C>
11.01.98 BEGINNING BALANCE $ 654.32
11.31.98 TOTAL DEPOSITS $ 7,000.00
11.30.98 CHECKS WRITTEN PER ATTACHED $ 5,215.28
----------
11.30.98 BALANCE $ 2,439.04
==========
</TABLE>
<PAGE> 7
TOTAL DR/CR 0.00 0.00
RUN DATE: 12/11/98 POWERTEL USA, INC. PAGE: 1
SYS DATE: 11/30/98 TRANSACTION JOURNAL TIME: 09:25 AM
<TABLE>
<CAPTION>
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
<S> <C> <C> <C> <C>
CD-0001 11/30/98 1020-000-00 5,215.28 DISBURSEMENTS
</TABLE>
<TABLE>
<CAPTION>
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
- -------- -------- -------------------- ----------- ------------
<S> <C> <C> <C> <C>
0001231 11/02/98 CASEY & BOOG 6600-000-00 95.00
0001232 11/02/98 CABO 6900-000-00 500.00
0001233 11/04/98 KNUTSONS TRAVEL PORT 7900-000-00 255.50
0001234 11/04/98 MCBEE 6500-000-00 120.08
0001235 11/06/98 CASEY & BOOG 6600-000-00 150.00
0001236 11/06/98 CASEY & BOOG PLC 6500-000-00 20.73
0001237 11/06/98 KNUTSON TRAVEL PORT 7900-000-00 465.99
0001238 11/13/98 CASEY & BOOG 6600-000-00 150.00
0001239 11/16/98 CASEY & BOOG 6600-000-00 95.00
0001240 11/16/98 SUNSHINE REPORTING 6600-000-00 389.18
0001241 11/17/98 IKON 6500-000-00 114.00
0001242 11/19/98 CORPORATE STOCK 7900-000-00 52.22
0001243 11/19/98 CORPORATE SVCS
TELECOM 7800-000-00 115.97
0001244 11/19/08 ROBERT LINDBERG 5050-000-00 254.30
0001245 11/20/98 CASEY & BOOG 6600-000-00 150.00
0001246 11/25/98 ENOS CHRISTIE 6600-000-00 500.00
0001247 11/25/98 FLEET 7900-000-00 213.47
0001248 11/25/98 PAUL GOEBEL GROUP 6110-000-00 529.84
0001249 11/24/98 US TRUSTEE 6200-000-00 500.00
0001250 11/24/98 VOID 1020-000-00 .00
0001251 11/29/98 KNUTSON TRAVEL 7900-000-00 382.00
0001252 11/28/98 CASEY & BOOG 6600-000-00 150.00
0001253 11/30/98 UPS 6000-000-00 12.00
---------
JOURNAL CD-0001 TOTALS: 5,215.28
---------
SOURCE CD TOTALS: 5,215.28
---------
REPORT TOTALS: 5,215.28
=========
</TABLE>
<PAGE> 8
CASH FLOW STATEMENT
NOVEMBER, 1998
<TABLE>
<CAPTION>
Projected
Current For current
Month Month
---------- ----------
<S> <C> <C>
Receipts:
Sales (Cash Only) $ $
---------- ----------
Collections of Accounts Receivable $ $
---------- ----------
Other Income DIEGOTEL INC.-TRANSFER $ 7,000.00 $
---------- ----------
Total Receipts $ 7,000.00 $
---------- ----------
Disbursements:
Purchases and Inventory $ $
---------- ----------
Salaries and Wages $ $
---------- ----------
Employee Benefits $ 529.84 $
---------- ----------
Shipping & Freight $ 12.00 $
---------- ----------
Rent $ 500.00 $
---------- ----------
Secured Debt Payments $ $
---------- ----------
Outside Services $ 1,679.18 $
---------- ----------
Telephone $ 115.97 $
---------- ----------
Repairs & Maintenance $ $
---------- ----------
Miscellaneous Office Expense $ 254.81 $
---------- ----------
Advertising $ $
---------- ----------
Travel & Entertainment $ 1.369.18 $
---------- ----------
Professional Fees $ 754.30 $
---------- ----------
Court Costs $ $
---------- ----------
Insurance: Liability $ $
---------- ----------
Property $ $
---------- ----------
Vehicle $ $
---------- ----------
Worker's Compensation $ $
---------- ----------
Other $ $
---------- ----------
Taxes: Payroll $ $
---------- ----------
Sales $ $
---------- ----------
Income $ $
---------- ----------
Real Property $ $
---------- ----------
Personal Property $ $
---------- ----------
Total Disbursements $ 5,215.28 $
---------- ----------
Cash Flow $ 1,784.72 $
---------- ----------
</TABLE>
<PAGE> 9
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying
in chronological (or reverse chronological) order every debt which came
due after the commencement of the bankruptcy case but has not been
paid, and specifying the creditor by name and address, the nature of
the debt (e.g., rent, advertising, wages, etc.), the amount owed and
the date on which the obligation come due. Provide summary information
below for both accounts payable and accounts receivable:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Accounts Payable Accounts Receivable
<S> <C> <C>
- --------------------------------------------------------------------------------
Less Than 31 Days Past Due
- --------------------------------------------------------------------------------
31 to 60 Days Past Due
- --------------------------------------------------------------------------------
61 to 90 Days Past Due
- --------------------------------------------------------------------------------
91 to 120 Days Past Due
- --------------------------------------------------------------------------------
Over 120 Days Past Due
- --------------------------------------------------------------------------------
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured Creditor and lessor by name and address, and provide
the requested information. Where there is a postpetition stipulation or
court order governing the creditor's treatment, respond on the basis of
that stipulation or order; otherwise, respond on the basis of the
prepetition contract or lease.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Creditor Name and Address Payment Period Periodic Date of Post Petition Payments
(mo/wk) Payment Last Made Missed
Amount Payment No. Amount No. Amount
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 10
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C>
Gross Payroll Expense for Report Month: $0.00
-----
Gross Sales Subject to Sales Tax for Report Month: $0.00
-----
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding
- -----------------------------------------------------------------------------------------------------------
State Payroll & Withholding 57.60
- -----------------------------------------------------------------------------------------------------------
State Sales & Use
- -----------------------------------------------------------------------------------------------------------
</TABLE>
IV. Insurance Coverage
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Carrier/Agent Amount of Policy Expiration Policy Paid
Name Coverage Date Through Date
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Worker's Compensation
Liability
- -------------------------------------------------------------------------------------------------
Fire & Extended Coverage
- -------------------------------------------------------------------------------------------------
Property
- -------------------------------------------------------------------------------------------------
Theft
- -------------------------------------------------------------------------------------------------
Vehicle
- -------------------------------------------------------------------------------------------------
Life (Beneficiary):
- -------------------------------------------------------------------------------------------------
Other (specify):
- -------------------------------------------------------------------------------------------------
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary course of
business to any officers, shareholders, directors, other principals or
insider-employees or to professionals without specific authorization under
a Bankruptcy Court order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy case,
made any payments on account of prepetition unsecured debts, except as
specifically authorized by the Bankruptcy Court? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 3
VI. Narrative
Provide a brief narrative report of any significant events outside of the
ordinary course of business which occurred during the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Quarter Ending Total Quarterly Fee Amount Paid Date Paid Total Quarterly
Disbursement Fees Due But
During Quarter Not Paid
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and, after making reasonable inquiry, believe that
these documents are accurate and correct.
DATED this 21 day of December, 1998.
By: /s/ Richard Cascarilla
--------------------------------
<PAGE> 1
Exhibit 10u
POWERTEL USA, INC.
97-30265
CHAPTER 11
MONTHLY OPERATING REPORT
DECEMBER 1998
The Debtor in Possession is filing an incomplete Monthly Operating Report due to
the lack of complete records. The former officers of PowerTel USA, Inc. have not
cooperated with the Debtor by providing the necessary information. The Books and
Records are missing. Therefore, it is impossible for the Debtor to file a
complete Monthly Operating Report.
/s/ Richard A. Cascarilla
-----------------------------------------
RICHARD A. CASCARILLA, PRESIDENT
DEBTOR IN POSSESSION
<PAGE> 2
BALANCE SHEET
December 31, 1998
<TABLE>
<CAPTION>
Assets
Current Assets:
<S> <C> <C> <C> <C>
Cash $ 14,901.03
-----------------
Accounts Receivable $
-----------------
Allowance for Doubtful
Accounts $
-----------------
Accounts Receivable (Net) $
-----------------
Inventory $
-----------------
Prepaid Expenses $
-----------------
Total Current Assets $ 14,901.03
-----------------
Property and Equipment (Fair Market Value)
Real Property $
-----------------
Machinery and Equipment $ 5,700,000.00
-----------------
Furniture and Fixtures $
-----------------
Office Equipment $
-----------------
Leasehold Improvements $
-----------------
Vehicles $
-----------------
Other $
-----------------
Total Property and Equipment $ 5,700,000.00
-----------------
Investments:
Herth Printing and Business Supply
Stock (at Book Value) $ 379,760.00
-----------------
Total Assets: $ 6,094,661.03
-----------------
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Liabilities
December 31, 1998
Postpetition Liabilities (Accrued and Unpaid)
<S> <C> <C> <C>
Salaries & Wages $
----------------
Payroll Taxes $ 8,347.85
----------------
Sales Taxes $
----------------
Income Taxes $
----------------
Real Property Taxes $
----------------
Personal Property Taxes $
----------------
Accounts Payable $
----------------
Postpetition Real Property
Lease Arrearages $
Postpetition Equipment
Lease Arrearages $
----------------
Accrued Professional Fees $ 209,557.74
----------------
Other: Loan Pay-Shareholder $ 4.000.00
----------------
DiegoTel, Inc. Stock-Book Value $ 14,500.00
----------------
Total Postpetition Liabilities $ 236,405.59
----------------
Prepetition Liabilities
Priority Debt (Schedule A-1) $
----------------
Secured Debt (Schedule A-2) $
----------------
Unsecured Debt (Schedule A-3) $ 647,000.00
----------------
Total Prepetition Liabilities $ 647,000.00
----------------
Shareholder's Equity
Common Stock $
----------------
Paid-In Capital $ 6,131,096.00
----------------
Retained Earnings $ (919,840.56)
----------------
Total Shareholder's Equity $ 5,211,255.44
----------------
Total Liabilities & Equity $ 6,094,661.03
----------------
</TABLE>
<PAGE> 4
INCOME STATEMENT
(Accrual Basis)
OCTOBER 1, 1997 TO DECEMBER 31, 1998
<TABLE>
Current Year to
Month Date
----------- -----------
<S> <C> <C> <C> <C>
Income $ $
----------- -----------
Cost of Goods Sold
Beginning Inventory $ $
----------- -----------
Inventory Purchases $ $
----------- -----------
Ending inventory $ $
----------- -----------
Total Costs of Goods Sold $ $
----------- -----------
Operating Expenses
Salaries and Wages $ 25,500.00 $ 98,700.00
----------- -----------
Employee Benefits $ 529.84 $ 2,119.54
----------- -----------
Shipping & Freight $ 150.00 $ 1,884.02
----------- -----------
Rent $ 500.00 $ 2,000.00
----------- -----------
Secured Debt Payments $ $
----------- -----------
Utilities $ 8,940.00 $ 16,935.74
----------- -----------
Telephone $ 146.32 $ 1,719.44
----------- -----------
Lawsuit Settlement $ 10,000.00 $ 10,000.00
----------- -----------
Misc $ 164.78 $ 2,943.19
----------- -----------
Advertising $ 320.00 $ 320.00
----------- -----------
Travel & Entertainment $ 335.77 $ 23,280.36
----------- -----------
Professional Fees $255,691.04 $309,813.91
----------- -----------
Court Costs $ $ 19,372.00
----------- -----------
Insurance: Liability $ $
----------- -----------
Property $ $ 407.70
----------- -----------
Vehicle $ $
----------- -----------
Worker's Compensation $ $
----------- -----------
Other: Bond $ $ (920.00)
----------- -----------
Taxes: Payroll $ 2,108.25 $ 9,070.21
----------- -----------
Sales $ $
----------- -----------
Income $ $
----------- -----------
Real Property $ $
----------- -----------
Personal Property $ $
----------- -----------
Total Operating Expenses $304,386.00 $497,646.11
----------- -----------
Total Profit (Loss) from Operations $(304,386.00) $(497,646.11)
----------- -----------
Other Income (Expense) $ $
----------- -----------
Gain (Loss) on Sale of Assets $ $
----------- -----------
Interest Expense $ $
----------- -----------
Interest Income $ $
----------- -----------
Dividend Income $ $ 16.34
----------- -----------
Herth Printing Income (loss) $ 1,525.00 $(33,336.00)
----------- -----------
Total $ 1,525.00 $(33,319.66)
----------- -----------
Total Profit (Loss) for Month $(302,861.00) $(530,965.77)
----------- -----------
</TABLE>
<PAGE> 5
Recapitulation
DECEMBER 1998
<TABLE>
<CAPTION>
Balance from Prior Month
General Account $ 2,439.04
<S> <C> <C>
--------------
Bank FIRST OF AMERICA BANK, N.A. MICHIGAN
Branch OKEMOS, MICHIGAN
Account # 62-30079367
General Account $
--------------
Bank
Branch
Account #
Tax Account $
--------------
Bank
Branch
Account #
Balance to Carry Forward to Next Month
General Account $ 14,901.03
--------------
General Account $
--------------
Tax Account $
--------------
</TABLE>
<PAGE> 6
POWERTEL USA, INC.
EAST LANSING, MICHIGAN
BANK ACCOUNT SUMMARIES
#97-31265
DECEMBER, 1998
<TABLE>
<CAPTION>
FIRST OF
DATE DESCRIPTION AMERICA
-------------- -------------------------------------------------------
<S> <C> <C>
12.01.98 BEGINNING BALANCE $ 2,439.04
12.31.98 TOTAL DEPOSITS 99,000.00
12.31.98 CHECKS WRITTEN PER ATTACHED 86,538.01
----------------
12.31.98 BALANCE $14,901.03
----------------
</TABLE>
<PAGE> 7
RUN DATE: 1/19/99 POWERTEL USA, INC. PAGE: 1
SYS DATE: 12/31/98 TRANSACTION JOURNAL TIME: 09:02 AM
SOURCE POSTING CREDIT
JOURNAL DATE ACCOUNT NO BATCH TOTAL JOURNAL COMMENT
CD-0001 12/31/98 1020-000-00 86,538.01 DISBURSEMENTS
<TABLE>
<CAPTION>
CHECK NO DATE COMMENT DEBIT ACCT TRANS AMOUNT
--------- -------- ------------------------ ----------- -------------
<S> <C> <C> <C> <C>
0001254 12/01/98 WALTER & HAVERFIELD 6200-000-00 30,000.00
0001255 12/02/98 ROBERT L. LINDBERG CPA 5050-000-00 188.30
0001256 12/02/98 AMERITECH 7800-000-00 18.98
0001257 12/02/98 MICHAEL KASSOUF 8100-000-00 3,681.00
0001258 12/02/98 RICHARD A. CASCARILLA 8100-000-00 15,637.00
0001259 12/03/98 CABO 6900-000-00 500.00
0001260 12/03/98 CASEY & BOOG 6600-000-00 95.00
0001261 12/03/98 JOHN VOGEL & DEAN C 2001-000-00 10,000.00
0001262 12/03/98 STEVEN HARRIS 6200-000-00 15,000.00
0001263 12/07/98 KAFNEY ACCOUNTING 5050-000-00 785.00
0001264 12/08/98 CASEY & BOOG 6600-000-00 150.00
0001265 12/07/98 UPS 6000-000-00 12.00
0001266 12/09/98 CASEY & BOOG 6500-000-00 25.78
0001267 12/11/98 CASEY & BOOG 6600-000-00 150.00
0001268 12/14/98 CORPORATE STOCK TRANSFER 7900-000-00 140.77
0001269 12/14/98 UPS 6000-000-00 36.00
0001270 12/15/98 HARTMAN & ARMSTRONG 6200-000-00 160.00
0001271 12/16/98 CASEY & BOOG 6600-000-00 95.00
0001272 12/16/98 CASEY & BOOG 6600-000-00 150.00
0001273 12/17/98 PR NEWSWIRE 5100-000-00 320.00
0001274 12/21/98 PAUL GOEBEL GROUP 6150-000-00 529.84
0001275 12/24/98 ENOS CHRISTIE 6600-000-00 500.00
0001276 12/24/98 JEFFREY HARTMAN 5750-000-00 2,500.00
0001277 12/24/98 MICHAEL KASSOUF 5750-000-00 2,500.00
0001278 12/24/98 RICHARD CASCARILLA 5750-000-00 2,500.00
0001279 12/24/98 UPS 6000-000-00 12.00
0001280 12/24/98 CASEY & BOOG 6600-000-00 150.00
0001281 12/25/98 UPS 6000-000-00 90.00
0001282 12/25/98 CUSIP 5900-000-00 139.00
0001283 12/28/98 CORPORATE SERVICES 7800-000-00 106.38
0001284 12/28/98 AMERITECH 7800-000-00 20.96
0001285 12/30/98 CASEY & BOOG 6600-000-00 150.00
0001286 12/30/98 KNUTSON TRAVEL PORT 7900-000-00 195.00
------------
JOURNAL CD-0001 TOTALS: 86,538.01
-------------
SOURCE CD TOTALS: 86,538.01
-------------
REPORT TOTALS: 86,538.01
=============
</TABLE>
<PAGE> 8
CASH FLOW STATEMENT
DECEMBER 1998
<TABLE>
<CAPTION>
Projected
Reported For Current
Month Month
Receipts:
<S> <C> <C>
Sales (Cash Only) $ $
----------- ----------
Collections of Accounts Receivable $94,000.00 $
Sales (Cash Only)
----------- ----------
Other Income HERTH PRINTING, INC.-DIVIDEND $ 5,000.00 $
Sales (Cash Only)
----------- ----------
Total Receipts $99,000.00 $
Sales (Cash Only)
----------- ----------
Disbursements:
Purchases and Inventory $ $
----------- ----------
Salaries and Wages $19,318.00 $
----------- ----------
Employee Benefits $ 529.84 $
----------- ----------
Shipping & Freight $ 150.00 $
----------- ----------
Rent $ 500.00 $
----------- ----------
Secured Debt Payments $ $
----------- ----------
Utilities $ 8,940.00 $
----------- ----------
Telephone $ 146.32 $
----------- ----------
Repairs & Maintenance $ $
----------- ----------
Misc. Office Expense $ 164.78 $
----------- ----------
Advertising $ 320.00 $
----------- ----------
Travel & Entertainment $ 335.77 $
----------- ----------
Professional Fees $56,133.30 $
----------- ----------
Court Costs $ $
----------- ----------
Insurance: Liability $ $
----------- ----------
Property $ $
----------- ----------
Vehicle $ $
----------- ----------
Worker's Compensation $ $
----------- ----------
Other $ $
--------------- ----------- ----------
Taxes: Payroll $ $
----------- ----------
Sales $ $
----------- ----------
Income $ $
----------- ----------
Real Property $ $
----------- ----------
Personal Property $ $
----------- ----------
Total Disbursements $86,538.01 $
----------- ----------
Cash Flow $12,461.09 $
----------- ----------
</TABLE>
<PAGE> 9
POWERTEL USA, INC.
EAST LANSING MICHIGAN
ACCOUNTS PAYABLE
#97-31265
DECEMBER, 1998
WALTER & HAVERFIELD $158,485.12
CLEVELAND, OHIO
LEGAL FEES
BELDING & HARRIS 51,072.62
RENO, NV
LEGAL FEES
-----------
$209,557.74
===========
<PAGE> 10
Monthly Questionnaire
I. Accounts Payable and Receivable Aging:
Attach an Accounts Payable and Receivable Aging Schedule, identifying
in chronological (or reverse chronological) order every debt which came
due after the commencement of the bankruptcy case but has not been
paid, and specifying the creditor by name and address, the nature of
the debt (e.g., rent, advertising, wages, etc.), the amount owed and
the date on which the obligation came due. Provide summary information
below for both accounts payable and accounts receivable:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Accounts Payable Accounts Receivable
<S> <C> <C>
- --------------------------------------------------------------------------------
Less Than 31 Days Past Due 209,557.74
- --------------------------------------------------------------------------------
31 to 60 Days Past Due
- --------------------------------------------------------------------------------
61 to 90 Days Past Due
- --------------------------------------------------------------------------------
91 to 120 Days Past Due
- --------------------------------------------------------------------------------
Over 120 Days Past Due
- --------------------------------------------------------------------------------
</TABLE>
II. Payments to Secured Creditors and Lessors:
Identify every secured creditor and lessor by name and address, and
provide the requested information. Where there is a postpetition
stipulation or court order governing the creditor's treatment, respond
on the basis of that stipulation or order; otherwise, respond on the
basis of the prepetition contract or lease.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Creditor Name and Address Payment Period Periodic Date of Post Petition Payments
(mo/wk) Payment Last Made Missed
Amount Payment No. Amount No. Amount
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 11
MONTHLY QUESTIONNAIRE
Page 2
III. Tax Liability
<TABLE>
<S> <C> <C>
Gross Payroll Expense for Report Month: $25,550.00
----------
Gross Sales Subject to Sales Tax for Report Month: $ -0-
----------
</TABLE>
Postpetition Taxes
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Date Paid Amount Paid Due But Not Paid Accrued But Not Due
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Payroll & Withholding 7,328.75
- -----------------------------------------------------------------------------------------------------------
State Payroll & Withholding 1,019.10
- -----------------------------------------------------------------------------------------------------------
State Sales & Use
- -----------------------------------------------------------------------------------------------------------
</TABLE>
IV. INSURANCE COVERAGE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Carrier/Agent Amount of Policy Expiration Policy Paid
Name Coverage Date Through Date
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Worker's Compensation
Liability
- -------------------------------------------------------------------------------------------------
Fire & Extended Coverage
- -------------------------------------------------------------------------------------------------
Property
- -------------------------------------------------------------------------------------------------
Theft
- -------------------------------------------------------------------------------------------------
Vehicle
- -------------------------------------------------------------------------------------------------
Life (Beneficiary):
- -------------------------------------------------------------------------------------------------
Other (specify):
- -------------------------------------------------------------------------------------------------
</TABLE>
V. Postpetition Payments
A. Has the Debtor made any payments outside of the ordinary
course of business to any officers, shareholders, directors, other
principals or insider-employees or to professionals without specific
authorization under a Bankruptcy Court order? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
B. Has the Debtor, following the commencement of the bankruptcy
case, made any payments on account of prepetition unsecured debts,
except as specifically authorized by the Bankruptcy Court? NO
If the answer is yes, identify each person paid, the date and amount of
such payment(s) and the basis for each such payment.
<PAGE> 12
MONTHLY QUESTIONNAIRE
Page 3
VI. Narrative
Provide a brief narrative report of any significant events outside of
the ordinary course of business which occurred during the Report Month:
VII. U.S. Trustee Fees
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Quarter Ending Total Quarterly Fee Amount Paid Date Paid Total Quarterly
Disbursement Fees Due But
During Quarter Not Paid
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
</TABLE>
I declare under penalty of perjury that I have reviewed the income
statement, cash flow statement, projections, balance sheet and monthly
questionnaire attached hereto and, after making reasonable inquiry,
believe that these documents are accurate and correct.
DATED this 20th day of January , 1999.
By: /s/ Richard Cascarilla
----------------------
