SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported): June 6, 1997
Opal Technologies, Inc.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
33-18834-LA
------------------------
(Commission file number)
Nevada 87-0306464
- ---------------------------- ---------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation)
9025 South 700 West, Sandy, Utah 84070
---------------------------------------------------
(Address of principal executive offices) (Zip code)
(801) 255-8500
----------------------------------------------------
(Registrant's telephone number, including area code)
MED-TEX CORPORATION
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
As a result of the acquisitions described in Item 2, control of the
Registrant passed to the Bestalong Group, Inc. ("Bestalong"), the former
shareholder of Triple Star Holdings Limited ("Triple") and Opal Agriculture
Development Limited ("OAD"). The new controlling shareholder is:
Name and Address Number of Common Shares Percent of Class
- ------------------------- ----------------------- ----------------
Bestalong Group, Inc. (1) 8,452,768 90.00%
Suite 4704 Central Plaza
18 Harbour Road
Wanchai, Hong Kong
- ------------------------
(1) Bestalong Group, Inc. is a privately held corporation organized under the
laws of the British Virgin Islands ("BVI"). Bestalong is controlled by John
Koon whose address is also Suite 4704 Central Plaza, 18 Harbour Road,
Wanchai, Hong Kong.
In addition, Bestalong was issued the following Series A Convertible
Preferred Shares ("Preferred Shares") which have voting rights equal to thirty
percent of the total vote on all corporate matters:
Name and Address Number of Shares Percent of Class
- ------------------------ ---------------- ----------------
Bestalong Group, Inc. 100,000 100%
Suite 4704 Central Plaza
18 Harbour Road
Wanchai, Hong Kong
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
As of the close of business June 6, 1997, the Registrant acquired all of
the issued and outstanding capital stock of Triple and all of the outstanding
capital stock of OAD, in exchange for (i) 8,452,768 shares of the Registrant's
common stock, $.001 par value; (ii) 100,000 shares of the Registrant's Series A
Preferred Stock, $.001 par value, which in the aggregate shall have a vote equal
to thirty percent of the total vote on all corporate matters; and (iii)
$2,100,000 in cash payable by the cancellation of a promissory note payable by
Bestalong to the Registrant. Triple is a BVI corporation which through its 55%
owned equity joint venture in the People's Republic of China ("PRC") is engaged
in the manufacturing and sale of organic agricultural fertilizer. OAD is a BVI
corporation and is principally engaged in the trading of organic agricultural
fertilizer.
ITEM 5. OTHER EVENTS
In connection with the share purchase described above, on May 14, 1997, the
Registrant changed its name from Med-Tex Corporation to Opal Technolgies, Inc.
2
<PAGE>
The Registrant also effected a one for ten reverse stock split and reauthorized
50,000,000 shares of stock as follows: 49,000,000 common shares, par value
$.001; and 1,000,000 preferred shares, par value $.001. In connection with the
share purchase Messrs. John Koon, Raul F. Sanchez-Elia, Michael William Botts,
Antonio C.K. Young, Long Chen Chen, James H. Shane and James Wong were appointed
as directors of the Registrant, and Scott Crawford and Karen Pollino resigned as
directors and officers. John Koon has been appointed president and chief
executive officer of the Registrant and Kings K.S. Poon has been appointed chief
financial officer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Financial Statements of Businesses Acquired
Triple Star Holding Limited
Report of Independent Public Accountants........................ 5
Consolidated Balance Sheet as of December 31, 1995 and 1996..... 6
Consolidated Statements of Operations for the period from
December 13, 1995 (date of inception) to December 31, 1995
and from January 1, 1996 to December 31, 1996.................. 7
Consolidated Statements of Cash Flows for the Period from
December 13, 1995 (date of inception) to December 31, 1995
and from January 1, 1996 to December 31, 1996.................. 8
Consolidated Statement of Changes in Equity for the Period
from December 13, 1995 (date of inception) to
December 31, 1995 and from January 1, 1996 to
December 31, 1996.............................................. 9
Notes to Consolidated Financial Statements...................... 10
Consolidated Balance Sheets as of March 31, 1997 and
December 31, 1996.............................................. 22
Consolidated Statements of Operations for the three months
ended March 31, 1997 and 1996.................................. 23
Consolidated Statements of Cash Flow for the three months
ended March 31, 1997 and 1996.................................. 24
Notes to Consolidated Financial Statements...................... 25
Opal Agriculture Development Limited
Report of Independent Public Accountants........................ 26
Balance Sheets as of December 31, 1995 and December 31, 1996.... 27
Statements of Operations for the period from
December 15, 1995 (date of inception) to December 31, 1995
and from January 1, 1996 to December 31, 1996.................. 28
Statement of Cash Flows for the period from December 15, 1995
(date of inception) to December 31, 1995 and from
January 1, 1996 to December 31, 1996........................... 29
3
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Statement of Changes in Equity for the period from
December 15, 1995 (date of inception) to
December 31, 1995 and from January 1, 1996 to
December 31, 1996.............................................. 30
Notes to Financial Statements................................... 31
Balance Sheet as of March 31, 1997 and December 31, 1996........ 37
Statements of Operations for the three months ended
March 31, 1997 and 1996........................................ 38
Statements of Cash Flow for the three months ended
March 31, 1997 and 1996........................................ 39
Notes to Financial Statements................................... 40
(b) Pro Forma Financial Information
Introduction to Pro Forma Condensed Financials Information...... 41
Pro Forma Condensed Combined Balance Sheet as of
March 31, 1997................................................. 42
Pro Forma Condensed Combined Statement of Operations
for the Year Ended December 31, 1996........................... 43
Pro Forma Condensed Combined Statement of Operations
for the Three Months March 31, 1997............................ 44
Notes to Pro Forma Financial Statements......................... 45
(c) Exhibits
2.1 Share Purchase Agreement with the Shareholders
of Triple Star Holdings Limited and Opal
Agriculture Development Limited........................... 46
3.1 Restated Articles of Incorporation......................... 79
3.2 Amended Bylaws............................................. 85
3.3 Certificate of Decrease in Authorized Shares............... 98
4.1 Certificate of Designation of Series A Preferred Stock.....100
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OPAL TECHNOLOGIES, INC.
By:
-----------------------------
John Koon
President
Date: June ___, 1997
4
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and the Board of Directors of Triple Star Holding Limited:
We have audited the accompanying consolidated balance sheets of Triple Star
Holding Limited (a company incorporated in the British Virgin Islands; "the
Company") and Subsidiaries ("the Group") as of December 31, 1995 and 1996, and
the related consolidated statements of operations, cash flows and changes in
shareholders' equity for the period from December 13, 1995 (date of
incorporation) to December 31, 1995 and for the year ended December 31, 1996.
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
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Triple Star Holding
Limited and Subsidiaries as of December 31, 1995 and 1996, and the results of
their operations and their cash flows for the period from December 13, 1995
(date of incorporation) to December 31, 1995 and for the year ended December 31,
1996, in conformity with generally accepted accounting principles in the United
States of America.
/s/ Arthur Andersen & Co.
- --------------------------
Arthur Andersen & Co.
Hong Kong,
April 21, 1997.
5
<PAGE>
TRIPLE STAR HOLDING LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1996
1995 1996
------- ---------------------
Rmb'000 Rmb'000 US$'000
------- ---------------------
ASSETS
Current assets:
Cash and bank deposits - 517 62
Accounts receivable, net - 3,960 478
Due from a related company - 749 90
Prepayments and other current assets - 155 19
Inventories, net - 5,435 656
----- ------- -------
Total current assets - 10,816 1,305
Property, machinery and equipment, net - 63,356 7,642
Goodwill, net - 1,624 196
----- ------- -------
Total assets - 75,796 9,143
===== ======= =======
LIABILITIES, MINORITY INTEREST AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable - 6,750 814
Accrued expenses - 1,049 127
----- ------- -------
Total current liabilities - 7,799 941
Loans from PRC joint venture partner - 1,008 122
Loans from parent company - 40,110 4,838
----- ------- -------
Total liabilities - 48,917 5,901
----- ------- -------
Minority interest - 23,269 2,806
----- ------- -------
Shareholders' equity:
Common stock, par value US$1;
authorized - 50,000 shares;
issued outstanding and
fully paid - 1 share - - -
Additional paid-in capital - 3,757 453
Retained earnings - 265 32
Cumulative translation adjustments - (412) (49)
----- ------- -------
Total shareholders' equity - 3,610 436
----- ------- -------
Total liabilities, minority
interest and shareholders'
equity - 75,796 9,143
===== ======= =======
The accompanying notes are an integral part of these financial statements.
Translation of amounts from Renminbi ("Rmb") into United States dollars ("US$")
is for the convenience of the readers, which has been made at the noon buying
rate in New York City for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York on March 31, 1997 of
US$1.00=Rmb8.29. No representation is made that the Renminbi amounts could have
been, or could be, converted into United States dollars at that rate or at any
other rate.
6
<PAGE>
TRIPLE STAR HOLDING LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM DECEMBER 13, 1995 (DATE OF INCORPORATION)
TO DECEMBER 31, 1995 AND FOR THE YEAR ENDED DECEMBER 31, 1996
December 13,
1995 to
December 31, January 1, 1996 to
1995 December 31, 1996
------------ ------------------
Rmb'000 Rmb'000 US$'000
------------ ------- -------
Net sales - 24,050 2,901
Cost of goods sold - (21,369) (2,578)
----- -------- -------
Gross profit - 2,681 323
General and administrative
expenses - (1,428) (172)
Interest income - 12 1
Other expense, net - (18) (2)
----- -------- -------
Income before income taxes - 1,247 150
Provision for income taxes - - -
----- -------- -------
Income before minority
interest - 1,247 150
Minority interest - (982) (118)
----- -------- -------
Net income - 265 32
===== ======== =======
The accompanying notes are an integral part of these financial statements.
Translation of amounts from Renminbi ("Rmb") into United States dollars ("US$")
is for the convenience of the readers, which has been made at the noon buying
rate in New York City for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York on March 31, 1997 of
US$1.00=Rmb8.29. No representation is made that the Renminbi amounts could have
been, or could be, converted into United States dollars at that rate or at any
other rate.
7
<PAGE>
TRIPLE STAR HOLDING LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM DECEMBER 13, 1995 (DATE OF INCORPORATION)
TO DECEMBER 31, 1995 AND FOR THE YEAR ENDED DECEMBER 31, 1996
December 13,
1995 to
December 31, January 1, 1996 to
1995 December 31, 1996
------------ ------------------
Rmb'000 Rmb'000 US$'000
------------ ------- -------
Cash flows from operating activities:
Net income - 265 32
Adjustments to reconcile net income
to net cash used in operating
activities -
Depreciation of property, machinery
and equipment - 53 6
Amortization of goodwill - 34 4
Minority interest - 982 118
(Increase) Decrease in operating assets -
Accounts receivable, net - 860 103
Due from a related company - (749) (90)
Prepayments and other current assets - (79) (10)
Inventories, net - (1,146) (138)
Decrease in operating liabilities -
Accounts payable - (1,246) (150)
Accrued expenses - (146) (17)
----- ------- -----
Net cash used in operating activities - (1,172) (142)
----- ------- -----
Cash flows from investing activities:
Acquisition of property, machinery
and equipment - (1,073) (129)
Net cash outflow from acquisition
of a subsidiary - (595) (71)
Effect of translation adjustments - (412) (49)
----- ------- -----
Net cash used in investing
activities - (2,080) (249)
----- ------- -----
Cash flows from financing activities:
Increase in loans from parent company - 3,457 415
Others - 312 38
----- ------- -----
Net cash provided by financing
activities - 3,769 453
----- ------- -----
Net increase in cash and bank deposits - 517 62
Cash and bank deposits, as of beginning
of period/year - - -
----- ------- -----
Cash and bank deposits, as of end of
period/year - 517 62
===== ======= =====
The accompanying notes are an integral part of these financial statements.
Translation of amounts from Renminbi ("Rmb") into United States dollars ("US$")
is for the convenience of the readers, which has been made at the noon buying
rate in New York City for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York on March 31, 1997 of
US$1.00=Rmb8.29. No representation is made that the Renminbi amounts could have
been, or could be, converted into United States dollars at that rate or at any
other rate.
8
<PAGE>
TRIPLE STAR HOLDING LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM DECEMBER 13, 1995 (DATE OF INCORPORATION)
TO DECEMBER 31, 1995 AND FOR THE YEAR ENDED DECEMBER 31, 1996
Additional Cumulatived
Common paid-in Retained translation
stock capital earnings adjustments
Rmb Rmb'000 Rmb'000 Rmb'000
Balance as of December 13,
1995 (date of incorporation) - - - -
Issuance of common stock 9 - - -
----- ------ ---- ----
Balance as of December 31,
1995 9 - - -
Forgiveness of loans from
parent company (Note 14) - 3,757 - -
Net income - - 265 -
Translation adjustments - - - (412)
----- ------- ----- -----
Balance as of December 31,
1996 9 3,757 265 (412)
===== ======= ===== =====
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
TRIPLE STAR HOLDING LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Triple Star Holding Limited ("the Company") was incorporated in the British
Virgin Islands on December 13, 1995. On December 15, 1995, the Company issued 1
share of common stock to Bestalong Group Inc., (a company incorporated in the
British Virgin Islands) at par value for cash of US$1 (equivalent to
approximately Rmb9).
On December 18, 1995, the Company established a wholly owned subsidiary - Triple
Star Group Limited ("TSG"; a company incorporated in the British Virgin
Islands). TSG is an investment holding company. On August 6, 1996, TSG acquired
a 55% interest in Beijing Opal Agriculture Biochemistry Co., Ltd. ("Beijing
Opal"), an equity joint venture established in the People's Republic of China
("the PRC") for a period of 20 years from February 8, 1995 to February 7, 2014.
Beijing Opal is principally engaged in the manufacturing and sales of organic
agricultural fertilizers.
Beijing Opal was originally established as a PRC equity joint venture between
Ideit Enterprise Co., Ltd. ("IECL"; a company incorporated in Taiwan) - 40% and
Beijing Opal Biochemistry Factory ("BOBF"; a PRC state-owned enterprise) - 60%.
Pursuant to a sale and purchase agreement dated August 6, 1996, TSG acquired
from IECL its entire 40% interest in Beijing Opal and acquired from BOBF a 15%
interest in Beijing Opal for an aggregate consideration of approximately
Rmb1,159,000. A revised joint venture agreement between TSG and BOBF was
executed on August 6, 1996, which was approved by the relevant PRC authorities
on March 24, 1997. Under the revised joint venture agreement, the joint venture
period has been extended to 30 years from February 8, 1995 to February 7, 2024,
and the total investment of Beijing Opal has been increased from US$350,000 to
US$10,000,000 (equivalent to approximately Rmb82,900,000), of which US$6,000,000
(equivalent to approximately Rmb49,920,000) has to be in the form of registered
capital to be injected within one year after Beijing Opal has obtained its
revised business license from the PRC authorities. As of the date of this
report, the revised business license has not been issued. TSG is obliged to
inject 55% of the registered capital amounted to US$3,300,000 (equivalent to
approximately Rmb27,357,000); while BOBF is obliged to inject 45% of the
registered capital amounted to US$2,700,000 (equivalent to approximately
Rmb22,383,000).
In 1996, TSG contributed cash of approximately US$1,322,000 (equivalent to
approximately Rmb10,963,000), representing approximately 40% of its obligation;
while BOBF contributed property and machinery with a valuation of approximately
US$2,700,000 (equivalent to approximately Rmb22,383,000), representing 100% of
its obligation. Approximately Rmb843,000 and Rmb1,261,000 of the contribution
made by TSG and BOBF, respectively had been verified by a certified public
accountant in the PRC according to PRC regulations. In accordance with the
revised joint venture agreement, TSG has to inject the remaining portion of its
capital contribution obligation, which amounting to approximately US$1,978,000
(equivalent to approximately Rmb16,394,000), within one year after Beijing Opal
has obtained its revised business license from the PRC authorities. As of the
date of this report, the revised business license has not been issued.
10
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1. ORGANIZATION AND PRINCIPAL ACTIVITIES (Cont'd)
The other key provisions of the revised joint venture agreement are:
a. the profit and loss sharing ratio is the same as the respective percentage
of equity interest.
b. upon early termination or liquidation of Beijing Opal, the net assets of
Beijing Opal will be distributed in accordance with respective percentage
of equity interest.
c. the Board of Director of Beijing Opal consists of seven members, with four
designated by TSG and three designated by BOBF.
2. SUBSIDIARIES
Details of the Company's subsidiaries (which together with the Company are
collectively referred to as "the Group") as of December 31, 1996 were as
follows:
% of
equity
Place of interest Principal
Name incorporation held activities
- --------------------- ------------------- -------- ------------------
Triple Star Group The British Virgin
Limited ("TSG") Islands 100% Investment holding
Beijing Opal Manufacturing and
Agriculture sale of organic
Biochemistry Co., agricultural
Ltd. ("Beijing Opal") The PRC 55% fertilizers
11
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3. BASIS OF PRESENTATION
The acquisition of Beijing Opal on August 6, 1996 has been accounted for using
the purchase method of accounting. Accordingly, the assets acquired and
liabilities assumed have been recorded at their estimated fair values, and the
operations of Beijing Opal are included in the consolidated financial statements
of the Group from the date of acquisition. The following is an unaudited pro
forma summary of the combined results of operations of the Company, TSG and
Beijing Opal for the year ended December 31, 1996 as if the acquisition had
occurred as of January 1, 1996. The unaudited pro forma summary is not
necessarily indicative either of the results of operations that would have
occurred had the acquisitions been made as of January 1, 1996, or of the future
results of operations of the combined companies.
Year ended December 31, 1996
----------------------------
Rmb'000 US$'000
-------- -------
Pro forma net sales 30,928 3,731
======= ======
Pro forma net income 586 71
======= ======
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All material intra-group balances and transactions
have been eliminated on consolidation.
b. Goodwill
Goodwill, being the excess of cost over the fair value of the net assets of
a subsidiary acquired, is amortized on a straight-line basis over 30 years.
The amortization recorded for the year ended December 31, 1996 was
approximately Rmb34,000. Accumulated amortization as of December 31, 1996
was approximately Rmb34,000.
c. Inventories
Inventories are stated at the lower of cost, on a first-in first-out basis,
and market value. Costs of work-in-process and finished goods are composed
of direct materials, direct labor and an attributable portion of production
overheads.
12
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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
d. Property, machinery and equipment
Property, machinery and equipment are recorded at cost. Gains or losses on
disposals are reflected in current operations. Depreciation for financial
reporting purpose is provided using the straight-line method over the
estimated useful lives of the assets as follows: machinery and equipment -
5 years, motor vehicles - 5 years, furniture and office equipment - 5
years. All ordinary repair and maintenance costs are expensed as incurred.
Construction-in-progress represents land and buildings under construction
in the PRC. This includes costs of land, costs of construction, and
interest charges arising from borrowings used to finance these assets
during the period of construction. There was no interest capitalized for
the period from December 13, 1995 to December 31, 1995 and for the year
ended December 31, 1996. No deprecation is provided in respect of
construction-in-progress until the construction is completed.
e. Net sales
Net sales represent the invoiced value of goods supplied to customers, net
of sales returns and allowances. Sales are recognized upon delivery of
goods and passage of title to customers.
f. Income taxes
Income taxes are provided under the provisions of Statement of Financial
Accounting Standards No. 109, which requires recognition of deferred tax
assets and liabilities for expected future tax consequences of events that
have been included in the financial statements or tax returns. Deferred
income taxes are provided using the liability method. Under the liability
method, deferred income taxes are recognized for all significant temporary
differences between the tax and financial statement basis of assets and
liabilities.
g. Operating leases
Operating leases represent those leases under which substantially all the
risks and rewards of ownership of the leased assets remain with the
lessors. Rental payments under operating leases are charged to expense on
the straight-line basis over the period of the relevant leases.
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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
h. Foreign currency translation
The Group considers Renminbi ("Rmb") as its functional currency as most of
the Group's business activities are based in Renminbi.
The translation of the financial statements of group companies into
Renminbi is performed for balance sheet accounts using closing exchange
rates in effect at the balance sheet date and for revenue and expense
accounts using an average exchange rate during each reporting period. Gains
or losses resulting from translation are included in shareholders' equity
separately as cumulative translation adjustments. There was no gain or loss
arise from foreign currency transactions for the period from December 13,
1995 to December 31, 1995 and for the year ended December 31, 1996.
i. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from
those estimates.
5. ACCOUNTS RECEIVABLE
Accounts receivable comprised:
1995 1996
------- -------------------
Rmb'000 Rmb'000 US$'000
------- ------- -------
Trade receivables - 3,985 481
Less: Allowance for doubtful
accounts - (25) (3)
----- ------ ----
- 3,960 478
===== ====== ====
6. INVENTORIES
Inventories comprised:
1995 1996
------- ------------------------
Rmb'000 Rmb'000 US$'000
------- ------------------------
Raw materials - 2,648 320
Work-in-process - 988 119
Finished goods - 1,799 217
----- ------ ----
- 5,435 656
===== ====== ====
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7. PROPERTY, MACHINERY AND EQUIPMENT
Property, machinery and equipment comprised:
1995 1996
------- -------------------
Rmb'000 Rmb'000 US$'000
------- ------- -------
Property, machinery and
equipment:
Machinery and equipment - 2,900 350
Motor vehicles - 215 26
Furniture and office
equipment - 20 2
----- ------- ------
- 3,135 378
Less: Accumulated
depreciation - (53) (6)
----- ------- ------
- 3,082 372
----- ------- ------
Deposits for purchase of
machinery - 28,700 3,462
----- ------- ------
Construction-in-progress:
Land cost - 24,700 2,979
Construction costs - 6,874 829
----- ------- ------
- 31,574 3,808
----- ------- ------
- 63,356 7,642
===== ======= ======
Construction-in-progress represents factories under construction in the PRC. The
land cost represented cost in acquiring land use right to a plot of land of
approximately 100 acres in Beijing, the PRC for a period of 50 years commencing
from the issuance date of the land use right certificate. As of December 31,
1996, Beijing Opal is committed to acquire the land use right on an adjacent
plot of land of 113 acres for Rmb27,911,000. According to the land purchase
agreements with the PRC government authority, Beijing Opal cannot apply for the
issuance of the land use right certificate(s) before the total consideration for
the entire 213 acres of land has been settled fully.
8. LOANS FROM PARENT COMPANY
Loans from Bestalong Group Inc., the parent company, are unsecured and
non-interest bearing. Approximately Rmb10,963,000 of the loans were used as
capital contributions into Beijing Opal and approximately Rmb28,700,000 of the
loan were used to purchase machinery. The parent company has agreed not to
demand the Company for repayment until the Company is financially capable to do
so.
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8. LOANS FROM PRC JOINT VENTURE PARTNER
The amount is unsecured and non-interest bearing. BOBF had agreed not to demand
Beijing Opal for repayment until Beijing Opal is financially capable to do so.
10. INCOME TAXES
The Company and its subsidiaries are subject to income taxes on an entity basis
on income arising in or derived from the tax jurisdictions in which they
operate. The British Virgin Islands entities (the Company and TSG) are
incorporated under the International Business Companies Act of the British
Virgin Islands and, accordingly, are exempted from payment of the British Virgin
Islands income taxes. The joint venture enterprise established in the PRC
(Beijing Opal) is subject to PRC income taxes at a rate of 33% (30% state
unified income tax and 3% local income tax). However, it is exempted from state
unified income tax and local income taxes for two years starting from the first
year of profitable operations and then is subject to a 50% reduction in the
state unified income tax for the next three years. The first profitable year for
Beijing Opal was the year ended December 31, 1996. If the tax holiday for
Beijing Opal did not exist, the Group's income tax expenses (net of minority
interest) would have been increased by approximately Rmb396,000 for the year
ended December 31, 1996.
The reconciliation of the statutory income tax rate in the PRC to the effective
income tax rate based on income before income taxes as stated in the
consolidated statements of operations is as follows:
December 13, 1995 to January 1, 1996 to
December 31, 1995 December 31, 1996
-------------------- -------------------
Statutory income tax rate - 33%
Effect of tax exemption - (33%)
----- -----
Effective income tax rate - -
===== =====
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11. DISTRIBUTION OF INCOME
At present, substantially all of the Group's income is contributed by its 55%
owned joint venture enterprise in the PRC - Beijing Opal. Income of Beijing Opal
as determined under generally accepted accounting principles in the PRC is
distributable to its joint venture partners after transfer to discretionary
dedicated capital as determined by Beijing Opal's board of directors, which
includes a salary fund and a staff welfare fund. Discretionary dedicated capital
is not distributable in the form of dividends. In the financial statements
prepared under US GAAP, amounts designated for payments of employee salary and
welfare of approximately Rmb40,000 for the year ended December 31, 1996 have
been charged to income and the related provisions are reflected as accrued
liabilities in the balance sheet as of December 31, 1996.
The income of Beijing Opal available for distribution to its joint venture
partners is based on the income reported in its statutory accounts prepared
under generally accepted accounting principles in the PRC. This differs from the
amount reported under generally accepted accounting principles in the United
States of America. As of December 31, 1996, such difference was insignificant.
12. RETIREMENT PLAN
The Group's employees in the PRC are all employed by Beijing Opal. As stipulated
by PRC regulations, Beijing Opal maintains a defined contribution retirement
plan for all of its employees. All retired employees of Beijing Opal are
entitled to an annual pension equal to their basic annual salary upon
retirement. Beijing Opal contributes to a state sponsored retirement plan
approximately 17% of the basic salary of its employees, and has no further
obligations for the actual pension payments or post-retirement benefits beyond
the annual contributions. The state sponsored retirement plan is responsible for
the entire pension obligations payable to retired employees. Beijing Opal's
contribution for the year ended December 31, 1996 was approximately Rmb16,000.
The Group has no retirement plan for its employees in Hong Kong.
13. COMMITMENTS
As of December 31, 1996, the Group had capital commitments amounting to
approximately Rmb27,911,000 in respect of acquisition of land in the PRC (see
Note 7). In addition, the Group had capital commitments amounting to
approximately Rmb36,300,000 for purchase of machinery.
17
<PAGE>
13. RELATED PARTY TRANSACTIONS
Name and relationship of related parties:
Name of related parties Existing relationships with the Company
- ---------------------------------- ---------------------------------------
Komix Asia Pacific Company Limited
("KAP") Common directors
Holding company of BOBF
Opal Agriculture Development Limited
("OAD") Common directors
Beijing Komix Vigour Property Liquid
Fertilizer Co. Ltd. ("BKVPL") Affiliated company of BOBF
Bestalong Group Inc. Parent company
Oriental Alliance Limited Subsidiary of Bestalong Group Inc.
Summary of related party balances and transactions is as follows:
1995 1996
------- ------------------
Rmb'000 Rmb'000 US$'000
------- ------- -------
Due from a related company
- - Oriental Alliance Limited (i) - 749 90
Accounts payable (ii)
- - (Agriculture and Production
Information Company) 1,261 152
- - KAP 360 43
- - BKVPL - 4,433 535
Sales to related companies
- - (Agriculture and Production
Information Company) - 19,426 2,343
- - OAD 1,529 184
Purchases from a related company
- - KAP - 2,164 261
Notes-
- ------------------------
(i) The amount due from Oriental Alliance Limited is unsecured, non-interest
bearing and without pre-determined repayment terms.
(ii) These arise from normal trading activities and are unsecured, non-interest
bearing and without pre-determined repayment terms.
In addition, in 1996, Bestalong Group Inc., the parent company, forgave loans
advanced to the Company of approximately Rmb3,757,000. This forgiveness of loans
has been treated as an equity contribution and recorded as additional paid-in
capital.
18
<PAGE>
14. SUPPLEMENTAL DISCLOSURE OF CASHFLOW INFORMATION
a. On August 6, 1996, TSG acquired a 55% interest in Beijing Opal for cash
consideration of approximately Rmb1,159,000. Details of assets acquired and
liabilities assumed were as follows:
Rmb'000
-------
Cash and bank deposits 564
Accounts receivable 4,820
Prepayments and other current assets 76
Inventories 4,289
Property, machinery and equipment 2,292
Accounts payables (7,996)
Accrued expenses (1,195)
Loans from Bestalong Group Inc. (3,757)
-------
Net liabilities assumed as of the date of acquisition (907)
-------
Share of net liabilities as of the date of acquisition (55%) (499)
Goodwill 1,658
-------
Consideration satisfied in cash 1,159
-------
Net cash outflow:
Cash paid 1,159
Cash and bank deposits acquired (564)
-------
595
=======
b. Non cash item:
Certain property, machinery and equipment (including deposits and
construction-in-progress) acquired by the Group amounting to approximately
Rmb60,044,000 was financed by loans advanced from the PRC joint venture
partner of approximately Rmb23,391,000 and loans advanced from the parent
company of approximately Rmb36,653,000.
16. OPERATING RISKS
a. Dependence strategic relationship
The Group conducts its operations in the PRC through an equity joint
venture with BOBF as described in Note 1. Any changes of this strategic
relationship may have significant effect on the financial position and
profitability of the Group. However, the Company's directors considered the
risk of any change in such strategic relationship would be minimal.
19
<PAGE>
16. OPERATING RISKS (Cont'd)
b. Concentration of credit risk
A substantial portion of the Group's sales are made to a small number of
customers on an open account basis and generally no collateral is required.
Details of individual customers accounting for more than 5% of the Group's
sales are as follows:
1995 1996
---- ----
Sales to:
(Agriculture and
Production Information Company),
a related party - 81%
OAD, a related party - 6%
==== ====
Concentration of accounts receivable as of December 31, 1995 and 1996 is as
follows:
1995 1996
---- ----
Five largest accounts receivable - 83%
==== ====
The Group performs ongoing credit evaluation of each customer's financial
condition. It maintains reserves for potential credit losses and such
losses in aggregate have not exceeded management's projections.
c. Concentration of suppliers
The Group purchases raw material from a number of suppliers. Details of
individual suppliers accounting for more than 5% of the Group's purchases
are as follows:
1995 1996
---- ----
Purchases from:
(Beijing Agriculture Production Company) - 85%
KAP, a related party - 9%
==== ====
20
<PAGE>
16. OPERATING RISKS (Cont'd)
d. Country risk
Substantially all of the Group's operations are conducted by its subsidiary
Beijing Opal, in the PRC and, accordingly, the Group is subject to special
considerations and significant risks not typically associated with
companies operating in North America and Western Europe. These include
risks associated with, among others, the political, economic and legal
environments and foreign currency exchange. The Group's results may be
affected by, among other things, changes in the political and social
conditions in the PRC and changes in governmental policies with respect to
laws and regulations, anti-inflationary measures, currency conversion and
remittance abroad, and rates and methods of taxation. The PRC government
has implemented economic reform policies for years, these reforms may be
refined or changed by the government at any time. It is also possible that
a change in the PRC leadership could lead to changes in economic policy.
In addition, a substantial portion of Beijing Opal's revenue is denominated
in Renminbi ("Rmb"), which must be converted into other currencies before
remittence outside the PRC. Both the conversion of Renminbi into other
foreign currencies and the remittance of foreign currencies abroad require
approvals of the PRC government.
17. OTHER SUPPLEMENTAL INFORMATION
The following items were included in the consolidated statements of operations:
1995 1996
------- ------------------------
Rmb'000 Rmb'000 US$'000
------- ------- -------
Depreciation of fixed assets - 53 6
Advertising expense - 53 6
Repair and maintenance expense - 12 1
Interest income - 12 1
===== === ===
21
<PAGE>
TRIPLE STAR HOLDING LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1997 AND DECEMBER 31, 1996
March 31, December 31,
1997 1996
--------- ------------
'000 '000
--------- ------------
ASSETS
Current assets:
Cash and bank deposits $ 122 $ 62
Accounts receivable, net 436 478
Inventories, net 738 656
Prepayments and other current assets 200 90
Amount due from a related company 154 19
------ ------
1,650 1,305
Property, machinery and equipment, net 7,628 7,642
Goodwill, net 194 196
------ ------
Total assets $9,472 $9,143
====== ======
LIABILITIES, MINORITY INTEREST
AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 992 $ 814
Accrued expenses 89 127
------ ------
1,081 941
Loan from PRC joint venture partner 122 122
Loan from parent company 5,067 4,838
------ ------
Total liabilities 6,270 5,901
Minority interest 2,795 2,806
Shareholders' equity
Common stock 0 0
Additional paid in capital 453 453
Retained earnings 5 32
Cumulative translation adjustments (51) (49)
------ ------
Total shareholders' equity 407 436
------ ------
Total liabilities, minority
interest and shareholders'
equity $9,472 $9,143
====== ======
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
TRIPLE STAR HOLDING LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATION
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
----- -----
'000 '000
----- -----
Net sales $ 85 $ 0
Cost of goods sold (66) 0
---- -----
Gross profit 19 0
General and administrative expenses 58 1
Interest income 0 0
---- -----
Loss before income taxes (39) (1)
Provision for income taxes 0 0
---- -----
Loss before minority interest (39) (1)
Minority interest 12 0
---- -----
Net loss $(27) $ (1)
==== =====
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
TRIPLE STAR HOLDING LTD. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASHFLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
-------- ------
'000 '000
-------- ------
Cash flow from operating activities
Net losses $ (27) $ (1)
Adjustments to reconcile net income
to net cash used in operating
activities
Depreciation 19 0
Amortization 2 0
Minority interest (12) 0
(Increase)/decrease in operating
assets
Inventories, net (82) 0
Accounts receivable, net 42 0
Prepayments, and other current
assets (181) 0
Due from a related company (64) 0
(Decrease)/increase in operating
liabilities
Accounts payable 178 0
Accrued expenses (38) 0
------- ------
Net cash used in operating
activities (163) (1)
Cash flows from investing activities
Acquisition of property, machinery
and equipment (5) 0
Effect of translation adjustment (1) 0
------ ------
Net cash used in investing
activities (6) 0
Cash flows from financing activities
Increase in loans from parent company 229 0
------ ------
Net cash provided from
financing activities 229 0
Net increase in cash and bank deposits 60 (1)
Cash and bank deposits, as of beginning
of period 62 0
------ ------
Cash and bank deposits, as of end of
period $ 122 $ (1)
====== ======
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
TRIPLE STAR HOLDING LTD. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
1. General
The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-QSB. The December 31, 1996 balance sheet data was
derived from audited financial statements but does not include all
disclosures required by generally accepted accounting principles. The
interim financial statements and notes included herewith should be read in
conjunction with the financial statements and notes included in the
Company's audited financial statements for the year ended December 31,
1996. In the opinion of management, the interim financial statements
reflect all adjustments of a normal recurring nature necessary for a fair
statement of the results for the interim periods presented.
25
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and the Board of Directors of
Opal Agriculture Development Limited:
We have audited the accompanying balance sheets of Opal Agriculture Development
Limited (a company incorporated in the British Virgin Islands; "the Company") as
of December 31, 1995 and 1996, and the related statements of operations, cash
flows and changes in shareholders' equity for the period from December 15, 1995
(date of incorporation) to December 31, 1995 and for the year ended December 31,
1996. 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
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Opal Agriculture Development
Limited as of December 31, 1995 and 1996, and the results of its operations and
its cash flows for the period from December 15, 1995 (date of incorporation) to
December 31, 1995 and for the year ended December 31, 1996, in conformity with
generally accepted accounting principles in the United States of America.
/s/ Arthur Andersen & Co.
- -------------------------
Arthur Andersen & Co.
Hong Kong,
May 30, 1997.
26
<PAGE>
OPAL AGRICULTURE DEVELOPMENT LIMITED
BALANCE SHEETS
AS OF DECEMBER 31, 1995 AND 1996
1995 1996
------- ---------------------
Rmb'000 Rmb'000 US$'000
------- -------- -------
ASSETS
Current assets:
Cash and bank deposits - 43 5
Accounts receivable, net - 754 91
Due from a director - 5 1
Inventories, net - 1,483 179
------ -------- ------
Total current assets - 2,285 276
Machinery - 9,500 1,146
Licensing costs - 7,980 962
------ ------- ------
Total assets - 19,765 2,384
====== ======= ======
LIABILITIES AND
SHAREHOLDERS' DEFICIT
Current liabilities:
Accrued liabilities - 517 61
Due to a related company - 268 32
------ ------- ------
Total current liabilities - 785 93
Loans from parent company - 18,284 2,206
------ ------- ------
Total liabilities - 19,069 2,299
------ ------- ------
Shareholders' equity:
Common stock, par value
US$1; authorized - 50,000
shares; issued, outstanding
and fully paid-nil share as
of December 31, 1995 and
50,000 shares as of
December 31, 1996 - 417 50
Additional paid-in capital - 4,145 500
Accumulated deficit - (3,866) (465)
------ ------- ------
Total shareholders' equity - 696 85
------ ------- ------
Total liabilities and
shareholders' equity - 19,765 2,384
====== ======= ======
The accompanying notes are an integral part of these financial statements.
Translation of amounts from Renminbi ("Rmb") into United States dollars ("US$")
is for the convenience of the readers, which has been made at the noon buying
rate in New York City for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York on April 30, 1997 of
US$1.00=Rmb8.29. No representation is made that the Renminbi amounts could have
been, or could be, converted into United States dollars at that rate or at any
other rate.
27
<PAGE>
OPAL AGRICULTURE DEVELOPMENT LIMITED
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM DECEMBER 15, 1995 (DATE OF INCORPORATION)
TO DECEMBER 31, 1995 AND FOR THE YEAR ENDED DECEMBER 31, 1996
December 15,
1995
to
December 31, January 1, 1996 to
1995 December 31, 1996
------------ ------------------------
Rmb'000 Rmb'000 US$'000
------------ ------- -------
Net sales - 1,366 165
Cost of goods sold - (635) (76)
----- ------- -----
Gross profit - 731 89
General and administrative
expenses - (4,564) (550)
Interest expense - (18) (2)
Other expense, net - (15) (2)
----- ------- -----
Loss before income taxes - (3,866) (465)
Provision for income taxes - - -
----- ------- -----
Net loss - (3,866) (465)
===== ======= =====
The accompanying notes are an integral part of these financial statements.
Translation of amounts from Renminbi ("Rmb") into United States dollars ("US$")
is for the convenience of the readers, which has been made at the noon buying
rate in New York City for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York on April 30, 1997 of
US$1.00=Rmb8.29. No representation is made that the Renminbi amounts could have
been, or could be, converted into United States dollars at that rate or at any
other rate.
28
<PAGE>
OPAL AGRICULTURE DEVELOPMENT LIMITED
STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM DECEMBER 15, 1995 (DATE OF INCORPORATION)
TO DECEMBER 31, 1995 AND FOR THE YEAR ENDED DECEMBER 31, 1996
December 15,
1995 to
December 31, January 1, 1996 to
1995 December 31, 1996
------------ ----------------------
Rmb'000 Rmb'000 US$'000
------------ -------- -------
Cash flows from operating activities:
Net loss - (3,866) (465)
Adjustments to reconcile net loss
to net cash used in operating
activities -
Increase in operating assets -
Accounts receivable, net - (754) (91)
Due from a director - (5) (1)
Inventories, net - (1,483) (179)
Increase in operating liabilities -
Accrued liabilities - 517 61
Due to a related company - 268 32
----- ------- -------
Net cash used in operating
activities - (5,323) (643)
----- ------- -------
Cash flows from investing activities:
Acquisition of machinery - (9,500) (1,146)
Acquisition of license right - (7,980) (962)
----- ------- -------
Net cash used in investing
activities - (17,480) (2,108)
----- ------- -------
Cash flows from financing activities:
Issuance of common stock - 417 50
Loans from parent company - 22,429 2,706
----- ------- -------
Net cash provided by financing
activities - 22,846 2,756
----- ------- -------
Net increase in cash and bank deposits - 43 5
Cash and bank deposits, as of beginning
of period/year - - -
----- ------- -------
Cash and bank deposits, as of end of
period/year - 43 5
===== ======= =======
The accompanying notes are an integral part of these financial statements.
Translation of amounts from Renminbi ("Rmb") into United States dollars ("US$")
is for the convenience of the readers, which has been made at the noon buying
rate in New York City for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York on April 30, 1997 of
US$1.00=Rmb$8.29. No representation is made that the Renminbi amounts could have
been, or could be, converted into United States dollars at that rate or at any
other rate.
29
<PAGE>
OPAL AGRICULTURE DEVELOPMENT LIMITED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM DECEMBER 15, 1995 (DATE OF INCORPORATION)
TO DECEMBER 31, 1995 AND FOR THE YEAR ENDED DECEMBER 31, 1996
Additional
Common paid-in Accumulated
stock capital deficit
------- ------- -------
Rmb'000 Rmb'000 Rmb'000
------- ------- -------
Balance as of December 15, 1995
(date of incorporation) and
December 31, 1995 - - -
Issuance of common stock 417 - -
Forgiveness of loan from parent
company (Note 7) - 4,145 -
Net loss - - (3,866)
---- ------ -------
Balance as of December 31, 1996 417 4,145 (3,866)
==== ====== =======
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
OPAL AGRICULTURE DEVELOPMENT LIMITED
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
Opal Agriculture Development Limited ("the Company") was incorporated in the
British Virgin Islands on December 15, 1995. On January 2, 1996, the Company
issued 50,000 shares of common stock to Asian Connections Limited, a company
incorporated in the British Virgin Islands and beneficially owned by independent
investors, at par value for a total cash consideration of US$50,000. On March
22, 1997 (subsequent to year end), Asian Connections Limited transferred its
entire interest in the Company to Bestalong Group Inc., a company incorporated
in the British Virgin Islands. Bestalong Group Inc. indirectly owns a 55%
interest in Beijing Opal Agriculture Biochemistry Co. Ltd. (see below).
The Company is principally engaged in the trading of organic agricultural
fertilizer manufactured by Beijing Opal Agriculture Biochemistry Co. Ltd.
("Beijing Opal"), a joint venture established in the People's Republic of China
("the PRC") and is 55% owned indirectly by Bestalong Group Inc.. On December 16,
1996, the Company was appointed by Beijing Opal as its sole agent and was
granted the exclusive right to distribute and sell organic agriculture
fertilizer manufactured by Beijing Opal in the PRC, Hong Kong, Taiwan and Macau
for the period from January 1, 1997 to February 7, 2015.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventories
a. Inventories are stated at the lower of cost, on a first-in first-out basis,
and market value.
b. Machinery
Machinery is recorded at cost, which includes production cost of the
machines and related design fees. Depreciation for financial reporting
purposes is provided using the straight-line method over the estimated
useful lives of five to ten years. Gains or losses on disposals are
reflected in current operations. All ordinary repair and maintenance costs
are expensed as incurred.
c. Licensing costs
Licensing costs are costs incurred to acquire the exclusive right to
distribute and sell a brand of organic agricultural fertilizer.
Amortization for financial reporting purposes is provided using the
straight-line method over the license period of 18 years.
31
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont'd)
d. Sales
Sales represent the invoiced value of goods supplied to customers, net of
sales returns and allowances. Sales are recognized upon delivery of goods
and passage of title to customers.
e. Income taxes
Income taxes are provided under the provisions of Statement of Financial
Accounting Standards No. 109, which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of events
that have been included in the financial statements or tax returns.
Deferred income taxes are provided using the liability method. Under the
liability method, deferred income taxes are recognized for all significant
temporary differences between the tax and financial statement basis of
assets and liabilities.
f. Foreign currency translation
The Company considers Renminbi ("Rmb") as its functional currency as most
of its business activities are based in Renminbi.
g. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect certain reported
amounts and disclosures. Accordingly, actual results could differ from
those estimates.
3. ACCOUNTS RECEIVABLE
Accounts receivable comprised:
1995 1996
------- -------------------
Rmb'000 Rmb'000 US$'000
------- -------------------
Trade receivables - 794 96
Less : Allowance for doubtful accounts - (40) (5)
----- ---- ---
Accounts receivable, net - 754 91
===== ==== ===
4. INVENTORIES
Inventories comprised trading merchandise purchased from Beijing Opal.
32
<PAGE>
5. MACHINERY
Machinery comprised:
1995 1996
------- ------------------
Rmb'000 Rmb'000 US$'000
------- ------------------
Machinery
- Design fee - 6,500 784
- Production cost - 3,000 362
----- ------ ------
Cost - 9,500 1,146
Less : Accumulated depreciation - - -
----- ------ ------
Machinery, net - 9,500 1,146
===== ====== ======
No depreciation on machinery was provided as the machines had not been put into
use as of December 31, 1996.
6. LICENSING COSTS
The Company paid to a third party a negotiation fee and an arrangement fee to
obtain the exclusive right to distribute and sell organic agriculture fertilizer
manufactured by Beijing Opal in the PRC, Hong Kong, Taiwan and Macau for a
period from January 1, 1997 to February 7, 2015 (see Note 1).
No amortization was provided as of December 31, 1996 as the contractual period
had not yet commenced.
7. LOANS FROM PARENT COMPANY
Loans from Asian Connections Limited, the parent company as of December 31,
1996, are unsecured and non-interest bearing. Asian Connections Limited has
agreed not to demand repayment until the Company is financially capable to do
so. During the year, Asian Connections Limited forgave part of the loans
advanced to the Company of approximately Rmb4,145,000. This forgiveness of loans
has been treated as an equity contribution and recorded as additional paid-in
capital.
Subsequent to year end, in connection with the sale by Asian Connections Limited
of its entire interest in the Company, Asian Connections Limited assigned its
loans receivable from the Company to Bestalong Group Inc.
33
<PAGE>
8. INCOME TAXES
The Company is incorporated under the International Business Companies Act of
the British Virgin Islands and, accordingly, is exempted from payment of the
British Virgin Islands income taxes. No provision for income taxes was made as
the Company incurred a loss for the year ended December 31, 1996.
9. RELATED PARTY TRANSACTIONS
Name and relationship of related parties:
Name of related parties Existing relationship with the Company
- ----------------------------- --------------------------------------
Beijing Opal Agriculture
Biochemistry Co. Ltd.
("Beijing Opal") Common director
Fuzhou Opal Company Limited Common director
Beijing Opal is 55% indirectly owned by Bestalong Group Limited. Upon
acquisition of 100% in the Company by Bestalong Group Limited on March 22, 1997,
Beijing Opal became a fellow subsidiary of the Company.
Summary of related party transactions:
December 15,
1995 to
December 31, January 1, 1996 to
1995 December 31, 1996
------------ ------------------
Rmb'000 Rmb'000 US$'000
------------ -------- -------
Purchases from Beijing Opal - 2,480 299
Sales to Fuzhou Opal Company
Limited - 625 75
December 31,
1995 December 31, 1996
------------ -----------------
Rmb'000 Rmb'000 US$'000
------------ ------- -------
Accounts receivable from
Fuzhou Opal Company Limited
- 453 55
Due from a director, Mr. Chen
Long Chen - 5 1
Accounts payable to Beijing Opal - 268 32
34
<PAGE>
10. OPERATING RISKS
a. Dependence on a single series of products
The Company's principal activity is distributing and selling organic
agriculture fertilizer manufactured by Beijing Opal under an exclusive
license right (see Note 1). Any changes to this distribution arrangement
could have significant adverse effects on the financial position and
profitability of the Company. However, the Company's directors believe the
risk of any change in the distribution arrangement would be minimal,
especially taking into account that Bestalong Group Inc., the majority
shareholder of Beijing Opal, has become the Company's sole shareholder
after year end.
b. Concentration of credit risk
A substantial portion of the Company's sales were made to two customers on
an open account basis and generally no collateral was required in the year.
Starting in 1997, the Company has appointed over 15 re-distributors in 15
different provinces in the PRC for distribution and sales.
Details of individual customers accounting for more than 5% of the
Company's sales for the period from December 15, 1995 to December 31, 1995
and for the year ended December 31, 1996 were as follows:
December 15,
1995 to
December 31, January 1, 1996 to
1995 December 31, 1996
------------ ------------------
Yunnan Xing Long Agriculture Co. Ltd.
- 54%
Fuzhou Opal Co. Ltd
- 44%
Concentration of accounts receivable as of December 31, 1995 and 1996 is as
follows:
1995 1996
---- ----
Yunnan Xing Long Agriculture Co. Ltd. - 43%
Fuzhou Opal Co. Ltd - 57%
===== ===
The Company performs ongoing credit evaluation of each customer's financial
condition. It maintains reserves for potential credit losses and such losses in
aggregate have not exceeded management's projections.
35
<PAGE>
10. OPERATING RISKS (Cont'd)
c. Country risk
Substantially all of the Company's sales activities are conducted in the
PRC and, accordingly, the Company is subject to special considerations and
significant risks not typically associated with companies in North America
and Western Europe. These include risks associated with, among others, the
political, economic and legal environments and foreign currency exchange.
The Company's results may be adversely affected by, among other things,
changes in the political and social conditions in the PRC and changes in
governmental policies with respect to laws and regulations,
anti-inflationary measures, currency conversion and remittance abroad, and
rates and methods of taxation. The PRC government has implemented economic
reform policies, but, these reforms may be refined or changed by the
government at any time. It is also possible that a change in the PRC
leadership could lead to changes in economic policy.
In addition, a substantial portion of the Company's revenue is denominated
in Renminbi ("Rmb"), which must be converted into other currencies before
remittance out of the PRC. Both the conversion of Renminbi into other
foreign currencies and the remittance of foreign currencies abroad require
approvals of the PRC government.
11. Other supplemental information
The following items were included in the statements of operations:
December 15,
1995 to
December 31, January 1, 1996 to
1996 December 31, 1996
------------ ------------------
Rmb'000 Rmb'000 US$'000
------------ ------------------
Provision for bad and doubtful debts - 40 5
Interest expense - 18 2
===== === ==
36
<PAGE>
OPAL AGRICULTURE DEVELOPMENT LIMITED
UNAUDITED BALANCE SHEET
AS OF MARCH 31, 1997 AND DECEMBER 31, 1996
March 31, December 31,
1997 1996
--------- ------------
'000 '000
--------- ------------
ASSETS
Current assets:
Cash and bank deposits $ 5 $ 5
Accounts receivable, net 474 91
Inventories, net 49 179
Prepayments and other current assets 9 0
Amount due from a director 6 1
--------- -------
543 276
Machinery 1,146 1,146
License costs 926 962
--------- -------
Total assets $ 2,615 $ 2,384
========= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Amount due to a related company 63 $ 62
Accrued expenses 58 32
--------- -------
121 94
Loan from parent company 2,358 2,205
--------- -------
Total liabilities 2,479 2,299
Shareholders' equity:
Common stock 50 50
Additional paid in capital 500 500
Accumulated deficit (414) (465)
--------- -------
Total shareholders' equity 136 85
--------- -------
Total liabilities and
shareholders' equity $ 2,615 $ 2,384
========= =======
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
OPAL AGRICULTURE DEVELOPMENT LIMITED
UNAUDITED STATEMENTS OF OPERATION
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
----- -----
'000 '000
----- -----
Net sales $ 407 $ 0
Cost of goods sold (203) 0
----- -----
Gross profit 204 0
General and administrative expenses 159 21
Interest expenses 0 0
----- -----
Total expenses, net 159 21
Income/(Loss) before income taxes 45 (21)
Provision for income taxes 0 0
----- -----
Net income/(loss) $ 45 $ (21)
===== =====
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
OPAL AGRICULTURE DEVELOPMENT LIMITED
UNAUDITED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
----- ------
'000 '000
----- ------
Cash flow from operating activities
Net (loss)/income $ 45 $ (21)
Adjustments to reconcile net income to
net cash used in operating activities
Amortization 13 0
(Increase)/Decrease in operating assets
Inventories, net 130 0
Accounts receivable, net (378) 0
Prepayments, and other current assets (9) 0
Amount due from a director (5) 0
(Decrease)/Increase in operating
liabilities
Amount due to a related company 31 0
Accrued expenses 21
----- -----
Net cash used in operating
activities (152) (21)
Cash flows from financing activities
Increase in loans from parent company 152 21
----- -----
Net cash provided from financing
activities 152 21
Net increase in cash and bank deposits 0 0
Cash and bank deposits, as of beginning
of period 5 0
----- -----
Cash and bank deposits, as of end of period $ 5 $ 0
===== =====
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
OPAL AGRICULTURE DEVELOPMENT LIMITED
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 1997
1. General
The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-QSB. The December 31, 1996 balance sheet data was
derived from audited financial statements but does not include all
disclosures required by generally accepted accounting principles. The
interim financial statements and notes included herewith should be read in
conjunction with the financial statements and notes included in the
Company's audited financial statements for the year ended December 31,
1996. In the opinion of management, the interim financial statements
reflect all adjustments of a normal recurring nature necessary for a fair
statement of the results for the interim periods presented.
40
<PAGE>
OPAL TECHNOLOGIES, INC.
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information
reflects the June 6, 1997 acquisition from Bestalong Group, Inc. ("Bestalong")
of 100% of the issued and outstanding shares of Triple Star Holding Limited
("Triple") and Opal Agriculture Development Limited ("OAD") in exchange for
cancellation of indebtedness of $2,100,000, 100,000 shares of Series A preferred
stock, $.001 par value, and 8,452,768 shares of common stock. Both Triple and
OAD are British Virgin Island corporations. Triple, through its 55% owned equity
joint venture in the People's Republic of China is engaged in the manufacturing
and sale of organic agricultural fertilizer. OAD is engaged principally in the
trading of organic agricultural fertilizer.
The pro forma balance sheet data at March 31, 1997 assumes the acquisition
of both Triple and OAD as if they had occurred as of March 31, 1997. The pro
forma statements of operations for both the year ended December 31, 1996 and the
three months ended March 31, 1997 assumes the acquisition of both Triple and OAD
as of January 1, 1996.
The historical financial information of OAD and Triple have been derived
from the respective company's financial statements included elsewhere herein and
such information with respect to the Company has been derived from reports filed
by the Company on Form 10-KSB and Form 10-QSB for such periods. The pro forma
financial information should be read in conjunction with the accompanying notes
thereto and the financial statements of the Company, Triple and OAD.
The pro forma condensed combined financial information does not purport to
be indicative of the financial position or operating results which would be
achieved had the acquisition of both Triple and OAD been consummated as of the
dates indicated and should not be construed as representative of future
financial position or operating results. In management's opinion, all
adjustments necessary to reflect the effects of the transactions described have
been made.
41
<PAGE>
OPAL TECHNOLOGIES, INC. AND SUBSIDIARIES
PRO-FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 1997
<TABLE>
<CAPTION>
Opal Opal Triple
Tech- Agriculture Star
nologies, Development Holding, Pro-forma Pro-forma
Inc. Ltd. Ltd. Adjustments Combined
--------- ----------- -------- ----------- ---------
'000 '000 '000 '000 '000
--------- ----------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 0 $ 5 $ 122 $ $ 127
Accounts receivable 0 474 436 910
Due from a related
company/director 2,100 6 154 (160)(1) 0
(2,100)(4)
Prepayments, etc. 0 9 200 209
Inventories 0 49 738 787
------ ------ ------ ------- -------
Total current assets 2,100 543 1,650 (2,260) 2,033
Property, plant and equipment,
net 0 1,146 7,628 8,774
Licensing costs 0 926 0 926
Goodwill, net 0 0 194 194
------- ------ ------ ------- -------
Total assets $ 0 $2,615 $9,472 $(2,260) $11,927
======= ====== ====== ======= =======
LIABILITIES & SHAREHOLDERS'
EQUITY
Current liabilities:
Accrued liabilities $ 0 $ 58 $1,081 $ (160)(1) $ 979
Due to a related company 0 63 0 63
------- ------ ------ ------- -------
Total current
liabilities 0 121 1,081 (160) 1,042
Loans form PRC joint venture 0 122 122
Loans from parent company 0 2,358 5,067 (2,100)(4) 5,325
------- ------ ------ ------- -------
Total liabilities 0 2,479 6,270 (2,260) 6,489
------- ------ ------ ------- -------
Minority interest 0 0 2,795 2,795
Shareholders' equity
Common stock 11 50 453 (504)(3) 10
Preferred stock 0 0 0 1(3) 1
Additional paid-in capital 4,588 500 0 (1,996)(3) 3,092
Retained earnings (deficit) (2,499) (414) 5 2,499(3) (409)
Cumulative translation
adjustment 0 0 (51) (51)
------- ------ ------ ------- -------
Total shareholders'
equity 2,100 136 407 2,643
------- ------ ------ ------- -------
Total liabilities and
shareholders equity $ 2,100 $2,615 $9,472 $(2,260) $11,927
======= ====== ====== ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
OPAL TECHNOLOGIES, INC.
PRO-FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR-ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Opal
Opal Agriculture Triple Star
Technologies, Development Holding Pro-forma Pro-forma
Inc. Ltd. Ltd. Adjustments Combined
------ ----------- ----------- ----------- ---------
'000 '000 '000 '000 '000
------ ----------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
Net sales $ 0 $ 165 $2,901 $ 300 (2) $ 2,766
Cost of goods sold 0 76 2,578 (300)(2) 2,354
----- ----- ------ ----- -------
Gross Profit 0 89 323 0 412
General and administrative
expenses 0 550 172 722
Interest (income) expense 0 2 (1) 1
Other expense (net) 0 2 2 4
Loss from discontinued
operation and extraordinary
items (439) 0 0 (439)
----- ----- ------ ----- --------
Income before income
taxes (439) (465) 150 (754)
Provision for income taxes 0 0 0 0
----- ----- ------ ----- --------
Income before minority (439) (465) 150 (754)
interest
Minority interest 0 0 118 118
----- ----- ------ ----- --------
Net income $ 439 $ 465 $ 32 $ (872)
===== ===== ====== ===== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
OPAL TECHNOLOGIES, INC.
PRO-FORMA STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Opal
Opal Agriculture Triple Star
Technologies, Development Holding Pro-forma Pro-forma
Inc. Ltd. Ltd. Adjustments Consolidated
------------- ----------- ----------- ----------- ------------
'000 '000 '000 '000 '000
------------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net sales $ 0 $ 407 $ 85 $ $ 492
Cost of goods sold 0 203 66 269
------- ----- ---- ----- -----
Gross Profit 0 204 19 223
General and administrative
expenses 0 159 58 217
Interest (income) expense 0 0 0 0
Other expense (net) 0 0 0 0
Income before income
taxes 0 45 (39) 6
Provision for income taxes 0 0 0 0
------- ---- ---- ----- -----
Income before minority 0 45 (39) 6
interest
Minority interest 0 0 12 12
------- ----- ---- ----- -----
Net income $ 0 $ 45 $(27) $ 18
======= ===== ==== ===== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
44
<PAGE>
OPAL TECHNOLOGIES, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
Pro Forma adjustments
(1) To eliminate inter-company receivable/payable.
(2) To eliminate inter-company sales/purchases.
(3) To record the issuance of 8,452,768 shares of common stock and 100,000
shares of Series A Preferred Stock to the stockholder of Triple and OAD,
the elimination of the common shares of Triple and OAD acquired by the
Company and elimination of the Company's accumulated deficit.
(4) To record the cancellation of indebtedness from Bestalong to the Company
and from OAD and Triple to Bestalong in the amount of $2,100,000 as partial
consideration for the acquisition of Triple and OAD.
45
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (hereinafter referred to as this "Agreement")
is entered into as of this 6th day of June, 1997, by and between OPAL
TECHNOLOGIES, INC., a Nevada corporation (hereinafter referred to as
"OPAL"),TRIPLE STAR HOLDINGS LIMITED (hereinafter referred to as "TRIPLE"), a
BVI corporation, OPAL AGRICULTURE DEVELOPMENT LIMITED(hereinafter "OAD"), a BVI
corporation and BESTALONG GROUP, INC. (hereinafter "SHAREHOLDER"), a BVI
corporation upon the following premises:
Premises
WHEREAS, OPAL is a publicly held corporation organized under the laws of
the State of Nevada and is seeking the acquisition of an operating business;
WHEREAS, TRIPLE and OAD are operating businesses engaged in the investment,
development production and marketing for the industry of agricultural
fertilizers;
WHEREAS, the SHAREHOLDER is seeking a publicly held vehicle for the
ownership of TRIPLE and OAD to enhance its ability to raise capital for these
entities;
WHEREAS, pursuant to negotiations between management of the constituent
companies; the SHAREHOLDER desires to transfer its share ownership of TRIPLE and
OAD to OPAL in exchange for 1) $2,100,000 in cash, 2) 100,000 shares of Series A
preferred stock, $.001 par value of OPAL and, 3) 8,452,768 shares of common
stock, $.001 par value of OPAL.
Agreement
NOW THEREFORE, on the stated premises and for and in consideration of the
mutual covenants and agreements hereinafter set forth and the mutual benefits to
the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS, AND WARRANTIES
OF TRIPLE, OAD AND THE SHAREHOLDER
As an inducement to, and to obtain the reliance of OPAL, except as set
forth on the TRIPLE and OAD Schedules (as hereinafter defined) and except for
information which is confidential or would constitute a trade secret, TRIPLE,
OAD and the SHAREHOLDER represent and warrant as follows:
Section 1.01 Organization. (a) TRIPLE is a corporation duly organized,
validly existing, and in good standing under the laws of the BVI and has the
corporate power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, including qualification
to do business as a foreign corporation in the states or countries in which the
<PAGE>
character and location of the assets owned by it or the nature of the business
transacted by it requires qualification, except where failure to be so qualified
would not have a material adverse effect on its business. Included in the TRIPLE
Schedules are complete and correct copies of the organizational documents of
TRIPLE and each of its subsidiaries as in effect on the date hereof. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby will not, violate any provision of TRIPLE's
Memorandum and Articles of Association or other organizational documents. TRIPLE
has taken all actions required by law, its organization documents, or otherwise
to authorize the execution and delivery of this Agreement. TRIPLE has full
power, authority, and legal right and has taken all action required by law, its
Articles of Incorporation, and otherwise to consummate the transactions herein
contemplated.
(b) OAD is a corporation duly organized, validly existing, and in good
standing under the laws of BVI and has the corporate power and is duly
authorized, qualified, franchised, and licensed under all apf public authorities
to own all of its properties and assets and to carry on its business in all
material respects as it is now being conducted, including qualification to do
business as a foreign corporation in the states or countries in which the
character and location of the assets owned by it or the nature of the business
transacted by it requires qualification, except where failure to be so qualified
would not have a material adverse effect on its business. Included in the OAD
Schedules are complete and correct copies of the organizational documents of OAD
and each of its subsidiaries as in effect on the date hereof. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby will not, violate any provision of OAD's Memorandum and
Articles of Association or other organizational documents. OAD has taken all
actions required by law, its organization documents, or otherwise to authorize
the execution and delivery of this Agreement. OAD has full power, authority, and
legal right and has taken all action required by law, its Articles of
Incorporation, and otherwise to consummate the transactions herein contemplated.
Section 1.02 Capitalization. a) The authorized capitalization of TRIPLE
consists of 50,000 shares of common stock, $1.00 par value, of which one share
is currently issued and outstanding. All issued and outstanding shares are
legally issued, fully paid, and non-assessable and not issued in violation of
the preemptive or other rights of any person.
(b) The authorized capitalization of OAD consists of 50,000 shares of
common stock, $1.00 par value, of which 50,000 shares are currently issued and
outstanding. All issued and outstanding shares are legally issued, fully paid,
and non-assessable and not issued in violation of the preemptive or other rights
of any person.
Section 1.03 Subsidiaries and Predecessor Corporations. a) TRIPLE does not
have any predecessor corporation(s) or subsidiaries, and does not own,
beneficially or of record, any shares of any other corporation, except as
disclosed in the TRIPLE Schedules.
(b) OAD does not have any predecessor corporation(s) or subsidiaries, and
does not own, beneficially or of record, any shares of any other corporation,
except as disclosed in the OAD Schedules.
2
<PAGE>
Section 1.04 Financial Statements. a) TRIPLE's Statements
(1) Included in the TRIPLE Schedules are the audited balance sheets of
TRIPLE as of December 31, 1996 and December 31, 1995, and the related
audited statements of operations, stockholders' equity and cash flows for
the two fiscal years ended December 31, 1996 and December 31, 1995,
together with the notes to such statements and the opinion of Arthur
Andersen & Co. independent certified public accountants, with respect
thereto.
(2) The audited financial statements have been prepared in accordance
with generally accepted accounting principles. The TRIPLE audited balance
sheets present a true and fair view as of the dates of such balance sheets
of the financial condition of TRIPLE. The assets and liabilities reflected
therein are properly reported and present fairly the financial condition of
the assets and liabilities of TRIPLE in accordance with generally accepted
accounting principles.
(3) To the best of TRIPLE's knowledge, TRIPLE has accrued all
liabilities with respect to the payment of any federal, state, county,
local or other taxes (including any deficiencies, interest or penalties),
except for taxes accrued but not yet known to be due and payable.
(4) To the best of TRIPLE's knowledge, TRIPLE has filed all state,
federal or local income and/or franchise tax returns required to be filed
by it from inception to the date hereof. Each of such income tax returns
reflects the taxes due for the period covered thereby, except for amounts
which, in the aggregate, are immaterial.
(5) The books and records, financial and accounting documents, of
TRIPLE are in all material respects complete and correct and have been
maintained in accordance with good business and accounting practices.
(6) TRIPLE's assets and liabilities are reflected on its financial
statements are complete and properly record all of its material assets and
liabilities except as set forth in the TRIPLE Schedules the financial
statements of TRIPLE or the notes thereto.
(b) OAD's Statements
(1) Included in the OAD Schedules are the audited balance sheets of
OAD as of December 31, 1996 and December 31, 1995, and the related audited
statements of operations, stockholders' equity and cash flows for the two
fiscal years ended December 31, 1996 and December 31, 1995, together with
the notes to such statements and the opinion of Arthur Andersen & Co.,
independent certified public accountants, with respect thereto.
(2) The audited financial statements have been prepared in accordance
with generally accepted accounting principles. The OAD audited balance
sheets present a true and fair view as of the dates of such balance sheets
of the financial condition of OAD.
3
<PAGE>
The assets and liabilities reflected therein are properly reported and
present fairly the financial condition of the assets and liabilities of OAD
in accordance with generally accepted accounting principles.
(3) To the best of OAD's knowledge, OAD has accrued all liabilities
with respect to the payment of any federal, state, county, local or other
taxes (including any deficiencies, interest or penalties), except for taxes
accrued but not yet known to be due and payable.
(4) To the best of OAD's knowledge, OAD has filed all state, federal
or local income and/or franchise tax returns required to be filed by it
from inception to the date hereof. Each of such income tax returns reflects
the taxes due for the period covered thereby, except for amounts which, in
the aggregate, are immaterial.
(5) The books and records, financial and accounting documents of OAD
are in all material respects complete and correct and have been maintained
in accordance with good business and accounting practices.
(6) OAD's assets and liabilities as reflected on its financial
statements are complete and properly record all of its material assets and
liabilities except as set forth in the OAD Schedules, the financial
statements of OAD or the notes thereto.
Section 1.05 Information. ((a) The information concerning TRIPLE set forth
in this Agreement and in the TRIPLE Schedules is complete and accurate in all
material respects and does not contain any untrue statement of a material fact
or omit to state a material fact required to make the statements made, in light
of the circumstances under which they were made, not misleading. In addition,
TRIPLE has fully disclosed in writing to OPAL (through this Agreement or the
TRIPLE Schedules) all information relating to matters involving TRIPLE or its
assets or its present or past operations or activities which (i) have led or may
lead to a competitive disadvantage on the part of TRIPLE or (ii) either alone or
in aggregation with other information covered by this Section, otherwise have
led or may lead to a material adverse effect on the transactions contemplated
herein or on TRIPLE, its assets, or its operations or activities as presently
conducted or as contemplated to be conducted after the Closing Date, including,
but not limited to, information relating to governmental, employee,
environmental, litigation and securities matters and transactions with
affiliates.
(b) The information concerning OAD set forth in this Agreement and in the
OAD Schedules is complete and accurate in all material respects and does not
contain any untrue statement of a material fact or omit to state a material fact
required to make the statements made, in light of the circumstances under which
they were made, not misleading. In addition, OAD has fully d) all information
relating to matters involving OAD or its assets or its present or past
operations or activities which (i) have led or may lead to a competitive
disadvantage on the part ormation covered by this Section, otherwise have led or
may lead to a material adverse effect on the transactions contemplated herein or
on OAD its assets, or its operations or activities as presently conducted or as
contemplated to be conducted after the Closing Date, including, but not limited
to, information relating to governmental, employee, environmental, litigation
and securities matters and transactions with affiliates.
4
<PAGE>
Section 1.06 Options or Warrants. (a) Except as set forth in the TRIPLE
Schedules, there are no existing options, warrants, calls, or commitments of any
character relating to the authorized and unissued TRIPLE common stock, except
options, warrants, calls or commitments, if any, to which TRIPLE is not a party
and by which it is not bound.
(b) Except as set forth in the OAD Schedules, there are no existing
options, warrants, calls, or commitments of any character relating to the
authorized and unissued OAD common stock, except options, warrants, calls or
commitments, if any, to which OAD is not a party and by which it is not bound.
Section 1.07 Absence of Certain Changes or Events. (a) Except as set forth
in this Agreement or the TRIPLE Schedules, since December 31, 1996:
(1) there has not been (i) any material adverse change in the
business, operations, properties, assets, or condition of TRIPLE or (ii)
any damage, destruction, or loss to TRIPLE (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets, or condition of TRIPLE;
(2) TRIPLE has not (i) amended its Memorandum and Articles of
Association; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind whatsoever
to stockholders or purchased or redeemed, or agreed to purchase or redeem,
any of its capital stock; (iii) waived any rights of value which in the
aggregate are outside of the ordinary course of business or material
considering the business of TRIPLE; (iv) made any material change in its
method of management, operation or accounting; (v) entered into any other
material transaction other than in the ordinary course of its business;
(vi) made any accrual or arrangement for payment of bonuses or special
compensation of any kind or any severance or termination pay to any present
or former officer or employee; (vii) made any material increase in any
profit sharing, insurance, pension, retirement, or other employee benefit
plan, payment, or arrangement made to, for, or with its officers,
directors, or employees;
(3) Other than in the ordinary course of business, TRIPLE has not (i)
borrowed or agreed to borrow any funds or incurred, or become subject to,
any material obligation or liability (absolute or contingent) except as
disclosed herein and except liabilities incurred in the ordinary course of
business or inter-company loans; (ii) paid or agreed to pay any material
obligations or liability (absolute or contingent) other than liabilities
reflected in or shown on the most recent TRIPLE balance sheet, and
liabilities incurred since that date in the ordinary course of business and
professional and other fees and expenses in connection with the preparation
of this Agreement and the consummation of the transactions contemplated
hereby; (iii) sold or transferred, or agreed to sell or transfer, any of
its assets, properties, or rights (except assets, properties, or rights not
5
<PAGE>
used or useful in its business which, in the aggregate have a value of less
than $1,000), or canceled, or agreed to cancel, any debts or claims (except
debts or claims which in the aggregate are of a value of less than $1,000);
(iv) made or permitted any amendment or termination of any contract,
agreement, or license to which it is a party if such amendment or
termination is material, considering the business of TRIPLE; or (v) issued,
delivered, or agreed to issue or deliver any stock, bonds or other
corporate securities including debentures (whether authorized and unissued
or held as treasury stock); and
(4) to the best knowledge of TRIPLE, TRIPLE has not become subject to
any law or regulation which materially and adversely affects the business,
operations, properties, assets, or condition of TRIPLE.
(b) Except as set forth in this Agreement or the OAD Schedules, since
December 31, 1996:
(1) there has not been (i) any material adverse change in the
business, operations, properties, assets, or condition of OAD or (ii) any
damage, destruction, or loss to OAD (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties,
assets, or condition of OAD;
(2) OAD has not (i) amended its Memorandum and Articles of
Association; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind whatsoever
to stockholders or purchased or redeemed, or agreed to purchase or redeem,
any of its capital stock; (iii) waived any rights of value which in the
aggregate are outside of the ordinary course of business or material
considering the business of OAD (iv) made any material change in its method
of management, operation or accounting; (v) entered into any other material
transaction other than in the ordinary course of its business; (vi) made
any accrual or arrangement for payment of bonuses or special compensation
of any kind or any severance or termination pay to any present or former
officer or employee; (vii) made any material increase in any profit
sharing, insurance, pension, retirement, or other employee benefit plan,
payment, or arrangement made to, for, or with its officers, directors, or
employees;
(3) Other than in the ordinary course of business, OAD has not (i)
borrowed or agreed to borrow any funds or incurred, or become subject to,
any material obligation or liability (absolute or contingent) except as
disclosed herein and except liabilities incurred in the ordinary course of
business or inter-company loans; (ii) paid or agreed to pay any material
obligations or liability (absolute or contingent) other than liabilities
reflected in or shown on the most recent OAD balance sheet, and liabilities
incurred since that date in the ordinary course of business and
professional and other fees and expenses in connection with the preparation
of this Agreement and the consummation of the transactions contemplated
hereby; (iii) sold or transferred, or agreed to sell or transfer, any of
its assets, properties, or rights (except assets, properties, or rights not
6
<PAGE>
used or useful in its business which, in the aggregate have a value of less
than $1,000), or canceled, or agreed to cancel, any debts or claims (except
debts or claims which in the aggregate are of a value of less than $1,000);
(iv) made or permitted any amendment or termination of any contract,
agreement, or license to which it is a party if such amendment or
termination is material, considering the business of OAD or (v) issued,
delivered, or agreed to issue or deliver any stock, bonds or other
corporate securities including debentures (whether authorized and unissued
or held as treasury stock); and
(4) to the best knowledge of OAD, OAD has not become subject to any
law or regulation which materially and adversely affects the business,
operations, properties, assets, or condition of OAD.
Section 1.08 Title and Related Matters. (a) TRIPLE has good title to all of
its properties, inventory, interests in properties, and assets, real and
personal, which are reflected in the most recent TRIPLE audited balance sheet or
acquired after that date (except properties, inventory, interests in properties,
and assets sold or otherwise disposed of since such date in the ordinary course
of business) free and clear of all liens, pledges, charges, or encumbrances
except (a) statutory liens or claims not yet delinquent; (b) such imperfections
of title and easements as do not and will not materially detract from or
interfere with the present or proposed use of the properties subject thereto or
affected thereby or otherwise materially impair present business operations on
such properties; and (c) as described in the TRIPLE Schedules. Except as set
forth in the TRIPLE Schedules, TRIPLE owns, free and clear of any liens, claims,
encumbrances, royalty interests, or other restrictions or limitations of any
nature whatsoever, any and all products it is currently manufacturing, including
the underlying technology and data, and all procedures, techniques, marketing
plans, business plans, methods of management, or other information utilized in
connection with TRIPLE's business. Except as set forth in the TRIPLE Schedules,
no third party has any right to, and TRIPLE has not received any notice of
infringement of or conflict with asserted rights of others with respect to any
product, technology, data, trade secrets, know-how, propriety techniques,
trademarks, service marks, trade names, or copyrights which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a materially adverse effect on the business, operations, financial
condition, income, or business prospects of TRIPLE or any material portion of
its properties, assets, or rights.
(b) OAD has good title to all of its properties, inventory, interests in
properties, and assets, real and personal, which are reflected in the most
recent OAD audited balance sheet or acquired after that date (except properties,
inventory, interests in properties, and assets sold or otherwise disposed of
since such date in the ordinary course of business) free and clear of all liens,
pledges, charges, or encumbrances except (a) statutory liens or claims not yet
delinquent; ((b) such imperfections of title and easements as do not and will
not materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and (c) as described in the OAD
Schedules. Except as set forth in the OAD Schedules, OAD interests, or other
restrictions or limitations of any nature whatsoever, any and all products it is
currently manufacturing, including the underlying technology and data, and all
procedures, techniques, marketing plans, business plans, methods of management,
or other information utilized in connection with OAD's business. Except as set
forth in the OAD Schedules, no third party has any right to, and OAD has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any product, technology, data, trade secrets, know-how,
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propriety techniques, trademarks, service marks, trade names, or copyrights
which, individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a materially adverse effect on the
business, operations, financial condition, income, or business prospects of OAD
or any material portion of its properties, assets, or rights.
Section 1.09 Litigation and Proceedings. (a) Except as set forth in the
TRIPLE Schedules, there are no actions, suits, proceedings, or investigations
pending or, to the knowledge of TRIPLE after reasonable investigation,
threatened by or against TRIPLE or affecting TRIPLE or its properties, at law or
in equity, before any court or other governmental agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind. TRIPLE does not have
any knowledge of any material default on its part with respect to any judgment,
order, injunction, decree, award, rule, or regulation of any court, arbitrator,
or governmental agency or instrumentality or of any circumstances which, after
reasonable investigation would result in the discovery of such a default.
(b) Except as set forth in the OAD Schedules, there are no actions, suits,
proceedings, or investigations pending or, to the knowledge of OAD after
reasonable investigation, threatened by or against OAD or affecting OAD or its
properties, at law or in equity, before any court or other governmental agency
or instrumentality, domestic or foreign, or before any arbitrator of any kind.
OAD does not have any knowledge of any material default on its part with respect
to any judgment, order, injunction, decree, award, rule, or regulation of any
court, arbitrator, or governmental agency or instrumentality or of any
circumstances which, after reasonable investigation would result in the
discovery of such a default.
Section 1.10 Contracts.
(a) TRIPLE Contracts
(1) Except as included or described in the TRIPLE Schedules, there are
no "material" contracts, agreements, franchises, license agreements, debt
instruments or other commitments to which TRIPLE is a party or by which it
or any of its assets, products, technology, or properties are bound other
than those incurred in the ordinary course of business (as used in this
Agreement, a "material" contract, agreement, franchise, license agreement,
debt instrument or commitment is one which (i) will remain in effect for
more than six (6) months after the date of this Agreement or (ii) involves
aggregate obligations of at least ten thousand dollars ($10,000));
(2) The contracts, agreements, franchises, license agreements, and
other commitments to which TRIPLE is a party or by which its properties are
bound and which are material to the operations of TRIPLE taken as a whole
are valid and enforceable by TRIPLE in all respects, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally;
(3) TRIPLE is not a party to or bound by, and the properties of TRIPLE
are not subject to any contract, agreement, other commitment or instrument;
any charter or other corporate restriction; or any judgment, order, writ,
injunction, decree, or award which materially and adversely affects, the
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business operations, properties, assets, or condition of TRIPLE; and (4)
Except as included or described in the TRIPLE Schedules or reflected in the
most recent TRIPLE balance sheet, or other than in the ordinary course of
business, TRIPLE is not a party to any written (i) contract for the
employment of any officer or employee which is not terminable on 90 days,
or less notice; (ii) profit sharing, stock option, severance pay, pension
benefit or retirement plan, (iii) agreement, contract, or indenture
relating to the borrowing of money, (iv) guaranty of any obligation, other
than one on which TRIPLE is a primary obligor or incurred in the normal
course of business, for the borrowing of money or otherwise, excluding
endorsements made for collection and other guaranties of obligations which,
in the aggregate do not exceed more than one year or providing for payments
in excess of $10,000 in the aggregate; (v) collective bargaining agreement;
or (vi) agreement with any present or former officer or director of TRIPLE.
(b) OAD Contracts
(1) Except as included or described in the OAD Schedules, there are no
"material" contracts, agreements, franchises, license agreements, debt
instruments or other commitments to which OAD is a party or by which it or
any of its assets, products, technology, or properties are bound other than
those incurred in the ordinary course of business (as used in this
Agreement, a "material" contract, agreement, franchise, license agreement,
debt instrument or commitment is one which (i) will remain in effect for
more than six (6) months after the date of this Agreement or (ii) involves
aggregate obligations of at least ten thousand dollars ($10,000));
(2) The contracts, agreements, franchises, license agreements, and
other commitments to which OAD is a party or by which its properties are
bound and which are material to the operations of OAD taken as a whole are
valid and enforceable by OAD in all respects, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally;
(3) OAD is not a party to or bound by, and the properties of OAD are
not subject to any contract, agreement, other commitment or instrument; any
charter or other corporate restriction; or any judgment, order, writ,
injunction, decree, or award which materially and adversely affects, the
business operations, properties, assets, or condition of OAD; and
(4) Except as included or described in the OAD Schedules or reflected
in the most recent OAD balance sheet, or other than in the ordinary course
of business, OAD is not a party to any written (i) contract for the
employment of any officer or employee which is not terminable on 90 days,
or less notice; (ii) profit sharing, bonus, deferred compensation, stock
option, severance pay, pension benefit or retirement plan, (iii) agreement,
contract, or indenture relating to the borrowing of money, (iv) guaranty of
any obligation, other than one on which OAD is a primary obligor or
incurred in the normal course of business, for the borrowing of money or
otherwise, excluding endorsements made for collection and other guaranties
of obligations which, in the aggregate do not exceed more than one year or
providing for payments in excess of $10,000 in the aggregate; (v)
collective bargaining agreement; or (vi) agreement with any present or
former officer or director of OAD.
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Section 1.11 Material Contract Defaults. (a) TRIPLE is not in default in
any material respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to the business, operations,
properties, assets or condition of TRIPLE and there is no event of default in
any material respect under any such contract, agreement, lease, or other
commitment in respect of which TRIPLE has not taken adequate steps to prevent
such a default from occurring.
(b) OAD is not in default in any material respect under the terms of any
outstanding contract, agreement, lease, or other commitment which is material to
the business, operations, properties, assets or condition of OAD and there is no
event of default in any material respect under any such contract, agreement,
lease, or other commitment in respect of which OAD has not taken adequate steps
to prevent such a default from occurring.
Section 1.12 No Conflict With Other Instruments. (a) The executhis
Agreement will not result in the breach of any term or provision of, constitute
an event of default under, or terminate, accelerate or modify the terms of any
material indenture, mortgage, deed of trust, or other material contract,
agreement, or instrument to which TRIPLE is a party or to which any of its
properties or operations are subject.
(b) The execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will not result in the breach of any
term or provision of, constitute an event of default under, or terminate,
accelerate or modify the terms of any material indenture, mortgage, deed of
trust, or other material contract, agreement, or instrument to which OAD is a
party or to which any of its properties or operations are subject.
Section 1.13 Governmental Authorizations. (a) Except as set forth in the
TRIPLE Schedules, TRIPLE has the licenses, franchises, permits, and other
governmental authorizations that are legally required to enable it to conduct
its business in all material respects as conducted on the date hereof.
(b) Except as set forth in the OAD Schedules, OAD has the licenses,
franchises, permits, and other governmental authorizations that are legally
required to enable it to conduct its business in all material respects as
conducted on the date hereof.
Section 1.14 Compliance With Laws and Regulations. (a) Except as set forth
in the TRIPLE Schedules, to the best of their knowledge TRIPLE has complied with
the applicable statutes and regulations of any federal, state, or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets, or condition of TRIPLE or except to the extent that noncompliance would
not result in the occurrence of any material liability for TRIPLE.
(b) Except as set forth in the OAD Schedules, to the best of their
knowledge OAD has complied with the applicable statutes and regulations of any
federal, state, or other governmental entity or agency thereof, except to the
extent that noncompliance would not materially adversely affect the business
operations properties assets or condition of TRIPLE or except to the extent that
noncompliance would not result in the occurrence of any material liability for
OAD.
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Section 1.15 Insurance. (a) TRIPLE All of the properties of TRIPLE are
insured as required in the country of their location.
(b) OAD All of the properties of OAD are insured as required in the country
of their location.
Section 1.16 Approval of Agreement. (a) TRIPLE The board of directors of
TRIPLE has authorized the execution and delivery of this Agreement by TRIPLE and
has approved this Agreement and the transactions contemplated hereby, and will
recommend to the SHAREHOLDER that the purchase and sale described herein be
accepted by it.
(b) OAD The board of directors of OAD has authorized the execution and
delivery of this Agreement by OAD and has approved this Agreement and the
transactions contemplated hereby, and will recommend to the SHAREHOLDER that the
purchase and sale described herein be accepted by it.
Section 1.17 Material Transactions or Affiliations. (a) TRIPLE Set
forth in the TRIPLE Schedules is a description of every contract, agreement, or
arrangement between TRIPLE and any predecessor and any person who was at the
time of such contract, agreement, or arrangement an officer, director, or person
owning of record, or known by TRIPLE to own beneficially, 5% or more of the
issued and outstanding common stock of TRIPLE and which is to be performed in
whole or in part after the date hereof or which was entered into not more than
three years prior to the date hereof. Except as disclosed in the TRIPLE
Schedules or otherwise disTRIPLE, any known interest, direct or indirect, in any
transaction with TRIPLE which was material to the business of TRIPLE and was not
in the ordinary course of business. There are no written commitments by TRIPLE
to lend any funds, or to borrow any money from, or enter into any other
transaction with, any such affiliated person.
(b) OAD Set forth in the OAD Schedules is a description of every contract,
agreement, or arrangement between OAD and any predecessor and any person who was
at the time of such contract, agreement, or arrangement an officer, director, or
person owning of record, or known by OAD to own beneficially, 5% or more of the
issued and outstanding common stock of OAD and which is to be performed in whole
or in part after the date hereof or which was entered into not more than three
years prior to the date hereof. Except as disclosed in the OAD Schedules or
otherwise disclosed herein, no officer, director, or 5% shareholder of OAD has,
or has had since inception of OAD any known interest, direct or indirect, in any
transaction with TRIPLE which was material to the business of OAD and was not in
the ordinary course of business. There are no written commitments by OAD to lend
any funds, or to borrow any money from, or enter into any other transaction
with, any such affiliated person.
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Section 1.18 Labor Relations. (a) TRIPLE has not had work stoppage
resulting from labor problems.
(b) OAD has not had work stoppage resulting from labor problems.
Section 1.19 Schedules. (a) TRIPLE has delivered to OPAL the following
schedules, which are collectively referred to as the "TRIPLE Schedules" and
which consist of separate schedules dated as of the date of execution of this
Agreement, all certified by the chief executive officer of TRIPLE as complete,
true, and correct as of the date of this Agreement in all material respects:
(1) Schedule 1.01(a) through Schedule 1.18(a) setting forth any
exceptions, information and copies of documents required to be disclosed in
the TRIPLE Schedules by Sections 1.01(a) through 1.18(a).
(2) Schedule 1.19(a)(2) containing a list indicating the name and
address of each shareholder of TRIPLE together with the number of shares
owned by it;
(3) Schedule 1.19(a)(3) containing a description of all real property
owned by TRIPLE, together with a description of every mortgage, deed of
trust, pledge, lien, agreement, encumbrance, claim, or equity interest of
any nature whatsoever in such real property;
(4) Schedule 1.19(a)(4) including copies of the licenses, permits, and
other governmental authorizations (or requests or applications therefor)
pursuant to which TRIPLE carries on or proposes to carry on its business
(except those which, in the aggregate, are immaterial to the present or
proposed business of TRIPLE);
(5) Schedule 1.19((a)(5) listing the accounts receivable and notes and
other obligations receivable of TRIPLE as of December 31, 1996, or
thereafter other than in the ordinary course of business of TRIPLE,
indicating the debtor and amount, and classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the
nature and amount of any refunds, set offs, reimbursements, discounts, or
other adjustments, which are in the aggregate material and due to or
claimed by such debtor; and
(6) Schedule 1.19(a)(6) listing the accounts payable and notes and
other obligations payable of TRIPLE as of December 31, 1996, or that arose
thereafter other than in the ordinary course of the business of TRIPLE,
indicating the creditor and amount, classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the
nature and amount of any refunds, set offs, reimbursements, discounts, or
other adjustments, which in the aggregate are material and due to or
claimed by TRIPLE respecting such obligations.
TRIPLE shall cause the TRIPLE Schedules and the instruments and the data
delivered to OPAL hereunder to be promptly updated after the date hereof up to
and including the Closing Date.
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It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by TRIPLE. TRIPLE shall
have until July 10, 1997 to provide such schedules. If TRIPLE cannot or fails to
do so, or if OPAL acting reasonably finds any such schedules or updates provided
after the date hereof to be unacceptable, OPAL may terminate this Agreement by
giving written notice to TRIPLE within five (5) days after the schedules or
updates were due to be produced or were provided. For purposes of the foregoing,
OPAL may consider a disclosure in the TRIPLE Schedules to be "unacceptable" only
if that item would have a material adverse impact on the financial statements
listed in Section 1.04(a), taken as a whole.
(b) OAD has delivered to OPAL the following schedules, which are
collectively referred to as the "OAD Schedules" and which consist of separate
schedules dated as of the date of execution of this Agreement, all certified by
the chief executive officer of OAD as complete, true, and correct as of the date
of this Agreement in all material respects:
(1) Schedule 1.01(b) through Schedule 1.18(b) setting forth any
exceptions, information and copies of documents required to be disclosed in
the OAD Schedules by Sections 1.01(b) through 1.18(b).
(2) Schedule 1.19(b)(2) containing a list indicating the name and
address of each shareholder of OAD together with the number of shares owned
by him, her or it;
(3) Schedule 1.19(b)(3) containing a description of all real property
owned by OAD together with a description of every mortgage, deed of trust,
pledge, lien, agreement, encumbrance, claim, or equity interest of any
nature whatsoever in such real property;
(4) a Schedule 1.19(b)(4) including copies of the licenses, permits,
and other governmental authorizations (or requests or applications
therefor) pursuant to which OAD carries on or proposes to carry on its
business (except those which, in the aggregate, are immaterial to the
present or proposed business of OAD);
(5) a Schedule 1.19(b)(5) listing the accounts receivable and notes
and other obligations receivable of OAD as of December 31, 1996, or
thereafter other than in the ordinary course of business of OAD indicating
the debtor and amount, and classifying the accounts to show in reasonable
detail the length of time, if any, overdue, and stating the nature and
amount of any refunds, set offs, reimbursements, discounts, or other
adjustments, which are in the aggregate material and due to or claimed by
such debtor; and
(6) a Schedule 1.19(b)(6) listing the accounts payable and notes and
other obligations payable of OAD as of December 31, 1996, or that arose
thereafter other than in the ordinary course of the business of OAD
indicating the creditor and amount, classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the
nature and amount of any refunds, set offs, reimbursements, discounts, or
other adjustments, which in the aggregate are material and due to or
claimed by OAD respecting such obligations.
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OAD shall cause the OAD Schedules and the instruments and the data
delivered to OPAL hereunder to be promptly updated after the date hereof up to
and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by OAD. OAD shall have
until July 10, 1997 to provide such schedules. If OAD cannot or fails to do so,
or if Opal acting reasonably finds any such schedules or updates provided after
the date hereof to be unacceptable, OPAL may terminate this Agreement by giving
written notice to OAD within five (5) days after the schedules or updates were
due to be produced or were provided. For purposes of the foregoing, OPAL may
consider a disclosure in the OAD Schedules to be "unacceptable" only if that
item would have a material adverse impact on the financial statements listed in
Section 1.04(b), taken as a whole.
Section 1.20 Reserved.
Section 1.21 Reserved.
Section 1.22 Valid Obligation. (a) TRIPLE This Agreement and all agreements
and other documents executed by TRIPLE and the SHAREHOLDER in connection
herewith constitute the valid and binding obligation of TRIPLE and the
SHAREHOLDER, enforceable in accordance with its or their terms, except as may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
the enforcement of creditors' rights generally and subject to the qualification
that the availability of equitable remedies is subject to the discretion of the
court before which any proceeding therefor may be brought.
(b) OAD This Agreement and all agreements and other documents executed by
OAD in connection herewith constitute the valid and binding obligation of OAD,
enforceable in accordance with its or their terms, except as may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and subject to the qualification
which any proceeding therefor may be brought.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF OPAL
As an inducement to, and to obtain the reliance of TRIPLE and OAD and the
SHAREHOLDER, except as set forth in the OPAL Schedules (as hereinafter defined),
OPAL represents and warrants as follows:
Section 2.01 Organization. OPAL is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Nevada and has the
corporate power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets, to carry on its business in
all material respects as it is now being conducted, and except where failure to
be so qualified would not have a material adverse effect on its business, there
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is no jurisdiction in which it is not qualified in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in the OPAL Schedules are complete and
correct copies of the Articles of Incorporation and By-Laws of OPAL as in effect
on the date hereof. The execution and delivery of this Agreement does not, and
the consummation of the transactions contemplated hereby will not, violate any
provision of OPAL's certificate of incorporation or bylaws. OPAL has taken all
action required by law, their certificate of incorporation, bylaws or otherwise
to authorize the execution and delivery of this Agreement, and OPAL has full
power, authority, and legal right and has taken all action required by law,
their Articles of Incorporation, By-Laws, or otherwise to consummate the
transactions herein contemplated.
Section 2.02 Capitalization. OPAL's authorized capitalization consists of
49,000,000 shares of common stock, par value $.001 of which 939,196 shares are
issued and outstanding and 1,000,000 shares of Preferred Stock, par value $.001,
of which no shares are issued and outstanding. All issued and outstanding shares
are, and all shares issuable by OPAL hereunder will be, legally issued, fully
paid, and non-assessable and not issued in violation of the preemptive or other
rights of any person.
Section 2.03 Subsidiaries and Predecessor Corporations. OPAL does not have
any predecessor corporation(s) or subsidiaries, and does not own, beneficially
or of record, any shares of any other corporation, except as disclosed in the
OPAL Schedules. For purposes hereinafter, the term "OPAL" also includes those
subsidiaries, if any, set forth in the OPAL Schedules.
Section 2.04 Securities Filings; Financial Statements.
(a) Since December, 1994, OPAL has timely filed all forms, reports and
documents required to be filed with the Securities and Exchange Commission,
and has heretofore delivered to TRIPLE and OAD, in the form filed with the
Commission, (i) all quarterly and annual reports on Forms 10-QSB and 10-KSB
filed since December 31, 1994, (ii) all other reports filed by OPAL with
the Securities and Exchange Commission since December 31, 1995
(collectively, the "SEC Reports") and (iii) all comment letters from the
Securities and Exchange Commission with respect to the SEC Reports. The SEC
Reports (i) were prepared in accordance with the requirements of the
Securities Exchange Act of 1934 or the Securities Act of 1933, as
appropriate, and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Included in the OPAL Schedules are (i) the unaudited balance
sheets of OPAL and the related statements of operations and cash flows as
of and for the three months ended March 31, 1997 and (ii) the audited
balance sheets of OPAL as of December 31, 1996 and December 31, 1995, and
the related audited statements of operations, stockholders' equity and cash
flows for the two fiscal years ended December 31, 1996 and December 31,
1995, together with the notes to such statements and the opinion of H.J.
Swart & Co. P.A., independent certified public accountants, with respect
thereto, all as set forth in the SEC Reports.
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(c) All such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved. The OPAL balance sheets present fairly as
of their respective dates the financial condition of OPAL. As of the date
of such balance sheets, except as and to the extent reflected or reserved
against therein, OPAL had no liabilities or obligations (absolute or
contingent) which should be reflected in the balance sheets or the notes
thereto prepared in accordance with generally accepted accounting
principles, and all assets reflected therein are properly reported and
present fairly the financial condition of the assets of OPAL, in accordance
with generally accepted accounting principles. The statements of
operations, stockholders' equity and cash flows reflect fairly the
information required to be set forth therein by generally accepted
accounting principles.
(d) OPAL has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any deficiencies,
interest or penalties).
(e) OPAL has timely filed all state, federal or local income and/or
franchise tax returns required to be filed by it from inception to the date
hereof. Each of such income tax returns reflects the taxes due for the
period covered thereby, except for amounts which, in the aggregate, are
immaterial.
(f) The books and records, financial and otherwise, of OPAL are in all
material aspects complete and correct and have been maintained in
accordance with good business and accounting practices.
(g) All of OPAL's assets are reflected on its financial statements,
and OPAL has no material liabilities, direct or indirect, matured or
unmatured, contingent or otherwise.
Section 2.05 Information. The information concerning OPAL set forth in this
Agreement and the OPAL Schedules is complete and accurate in all material
respects and does not contain any untrue statements of a material fact or omit
to state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading. In addition, OPAL has
fully disclosed in writing to TRIPLE and OAD (through this Agreement or the OPAL
Schedules) all information relating to matters involving OPAL or its assets or
its present or past operations or activities which (i) indicated or may
indicate, in the aggregate, the existence of a greater than $50,000 liability or
diminution in value, (ii) have led or may lead to a competitive disadvantage on
the part of OPAL or (iii) either alone or in aggregation with other information
covered by this Section, otherwise have led or may lead to a material adverse
effect on the transactions contemplated herein or on OPAL, its assets, or its
operations or activities as presently conducted or as contemplated to be
conducted after the Closing Date, including, but not limited to, information
relating to governmental, employee, environmental, litigation and securities
matters and transactions with affiliates.
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Section 2.06 Options or Warrants. There are no existing options, warrants,
calls, or commitments of any character relating to the authorized and unissued
stock of OPAL (the "Existing Rights").
Section 2.07 Absence of Certain Changes or Events. Since the date of the
most recent OPAL balance sheet:
(a) there has not been (i) any material adverse change in the
business, operations, properties, assets or condition of OPAL or (ii) any
damage, destruction or loss to OPAL (whether or not covered by insurance)
materially and adversely affecting the business, operations, properties,
assets or condition of OPAL;
(b) OPAL has not (i) amended its certificate of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make any payment of
dividends or distributions of any assets of any kind whatsoever to
stockholders or purchased or redeemed, or agreed to purchase or redeem, any
of its capital stock; (iii) waived any rights of value which in the
aggregate are outside of the ordinary course of business or material
considering the business of OPAL; (iv) made any material change in its
method of management, operation, or accounting; (v) entered into any
transactions or agreements other than in the ordinary course of business;
(vi) made any accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any present
or former officer or employee; (vii) increased the rate of compensation
payable or to become payable by it to any of its officers or directors or
any of its salaried employees whose monthly compensation exceed $1,000; or
(viii) made any increase in any profit sharing, bonus, deferred
compensation, insurance, pension, retirement, or other employee benefit
plan, payment, or arrangement, made to, for or with its officers,
directors, or employees;
(c) OPAL has not (i) granted or agreed to grant any options, warrants,
or other rights for its stock, bonds, or other corporate securities calling
for the issuance thereof; (ii) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability
(absolute or contingent) (ii) paid or agreed to pay any material
obligations or liabilities (absolute or contingent) (iii) sold or
transferred, or agreed to sell or transfer, any of its assets, properties,
or rights (except assets, properties, or rights not used or useful in its
business which, in the aggregate have a value of less than $1000), or
canceled, or agreed to cancel, any debts or claims (except debts or claims
which in the aggregate are of a value less than $1000); (iv) made or
permitted any amendment or termination of any contract, agreement, or
license to which it is a party if such amendment or termination is
material, considering the business of OPAL or (v) issued, delivered or
agreed to issue or deliver, any stock, bonds, or other corporate securities
including debentures (whether authorized and unissued or held as treasury
stock), except in connection with this Agreement; and
(d) to the best knowledge of OPAL, it has not become subject to any
law or regulation which materially and adversely affects, or in the future,
may adversely affect, the business, operations, properties, assets or
condition of OPAL.
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Section 2.08 Title and Related Matters. OPAL has good and marketable title
to all of its properties, inventory, interest in properties, and assets, real
and personal, which are reflected in the most recent OPAL balance sheet or
acquired after that date (except properties, inventory, interest in properties,
and assets sold or otherwise disposed of since such date in the ordinary course
of business), free and clear of all liens, pledges, charges, or encumbrances
except (a) statutory liens or claims not yet delinquent; (b) such imperfections
of title and easements as do not and will not materially detract from or
interfere with the present or proposed use of the properties subject thereto or
affected thereby or otherwise materially impair present business operations on
such properties; and (c) as described in the OPAL Schedules. Except as set forth
in the OPAL Schedules, OPAL owns, free and clear of any liens, claims,
encumbrances, royalty interests, or other restrictions or limitations of any
nature whatsoever, any and all products it is currently manufacturing, including
the underlying technology and data, and all procedures, techniques, marketing
plans, business plans, methods of management, or other information utilized in
connection with OPAL's business. Except as set forth in the OPAL Schedules, no
third party has any right to, and OPAL has not received any notice of
infringement of or conflict with asserted rights of others with respect to any
product, technology, data, trade secrets, know-how, propriety techniques,
trademarks, service marks, trade names, or copyrights which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a materially adverse effect on the business, operations, financial
condition, income, or business prospects of OPAL or any material portion of its
properties, assets, or rights.
Section 2.09 Litigation and Proceedings. Except as set forth in the OPAL
Schedules, there are no actions, suits, proceedings or investigations pending
or, to the knowledge OPAL after reasonable investigation, threatened by or
against OPAL or affecting OPAL or its properties, at law or in equity, before
any court or other governmental agency or instrumentality, domestic or foreign,
or before any arbitrator of any kind. OPAL has no knowledge of any default on
its part with respect to any judgement, order, writ, injunction, decree, award,
rule or regulation of any court, arbitrator, or governmental agency or
instrumentality or any circumstance which after reasonable investigation would
result in the discovery of such default.
Section 2.10 Contracts.
(a) OPAL is not a party to, and its assets, products, technology and
properties are not bound by, any material contract, franchise, license
agreement, agreement, debt instrument or other commitments whether such
agreement is in writing or oral, except as disclosed in the SEC Reports or
the OPAL Schedules.
(b) All contracts, agreements, franchises, license agreements, and
other commitments to which OPAL is a party or by which its properties are
bound and which are material to the operations of OPAL taken as a whole are
valid and enforceable by OPAL in all respects, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally;
(c) OPAL is not a party to or bound by, and the properties of OPAL are
not subject to any contract, agreement, other commitment or instrument; any
charter or other corporate restriction; or any judgment, order, writ,
injunction, decree, or award which materially and adversely affects, the
business operations, properties, assets, or condition of OPAL; and
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(d) OPAL is not a party to any oral or written (i) contract for the
employment of any officer or employee which is not terminable on 30 days,
or less notice; (ii) profit sharing, bonus, deferred compensation, stock
option, severance pay, pension benefit or retirement plan, (iii) agreement,
contract, or indenture relating to the borrowing of money, (iv) guaranty of
any obligation, (v) collective bargaining agreement; or (vi) agreement with
any present or former officer or director of OPAL.
Section 2.11 Material Contract Defaults. OPAL is not in default in any
material respect under the terms of any outstanding contract, agreement, lease,
or other commitment which is material to the business, operations, properties,
assets or condition of OPAL and there is no event of default in any material
respect under any such contract, agreement, lease, or other commitment in
respect of which OPAL has not taken adequate steps to prevent such a default
from occurring.
Section 2.12 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, constitute
a default under, or terminate, accelerate or modify the terms of, any indenture,
mortgage, deed of trust, or other material agreement or instrument to which OPAL
is a party or to which any of its assets or operations are subject.
Section 2.13 Governmental Authorizations. OPAL has all licenses,
franchises, permits, and other governmental authorizations necessary to conduct
its business as conducted on the date hereof. Except for compliance with federal
and state securities or corporation laws, as hereinafter provided, no
authorization, approval, consent or order of, of registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by OPAL of this Agreement and the coLaws and
Regulations. To the best of its knowledge, OPAL has complied with all applicable
statutes and regulations of any federal, state, or other applicable governmental
entity or agency thereof, except to the extent that noncompliance would not
materially and adversely affect the business, operations, properties, assets or
condition of OPAL or except to the extent that noncompliance would not result in
the occurrence of any material liability. This compliance includes, but is not
limited to, the filing of all reports to date with federal and state securities
authorities.
Section 2.15 Insurance. All of the properties of OPAL are fully insured for
their full replacement cost.
Section 2.16 Approval of Agreement. The board of directors of OPAL has
authorized the execution and delivery of this Agreement by OPAL and has approved
this Agreement and the transactions contemplated hereby.
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Section 2.17 Continuity of Business Enterprises. OPAL has no commitment or
present intention to liquidate either TRIPLE or OAD or sell or otherwise dispose
of a material portion of TRIPLE or OAD's business or assets following the
consummation of the transactions contemplated hereby.
Section 2.18 Material Transactions or Affiliations. Except as disclosed
herein and in the OPAL Schedules, there exists no contract, agreement or
arrangement between OPAL and any predecessor and any person who was at the time
of such contract, agreement or arrangement outstanding common stock of OPAL and
which is to be performed in whole or in part after the date hereof or was
entered into not more than three years prior to the date hereof. Neither any
officer, director, nor 5% shareholder of OPAL has, or has had since inception of
OPAL, any known interest, direct or indirect, in any such transaction with OPAL
which was material to the business of OPAL. OPAL has no commitment, whether
written or oral, to lend any funds to, borrow any money from, or enter into any
other transaction with, any such affiliated person.
Section 2.19 Labor Relations. OPAL has not had work stoppage resulting
from labor problems. To the knowledge of OPAL, no union or other collective
bargaining organization is organizing or attempting to organize any employee of
OPAL.
Section 2.20 OPAL Schedules. OPAL has delivered to both TRIPLE and OAD the
following schedules, which are collectively referred to as the "OPAL Schedules"
and which consist of separate schedules, which are dated the date of this
Agreement, all certified by the chief executive officer of OPAL to be complete,
true, and accurate in all material respects as of the date of this Agreement:
(a) Schedule 2.01 through Schedule 2.17 setting forth any exceptions,
information and copies of documents required to be disclosed in the OPAL
Schedules by Sections 2.01 through 2.17.
(b) Schedule 2.20(b) containing a description of all real property
owned by OPAL, together with a description of every mortgage, deed of
trust, pledge, lien, agreement, encumbrance, claim, or equity interest of
any nature whatsoever in such real property;
(c) Schedule 2.20(c) including copies of all licenses, permits, and
other governmental authorizations (or requests or applications therefor)
pursuant to which OPAL carries on or proposes to carry on its business
(except those which, in the aggregate, are immaterial to the present or
proposed business of OPAL);
(d) Schedule 2.20(d) listing the accounts receivable and notes and
other obligations receivable of OPAL as of March 31, 1997, or thereafter
other than in the ordinary course of business of OPAL, indicating the
debtor and amount, and classifying the accounts to show in reasonable
detail the length of time, if any, overdue, and stating the nature and
amount of any refunds, set offs, reimbursements, discounts, or other
adjustments, which are in the aggregate material and due to or claimed by
such debtor; and;
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(e) Schedule 2.20(e) listing the accounts payable and notes and other
obligations payable of OPAL as of March 31, 1997, or that arose thereafter
other than in the ordinary course of the business of OPAL, indicating the
creditor and amount, classifying the accounts to show in reasonable detail
the length of time, if any, overdue, and stating the nature and amount of
any refunds, set offs, reimbursements, discounts, or other adjustments,
which in the aggregate are material and due to or claimed by OPAL
respecting such obligations.
OPAL shall cause the OPAL Schedules and the instruments and data delivered
to TRIPLE and OAD hereunder to be promptly updated after the date hereof up to
and including the Closing Date.
It is understood and agreed that not all of the schedules referred to above
have been completed or are available to be furnished by OPAL. OPAL shall have
until July 10, 1997 to provide such schedules. If OPAL cannot or fails to do so,
or if either TRIPLE or OAD acting reasonably find any such schedules or updates
provided after the date hereof to be unacceptable according to the criteria set
forth below, either TRIPLE or OAD, may terminate this Agreement by giving
written notice to OPAL within five (5) days after the schedules or updates were
due to be produced or were provided. For purposes of the foregoing, either
TRIPLE or OAD may consider a disclosure in the OPAL Schedules to be
"unacceptable" only if that item would have a material adverse impact on the
financial statements listed in Section 2.04(b), taken as a whole.
Section 2.21 Reserved.
Section 2.22 Reserved.
Section 2.23 Valid Obligation. This Agreement and all agreements and other
documents executed by OPAL in connection herewith constitute the valid and
binding obligation of OPAL, enforceable in accordance with its or their terms,
except as may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecti of equitable remedies is subject to the discretion of the court
before which any proceeding therefor may be brought.
ARTICLE III
PURCHASE AND SALE
Section 3.01 Purchase and Sale. On the terms and subject to the conditions
set forth in this Agreement, on the Closing Date (as defined in Section 3.03),
the SHAREHOLDER shall assign, transfer and deliver to OPAL, free of all liens,
pledges, encumbrances, charges, restrictions or known claims of any kind,
nature, or description, one share of TRIPLE and, 50,000 shares of OAD common
stock (the "Purchased Shares") set forth in Schedule 3.01(a) & (b) attached
hereto, in the aggregate constituting all of the issued and outstanding shares
of common stock of both TRIPLE and OAD immediately following the Closing. In
exchange for the transfer of the Purchased Shares by the SHAREHOLDER, OPAL shall
pay and/or issue to the SHAREHOLDER, at Closing, an aggregate of (1) 2,100,000
of cash by means of the cancellation of a $2,100,000 promissory note payable to
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OPAL by the SHAREHOLDER its assignment or transaction producing a like result,
(2) 100,000 shares of OPAL Series A Preferred Stock, $.001 par value, which is
the aggregate shall have a vote equal to thirty percent (30%) of the total vote
on all corporate matters, and (3) 8,452,768 common shares of OPAL, $.001 par
value.
It is hereby acknowledged and agreed that both the Purchased Shares to be
transferred by the SHAREHOLDER and the OPAL Shares constituting a portion of the
Purchase Price shall be "restricted stock" as that term is defined under Rule
144 of the Securities Act of 1933. Both the SHAREHOLDER and OPAL represent and
agree that the Purchased Shares and the OPAL Shares being acquired by each are
being acquired for investment purposes without intent to resell such shares and
that the subsequent sale or transfer of such shares may only be made in
accordance with registration or a valid exemption from registration pursuant to
U.S. securities laws, to the extent such laws govern any such sale or transfer.
Further, it is understood and agreed that all certificates evidencing the OPAL
Shares shall bear the foll-transfer orders with the respective transfer agents
for such shares:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF EITHER AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR AN OPINION OF COUNSEL THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
Section 3.02 Anti-Dilution. The number of Purchased Shares and OPAL Shares
issuable upon pursuant to Section 3.01 shall be appropriately adjusted to take
into account any stock split, stock dividend, reverse stock split,
recapitalization, or similar change in the common stock of TRIPLE, OAD or OPAL
which may occur between the date of the execution of this Agreement and the
Closing Date.
Section 3.03 Closing. The closing ("Closing") of the transactions
contemplated by this Agreement shall be on a date and at such time as the
parties may agree ("Closing Date") but not later than , 1997,
-----------------
subject to the right of OPAL, TRIPLE or OAD to extend such Closing Date by up to
an additional sixty (60) days. Such Closing shall take place at a mutually
agreeable time and place.
Section 3.04 Closing Events. At the Closing, OPAL, TRIPLE and OAD shall
execute, acknowledge, and deliver (or shall ensure to be executed, acknowledged,
and delivered) any and all certificates, opinions, financial statements,
schedules, agreements, resolutions, rulings or other instruments required by
this Agreement to be so delivered at or prior to the Closing, together with such
other items as may be reasonably requested by the parties hereto and their
respective legal counsel in order to effectuate or evidence the transactions
contemplated hereby.
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Section 3.05 Termination.
(a) This Agreement may be terminated by the board of directors of
either OPAL, TRIPLE or OAD at any time prior to the Closing Date if:
(i) there shall be any actual or threatened action or proceeding
before any court or any governmental body which shall seek to
restrain, prohibit, or invalidate the transactions contemplated by
this Agreement and which, in the judgement of such board of directors,
made in good faith and based upon the advice of its legal counsel,
makes it inadvisable to proceed with the purchase and sale
contemplated hereby; or
(ii) any of the transactions contemplated hereby are disapproved
by any regulatory authority whose approval is required to consummate
such transactions (which does not include the Securities and Exchange
Commission) or in the judgement of such board of directors, made in
good faith and based on the advice of counsel, there is substantial
likelihood that any such approval will not be obtained or will be
obtained only on a condition or conditions which would be unduly
burdensome, making it inadvisable to proceed with the purchase and
sale.
(b) This Agreement may be terminated by the board of directors of OPAL
at any time prior to the Closing Date if:
(i) other than in the close of business, there shall have been
any change after the date of the latest audited balance sheet of
either TRIPLE or OAD in the assets, properties, business, or financial
condition of either TRIPLE or OAD, which could have a materially
prolonged or permanent adverse effect on the financial statements of
TRIPLE or OAD listed in Section 1.04(a) and (b) taken as a whole,
except any changes disclosed in either TRIPLE or OAD Schedules;
(ii) the board of directors of OPAL determines in good faith and
after notice that one or more of OPAL's conditions to Closing has not
occurred, and after notice has not been cured through no fault of
OPAL.
(iii) either TRIPLE or OAD shall fail to comply in material
respect with any of its covenants or agreements contained in this
Agreement or if any of the representations or warranties of either
TRIPLE or OAD contained herein shall be inaccurate in any material
respect, where such noncompliance or inaccuracy has not been cured
with ten (10) days after written notice thereof.
If this Agreement is terminated pursuant to this paragraph (b) of Section 3.05,
this Agreement shall be of no further force or effect, and no obligation, right
or liability shall arise hereunder, except that both TRIPLE and OAD shall bear
its own costs as well as the reasonable costs of OPAL in connection with the
negotiation, preparation, and execution of this Agreement.
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(c) This Agreement may be terminated by the board of directors of
either TRIPLE or OAD at any time prior to the Closing Date if:
(i) there shall have been any change after the date of the latest
balance sheet of OPAL in the assets, properties, business or financial
condition of OPAL, which could have a material adverse effect on the
financial statements of OPAL listed in Section 2.04 taken as a whole,
except any changes disclosed in the OPAL Schedules;
(ii) if the board of directors of either TRIPLE or OAD determine
in good faith that one or more of either TRIPLE or OAD's conditions to
Closing has not occurred, through no fault of either TRIPLE or OAD.
(iii) either TRIPLE or OAD takes the termination action specified
in Section 2.20(a) or (b) as a result of OPAL Schedules or updates
thereto which OPAL finds unacceptable;
(iv) on or before May 15, 1997, either TRIPLE or OAD notifies
OPAL that it or their investigation pursuant to Section 4.01 below has
uncovered information which it finds unacceptable by the same criteria
set forth in Section 2.20(a) or (b);
(v) OPAL shall fail to comply in any material respect with any of
its covenants or agreements contained in this Agreement or if any of
the representations or warranties of OPAL contained herein shall be
inaccurate in any material respect, where such noncompliance or
inaccuracy has not been cured within ten (10) days after written
notice hereof.
If this Agreement is terminated pursuant to this paragraph (c) of Section
3.05, this Agreement shall be of no further force or effect, and no obligation,
right or liability shall arise hereunder, except that OPAL shall bear their own
costs as well as the reasonable costs of both TRIPLE and OAD in connection with
the negotiation, preparation, and execution of this Agreement.
ARTICLE IV
SPECIAL COVENANTS
Section 4.01 Access to Properties and Records. OPAL, TRIPLE and OAD will
each afford to the officers and authorized representatives of the other full
access to the properties, books and records of OPAL, TRIPLE and OAD, as the case
may be, in order that each may have a full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of the other, and each
will furnish the other with such additional financial and operating data and
other information as to the business and properties of OPAL, TRIPLE or OAD, as
the case may be, as the other shall from time to time reasonably request.
Without limiting the foregoing, as soon as practicable after the end of each
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fiscal quarter (and in any event through the last fiscal quarter prior to the
Closing Date), each party shall provide the other with quarterly internally
prepared and unaudited financial statements.
Section 4.02 Delivery of Books and Records. At the Closing, TRIPLE and OAD
shall deliver to OPAL the corporate documents necessary for OPAL to fulfill its
U.S. reporting obligations.
Section 4.03 Third Party Consents and Certificates. OPAL, TRIPLE and OAD
agree to cooperate with each other in order to obtain any required third party
consents to this Agreement and the transactions herein contemplated.
Section 4.04 Reserved.
Section 4.05 Officers and Directors. On or before Closing, OPAL shall cause
to be delivered such resignations of all of the officers and directors of OPAL
and shall request and shall cooperate with TRIPLE and OAD with respect to the
appointment of new officers and directors for OPAL as the Shareholder shall
request.
Section 4.06 Reserved.
Section 4.07 Exclusive Dealing Rights. Until 5:00 p.m. CDT May 15,1997, in
recognization of the substantial time and effort which OPAL has spent and will
continue to spend in investigating TRIPLE and OAD and its business and in
addressing the matters related to the transactions contemplated herein, each of
which may preempt or representatives or agents will directly or indirectly
solicit or initiate any discussions or negotiations with, or, except where
required by fiduciary obligations under applicable law as advised by counsel,
participate in any negotiations with or provide any information to or otherwise
cooperate in any other way with, or facilitate or encourage any effort or
attempt by, any corporation, partnership, person or other entity or group (other
than OPAL and its directors, officers, employees, representatives and agents)
concerning any merger, sale of substantial assets, sale of shares of capital
stock, (including without limitation, any public or private offering of the
common stock of either TRIPLE or OAD) of similar transactions involving either
TRIPLE or OAD (all such transactions being referred to as "TRIPLE/OAD
Acquisition Transactions"). If either TRIPLE or OAD receives any proposal with
respect to a TRIPLE/OAD Acquisition Transaction, it will immediately communicate
to OPAL the fact that it has received such proposal and the principal terms
thereof.
Section 4.08 Actions prior to Closing.
(a) From and after the date of this Agreement until the Closing Date and
except as set forth in the OPAL, TRIPLE and OAD Schedules or as permitted or
contemplated by the Agreement, OPAL (subject to paragraph (d) below) TRIPLE and
OAD respectively, will each:
(i) carry on its business in substantially the same manner as it
has heretofore;
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(ii) maintain and keep its properties in states of good repair
and condition as at present, except for depreciation due to ordinary
wear and tear and damage due to casualty;
(iii) maintain in full force and effect insurance comparable in
amount and in scope of coverage to that now maintained by it;
(iv) perform in all material respects all of its obligations
under material contracts, leases, and instruments relating to or
affecting its assets, properties, and business;
(v) use its best efforts to maintain and preserve its business
organization intact, to retain its key employees, and to maintain its
relationship with its material suppliers and customers; and
(vi) fully comply with and perform in all material respects all
obligations and duties imposed on it by all federal and state laws and
all rules, regulations, and orders imposed by federal or state
governmental authorities.
(b) From and after the date of this Agreement until the Closing Date,
neither OPAL, TRIPLE or OAD will:
(i) make any changes in their articles or certificate of
incorporation or bylaws;
(ii) take any action described in Section 1.07(a) in the case of
TRIPLE, 1.07 (b) in the case of OAD, or in Section 2.07, in the case
of OPAL (all except as permitted therein or as disclosed in the
applicable party's schedules);
(iii) enter into or amend any contract, agreement, or other
instrument of any of the types described in such party's schedules,
except that a party may enter into or amend any contract, agreement,
or other instrument in the ordinary course of business involving the
sale of goods or services; or
(iv) sell any assets or discontinue any operations, sell any
shares of capital stock (other than the sale of securities underlying
existing warrants or options of OPAL) or conduct any similar
transactions other than in the ordinary course of business (other than
transactions contemplated herein or in the OPAL, TRIPLE or OAD
Schedules).
Section 4.09 Sales Under Rule 144 or 145, If Applicable.
(a) OPAL will use its best efforts to at all times comply with the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including timely filing of all periodic reports required under
the provisions of the Exchange Act and the rules and regulations promulgated
thereunder.
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(b) Upon being informed in writing by any such person holding restricted
stock of OPAL that such person intends to sell any shares under Rule 144, Rule
145 or Regulation S promulgated under the Securities Act (including any rule
adopted in substitution or replacement thereof), OPAL will certify in writing to
such person that it has filed all of the reports required to be filed by it
under the Exchange Act to enable such person to sell such person's restricted
stock under Rule 144, 145 or Regulation S, as may be applicable in the
circumstances, or will inform such person in writing that it has not filed any
such report or reports.
(c) If any certificate representing any such restricted stock is presented
to OPAL's transfer agent for registration of transfer in connection with any
sale theretofore made under Rule 144, 145 or Regulation S, provided such
certificate is duly endorsed for transfer by the appropriate person(s) in each
case with reasonable assurances that such endorsements are genuine and
effective, and is accompanied by an opinion of counsel satisfactory to OPAL and
its counsel that the stock transfer has complied with the requirements or Rule
144, 145 or Regulation S, as the case may be, OPAL will promptly instruct its
transfer agent to register such shares and to issue one or more new certificates
representing such shares to the transferee and, if appropriate under the
provisions of Rule 144, 145 or Regulation S, as the case may be, free of any
stop transfer order or restrictive legend. The provisions of this Section 4.09
shall survive the Closing and the consummation of the transactions contemplated
by this Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF OPAL
The obligations of OPAL under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
Section 5.01 Accuracy of Representations and Performance of Covenants. The
representations and warranties made by TRIPLE, OAD and the SHAREHOLDER in this
Agreement were true when made and shall be true at the Closing Date with the
same force and effect as if such representations and warranties were made at and
as of the Closing Date (except for changes therein permitted by this Agreement).
Additionally, TRIPLE, OAD and the SHAREHOLDER shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by TRIPLE, OAD and the SHAREHOLDER.
OPAL shall have been furnished with certificates, signed by duly authorized
executive officers of TRIPLE, OAD and the SHAREHOLDER and dated the Closing
Date, to the foregoing effect.
Section 5.02 Officer's Certificate. OPAL shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
each respective company to the effect that no litigation, proceeding,
investigation, or inquiry is pending, or to the best knowledge of TRIPLE and OAD
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement, or, to the
extent not disclosed in the TRIPLE and OAD Schedules, by or against TRIPLE or
OAD, which might result in any material adverse change in any of the assets,
properties, business, or operations of TRIPLE.
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Section 5.03 No Material Adverse Change. Prior to the Closing Date,
there shall not have occurred any change in the financial condition, business,
or operations of either TRIPLE or OAD nor shall any event have occurred which,
with the lapse of time or the giving of notice, is determined to be unacceptable
in accordance with Section 1.19(a) or (b).
Section 5.04 Good Standing. OPAL shall have received a certificate of good
standing from the applicable issuing authority in the BVI dated as of the date
within ten days prior to the Closing Date certifying that both TRIPLE and OAD
are in good standing as corporations in the BVI and the BVI respectively.
Section 5.05 No Governmental Prohibition. No order, statute, rule,
regulation, executive order, injunction, stay, decree, judgment or restraining
order shall have been enacted, entered, promulgated or enforced by any court or
governmental or regulatory authority or instrumentality which prohibits the
consummation of the transactions contemplated hereby.
Section 5.06 Consents. All consents, approvals, waivers or amendments
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of OPAL and TRIPLE and OAD after the Closing Date on the basis as
presently operated shall have been obtained.
Section 5.07 Other Items. OPAL shall have received such further opinions,
documents, certificates or instruments relating to the transactions contemplated
hereby as OPAL may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SHAREHOLDER
The obligations of TRIPLE, OAD and the SHAREHOLDER under this Agreement are
subject to the satisfaction, at or before the Closing Date, of the following
conditions:
Section 6.01 Accuracy of Representations and Performance of Covenants. The
representations and warranties made by TRIPLE, OAD and the SHAREHOLDER in this
Agreement were true when made and shall be true at the Closing Date with the
same force and effect as if such representations and warranties were made at and
as of the Closing Date (except for changes therein permitted by this Agreement).
Additionally, TRIPLE, OAD and the SHAREHOLDER shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by TRIPLE, OAD and the SHAREHOLDER.
Section 6.02 Officer's Certificate. Both TRIPLE and OAD shall have been
furnished with certificates dated the Closing Date and signed by duly authorized
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executive officers of OPAL, to the effect that no litigation, proceeding,
investigation or inquiry is pending, or to the best knowledge of OPAL
threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the OPAL Schedules, by or against OPAL, which might
result in any material adverse change in any of the assets, properties or
operations of OPAL.
Section 6.03 No Material Adverse Change. Prior to the Closing Date, there
shall not have occurred any change in the financial condition, business or
operations of OPAL nor shall any event have occurred which, with the lapse of
time or the giving of notice is determined to be unacceptable using the criteria
set forth in Section 2.20.
Section 6.04 Good Standing. TRIPLE and OAD shall have received a
certificate of good standing from the Secretary of State of the State of Nevada
or other appropriate office, dated as of a date within ten daysction 6.05 No
Governmental Prohibition. No order, statute, rule, regulation, executive order,
injunction, stay, decree, judgment or restraining order shall have been enacted,
entered, promulgated or enforced by any court or governmental or regulatory
authority or instrumentality which prohibits the consummation of the
transactions contemplated hereby.
Section 6.06 Consents. All consents, approvals, waivers or amendments
pursuant to all contracts, licenses, permits, trademarks and other intangibles
in connection with the transactions contemplated herein, or for the continued
operation of OPAL, TRIPLE and OAD after the Closing Date on the basis as
presently operated shall have been obtained.
Section 6.07 Other Items. Both TRIPLE and OAD shall have received further
opinions, documents, certificates, or instruments relating to the transactions
contemplated hereby as either TRIPLE or OAD may reasonably request.
ARTICLE VII
MISCELLANEOUS
Section 7.01 Brokers. OPAL, TRIPLE, and OAD agree that, except as set out
on Schedule 7.01 attached hereto, there were no finders or brokers involved in
bringing the parties together or who were instrumental in the negotiation,
execution or consummation of this Agreement. OPAL, TRIPLE and OAD agree to
indemnify the other against any claim by any third person other than those
described above for any commission, brokerage, or finder's fee arising from the
transactions contemplated hereby based on any alleged agreement or understanding
between the indemnifying party and such third person, whether express or implied
from the actions of the indemnifying party.
Section 7.02 Alternate Dispute Resolution. The parties agree and
contract that any and all claims, disputes, or controversies arising out of or
in any way relating to this Agreement, any provision hereof, any contract
related hereto, any benefits hereunder, or the claimed breach of termination of
29
<PAGE>
any provision of any of same, whether based on the Constitution, statutes,
Code(s) or at common law of the United States or of any State, including the
arbitability of any claim, dispute or controversy, shall be exclusively resolved
by the parties first trying to settle the dispute in mediation under the
Mediation Rules administered by and conducted by the Neutrals of the national
Association for Dispute resolution, Inc., failing which, settlement of the
dispute shall be by binding arbitration conducted under the Arbitration Rules
of, and before an Arbitration tribunal of the National Association for Dispute
resolution, Inc. The arbitrator(s) shall have full and complete discretion and
authority to do substantial justice for the parties to the dispute. In the event
that the National Association for Dispute resolution, Inc. is not available or
is no longer in business, the arbitration provided hereunder shall be conducted
by the American Arbitration Association under their rules and procedures.
Section 7.03 Governing Law. This agreement shall be governed by, enforced,
and construed under and in accordance with the laws of the United States of
America and, with respect to the matters of state law, with the laws of the
State of Texas, without giving effect to principles of conflicts of law
thereunder.
Section 7.04 Notices. Any notice or other communications required or
permitted hereunder shall be in writing and shall be sufficiently given if
personally delivered to it or sent by telecopy, overnight courier or registered
mail or certified mail, postage prepaid, addressed as follows:
If to OPAL, to: Opal Technologies, Inc.
9025 South 700 West
Sandy, Utah 84070
Attn: Scott Crawford
If to TRIPLE or OAD: Bestalong Group, Inc.
Suite 4704, Central Plaza
18 Harbour Road
Wanchai, Hong Kong
Attn: John Koon
With copy to Vanderkam
and Sanders: Vanderkam & Sanders
440 Louisiana, Suite 475
Houston, TX 77002
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given (i) upon receipt, if personally delivered, (ii) on
the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if
transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3)
days after mailing, if sent by registered or certified mail.
Section 7.05 Attorney's Fees. In the event that either party institutes any
30
<PAGE>
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the prevailing party shall be reimbursed by the
losing party for all costs, including reasonable attorney's fees, incurred in
connection therewith and in enforcing or collecting any judgement rendered
therein.
Section 7.06 Confidentiality. Each party hereto agrees with the other that,
unless and until the transactions contemplated by this Agreement have been
consummated, it and its representatives will hold in strict confidence all data
and information obtained with respect to another party or any subsidiary thereof
from any representative, officer, director or employee, or from any books or
records or from personal inspection, of such other party, and shall not use such
data or information or disclose the same to others, except (i) to the extent
such data or information is published, is a matter of public knowledge, or is
required by law to be published; or (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement. In the event of the termination of this
agreement, each party shall return to the other party all documents and other
materials obtained by it or on its behalf and shall destroy all copies, digests,
workpapers, abstracts or other materials relating thereto, and each party will
continue to comply with the confidentiality provisions set forth herein.
7.07 Public Announcements and Filings. Unless required by applicable law or
regulatory authority, none of the parties will issue any report, statement or
press release to the general public, to the trade, to the general trade or trade
press, or to any third party (other than its advisors and representatives in
connection with the transactions contemplated hereby) or file any document,
relating to this Agreement and the transactions contemplated hereby, except as
may be mutually agreed by the parties. Copies of any such filings, public
announcements or disclosures, including any announcements or disclosures
mandated by law or regulatory authorities, shall be delivered to each party at
least one (1) business day prior to the release thereof.
Section 7.08 Third Party Beneficiaries. This contract is strictly between
OPAL, TRIPLE, OAD and the SHAREHOLDER, and, except as specifically provided, no
director, officer, stockholder, employee, agent, independent contractor or any
other person or entity shall be deemed to be a third party beneficiary of this
Agreement.
Section 7.09 Expenses. Subject to Sections 3.05 and 7.04 above, whether or
not the purchase and sale is consummated, OPAL, TRIPLE and OAD will bear their
own respective expenses, including legal, accounting and professional fees,
incurred in connection with the purchase and sale or any of the other
transactions contemplated hereby.
Section 7.10 Entire Agreement. This Agreement represents the entire
agreement between the parties relating to the subject matter thereof and
supersedes all prior agreements, understandings and negotiations, written or
oral, with respect to such subject matter.
Section 7.11 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.
Section 7.12 Amendment or Waiver. aw, or in equity, and may be enforced
concurrently herewith, and no waiver by any party of the performance of any
obligation by the other shall be construed as a waiver of the same or any other
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<PAGE>
default then, theretofore, or thereafter occurring or existing. At any time
prior to the Closing Date, this Agreement may by amended by a writing signed by
all parties hereto, with respect to any of the terms contained herein, and any
term or condition of this Agreement may be waived or the time for performance
may be extended by a writing signed by the party or parties for whose benefit
the provision is intended.
Section 7.13 Legal Representation. Each party hereto, including the
SHAREHOLDER which is signing this Agreement, hereby acknowledges that he or it
has been provided an opportunity to consult with legal counsel of his or its
choice to seek counsel with respect to the transactions contemplated herein and
that each such party has secured such advice as he or it deems necessary to
understand the terms of this Agreement.
Section 7.14 Best Efforts. Subject to the terms and conditions herein
provided, each party shall use its best efforts to perform or fulfill all
conditions and obligations to be performed or fulfilled by it under this
Agreement so that the transactions contemplated hereby shall be consummated as
soon as practicable. Each party also agrees that it shall use its best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement
to be executed by their respective officers, hereunto duly authorized, as of the
date first-above written.
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ATTEST: OPAL TECHNOLOGIES, INC.
- -------------------------------- By:
Secretary or Assistant Secretary ---------------------------------
President
ATTEST: TRIPLE STAR HOLDING LTD.
/s/ illegible By: /s/ illegible
- -------------------------------- ---------------------------------
illegible illegible
Secretary or Assistant Secretary Chairman
ATTEST: OPAL AGRICULTURE DEVELOPMENT LTD.
/s/ illegible By: /s/ illegible
- -------------------------------- ---------------------------------
illegible illegible
Secretary or Assistant Secretary Chairman
The undersigned shareholder of both TRIPLE and OAD hereby agrees to
participate in the purchase and sale of the Purchased Shares on the terms set
forth above and to otherwise facilitate the purchase and sale contemplated
herein. Each of the undersigned hereby represents and affirms that he has read
each of the representations and warranties of both TRIPLE and OAD set out in
Article I hereof and that, to the best of his knowledge, all of such
representations and warranties are true and correct.
BESTALONG GROUP INC.
By: /s/ illegible
--------------------------------------
Chairman
33
RESTATED ARTICLES OF INCORPORATION
OF
MED-TEX CORPORATION
We, the undersigned President and Secretary of Med-Tex Corporation do
hereby certify:
That the board of directors and shareholders of said corporation at a
meeting duly convened on May 8, 1996, adopted resolutions to amend and restate
the Articles of Incorporation, and
That the number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 9,391,964; that said
amendments have been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote thereon, and
That the text of the Articles of Incorporation as amended to date reads as
herein set forth in full:
ARTICLE I
NAME
The name of the corporation (hereinafter called "Corporation") is Opal
Technologies, Inc.
ARTICLE II
PERIOD OF DURATION
The period of duration of the Corporation is perpetual.
ARTICLE III
PURPOSES AND POWERS
The purpose for which this Corporation is organized is to engage in the
business of investing in investments of all forms and nature and to engage in
any and all other lawful business.
ARTICLE IV
CAPITALIZATION
The total number of shares of stock which the Corporation shall have the
authority to issue is fifty million (50,000,000) shares, consisting of forty
nine million (49,000,000) shares of Common Stock having a par value of $.00l per
share and one million (1,000,000) shares of Preferred Stock having a par value
of $.00l per share.
1
<PAGE>
A. Preferred Stock
The Board of Directors is authorized, subject to the limitations prescribed
by law and the provisions of this Article, to provide for the issuance of
the shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Nevada, to establish from
time to time the number of shares to be included in each such series and to
fix the designation, powers, preferences and rights of the shares of each
such series and the qualifications, limitations or restrictions thereof.
1. The authority of the Board with respect to each series shall
include, but not be limited to, determination of the following:
a. The number of shares constituting that series and the
distinctive designation of that series;
b. The dividend rate on the shares of that series, whether
dividends shall be cumulative, and if so, from which date or dates,
and the relative rights of priority, if any, of payment of dividends
on shares of that series;
c. Whether that series shall have voting rights, in addition to
the voting rights provided by law, and if so, the terms of such voting
rights;
d. Whether that series shall have conversion privileges and, if
so, the terms and conditions of such conversion, including provision
for adjustment of the conversion rate in such events as the Board of
Directors shall determine;
e. Whether or not the shares of that series shall be redeemable
and, if so, the terms and conditions of such redemption, including the
date or dates upon or after which they shall be redeemable and the
amount per share payable in case of redemption, which amount may vary
wider different conditions and at different redemption dates;
f Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series and, if so, the terms
and amount of such sinking fund;
g. The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment
of shares of that series; and
2
<PAGE>
h. Any other relative rights, preferences and limitations of that
series.
2. Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment, before any dividends shall be paid or
declared and set apart for payment on Common Stock with respect to the same
dividend period
3. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets available for distribution to
holders of shares of Preferred Stock of all series shall be insufficient to
pay such holders the full preferential amount to which they are entitled,
then such assets shall be distributed ratably among the shares of all
series of Preferred Stock in accordance with the respective preferential
amounts (including unpaid cumulative dividends, if any) payable with
respect thereto.
4. Unless otherwise provided in any resolution of the Board of
Directors providing for the issuance of any particular series of Preferred
Stock, no holder of Preferred Stock shall have any pre-emptive right as
such holder to subscribe for, purchase or receive any part of any new or
additional issue of capital stock of any class or series, including
unissued and treasury stock, or obligations or other securities convertible
into or exchangeable for capital stock of any class or series, or warrants
or other instruments evidencing rights or options to subscribe for,
purchase or receive any capital stock of any class or series, whether now
or hereafter authorized and whether issued for cash or other consideration
or by way of dividend.
B. Common Stock
1. Subject to the prior and superior rights of the Preferred Stock and
on the conditions set forth in the foregoing parts of this Article or in
any resolution of the Board of Directors providing for the issuance of any
particular series of Preferred Stock, and not otherwise, such dividends
(payable in cash, stock or otherwise) as may be determined by the Board of
Directors may be declared and paid on the Common Stock from time to time
out of any funds legally available therefor.
2. Except as otherwise provided by law, by this Certificate of
Incorporation or by the resolution or resolutions of the Board of Directors
providing for the issue of any series of the Preferred Stock, the Common
Stock shall have the exclusive right to vote for the election of directors
and for all other purposes, each holder of the Common Stock being entitled
to one vote for each share held.
3
<PAGE>
3. Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, and after the holders of the Preferred
Stock of each series shall have been paid in full the amount to which they
respectively shall be entitled, or a sum sufficient for such payments in
assets of the Corporation shall be distributed pro rata to the holders of
the Common Stock in accordance with their respective rights and interests,
to the exclusion of the holders of the Preferred Stock
ARTICLE V
REGISTERED OFFICE AND AGENT
The name and address of the corporation's registered agent and address is the
Corporation Trust Company of Nevada, One East First Street, Reno, Nevada 89501.
ARTICLE VI
DIRECTORS
The Corporation shall be governed by a Board of Directors consisting of
such number of directors as shall be fixed the Corporation's bylaws. The number
of directors constituting the initial board of directors of the corporation is
three and the names and addresses of the directors are as follows:
Name Address
---- -------
Scott Crawford 9025 South 700 West
Sandy, UT 84070
Karen Pollino 9025 South 700 West
Sandy, UT 84070
Angela Morin 9025 South 700 West
Sandy, UT 84070
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
There shall be no preemptive right to acquire unissued and/or treasury shares of
the stock of the Corporation.
4
<PAGE>
ARTICLE VIII
LIABILITY OF OFFICERS AND DIRECTORS
A director or officer of the Corporation shall not be liable to the Corporation
or its shareholders for damages for breach of fiduciary duty as a director or
officer unless the act or omission involves intentional misconduct, fraud, an
knowing violation of law or the payment of an unlawful dividend in violation of
NRS 78.300.
ARTICLE IX
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall identify 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 at 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.
DATED this 8th day of May, 1997.
OPAL TECHNOLOGIES, INC.
(formerly Med-Tex Corporation)
By:
------------------------------------
Scott Crawford
President
Attest:
By:
--------------------------------
Karen Pollino
Secretary
5
<PAGE>
STATE OF TEXAS )
)
COUNTY OF HARRIS )
On May , 1997 personally appeared before me, a Notary Public, Scott
Crawford, who acknowledged that he executed the above document in his capacity
as President of Med-Tex Corporation.
---------------------------------
Notary Public
STATE OF TEXAS )
)
COUNTY OF HARRIS )
On May , 1997 personally appeared before me, a Notary Public, Scott
Crawford, who acknowledged that he executed the above document in his capacity
as President of Med-Tex Corporation.
---------------------------------
Notary Public
6
BYLAWS
OF
OPAL TECHNOLOGIES, INC.
ARTICLE I
OFFICES
1.01 REGISTERED OFFICE AND AGENT
The registered office of the Corporation shall be maintained at The
Corporation Trust Company in Nevada, One East First Street, Reno, Nevada 89501
in the State of Nevada. The registered office or the registered agent, or both,
may be changed by resolution of the Board of Directors, upon filing the
statement required by law.
1.02 PRINCIPAL OFFICE
The principal office of the Corporation shall be at 9025 South 700 West,
Sandy, Utah 84070 provided that the Board of Directors shall have power to
change the location of the principal office in its discretion.
1.03 OTHER OFFICES
The Corporation may also maintain other offices at such places within or
without the State of Nevada as the Board of Directors may from time to time
appoint or as the business of the Corporation may require.
ARTICLE II
SHAREHOLDERS
2.01 PLACE OF MEETING
All meetings of shareholders, both regular and special, shall be held
either at the registered office of the Corporation, or at such other place as
shall be designated in the notice of the meeting.
-1-
<PAGE>
2.02 ANNUAL MEETING
The annual meeting of shareholders for the election of directors and for
the transaction of all other business which may come before the meeting shall be
held on the 30th day of April in each year (if not a legal holiday and, if a
legal holiday, then on the next business day following) at the hour specified in
the notice of meeting.
If the election of directors shall not be held on the day above designated
for the annual meeting, the Board of Directors shall cause the election to be
held as soon thereafter as conveniently may be at a special meeting of the
shareholders called for the purpose of holding such election.
The annual meeting of shareholders may be held for any other purpose in
addition to the election of director which may be specified in a notice of such
meeting. The meeting may be called by resolution of the Board of Directors or by
a writing filed with the secretary signed either by a majority of the directors
or by shareholders owning a majority in amount of the entire capital stock of
the Corporation issued and outstanding and entitled to vote at any such meeting.
2.03 NOTICE OF SHAREHOLDERS' MEETING
A written or printed notice stating the place, day and hour of the meeting,
and in case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than ten (10) nor more than sixty (60)
days before the date of the meeting, either personally or by mail, by or at the
direction of the president, secretary or the officer or person calling the
meeting, to each shareholders of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
share transfer books of the Corporation, with postage thereon prepaid.
2.04 VOTING OF SHARES
Each outstanding share, regardless of class, shall be entitled to one vote
on each matter submitted to a vote at a meeting of shareholders, except to the
extent that the voting rights of the shares of any class or classes are limited
or denied by the Articles of Incorporation or by law.
Treasury shares, shares of its own stock owned by another corporation the
majority of the voting stock of which is owned or controlled by this
Corporation, and shares of its own stock held by this Corporation in a fiduciary
capacity shall not be voted, directly or indirectly, at any meeting, and shall
not be counted in determining the total number of outstanding shares at any
given time.
-2-
<PAGE>
A shareholder may vote either in person or by proxy executed in writing by
the shareholder or by his duly authorized attorney-in-fact. No proxy shall be
valid after eleven (11) months from the date of its execution unless otherwise
provided in the proxy. Each proxy shall be revocable unless expressly provided
therein to be irrevocable, and in no event shall it remain irrevocable for a
period of more than eleven (11) months.
At each election for directors and every shareholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number of
shares owned by him for as many persons as there are directors to be elected and
for whose election he has a right to vote, or unless prohibited by the Articles
of Incorporation, to cumulate his votes by giving one candidate as many votes as
the number of such directors multiplied by the number of his shares shall equal,
or by distributing such votes on the same principal among any number of such
candidates. Any shareholder who intends to cumulate his votes as herein
authorized shall give written notice of such intention to the secretary of the
Corporation on or before the day preceding the election at which such
shareholder intends to cumulate his votes.
2.05 CLOSING TRANSFER BOOKS AND FIXING RECORD DATE
For the purpose of determining shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof, or entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may provide
that the share transfer books shall be closed for a stated period not exceeding
sixty (60) days. If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten (10) days immediately
preceding such meeting. In lieu of closing the stock transfer books, the ByLaws
or, in the absence of an applicable ByLaw, the Board of Directors may fix in
advance a date as the record date for any such determination of shareholders,
not later than sixty (60) days and, in case of a meeting of shareholders, not
earlier than ten (10) days, prior to the date on which the particular action
requiring such determination of shareholders is to be taken. If the share
transfer books are not closed and no record date is fixed for the determination
of shareholders entitled to notice of or to vote at a meeting of shareholders,
or shareholders entitled to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the Board
of Directors declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of shareholders. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof, except where the determination has been made through the closing of
share transfer books and the stated period of closing has expired.
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<PAGE>
2.06 QUORUM OF SHAREHOLDERS
Unless otherwise provided in the Articles of Incorporation, the holders of
a majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders, but in no event shall a
quorum consist of the holders of less than one-third (1/3) of the shares
entitled to vote and thus represented at such meeting. The vote of the holders
of a majority of the shares entitled to vote and thus represented at a meeting
at which a quorum is present shall be the act of the shareholders' meeting,
unless the vote of a greater number is required by law, the Articles of
Incorporation or the ByLaws.
2.07 VOTING LISTS
The officer or agent having charge of the share transfer books for the
shares of the Corporation shall make, at least ten (10) days before each meeting
of shareholders, a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten (10) days prior to such meeting, shall be kept on file at the registered
office of the Corporation and shall be subject to inspection by any shareholders
at any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting. The original
share transfer books shall be prima-facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders.
2.08 ACTION BY CONSENT OF SHAREHOLDERS
In lieu of a formal meeting, action may be taken by written consent of such
number of the shareholders as is required by either State law or the
Corporation's Bylaws for passage of such corporate action.
ARTICLE III
DIRECTORS
3.01 BOARD OF DIRECTORS
The business and affairs of the Corporation shall be managed by a Board of
Directors. Directors need not be residents of the State of Nevada or
shareholders in the Corporation.
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<PAGE>
3.02 NUMBER AND ELECTION OF DIRECTORS
The number of directors shall be seven (7) provided that the number may be
increased or decreased from time to time by an amendment to these ByLaws, but no
decrease shall have the effect of shortening the term of any incumbent director.
At each annual election the shareholders shall elect directors to hold office
until the next succeeding annual meeting.
3.03 VACANCIES
Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the remaining directors, though less than a quorum of the
Board. A director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any directorship to be filled by reason of an
increase in the number of directors shall be filled by election at an annual
meeting or at a special meeting of shareholders called for that purpose.
3.04 QUORUM OF DIRECTORS
A majority of the Board of Directors shall constitute a quorum for the
transaction of business. The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors.
3.05 ANNUAL MEETING OF DIRECTORS
Within thirty (30) days after each annual meeting of shareholders, the
Board of Directors elected at such meeting shall hold an annual meeting at which
they shall elect officers and transact such other business as shall come before
the meeting.
3.06 REGULAR MEETING OF DIRECTORS
A regular meeting of the Board of Directors may be held at such time as
shall be determined from time to time by resolution of the Board of Directors.
3.07 SPECIAL MEETINGS OF DIRECTORS
The secretary shall call a special meeting of the Board of Directors
whenever requested to do so by the President or by two directors. Such special
meeting shall be held at the time specified in the notice of meeting.
3.08 PLACE OF DIRECTORS MEETINGS
All meetings of the Board of Directors (annual, regular or special) shall
be held either at the principal office of the Corporation or at such other
place, either within or without the State of Nevada, as shall be specified in
the notice of meeting.
-5-
<PAGE>
3.09 NOTICE OF DIRECTORS MEETINGS
All meetings of the Board of Directors (annual, regular or special) shall
be held upon five (5) days written notice stating the date, place and hour of
meeting delivered to each director either personally or by mail or at the
direction of the president or the secretary or the officer or person calling the
meeting.
In any case where all of the directors execute a waiver of notice of the
time and place of meeting, no notice thereof shall be required, and any such
meeting (whether annual, regular or special) shall be held at the time and at
the place (either within or without the State of Nevada) specified in the waiver
of notice. Attendance of a director at any meeting shall constitute a waiver of
notice of such meeting, except where the directors attends a meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any annual,
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
3.10 COMPENSATION
Directors, as such, shall not receive any stated salary for their services,
but by resolution of the Board of Directors a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each annual, regular or
special meeting of the Board, provided, that nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
3.11 ACTION BY CONSENT OF DIRECTORS
In lieu of a formal meeting, action may be taken by written consent of such
number of the directors as is required by either State law or the Corporation's
Bylaws for passage of such corporate action.
-6-
<PAGE>
ARTICLE IV
OFFICERS
4.01 OFFICERS ELECTION
The officers of the Corporation shall consist of a president, one or more
vice presidents, a secretary, and a treasurer. All such officers shall be
elected at the annual meeting of the Board of Directors provided for in Article
III, Section 5. If any office is not filled at such annual meeting, it may be
filled at any subsequent regular or special meeting of the Board. The Board of
Directors at such annual meeting, or at any subsequent regular or special
meeting may also elect or appoint such other officers and assistant officers and
agents as may be deemed necessary. Any two or more offices may be held by the
same person, except the offices of president and secretary.
All officers and assistant officers shall be elected to serve until the
next annual meeting of directors (following the next annual meeting of
shareholders) or until their successors are elected; provided, that any officer
or assistant officer elected or appointed by the Board of Directors may be
removed with or without cause at any regular or special meeting of the Board
whenever in the judgment of the Board of Directors the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Any agent appointed
shall serve for such term, not longer than the next annual meeting of the Board
of Directors, as shall be specified, subject to like right of removal by the
Board of Directors.
4.02 VACANCIES
If any office becomes vacant for any reason, the vacancy may be filled by
the Board of Directors.
4.03 POWER OF OFFICERS
Each officer shall have, subject to these ByLaws, in addition to the duties
and powers specifically set forth herein, such powers and duties as are commonly
incident to his office and such duties and powers as the Board of Directors
shall from time to time designate. All officers shall perform their duties
subject to the directions and under the supervision of the Board of Directors.
The president may secure the fidelity of any and all officers by bond or
otherwise.
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4.04 PRESIDENT
The president shall be the chief executive officer of the Corporation. He
shall preside at all meetings of the directors and shareholders. He shall see
that all orders and resolutions of the Board are carried out, subject however,
to the right of the directors to delegate specific powers, except such as may be
by statute exclusively conferred on the president, to any other officers of the
Corporation.
He or any vice president shall execute bonds, mortgages and other
instruments requiring a seal, in the name of the Corporation, and, when
authorized by the Board, he or any vice president may affix the seal to any
instrument requiring the same, and the seal when so affixed shall be attested by
the signature of either the secretary or an assistant secretary. He or any vice
president shall sign certificates of stock.
The president shall be ex-officio a member of all standing committees.
He shall submit a report of the operations of the Corporation for the year
to the directors at their meeting next preceding the annual meeting of the
shareholders and to the shareholders at their annual meeting.
4.05 VICE PRESIDENT
The vice president shall, in the absence or disability of the president,
perform the duties and exercise the powers of the president, and they shall
perform such other duties as the Board of Directors shall prescribe.
4.06. SECRETARY AND ASSISTANT SECRETARIES
The secretary shall attend all meetings of the Board and all meetings of
the shareholders and shall record all votes and the minutes of all proceedings
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 shareholders and
all meetings of the Board of Directors and shall perform such other duties as
may be prescribed by the Board. He shall keep in safe custody the seal of the
Corporation, and when authorized by the Board, affix the same to any instrument
requiring it, and when so affixed, it shall be attested by his signature or by
the signature of an assistant secretary.
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<PAGE>
The assistant secretary shall, in the absence or disability of the
secretary, perform the duties and exercise the powers of the secretary, and they
shall perform such other duties as the Board of Directors shall prescribe.
In the absence of the secretary or an assistant secretary, the minutes of
all meetings of the Board and shareholders shall be recorded by such person as
shall be designated by the president or by the Board of Directors.
4.07 TREASURER AND ASSISTANT TREASURERS
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.
The treasurer shall disburse the funds of the Corporation as may be ordered
by the Board of Directors, taking proper vouchers for such disbursements. He
shall keep and maintain the Corporation's books of account and shall render to
the president and directors an account of all of his transactions as treasurer
and of the financial condition of the Corporation and exhibit his books, records
and accounts to the president or directors at any time. He shall disburse funds
for capital expenditures as authorized by the Board of Directors and in
accordance with the orders of the president, and present to the president for
his attention any requests for disbursing funds if in the judgment of the
treasurer any such request is not properly authorized. He shall perform such
other duties as may be directed by the Board of Directors or by the president.
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 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.
The assistant treasurers in the order of their seniority shall, in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer, and they shall perform such other duties as the Board
of Directors shall prescribe.
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ARTICLE V
CERTIFICATES OF STOCK: TRANSFER, ETC.
5.01 CERTIFICATES OF STOCK
The certificates for shares of stock of the Corporation shall be numbered
and shall be entered in the Corporation as they are issued. They shall exhibit
the holder's name and number of shares and shall be signed by the president or a
vice president and the secretary or an assistant secretary or if the Board of
Directors determines, by any one of the afore named officers and shall be sealed
with the seal of the Corporation or a facsimile thereof. If the Corporation has
a transfer agent or a registrar, other than the Corporation itself or an
employee of the Corporation, the signatures of any such officer may be
facsimile. 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 said certificate or
certificates shall have been issued, such certificate may nevertheless be issued
by the Corporation with the same effect as though the person or persons who
signed such certificates or whose facsimile signature or signatures shall have
been used thereon had been such officer or officers at the date of its issuance.
Certificates shall be in such form as shall in conformity to law be prescribed
from time to time by the Board of Directors.
The Corporation may appoint from time to time transfer agents and
registrars, who shall perform their duties under the supervision of the
secretary.
5.02 TRANSFERS OF SHARES
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.
5.03 REGISTERED SHAREHOLDERS
The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and, accordingly shall
not be bound to recognize any equitable or other claim to or interest in such
share on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by law.
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<PAGE>
5.04 LOST CERTIFICATE
The Board of Directors may direct a new 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 to be lost. When
authorizing such issue of a new certificate or certificates, the Board of
Directors in its discretion and as a condition precedent to the issuance
thereof, may 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 or to give the corporation a bond with surety and in form
satisfactory to the Corporation (which bond shall also name the Corporation's
transfer agents and registrars, if any, as obligees) in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
or other obligees with respect to the certificate alleged to have been lost or
destroyed, or to advertise and also give such bond.
ARTICLE VI
DIVIDEND
6.01 DECLARATION
The Board of Directors may declare at any annual, regular or special
meeting of the Board and the Corporation may pay, dividends on the outstanding
shares in cash, property or in the shares of the Corporation to the extent
permitted by, and subject to the provisions of, the laws of the State of Nevada.
6.02 RESERVES
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 fund 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
abolish any such reserve in the manner in which it was created.
ARTICLE VII
MISCELLANEOUS
7.01 INFORMAL ACTION
Any action required to be taken or which may be taken at a meeting of the
shareholders, directors or members of the executive committee, may be taken
without a meeting if a consent in writing setting forth the action so taken
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<PAGE>
shall be signed by all of the shareholders, directors, or members of the
executive committee, as the case may be, entitled to vote with respect to the
subject matter thereof, and such consent shall have the same force and effect as
a unanimous vote of the shareholders, directors, or members of the executive
committee, as the case may be, at a meeting of said body.
7.02 SEAL
The corporate seal shall be circular in form and shall contain the name
of the Corporation, the year of its incorporation and the words "State of
Nevada", and "CORPORATE SEAL". The seal may be used by causing it or a facsimile
to be impressed or affixed or in any other manner reproduced. The corporate seal
may be altered by order of the Board of Directors at any time.
7.03 CHECKS
All checks or demands for money and notes of the Corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
7.04 FISCAL YEAR
The fiscal year of the Corporation shall begin on the 1st day of January in
each and every year.
7.05 DIRECTORS ANNUAL STATEMENT
The Board of Directors shall present at each annual meeting of shareholders
a full and clear statement of the business and condition of the Corporation.
7.06 CLOSE CORPORATIONS: MANAGEMENT BY SHAREHOLDERS
If the Articles of Incorporation of the Corporation and each certificate
representing its issued and outstanding shares states that the business and
affairs of the Corporation shall be managed by the shareholders of the
Corporation rather than by the Board of Directors, then, whenever the context so
requires the shareholders of the Corporation shall be deemed the directors of
the Corporation for the purposes of applying any provision of these ByLaws.
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<PAGE>
7.07 AMENDMENTS
These ByLaws may be altered, amended or repealed in whole or in part by the
affirmative vote of the Board of Directors.
ARTICLE VIII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 1. Every person who was or is a party to, or is threatened to be
made a party to, or is involved in any action, suit or proceedings, whether
civil, criminal,. administrative or investigative, by reason of the fact that he
or a person to whom he is the legal representative is or was a director or
officer of the corporation or is or was serving at the request of the
corporation as a director or officer of another corporation, or as its
representative in a partnership, joint venture, trust or other enterprise, shall
be indemnified and held harmless, to the fullest extent legally permissible
under the laws of the State of Nevada, against all expenses, liability and loss,
including attorney's fees, judgements, fines and amounts paid or to be paid in
settlement, reasonably incurred or suffered by him in connection therewith, all
pursuant to NRS 78.151. Such right of indemnification shall be a contract right
which may be enforced in any manner desired by such person.
Section 2. This indemnification is intended to provide at all times the
fullest indemnification permitted by the laws of the State of Nevada and the
corporation may purchase and maintain insurance on behalf of any person who is
or was serving at the request of the corporation as a director or officer of
another corporation, or as its representative in a partnership, joint venture,
trust or other enterprise against any liability asserted against such person and
incurred in any such capacity or arising out of such status, whether or not the
corporation would have the power to indemnify such person.
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CERTIFICATE
OF
DECREASE IN AUTHORIZED SHARES PURSUANT TO NRS 78.207
OF
OPAL TECHNOLOGIES, INC.
We, the undersigned President and Secretary of Opal Technologies, Inc. do
hereby certify that:
1. The Board of Directors of said corporation, on June __, 1997, adopted
a resolution decreasing the authorized and outstanding shares of
common stock by means of a 1- for-10 reverse stock split in accordance
with the provisions of NRS 78.207, and subsequently reauthorizing the
Common Stock and Preferred Stock at the amounts authorized prior to
the reverse stock split.
2. (a) The number and par value of authorized shares before the change is
as follows:
(i) Common Stock - 49,000,000 shares authorized; $0.001 par
value.
(ii) Preferred Stock - 1,000,000 shares authorized; $0.001 par
value;
(b) The number and par value of authorized shares after the reverse
stock split is as follows:
(i) Common Stock - 4,900,000 shares authorized; $0.001 par
value.
(ii) Preferred Stock - 100,000 shares authorized; $0.001 par
value;
(c) The number and par value of authorized shares after the
reauthorization , and currently is as follows:
(i) Common Stock - 49,000,000 shares authorized; $0.001 par
value.
(ii) Preferred Stock - 1,000,000 shares authorized; $0.001 par
value;
(d) One-tenth (.10) of a share of common stock shall be issued
pursuant to the change for each issued share of common stock prior to
the change.
(e) No fractional shares shall be issued pursuant to the change. In
lieu of fractional shares, each fractional share otherwise issuable
shall be rounded up to the nearest whole share.
(f) No approval of stockholders is required pursuant to NRS 78.207.
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<PAGE>
(g) The effective date of the change is June __, 1997.
Dated: June __, 1997
Opal Technologies, Inc.
By:
---------------------------------
Scott Crawford, President
By:
---------------------------------
Karen Pollino, Secretary
STATE OF )
)
COUNTY OF )
On June __, 1997 personally appeared before me, a Notary Public, Scott
Crawford, who acknowledged that he executed the above document as President of
Opal Technologies, Inc.
------------------------------
Notary Public
2
Opal Technologies, Inc.
Certificate of Designation, Preferences and Rights
of a Series of 100,000 Shares of Preferred Stock,
$.001 Par Value, Designated
"Series A Preferred Stock"
Opal Technologies, Inc., a Nevada Corporation (the "Corporation"), by way
of this Certificate of Designation, Preferences and Rights (as it may hereafter
be amended, modified or supplemented upon vote of the Board of Directors of the
Corporation and approval of all holders of Series A Preferred Stock, as such
term is hereinafter defined, this ("Certificate") certifies that, pursuant to
the authority expressly vested in the Board of Directors by the Corporation's
Articles of Incorporation, and in accordance with the provisions of Section
78.195 of the Nevada Revised Statutes, the Board of Directors of the Corporation
has duly adopted the following resolutions creating a series of its Preferred
Stock designated as Series A Preferred Stock:
RESOLVED, that pursuant to the authority expressly granted to and vested in
the Board of Directors of the Corporation by the provisions of the Articles
of Incorporation of the Corporation, as amended, this Board of Directors
hereby creates a series of Preferred Stock, $.001 par value, and this Board
of Directors hereby fixes the designation and the voting power, preferences
and rights, and the qualifications, limitations or restrictions thereof, of
the shares of such series (in addition to the powers, preferences and
rights, and the qualifications, limitations or restrictions thereon, set
forth in the Articles of Incorporation, as amended, which are applicable to
all series of Preferred Stock of the Corporation) as follows:
One hundred thousand (100,000) shares of Preferred Stock, par value $.001
per share, of the Corporation are hereby constituted as a series of
Preferred Stock designated as Series A Preferred Stock (the "Series A
Preferred Stock") with the voting powers and the preferences and rights
hereinafter set forth:
Section 1. Dividends. The holders of shares of Series A Preferred
Stock (the "Preferred Shares") shall be entitled to receive out of the
assets of the Corporation legally available for dividends such
dividends in cash, stock or property as the board of directors shall,
in its discretion, declare from time to time.
Section 2. Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the affairs of the Corporation, whether
voluntary or involuntary, the holders of the Preferred Shares shall be
entitled to be paid first out of the assets of the Corporation
available for distribution to holders of the Corporation's capital
stock of all classes an amount equal to $.001 per share of Series A
Preferred Stock, and no
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<PAGE>
more, before any distribution shall be made to the holders of the
Common Stock or any other class of capital stock or series thereof
ranking junior to the Preferred Shares with respect to the
distribution of assets. If the assets of the Corporation shall be
insufficient to permit the payment in full to the holders of the
Preferred Shares of the amounts thus distributable, then the entire
assets of the Corporation available for such distribution shall be
distributed ratably among the holders of the Preferred Shares in
proportion to the full preferential amount each such holder is
otherwise entitled to receive.
Section 3. Voting Rights. The holders of the Series A Preferred Stock
shall, as a class, be entitled to such number of votes as shall
constitute thirty percent (30%) of the total eligible votes in all
matters voted on by the shareholders of the Corporation an shall be
further entitled to such voting rights as may be expressly required by
law. Without the approval of holders of a majority of the outstanding
Preferred Shares, the Corporation shall not (a) authorize, create or
issue any shares of any class or series ranking senior to the
Preferred Shares as to liquidation rights, (b) amend, alter or repeal,
by any means, the Certificate of Incorporation if the powers,
preferences, or special rights of the Preferred Shares would be
adversely affected, or (c) become subject to any restriction on the
Preferred Shares, other than restrictions arising solely under the
General Corporation Law of the State of Nevada or existing under the
Certificate of Incorporation as in effect on May 14, 1997.
Section 4. Rights Otherwise Identical. In all other respects, each
share of the Series A Preferred Stock and the share of any other
series, if any, shall have identical rights and privileges in every
respect.
IN WITNESS WHEREOF, Opal Technologies, Inc. has caused this Certificate to
be duly executed and attested effective as of the day of June, 1997.
Opal Technologies, Inc.
By:
-----------------------------
Scott Crawford
President
Attest:
By:
-----------------------------
Karen Polino
Secretary
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<PAGE>
STATE OF )
----------
)
COUNTY OF )
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I, , a Notary Public, do hereby certify that on this
-----------------------
day of June, 1997, personally appeared before me Scott Crawford , who, being by
me first duly sworn declared that he is the President of Opal Technologies,
Inc., that he signed the foregoing document as President of the corporation, and
that the statements therein contained are true and correct.
--------------------------------
Notary Public in and for the
State of
-----------------------
--------------------------------
Printed Name of Notary Public
My Commission Expires:
---------
3
