U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUER
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
COMET TECHNOLOGIES, INC.
(Name of Small Business Issuer in its charter)
Nevada 87-0430322
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
10 West 100 South, Suite 610, Salt Lake City, Utah 84101
(Address of Principal Executive Offices and Zip Code)
Issuer's Telephone Number: (801) 532-7851
Securities to be registered under Section 12(b) of the Act:
Securities to be registered under Section 12(g) of the Act:
Common Stock, Par Value $0.001
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TABLE OF CONTENTS
ITEM NUMBER AND CAPTION Page
Part I 3
1. Description of Business 3
2. Management's Discussion and Analysis or Plan of 7
Operations
3. Description of Properties 7
4. Security Ownership of Certain Beneficial Owners and 8
Management
5. Directors, Executive Officers, Promoters and Control 8
Persons
6. Executive Compensation 9
7. Certain Relationships and Related Transactions 10
8. Legal Proceedings 10
9. Market for Common Equity and Related Stockholder 10
Matters
10. Recent Sales of Unregistered Securities 11
11. Description of Securities 11
12. Indemnification of Directors and Officers 12
13. Financial Statements 13
14. Changes in and Disagreements with Accountants on 13
Accounting and Financial Disclosure
15. Financial Statements and Exhibits 13
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ITEM 1. DESCRIPTION OF BUSINESS
History
The Company was formed as a Nevada corporation in February 1986,
for the purpose of seeking a favorable business opportunity.
Immediately following organization of the Company, it sold
1,098,000 shares of its common stock to its officers, directors
and other shareholders for an aggregate of $25,000 in cash for a
price per share of $0.023. In order to provide the Company with
additional capital to seek to acquire or enter into a favorable
business opportunity, in July 1986, the Company completed a
public offering of 2,500,000 shares of its common stock as a
sales price of $0.10 per share or an aggregate offering of
$250,000. Since the completion of the offering, the Company has
not participated in any business venture.
General
The Company was organized for the purpose of creating a capital
resource fund to seek, investigate, and, if warranted, acquire or
participate in a favorable business opportunity. Since the
completion of the Company's public offering in July 1986, the
Company has reviewed and evaluated a number of business ventures
for possible acquisition or participation by the Company. The
Company has not entered into any agreement, nor does it have any
commitment or understanding to enter into or become engaged in a
transaction as of the date of this filing. The Company continues
to investigate, review, and evaluate business opportunities as
they become available and will seek to acquire or become engaged
in business opportunities at such time as specific opportunities
warrant.
To date, opportunities have been made available to the Company
through its officers and directors and through professional
advisors including securities broker-dealers and through members
of the financial community. It is anticipated that business
opportunities will continue to be available primarily from these
sources.
To a large extent, a decision to participate in a specific
business opportunity may be made upon management's analysis
regarding the quality of the other firm's management and
personnel, the asset base of such firm or enterprise, the
anticipated acceptability of new products or marketing concepts,
the merit of the firms business plan, and numerous other factors
which are difficult, if not impossible, to analyze through the
application of any objective criteria.
Since its inception, the Company has had no active business
operations, and has been seeking to acquire an interest in a
business with long-term growth potential. The Company currently
has no commitment or arrangement to participate in a business and
cannot now predict what type of business it may enter into or
acquire. It is emphasized that the business objectives discussed
herein are extremely general and are not intended to be
restrictive on the discretion of the Company's management.
There are no plans or arrangements proposed or under
consideration for the issuance or sale of additional securities
by the Company prior to the identification of an acquisition
candidate. Consequently, management anticipates that it may be
able to participate in only one potential business venture, due
primarily to the Company's limited capital. This lack of
diversification should be considered a substantial risk, because
it will not permit the Company to offset potential losses from
one venture against gains from another.
Selection of a Business
The Company anticipates that businesses for possible acquisition
will be referred by various sources, including its officers and
directors, professional advisors, securities broker-dealers,
venture capitalists, members of the financial community, and
others who may present unsolicited proposals. The Company will
not engage in any general solicitation or advertising for a
business opportunity, and will rely on personal contacts of its
officers and directors and their affiliates, as well as indirect
associations between them and other business and professional
people. By relying on "word of mouth", the Company may be
limited in the number of potential acquisitions it can identify.
While it is not presently anticipated that the Company will
engage unaffiliated professional firms specializing in business
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acquisitions or reorganizations, such firms may be retained if
management deems it in the best interest of the Company.
Compensation to a finder or business acquisition firm may take
various forms, including one-time cash payments, payments based
on a percentage of revenues or product sales volume, payments
involving issuance of securities (including those of the
Company), or any combination of these or other compensation
arrangements. Consequently, the Company is currently unable to
predict the cost of utilizing such services.
The Company will not restrict its search to any particular
business, industry, or geographical location, and management
reserves the right to evaluate and enter into any type of
business in any location. The Company may participate in a newly
organized business venture or a more established company entering
a new phase of growth or in need of additional capital to
overcome existing financial problems. Participation in a new
business venture entails greater risks since in many instances
management of such a venture will not have proved its ability,
the eventual market of such venture's product or services will
likely not be established, and the profitability of the venture
will be unproved and cannot be predicted accurately. If the
Company participates in a more established firm with existing
financial problems, it may be subjected to risk because the
financial resources of the Company may not be adequate to
eliminate or reverse the circumstances leading to such financial
problems.
In seeking a business venture, the decision of management will
not be controlled by an attempt to take advantage of any
anticipated or perceived appeal of a specific industry,
management group, product, or industry, but will be based on the
business objective of seeking long-term capital appreciation in
the real value of the Company. The Company will not acquire or
merge with a business or corporation in which the Company's
officers, directors, or promoters, or their affiliates or
associates, have any direct or indirect ownership interest.
The analysis of new businesses will be undertaken by or under the
supervision of the officers and directors. In analyzing
prospective businesses, management will consider, to the extent
applicable, the available technical, financial, and managerial
resources; working capital and other prospects for the future;
the nature of present and expected competition; the quality and
experience of management services which may be available and the
depth of that management; the potential for further research,
development, or exploration; the potential for growth and
expansion; the potential for profit; the perceived public
recognition or acceptance of products, services, or trade or
service marks; name identification; and other relevant factors.
The decision to participate in a specific business may be based
on management's analysis of the quality of the other firm's
management and personnel, the anticipated acceptability of new
products or marketing concepts, the merit of technological
changes, and other factors which are difficult, if not
impossible, to analyze through any objective criteria. It is
anticipated that the results of operations of a specific firm may
not necessarily be indicative of the potential for the future
because of the requirement to substantially shift marketing
approaches, expand significantly, change product emphasis, change
or substantially augment management, and other factors.
The Company will analyze all available factors and make a
determination based on a composite of available facts, without
reliance on any single factor. The period within which the
Company may participate in a business cannot be predicted and
will depend on circumstances beyond the Company's control,
including the availability of businesses, the time required for
the Company to complete its investigation and analysis of
prospective businesses, the time required to prepare appropriate
documents and agreements providing for the Company's
participation, and other circumstances.
Acquisition of a Business
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, or other reorganization with another corporation
or entity; joint venture; license; purchase and sale of assets;
or purchase and sale of stock, the exact nature of which cannot
now be predicted. Notwithstanding the above, the Company does
not intend to participate in a business through the purchase of
minority stock positions. On the consummation of a transaction,
it is likely that the present management and shareholders of the
Company will not be in control of the Company. In addition, a
majority or all of the Company's directors may, as part of the
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terms of the acquisition transaction, resign and be replaced by
new directors without a vote of the Company's shareholders.
In connection with the Company's acquisition of a business, the
present shareholders of the Company, including officers and
directors, may, as a negotiated element of the acquisition, sell
a portion or all of the Company's Common Stock held by them at a
significant premium over their original investment in the
Company. As a result of such sales, affiliates of the entity
participating in the business reorganization with the Company
would acquire a higher percentage of equity ownership in the
Company. Management does not intend to actively negotiate for or
otherwise require the purchase of all or any portion of its stock
as a condition to or in connection with any proposed merger or
acquisition. Although the Company's present shareholders did not
acquire their shares of Common Stock with a view towards any
subsequent sale in connection with a business reorganization, it
is not unusual for affiliates of the entity participating in the
reorganization to negotiate to purchase shares held by the
present shareholders in order to reduce the amount of shares held
by persons no longer affiliated with the Company and thereby
reduce the potential adverse impact on the public market in the
Company's common stock that could result from substantial sales
of such shares after the business reorganization. Public
investors will not receive any portion of the premium that may be
paid in the foregoing circumstances. Furthermore, the Company's
shareholders may not be afforded an opportunity to approve or
consent to any particular stock buy-out transaction.
In the event sales of shares by present shareholders of the
Company, including officers and directors, is a negotiated
element of a future acquisition, a conflict of interest may arise
because directors will be negotiating for the acquisition on
behalf of the Company and for sale of their shares for their own
respective accounts. Where a business opportunity is well suited
for acquisition by the Company, but affiliates of the business
opportunity impose a condition that management sell their shares
at a price which is unacceptable to them, management may not
sacrifice their financial interest for the Company to complete
the transaction. Where the business opportunity is not well
suited, but the price offered management for their shares is
high, Management will be tempted to effect the acquisition to
realize a substantial gain on their shares in the Company.
Management has not adopted any policy for resolving the foregoing
potential conflicts, should they arise, and does not intend to
obtain an independent appraisal to determine whether any price
that may be offered for their shares is fair. Stockholders must
rely, instead, on the obligation of management to fulfill its
fiduciary duty under state law to act in the best interests of
the Company and its stockholders.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance on exemptions from
registration under applicable federal and state securities laws.
In some circumstances, however, as a negotiated element of the
transaction, the Company may agree to register such securities
either at the time the transaction is consummated, under certain
conditions, or at specified times thereafter. Although the terms
of such registration rights and the number of securities, if any,
which may be registered cannot be predicted, it may be expected
that registration of securities by the Company in these
circumstances would entail substantial expense to the Company.
The issuance of substantial additional securities and their
potential sale into any trading market which may develop in the
Company's securities may have a depressive effect on such market.
While the actual terms of a transaction to which the Company may
be a party cannot be predicted, it may be expected that the
parties to the business transaction will find it desirable to
structure the acquisition as a so-called "tax-free" event under
sections 351 or 368(a) of the Internal Revenue Code of 1986, (the
"Code"). In order to obtain tax-free treatment under section 351
of the Code, it would be necessary for the owners of the acquired
business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of the Company would
retain less than 20% of the issued and outstanding shares of the
surviving entity. Section 368(a)(1) of the Code provides for tax-
free treatment of certain business reorganizations between
corporate entities where one corporation is merged with or
acquires the securities or assets of another corporation.
Generally, the Company will be the acquiring corporation in such
a business reorganization, and the tax-free status of the
transaction will not depend on the issuance of any specific
amount of the Company's voting securities. It is not uncommon,
however, that as a negotiated element of a transaction completed
in reliance on section 368, the acquiring corporation issue
securities in such an amount that the shareholders of the
acquired corporation will hold 50% or more of the voting stock of
the surviving entity. Consequently, there is a substantial
possibility that the shareholders of the Company immediately
prior to the transaction would retain less than 50% of the issued
and outstanding shares of the surviving entity. Therefore,
regardless of the form of the business acquisition, it may be
anticipated that stockholders immediately prior to the
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transaction will experience a significant reduction in their
percentage of ownership in the Company.
Notwithstanding the fact that the Company is technically the
acquiring entity in the foregoing circumstances, generally
accepted accounting principles will ordinarily require that such
transaction be accounted for as if the Company had been acquired
by the other entity owning the business and, therefore, will not
permit a write-up in the carrying value of the assets of the
other company.
The manner in which the Company participates in a business will
depend on the nature of the business, the respective needs and
desires of the Company and other parties, the management of the
business, and the relative negotiating strength of the Company
and such other management.
The Company will participate in a business only after the
negotiation and execution of appropriate written agreements.
Although the terms of such agreements cannot be predicted,
generally such agreements will require specific representations
and warranties by all of the parties thereto, will specify
certain events of default, will detail the terms of closing and
the conditions which must be satisfied by each of the parties
prior to such closing, will outline the manner of bearing costs
if the transaction is not closed, will set forth remedies on
default, and will include miscellaneous other terms.
Operation of Business After Acquisition
The Company's operation following its acquisition of a business
will be dependent on the nature of the business and the interest
acquired. The Company is unable to predict whether the Company
will be in control of the business or whether present management
will be in control of the Company following the acquisition. It
may be expected that the business will present various risks,
which cannot be predicted at the present time.
Governmental Regulation
It is impossible to predict the government regulation, if any, to
which the Company may be subject until it has acquired an
interest in a business. The use of assets and/or conduct of
businesses which the Company may acquire could subject it to
environmental, public health and safety, land use, trade, or
other governmental regulations and state or local taxation. In
selecting a business in which to acquire an interest, management
will endeavor to ascertain, to the extent of the limited
resources of the Company, the effects of such government
regulation on the prospective business of the Company. In
certain circumstances, however, such as the acquisition of an
interest in a new or start-up business activity, it may not be
possible to predict with any degree of accuracy the impact of
government regulation. The inability to ascertain the effect of
government regulation on a prospective business activity will
make the acquisition of an interest in such business a higher
risk.
Competition
The Company will be involved in intense competition with other
business entities, many of which will have a competitive edge
over the Company by virtue of their stronger financial resources
and prior experience in business. There is no assurance that the
Company will be successful in obtaining suitable investments.
Employees
The Company is a development stage company and currently has no
employees. Executive officers, who are not compensated for their
time contributed to the Company, will devote only such time to
the affairs of the Company as they deem appropriate, which is
estimated to be approximately 20 hours per month per person.
Management of the Company expects to use consultants, attorneys,
and accountants as necessary, and does not anticipate a need to
engage any full-time employees so long as it is seeking and
evaluating businesses. The need for employees and their
availability will be addressed in connection with a decision
whether or not to acquire or participate in a specific business
industry.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS
Results of Operations
Calendar Years Ended December 31, 1998 and 1997
The Company had no revenue from continuing operations for the
periods ended December 31, 1998 and 1997.
General and administrative expenses for the periods ended
December 31, 1998 and 1997, consisted of general corporate
administration, legal and professional expenses, and accounting
and auditing costs. These expenses were $9,224 and $5,475 for
the periods ended December 31, 1998 and 1997, respectively.
General and administrative expenses in the period ended December
31, 1998 were greater than in the period ended December 31, 1997
primarily due to the number of business opportunities reviewed
during the year in which professional services were required.
The Company had no interest expense in the periods ending
December 31, 1998 or 1997. Interest income in the periods ended
December 31, 1998 and 1997, respectively, resulted from the
investment of funds in short-term, liquid cash equivalents.
Interest income was $7,463 and $6,958 in the periods ended
December 31, 1998 and 1997, respectively. Interest income has
increased from period to period primarily because of the
additional interest earned on interest accumulated in prior
periods.
As a result of the foregoing factors, the Company realized a net
loss of $1,761 for the period ended December 31, 1998, as
compared to a net gain of $4,261 for the same period in 1997.
Liquidity and Capital Resources
At December 31, 1998, the Company had working capital of
approximately $201,075 as compared to $200,808 at December 31,
1997. Working capital as of both dates consisted substantially
of short-term investments, and cash and cash equivalents.
Although the Company's most significant assets consist largely of
cash and cash equivalents, the Company has no intent to become,
or hold itself out to be, engaged primarily in the business of
investing, reinvesting, or trading in securities. Accordingly,
the Company does not anticipate being required to register
pursuant to the Investment Company Act of 1940 and expects to be
limited in its ability to invest in securities, other than cash
equivalents and government securities, in the aggregate amount of
over 40% of its assets. There can be no assurances that any
investment made by the Company will not result in losses.
Management believes that the Company has sufficient cash and
short-term investments to meet the anticipated needs of the
Company's operations through at least the next 12 months.
However, there can be no assurances to that effect, as the
Company has no significant revenues and the Company's need for
capital may change dramatically if it acquires an interest in a
business opportunity during that period. The Company's current
operating plan is to (i) handle the administrative and reporting
requirements of a public company; and (ii) search for potential
businesses, products, technologies and companies for acquisition.
At present, the Company has no understandings, commitments or
agreements with respect to the acquisition of any business,
product, technology or company and there can be no assurance that
the Company will identify any such business, product, technology
or company suitable for acquisition in the future. Further,
there can be no assurance that the Company would be successful in
consummating any acquisition on favorable terms or that it will
be able to profitably manage the business, product, technology or
company it acquires.
ITEM 3. DESCRIPTION OF PROPERTIES
The Company uses offices and related clerical services at 10 West
100 South, Suite 610, Salt Lake City, Utah 84101, provided by an
officer and director of the Company at a monthly rental rate of
$200.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as of April 30, 1999, the number
and percentage of the outstanding shares of common stock which,
according to the information supplied to the Company, were
beneficially owned by (i) each person who is currently a director
of the Company, (ii) each executive officer, (iii) all current
directors and executive officers of the Company as a group and
(iv) each person who, to the knowledge of the Company, is the
beneficial owner of more than 5% of the outstanding common stock.
Except as otherwise indicated, the persons named in the table
have sole voting and dispositive power with respect to all shares
beneficially owned, subject to community property laws where
applicable.
Common Options(1) Percent
Shares of
Class(2)
Name and Address
Richard B. Stuart (3) 175,680 200,000 9.9
10 West 100 South, Suite 610
Salt Lake City, Utah 84101
Philip C. Gugel (3) 131,760 200,000 8.7
10 West 100 South, Suite 610
Salt Lake City, Utah 84101
Jack M. Gertino (3) 175,680 200,000 9.9
10 West 100 South, Suite 610
Salt Lake City, Utah 84101
All Executive officers and 483,120 600,000 25.8
Directors as a Group (3 persons)
(1) These figures represent options that are vested or will vest
within 10 years from the date as of which information is
presented in the table.
(2) These figures represent the percentage of ownership of the
named individuals assuming each of them alone has exercised his
or her options, and percentage ownership of all officers and
directors of a group assuming all such purchase rights held by
such individuals are exercised.
(3) Messrs. Stuart, Gugel and Gertino are all of the officers
and directors of the Company.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
Directors and Officers
The following table sets forth the names, ages, and positions
with the Company for each of the directors and officers of the
Company.
Name Age Positions (1) Since
Richard B. Stuart 60 President and Director 1986
Philip C. Gugel 56 Vice President and Director 1986
Jack M. Gertino Secretary, Treasurer and 1986
Director
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All executive officers are elected by the Board and hold office
until the next Annual Meeting of stockholders and until their
successors are elected and qualify.
The following is information on the business experience of each
director and officer.
Richard Stuart is President and a director of Compuscore, a
privately-held company providing computer scoring of clinical
protocols. From 1972 to 1983, Dr. Stuart was affiliated with
Weight Watchers International, holding such titles as
Psychological Director and Executive Director of One to One
Weight management System, a subsidiary of Weight Watchers. Dr.
Stuart has been employed part time with the University of Utah
since 1977 and is presently Professor of Family and Community
Medicine and Professor of Social Work. Dr. Stuart is also a
director of Domino Investments, Inc., a Utah publicly-held
corporation organized for the same general purpose as the
Company, until 1985, when it merged with General Automotive Corp.
He continues to serve as a director of such company. Dr. Stuart
completed his undergraduate training at New York University in
1955 and received his masters and doctoral degrees from Columbia
University in 1960 and 1965 respectively.
Philip C. Gugel has been a private investor and businessman for
the past five years. Since 1986 he has been the Chief Executive
Officer of Hawthorne Capital Corporation, a private company which
owns and operates a Molly Maid franchise in Modesto, CA.
Jack M Gertino, has been a private investor and business
consultant in Salt Lake City, Utah, for the past five years.
From June 1995 through October 1996, Mr. Gertino was an owner of
a Tunex Service Center franchise in Layton, Utah, which offers
automotive Tune-up services. He is currently pursuing a number
of real estate projects, including the recent purchase and
operation of a commercial office building in Salt Lake City.
From February 1992 to the present, he has served as a director of
Red Horse Entertainment Corporation, a publicly held shell
corporation seeking a business acquisition. Since February 1997,
he has also served as an officer and director of Lazarus
Industries, Inc., a publicly held shell corporation seeking a
business acquisition.
Other Shell Company Activities
Mr. Gertino is currently a director of Red Horse Entertainment
Corporation and Lazarus Industries, Inc., both publicly held
shell corporations seeking a business acquisition. The
possibility exists that one or more of the officers and directors
of the Company could become officers and/or directors of other
shell companies in the future, although they have no intention of
doing so at the present time. Certain conflicts of interest are
inherent in the participation of the Company's officers and
directors as management in other shell companies, which may be
difficult, if not impossible, to resolve in all cases in the best
interests of the Company. Failure by management to conduct the
Company's business in its best interests may result in liability
of management of the Company to the shareholders.
ITEM 6. EXECUTIVE COMPENSATION
The Company has no agreement or understanding, express or
implied, with any officer, director, or principal stockholder, or
their affiliates or associates, regarding employment with the
Company or compensation for services. The Company has no plan,
agreement, or understanding, express or implied, with any
officer, director, or principal stockholder, or their affiliates
or associates, regarding the issuance to such persons of any
shares of the Company's authorized and unissued common stock.
There is no understanding between the Company and any of its
present stockholders regarding the sale of a portion or all of
the common stock currently held by them in connection with any
future participation by the Company in a business. There are no
other plans, understandings, or arrangements whereby any of the
Company's officers, directors, or principal stockholders, or any
of their affiliates or associates, would receive funds, stock, or
other assets in connection with the Company's participation in a
business. No advances have been made or contemplated by the
Company to any of its officers, directors, or principal
stockholders, or any of their affiliates or associates.
There is no policy that prevents management from adopting a plan
or agreement in the future that would provide for cash or stock
based compensation for services rendered to the Company.
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On acquisition of a business, it is possible that current
management will resign and be replaced by persons associated with
the business acquired, particularly if the Company participates
in a business by effecting a stock exchange, merger, or
consolidation as discussed under "BUSINESS." In the event that
any member of current management remains after effecting a
business acquisition, that member's time commitment and
compensation will likely be adjusted based on the nature and
location of such business and the services required, which cannot
now be foreseen.
On March 11, 1999, the Company granted to Richard B. Stuart,
Phillip C. Gugel and Jack M. Gertino options to purchase 200,000
shares of common stock each at an exercise price of $0.1875,
which was the average of the bid and asked prices for the common
stock on that date. The option are vested and expire in March
2009. The options were issued to compensate these persons for
their services to the Company over the past 13 years, for which
they have received no other compensation.
The following table sets forth certain information with respect
to unexercised options held by the executive officers as of April
23, 1999.
Number of Securities Value of Unexercised
Name and Principal Underlying Unexercised Options In-the-Money Options
Position at April 23, 1999 (#) at April 23, 1999 ($)(1)
Exerciseable/Unexercisable Exerciseable/Unexerciseable
Richard B. Stuart 200,000/ -0- 12,500/ -0-
President
Philip C. Gugel 200,000/ -0- 12,500/ -0-
Vice President
Jack M. Gertino 200,000/ -0- 12,500/ -0-
Secretary and Treasurer
(1) This value is determined on the basis of the difference
between the last sale price on April 23, 1999, of the securities
underlying the options, which was $0.25, and the exercise price.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no proposed transactions and no transactions during the
past two years to which the Company was a party and in which any
officer, director, or principal stockholder, or their affiliates
or associates, was also a party.
ITEM 8. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings, and to the best of its knowledge, no such
proceedings by or against the Company have been threatened.
ITEM 9. MARKET FOR COMMON EQUITY AND OTHER STOCKHOLDER MATTERS
Although quotations for the Company's common stock appear on the
OTC Bulletin Board, there is no established trading market for
the common stock. For the past two calendar years, and from
December 31, 1998, to the present, transactions in the common
stock can only be described as sporadic. Consequently, the
Company is of the opinion that any published prices cannot be
attributed to a liquid and active trading market and, therefore,
are not indicative of any meaningful market value.
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The following table sets forth for the respective periods
indicated the prices of the Company's Common Stock in the over-
the-counter market, as reported and summarized by the OTC
Bulletin Board. Such prices are based on inter-dealer bid and
asked prices, without markup, markdown, commissions, or
adjustments and may not represent actual transactions.
Calendar Quarter Ended High Bid ($) Low Bid ($)
March 31, 1997 0.125 0.0625
June 30, 1997 0.15625 0.125
September 30, 1997 0.1875 0.15625
December 31, 1997 0.15625 0.125
March 31, 1998 0.1875 0.125
June 30, 1998 0.125 0.125
September 30, 1998 0.125 0.125
December 31, 1998 0.125 0.125
There are outstanding options to purchase 600,000 shares of
common stock at an exercise price of $0.1875, which expire in
March 2009. There is an outstanding warrant to purchase 50,000
shares of the Company's common stock at an exercise price of
$0.1875, which expire in March 2009. All shares of common stock
outstanding may be sold without restriction under Rule 144(k)
promulgated under the Securities Act of 1933, except 483,120
shares which are held by officers and directors ("Control
Shares"). Control Shares may be sold subject to complying with
all of the terms and conditions of Rule 144, except the one-year
holding period which has been satisfied.
Since its inception, no dividends have been paid on the Company's
common stock. The Company intends to retain any earnings for use
in its business activities, so it is not expected that any
dividends on the common stock will be declared and paid in the
foreseeable future.
At April 30, 1999, there were approximately 100 holders of record
of the Company's Common Stock.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
On March 11, 1999, the Company granted to Richard B. Stuart,
Philip C. Gugel and Jack M. Gertino options to purchase 200,000
shares of common stock each at an exercise price of $0.1875, all
of which expire in March 2009. The options were issued as
compensation for services rendered to the Company. On the same
day, a warrant was issued to the Company's attorney to purchase
50,000 shares of the Company's common stock at an exercise price
of $0.1875, which expires in March 2009. The warrant was issued
as compensation for services rendered to the Company. The
options and warrant were issued in reliance on the exemption from
registration set forth in Section 4(2) of the Securities Act of
1933.
ITEM 11. DESCRIPTION OF SECURITIES
The Company is authorized to issue 20,000,000 shares of common
stock, par value $0.001 per share, of which 3,598,000 shares are
issued and outstanding. Holders of common stock are entitled to
one vote per share on each matter submitted to a vote at any
meeting of stockholders. Shares of common stock do not carry
cumulative voting rights and, therefore, holders of a majority of
the outstanding shares of common stock will be able to elect the
entire board of directors, and, if they do so, minority
stockholders would not be able to elect any members to the board
of directors. The Company's board of directors has authority,
without action by the Company's stockholders, to issue all or any
portion of the authorized but unissued shares of common stock,
which would reduce the percentage ownership in the Company of its
stockholders and which may dilute the book value of the common
stock. Stockholders of the Company have no pre-emptive rights to
acquire additional shares of common stock. The common stock is
not subject to redemption and carries no subscription or
conversion rights. In the event of liquidation of the Company,
the shares of common stock are entitled to share equally in
corporate assets after satisfaction of all liabilities. Holders
of common stock are entitled to receive such dividends as the
board of directors may from time to time declare out of funds
11
<PAGE>
legally available for the payment of dividends. The Company has
not paid dividends on its common stock and does not anticipate
that it will pay dividends in the foreseeable future.
The Company is authorized to issue 5,000,000 shares of preferred
stock, par value $0.001, none of which are issued and
outstanding. The Company currently has no plans to issue any
preferred stock. The Company's board of directors has authority,
without action by the shareholders, to issue all or any portion
of the unissued preferred stock in one or more series and to
determine the voting rights, preferences as to dividends and
liquidation, conversion rights and other rights of such series.
The preferred stock, if and when issued, may carry rights
superior to those of the common stock.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of the Nevada Revised Statutes provides in
relevant part as follows:
(1) A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending,
or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative except an action by or
in the right of the corporation, by reason of the fact that he is
or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other
enterprise, against expenses, including attorneys' fees,
judgments, fines, and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit,
or proceeding if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by
judgment, order, settlement, conviction, or on a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and that, with respect to
any criminal action or proceeding, he had reasonable cause to
believe that his conduct was unlawful.
(2) A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending,
or completed action or suit by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other
enterprise against expenses, including amounts paid in settlement
and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit
if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue, or matter
as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the
corporation unless and only to the extent that the court in which
such action or suit was brought shall determine on application
that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall
deem proper.
(3) To the extent that a director, officer, employee, or agent
of a corporation has been successful on the merits or otherwise
in defense of any action, suit, or proceeding referred to in
subsections 1 and 2, or in defense of any claim, issue, or matter
therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in
connection therewith.
The Company's articles of incorporation provide that the Company
may indemnify to the full extent of its power to do so under
Nevada law, all directors, officers, employees, and/or agents of
the Company for liabilities and expenses reasonably incurred in
connection with any action, suit, or proceeding to which such
person may be a party by reason of such person's position with
the Company. Consequently, the Company intends to indemnify its
officers, directors, employees, and agents to the full extent
permitted by the statute noted above.
12
<PAGE>
ITEM 13. FINANCIAL STATEMENTS
The financial statements of the Company appear at the end of
this report beginning with the Index to Financial Statements on
page F-1.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants
since the Company's organization.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements of the Company appear at the
end of this registration statement beginning with the Index to
Financial Statements on page F-1.
Independent Auditors' Report
Balance Sheets
Statement of Operations
Statement of Stockholders' Equity From Inception through December
31, 1998
Statement of Cash Flows
Notes to the Financial Statements
Exhibits
Copies of the following documents are included as exhibits to
this report pursuant to Item 601 of Regulation S-B.
Exhibit SEC Title of Document Page
No. Ref.
No.
1 (3)(i) Articles of Incorporation, as
amended E-1
2 (3)(ii) By-Laws E-6
3 (10) Option granted to Richard B. Stuart E-15
March 11, 1999
4 (10) Option granted to Philip C. Gugel E-22
March 11, 1999
5 (10) Option granted to Jack M. Gertino E-29
March 11, 1999
6 (10) Warrant granted to Mark E. Lehman E-36
March 11, 1999
7 (27) Financial Data Schedules *
* The Financial Data Schedule is presented only in the
electronic filing with the Securities and Exchange Commission.
13
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant caused this registration statement to be
signed on its behalf by the undersigned thereunto duly
authorized.
COMET TECHNOLOGIES , INC.
Date: May 11, 1999 By: /s/ Richard B. Stuart, President
In accordance with the Exchange Act, this registration statement
has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Dated: May 11, 1999 /s/ Richard B. Stuart, Director
Dated: May 11, 1999 /s/ Philip Gugel, Director
Dated: May 11, 1999 /s/ Jack M. Gertino, Director
14
<PAGE>
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Financial Statements
December 31, 1998 and 1997
C O N T E N T S
Independent Auditors' Report F-2
Balance Sheets F-3
Statements of Operations F-4
Statements of Stockholders' Equity F-5
Statements of Cash Flows F-7
Notes to the Financial Statements F-8
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Comet Technologies, Inc.
(A Development Stage Company)
Salt Lake City, Utah
We have audited the accompanying balance sheet of Comet
Technologies, Inc. (a development stage company) as of December
31, 1998 and the related statements of operations, stockholders'
equity, and cash flows for the years ended December 31, 1998 and
1997, and from the date of inception on February 7, 1986 through
December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Comet Technologies, Inc. as of December 31, 1998 and the
results of its operations and its cash flows for the years ended
December 31, 1998 and 1997 and from the date of inception on
February 7, 1986 through December 31, 1998 in conformity with
generally accepted accounting principles.
Jones, Jensen & Company
Salt Lake City, Utah
April 5, 1999
F-2
<PAGE>
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
December 31,
1998
CURRENT ASSETS
Cash $ 201,075
Prepaid Expenses $ 101
Total Current Assets 201,176
TOTAL ASSETS $ 201,176
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,246
Taxes Payable (Note 1) $ 100
Total Current Liabilities $ 2,346
Total Liabilities $ 2,346
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 5,000,000
shares authorized; none issued or
outstanding -
Common stock, $0.001 par value 20,000,000
shares authorized; 3,598,000 issued and
outstanding $ 3,598
Capital in excess of par value $ 238,561
Deficit accumulated during the
development stage (43,329)
Total Stockholders' Equity $ 198,830
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 201,176
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Statements of Operations
From Inception
on February 7,
For the Years Ended 1986 through
December 31, December 31,
1998 1997 1998
(Unaudited)
REVENUES $ - $ - $ -
EXPENSES
Accounting and legal 5,331 645 14,504
Bank Fees 228 252 47,623
Licenses, taxes and fees 445 420 181,135
Travel and entertainment - 1,098 25,829
Telephone - 600 5,555
Rent 2,400 1,800 28,744
Legal - - 9,003
Office Expenses 559 405 9,993
Transfer Fees 261 255 4,347
Total Expenses 9,224 5,475 163,733
NET LOSS FROM OPERATIONS (9,224) (5,475) (163,733)
OTHER (INCOME) LOSS
Dividend Income - 2,778 5,493
Interest income 7,463 6,958 121,561
Unrealized Loss from - - (6,650)
Marketable securities
Total other income (Loss) 7,463 9,736 120,404
NET (LOSS) (1,761) 4,261 43,329
BASIS EARNINGS PER SHARE $ 0.00 $ 0.00
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
From Inception on February 7, 1986 through December 31, 1998
Deficit
Accumulated
Capital in During The
Common Stock Excess of Development
Shares Amount Par Value Stage
<S> <C> <C> <C> <C>
Balances at Inception on - $ - $ - $ -
February 7, 1986
Issuance of 1,098,000 shares
Of common stock to Officers,
Directors and other individuals 1,098,000 1,098 23,902 -
For $0.023 per share on
February 7, 1986
Public Offering of the Company's
Common stock (note 2) 2,500,000 2,500 247,500 -
Deferred offering costs offset - - (32,841) -
against capital in excess
of par value
Net loss from inception on
February 7, 1986 through
December 31, 1986 - - - (11,916)
Balance, December 31, 1986 3,598,000 3,598 238,561 (11,916)
Net loss for the year ended
December 31, 1987 - - - (15,751)
Balance, December 31, 1987 3,598,000 3,598 238,561 (27,667)
Net loss for year ended
December 31, 1988 - - - (11,431)
Balance, December 31, 1988 3,598,000 3,598 238,561 (39,098)
Net loss for year ended
December 31, 1989 - - - (14,166)
Balances, December 31, 1989 3,598,000 3,598 238,561 (53,264)
Net loss for year ended
December 31, 1990 - - - 684
Balances, December 31, 1990 3,598,000 3,598 238,561 (52,580)
Net loss for year ended
December 31, 1991 - - - (6,658)
<CAPTION>
The accompanying notes are an integral part of the financial statements.
F-5
<PAGE>
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Continued)
From Inception on February 7, 1986 through December 31, 1998
Deficit
Accumulated
Additional During The
Common Stock Paid-in Development
Shares Amount Capital Stage
<S> <C> <C> <C> <C>
Net loss for year ended
December 31, 1991 - - - (6,658)
Balances, December 31, 1991 3,598,000 $ 3,598 $ 238,561 $ (59,238)
Net loss for year ended
December 31, 1992 - - - (2,598)
Balances, December 31, 1992 3,598,000 3,598 238,561 (61,836)
Net income for year ended
December 31, 1993 - - - 2,270
Balances, December 31, 1993 3,598,000 3,598 238,561 (59,566)
Net income for year ended
December 31, 1994 - - - 3,695
Balances, December 31, 1994 3,598,000 3,598 238,561 (55,871)
Net income for year ended
December 31, 1995 - - - 4,843
Balances, December 31, 1995 3,598,000 3,598 238,561 (51,028)
Net income for year ended
December 31, 1996 - - - 5,199
Balances, December 31, 1996 3,598,000 3,598 238,561 (45,829)
Net income for year ended
December 31, 1997 - - - 4,261
Balances, December 31, 1997 3,598,000 3,598 238,561 (41,568)
Net income for year ended
December 31, 1998 - - - (1,761)
Balances, December 31, 1998 3,598,000 3,598 238,561 (43,329)
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-6
<PAGE>
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Statements of Cash Flows
From
Inception on
February 7, 1986
For the Years Ended Through
December 31, December 31,
1998 1997 1998
CASH FLOWS FROM
OPERATING ACTIVITIES
Income (loss) from operations $ (1,761) $ 4,261 $ (43,329)
Adjustments to reconcile
net income (loss) to net cash used
by operating activities:
Amortization - - 301
Changes in operating
assets and liabilities:
(Increase) in prepaid expenses (101) - (101)
(Increase) decrease in interest
receivable - 1,880 -
Increase in taxes payable - - 300
Increase (decrease) in accounts
payable 2,129 116 2,045
Net Cash Provided (Used)
by Operating Activities 267 6,257 (40,784)
CASH FLOWS FROM
INVESTING ACTIVITIES - - -
CASH FLOWS FROM
FINANCING ACTIVITIES
Organizational costs - - (300)
Net stock offering proceeds - - 242,159
Net Cash Provided by
Financing Activities $ - $ - $ 241,859
INCREASE IN CASH AND CASH
EQUIVALENTS 267 6,257 201,075
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 200,808 194,551 -
CASH AND CASH EQUIVALENTS
AT END OF PERIOD 201,075 200,808 201,075
CASH PAID FOR:
Taxes - - -
Interest - - -
The accompanying notes are an integral part of the financial statements.
F-7
<PAGE>
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998 and 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements presented are those of Comet
Technologies, Inc. The Company was incorporated in the
State of Nevada on February 7, 1986. The Company was
incorporated for the purpose of providing a vehicle which
could be used to raise capital and seek business
opportunities believed to hold a potential for profit.
The Company has not presently identified a specific
business area or direction that it will follow.
Therefore, no principal operations have yet begun.
b. Accounting Method
The Company's financial statements are prepared using the
accrual method of accounting. The Company has adopted a
calendar year end.
c. Basic Earning Per Share
The Computation of basic earnings per share of common
stock is based on the weighted average number of shares
outstanding during the period of the financial
statements.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with
a maturity of three months or less when purchased to be
cash equivalents.
e. Income Taxes
No provision for income taxes has been accrued because
the Company has net operating losses from inception. The
net operating loss carryforwards of approximately $41,000
at December 31, 1998 expire in 2001 through 2013. No tax
benefit has been reported in the financial statements
because the Company is uncertain if the carryforwards
will expire unused. Accordingly, the potential tax
benefits are offset by a valuation account of the same
amount.
f. Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 2 - PUBLIC OFFERING OF UNITS
In July of 1986, the Company completed a public offering
of 2,500,000 shares of its previously authorized but
unissued common stock to the public. An offering price
of $0.10 per share was arbitrarily determined by the
Company. Offering costs totaled $32,841 and were offset
against capital in excess of par value. The net proceeds
to the Company from the offering were $217,159, which
equals $250,000 minus the offering costs of $32,841.
F-8
<PAGE>
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
December 31, 1998 and 1997
NOTE 3 - PREFERRED STOCK
None of the Company's authorized 5,000,000 shares of
preferred stock is issued and outstanding and the Company
currently has no plan to issue any preferred stock. The
Company's board of directors has authority, without
action by the shareholders, to issue all or any portion
of the authorized but unissued preferred stock in one or
more series and to determine the voting rights,
preferences as to dividends and liquidation, conversion
rights and other rights of such series. The preferred
stock, if and when issued, may carry rights superior to
those of the common stock.
F-9
Exhibit 1
Comet Technologies, Inc.
Form 10-SB
ARTICLES OF INCORPORATION
OF
COMET TECHNOLOGIES, INC.
I, the undersigned, being a natural person more than
eighteen (18) years of age, acting as incorporator of the above-
named corporation (hereinafter referred to as the "Corporation")
under the provisions of the Nevada Business Corporation Act, do
hereby adopt the following Articles of Incorporation for such
Corporation:
ARTICLE
NAME
The name of the Corporation hereby created shall be:
Comet Technologies, Inc.
ARTICLE II
DURATION
The Corporation shall continue in existence perpetually
unless sooner dissolved according to law.
ARTICLE III
PURPOSE
The purposes for which the Corporation is organized are:
(a) To acquire by purchase or otherwise, own, hold,
lease, rent, mortgage or otherwise, to trade with and deal
in real estate, lands and interests in lands and all other
property of every kind and nature;
(b) To manufacture, use, work, sell and deal in
chemicals, biologicals, pharmaceuticals, electronics and
products of all types owned or hereafter owned by it for
manufacturing, using and vending any device or devices,
machine or machines or manufacturing, working or producing
any or all products;
(c) To borrow money and to execute notes and
obligations and security contracts therefor, to lend any of
the monies or funds of the Corporation and to take evidence
of indebtedness therefor; and to negotiate loans; to carry
on a general merchantile and merchandise business and to
purchase, sell and deal in such goods, supplies and
merchandise of every kind and nature;
(d) To guarantee the payment of dividends or interest
on any other contract or obligation of any corporation
whenever proper or necessary for the business of the
Corporation in the judgment of its directors;
(e) To do all and everything necessary, suitable,
convenient, or proper for the accomplishment of any of the
purposes or the attainment of any one or more of the objects
herein enumerated or incidental to the powers therein named
or which shall at any time appear conclusive or expedient
for the protection or benefit of the Corporation, with all
the powers hereafter conferred by the laws under which this
Corporation is organized; and
(f) To engage in any and all other lawful purposes,
activities and pursuits, whether similar or dissimilar to
the foregoing, and the Corporation shall have all the powers
allowed or permitted by the laws of the state of Nevada.
ARTICLE IV
CAPITAL STOCK
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 25,000,000 shares,
consisting of 5,000,000 shares of preferred stock, par value
$.001 per share (hereinafter the "Preferred Stock"), and
20,000,000 shares of common stock, par value $.001 per share
(hereinafter the "Common Stock"). The Common Stock shall be non-
assessable and shall not have cumulative voting rights.
(a) Preferred Stock. Shares of Preferred Stock may be
issued from time to time in one or more series as may from
time to time be determined by the Board of Directors. Each
series shall be distinctly designated. All shares of any one
series of the Preferred Stock shall be alike in every
particular, except that there may be different dates from
which dividends thereon, if any, shall be cumulative, if
made cumulative. The powers, preferences and relative,
participating, optional and other rights of each such
series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other
series at any time outstanding. Except as hereinafter
provided, the Board of Directors of this corporation is
hereby expressly granted authority to fix, by resolution or
resolutions adopted prior to the issuance of any shares of
each particular series of Preferred Stock, the designation,
powers, preferences and relative, participating, optional
and other rights, and the qualifications, limitations and
restrictions thereof, if any, of such series, including but
without limiting the generality of the foregoing, the
following:
(i) the distinctive designation of, and the number of
shares of Preferred Stock which shall constitute the series,
which number may be increased (except as otherwise fixed by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by action of the Board of Directors;
(ii) the rate and times at which, and the terms and
conditions upon which, dividends, if any, on shares of the
series shall be paid, the extent of preferences or
relations, if any, of such dividends to the dividends
payable on any other class or classes of stock of this
corporation, or on any series of Preferred Stock or of any
other class or classes of stock of this corporation, and
whether such dividends shall be cumulative or non-
cumulative.
(iii) the right, if any, of the holders of shares of
the series to convert the same into, or exchange the same
for, shares of any other class or classes of stock of this
corporation, or of any series of Preferred Stock or of any
other class or classes of stock of this corporation, and the
terms and conditions of such conversion or exchange;
(iv) whether shares of the series shall be subject to
redemption, and the redemption price or prices including,
without limitation, a redemption price or prices payable in
shares of the Common Stock and the time or times at which,
and the terms and conditions upon which, shares of the
series may be redeemed;
(v) the rights, if any, of the holders of shares of the
series upon voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution
or winding-up of this corporation;
(vi) the terms of the sinking fund or redemption or
purchase account, if any, to be provided for shares of the
series; and
(vii) the voting Power, if any, of the holders of
shares of the series which may, without limiting the
generality of the foregoing, include the right to more or
less than one vote per share of any or all matters voted
upon by the shareholders and the right to vote, as a series
by itself or together with other series of Preferred Stock
as a class, upon such matters, under such circumstances and
upon such conditions as the Board of Directors may fix,
including, without limitation, the right, voting as a series
by itself or together with other series of Preferred Stock
or together with all series of Preferred Stock as a class,
to elect one or more directors of this corporation in the
event there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or
under such other circumstances and upon such condition as
the Board may determine.
(b) Common Stock
(i) after the requirements with respect to preferential
dividends on Preferred Stock (fixed in accordance with the
provisions of subparagraph (a)(ii) of this Article, if any,
shall have been met and after this corporation shall have
complied with all the requirements, if any, with respect to
the setting aside of sums as sinking funds or redemption or
purchase accounts as sinking funds or redemption or purchase
accounts (fixed in accordance with the provisions of
subparagraph (a)(ii) of this Article) and subject further to
any other conditions which may be fixed in accordance with
the provisions of papagraph (a) of this Article, then, but
not otherwise, the holders of Common Stock shall be entitled
to receive such dividends, if any, as may be declared from
time to time by the board of directors;
(ii) after distribution in full of the preferential
amount (fixed in accordance with the provisions of paragraph
(a) of this Article), if any, to be distributed to the
holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets,
dissolution or winding-up of the corporation, the holders of
the Common Stock shall be entitled to receive all the
remaining assets of this Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders, ratably in proportion to the number of shares
of the Common Stock held by each; and
(iii) no holder of any of the shares of any class or
series of stock or of options, warrants or other rights to
purchase share of any class or series of stock or of other
securities of the Corporation shall have any pre-emptive
right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or
series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or
series, or bonds, certificates of indebtedness, debentures
or other securities convertible into or exchangeable for
stock of the Corporation or any class or series, or carrying
any right to purchase stock of any class or series, but any
such unissued stock, additional authorized issue of shares
of any class or series of stock or securities convertible
into or exchangeable for stock, or carrying any right to
purchase stock, may be issued and disposed of pursuant to
resolution of the board of directors to such persons, firms,
corporation or association, whether such holders or others,
and upon such terms as may be deemed advisable by the board
of directors in the exercise of its sole discretion.
ARTICLE V
DENIAL OF PRE-EMPTIVE RIGHTS
No holder of any shares of the Corporation, whether now or
hereafter authorized, shall have any pre-emptive or preferential
right's acquire shares or securities of the Corporation.
ARTICLE VI
PAID IN CAPITAL
The Corporation will not commence business until the
consideration of the value of at least $1,000.00 has been
received by it as consideration for the issuance of the shares.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall indemnify any and all persons who may
serve or who have served at any time as directors or officers or
who at the request of the Board of Directors of the Corporation,
may serve or any time have served as directors or officers of
another corporation in which the Corporation at such time owned
or may own shares of stock or of which it was or may be a
creditor, and their respective heirs, administrators, successors
and assigns, against any and all expenses, including amounts paid
upon judgments, counsel fees and amounts paid in settlement
(before or after suit is commenced), actually and necessarily by
such persons in connection with the defense or settlement of any
claim, action, suit or proceeding in which they, or any of them,
are made parties, or a party, or which may be asserted against
them or any of them, by reason of being or having been directors
or officers of the Corporation, or of such other corporation,
except in relation to matters as to which any such director or
officer of the Corporation, or of such other corporation or
former director or officer or person shall be adjudged in any
action, suit or proceeding to be liable for his own negligence or
misconduct in the performance of his duty. Such indemnification
shall be in addition to any other rights to which those
indemnified may be entitled under any law, by law, agreement,
vote of shareholder or otherwise.
ARTICLE III
OFFICERS' AND DIRECTORS' CONTRACTS
No contract or other transaction between this Corporation and any
other firm or corporation shall be affected by the fact that a
director or officer of this Corporation has an interest in, or is
a director or officer of this Corporation or any other
corporation. Any officer or director, individually or with
others, may be a party to, or may have an interest in, any
transaction of this Corporation or any transaction in which this
Corporation is a party or has an interest. Each person who is now
or may become an officer or director of this Corporation is
hereby relieved from liability that he might otherwise obtain in
the event such officer or director contracts with this
Corporation for the benefit of himself or any firm or other
corporation in which be may have an interest, provided such
officer or director acts in good faith.
ARTICLE IX
ADOPTION AND AMENDMENT OF BY-LAWS
The initial By-Laws of the Corporation shall be adopted by
its board of directors. The power to alter or amend or repeal the
By-Laws or adopt new By-Laws shall be vested in the board of
directors, but the holders of common stock of the Corporation may
also alter, amend, or repeal the By-Laws or adopt new By-Laws.
The By-Laws may contain any provisions for the regulation and
management of the affairs of the Corporation not inconsistent
with law or these Articles of Incorporation.
ARTICLE X
REGISTERED OFFICE AND AGENT
The address of the initial registered office of the
Corporation and its initial registered agent at such address is:
The Corporation Trust Company of Nevada
One East First Street
Reno, Nevada 89501
ARTICLE XI
DIRECTORS
The Corporation shall not have fewer directors than the
number of shareholders who own an equity interest in the
Corporation. At such time as the Corporation has three (3) or
more shareholders, it shall not have less than three (3) nor more
than nine (9) directors. The permissible number of directors may
be increased or decreased from time to time by the board of
directors in accordance with 178.330 of the Nevada Revised
Statutes or any amendment or successor statute. The original
board of directors shall be comprised of one (1) person. The name
and address of the person who is to serve as director until the
first annual meeting of shareholders and until his successor is
duly elected and shall qualify is:
Tod W. Anderson
175 West 200 South, #4006
Salt Lake City, Utah 84101
ARTICLE XII
INCORPORATOR
The name and address of the incorporator is:
Tod W. Anderson
175 West 200 South, #4006
Salt Lake City, Utah 84101
DATED this 27th day of January, 1986.
/s/ Tod W. Anderson
Exhibit 2
Comet Technologies, Inc.
Form 10-SB
COMET TECHNOLOGIES, INC.
BYLAWS
ARTICLE I
OFFICES
Section 1. The registered office of the corporation shall be
in the city of Las Vegas, county of Clark, state of Nevada.
Section 2. The corporation may also have offices at such
other places both within and without the state of Nevada as the
board of directors may from time to time determine or the
business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All annual meetings of the stockholders shall be
held at the principal executive office of the corporation or such
other place as the board of directors shall determine. Special
meetings of the stockholders may he held at such time and place
within or without the state of Nevada as shall be stated in the
notice of the meeting,, or in a duly executed waiver of notice
thereof.
Section 2. Annual meetings of stockholders shall be held at
such place and time not less than 90 nor more than 180 days after
the end of the corporation's fiscal year as the board of
directors shall determine, at which they shall elect by a
plurality vote a board of directors, and transact such other
business as may properly be brought before-the meeting.
Section 3. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by
the articles of incorporation, may he called by the president and
shall be called by the president or secretary at the request in
writing of a majority of the board of directors, or at the
request in writing of stockholders owning a majority in amount of
the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting.
Section 4. Notices of meetings shall be in writing and
signed by the president or a vice-president, or the secretary, or
an assistant secretary, or by such other person or persons as the
directors shall designate. Such notice shall state the purpose or
purposes for which t he meeting is called and the time and place
at which it is to be held, which may be mailed, postage prepaid,
to each stockholder of record entitled to vote at such meeting
not less than ten nor more than 60 days before such meeting. If
mailed, it shall be directed to a stockholder at his address as
it appears upon the records of the corporation and upon such
mailing of any such notice, the service thereof shall be
complete, and the time of the notice shall begin to run from the
date upon which such notice is deposited in the mail for
transmission to such stockholder. Personal delivery of any such
notice to any officer of a corporation or association, or to any
member of a partnership shall constitute delivery of such notice
to such corporation, association, or partnership. In the event of
the transfer of stock after delivery or mailing of the notice of
and prior to the holding of the meeting it shall not be necessary
to deliver or mail notice of the meeting to the transferee.
Section 5. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the
notice.
Section 6. The holders of at least 33-1/3% of stock issued
and outstanding and entitled to vote thereat, present in person
or represented by proxy, shall constitute a quorum at all
meetings of the stockholders or for the transaction of business
except as otherwise provided by statute or by the articles of
incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned meeting
at which a quorum shall be present or represented any business
may be transacted which might have been transacted at the meeting
as originally notified.
Section 7. When a quorum is present or represented at any
meeting, the vote of the holders of a majority of the stock
having voting power present in person or represented by proxy
shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes
or of the articles of incorporation a different vote is required
in which case such express provision shall govern and control the
decision of such question.
Section 8. Every stockholder of record of the corporation
shall be entitled at each meeting of stockholders to one vote for
each share of stock standing in his name on the books of the
corporation.
Section 9. At any meeting of the stockholders, any
stockholder may be represented and vote by a proxy or proxies
appointed by an instrument in writing. In the event that any such
instrument in writing shall designated two or more persons to act
as proxies, a majority of such persons present at the meeting,
or, if only one shall be present, then that one shall have and
may exercise all of the powers conferred by such written
instrument upon all of the persons so designated unless the
instrument shall otherwise provide. No such proxy shall be valid
after the expiration of six months from the date of its
execution, unless coupled with an interest, or unless the person
executing it specifies therein the length of time for which it is
to continue in force, which in no case shall exceed seven years
from the date of its execution. Subject to the above, any proxy
duly executed is not revoked and continues in full force and
effect until an instrument revoking it or a duly executed proxy
bearing a later date is filed with the secretary of the
corporation.
Section 10. Any action, except election of directors, which
may be taken by the vote of the stockholders at a meeting, may be
taken without a meeting if authorized by the written consent of
stockholders holding at least a majority of the voting power,
unless the provisions of the statutes or of the articles of
incorporation require a greater proportion of voting power to
authorize such action in which case such greater proportion of
written consents shall be required.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute
the whole board shall be three. The board of directors may
increase or decrease the number of directors by resolution to not
less than three. The directors shall be elected at the annual
meeting of the stockholders and except as provided in Section 2
of this Article III, each director elected shall hold office
until his successor is elected and qualified. Directors need not
be stockholders.
Section 2. Vacancies, including those caused by an increase
in the number of directors, may be filled by a majority of the
remaining directors though less than a quorum. When one or more
directors shall have notice of his or their resignation to the
board, effective at a future date, the board shall have power to
fill such vacancy or vacancies to take effect when such
resignation or resignations shall become effective, each director
so appointed to hold office during the remainder of the term of
office of the resigning director or directors.
Section 3. The business of the corporation shall be managed
by its board of directors which may exercise all such powers of
the corporation and do all such lawful acts and things as are
noted by statute or by the articles of incorporation or by these
Bylaws directed or required to be exercised or done by the
stockholders.
Section 4. The board of directors of the corporation may
hold meetings, both regular and special, either within or without
the state of Nevada.
MEETINGS OF THE BOARD OF DIRECTORS
Section 5. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed
by the vote of the stockholders at the annual meeting and no
notice of such meeting shall be necessary to the newly elected
directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of
the newly elected board of directors, or in the event such
meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be
specified in a written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be
held without notice at such time and place as shall from time to
time be determined by the board.
Section 7. Special meetings of the board of directors may be
called by the president or secretary on the written request of
two directors. Written notice of special meetings of the board of
directors shall be given to each director at least five days
before the date of the meeting.
Section 8. A majority of the board of directors, at a
meeting duly assembled, shall be necessary to constitute a quorum
for the transaction of business and the act of a majority of the
directors present at any meeting at which a quorum is present
shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the articles of
incorporation. Any action required or permitted to be taken at a
meeting of the directors may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be
signed by all of the directors entitled to vote with respect to
the subject matter thereof.
COMMITTEES OF DIRECTORS
Section 9. The board of directors may, by resolution passe
by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the
directors of the corporation, which, to the extent provided in
the resolution, shall have and may exercise the powers of the
board of directors in the management of the business and affairs
of the corporation, and may have power to authorize the seal of
the corporation to be affixed to all papers which may require it.
Such committee or committees shall have such name or names as may
be determined from time to time by resolution adopted by the
board of directors.
Section 10. The committees shall keep regular minutes of
their proceedings and report the same to the board when retired.
COMPENSATION OF DIRECTORS
Section 11. The directors may be paid their expenses, if
any, of attendance at each meeting of the board of directors and
may be paid a fixed sum for attendance at each meeting of the
board of directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation
in any other capacity and receiving compensation therefor.
Members of special or standing committees may be allowed like
compensation for attending committee meetings.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders shall be in
writing and delivered personally or mailed to the directors or
stockholders at their addresses appearing on the books of the
corporation. Notice by mail shall be deemed to be given at the
time when the same shall be mailed. Notice to directors may also
be given by telegram.
Section 2. Whenever all parties entitled to vote at any
meeting, whether of directors or stockholders, consent, either by
a writing on the records of the meeting or filed with the
secretary, or by presence at such meeting and oral consent
entered on the minutes, or by taking part in the deliberations at
such meeting without objection, the doings of such meeting shall
be as valid as if a meeting had regularly been called and
noticed, and at such meeting any business may be transacted which
is not excepted from the written consent or to the consideration
of which no objection for want of notice is made at the time, and
if any meeting be irregular for want of notice or of such
consent, provided a quorum was present at such meeting, the
proceedings of said meeting may be ratified and approved and
rendered likely valid and the irregularity or defect therein
waived by a writ signed by all the parties having the right to
vote at such meeting and such consent or approval of stockholders
may be by proxy o attorney, but all such proxies and powers of
attorney must be in writing.
Section 3. Whenever any notice whatever is required to be
given under the provisions of the statutes, of the articles of
incorporation or of these Bylaws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen
by the board of directors and shall be a president, a vice
president, a secretary, and a treasurer. Any person may hold two
or more offices.
Section 2. The board of directors at its first meeting after
each annual meeting of stockholders shall choose a president, a
vice-president, a secretary, and a treasurer, none of whom need
be a member of the board.
Section 3. The board of directors may appoint additional
vice-presidents, and assistant secretaries and assistant
treasurers, and such other officers and agents as it shall deem
necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be
determined from time to time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office
until their successors are chosen and qualify. Any officer
elected or appointed by the board of directors may be removed at
any time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the corporation
by death, resignation, removal, or otherwise shall be filled by
the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive
officer of the corporation, shall preside at all meetings of the
stockholders and the board of directors, shall have general
active management of the business of the corporation, and shall
see that all orders and resolutions of the board of directors are
carried into effect. stockholders and the board of directors,
shall have general active management of the business of the
corporation, and shall see that all orders and resolutions of the
board of directors are carried into effect.
Section 7. He shall execute bonds, mortgages, and other
contracts requiring a seal, under the seal of the corporation,
except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof
shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE-PRESIDENT
Section 8. The vice-president shall, in the absence or
disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties as
the board of directors may from time to time prescribe.
THE SECRETARY
Section 9. The secretary shall attend all meetings of the
board of directors and all meetings of the stockholders and
record all the proceedings of the meetings of the corporation and
of the board of directors in a book to be kept for that purpose
and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as may be
prescribed by the board of directors or president, under whose
supervision he shall be. He shall keep in safe custody the seal
of the corporation and, when authorized by the board of
directors, affix the same to any instrument requiring it and,
when so affixed, it shall be attested by his signature or by the
signature of the treasurer or an assistant secretary.
THE TREASURER
Section 10. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such
depositories as may be designated by the board of directors.
Section 11. He shall disburse the funds of the corporation
as may be ordered by the board of directors taking proper
vouchers for such disbursements, and shall render to the
president and the board of directors, at the regular meetings of
the board, or when the board of directors so requires, an account
of all his transactions as treasurer and of the financial
condition of the corporation.
Section 12. If required by the board of directors, he shall
give the corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the,
restoration to the corporation, in case of his death,
resignation, retirement, or removal from office, of all books
papers, vouchers money, and other property of whatever kind in
his possession or under his control belonging to the corporation.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every stockholder shall be entitled to have a
certificate, signed by the president or a vice-president and the
treasurer or an assistant treasurer, or the secretary or an
assistant secretary of the corporation, certifying the number of
shares owned by him in the corporation. When the corporation is
authorized to issue shares of more than one class or more than
one series of any class, there shall be set forth upon the face
or back of the certificate, or the certificate shall have a
statement that the corporation will furnish to any stockholders
upon request and without charge, a full or summary statement of
the designations, preferences, and relative, participating,
optional, or other special rights of the various classes of stock
or series thereof and the qualifications, limitations, or
restrictions of such rights, and, if the corporation shall be
authorized to issue only special stock, such certificate shall
set forth in full or summarize the rights of the holders of such
stock.
Section 2. Whenever any certificate is countersigned or
otherwise authenticated by a transfer agent or transfer clerk,
and by a registrar, then a facsimile of the signatures of the
officers or agents of the corporation may be printed or
lithographed upon such certificate in lieu of the actual
signatures. In case any officer or officers who shall have
signed, or whose facsimile signature or signatures shall have
been used on, any such certificate or certificates shall cease to
be such officer or officers of the corporation, whether because
of death, resignation, or otherwise, before such certificate or
certificates shall have been delivered by the corporation, such
certificate or certificates may nevertheless be adopted by the
corporation and be issued and delivered as though the person or
persons who signed such certificate or certificates, or whose
facsimile signature or signatures shall have been used thereon,
had not ceased to be the officer or officers of such corporation.
LOST CERTIFICATES
Section 3. The board of directors may direct a new or
certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation
alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of
stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the board of directors may, in
its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate
or certificates, or his legal representative, to advertise the
same in such manner as it shall require and/or give the
corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost or
destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession,
assignment, or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction
upon its books.
CLOSING OF TRANSFER BOOKS
Section 5. The directors may prescribe a period not
exceeding 60 days prior to any meeting of the stockholders during
which no transfer of stock on the books of the corporation may be
made, or may fix a day not more than 60 days prior to the holding
of any such meeting as the day as of which stockholders entitled
to notice of and to vote at such meeting shall be determined; and
only stockholders of record on such day shall be entitled to
notice or to vote at such meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize
the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner,
and to hold liable for calls and assessments a person registered
on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as
otherwise provided by the laws of the state of Nevada.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the articles of
incorporation, if any, may be declared by the board of directors
at any regular or special meeting pursuant to law. Dividends may
be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends
such sum or sums as the directors from time to time, in their
absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such
reserves in the manner in which they were created.
CHECKS
Section 3. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers of such
other person or persons as the board of directors may from time
to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon
the name of the corporation, the year of its incorporation and
the words "Corporate Seal, Nevada".
ARTICLE VIII
AMENDMENTS
Section 1. These Bylaws may be altered or repealed at any
regular meeting of the stockholders or of the board of directors
or at any special meeting of the stockholders or of the board of
directors if notice of such alteration or repeal be contained in
the notice of such special meeting.
Exhibit 3
Comet Technologies, Inc.
Form 10-SB
COMET TECHNOLOGIES, INC.
Option for the Purchase of 200,000
Shares of Common Stock
Par Value $0.001
STOCK OPTION AGREEMENT
THE HOLDER OF THIS OPTION, BY ACCEPTANCE HEREOF, BOTH WITH
RESPECT TO THE OPTION AND COMMON STOCK ISSUABLE UPON EXERCISE OF
THE OPTION, AGREES AND ACKNOWLEDGES THAT THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR OTHER
COMPLIANCE UNDER THE SECURITIES ACT OR THE LAWS OF THE APPLICABLE
STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE SECURITIES
AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT
THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT AND SUCH STATE STATUTES.
This is to certify that, for value received, RICHARD B.
STUART (the "Optionee") is entitled to purchase from COMET
TECHNOLOGIES, INC. (the "Company"), on the terms and conditions
hereinafter set forth, all or any part of 200,000 shares ("Option
Shares") of the Company's common stock, par value $0.001 (the
"Common Stock"), at the purchase price of $0.1875 per share
("Option Price"). Upon exercise of this option in whole or in
part, a certificate for the Option Shares so purchased shall be
issued and delivered to the Optionee. If less than the total
option is exercised, a new option of similar tenor shall be
issued for the unexercised portion of the options represented by
this Agreement.
This option is granted subject to the following further
terms and conditions:
1. This option shall vest and be exercisable immediately, and
shall expire at 5:00 p.m. Salt Lake City time on March 10, 2009.
In order to exercise this option with respect to all or any part
of the Option Shares for which this option is at the time
exercisable, Optionee (or in the case of exercise after
Optionee's death, Optionee's executor, administrator, heir or
legatee, as the case may be) must take the following actions:
(a) Deliver to the Corporate Secretary of the
Corporation an executed notice of exercise in substantially the
form of attached to this Agreement (the "Exercise Notice") in
which there is specified the number of Option Shares which are to
be purchased under the exercised option.
(b) Pay the aggregate Option Price for the purchased
shares through one or more of the following alternatives:
(i) full payment in cash or by check made payable
to the Corporation's order;
(ii) full payment in shares of Common Stock held
for the requisite period necessary to avoid a
charge to the Company's earnings for
financial reporting purposes and valued at
Fair Market Value on the Exercise Date (as
such term is defined below);
(iii) full payment through a combination of
shares of Common Stock held for the requisite
period necessary to avoid a charge to the
Company's earnings for financial reporting
purposes and valued at Fair Market Value on
the Exercise Date and cash or check payable
to the Company's order;
(iv) full payment effected through a broker-dealer sale and
remittance procedure pursuant to which Optionee shall
provide concurrent irrevocable written instructions (i)
to a brokerage firm to effect the immediate sale of the
purchased shares and remit to the Company, out of the
sale proceeds available on the settlement date,
sufficient funds to cover the aggregate Option Price
payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes
required to be withheld in connection with such purchase
and (ii) to the Company to deliver the certificates for
the purchased shares directly to such brokerage firm in
order to complete the sale transaction; or
(v) full payment through conversion of the option
to purchase Option Shares into the number of
fully paid and nonassessable Option Shares
calculated pursuant to the following formula:
X = Y (A-B)
A
where: X = the number of Option
Shares to be issued to the Optionee;
Y = the number of Option Shares for
which the conversion right is being
exercised;
A = the Fair Market Value per share as
of the date of exercise of such conversion
right; and
B = the Option Price with respect to
such Option Shares.
(c) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option
(if other than Optionee) have the right to exercise this option.
(d) For purposes of this Agreement, the Exercise Date
shall be the date on which the executed Exercise Notice shall
have been delivered to the Company. Except to the extent the
sale and remittance procedure specified above is utilized in
connection with the option exercise, payment of the Option Price
for the purchased shares must accompany such Exercise Notice.
(e) For all valuation purposes under this Agreement,
the Fair Market Value per share of Common Stock on any relevant
date shall be determined in accordance with the following
provisions:
(i) If the Common Stock is not at the time listed
or admitted to trading on any national
securities exchange but is traded on the
Nasdaq National Market, the Fair Market Value
shall be the mean between the highest "bid"
and lowest "offered" quotations of a share of
Common Stock on such date (or if none, on the
most recent date on which there were bid and
offered quotations of a share of Common
Stock), as reported by the Nasdaq National
Market or any successor system.
(ii) If the Common Stock is at the time listed or
admitted to trading on any national
securities exchange, then the Fair Market
Value shall be the closing selling price per
share on the date in question on the
securities exchange, as such price is
officially quoted in the composite tape of
transactions on such exchange. If there is
no reported sale of Common Stock on such
exchange on the date in question, then the
Fair Market Value shall be the closing
selling price on the exchange on the last
preceding date for which such quotation
exists.
(iii) If the Common Stock is not listed on
such date on any national securities exchange
nor included in the Nasdaq National Market,
but is traded in the over-the-counter market,
the highest "bid" quotation of a share of
Common Stock on such date (or if none, on the
most recent date on which there were bid
quotations of a share of Common Stock), as
reported on the Nasdaq Smallcap Market or the
NASD OTC Bulletin Board, as applicable.
(f) Upon such exercise, the Company shall issue and
cause to be delivered with all reasonable dispatch (and in any
event within three business days of such exercise) to or upon the
written order of the Optionee at its address, and in the name of
the Optionee, a certificate or certificates for the number of
full Option Shares issuable upon the exercise together with such
other property (including cash) and securities as may then be
deliverable upon such exercise. Such certificate or certificates
shall be deemed to have been issued and the Optionee shall be
deemed to have become a holder of record of such Option Shares as
of the Exercise Date.
2. The Optionee acknowledges that the shares subject to
this option have not and will not be registered as of the date of
exercise of this option under the Securities Act or the
securities laws of any state. The Optionee acknowledges that this
option and the shares issuable on exercise of the option, when
and if issued, are and will be "restricted securities" as defined
in Rule 144 promulgated by the Securities and Exchange Commission
and must be held indefinitely unless subsequently registered
under the Securities Act and any other applicable state
registration requirements. Except as provided herein, the
Company is under no obligation to register the securities under
the Securities Act or under applicable state statutes. In the
absence of such a registration or an available exemption from
registration, sale of the Option Shares may be practicably
impossible. The Optionee shall confirm to the Company the
representations set forth above in connection with the exercise
of all or any portion of this option. The Company agrees to
register or qualify the Option Shares, but not this option, for
resale as follows:
(a) If, at any time during the period in which the rights
represented by this Agreement are exercisable, the Company
proposes to file a registration statement or notification under
the Securities Act for the primary or secondary sale of any debt
or equity security, it will give written notice at least 30 days
prior to the filing of such registration statement or
notification to the Optionee of its intention to do so. The
Company agrees that, after receiving written notice from the
Optionee of its desire to include its Option Shares in such
proposed registration statement or notification, the Company
shall afford the Optionee the opportunity to have its Option
Shares included therein. Notwithstanding the provisions of this
paragraph 2(b), the Company shall have the right, at any time
after it shall have given written notice pursuant to this
paragraph (whether or not a written request for inclusion of the
Option Shares shall be made) to elect not to file any such
proposed registration statement or notification or to withdraw
the same after the filing but prior to the effective date
thereof. In no event shall the Company be obligated to include
the Option Shares in any registration statement or notification
under this paragraph 2(b) if, in the opinion of the underwriter,
the inclusion of the Option Shares in such registration statement
or notification would be materially detrimental to the proposed
offering of debt or equity securities pursuant to which the
Company gave notice to the holders under this paragraph;
provided, that the Option Shares shall not be excluded from any
such registration statement or notification if debt or equity
securities of the Company held by any other persons are, or will
be, included in such registration statement or notification.
(b) In connection with the filing of a registration
statement, notification, or post-effective amendment under this
section, the Company covenants and agrees:
(i) to pay all expenses of such registration
statement, notification, or post-effective amendment,
including, without limitation, printing charges, legal fees
and disbursements of counsel for the Company, blue sky
expenses, accounting fees and filing fees, but not including
legal fees and disbursements of counsel to the Optionee and
any sales commissions on Option Shares offered and sold;
(ii) to take all necessary action which may reasonably
be required in qualifying or registering the Option Shares
included in a registration statement, notification or post-
effective amendment for the offer and sale under the
securities or blue sky laws of such states as requested by
the Optionee; provided that the Company shall not be
obligated to execute or file any general consent to service
of process or to qualify as a foreign corporation to do
business under the laws of any such jurisdiction; and
(iii) to utilize its best efforts to keep the same
effective on a continuous or shelf basis until all
registered Option Shares of the Optionee have been sold.
(c) The Optionee shall cooperate with the Company and shall
furnish such information as the Company may request in connection
with any such registration statement, notification or post-
effective amendment hereunder, on which the Company shall be
entitled to rely, and the Optionee shall indemnify and hold
harmless the Company (and all other persons who may be subject to
liability under the Securities Act or otherwise) from and against
any and all claims, actions, suits, liabilities, losses, damages,
and expenses of every nature and character (including, but
without limitation, all attorneys' fees and amounts paid in
settlement of any claim, action, or suit) which arise or result
directly or indirectly from any untrue statement of a material
fact furnished by the Optionee in connection with such
registration or qualification, or from the failure of the
Optionee to furnish material information in connection with the
facts required to be included in such registration statement,
notification or post-effective amendment necessary to make the
statements therein not misleading.
3. The Company, during the term of this Agreement, will
obtain from the appropriate regulatory agencies any requisite
authorization in order to issue and sell such number of shares of
its Common Stock as shall be sufficient to satisfy the
requirements of the Agreement.
4. The number of Option Shares purchasable upon the
exercise of this option and the Option Price per share shall be
subject to adjustment from time to time subject to the following
terms. If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a
different number or kind of shares of the Company through
reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, the Company or its
successors and assigns shall make an appropriate and
proportionate adjustment in the number or kind of shares, and the
per-share Option Price thereof, which may be issued to the
Optionee under this Agreement upon exercise of the options
granted under this Agreement. The purchase rights represented by
this option shall not be exercisable with respect to a fraction
of a share of Common Stock. Any fractional shares of Common
Stock arising from the dilution or other adjustment in the number
of shares subject to this option shall rounded up to the nearest
whole share.
5. The Company covenants and agrees that all Option Shares
which may be delivered upon the exercise of this option will,
upon delivery, be free from all taxes, liens, and charges with
respect to the purchase thereof; provided, that the Company shall
have no obligation with respect to any income tax liability of
the Optionee and the Company may, in its discretion, withhold
such amount or require the Optionee to make such provision of
funds or other consideration as the Company deems necessary to
satisfy any income tax withholding obligation under federal or
state law.
6. The Company agrees at all times to reserve or hold
available a sufficient number of shares of Common Stock to cover
the number of Option Shares issuable upon the exercise of this
and all other options of like tenor then outstanding.
7. This option shall not entitle the holder hereof to any
voting rights or other rights as a shareholder of the Company, or
to any other rights whatsoever, except the rights herein
expressed, and no dividends shall be payable or accrue in respect
of this option or the interest represented hereby or the Option
Shares purchasable hereunder until or unless, and except to the
extent that, this option shall be exercised..
8. The Company may deem and treat the registered owner of
this option as the absolute owner hereof for all purposes and
shall not be affected by any notice to the contrary.
9. In the event that any provision of this Agreement is
found to be invalid or otherwise unenforceable under any
applicable law, such invalidity or unenforceability shall not be
construed as rendering any other provisions contained herein
invalid or unenforceable, and all such other provisions shall be
given full force and effect to the same extent as though the
invalid or unenforceable provision were not contained herein.
10. This Agreement shall be governed by and construed in
accordance with the internal laws of the state of Utah, without
regard to the principles of conflicts of law thereof.
11. Except as otherwise provided herein, this Agreement
shall be binding on and inure to the benefit of the Company and
the person to whom an option is granted hereunder, and such
person's heirs, executors, administrators, legatees, personal
representatives, assignees, and transferees.
IN WITNESS WHEREOF, the Company has caused this option to be
executed by the signature of its duly authorized officer,
effective this 11th day of March, 1999.
COMET TECHNOLOGIES, INC.
By: /s/ Jack M. Gertino, Treasurer
The undersigned Optionee hereby acknowledges receipt of a
copy of the foregoing option and acknowledges and agrees to the
terms and conditions set forth in the option.
/s/ Richard B. Stuart
Exercise Notice
(to be signed only upon exercise of Option)
TO: Comet Technologies, Inc.
The Optionee, holder of the attached option, hereby
irrevocable elects to exercise the purchase rights represented by
the option for, and to purchase thereunder,
________________________________ shares of common stock of Comet
Technologies, Inc., and herewith makes payment therefor, and
requests that the certificate(s) for such shares be delivered to
the Optionee at:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
If purchase is to be effected by conversion of the option to
Common Stock, the Optionee hereby converts option rights with
respect to __________________________________ Option Shares
represented by the option.
If acquired without registration under the Securities Act of
1933, as amended ("Securities Act"), the Optionee represents that
the Common Stock is being acquired without a view to, or for,
resale in connection with any distribution thereof without
registration or other compliance under the Securities Act and
applicable state statutes, and that the Optionee has no direct or
indirect participation in any such undertaking or in the
underwriting of such an undertaking. The Optionee understands
that the Common Stock has not been registered, but is being
acquired by reason of a specific exemption under the Securities
Act as well as under certain state statutes for transactions by
an issuer not involving any public offering and that any
disposition of the Common Stock may, under certain circumstances,
be inconsistent with these exemptions. The Optionee acknowledges
that the Common Stock must be held and may not be sold,
transferred, or otherwise disposed of for value unless
subsequently registered under the Securities Act or an exemption
from such registration is available. The Company is under no
obligation to register the Common Stock under the Securities Act,
except as provided in the Agreement for the option. The
certificates representing the Common Stock will bear a legend
restricting transfer, except in compliance with applicable
federal and state securities statutes.
The Optionee agrees and acknowledges that this purported
exercise of the option is conditioned on, and subject to, any
compliance with requirements of applicable federal and state
securities laws deemed necessary by the Company.
DATED this ________ day of _____________________,__________.
_____________________________
Signature
Exhibit 4
Comet Technologies, Inc.
Form 10-SB
COMET TECHNOLOGIES, INC.
Option for the Purchase of 200,000
Shares of Common Stock
Par Value $0.001
STOCK OPTION AGREEMENT
THE HOLDER OF THIS OPTION, BY ACCEPTANCE HEREOF, BOTH WITH
RESPECT TO THE OPTION AND COMMON STOCK ISSUABLE UPON EXERCISE OF
THE OPTION, AGREES AND ACKNOWLEDGES THAT THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR OTHER
COMPLIANCE UNDER THE SECURITIES ACT OR THE LAWS OF THE APPLICABLE
STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE SECURITIES
AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT
THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT AND SUCH STATE STATUTES.
This is to certify that, for value received, PHILIP C. GUGEL
(the "Optionee") is entitled to purchase from COMET TECHNOLOGIES,
INC. (the "Company"), on the terms and conditions hereinafter set
forth, all or any part of 200,000 shares ("Option Shares") of the
Company's common stock, par value $0.001 (the "Common Stock"), at
the purchase price of $0.1875 per share ("Option Price"). Upon
exercise of this option in whole or in part, a certificate for
the Option Shares so purchased shall be issued and delivered to
the Optionee. If less than the total option is exercised, a new
option of similar tenor shall be issued for the unexercised
portion of the options represented by this Agreement.
This option is granted subject to the following further
terms and conditions:
1. This option shall vest and be exercisable immediately, and
shall expire at 5:00 p.m. Salt Lake City time on March 10, 2009.
In order to exercise this option with respect to all or any part
of the Option Shares for which this option is at the time
exercisable, Optionee (or in the case of exercise after
Optionee's death, Optionee's executor, administrator, heir or
legatee, as the case may be) must take the following actions:
(a) Deliver to the Corporate Secretary of the
Corporation an executed notice of exercise in substantially the
form of attached to this Agreement (the "Exercise Notice") in
which there is specified the number of Option Shares which are to
be purchased under the exercised option.
(b) Pay the aggregate Option Price for the purchased
shares through one or more of the following alternatives:
(i) full payment in cash or by check made payable
to the Corporation's order;
(ii) full payment in shares of Common Stock held
for the requisite period necessary to avoid a
charge to the Company's earnings for
financial reporting purposes and valued at
Fair Market Value on the Exercise Date (as
such term is defined below);
(iii) full payment through a combination of
shares of Common Stock held for the requisite
period necessary to avoid a charge to the
Company's earnings for financial reporting
purposes and valued at Fair Market Value on
the Exercise Date and cash or check payable
to the Company's order;
(iv) full payment effected through a broker-dealer sale and
remittance procedure pursuant to which Optionee shall
provide concurrent irrevocable written instructions (i)
to a brokerage firm to effect the immediate sale of the
purchased shares and remit to the Company, out of the
sale proceeds available on the settlement date, sufficient
funds to cover the aggregate Option Price payable for the
purchased shares plus all applicable Federal, state and
local income and employment taxes required to be withheld
in connection with such purchase and (ii) to the Company
to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the
sale transaction; or
(v) full payment through conversion of the option
to purchase Option Shares into the number of
fully paid and nonassessable Option Shares
calculated pursuant to the following formula:
X = Y (A-B)
A
where: X = the number of Option
Shares to be issued to the Optionee;
Y = the number of Option Shares for
which the conversion right is being
exercised;
A = the Fair Market Value per share as
of the date of exercise of such conversion
right; and
B = the Option Price with respect to
such Option Shares.
(c) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option
(if other than Optionee) have the right to exercise this option.
(d) For purposes of this Agreement, the Exercise Date
shall be the date on which the executed Exercise Notice shall
have been delivered to the Company. Except to the extent the
sale and remittance procedure specified above is utilized in
connection with the option exercise, payment of the Option Price
for the purchased shares must accompany such Exercise Notice.
(e) For all valuation purposes under this Agreement,
the Fair Market Value per share of Common Stock on any relevant
date shall be determined in accordance with the following
provisions:
(i) If the Common Stock is not at the time listed
or admitted to trading on any national
securities exchange but is traded on the
Nasdaq National Market, the Fair Market Value
shall be the mean between the highest "bid"
and lowest "offered" quotations of a share of
Common Stock on such date (or if none, on the
most recent date on which there were bid and
offered quotations of a share of Common
Stock), as reported by the Nasdaq National
Market or any successor system.
(ii) If the Common Stock is at the time listed or
admitted to trading on any national
securities exchange, then the Fair Market
Value shall be the closing selling price per
share on the date in question on the
securities exchange, as such price is
officially quoted in the composite tape of
transactions on such exchange. If there is
no reported sale of Common Stock on such
exchange on the date in question, then the
Fair Market Value shall be the closing
selling price on the exchange on the last
preceding date for which such quotation
exists.
(iii) If the Common Stock is not listed on
such date on any national securities exchange
nor included in the Nasdaq National Market,
but is traded in the over-the-counter market,
the highest "bid" quotation of a share of
Common Stock on such date (or if none, on the
most recent date on which there were bid
quotations of a share of Common Stock), as
reported on the Nasdaq Smallcap Market or the
NASD OTC Bulletin Board, as applicable.
(f) Upon such exercise, the Company shall issue and
cause to be delivered with all reasonable dispatch (and in any
event within three business days of such exercise) to or upon the
written order of the Optionee at its address, and in the name of
the Optionee, a certificate or certificates for the number of
full Option Shares issuable upon the exercise together with such
other property (including cash) and securities as may then be
deliverable upon such exercise. Such certificate or certificates
shall be deemed to have been issued and the Optionee shall be
deemed to have become a holder of record of such Option Shares as
of the Exercise Date.
2. The Optionee acknowledges that the shares subject to
this option have not and will not be registered as of the date of
exercise of this option under the Securities Act or the
securities laws of any state. The Optionee acknowledges that this
option and the shares issuable on exercise of the option, when
and if issued, are and will be "restricted securities" as defined
in Rule 144 promulgated by the Securities and Exchange Commission
and must be held indefinitely unless subsequently registered
under the Securities Act and any other applicable state
registration requirements. Except as provided herein, the
Company is under no obligation to register the securities under
the Securities Act or under applicable state statutes. In the
absence of such a registration or an available exemption from
registration, sale of the Option Shares may be practicably
impossible. The Optionee shall confirm to the Company the
representations set forth above in connection with the exercise
of all or any portion of this option. The Company agrees to
register or qualify the Option Shares, but not this option, for
resale as follows:
(a) If, at any time during the period in which the rights
represented by this Agreement are exercisable, the Company
proposes to file a registration statement or notification under
the Securities Act for the primary or secondary sale of any debt
or equity security, it will give written notice at least 30 days
prior to the filing of such registration statement or
notification to the Optionee of its intention to do so. The
Company agrees that, after receiving written notice from the
Optionee of its desire to include its Option Shares in such
proposed registration statement or notification, the Company
shall afford the Optionee the opportunity to have its Option
Shares included therein. Notwithstanding the provisions of this
paragraph 2(b), the Company shall have the right, at any time
after it shall have given written notice pursuant to this
paragraph (whether or not a written request for inclusion of the
Option Shares shall be made) to elect not to file any such
proposed registration statement or notification or to withdraw
the same after the filing but prior to the effective date
thereof. In no event shall the Company be obligated to include
the Option Shares in any registration statement or notification
under this paragraph 2(b) if, in the opinion of the underwriter,
the inclusion of the Option Shares in such registration statement
or notification would be materially detrimental to the proposed
offering of debt or equity securities pursuant to which the
Company gave notice to the holders under this paragraph;
provided, that the Option Shares shall not be excluded from any
such registration statement or notification if debt or equity
securities of the Company held by any other persons are, or will
be, included in such registration statement or notification.
(b) In connection with the filing of a registration
statement, notification, or post-effective amendment under this
section, the Company covenants and agrees:
(i) to pay all expenses of such registration
statement, notification, or post-effective amendment,
including, without limitation, printing charges, legal fees
and disbursements of counsel for the Company, blue sky
expenses, accounting fees and filing fees, but not including
legal fees and disbursements of counsel to the Optionee and
any sales commissions on Option Shares offered and sold;
(ii) to take all necessary action which may reasonably
be required in qualifying or registering the Option Shares
included in a registration statement, notification or post-
effective amendment for the offer and sale under the
securities or blue sky laws of such states as requested by
the Optionee; provided that the Company shall not be
obligated to execute or file any general consent to service
of process or to qualify as a foreign corporation to do
business under the laws of any such jurisdiction; and
(iii) to utilize its best efforts to keep the same
effective on a continuous or shelf basis until all
registered Option Shares of the Optionee have been sold.
(c) The Optionee shall cooperate with the Company and shall
furnish such information as the Company may request in connection
with any such registration statement, notification or post-
effective amendment hereunder, on which the Company shall be
entitled to rely, and the Optionee shall indemnify and hold
harmless the Company (and all other persons who may be subject to
liability under the Securities Act or otherwise) from and against
any and all claims, actions, suits, liabilities, losses, damages,
and expenses of every nature and character (including, but
without limitation, all attorneys' fees and amounts paid in
settlement of any claim, action, or suit) which arise or result
directly or indirectly from any untrue statement of a material
fact furnished by the Optionee in connection with such
registration or qualification, or from the failure of the
Optionee to furnish material information in connection with the
facts required to be included in such registration statement,
notification or post-effective amendment necessary to make the
statements therein not misleading.
3. The Company, during the term of this Agreement, will
obtain from the appropriate regulatory agencies any requisite
authorization in order to issue and sell such number of shares of
its Common Stock as shall be sufficient to satisfy the
requirements of the Agreement.
4. The number of Option Shares purchasable upon the
exercise of this option and the Option Price per share shall be
subject to adjustment from time to time subject to the following
terms. If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a
different number or kind of shares of the Company through
reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, the Company or its
successors and assigns shall make an appropriate and
proportionate adjustment in the number or kind of shares, and the
per-share Option Price thereof, which may be issued to the
Optionee under this Agreement upon exercise of the options
granted under this Agreement. The purchase rights represented by
this option shall not be exercisable with respect to a fraction
of a share of Common Stock. Any fractional shares of Common
Stock arising from the dilution or other adjustment in the number
of shares subject to this option shall rounded up to the nearest
whole share.
5. The Company covenants and agrees that all Option Shares
which may be delivered upon the exercise of this option will,
upon delivery, be free from all taxes, liens, and charges with
respect to the purchase thereof; provided, that the Company shall
have no obligation with respect to any income tax liability of
the Optionee and the Company may, in its discretion, withhold
such amount or require the Optionee to make such provision of
funds or other consideration as the Company deems necessary to
satisfy any income tax withholding obligation under federal or
state law.
6. The Company agrees at all times to reserve or hold
available a sufficient number of shares of Common Stock to cover
the number of Option Shares issuable upon the exercise of this
and all other options of like tenor then outstanding.
7. This option shall not entitle the holder hereof to any
voting rights or other rights as a shareholder of the Company, or
to any other rights whatsoever, except the rights herein
expressed, and no dividends shall be payable or accrue in respect
of this option or the interest represented hereby or the Option
Shares purchasable hereunder until or unless, and except to the
extent that, this option shall be exercised..
8. The Company may deem and treat the registered owner of
this option as the absolute owner hereof for all purposes and
shall not be affected by any notice to the contrary.
9. In the event that any provision of this Agreement is
found to be invalid or otherwise unenforceable under any
applicable law, such invalidity or unenforceability shall not be
construed as rendering any other provisions contained herein
invalid or unenforceable, and all such other provisions shall be
given full force and effect to the same extent as though the
invalid or unenforceable provision were not contained herein.
10. This Agreement shall be governed by and construed in
accordance with the internal laws of the state of Utah, without
regard to the principles of conflicts of law thereof.
11. Except as otherwise provided herein, this Agreement
shall be binding on and inure to the benefit of the Company and
the person to whom an option is granted hereunder, and such
person's heirs, executors, administrators, legatees, personal
representatives, assignees, and transferees.
IN WITNESS WHEREOF, the Company has caused this option to be
executed by the signature of its duly authorized officer,
effective this 11th day of March, 1999.
COMET TECHNOLOGIES, INC.
By: /s/ Jack M. Gertino, Treasurer
The undersigned Optionee hereby acknowledges receipt of a
copy of the foregoing option and acknowledges and agrees to the
terms and conditions set forth in the option.
/s/ Philip C. Gugel
Exercise Notice
(to be signed only upon exercise of Option)
TO: Comet Technologies, Inc.
The Optionee, holder of the attached option, hereby
irrevocable elects to exercise the purchase rights represented by
the option for, and to purchase thereunder,
________________________________ shares of common stock of Comet
Technologies, Inc., and herewith makes payment therefor, and
requests that the certificate(s) for such shares be delivered to
the Optionee at:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
If purchase is to be effected by conversion of the option to
Common Stock, the Optionee hereby converts option rights with
respect to __________________________________ Option Shares
represented by the option.
If acquired without registration under the Securities Act of
1933, as amended ("Securities Act"), the Optionee represents that
the Common Stock is being acquired without a view to, or for,
resale in connection with any distribution thereof without
registration or other compliance under the Securities Act and
applicable state statutes, and that the Optionee has no direct or
indirect participation in any such undertaking or in the
underwriting of such an undertaking. The Optionee understands
that the Common Stock has not been registered, but is being
acquired by reason of a specific exemption under the Securities
Act as well as under certain state statutes for transactions by
an issuer not involving any public offering and that any
disposition of the Common Stock may, under certain circumstances,
be inconsistent with these exemptions. The Optionee acknowledges
that the Common Stock must be held and may not be sold,
transferred, or otherwise disposed of for value unless
subsequently registered under the Securities Act or an exemption
from such registration is available. The Company is under no
obligation to register the Common Stock under the Securities Act,
except as provided in the Agreement for the option. The
certificates representing the Common Stock will bear a legend
restricting transfer, except in compliance with applicable
federal and state securities statutes.
The Optionee agrees and acknowledges that this purported
exercise of the option is conditioned on, and subject to, any
compliance with requirements of applicable federal and state
securities laws deemed necessary by the Company.
DATED this ________ day of ________________________________,
__________.
_______________________________________
Signature
Exhibit 5
Comet Technologies, Inc.
Form 10-SB
COMET TECHNOLOGIES, INC.
Option for the Purchase of 200,000
Shares of Common Stock
Par Value $0.001
STOCK OPTION AGREEMENT
THE HOLDER OF THIS OPTION, BY ACCEPTANCE HEREOF, BOTH WITH
RESPECT TO THE OPTION AND COMMON STOCK ISSUABLE UPON EXERCISE OF
THE OPTION, AGREES AND ACKNOWLEDGES THAT THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR OTHER
COMPLIANCE UNDER THE SECURITIES ACT OR THE LAWS OF THE APPLICABLE
STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE SECURITIES
AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT
THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT AND SUCH STATE STATUTES.
This is to certify that, for value received, JACK M. GERTINO
(the "Optionee") is entitled to purchase from COMET TECHNOLOGIES,
INC. (the "Company"), on the terms and conditions hereinafter set
forth, all or any part of 200,000 shares ("Option Shares") of the
Company's common stock, par value $0.001 (the "Common Stock"), at
the purchase price of $0.1875 per share ("Option Price"). Upon
exercise of this option in whole or in part, a certificate for
the Option Shares so purchased shall be issued and delivered to
the Optionee. If less than the total option is exercised, a new
option of similar tenor shall be issued for the unexercised
portion of the options represented by this Agreement.
This option is granted subject to the following further
terms and conditions:
1. This option shall vest and be exercisable immediately, and
shall expire at 5:00 p.m. Salt Lake City time on March 10, 2009.
In order to exercise this option with respect to all or any part
of the Option Shares for which this option is at the time
exercisable, Optionee (or in the case of exercise after
Optionee's death, Optionee's executor, administrator, heir or
legatee, as the case may be) must take the following actions:
(a) Deliver to the Corporate Secretary of the
Corporation an executed notice of exercise in substantially the
form of attached to this Agreement (the "Exercise Notice") in
which there is specified the number of Option Shares which are to
be purchased under the exercised option.
(b) Pay the aggregate Option Price for the purchased
shares through one or more of the following alternatives:
(i) full payment in cash or by check made payable
to the Corporation's order;
(ii) full payment in shares of Common Stock held
for the requisite period necessary to avoid a
charge to the Company's earnings for
financial reporting purposes and valued at
Fair Market Value on the Exercise Date (as
such term is defined below);
(iii) full payment through a combination of
shares of Common Stock held for the requisite
period necessary to avoid a charge to the
Company's earnings for financial reporting
purposes and valued at Fair Market Value on
the Exercise Date and cash or check payable
to the Company's order;
(iv) full payment effected through a broker-dealer sale and
remittance procedure pursuant to which Optionee shall
provide concurrent irrevocable written instructions (i)
to a brokerage firm to effect the immediate sale of the
purchased shares and remit to the Company, out of the
sale proceeds available on the settlement date, sufficient
funds to cover the aggregate Option Price payable for the
purchased shares plus all applicable Federal, state and
local income and employment taxes required to be withheld
in connection with such purchase and (ii) to the Company
to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete
the sale transaction; or
(v) full payment through conversion of the option
to purchase Option Shares into the number of
fully paid and nonassessable Option Shares
calculated pursuant to the following formula:
X = Y (A-B)
A
where: X = the number of Option
Shares to be issued to the Optionee;
Y = the number of Option Shares for
which the conversion right is being
exercised;
A = the Fair Market Value per share as
of the date of exercise of such conversion
right; and
B = the Option Price with respect to
such Option Shares.
(c) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option
(if other than Optionee) have the right to exercise this option.
(d) For purposes of this Agreement, the Exercise Date
shall be the date on which the executed Exercise Notice shall
have been delivered to the Company. Except to the extent the
sale and remittance procedure specified above is utilized in
connection with the option exercise, payment of the Option Price
for the purchased shares must accompany such Exercise Notice.
(e) For all valuation purposes under this Agreement,
the Fair Market Value per share of Common Stock on any relevant
date shall be determined in accordance with the following
provisions:
(i) If the Common Stock is not at the time listed
or admitted to trading on any national
securities exchange but is traded on the
Nasdaq National Market, the Fair Market Value
shall be the mean between the highest "bid"
and lowest "offered" quotations of a share of
Common Stock on such date (or if none, on the
most recent date on which there were bid and
offered quotations of a share of Common
Stock), as reported by the Nasdaq National
Market or any successor system.
(ii) If the Common Stock is at the time listed or
admitted to trading on any national
securities exchange, then the Fair Market
Value shall be the closing selling price per
share on the date in question on the
securities exchange, as such price is
officially quoted in the composite tape of
transactions on such exchange. If there is
no reported sale of Common Stock on such
exchange on the date in question, then the
Fair Market Value shall be the closing
selling price on the exchange on the last
preceding date for which such quotation
exists.
(iii) If the Common Stock is not listed on
such date on any national securities exchange
nor included in the Nasdaq National Market,
but is traded in the over-the-counter market,
the highest "bid" quotation of a share of
Common Stock on such date (or if none, on the
most recent date on which there were bid
quotations of a share of Common Stock), as
reported on the Nasdaq Smallcap Market or the
NASD OTC Bulletin Board, as applicable.
(f) Upon such exercise, the Company shall issue and
cause to be delivered with all reasonable dispatch (and in any
event within three business days of such exercise) to or upon the
written order of the Optionee at its address, and in the name of
the Optionee, a certificate or certificates for the number of
full Option Shares issuable upon the exercise together with such
other property (including cash) and securities as may then be
deliverable upon such exercise. Such certificate or certificates
shall be deemed to have been issued and the Optionee shall be
deemed to have become a holder of record of such Option Shares as
of the Exercise Date.
2. The Optionee acknowledges that the shares subject to
this option have not and will not be registered as of the date of
exercise of this option under the Securities Act or the
securities laws of any state. The Optionee acknowledges that this
option and the shares issuable on exercise of the option, when
and if issued, are and will be "restricted securities" as defined
in Rule 144 promulgated by the Securities and Exchange Commission
and must be held indefinitely unless subsequently registered
under the Securities Act and any other applicable state
registration requirements. Except as provided herein, the
Company is under no obligation to register the securities under
the Securities Act or under applicable state statutes. In the
absence of such a registration or an available exemption from
registration, sale of the Option Shares may be practicably
impossible. The Optionee shall confirm to the Company the
representations set forth above in connection with the exercise
of all or any portion of this option. The Company agrees to
register or qualify the Option Shares, but not this option, for
resale as follows:
(a) If, at any time during the period in which the rights
represented by this Agreement are exercisable, the Company
proposes to file a registration statement or notification under
the Securities Act for the primary or secondary sale of any debt
or equity security, it will give written notice at least 30 days
prior to the filing of such registration statement or
notification to the Optionee of its intention to do so. The
Company agrees that, after receiving written notice from the
Optionee of its desire to include its Option Shares in such
proposed registration statement or notification, the Company
shall afford the Optionee the opportunity to have its Option
Shares included therein. Notwithstanding the provisions of this
paragraph 2(b), the Company shall have the right, at any time
after it shall have given written notice pursuant to this
paragraph (whether or not a written request for inclusion of the
Option Shares shall be made) to elect not to file any such
proposed registration statement or notification or to withdraw
the same after the filing but prior to the effective date
thereof. In no event shall the Company be obligated to include
the Option Shares in any registration statement or notification
under this paragraph 2(b) if, in the opinion of the underwriter,
the inclusion of the Option Shares in such registration statement
or notification would be materially detrimental to the proposed
offering of debt or equity securities pursuant to which the
Company gave notice to the holders under this paragraph;
provided, that the Option Shares shall not be excluded from any
such registration statement or notification if debt or equity
securities of the Company held by any other persons are, or will
be, included in such registration statement or notification.
(b) In connection with the filing of a registration
statement, notification, or post-effective amendment under this
section, the Company covenants and agrees:
(i) to pay all expenses of such registration
statement, notification, or post-effective amendment,
including, without limitation, printing charges, legal fees
and disbursements of counsel for the Company, blue sky
expenses, accounting fees and filing fees, but not including
legal fees and disbursements of counsel to the Optionee and
any sales commissions on Option Shares offered and sold;
(ii) to take all necessary action which may reasonably
be required in qualifying or registering the Option Shares
included in a registration statement, notification or post-
effective amendment for the offer and sale under the
securities or blue sky laws of such states as requested by
the Optionee; provided that the Company shall not be
obligated to execute or file any general consent to service
of process or to qualify as a foreign corporation to do
business under the laws of any such jurisdiction; and
(iii) to utilize its best efforts to keep the same
effective on a continuous or shelf basis until all
registered Option Shares of the Optionee have been sold.
(c) The Optionee shall cooperate with the Company and shall
furnish such information as the Company may request in connection
with any such registration statement, notification or post-
effective amendment hereunder, on which the Company shall be
entitled to rely, and the Optionee shall indemnify and hold
harmless the Company (and all other persons who may be subject to
liability under the Securities Act or otherwise) from and against
any and all claims, actions, suits, liabilities, losses, damages,
and expenses of every nature and character (including, but
without limitation, all attorneys' fees and amounts paid in
settlement of any claim, action, or suit) which arise or result
directly or indirectly from any untrue statement of a material
fact furnished by the Optionee in connection with such
registration or qualification, or from the failure of the
Optionee to furnish material information in connection with the
facts required to be included in such registration statement,
notification or post-effective amendment necessary to make the
statements therein not misleading.
3. The Company, during the term of this Agreement, will
obtain from the appropriate regulatory agencies any requisite
authorization in order to issue and sell such number of shares of
its Common Stock as shall be sufficient to satisfy the
requirements of the Agreement.
4. The number of Option Shares purchasable upon the
exercise of this option and the Option Price per share shall be
subject to adjustment from time to time subject to the following
terms. If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a
different number or kind of shares of the Company through
reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, the Company or its
successors and assigns shall make an appropriate and
proportionate adjustment in the number or kind of shares, and the
per-share Option Price thereof, which may be issued to the
Optionee under this Agreement upon exercise of the options
granted under this Agreement. The purchase rights represented by
this option shall not be exercisable with respect to a fraction
of a share of Common Stock. Any fractional shares of Common
Stock arising from the dilution or other adjustment in the number
of shares subject to this option shall rounded up to the nearest
whole share.
5. The Company covenants and agrees that all Option Shares
which may be delivered upon the exercise of this option will,
upon delivery, be free from all taxes, liens, and charges with
respect to the purchase thereof; provided, that the Company shall
have no obligation with respect to any income tax liability of
the Optionee and the Company may, in its discretion, withhold
such amount or require the Optionee to make such provision of
funds or other consideration as the Company deems necessary to
satisfy any income tax withholding obligation under federal or
state law.
6. The Company agrees at all times to reserve or hold
available a sufficient number of shares of Common Stock to cover
the number of Option Shares issuable upon the exercise of this
and all other options of like tenor then outstanding.
7. This option shall not entitle the holder hereof to any
voting rights or other rights as a shareholder of the Company, or
to any other rights whatsoever, except the rights herein
expressed, and no dividends shall be payable or accrue in respect
of this option or the interest represented hereby or the Option
Shares purchasable hereunder until or unless, and except to the
extent that, this option shall be exercised..
8. The Company may deem and treat the registered owner of
this option as the absolute owner hereof for all purposes and
shall not be affected by any notice to the contrary.
9. In the event that any provision of this Agreement is
found to be invalid or otherwise unenforceable under any
applicable law, such invalidity or unenforceability shall not be
construed as rendering any other provisions contained herein
invalid or unenforceable, and all such other provisions shall be
given full force and effect to the same extent as though the
invalid or unenforceable provision were not contained herein.
10. This Agreement shall be governed by and construed in
accordance with the internal laws of the state of Utah, without
regard to the principles of conflicts of law thereof.
11. Except as otherwise provided herein, this Agreement
shall be binding on and inure to the benefit of the Company and
the person to whom an option is granted hereunder, and such
person's heirs, executors, administrators, legatees, personal
representatives, assignees, and transferees.
IN WITNESS WHEREOF, the Company has caused this option to be
executed by the signature of its duly authorized officer,
effective this 11th day of March, 1999.
COMET TECHNOLOGIES, INC.
By: /s/ Philip C. Gugel, Vice President
The undersigned Optionee hereby acknowledges receipt of a
copy of the foregoing option and acknowledges and agrees to the
terms and conditions set forth in the option.
/s/ Jack M. Gertino
Exercise Notice
(to be signed only upon exercise of Option)
TO: Comet Technologies, Inc.
The Optionee, holder of the attached option, hereby
irrevocable elects to exercise the purchase rights represented by
the option for, and to purchase thereunder,
________________________________ shares of common stock of Comet
Technologies, Inc., and herewith makes payment therefor, and
requests that the certificate(s) for such shares be delivered to
the Optionee at:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
If purchase is to be effected by conversion of the option to
Common Stock, the Optionee hereby converts option rights with
respect to __________________________________ Option Shares
represented by the option.
If acquired without registration under the Securities Act of
1933, as amended ("Securities Act"), the Optionee represents that
the Common Stock is being acquired without a view to, or for,
resale in connection with any distribution thereof without
registration or other compliance under the Securities Act and
applicable state statutes, and that the Optionee has no direct or
indirect participation in any such undertaking or in the
underwriting of such an undertaking. The Optionee understands
that the Common Stock has not been registered, but is being
acquired by reason of a specific exemption under the Securities
Act as well as under certain state statutes for transactions by
an issuer not involving any public offering and that any
disposition of the Common Stock may, under certain circumstances,
be inconsistent with these exemptions. The Optionee acknowledges
that the Common Stock must be held and may not be sold,
transferred, or otherwise disposed of for value unless
subsequently registered under the Securities Act or an exemption
from such registration is available. The Company is under no
obligation to register the Common Stock under the Securities Act,
except as provided in the Agreement for the option. The
certificates representing the Common Stock will bear a legend
restricting transfer, except in compliance with applicable
federal and state securities statutes.
The Optionee agrees and acknowledges that this purported
exercise of the option is conditioned on, and subject to, any
compliance with requirements of applicable federal and state
securities laws deemed necessary by the Company.
DATED this ________ day of ________________________________,
__________.
_______________________________________
Signature
Exhibit 6
Comet Technologies, Inc.
Form 10-SB
COMET TECHNOLOGIES, INC.
Warrant for the Purchase of 50,000
Shares of Common Stock
Par Value $0.001
WARRANT AGREEMENT
THE HOLDER OF THIS WARRANT, BY ACCEPTANCE HEREOF, BOTH WITH
RESPECT TO THE WARRANT AND COMMON STOCK ISSUABLE UPON EXERCISE OF
THE OPTION, AGREES AND ACKNOWLEDGES THAT THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR OTHER
COMPLIANCE UNDER THE SECURITIES ACT OR THE LAWS OF THE APPLICABLE
STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE SECURITIES
AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT
THE SALE OR TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT AND SUCH STATE STATUTES.
This is to certify that, for value received, MARK E. LEHMAN
(the "Holder") is entitled to purchase from COMET TECHNOLOGIES,
INC. (the "Company"), on the terms and conditions hereinafter set
forth, all or any part of 50,000 shares ("Warrant Shares") of the
Company's common stock, par value $0.001 (the "Common Stock"), at
the purchase price of $0.1875 per share ("Warrant Price"). Upon
exercise of this warrant in whole or in part, a certificate for
the Warrant Shares so purchased shall be issued and delivered to
the Holder. If less than the total warrant is exercised, a new
warrant of similar tenor shall be issued for the unexercised
portion of the warrants represented by this Agreement.
This warrant is granted subject to the following further
terms and conditions:
1. This warrant shall vest and be exercisable immediately, and
shall expire at 5:00 p.m. Salt Lake City time on March 10, 2009.
In order to exercise this warrant with respect to all or any part
of the Warrant Shares for which this warrant is at the time
exercisable, Holder (or in the case of exercise after Holder's
death, Holder's executor, administrator, heir or legatee, as the
case may be) must take the following actions:
(a) Deliver to the Corporate Secretary of the
Corporation an executed notice of exercise in substantially the
form of attached to this Agreement (the "Exercise Notice") in
which there is specified the number of Warrant Shares which are
to be purchased under the exercised warrant.
(b) Pay the aggregate Warrant Price for the purchased
shares through one or more of the following alternatives:
(i) full payment in cash or by check made payable
to the Corporation's order;
(ii) full payment in shares of Common Stock held
for the requisite period necessary to avoid a
charge to the Company's earnings for
financial reporting purposes and valued at
Fair Market Value on the Exercise Date (as
such term is defined below);
(iii) full payment through a combination of
shares of Common Stock held for the requisite
period necessary to avoid a charge to the
Company's earnings for financial reporting
purposes and valued at Fair Market Value on
the Exercise Date and cash or check payable
to the Company's order;
(iv) full payment effected through a broker-dealer sale and
remittance procedure pursuant to which Holder shall provide
concurrent irrevocable written instructions (i) to a
brokerage firm to effect the immediate sale of the
purchased shares and remit to the Company, out of the
sale proceeds available on the settlement date, sufficient
funds to cover the aggregate Warrant Price payable for
the purchased shares plus all applicable Federal, state
and local income and employment taxes required to be
withheld in connection with such purchase and (ii) to the
Company to deliver the certificates for the purchased
shares directly to such brokerage firm in order to
complete the sale transaction; or
(v) full payment through conversion of the
warrant to purchase Warrant Shares into the
number of fully paid and nonassessable
Warrant Shares calculated pursuant to the
following formula:
X = Y (A-B)
A
where: X = the number of Warrant
Shares to be issued to the Holder;
Y = the number of Warrant Shares for
which the conversion right is being
exercised;
A = the Fair Market Value per share as
of the date of exercise of such conversion
right; and
B = the Warrant Price with respect to
such Warrant Shares.
(c) Furnish to the Corporation appropriate
documentation that the person or persons exercising the warrant
(if other than Holder) have the right to exercise this warrant.
(d) For purposes of this Agreement, the Exercise Date
shall be the date on which the executed Exercise Notice shall
have been delivered to the Company. Except to the extent the
sale and remittance procedure specified above is utilized in
connection with the warrant exercise, payment of the Warrant
Price for the purchased shares must accompany such Exercise
Notice.
(e) For all valuation purposes under this Agreement,
the Fair Market Value per share of Common Stock on any relevant
date shall be determined in accordance with the following
provisions:
(i) If the Common Stock is not at the time listed
or admitted to trading on any national
securities exchange but is traded on the
Nasdaq National Market, the Fair Market Value
shall be the mean between the highest "bid"
and lowest "offered" quotations of a share of
Common Stock on such date (or if none, on the
most recent date on which there were bid and
offered quotations of a share of Common
Stock), as reported by the Nasdaq National
Market or any successor system.
(ii) If the Common Stock is at the time listed or
admitted to trading on any national
securities exchange, then the Fair Market
Value shall be the closing selling price per
share on the date in question on the
securities exchange, as such price is
officially quoted in the composite tape of
transactions on such exchange. If there is
no reported sale of Common Stock on such
exchange on the date in question, then the
Fair Market Value shall be the closing
selling price on the exchange on the last
preceding date for which such quotation
exists.
(iii) If the Common Stock is not listed on
such date on any national securities exchange
nor included in the Nasdaq National Market,
but is traded in the over-the-counter market,
the highest "bid" quotation of a share of
Common Stock on such date (or if none, on the
most recent date on which there were bid
quotations of a share of Common Stock), as
reported on the Nasdaq Smallcap Market or the
NASD OTC Bulletin Board, as applicable.
(f) Upon such exercise, the Company shall issue and
cause to be delivered with all reasonable dispatch (and in any
event within three business days of such exercise) to or upon the
written order of the Holder at its address, and in the name of
the Holder, a certificate or certificates for the number of full
Warrant Shares issuable upon the exercise together with such
other property (including cash) and securities as may then be
deliverable upon such exercise. Such certificate or certificates
shall be deemed to have been issued and the Holder shall be
deemed to have become a holder of record of such Warrant Shares
as of the Exercise Date.
2. The Holder acknowledges that the shares subject to this
warrant have not and will not be registered as of the date of
exercise of this warrant under the Securities Act or the
securities laws of any state. The Holder acknowledges that this
warrant and the shares issuable on exercise of the warrant, when
and if issued, are and will be "restricted securities" as defined
in Rule 144 promulgated by the Securities and Exchange Commission
and must be held indefinitely unless subsequently registered
under the Securities Act and any other applicable state
registration requirements. Except as provided herein, the
Company is under no obligation to register the securities under
the Securities Act or under applicable state statutes. In the
absence of such a registration or an available exemption from
registration, sale of the Warrant Shares may be practicably
impossible. The Holder shall confirm to the Company the
representations set forth above in connection with the exercise
of all or any portion of this warrant. The Company agrees to
register or qualify the Warrant Shares, but not this warrant, for
resale as follows:
(a) If, at any time during the period in which the rights
represented by this Agreement are exercisable, the Company
proposes to file a registration statement or notification under
the Securities Act for the primary or secondary sale of any debt
or equity security, it will give written notice at least 30 days
prior to the filing of such registration statement or
notification to the Holder of its intention to do so. The
Company agrees that, after receiving written notice from the
Holder of its desire to include its Warrant Shares in such
proposed registration statement or notification, the Company
shall afford the Holder the opportunity to have its Warrant
Shares included therein. Notwithstanding the provisions of this
paragraph 2(b), the Company shall have the right, at any time
after it shall have given written notice pursuant to this
paragraph (whether or not a written request for inclusion of the
Warrant Shares shall be made) to elect not to file any such
proposed registration statement or notification or to withdraw
the same after the filing but prior to the effective date
thereof. In no event shall the Company be obligated to include
the Warrant Shares in any registration statement or notification
under this paragraph 2(b) if, in the opinion of the underwriter,
the inclusion of the Warrant Shares in such registration
statement or notification would be materially detrimental to the
proposed offering of debt or equity securities pursuant to which
the Company gave notice to the holders under this paragraph;
provided, that the Warrant Shares shall not be excluded from any
such registration statement or notification if debt or equity
securities of the Company held by any other persons are, or will
be, included in such registration statement or notification.
(b) In connection with the filing of a registration
statement, notification, or post-effective amendment under this
section, the Company covenants and agrees:
(i) to pay all expenses of such registration
statement, notification, or post-effective amendment,
including, without limitation, printing charges, legal fees
and disbursements of counsel for the Company, blue sky
expenses, accounting fees and filing fees, but not including
legal fees and disbursements of counsel to the Holder and
any sales commissions on Warrant Shares offered and sold;
(ii) to take all necessary action which may reasonably
be required in qualifying or registering the Warrant Shares
included in a registration statement, notification or post-
effective amendment for the offer and sale under the
securities or blue sky laws of such states as requested by
the Holder; provided that the Company shall not be obligated
to execute or file any general consent to service of process
or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction; and
(iii) to utilize its best efforts to keep the same
effective on a continuous or shelf basis until all
registered Warrant Shares of the Holder have been sold.
(c) The Holder shall cooperate with the Company and shall
furnish such information as the Company may request in connection
with any such registration statement, notification or post-
effective amendment hereunder, on which the Company shall be
entitled to rely, and the Holder shall indemnify and hold
harmless the Company (and all other persons who may be subject to
liability under the Securities Act or otherwise) from and against
any and all claims, actions, suits, liabilities, losses, damages,
and expenses of every nature and character (including, but
without limitation, all attorneys' fees and amounts paid in
settlement of any claim, action, or suit) which arise or result
directly or indirectly from any untrue statement of a material
fact furnished by the Holder in connection with such registration
or qualification, or from the failure of the Holder to furnish
material information in connection with the facts required to be
included in such registration statement, notification or post-
effective amendment necessary to make the statements therein not
misleading.
3. The Company, during the term of this Agreement, will
obtain from the appropriate regulatory agencies any requisite
authorization in order to issue and sell such number of shares of
its Common Stock as shall be sufficient to satisfy the
requirements of the Agreement.
4. The number of Warrant Shares purchasable upon the
exercise of this warrant and the Warrant Price per share shall be
subject to adjustment from time to time subject to the following
terms. If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a
different number or kind of shares of the Company through
reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, the Company or its
successors and assigns shall make an appropriate and
proportionate adjustment in the number or kind of shares, and the
per-share Warrant Price thereof, which may be issued to the
Holder under this Agreement upon exercise of the warrants granted
under this Agreement. The purchase rights represented by this
warrant shall not be exercisable with respect to a fraction of a
share of Common Stock. Any fractional shares of Common Stock
arising from the dilution or other adjustment in the number of
shares subject to this warrant shall rounded up to the nearest
whole share.
5. The Company covenants and agrees that all Warrant
Shares which may be delivered upon the exercise of this warrant
will, upon delivery, be free from all taxes, liens, and charges
with respect to the purchase thereof; provided, that the Company
shall have no obligation with respect to any income tax liability
of the Holder and the Company may, in its discretion, withhold
such amount or require the Holder to make such provision of funds
or other consideration as the Company deems necessary to satisfy
any income tax withholding obligation under federal or state law.
6. The Company agrees at all times to reserve or hold
available a sufficient number of shares of Common Stock to cover
the number of Warrant Shares issuable upon the exercise of this
and all other warrants of like tenor then outstanding.
7. This warrant shall not entitle the holder hereof to any
voting rights or other rights as a shareholder of the Company, or
to any other rights whatsoever, except the rights herein
expressed, and no dividends shall be payable or accrue in respect
of this warrant or the interest represented hereby or the Warrant
Shares purchasable hereunder until or unless, and except to the
extent that, this warrant shall be exercised..
8. The Company may deem and treat the registered owner of
this warrant as the absolute owner hereof for all purposes and
shall not be affected by any notice to the contrary.
9. In the event that any provision of this Agreement is
found to be invalid or otherwise unenforceable under any
applicable law, such invalidity or unenforceability shall not be
construed as rendering any other provisions contained herein
invalid or unenforceable, and all such other provisions shall be
given full force and effect to the same extent as though the
invalid or unenforceable provision were not contained herein.
10. This Agreement shall be governed by and construed in
accordance with the internal laws of the state of Utah, without
regard to the principles of conflicts of law thereof.
11. Except as otherwise provided herein, this Agreement
shall be binding on and inure to the benefit of the Company and
the person to whom an warrant is granted hereunder, and such
person's heirs, executors, administrators, legatees, personal
representatives, assignees, and transferees.
IN WITNESS WHEREOF, the Company has caused this warrant to
be executed by the signature of its duly authorized officer,
effective this 11th day of March, 1999.
COMET TECHNOLOGIES, INC.
By: /s/ Jack M. Gertino, Treasurer
The undersigned Holder hereby acknowledges receipt of a copy
of the foregoing warrant and acknowledges and agrees to the terms
and conditions set forth in the warrant.
/s/ Mark E. Lehman
Exercise Notice
(to be signed only upon exercise of Warrant)
TO: Comet Technologies, Inc.
The Holder of the attached warrant hereby irrevocable elects
to exercise the purchase rights represented by the warrant for,
and to purchase thereunder, ________________________________
shares of common stock of Comet Technologies, Inc., and herewith
makes payment therefor, and requests that the certificate(s) for
such shares be delivered to the Holder at:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
If purchase is to be effected by conversion of the warrant
to Common Stock, the Holder hereby converts warrant rights with
respect to __________________________________ Warrant Shares
represented by the warrant.
If acquired without registration under the Securities Act of
1933, as amended ("Securities Act"), the Holder represents that
the Common Stock is being acquired without a view to, or for,
resale in connection with any distribution thereof without
registration or other compliance under the Securities Act and
applicable state statutes, and that the Holder has no direct or
indirect participation in any such undertaking or in the
underwriting of such an undertaking. The Holder understands that
the Common Stock has not been registered, but is being acquired
by reason of a specific exemption under the Securities Act as
well as under certain state statutes for transactions by an
issuer not involving any public offering and that any disposition
of the Common Stock may, under certain circumstances, be
inconsistent with these exemptions. The Holder acknowledges that
the Common Stock must be held and may not be sold, transferred,
or otherwise disposed of for value unless subsequently registered
under the Securities Act or an exemption from such registration
is available. The Company is under no obligation to register the
Common Stock under the Securities Act, except as provided in the
Agreement for the warrant. The certificates representing the
Common Stock will bear a legend restricting transfer, except in
compliance with applicable federal and state securities statutes.
The Holder agrees and acknowledges that this purported
exercise of the warrant is conditioned on, and subject to, any
compliance with requirements of applicable federal and state
securities laws deemed necessary by the Company.
DATED this ________ day of ________________________________,
__________.
_____________________________
Signature
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 201,075
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 201,176
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 201,176
<CURRENT-LIABILITIES> 2,346
<BONDS> 0
0
0
<COMMON> 3,598
<OTHER-SE> 195,232
<TOTAL-LIABILITY-AND-EQUITY> 201,176
<SALES> 0
<TOTAL-REVENUES> 7,463
<CGS> 0
<TOTAL-COSTS> 9,224
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,761)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,761)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,761)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
