<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___)*
Deucalion Research, Inc.
------------------------
(Name of Issuer)
Common Stock, $.0001 Par Value
------------------------------
(Title of Class of Securities)
251468
------
(CUSIP Number)
Gerald Raskin, 1400 Glenarm Place, Suite 300, Denver, CO 80202 (303) 571-1400
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
July 28, 1999
-------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of (S) 240.13d-1(e), (S) 240.13d-1(f), or (S) 240.13d-1(g)
check the following box.
Check the following box if a fee is being paid with the statement. X or
--- ---
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
Note: See (S) 240.13d-7(b) for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities and Exchange Act
of 1934 ("Act") or otherwise subject to the liabilities of that section of the
Act but shall be subject to all other provisions of the Act (however, see the
Notes).
1
<PAGE>
1. Name of Reporting Persons
I.R.S. Identification numbers of above persons (entities only)
Michael R. Farley
###-##-####
Forrest L. Metz
###-##-####
The Metz Trust, Tax ID Number
86-6197424. Mr. Metz is the trustee
of the Metz trust and will have the
power to vote all of the shares in
the Metz trust. Therefore, Forrest L.
Metz is also reporting as an individual
in this Schedule 13d.
2. Check the Appropriate Box if a Member of a Group A X
---
B
---
3. SEC Use Only
4. Source of Funds
Michael R. Farley - PF
Forrest L. Metz - Not applicable
The Metz Trust - 00 Funds of the Trust
5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) Not Applicable
6. Citizenship or Place of Organization
United States of America
7. Sole Voting Power
Michael R. Farley - 499,000,000 shares
The Metz Trust, Forrest L. Metz, as trustee - 499,000,000
8. Shared Voting Power
998,000,000 shares
9. Sole Dispositive Power
Michael R. Farley - 499,000,000 shares
The Metz Trust, Forrest L. Metz, as trustee - 499,000,000
2
<PAGE>
10. Shared Dispositive Power
998,000,000
11. Aggregate Amount Beneficially Owned by Each Reporting Person
Michael R. Farley - 499,000,000 shares
The Metz Trust, Forrest L. Metz, trustee - 499,000,000
Forrest L. Metz - 0, Mr. Metz disclaims any beneficial interest in
the 499,000,000 shares owned by The Metz Trust. As sole trustee he
has the power to vote the shares.
12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares
Not Applicable
13. Percent of Class Represented by Amount in Row (11)
Michael R. Farley - 33.4%
The Metz Trust, Forrest L. Metz, trustee - 33.4%
14. Type of Reporting Persons
Michael R. Farley - IN
Forrest L. Metz - IN
The Metz Trust - 00 Trust
3
<PAGE>
Item 1. Security and Issuer
Common Stock, $.0001 par value per share
Jon Geyerman - Chief Executive Officer
Deucalion Research, Inc.
118 1/2 First Avenue West
Williston, North Dakota 58801
Item 2. Identity and Background
(a) The Reporting Persons are Michael R. Farley, Forrest L. Metz and The
Metz Trust, of which Forrest L. Metz is the sole trustee.
(b) The mailing and business address of the Reporting Persons are:
Michael R. Farley
6601 E. Grant Road, Suite 101
Tucson, Arizona 85715-3847
Forrest L. Metz
877 S. Alvernon Way
Tucson, Arizona 85711
The Metz Trust
Forrest L. Metz, trustee
877 S. Alvernon Way
Tucson, Arizona 85711
(c) The present principal occupation of Michael R. Farley is president of
Farley & Associates, a company involved in the business of providing
financing and strategic business plans for small and medium sized
companies. The principal business address of Mr. Farley is:
Farley & Associates
6601 E. Grant Road, Suite 101
Tucson, Arizona 85715-3847
The present principal occupations of Forrest L. Metz are Chairman of
the Board and Chief Executive Officer of Urban Engineering, Inc., a
planning, engineering and surveying consulting firm, and Chairman of
the Board and Chief Executive Officer of Metz, LLC, a holding company
that invests in the communication, software, and manufacturing
industries. The principal business address of Mr. Metz is:
Urban Engineering, Inc.
877 S. Alvernon Way
Tucson, Arizona 85711
4
<PAGE>
(d) During the last five years, the Reporting Persons have not been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
(e) During the last five years, the Reporting Persons have not been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding were or are subject to
a judgment, decree or final or order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violations with respect to such laws.
(f) The Reporting Persons are a citizens of the United States of America
Item 3. Source and Amount of Funds or Other Consideration
The source of the funds used to purchase the stock of Deucalion Research,
Inc. are the personal funds of Michael R. Farley and the trusts funds in The
Metz Trust. The entire consideration for the stock purchase is $110,000,
$100,000 for the initial purchase, plus an additional $10,000 to purchase
additional shares once the Reporting Persons have affected a recapitalization,
including a reverse stock split of a magnitude not yet determined. See, Item 4
and the Agreement, reproduced here as Exhibit 10.1.
Item 4. Purpose of Transaction
Deucalion Research, Inc. (the Company"), has had no business operations
since 1992 and does not intend to recommence operations at any time in the near
future. The Company has been attempting to find an operating enterprise with
which to merge or otherwise form a business combination. No such opportunity
presented itself until Messrs. Farley and Metz proposed to purchase a majority
of the outstanding shares of the Company. See, Exhibit 1, the Stock Purchase
Agreement (the "Agreement") dated April 20, 1999, between the Company and
Messrs. Farley and Metz.
At the closing called for by the Agreement, the Company will deliver the
resignations of each of its officers and directors and the Reporting Persons
will be elected to the Board who will then appoint new officers of the Company.
As soon as practicable after the completion of the closing, the Reporting
Persons will cause the Company to call a special meeting of its shareholders to:
effect a recapitalization of the Company which may include a reverse stock split
of a magnitude not yet determined; change the name of the Company (new name not
decided yet); appoint independent accountants; and change the domicile of the
Company to Delaware. After the reverse stock split and recapitalization, the
Reporting Persons will purchase additional shares of common stock of the Company
and will own 95% of the outstanding securities of the Company.
The Reporting Persons acquired the securities of the Issuer as reported
herein to gain control of the corporation and seek business opportunities in the
communications and internet businesses.
5
<PAGE>
Except as otherwise stated herein and in the Agreement, reproduced here as
Exhibit 1, the Reporting Persons have no plans or proposals which relate to or
would result in:
(a) The acquisition by any person of additional securities of the Issuer,
or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer or any
of its subsidiaries;
(d) Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number of term
of directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend policy of
the Issuer;
(f) Any other material change in the Issuer's business or corporate
structure including but not limited to, if the issuer is a registered
closed-end investment company, any plans or proposals to make any
changes in its investment policy for which a vote is required by
section 13 of the Investment Company Act of 1940;
(g) Changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control of
the Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted from a
national securities exchange or cease to be authorized to be quoted in
an inter-dealer quotation system of a registered national securities
association;
(i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934, as amended; or
(j) Any action similar to any of those enumerated above.
Item 5. Interest in the Securities of the Issuer
(a) Michael R. Farley - 499,000,000 shares, representing 33.4% of the
Issuer's outstanding common stock as of July 28, 1999; The Metz Trust -
499,000,000 shares, representing 33.4% of the Issuer's outstanding
common stock as of July 28, 1999; Forrest L Metz disclaims any
beneficial interest in shares of the Issuer, as trustee of the Metz
Trust he does have the power to vote and dispose of the shares. The
Reporting Persons will have the shared power to vote or direct the vote
of 998,000,000 shares, representing 66.9% of the Issuer's outstanding
common stock as of July 28, 1999. The manner in which the Reporting
Persons own these shares is as follows:
6
<PAGE>
Michael R. Farley
- -----------------
Direct, of record 499,000,000 shares
Sole power to vote or direct the vote: 499,000,000 shares
The Metz Trust
- --------------
Direct, of record 499,000,000 shares*
Forrest L. Metz, trustee of The Metz Trust
- ---------------
Sole power to vote or direct the vote: 499,000,000 shares*
(b) Shared power of the Reporting Persons to vote or direct the vote:
998,000,000 shares
Shared power of the Reporting Persons to dispose or to direct the
disposition:
998,000,000 shares
(c) On July 28, 1999, Michael R. Farley and the Metz Trust, Forrest L. Metz
trustee, each acquired 499,000,000 shares of the Company for a total
acquisition of 998,000,000 shares for a purchase price of $100,000.
According to the terms of the Agreement, reproduced here as Exhibit
10.1 the Reporting Persons will: effect a reverse stock split of a
magnitude not yet determined; effect a recapitalization; and will
purchase additional shares of common stock of the Company to equal 95%
of the outstanding securities of the Company for an additional $10,000.
(d) No other person has the right or the power to direct the receipt of
dividends or the proceeds from the sale of the securities reported
herein.
(e) Not applicable.
__________________________
* The beneficiaries of the Trust are Kim Metz, Forrest L. Metz, Jr. and
Jenifer K. Metz. The tax ID # for the Metz trust is 86-6197424.
7
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
The Reporting Persons have an informal agreement to vote their securities
together, representing 66.9% of the outstanding securities of the Issuer, for
the limited purpose of effecting: a recapitalization of the Company which may
include a reverse stock split of a magnitude not yet determined; changing the
name of the Company (new name not decided yet); appointing independent
accountants; and changing the domicile of the Company to Delaware. After the
reverse stock split and recapitalization, the Reporting Persons will purchase
additional shares of common stock of the Company and together will own 95% of
the outstanding securities of the Company. Thereafter the informal agreement
ends and each Reporting Person will vote his securities as he sees fit. See,
the Agreement, reproduced here as Exhibit 10.1
Item 7. Material to be Filed as Exhibits
Exhibit 10.1 Stock Purchase Agreement dated April 20, 1999, between
Deucalion Research, Inc., and Michael R. Farley and Forrest
L. Metz.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct, as of the 5th day of August, 1999.
<TABLE>
<S> <C> <C>
\s\ Michael R. Farley \s\ Forrest L. Metz /s/ Forrest L. Metz
_____________________ _______________________ ____________________________
Michael R. Farley Forrest L. Metz The Metz Trust
By: Forrest L. Metz, Trustee
</TABLE>
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001).
8
<PAGE>
EXHIBIT 10.1
STOCK PURCHASE
AGREEMENT
____________________
BETWEEN
DEUCALION RESEARCH, INC.,
as Seller
AND
MICHAEL R. FARLEY
and
FORREST L. METZ
as Purchasers,
April 20, 1999
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
Table of Contents
-----------------
<TABLE>
<CAPTION>
Paragraph Title Page
- --------- ----- ----
<S> <C>
RECITALS........................................................................ -1-
1. The Purchase...................................................... -1-
1.1 Agreement to Purchase.................................... -1-
1.3 Closing.................................................. -2-
2. Actions on the Initial Closing Date............................... -2-
2.1 Directors................................................ -2-
2.2 Officers................................................. -2-
2.3 The Purchasers Actions at Closing........................ -2-
2.4 The Company's Actions at Closing......................... -2-
3. Representations and Warranties.................................... -2-
3.1 The Purchasers........................................... -2-
3.2 The Company.............................................. -3-
4. Conditions to Obligations of Parties.............................. -5-
4.1 Conditions to the Obligations of the Company............. -5-
4.2 Conditions to Obligations of the Purchasers.............. -5-
5. Post Closing Events............................................... -6-
5.1 Meeting of Shareholders.................................. -6-
5.2 Completion of Transactions............................... -6-
6. Termination....................................................... -6-
6.1 Termination by Agreement................................. -6-
6.2 Termination upon Default................................. -6-
6.3 Automatic Termination.................................... -7-
7. Miscellaneous..................................................... -7-
7.1 Notice................................................... -7-
7.3 Survival of Representations.............................. -8-
7.4 Benefit.................................................. -8-
7.5 Fees..................................................... -8-
7.6 Waiver of Terms.......................................... -8-
7.7 Modification............................................. -8-
7.8 Applicable Law........................................... -8-
7.9 Counterparts............................................. -9-
7.10 Status................................................... -9-
7.11 Finder's Fee............................................. -9-
</TABLE>
-ii-
<PAGE>
EXHIBITS
Exhibit
- -------
A Subscription Agreement (Farley)
B Subscription Agreement (Metz)
C Minutes of the Board of Directors of the Company
------------------------------
-iii-
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT is executed as of the 20th day of April, 1999
(hereinafter called the "Agreement"), by and between DEUCALION RESEARCH, INC.
(hereinafter referred to as "the Company"), a North Dakota corporation, and
MICHAEL R. FARLEY and FORREST L. METZ (hereinafter Messrs. Farley and Metz
collectively referred to as "the Purchasers").
RECITALS
--------
WHEREAS:
A. The Company is a corporation organized and existing under the laws of
the State of North Dakota, having its principal place of business located in
Williston, North Dakota.
B. The Purchasers are residents of the State of Arizona.
C. The Company has not conducted business operations for several years.
D. The Purchasers have offered to purchase a number of shares of common
stock of the Company that will equal 95.0 percent of the voting stock of the
Company that will be outstanding upon closing of the transactions contemplated
by this Agreement for an aggregate purchase price of $110,000. The Board of
Directors of the Company deems it advisable and in the best interests of the
Company and the shareholders of the Company that the Company sell such shares to
the Purchasers pursuant to the provisions of this Agreement.
NOW, THEREFORE, in consideration of the above premises and of the
respective representations, warranties and agreements herein contained, the
parties agree as follows:
1. The Purchase
1.1 Agreement to Purchase. The Purchasers hereby agree to purchase from
---------------------
the Company, and the Company hereby agrees to sell to the Purchasers, that
number of shares of common stock of the Company that will equal 95.0 percent of
the voting stock outstanding upon closing on that transactions contemplated by
this Agreement (the "Company Shares") for an aggregate purchase price of
$110,000.
1.2 Assignment by Purchasers. The Purchasers may assign their right to
------------------------
receive all or part of the Company Shares to one or more designees.
-1-
<PAGE>
1.3 Closing. The completion of the initial purchase shall take place as
-------
may be agreed between the parties, no later than June 30, 1999 (the "Termination
Date"). The date of completion of the purchase shall be hereinafter referred to
as the "Initial Closing Date."
2. Actions on the Initial Closing Date
2.1 Directors. On the Initial Closing Date, the Directors of the Company
---------
shall resign and the Purchasers and/or their designees shall be elected as the
Directors of the Company. The Board of Directors of the Company shall have
approved Minutes or a Statement of Consent in substantially the form of Exhibit
C, attached.
2.2 Officers. On the Initial Closing Date, the current officers of the
--------
Company shall resign and the Purchasers and/or their designees shall be elected
as officers of the Company.
2.3 The Purchasers Actions at Closing. On the Initial Closing Date, the
---------------------------------
Purchasers shall deliver to the Company:
2.3.1 The Subscription Agreements in substantially the form of
Exhibits A and B attached .
2.3.2 $100,000 of the Purchase Price.
2.4 The Company's Actions at Closing. On the Closing Date the Company
--------------------------------
shall deliver to the Purchasers:
2.4.1 Certificates registered in the names of the Purchasers or their
designees for the number of authorized but unissued shares of the Company's
common stock, which, in any event, shall be not less than 998,000,000 shares.
2.4.2 A certificate of good standing from the North Dakota Secretary
of State.
2.4.3 Such other certificates as the Purchasers reasonably may
request.
2.4.4 The financial statements described in Section 4.2.6.
2.4.5 An agreement signed by Norman Jessen & Associates, Inc. under
which the $93,411.94 owed by the Company would be satisfied through the issuance
by the Company of common stock equal to 1% of the outstanding stock of the
Company after completion of the transactions contemplated by this Agreement.
-2-
<PAGE>
2.4.6 An agreement signed by Friedlob Sanderson Raskin Paulson &
Tourtillott, LLC under which the $38,835.74 owed by the Company would be
satisfied through the issuance by the Company of Common Stock equal to 1/2 of
1% of the outstanding stock of the Company after completion of the transactions
contemplated by this Agreement.
3. Representations and Warranties
3.1 The Purchasers. The Purchasers represent and warrant to the Company as
--------------
follows:
3.1.1 Corporate Powers, Compliance with Other Instruments,
---------------------------------------------------
Governmental Consents and Law. The Purchasers have the unconditional right,
- -----------------------------
power and authority to execute, pursue and complete this Agreement, and neither
the execution of this Agreement, nor the completion of the acts and events
described in and/or contemplated by this Agreement, in accordance with its
provisions, will alter the rights or remedies under or the condition or status
of the Purchasers with respect to others, conflict with or constitute a default
under or a breach or a violation of or grounds for termination of, or an event
which, with the lapse of time or notice, could constitute a default under or
breach or violation or grounds for termination, of any note, indenture,
mortgage, deed of trust or other agreement or instrument to which the Purchasers
or either of them, is a party or by which either of them is bound, nor any
existing law, order, rule, regulation, writ, injunction or decree of any union
or any government, governmental department, commission, board, bureau, agency or
instrumentality or court, domestic or foreign, having jurisdiction over the
Purchasers or their properties. No consent, approval, authorization or order of
any court or governmental agency or body or union or other body is required by
the Purchasers to complete the transactions contemplated herein.
3.1.2 Enforceability. This Agreement constitutes the valid and
--------------
binding obligation of each of the Purchasers, enforceable against them in
accordance with the terms, except that such enforceability may be subject to
bankruptcy, insolvency, reorganization or other similar laws affecting or
relating to enforcement of creditors rights generally and general equitable
principles.
3.1.3 Subscription Agreements. The Purchasers will execute and deliver
-----------------------
to the Company the Subscription Agreements in substantially the form of
Exhibits A and B attached hereto.
3.1.4 Actions of the Purchasers. Prior to the Initial Closing Date,
-------------------------
the Purchaser shall use their best efforts to complete the transaction
contemplated in this Agreement.
3.2 The Company. The Company represents and warrants to the Purchasers as
follows:
3.2.1 Organization and Good Standing. The Company is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of North Dakota. The Company has full power and authority, corporate and
otherwise, to carry on its business as and where now conducted. The Company is
not required to qualify as a foreign corporation in any state.
-3-
<PAGE>
3.2.2 Authorized Capitalization. The authorized capital stock of the
-------------------------
Company is 1,500,000,000 shares of $.0001 value common stock, of which
501,610,127 shares currently are outstanding and no shares of preferred stock
are authorized. The Company has no outstanding rights, options, warrants,
convertible securities, contracts or commitments or demands of any character
which would require the original issuance or reissuance from treasury by the
Company of any shares of its capital stock and the Company Shares will
constitute 95.0 percent of the issued and outstanding shares of the voting stock
of the Company upon completion of the transactions contemplated by this
Agreement.
3.2.3 Status of the Company Shares. The Company Shares, when issued
----------------------------
pursuant to the terms hereof, will be duly authorized, legally and validly
issued, fully-paid, and non-assessable.
3.2.4 Corporate Powers, Compliance with Other Instruments,
---------------------------------------------------
Governmental Consents and Laws. The Company has the unconditional right, power
- ------------------------------
and authority execute, pursue and complete this Agreement and neither the
execution of this Agreement, nor the completion of the acts and events described
in and/or contemplated by this Agreement, in accordance with its provisions,
will alter the rights or remedies under or the condition or status of the
Company with respect to others, conflict with or constitute a default under or a
breach or a violation of or grounds for termination of, or an event which, with
the lapse of time or notice, could constitute a default under or breach or
violation or grounds for termination of the articles of incorporation, as
amended, or bylaws of the Company, or any note, indenture, mortgage, deed of
trust or other agreement or instrument to which the Company is a party or by
which it is bound, nor, to the best of the Company's knowledge, any existing
law, order, rule, regulation, writ, injunction or decree of any union or any
government, governmental department, commission, board, bureau, agency or
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or its properties. Except for compliance with the various state and
federal securities laws and all necessary approvals by regulatory agencies with
jurisdiction over said securities laws, no consent, approval, authorization or
order of any court or governmental agency or body or union or other body is
required by the Company to complete the transactions contemplated herein.
3.2.5 The Company Information. The Company has made information
-----------------------
available to the Purchasers as set forth in the Subscription Agreements attached
hereto as Exhibits A and B, such information being referred to herein as the
"Available Information." The financial statements contained in the Available
Information are accurate and complete and the Company has no liabilities,
absolute or contingent, other than as described in the Available Information.
3.2.6 No Subsequent Material Events. Except for the transaction
-----------------------------
contemplated hereby, there have been (1) no increases or commitments made or
outstanding for the increases of salaries, fees or other forms of compensation
of any employee, (2) no bonuses paid or incurred and no commitments made or
outstanding for any such bonuses, (3) no loans made or agreed to be made to any
person, firm or corporation, (4) no dividends or other distributions declared or
paid, (5) no purchase or commitments for the purchase or redemption of any
shares of outstanding capital stock,
-4-
<PAGE>
(6) no capital expenditures and no commitments for capital expenditures and (7)
no other material transactions.
3.2.7 Filing with SEC. Not less than ten days prior to the Closing
---------------
Date the Company shall file with the Securities and Exchange Commission and mail
to the Company's shareholders the information required by Rule 14f-1 under the
Securities Exchange Act of 1934.
3.2.8 Authorization by Directors; Enforceability. The execution and
------------------------------------------
delivery of this Agreement and the completion of the transactions contemplated
hereby have been duly authorized by the Board of Directors of the Company and
constitutes the valid and binding obligation of the Company, enforceable against
it in accordance with its terms, except that such enforceability may be subject
to bankruptcy, insolvency, reorganization or other similar laws affecting or
relating to enforcement of creditors' rights generally and general equitable
principles.
4. Conditions to Obligations of Parties
4.1 Conditions to the Obligations of the Company. The obligations of
--------------------------------------------
the Company hereunder are, at the option of the Company, subject to compliance
with and/or fulfillment of each of the following conditions prior to the Initial
Closing Date.
4.1.1 Representations. The representations and warranties of the
---------------
Purchasers contained in this Agreement shall be true and correct on and as of
the date hereof and the Initial Closing Date, with the same effect as though all
such representations and warranties had been made on and as of such dates.
4.1.2 Compliance. All the terms, covenants and conditions hereof to
----------
be followed and performed by the Purchasers on or before the Initial Closing
Date shall be fully and timely performed.
4.1.3 No Errors or Misrepresentations. On or before the Initial
-------------------------------
Closing Date, the Company shall not have discovered any material error, mistake
or omission in the representations and warranties made herein by the Purchasers.
4.1.4 Consents; Actions. All consents, approvals, authorizations,
-----------------
waivers or orders of any court, tribunal, arbitrator or governmental agency or
body or union required or necessary for the completion of the transactions
contemplated by this Agreement shall have been obtained. No person, including,
without limitation, any agency or department of any government unit or
subdivision, shall have threatened any action against either the Purchasers or
the Company to prevent, or as a result of, the completion of the transactions
contemplated by this Agreement.
4.2 Conditions to Obligations of the Purchasers. The obligations of
-------------------------------------------
the Purchasers hereunder are, at the option of the Purchasers, subject to
compliance with and/or fulfillment of each of the following conditions prior to
the Initial Closing Date.
-5-
<PAGE>
4.2.1 Representations. The representations and warranties of the
---------------
Company contained in this Agreement shall be true and correct on and as of the
date hereof and Initial Closing Date, with the same effect as though all such
representations and warranties had been made on and as of such dates.
4.2.2 Compliance. All the terms, covenants and conditions hereof to be
----------
followed and performed by the Company on or before the Initial Closing Date
shall be fully and timely performed.
4.2.3 No Material Change. There shall not have been any material
------------------
adverse change in the condition, financial or otherwise or net worth of the
Company from that described in the Company Available Information.
4.2.4 No Errors or Misrepresentations. On or before the Initial
-------------------------------
Closing Date, the Purchasers shall not have discovered any material error,
mistake or omission in the representations and warranties made herein by the
Company or in the information filed by the Company under Rule 14f-1 under the
Securities Exchange Act of 1934.
4.2.5 Consents; Actions. All consents, approvals, authorizations,
-----------------
waivers or orders of any court, tribunal, arbitrator or governmental agency or
body or union required or necessary for the completion of the transactions
contemplated by this Agreement shall have been obtained. No person, including,
without limitation, any agency or department of any government unit or
subdivision, shall have threatened any action against either the Company or the
Purchasers to prevent, or as a result of, the completion of the transactions
contemplated by this Agreement.
4.2.6 Audit. The Company shall have delivered to the Purchasers
-----
audited financial statements for the years ended December 31, 1998, 1997 and
1996 prepared in accordance with generally accepted accounting principles
consistently applied and in a form acceptable for filing in a registration
statement on Form S-1 under the Securities Act of 1933, as amended and
reasonably acceptable to Purchasers.
5. Post Closing Events
5.1 Meeting of Shareholders. As soon as practicable after the Closing,
-----------------------
the Purchaser will cause the Company to call a special meeting of its
shareholders to consider, among other things, a recapitalization of the Company
which may include a reverse stock split of a magnitude not yet determined, the
election of directors, appointment of independent accountants and a change of
domicile of the Company. The Purchasers do not intend to have the Company or
others solicit proxies in connection with the special meeting of shareholders.
5.2 Completion of Transactions. At the conclusion of the
--------------------------
recapitalization, the Company will issue to the Purchasers that number of
Company Shares not yet issued to the Purchasers so that, after the
recapitalization, the Purchasers will own 95.0 percent of the issued and
outstanding shares
-6-
<PAGE>
of the Company's voting securities and the Purchasers will pay to the Company
the remaining $10,000 of the Purchase Price.
6. Termination
6.1 Termination by Agreement. This Agreement shall terminate if the
------------------------
Purchasers and the Board of Directors of the Company, prior to the Termination
Date, decide that the transaction is un desirable and mutually agree to
terminate this Agreement.
6.2 Termination upon Default. If any party shall fail to use its best
------------------------
efforts to complete this Agreement and all conditions precedent thereto which
are the responsibility of that party by the Termination Date, then such shall
constitute an event of default under this Agreement. Upon the occurrence of an
event of default hereunder, the non-defaulting party shall have the right to
give notice to the defaulting party of the existence of the event of default no
later than ten days after such event. If the defaulting party shall not have
cured the event of default within 15 days of the date notice is given, the non-
defaulting party shall have the right to terminate this Agreement and to recover
from the defaulting party all costs and expenses incurred by it in connection
with this Agreement and the transactions contemplated hereby, including
reasonable attorneys' fees and other costs of collection.
6.3 Automatic Termination. This Agreement shall terminate in the
---------------------
event the Agreement has not been completed by the Termination Date, unless
extended by mutual agreement of the Company and the Purchasers, or unless notice
of default under Section 6.2 hereof has been given.
7. Miscellaneous
7.1 Notice. Any notice, request, instruction or other document to be
------
given hereunder shall be in writing and, except as otherwise provided for
herein, shall be delivered personally or sent by facsimile (with a confirmation
of receipts) or certified mail as follows:
If to the Company: DEUCALION RESEARCH, INC.
P.O. Box 1107
Williston, North Dakota 58802-1107
Fax Number: 701-774-8400
Attention: President
-7-
<PAGE>
with a copy to:
If to the Purchasers: MICHAEL R. FARLEY and FORREST L. METZ
with a copy to: Gerald Raskin
Raymond L. Friedlob
Friedlob Sanderson Raskin Paulson & Tourtillott, LLC
1400 Glenarm Place, Third Floor
Denver, Colorado 80202-5099
or to any subsequent address as to which the other party is advised in
accordance with the foregoing.
7.2 Assignability. Except as otherwise provided in this Agreement, the
-------------
rights and obligations of any party hereto may not be assigned or transferred to
any other person without the consent of the other parties hereto.
7.3 Survival of Representations. The representations, warranties,
---------------------------
covenants and agreements herein contained shall survive the execution of this
Agreement and the Initial Closing Date and the completion of the purchase for a
period of one year from the Initial Closing Date.
7.4 Benefit. This Agreement shall be binding upon and shall inure to
-------
the benefit of the Company and the Purchasers, and their respective successors
and permitted assigns. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the Company and the Purchasers
and their successors and permitted assigns, any rights or remedies under or by
reason thereof.
7.5 Fees. Except as otherwise provided herein, the Company and the
----
Purchasers shall pay their own costs and expenses incident to the negotiation,
preparation and performance of this Agreement, and compliance with all
agreements and conditions contained herein, including all fees, expenses and
disbursements of their respective counsel, whether or not the transactions
contemplated hereby are completed.
7.6 Waiver of Terms.
---------------
7.6.1 If any of the conditions specified in Section 4.1 of this
Agreement hereof have not been satisfied, the Company may, nevertheless, at its
election, proceed with the transactions contemplated hereby.
7.6.2 If any of the conditions specified in Section 4.2 of this
Agreement hereof have not been satisfied, the Purchasers may, nevertheless, at
their election, proceed with the transactions contemplated hereby.
-8-
<PAGE>
7.6.3 Any election by the Company or the Purchasers to proceed
pursuant to this Section 6.5 shall be evidenced by a certificate executed by an
officer of the Company or the Purchasers as the case may be.
7.7 Modification. This Agreement cannot be modified, changed,
------------
discharged or terminated except by an instrument in writing, signed by the party
against whom the enforcement of any waiver, change, discharge or termination is
sought. This Agreement and the Subscription Agreements contain the entire
understanding between the parties with respect to the transactions covered
hereby.
7.8 Applicable Law. This Agreement will be construed and governed in
--------------
accordance with the laws of the State of North Dakota.
7.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
7.10 Status. "Status" as such term is used in this Agreement shall
------
denote whether there is a default or breach in specific contractual obligations
and shall include a description of the character type of such default/breach and
the amount thereof in terms of money, if applicable.
7.11 Finder's Fee. Each of the parties represents and warrants to each
------------
other that no broker or other person is entitled to a brokerage or finder's fee
or commission or other compensation in respect to the execution of this
Agreement and the completion of the transactions contemplated hereby. Each of
the parties hereto agrees to indemnify and hold the other harmless against and
in respect to any and all claims, losses, liabilities or expenses which may be
asserted against such other party by any broker or other person who claims to be
entitled to a brokerage or finder's fee or commission in respect of the
execution of this Agreement and the completion of the transactions contemplated
hereby by reason of his or its acting at the request of such party.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
DEUCALION RESEARCH, INC.
By_____________________________
President
THE PURCHASERS:
_______________________________
Michael R. Farley
_______________________________
Forrest L. Metz
-10-
<PAGE>
EXHIBIT A
---------
DEUCALION RESEARCH, INC.
(A NORTH DAKOTA CORPORATION)
SUBSCRIPTION AGREEMENT
- ----------------------
THE SECURITIES BEING OFFERED BY DEUCALION RESEARCH, INC. HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE BLUE SKY OR
SECURITIES LAWS AND ARE OFFERED UNDER AN EXEMPTION FROM THE REGISTRATION
PROVISIONS OF SUCH LAWS.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER CONTAINED IN THIS STOCK
SUBSCRIPTION AGREEMENT AND APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
This Subscription Agreement is entered for the purpose of MICHAEL R. FARLEY (the
"Undersigned") acquiring __________ shares of $.0001 par value common stock (the
"Securities") of DEUCALION RESEARCH, INC., a North Dakota corporation ("the
Company" or the "Company") from the Company in exchange for consideration as set
forth in the Stock Purchase Agreement to which this Subscription Agreement is
attached as Exhibit A. It is understood that this Subscription Agreement is not
binding until the Company accepts it in writing and then only in accordance with
the terms of this Subscription Agreement.
In connection with the Undersigned's acquisition of the Securities, the
Undersigned represents and warrants to the Company as follows:
The Undersigned has been provided, and has reviewed the following documents
to the extent the Undersigned deemed necessary or appropriate (the "Available
Information"):
Describe Available Information In Detail;
The Stock Purchase Agreement; and
Such other information as the Undersigned may have requested of the Company
regarding its past and current business, operations, management, and
financial condition.
The Securities are being acquired by the Undersigned for its own account
and not on behalf
-1-
<PAGE>
of any other person or entity.
The Securities are being acquired for investment purposes and not for
resale or distribution.
1. The Undersigned is not aware of the payment of any commission or other
remuneration to any person in connection with the execution of this transaction
or the purchase of the Securities.
2. The Undersigned has reviewed the Available Information and is aware of
the current situation whereby the Company owes significant sums to creditors and
to certain officers, directors, and shareholders. The Undersigned reviewed the
audit of the Company's financial statements for the three years ended September
30, 1998 and the qualified opinion issued by the Company's independent
[accountants, and the liquidation basis accounting utilized in connection with
the preparation of the Company's financial statements.] The Undersigned further
understands that the Company is not currently engaged in business.
3. The Company has given the Undersigned the opportunity to ask questions
of and to receive answers from persons acting on the Company's behalf concerning
the terms and conditions of this transaction and the opportunity to obtain any
additional information regarding the Company, its business and financial
condition which the Company possesses or can acquire without unreasonable effort
or expense.
4. The Undersigned understands that the Company has substantial
liabilities which will survive the completion of the transactions contemplated
by the Stock Purchase Agreement. The Undersigned further acknowledges and
agrees that the initial obligation to pay the balance of the Purchasers Price as
described in the Stock Purchase Agreement will survive the purchase of the
Securities, and the Undersigned agrees that he intends to pay the balance of the
Purchase Price as described in the Stock Purchase Agreement.
5. The Undersigned's present financial condition is such that it is
unlikely that it would be necessary for the Undersigned to dispose of any
portion of the Securities in the foreseeable future.
6. The Undersigned understands that the Securities being acquired hereby
are and will continue to be restricted securities within the meaning of Rule 144
of the General Rules and Regulations under the Securities Act of 1933, as
amended (the "Act") and applicable state statutes, and consents to the placement
of an appropriate restrictive legend or legends on any certificates evidencing
the Securities and any certificates issued in replacement or exchange therefor
and acknowledges that the Company will cause its stock transfer records to note
such restrictions.
-2-
<PAGE>
7. The Undersigned understands and agrees that:
(a) the Securities have not been registered under the Act or any state
or foreign securities laws;
(b) the Securities cannot be sold unless they are registered under
the Act and any applicable state securities laws or unless an exemption from
such registration requirements is available;
(c) the Undersigned must bear the economic risks of the investment in
the Securities for an indefinite period of time because they have not been
registered under the Act or any state securities laws;
(d) The Company is the only person which may register the Securities
under the Act and state securities statutes and the Company has not made any
representations to the Undersigned regarding the registration of the Securities
or compliance with Regulation A or some other exemption under the Act;
(e) the Undersigned will not sell or attempt to sell the Securities
without registration under the Act and any applicable state securities laws,
unless exemptions from such registration requirements are available and the
Undersigned has satisfied the Company that an exemption is available for such
sale;
(f) The Company shall have the right to issue stop transfer
instructions to its transfer agent to bar the transfer of any of the
certificates representing the Securities except in accordance with the Act.
8. The Undersigned acknowledges and understands that there is no, and may
never be, a market for the Securities. If such an active market should develop
(of which there can be no assurance), the Undersigned will only be able to
resell the Securities pursuant to the provisions of Rule 144 (the "Rule") if the
exemption from registration provided by the Rule is in fact available at the
time that the Undersigned desires to sell the Securities. In case the Rule is
not applicable, any sales may be made only pursuant to an effective registration
statement or an available exemption from registration.
9. The Undersigned agrees to disclose to any proposed buyer or transferee
of the Securities the restrictions relating to the sale or transfer of the
Securities being purchased hereby.
10. This Subscription Agreement shall be irrevocable unless it is rejected
by the Company. By the Undersigned's execution below, it is acknowledged and
understood that the Company is relying upon the accuracy and completeness hereof
in complying with certain obligations under applicable securities laws.
-3-
<PAGE>
11. The Undersigned has reviewed the terms of this Subscription Agreement
and all of the Available Information with his tax and financial advisors to the
extent the Undersigned deems such consultation appropriate, and the Undersigned
has also consulted with such advisors with regard to the advisability of this
investment to the extent deemed appropriate. The undersigned has relied on its
own investigation and upon its advisors with respect to issues regarding the
acquisition of the Company's common stock, including tax aspects and the merit
of the investment, and has not relied on any representations made by the Company
or the officers or directors of the Company.
12. The Undersigned hereby represents that an investment in the Securities
is a suitable investment for it, taking into consideration the restrictions on
transferability and the other considerations affecting the Securities and the
Company as described herein and in the documents attached hereto, and in the
investigation that the Undersigned has made.
13. This Agreement may be amended or modified only in writing signed by
the parties hereto. No evidence shall be admissible in any court concerning any
alleged oral amendment hereof. The Stock Purchase Agreement and this Agreement
fully integrate all prior agreements and understandings between the parties
concerning their subject matter.
14. This Agreement binds and inures to the benefit of the representatives,
successors and permitted assigns of the respective parties hereto.
15. Each party hereto agrees for itself, its successors and permitted
assigns to execute any and all instruments necessary for the fulfillment of the
terms of this Agreement.
16. This Agreement is made under, shall be construed in accordance with
and shall be governed by the laws of the State of North Dakota.
IN WITNESS WHEREOF, subject to acceptance by the Company, the Undersigned
has completed this Subscription Agreement and tendered payment as set forth
above to evidence the Undersigned's commitment to purchase the Securities as set
forth above.
(Undersigned)
--------------------------
MICHAEL R. FARLEY
-4-
<PAGE>
SUBSCRIPTION ACCEPTED AND RECEIPT OF CONSIDERATION ACKNOWLEDGED:
DEUCALION RESEARCH, INC.
______________, 1999 By____________________________
President
-5-
<PAGE>
EXHIBIT B
---------
DEUCALION RESEARCH, INC.
(A NORTH DAKOTA CORPORATION)
SUBSCRIPTION AGREEMENT
- ----------------------
THE SECURITIES BEING OFFERED BY DEUCALION RESEARCH, INC. HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE BLUE SKY OR
SECURITIES LAWS AND ARE OFFERED UNDER AN EXEMPTION FROM THE REGISTRATION
PROVISIONS OF SUCH LAWS.
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER CONTAINED IN THIS STOCK
SUBSCRIPTION AGREEMENT AND APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
This Subscription Agreement is entered for the purpose of FORREST L. METZ (the
"Undersigned") acquiring __________ shares of $.0001 par value common stock (the
"Securities") of DEUCALION RESEARCH, INC., a North Dakota corporation ("the
Company" or the "Company") from the Company in exchange for consideration as set
forth in the Stock Purchase Agreement to which this Subscription Agreement is
attached as Exhibit B. It is understood that this Subscription Agreement is not
binding until the Company accepts it in writing and then only in accordance with
the terms of this Subscription Agreement.
In connection with the Undersigned's acquisition of the Securities, the
Undersigned represents and warrants to the Company as follows:
The Undersigned has been provided, and has reviewed the following documents
to the extent the Undersigned deemed necessary or appropriate (the "Available
Information"):
Describe Available Information In Detail;
The Stock Purchase Agreement; and
Such other information as the Undersigned may have requested of the Company
regarding its past and current business, operations, management, and
financial condition.
The Securities are being acquired by the Undersigned for its own account
and not on behalf
-1-
<PAGE>
of any other person or entity.
The Securities are being acquired for investment purposes and not for
resale or distribution.
1. The Undersigned is not aware of the payment of any commission or other
remuneration to any person in connection with the execution of this transaction
or the purchase of the Securities.
2. The Undersigned has reviewed the Available Information and is aware of
the current situation whereby the Company owes significant sums to creditors and
to certain officers, directors, and shareholders. The Undersigned reviewed the
audit of the Company's financial statements for the three years ended September
30, 1998 and the qualified opinion issued by the Company's independent
[accountants, and the liquidation basis accounting utilized in connection with
the preparation of the Company's financial statements.] The Undersigned further
understands that the Company is not currently engaged in business.
3. The Company has given the Undersigned the opportunity to ask questions
of and to receive answers from persons acting on the Company's behalf concerning
the terms and conditions of this transaction and the opportunity to obtain any
additional information regarding the Company, its business and financial
condition which the Company possesses or can acquire without unreasonable effort
or expense.
4. The Undersigned understands that the Company has substantial
liabilities which will survive the completion of the transactions contemplated
by the Stock Purchase Agreement. The Undersigned further acknowledges and
agrees that the initial obligation to pay the balance of the Purchasers Price as
described in the Stock Purchase Agreement will survive the purchase of the
Securities, and the Undersigned agrees that he intends to pay the balance of the
Purchase Price as described in the Stock Purchase Agreement.
5. The Undersigned's present financial condition is such that it is
unlikely that it would be necessary for the Undersigned to dispose of any
portion of the Securities in the foreseeable future.
6. The Undersigned understands that the Securities being acquired hereby
are and will continue to be restricted securities within the meaning of Rule 144
of the General Rules and Regulations under the Securities Act of 1933, as
amended (the "Act") and applicable state statutes, and consents to the placement
of an appropriate restrictive legend or legends on any certificates evidencing
the Securities and any certificates issued in replacement or exchange therefor
and acknowledges that the Company will cause its stock transfer records to note
such restrictions.
-2-
<PAGE>
7. The Undersigned understands and agrees that:
(a) the Securities have not been registered under the Act or any state
or foreign securities laws;
(b) the Securities cannot be sold unless they are registered under
the Act and any applicable state securities laws or unless an exemption from
such registration requirements is available;
(c) the Undersigned must bear the economic risks of the investment in
the Securities for an indefinite period of time because they have not been
registered under the Act or any state securities laws;
(d) The Company is the only person which may register the Securities
under the Act and state securities statutes and the Company has not made any
representations to the Undersigned regarding the registration of the Securities
or compliance with Regulation A or some other exemption under the Act;
(e) the Undersigned will not sell or attempt to sell the Securities
without registration under the Act and any applicable state securities laws,
unless exemptions from such registration requirements are available and the
Undersigned has satisfied the Company that an exemption is available for such
sale;
(f) The Company shall have the right to issue stop transfer
instructions to its transfer agent to bar the transfer of any of the
certificates representing the Securities except in accordance with the Act.
8. The Undersigned acknowledges and understands that there is no, and may
never be, a market for the Securities. If such an active market should develop
(of which there can be no assurance), the Undersigned will only be able to
resell the Securities pursuant to the provisions of Rule 144 (the "Rule") if the
exemption from registration provided by the Rule is in fact available at the
time that the Undersigned desires to sell the Securities. In case the Rule is
not applicable, any sales may be made only pursuant to an effective registration
statement or an available exemption from registration.
9. The Undersigned agrees to disclose to any proposed buyer or transferee
of the Securities the restrictions relating to the sale or transfer of the
Securities being purchased hereby.
10. This Subscription Agreement shall be irrevocable unless it is rejected
by the Company. By the Undersigned's execution below, it is acknowledged and
understood that the Company is relying upon the accuracy and completeness hereof
in complying with certain obligations under applicable securities laws.
-3-
<PAGE>
11. The Undersigned has reviewed the terms of this Subscription Agreement
and all of the Available Information with his tax and financial advisors to the
extent the Undersigned deems such consultation appropriate, and the Undersigned
has also consulted with such advisors with regard to the advisability of this
investment to the extent deemed appropriate. The undersigned has relied on its
own investigation and upon its advisors with respect to issues regarding the
acquisition of the Company's common stock, including tax aspects and the merit
of the investment, and has not relied on any representations made by the Company
or the officers or directors of the Company.
12. The Undersigned hereby represents that an investment in the Securities
is a suitable investment for it, taking into consideration the restrictions on
transferability and the other considerations affecting the Securities and the
Company as described herein and in the documents attached hereto, and in the
investigation that the Undersigned has made.
13. This Agreement may be amended or modified only in writing signed by
the parties hereto. No evidence shall be admissible in any court concerning any
alleged oral amendment hereof. The Stock Purchase Agreement and this Agreement
fully integrate all prior agreements and understandings between the parties
concerning their subject matter.
14. This Agreement binds and inures to the benefit of the representatives,
successors and permitted assigns of the respective parties hereto.
15. Each party hereto agrees for itself, its successors and permitted
assigns to execute any and all instruments necessary for the fulfillment of the
terms of this Agreement.
16. This Agreement is made under, shall be construed in accordance with
and shall be governed by the laws of the State of North Dakota.
IN WITNESS WHEREOF, subject to acceptance by the Company, the Undersigned
has completed this Subscription Agreement and tendered payment as set forth
above to evidence the Undersigned's commitment to purchase the Securities as set
forth above.
(Undersigned)
_______________________________________
FORREST L. METZ
-4-
<PAGE>
SUBSCRIPTION ACCEPTED AND RECEIPT OF CONSIDERATION ACKNOWLEDGED:
DEUCALION RESEARCH, INC.
__________________, 1999 By____________________________
President
-5-
<PAGE>
EXHIBIT C
---------
Minutes or Consent of the Board of Directors of The Company
Pursuant to Section 2.1
-6-
