SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1999 Commission file number 0-17874
NetHoldings.Com, Inc.
(Formerly Xplorer, S.A.)
(Exact name of registrant as specified in its charter)
Nevada
(State or Other Jurisdiction of Incorporation or Organization)
2929 S. Maryland Parkway
Las Vegas, Nevada 89109
(Address of Principal Executive Offices)
88- 0199674
(I.R.S. Employer Identification No.)
Registrant's telephone number, including area code: (702) 699-5400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001
Par Value
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
Revenues for its most recent year ended December 31, 1999: $ -0-. As of
February 29, 2000 the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date within
the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange
Act) was approximately: $620,000.
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. At March 31, 2000, the
registrant had 826,378 shares of common stock, no par value, issued and
outstanding.
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TABLE OF CONTENTS
Page
PART I
Item 1. Business......................................................... 3
Item 2. Properties....................................................... 6
Item 3. Legal Proceedings................................................ 6
Item 4. Submission of Matters to a Vote of Security Holders.............. 6
PART II
Item 5. Market for Company's Common Equity and Related
Stockholder matters........................................... 6
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 7
Item 7. Financial Statements............................................. 9
Item 8. Change in and Disagreements With Accountants..................... 9
PART III
Item 9. Directors and Executive Officers................................. 10
Item 10. Executive Compensation........................................... 11
Item 11. Security Ownership of Certain Beneficial Owners and Management... 13
Item 12. Certain Relationships and Related Transactions................... 14
PART IV
Item 13. Exhibits and Reports on Form 8-K................................. 14
Index to Consolidated Financial Statements....................... F-i
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
Introduction
NetHoldings.Com, Inc. ("NetHoldings.Com" or "The Company") was originally
incorporated as L.A. Entertainment, Inc. under the laws of the State of Nevada
on May 2, 1984. In 1992, the Company changed its name to Gerant Industries, Inc.
("Gerant"); in August, 1996 changed its name to Xplorer, S.A. ("Xplorer") and in
August, 1999, further changed its name to NetHoldings.Com, Inc.
On March 1, 1994, Gerant filed a petition for reorganization under Chapter
11 of the United States Bankruptcy Code in the United States Bankruptcy Court
for the Central District of California. Gerant operated as a
debtor-in-possession until the United States Bankruptcy Court entered an order
confirming its Third Amended Plan of Reorganization (the "Plan") on July 24,
1996, and the Plan became effective August 5, 1996. Included in the Plan was the
valuation utilized by Atlantic Pacific Trust ("APT") for its gold ore reserves.
These values are based upon a comprehensive geological reserve study.
Pursuant to the Plan, certain holders of Units of Beneficial Interest ("UBI's")
in the Atlantic Pacific Trust, LLC ("APT LLC"), the successor in interest in the
corporate reorganization of APT, exchanged 417,240 UBI's on August 5, 1996, the
effective date of the Plan, for 1,043,000 shares of preferred stock of the
Company. Prior to August 5, 1996 APT had provided the necessary capital and
arranged loans for the successful completion of the Plan.
Additionally, APT LLC holders of approximately $29,278,000 principal value
of XPLORER promissory notes issued pursuant to the Plan ("Debtor Notes")
converted the Debtor Notes into approximately 14,639,750 shares of XPLORER
common stock. Furthermore, holders of securities in the Company during the
pendency of the Gerant bankruptcy proceedings shared pro rata in a distribution
of 400,000 Units consisting of one (1) share of XPLORER's common stock and one
(1) Class A Warrant entitling the holder to purchase one (1) share of XPLORER's
Common Stock one (1) year from the August 5, 1996 effective date of the Plan, at
70% of the asking price of the Company shares. Warrants need to be exercised
within 30 days of August 5, 1997. Subsequently the Class A Warrants were
extended until February 1998, at which time all Warrants were either exercised
or expired.
In November, 1996, the Company acquired an additional 189,960 UBI's of APT
in exchange for 237,550 shares of its preferred stock. In September,1997, the
Company acquired an additional 20,000 UBI's of APT in exchange for 250,000
shares of its common stock.
Effective September 30, 1999, the Company assigned all its rights and interest
in APT to an unrelated entity in exchange for a fully reserved for note owned by
that entity. The note received although fully reserved for was collateralized by
marketable securities with a market value of approximately $450,000. The Company
anticipates beginning default proceedings on the note to foreclose on the
collateral. The note is currently being carried at zero value in the financial
statements.
In August, 1999, the Company converted a Note payable in the amount of
$450,000, into 150,000 shares of the common stock of the Company, and in
September, 1999, converted all 1,280,550 shares of its Preferred Stock owned by
a single shareholder into 12, 805,500 shares of Xplorer, S.A. common stock.
In December 1999, the Company effected a 40 to 1 reverse stock split.
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Currently, the Company is a development stage enterprise and has not achieved
its intended operations or related revenue as of March 31, 2000.
The Company's principal executive offices are located at 2929 South Maryland
Parkway, Las Vegas, Nevada, 89109, and its telephone number is (702)699-5400.
CAUTIONARY "SAFE HARBOR" STATEMENT UNDER THE UNITED STATES PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
With the exception of historical matters, the matters discussed in this
report are forward- looking statements that involve risks and uncertainties that
could cause actual results to differ materially from targeted or projected
results. Such forward-looking statements include statements regarding targets
for gold production, cash operating costs and certain significant expenses,
schedules for completion of detailed feasibility studies and initial feasibility
studies, potential increases in reserves and production, the timing and scope of
future drilling and other exploration activities, expectations regarding receipt
of permits and commencement of mining or production, anticipated recovery rates
and potential acquisitions or increases in property interests. Factors that
could cause actual results to differ materially include, among others, changes
in gold and other mineral prices, unanticipated grade, geological,
metallurgical, processing, access, transportation of supplies or other problems,
results of current exploration activities, results of pending and future
feasibility studies, changes in project parameters as plans continue to be
refined, political, economic and operational risks of foreign operations,
availability of materials and equipment, the timing of receipt of governmental
permits, force majeure events, the failure of plant, equipment or processes to
operate in accordance with specifications or expectations, accidents, labor
relations, delays in start-up dates, environmental costs and risks, the outcome
of acquisition negotiations and general domestic and international economic and
political conditions, as well as other factors described herein or in the
Company's filings with the U.S. Securities and Exchange Commission. Many of
these factors are beyond the Company's ability to predict or control. Readers
are cautioned not to put undue reliance on forward-looking statements. See "Risk
Factors" for items which could affect forward-looking statements.
General Business
Proposed Operations
From July, 1995 through December 1999, the Company through APT was
anticipating exploring and developing a mining operation, building a pilot
refinery and operating the Evening Star Mine. As a result of lack of capital,
the Company ceased its mining operations while it sought additional capital. As
previously noted, in September, 1999, the Company exchanged its interest in APT
for a fully reserved for note receivable.
Currently, the Company intends to use various sources in its search for
potential business opportunities including its officers and directors,
consultants, special advisors, securities broker-dealers, venture capitalists,
members of the financial community and others who may present management with
unsolicited proposals. The Company may investigate and ultimately acquire a
venture that is in its preliminary or development stage, is already in
operation, or in various stages of its corporate existence or development.
Management cannot predict at this time the status or nature of any venture in
which the Company may participate. The most likely scenario for a possible
business arrangement would involve the acquisition of or merger with an
operating business which does not need additional capital, but which merely
desires to establish a public trading market for its shares. Management believes
that the Company could provide a potential public vehicle for a private entity
interested in becoming a publicly held corporation without the time and expense
typically associated with an initial public offering.
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Evaluation Criteria
Once the Company has identified a particular entity as a potential
acquisition or merger candidate, management will seek to determine whether
acquisition or merger is warranted or whether further investigation is
necessary. Such determination will generally be based on management's knowledge
and experience, or with the assistance of outside advisors and consultants
evaluating the preliminary information available to them. Management may elect
to engage outside independent consultants to perform preliminary analyses of
potential business opportunities. However, because of the Company's lack of
capital it may not have the necessary funds for a complete and exhaustive
investigation of any particular opportunity. Further, no member of management is
a professional business analyst and management will rely on its own business
judgment in formulating the types of businesses that the Company may acquire. It
is quite possible that management will not have any business experience or
expertise in the type of business engaged in by any potential acquisition or
merger candidate.
In evaluating such potential business opportunities, the Company will
consider, to the extent relevant to the specific opportunity, several factors
including potential benefits to The Company and its shareholders; working
capital, financial requirements and availability of additional financing;
history of operation, if any; nature of present and expected competition;
quality and experience of management; need for further research, development or
exploration; potential for growth and expansion; potential for profits; and
other factors deemed relevant to the specific opportunity. Because The Company
has not located or identified any specific business opportunity to date, there
are certain unidentified risks that cannot be adequately expressed prior to the
identification of a specific business opportunity. There can be no assurance
following consummation of any acquisition or merger that the business venture
will develop into a going concern or, if the business is already operating, that
it will continue to operate successfully. Many of the potential business
opportunities available to The Company may involve new and untested products,
processes or market strategies, which may not ultimately prove successful.
Presently, The Company cannot predict the manner in which it might
participate in a prospective business opportunity. Each separate potential
opportunity will be reviewed and, upon the basis of that review, a suitable
legal structure or method of participation will be chosen. The particular manner
in which The Company participates in a specific business opportunity will depend
upon the nature of that opportunity, the respective needs and desires of The
Company and management of the opportunity, and the relative negotiating strength
of the parties involved. Actual participation in a business venture may take the
form of an asset purchase, lease, joint venture, license, partnership, stock
purchase, reorganization, merger or consolidation. The Company may act directly
or indirectly through an interest in a partnership, corporation, or other form
of organization, however, The Company does not intend to participate in
opportunities through the purchase of minority stock positions.
Because The Company has not yet identified any potential acquisition or
merger candidate, it is unable to evaluate the type and extent of its likely
competition. The Company is aware that there are several other public companies
with only nominal assets that are also searching for operating businesses and
other business opportunities as potential acquisition or merger candidates. The
Company will be in direct competition with these other public companies in its
search for business opportunities and, due to The Company's lack of funds, it
may be difficult to successfully compete with these other companies.
5
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As of this date, The Company does not have any employees other than its
president and has no plans for retaining employees until such time as the
Company's business warrants the expense, or until the Company successfully
acquires or merges with an operating business.
Financing
Between February, 1996 and January, 1997, APT issued Industrial Revenue
Bonds, Investment Certificates, Gold Ore Contracts and Bond Certificates as a
means of providing working capital for its exploration operations. At September
30, 1999, the date of the exchange for the APT interests, APT had $1, 756,000
payable pursuant to these agreements. The Company is not liable for the debt
owed by APT that was previously included in the consolidated financial
statements.
Regulation
As a result of the exchange for APT, the Company's operations are no longer
subject to comprehensive regulation with respect to operational, environmental,
safety and similar matters by federal agencies including the U.S. Department of
the Interior, the U.S. Department of Agriculture (U.S. Forest Service), the U.S.
Environmental Protection Agency ("EPA"), the U.S. Mine Safety and Health
Administration ("MSHA") and similar state and local agencies.
Competition
As the Company is a development stage enterprise without any current
operations, the effect of competition on any future operations can not be
determined at this time.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's executive offices are located in a rented executive suite at
2929 S. Maryland, Las Vegas, Nevada 89109. The facility is provided free of
charge to the Company by one of the Company's shareholders. The Company
considers the facilities adequate for current needs.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to shareholders during the fourth quarter
of the fiscal year ended December 31, 1999.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's Common Stock was inactive for from June 23, 1984 until
September 22, 1997, when it began trading on the Bulletin Board Over-the-Counter
Market. The trading market is limited and sporadic and should not be deemed to
constitute an "established trading market".
6
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The following table sets forth the range of Bid and Ask prices for the
Common Stock during the periods indicated, and represents inter-dealer prices,
which do not include retail mark-ups and mark-downs, or any commission to the
broker-dealer, and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
1999 Bid(1) Asked(1)
<S> <C> <C>
Quarter ending December 31, 1999 $ 3.60 $ 8.80
Quarter ending September 30, 1999 $ 3.60 $ 7.20
Quarter ending June 30, 1999 $ 3.20 $ 11.20
Quarter ending March 31, 1999 $ 1.20 $ 11.20
1998
Quarter ending December 31, 1998 $ 1.20 $ 4.00
Quarter ending September 30, 1998 $ .40 $ 4.00
Quarter ending June 30, 1997 $ 1.20 $ 40.00
Quarter ending March 31, 1997 $ 14.00 $ 40.00
</TABLE>
(1) Amounts presented have been adjusted to give retroactive effect to
the 40 to 1 reverse stock split in December 1999.
(a) Holders:
The approximate number of holders of record of Common Shares, as of
March 31, 2000, was 496.
(b) Dividends:
The Company has not paid cash dividends on its common stock since its
inception. At the present time, the Company's anticipated working capital
requirements are such that it intends to follow a policy of retaining any
earnings in order to finance the development of its business.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis should be read together with the
financial statements and notes thereto included elsewhere herein.
I Gerant emerged from its Chapter 11 proceeding in August 1996. Prior to
that date, the reorganization with Xplorer, S.A., Gerant had no
significant operations, cash flows, or changes in financial condition, and
was inactive since January 1, 1994. Legal fees incurred during the
bankruptcy period are currently accrued by the Company.
II Plan of Operation
Through September 30, 1999, the Company through its subsidiary APT had
been preparing for the construction of a Pilot Plant to process both new
and existing ore of the Evening Star Mine (the "Mine") location. The
Pilot Plant had been expected to demonstrate the feasibility of extraction
of the precious metals contained within the ore.
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The new business strategy of the Company is to make acquisitions of or
investments in what management considers to be businesses which present
the greatest opportunities for growth: entertainment, communications
(including the Internet), financial services, natural resources and
consumer goods.
III Management's Discussion and Analysis of Financial Condition and Results of
Operations
The Company is a development stage enterprise and, as such, is incurring
expenses related to its search for new business opportunities. The Company
continues its efforts toward achieving a profitable operation and, although
management is confident of achieving that goal, the Company cannot assure its
shareholders that it will be successful in operating a profitable business.
Results of Operations
Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
There were no revenue generating operations during 1999 and 1998 and,
consequently, no operating revenues or cost of revenues were recorded.
General and administrative expenses were $344,000 in 1999 compared to
$291,000 in 1998 as a result of only limited operations in 1999. General and
administrative costs in 1999 were comprised of a restructuring fee of $270,000,
advisory fees of $40,000 and professional services of $31,000. In 1998, the
Company also incurred commission expense of $32,000, interest expense of
$115,000 and a loss on gold contracts of $121,000.
Liquidity and Capital Resources
As of December 31, 1999 the Company had a working capital deficiency of
$470,000, a decrease of $2.3 million from 1998. The decrease was attributable to
the Company assigning all of its rights in APT to an unrelated entity. The
Company was not liable for any debt owed by APT. The Company had no cash
available at December 31, 1999.
The Company's plan is to keep searching for additional sources of capital
and new operating opportunities. In the interim, the Company's existence is
dependent on continuing financial support from investors, which amount is
estimated to be minimal for the next fiscal year based upon current operations.
Furthermore, the Company may have to utilize its common stock for future
financial support to finance its needs. Such conditions raise substantial doubt
about the Company's ability to continue as a going concern. As such, the
Company's independent accountants have included an explanatory paragraph with
respect to the uncertainty.
The Company has no commitments for capital expenditures or additional equity or
debt financing and no assurances can be made that its working capital needs can
be met.
Additionally, as of December 31, 1999, the Company had three employees
including officers and directors.
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ITEM 7. FINANCIAL STATEMENTS
The following financial statements are included as a separate section
following the signature page to this Form 10-KSB and are incorporated herein by
reference:
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Auditor.....................................F-1
Consolidated Balance Sheet........................................F-2
Consolidated Statement of Operations for the year ended
December 31, 1999...............................................F-3
Consolidated Statement of Shareholders' Equity for the
year ended December 31, 1999....................................F-4
Consolidated Statement of Cash Flows for the year
ended December 31, 1999.........................................F-7
Notes to Financial Statements.....................................F-9
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Name Age Position
Steven B. Mortensen 38 Chairman of the Board and President
Leonard J. Roman 50 Director and Chief Financial Officer
Jon L. Lawver 62 Director and Secretary
Jon W. Bice (1) 55 Former Director, Treasurer and Chief
Financial Officer
Thomas C. Roddy, PE. (1) 47 Former Director
Joyce J. Pellet (1) 63 Former Director
Benjamin C. Rice (1) 61 Former Director
______________________________
(1) As part of a restructuring of Company in July 1999, Mr. Bice,
Mr. Roddy, Ms. Pellet and Mr. Rice resigned their positions as Officers and
Directors of the Company.
Steven B. Mortensen, Chairman of the Board since July, 1996 and President
since June 1998. Mr. Mortensen was Secretary from July, 1996 to June 1998. Mr.
Mortensen majored in computer science and math at Brigham Young University.
Previously, in 1991, Mr. Mortensen was senior vice president of the "B" paper
division of Trump Mortgage Group Inc. Mr. Mortensen's other past positions
include: President of North Star Industries, a mining, residential and
commercial contractor; President and owner of Hillcrest Development and Land, a
land and mine development company; Sales and Marketing Director of Mortensen
Construction and Lifestyle Homes, Inc.
Leonard J. Roman has been Chief Financial Officer and a director since July
1999 and has 29 years of diversified public and private business management
experience. From 1991 to 1994, he was General Manager and Chief Financial
Officer of Cosmar Corporation, from 1995 to 1997 he was President of Trumpets
Holdings, Inc. and was Executive Vice President, Chief Financial Officer of W-C
Designs, Inc. He is a CPA with a B.S. degree from St. John's University.
Jon L. Lawver has served as Director and Secretary since July 1999. Mr.
Lawver has been President and director of the Fantastic Foods International,
Inc., a wholly owned subsidiary of NuOasis Resorts, Inc., since June 1993. Mr.
Lawver has twenty-two (22) years of experience in the area of bank financing
where he has assisted companies in locating financing for small to medium size
companies primarily for expansion requirements. While assisting companies with
their financing requirements, Mr. Lawver has been under consulting contracts
through J. L. Lawver, Corp., a financial consulting firm, which he formed in
1973, after an 11-year career with Bank of America, NT&SA (the "Bank"). He began
his employment with the Bank in l961 and ended his employment in 1972 as Branch
Manager of three of the Bank's offices. Since 1988, Mr. Lawver has also served
as president and director of Eurasia Finance & Development Corp., a private
finance and equipment leasing company. Mr. Lawver has a Bachelor of Science
degree from the Widener University and has completed graduate courses with the
American Institute of Banking and University of California at Los Angeles.
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Jon W. Bice former director, treasurer and chief financial officer has
operated his own accounting and tax business since 1971. He prepares over 600
individual tax returns, 40 corporate returns, and 15 partnership returns per
year. His tax practice is national with clients in 29 states, ranging from
small, individual businesses to $100 million multi-national corporations.
Thomas C. Roddy had been a director since July, 1996 and President, Chief
Executive Officer from July, 1996 to June 1998. Mr. Roddy is a registered civil
engineer in the State of California. He received a B.S. in civil engineering
from California State University, Fresno in 1978. From 1978 through 1985, Mr.
Roddy was a senior engineer for Boyle Engineering Corporation, Bakersfield,
California. Since 1985, Mr. Roddy has been a consulting engineer in Bakersfield,
California. His engineering background is extensive and includes experience as
project manager/engineer for various mining projects in California and Nevada.
Joyce J. Pellet presently serves as trustee of Bedrock Trust, which owns
and manages several rental properties. She also actively serves as trustee for
Sequoia Trust and was co-trustee of Atlantic Pacific Trust.
Benjamin C. Rice is an attorney licensed to practice in the State of Idaho.
He received a B.S. in psychology and economics from Brigham Young University in
1964 and a Juris Doctorate degree from Golden Gate university in 1971. He has
been engaged in the private practice of law since 1988, specializing in
constitutional law, trust, tax law, asset protection and mining law. He serves
as corporate counsel for several corporations and trusts, including Atlantic
Pacific Trust and Emtec, Inc. Mr. Rice has been a law professor at National
University and has served as general counsel for an operating mining company,
Toone- Mitchell Mining Company.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission ("SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers, directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company and Exchange with copies of all Section
26(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5 was
required for such persons, the Company believes that, other than as disclosed
below, during the fiscal year ended December 31, 1997, all filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with.
All of the officers, directors and ten percent shareholders, including
Messrs. Moreland, Roddy, Mortensen, Bice and Rice, Ms. Pellet, and Atlantic
Pacific Trust, LLC, failed to report timely on Form 3's when they had become
directors, officers and ten percent shareholders of the Company at the
confirmation by the Bankruptcy Court of the Third Amended Plan in August 1996.
Procedures and controls have been instituted to assure future compliance with
Section 16(a) of the Exchange Act.
ITEM 10. EXECUTIVE COMPENSATION
No executive officer of the Company earned in excess of $60,000 during the
year ended December 31, 1999, less any stock incentives issued. There are no
written employment agreements with any employee of the Company.
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1997 Stock Incentive Plan
On January 24, 1997, the Company's Board of Directors approved a 1997 Stock
Incentive Plan (the "1997 Plan"). The purpose of the 1997 Plan is to enable the
Company to recruit and retain selected officers and other employees by providing
equity participation in the Company to such individuals. Under the 1997 Plan,
regular salaried employees, including directors who are full time employees, and
non-employee directors, may be granted options exercisable at not less than 100%
of the fair value of the share at the date of grant. The exercise price of any
option granted to an optionee who owns stock possessing more than 10% of the
voting power of all classes of stock of the Company must be 110% of the fair
market value of the Common Stock on the date of grant and the duration may not
exceed ten years. Since there is no public market for the Company's shares, the
fair market value has been determined from time to time by the Board of
Directors. The duration of options may not exceed ten years. Options under the
Plan are non-assignable, except in the case of death and may be exercised only
while the optionee is employed by the Company, said employment shall include a
leave of absence, with the consent of the Company, but shall not exceed three
months, or death. The purchase price and number of shares that may be purchased
upon exercise of options are subject to adjustment in certain cases, including
stock splits, recapitalizations and reorganizations.
The amount of options granted and to whom, are determined by the Board of
Directors at their discretion. There are no specific criteria, performance
formulas or measures.
Under the 1997 Plan, of the 1,500,000 shares available for grant, 680,000
were granted in January 1997 to officers, directors, consultants, and employees.
In October 1999, in anticipation of the 40 for 1 stock split to be effected
in December, the Board of Directors of the Company amended the 1997 Plan such
that the number of shares covered by the 1997 Plan, 1,500,000 were not to be
adjusted for the split. Further, the purchase price for each share to be issued
upon exercise of then outstanding options was adjusted to $2.00 per share. The
expiration date and other terms in the 1997 Plan were not changed.
The following table sets forth certain information with respect to all
qualified stock options held as of March 31, 1999 by the Company's executive
officers under the 1997 Plan. All options are exercisable at a price equal to
fair market value on date of grant and terminate 10 years from date of grant.
None of these options has been exercised.
Number of Exercise Expiration
Name Options Price/Share Date
Steven B. Mortensen 150,000 $ 2.00 January 30, 2007
Thomas C. Roddy 75,000 2.00 January 30, 2007
Jon W. Bice 75,000 2.00 January 30, 2007
All executive officers
as a group (1 person) 150,000 2.00 January 30, 2007
Non-Qualified Stock Options
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On January 31, 1997, 80,000 non-qualified stock options were granted to two
persons in consideration for services rendered to the Company. The exercise
price for all options has been adjusted to $2.00 per share. None of these
options has been exercised. All of these options expire on January 30, 2007.
Effective June 30, 1999, in connection with an Advisory Agreement entered
into by the Company and Fred G. Luke, doing business as NuVen Advisors, Inc.,
1,500,000 non-qualified stock options were granted to NuVen Advisors, Inc. . The
exercise price of these options has been adjusted to $2.00 per share as a result
of the 40 for 1 reverse stock split and the options expire on June 30, 2004.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 31, 1999,
with respect to the beneficial ownership of the Company's Common Stock, par
value $.001 per share, by holders of more than five percent of the Company's
Common Stock, by each director and executive officer of the Company, and by all
directors and officers of the Company as a group.
Name and Address of Number of Shares Percent
Beneficial Owner Beneficially Owned(1)(6) of Class(2)
Steven B. Mortensen 24,454(3) 2.9%
Leonard J. Roman -0- *
Jon L. Lawver -0- *
Financiera Intervest S.A. 186,851(4) 22.6%
Danns Corp, Inc. 81,709(5) 9.8%
* Less than one percent (1%).
(1) Unless otherwise indicated, all shares are beneficially owned and the sole
voting and investment power is held by the person named in the table above
and the address for each beneficial holder is in care of the Company.
(2) Based upon 826,378 shares of Common Stock outstanding.
(3) Does not include 3,125 shares in the Hughes Irrevocable Trust for the
benefit of Mr. Mortensen's wife. Mr. Mortensen disclaims any beneficial
interest in these shares. Does not include options to purchase 150,000
shares of the Company's common stock.
(4) The address for this beneficial holder is c/o Noe Kawer, 125 Meters E. of
Cemaco Cond Erika #1 Sabana Oeste, San Jose, Costa Rica, C.A.
(5) The address for this beneficial holder is 2929 S. Maryland Parkway,
Las Vegas, Nevada 89109.
(6) Does not include 1,500,000 shares that will be issued to NuVen Advisors,
Inc. in 2000, in connection with the execution of an advisory agreement and
the restructuring of the Company in July 1999.
13
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Effective June 30, 1999, the Company entered into an Advisory Agreement
("The Agreement") with Fred G. Luke doing business as NuVen Advisors,
Inc. ("NuVen" or "Advisor") to act as the exclusive financial advisor to the
Company in connection with a proposed restructuring of the Company and then to
advise and assist the Company with (i) the purchase of other businesses or a
joint venture or merger between the Company and an enterprise or individual
currently not an affiliate of the Company, and (ii) the potential sale of all or
a portion of the Company's assets.
The Agreement provides for a restructuring fee to be paid to the Advisor by
way of issuance of 1,500,000 shares of the Company's common stock and a stock
option for the purchase of 1,500,000 shares at 110% of the average moving
closing bid price for such shares for the 30 days prior to the effective date of
the option. It further provided that the Advisor would be paid an advisory fee
of $10,000 per month and either a merger fee or transaction fee relating to
services rendered by the Advisor.
At September 30, 1999 the Company accrued $270,000 as an expense for the
shares that were required to be issued for the restructuring fee described
above. At March 31, 2000 the shares had not been issued.
Effective, October 1, 1999, the Agreement was amended reducing the monthly
advisory fee to $3,500 per month and assigning the agreement to NuVen Advisors
Limited Partnership. As of December 31, 1999, advisory fees of $40,500 were
accrued but unpaid.
As a result of the 40 for 1 reverse stock split, the exercise price of all
outstanding options including those granted to the Advisor were changed to $2.00
per share.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
The following documents are filed as part of this report:
a. Listing of Exhibits
2.1(1) Disclosure Statement For Debtor's Third Amended Plan of
Reorganization.
2.2(1) Order Confirming Debtor's Third Amended Plan of
Reorganization.
2.3(2) Agreement and Plan of Reorganization between Atlantic Pacific
Trust and its Beneficiaries and Atlantic Pacific Trust, LLC.,
dated December 26, 1996.
3.1(a)(2) Articles of Incorporation and Amendments thereto of Company.
3.1(b)(2) Articles of Organization of Atlantic Pacific Trust, LLC and
Amendment thereto.
3.1(c) Restated Articles of Incorporation dated September 27, 1999
3.2(2) By-Laws of Company.
4.1(2) Certificate of Designation of Series A Convertible Preferred
Stock of Company.
14
<PAGE>
4.1(a)(2) Waiver of Preferred Stockholder between Company and Compania
Comercial Atlantis, S.A. dated December 11, 1996.
4.2(2) $450,000 10% Subordinated Convertible Note dated September
25,1996 between Company and Gardner Investments, Inc.(lender).
4.3(2) Warrant Certificate for Common Stock issued to shareholders of
the Company pursuant to Third Amended Plan of
Reorganization approved by the United States Bankruptcy Court
on August 5, 1996.
4.4(2) "B" Warrant Agreement between Company and Atlantic Pacific
Trust dated August 5, 1996.
4.4(a) Amendment to the "B" Warrant Agreement dated August 5, 1999
4.5(2) "C" Warrant Agreement between Company and Atlantic Pacific
Trust dated August 5, 1996.
4.5(a) Amendment to the "C" Warrant Agreement dated August 5, 1999
4.6 Amendment to "Units of Reorganized Debtor's Securities Dated
October 1, 1999.
10.1(2) Lease Agreement between Sequoia Trust and Atlantic Pacific
Trust dated July 15, 1995.
10.2(2) Lease Agreement between Sequoia Trust and Atlantic Pacific
Trust dated July 15, 1995.
10.3(2) Operating Agreement between Atlantic Pacific Trust and Emtec,
LLC dated July 25, 1995.
10.4(2) Assignment of Assets by Atlantic Pacific Trust to Benjamin C.
Rice, Trustee dated October 25, 1995.
10.5(2) Bill of Sale between Sequoia Trust and Atlantic Pacific Trust
dated July 15, 1995.
10.6(2) Regulation "S" Stock Purchase Agreement between Stonehill
Investments, Ltd. and Company.
10.7(2) Security Agreement between Plaza Realty One Limited
Partnership and Company dated August 19, 1994, and $400,000
Promissory Note between Plaza Realty One Limited Partnership
and Company dated August 19, 1994.
10.8(3) 1997 Stock Incentive Plan.
10.8(a) Amendment to the 1997 Stock Incentive Plan dated
October 1, 1999
10.9 Advisory Agreement with NuVen Advisors, Inc. effective
June 30, 1999.
10.9(a) First Amendment to Advisory Agreement and assignment to NuVen
Advisors Limited Partnership effective October 1, 1999.
15
<PAGE>
27.01 Financial Data Schedule. Pursuant to Rule 12b-32 under
Securities and Exchange Act of 1934, as amended.
(1) Filed as exhibits to Company's Form 8K which was filed with
the Commission on September 12, 1996, and incorporated herein
by this reference.
(2) Filed as exhibits to Company's Form 10-KSB for the year ended
December 31, 1996, which was filed on June 3, 1997 and
incorporated herein by this reference.
(3) Filed as exhibits to Company's Form 10-KSB for the year ended
December 31, 1997, which was filed on September 22, 1999 and
incorporated herein by this reference.
b. Reports on Form 8-K
(1) On December 23, 1999, the Company filed a Form 8-K reporting
the change of the name the Company from Xplorer, S.A. to
NetHoldings.Com, Inc.
16
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Company
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NetHoldings.Com, Inc.
Date: April 13, 2000 By: /s/ Steven B. Mortensen
Steven B. Mortensen, President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Company and in the capacities and on the
dates indicated.
Signature Title Date
/s/ Steven B. Mortensen President and Chairman of the Board 4-13-00
Steven B. Mortensen
/s/ Leonard J. Roman Treasurer/Financial Officer and 4-13-00
Leonard J. Roman Director
/s/ Jon L. Lawver Secretary and Director 4-13-00
Jon L. Lawver
17
<PAGE>
NetHoldings, Inc.
(Formerly XPLORER, S.A.)
DECEMBER 31, 1999
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Independent Auditor's Report................................................F-1
Consolidated Balance Sheet..................................................F-2
Consolidated Statement of Operations........................................F-3
Consolidated Statement of Shareholders' Equity (Deficit)....................F-4
Consolidated Statement of Cash Flows........................................F-7
Notes to Consolidated Financial Statements..................................F-9
F-i
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Board of Directors of
NetHoldings.Com, Inc.
Las Vegas, Nevada
We have audited the accompanying consolidated balance sheet of
NetHoldings.Com, Inc. formerly Xplorer, S.A. (the Company), a development stage
enterprise, as of December 31, 1999, and the related consolidated statement of
operations, shareholders' equity (deficit) and cash flows for the two years in
the period ended December 31, 1999. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1999, and the results of its operations and its cash flows
for the two years in the period ended December 31, 1999, in conformity with
generally accepted accounting principles.
As of December 31, 1999, the Company has significant negative working capital
and exposure to financial uncertainties (see Notes 1 and 2).
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1, there
are conditions which raise substantial doubt about the Company's ability to
continue as a going concern, including the Company's ability to raise additional
capital to fund its operations and development programs and to establish ore
reserves. Management's plans in regard to these matters are described in Note 1.
The consolidated financial statements do not include any adjustments relating to
the recoverability and classification of reported asset amounts and
classification of liabilities that might result from the outcome of these
uncertainties.
/s/BROWN ARMSTRONG RANDALL REYES PAULDEN & McCOWN
BROWN ARMSTRONG RANDALL REYES PAULDEN & McCOWN
ACCOUNTANCY CORPORATION
Bakersfield, California
April 10, 2000
F-1
<PAGE>
NetHoldings, Inc.
(Formerly XPLORER, S.A.)
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Current Assets
Cash and cash equivalents $ -
Receivables 3,495
Total Current Assets 3,495
Property and equipment -
TOTAL ASSETS $ 3,495
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accrued expenses $ 473,632
Total Current Liabilities 473,632
Shareholders' Equity (Deficit)
Preferred stock, par value $.001; authorized
25,000,000 shares; -0- shares outstanding -
Common stock, par value $.001; authorized
75,000,000 shares; 826,378 issued and
outstanding 826
Additional paid in capital 919,782
Accumulated deficit during development stage (1,390,745)
Total Shareholders' Equity (Deficit) (470,137)
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT) $ 3,495
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
NetHoldings.Com, Inc.
(Formerly XPLORER, S.A.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
AND THE PERIOD FROM AUGUST 31, 1996 (Inception of
Development Stage Enterprise Activities) THROUGH
DECEMBER 31, 1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
For the
Period from
August 15, 1996
For the For the (Inception)
Year Ended Year Ended Through
December 31, December 31, December 31,
1999 1998 1999
Revenues
Other income $ - $ - $ 62,976
Interest income - - 88,420
Total revenues - - 151,396
Expenses
Commission expense - 31,741 774,826
General and administrative 344,197 290,643 1,849,744
Loss on impairment of mining assets - - 3,303,500
Loss on impairment of other assets - - 500,000
Net loss on investments and settlement
of gold contracts - 121,705 350,022
Interest expense - 115,044 422,628
Total expenses 344,197 559,133 7,200,720
Net loss before minority interest (344,197) (559,133) (7,049,324)
Minority interest - 123,711 2,281,011
Net loss $ (344,197) $ (435,422) $ (4,768,313)
Net loss per common share(1) $ (.59) $ (.87)
Weighted average common shares
outstanding(1) 583,129 497,804
</TABLE>
(1) Per share amounts adjusted to give retroactive effect for a 40 for 1
reverse stock split in December 1999.
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
NetHoldings.Com,Inc.
(Formerly XPLORER, S.A.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY(DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Accumulated
Common Stock(1) Preferred Stock Deficit
Additional During
Paid-in Development
Capital Stage Total
Shares Amount Shares Amount
Balance, January 1, 1996 8,455 $ 9 - $ - $ 1,793,473 $ (104,001) $ 1,690,135
August 15, 1996 merger wit
Gerant pursuant to the Plan (August 1996) 366,025 366 1,043,000 1,043 238,491 52,000 320,446
Stock issued to special creditors pursuant
pursuant to the Plan (September 1996) 25,106 25 - - 97,623 - 99,602
Preferred stock issuance to Atlantic
beneficiary for 189,960 LLC's (December 1996) - - 237,550 238 207,300 - 207,538
Dividend waiver on preferred
stock (December 1996) 25,000 25 - - 99,975 (100,000) -
Stock issued to employees and consultants for
professional services (1996 and 1997) 65,925 66 - - 97,069 - 97,135
Shares issued for purchase of 20,000 units in
Atlantic Pacific Trust(September 1997) 6,300 6 - - - - 250
Shares retired(September 1997) (2,069) (2) - - - - (82)
Net loss for the periods - - - - - (3,988,694) (3,988,694)
Minority interest losses in excess of minority
interest equity - - - - - (965,000) (965,000)
Balance, December 31, 1997 494,742 495 1,280,550 1,281 2,565,249 (5,105,695) (2,538,670)
</TABLE>
(Continued)
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
NetHoldings.Com, Inc.
(Formerly XPLORER, S.A.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Accumulated
Common Stock(1) Preferred Stock Deficit
Additional During
Paid-in Development
Capital Stage Total
Shares Amount Shares Amount
Shares issued on stock options (March 1998) 185 - - - 3,447 - 3,447
Stock issued to employees and consultants for
professional services (July 1998) 7,550 7 - - 21,419 - 21,426
Net loss for period - - - - - (435,422) (435,422)
Minority interest losses in excess of
minority interest equity - - - - - (123,711) (123,711)
Balance, December 31, 1998 502,477 502 1,280,550 1,281 2,590,115 (5,664,828) (3,072,930)
Note payable converted to common stock)
(August 1999) 3,750 4 - - 449,996 - 450,000
Preferred stock converted to common stock
(September 1999) 320,151 320 (1,280,550) (1,281) 961 - -
Spinnoff of Atlantic Pacific Trust
(September 1999) - - - - (2,121,290) 4,618,280 2,496,990
Net loss for period - - - - - (344,197) (344,197)
Balance, December 31, 1999 826,378 $ 826 - $ - $ 919,782 $ (1,390,745) $ (470,137)
</TABLE>
(1) Per share amounts adjusted to give retroactive effect for a 40 for 1
reverse stock split in December 1999.
The accompanying notes are an integral parts of these financial statements.
F-5
<PAGE>
NetHoldings.Com, Inc. AND SUBSIDIARY
(Formally Xplorer,S.A.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
AND THE PERIOD FROM AUGUST 15, 1996 (Inception of
Development Stage Enterprise Activities) THROUGH
DECEMBER 31, 1999
<TABLE>
<CAPTION>
For the
Period from
August 15,
1996
For the For the (Inception)
Year Ended Year Ended Through
December 31, December 31, December 31,
<S> <C> <C> <C>
1999 1998 1998
Cash Flows from Operating Activities
Net loss $ (344,197) $ (435,422) $(4,768,313)
Adjustments to reconcile net loss to net cash used
by operating activities:
Minority interest in net loss of company - (123,711) (2,281,011)
Loss due to impairment of mining assets - - 3,303,500
Loss due to impairment of other assets - - 500,000
Loss on settlement of note receivable - - 256,487
Depreciation and amortization 1,803 21,185 204,888
Accretion of interest - - 160,400
Loss on marketable securities - - 189,400
Accrued expenses and other liabilities 338,502 115,884 640,253
Related party payables - - 364,675
Accrued Gerant obligations - - (140,000)
Due to trustee - 131,603 131,603
Accounts receivable - 35,671 (57,871)
Net Cash Used by Operating Activities (3,892) (254,790) (1,495,989)
Cash Flows from Financing Activities
Sale of Atlantic units for cash - - 458,300
Proceeds from sale of investment contracts - 240,538 2,310,826
Payments on investment contracts - (221,366) (601,900)
Repayment of gold contracts - - (479,364)
Repayment of U.S. Bonds - - (145,269)
Proceeds from notes payable - - 450,000
Note payable converted in common stock (450,000) - (450,000)
Common stock issued in debt conversion (450,000) - 450,000
Sale of common stock - 24,873 24,873
Net Cash Provided by Financing Activities - 44,045 2,017,466
(Continued)
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
NetHoldings.Com, Inc. And Subsidiary
(Formally XPLORER, S.A.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
AND THE PERIOD FROM AUGUST 15, 1996 (Inception of
Development Stage Enterprise Activities) THROUGH
DECEMBER 31, 1999(Continued)
<TABLE>
<CAPTION>
For the
Period from
August 15,
1996
For the For the (Inception)
Year Ended Year Ended Through
December 31, December 31, December 31,
1999 1998 1999
<S> <C> <C> <C>
Cash Flows from Investing Activities
Computer equipment purchases - - (8,000)
Mining property expenditures - - (527,000)
Sale of property and equipment - - 2,180
Acquisition of marketable securities - - (1,273,513)
Proceeds from marketable securities - 143,513 1,054,513
Gerant creditor expenditures - - (355,000)
Proceeds of other investments - - 249,343
Net Cash Provided (Used) by Investing Activities - 143,513 (857,477)
Net Increase (Decrease) in Cash (3,892) (67,232) (336,000)
Cash Balance, Beginning of Year 3,892 71,124 336,000
Cash Balance, End of Year $ - $ 3,892 $ -
Interest Paid $ - $ 12,880 $ 124,180
Income Taxes Paid $ - $ 800 $ 2,400
Non-Cash:
Minority losses in excess of minority equity $ - $ 123,711 $1,088,711
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
NetHoldings.Com, Inc. And Subsidiary
(Formally XPLORER, S.A.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND PRESENTATION
Organization
NetHoldings.Com, Inc. (the Company), (successor to Gerant Industries, Inc.)
was organized by adoption of amended and restated Articles of Incorporation
dated July 5, 1996, which were filed with the office of the Secretary of State
of Nevada on August 15, 1996. In 1999, the Company amended its articles of
incorporation changing its name from Xplorer, S.A. to NetHoldings.Com, Inc.
Gerant Industries, Inc. (Gerant) filed a petition for reorganization under
Chapter 11 of the United States Bankruptcy Court (the Court) for the Central
District of California on March 1, 1994. On July 24, 1996, the Court confirmed
Gerant's Third Amended Plan of Reorganization (the Plan). The Plan approved the
amendment of the Articles of Incorporation and By-laws, change of corporate
name, authorization of common and preferred shares of stock, payment of claims
and issuance of stock by the successors to this debtor-in-possession, Xplorer,
S.A.
The Company is a development stage enterprise and has not achieved its intended
operations or related revenue as of March 31,2000.
Through September 30, 1999 the Company owned 59% of Atlanta Pacific Trust, LLC
(APT). APT is the owner of the Evening Star Mine and through its related
company, Atlantic-Pacific Finanzprodukte, GMBH (APT Germany), secured financing
for its exploration and development activities. The operations of APT have been
included in the consolidated operations of the Company through September 30,
1999.
Effective September 30, 1999, the Company assigned all its rights and interest
in APT to an unrelated entity in exchange for a fully reserved for note owned by
that entity. The note received although fully reserved for was collateralized by
marketable securities with a market value of approximately $450,000. The Company
anticipates beginning default proceedings on the note to foreclose on the
collateral. The note is currently being carried at zero value in the financial
statements.
The Company's consolidated financial statements have been presented on the
basis that it is a going concern, which contemplates the realization of the
mineral properties and other assets and the satisfaction of liabilities in the
normal course of business. The Company has incurred losses of $7,049,324 before
minority interest from inception to December 31, 1999, and currently has no
operations. These factors raise substantial doubt about the Company's ability to
continue as a going concern. Management continues to actively seek additional
sources of capital to fund current and future operations. There is no assurance
that the Company will be successful in continuing to raise additional capital,
or be successful in its search for profitable operations or investments. These
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
F-8
<PAGE>
NetHoldings.Com, Inc. And Subsidiary
(Formally XPLORER, S.A.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
through September 30, 1999 the accounts of its 59% owned subsidiary, Atlantic
Pacific Trust, LLC (APT), and APT's related company, Atlantic-Pacific
Finanzprodukte, GmbH. In consolidations, all significant intercompany balances
and transactions are eliminated.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities, and
disclosure of contingent liabilities at the date of the financial statements,
and the reported amount of revenues and expenses during the reporting period.
Actual results could differ from those results.
Office Furniture and Equipment
Office furniture and equipment are recorded at cost. Depreciation is computed by
the straight-line method based upon the estimated useful lives of the respective
assets, generally three to five years.
Income (Loss) per Common Stock
Income (loss) per share of common stock is computed based on the weighted
average number of shares outstanding. The historical loss per share has been
retroactively adjusted to give effect to the 40 for 1 reverse stock split in
December, 1999. Warrants, options and convertible debentures have not been
included in the calculation as their effect would be anti-dilutive.
Income Taxes
The Company accounts for income taxes using the liability method which requires
recognition of deferred tax liabilities and assets for the expected future tax
consequences of events that have been included in the financial statements or
tax returns. Deferred tax assets and liabilities are determined based on the
difference between the financial statements and tax basis of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
Stock Based Compensation
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," (SFAS 123), which is effective for periods beginning after
December 15, 1995. SFAS 123 requires that companies either recognize
compensation expense for grants of stock, stock options, and other equity
instruments based on fair value or provide proforma disclosure of the effect on
net income and earnings per share in the Notes to the Financial Statements. The
Company intends to continue to account for its stock-based compensation under
Accounting Principles Board No. 25; however, the Company has adopted the
disclosure provisions of SFAS 123 for the fiscal year ended December 31, 1999.
F-9
<PAGE>
NetHoldings.Com, Inc. And Subsidiary
(Formally XPLORER, S.A.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include highly
liquid debt instruments purchased with a maturity of three months or less.
Earnings Per Share
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per
Share", which adopted by the Company. SFAS 128 replaces the presentation of
primary earnings per share with a presentation of basic earnings per share based
upon the weighted average number of common shares for the period.
NOTE 3 - AFFILIATES AND RELATED PARTIES
As previously noted, effective September 30, 1999, the Company assigned all
its rights and interest in APT to an unrelated entity in exchange for a fully
reserved for note owned by that entity. The note received although fully
reserved for was collateralized by marketable securities with a market value of
approximately $450,000. As a result, the Company no longer has an affiliate
relationship with APT or any entities that were related to APT.
Previously significant relationships existed through APT with Sequoia Trust and
Emtec, Inc. which leased land and provided services to APT.
NOTE 4 - SHAREHOLDERS' EQUITY
During 1999, the following major equity transactions occured:
- - The Company issued 150,000 shares of its common stock (prior to the 40 for 1
reverse stock split) in exchange for a note payable in the amount of $450,000.
- - The Company converted all 1,280,550 shares of its preferred stock into
12,805,050 shares of its common stock prior to the 40 for 1 reverse stock
split.
- - In December, 1999, the Company effected a 40 for 1 reverse stock split. As a
result, all historical per share references were adjusted to give retroactive
affect to the stock split.
During 1998, the following major equity transactions occured:
- - The Company issued 6,561 shares (prior to the 40 for 1 reverse stock split) of
Common Stock with a value of $3,447 for stock warrants issued under the
incentive stock option plan.
- - The Company issued 300,000 shares (prior to the 40 for 1 reverse stock split)
of Common Stock in exchange for certain professional services rendered to the
Company totaling $21,426.
F-10
<PAGE>
NetHoldings.Com, Inc. And Subsidiary
(Formally XPLORER, S.A.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
During fiscal 1997, the following major equity transactions occurred:
- - The Company issued 830,000 shares (prior to the 40 for 1 reverse stock split)
of Common Stock with a value of $830 in exchange for certain legal,
engineering and employment services.
- - The Company issued 250,000 shares (prior to the 40 for 1 reverse stock split)
of Common Stock with a value of $250 in connection with its acquisition of
20,000 units in Atlantic Pacific Trust.
During fiscal 1996, the following major equity transactions occurred:
- - Pursuant to the Plan of Reorganization, 336,218 shares (prior to the 40 for 1
reverse stock split) of Common Stock were issued.
- - Pursuant to the Plan of Reorganization, 14,639,000 shares (prior to the 40 for
1 reverse stock split) of Common Stock and 1,043,000 shares of Preferred Stock
were issued.
- - Pursuant to the Plan of Reorganization, the Company issued 1,002,229 shares
(prior to the 40 for 1 reverse stock split) of Common Stock to special
creditors.
- - The Company issued 237,550 shares of Preferred Stock to Atlantic Pacific Trust
beneficiary.
- - The Company issued 1,805,000 shares (prior to the 40 for 1 reverse stock
split) of Common Stock in exchange for certain legal and employment services
rendered to the Company totaling $96,305.
- - The Company declared a dividend waiver on Preferred Stock and issued 1,000,00
shares (prior to the 40 for 1 reverse stock split) of the Company's Common
Stock.
NOTE 5 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Effective June 30, 1999, the Company entered into an Advisory Agreement
("The Agreement") with Fred G. Luke doing business as NuVen Advisors,
Inc.("NuVen" or "Advisor") to act as the exclusive financial advisor to the
Company in connection with a proposed restructuring of the Company and then to
advise and assist the Company with (i) the purchase of other businesses or a
joint venture or merger between the Company and an enterprise or individual
currently not an affiliate of the Company, and (ii) the potential sale of all or
a portion of the Company's assets.
The Agreement provides for a restructuring fee to be paid to the Advisor by
way of issuance of 1,500,000 shares of the Company's common stock and a stock
option for the purchase of 1,500,000 shares at $.10 per share and was
subsequently adjusted to $2.00 per share which was average moving closing bid
price for such shares for the 30 days subsequent to the 40 for 1 stock split. It
further provided that the Advisor would be paid an advisory fee of $10,000 per
month and either a merger fee or transaction fee relating to services rendered
by the Advisor.
At September 30, 1999 the Company accrued $270,000 as an expense for the
shares that were required to be issued for the restructuring fee described
above. At March 31, 2000 the shares had not been issued.
F-11
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NetHoldings.Com, Inc. And Subsidiary
(Formally XPLORER, S.A.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Effective, October 1, 1999, the Agreement was amended reducing the monthly
advisory fee to $3,500 per month and assigning the agreement to NuVen Advisors
Limited Partnership. As of December 31, 1999, advisory fees of $40,500 were
accrued but unpaid.
NOTE 6 - STOCK OPTIONS
The Company has an incentive stock option plan under which ten-year options
may be granted to key employees to purchase shares of the Company's common stock
at $.50 per share on the date of grant. At December 31, 1998, options to
purchase a total of 680,000 shares were outstanding and exercisable, of the
original 1,500,000 shares authorized under the "1997 Stock Option Plan". The
exercise price of $.50 per share was subsequently adjusted to $2.00 per share
which was average moving closing bid price for such shares for the 30 days
subsequent to the 40 for 1 stock split.
Additionally, the Company had 1,500,000 options outstanding pursuant to the
advisory agreement described in note 6.
The Company applies APB Opinion 25 and related interpretations in accounting for
its stock option plan. The Company also applies principles from the consensus
reached in EITF 87-33 on stock option re-pricing transactions. Accordingly,
compensation cost has been recognized for the difference between the market
value of the stock at the date of issuance and the exercise price of the new
stock options granted. Had compensation cost for the Company's stock-based
compensation plan been determined based on the fair value at the grant dates for
awards under the plan consistent with the provision of SFAS 123, the Company's
net income and earnings per share would not have been materially reduced as the
theoretical value of the options were $.001.
NOTE 7 - INCOME TAXES
At December 31, 1999, the Company and its subsidiary had available net operating
loss carryforwards for financial statement and federal income tax purposes of
approximately $1,391,000. These loss carryforwards expire between 2016 and 2017.
The Company has reported income tax losses in prior years. In general, income
tax losses are carried forward to future years to reduce future income taxes.
A valuation allowance of approximately $473,000 has been provided to offset
the income tax benefit of approximately $473,000 from the remaining $1,391,000
loss carryforwards. This valuation allowance is necessary because at December
31, 1999, the available benefits are more likely than not to expire before they
can be used.
F-12
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Exhibit 3.1(c)
RESTATED
ARTICLES OF INCORPORATION
XPLORER, S.A. (the "Corporation"), a corporation organized and
existing under the laws of the State of Nevada, does hereby certify:
1. The name of the Corporation is XPLORER, S.A.. The Corporation was
originally incorporated under the name SUPER-VIDEO, INC. and the
original Articles of Incorporation were filed with the Secretary Of
State of the State of Nevada on May 02, 1984. The name and address
of the original incorporator's signing the original Articles of
Incorporation are:
Daniel Lezak 1098 Lucerne Way, P.O. Box 7202
Incline Village, Nevada 89450
Fred Sproule P.O. Box 7960
Incline Village, Nevada 89450
Ray R. Cummings 4208 Minnecota Drive
Thousand Oaks, CA 91360
2. That pursuant to an Order of the Bankruptcy Court, dated July 17,
1996, the Corporation was authorized to execute Restated Articles of
Incorporation and to cause it to be filed with the Secretary of the
State of Nevada which was executed and filed on August 15, 1996 with
the Secretary of the State of Nevada.
3. That the Board of Directors of the corporation, by Written Consent
Without a Meeting, dated the 30th day of July, 1999, adopted
resolutions to amend and restate the previously Restated Articles of
Incorporation, and for said changes to become effective
August 15, 1999.
4. That number of shares of the corporation outstanding and entitled to
vote on the amendment to the Corporations Restated Articles of
Incorporation is Thirty Three Million Forty-One Thousand Seven
Hundred Seventy (33,041,770) fully issued, and that the text of the
Restated Articles of Incorporation, as heretofore amended or
supplemented as set forth below, have been consented to and approved
by a majority vote of the stockholders holding Seventeen Million Two
Hundred Thirty Thousand Five Hundred (17,230,500) shares of the
corporation's Common Stock, which is the single class of voting stock
issued and outstanding, representing Fifty Two Percent (52%) which is
a majority of such class of stock outstanding and entitled to vote
thereon.
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5. That the Board of Directors of the Corporation pursuant to the text
of the Restated Articles of Incorporation as heretofore amended or
supplemented is hereby restated and further amended to read in its
entirety as follows:
FIRST: The name of the corporation is NET HOLDINGS.COM, INC.. ( the
"Corporation").
SECOND: The address of the Corporation's registered office in the state of
Nevada is: 2929 South Maryland Parkway, Las Vegas, Nevada 89109. The name of
the Corporation's registered agent at such address is: Steven Mortensen.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Nevada (the "Law").
FOURTH: The aggregate number of shares of all classes of stock, which the
Corporation shall have authority to issue is One Hundred Million (100,000,000)
of which Seventy Five Million (75,000,000) shares will be designated $.001 par
value common stock ("Common Stock"), and Twenty Five Million (25,000,000) shares
shall be designated $.001 par value preferred stock ("Preferred Stock"). Without
further authorization from the shareholders, the Board of Directors shall have
the authority to divide the Common Stock into separate classes or series with
such designations, preferences or other special rights, or qualifications,
limitations or restrictions thereof prior to issuance of any or all of the
shares of such Common Stock, and to forward or reverse split or divide into
separate such issues shares of Common Stock without affecting the total number
of shares of Common Stock authorized hereby, and, further, to divide and issue
from time to time any or all of the Twenty Five Million (25,000,000) shares of
such Preferred Stock into one or more series with such designations, preferences
or other special rights, or qualification, limitations or restrictions thereof,
as may be designated by the Board of Directors, prior to the issuance of such
series, and the Board of Directors is hereby expressly authorized to fix by
resolution or resolutions only and without further action or approval of the
corporation's shareholders, prior to such issuance, such designations,
preferences and relative, participating, optional
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or other special rights, or qualifications, limitations or restrictions,
including, without limitation the date and times at which, and the rate, if any,
or rates at which dividends on such series of Common Stock or Preferred Stock
shall be paid; the rights, if any, of the holders of such class or series of the
Common Stock or Preferred Stock to vote and the manner of voting, except as
otherwise provided by the law, the rights, if any, of the holders of shares of
such class or series of Common Stock or Preferred Stock to convert the same
into, or exchange the same for, other classes of stock of the Corporation, and
the terms and conditions for such conversion or exchange; the redemption price
or prices and the time at which, and the terms and conditions of which, the
shares of such class or series of Common Stock or Preferred Stock may be
redeemed; the rights of the holders of shares of such class or series of Common
Stock or Preferred Stock upon the voluntary or involuntary liquidation,
distribution or sale of assets, dissolution or winding up of the Corporation,
and the terms of the sinking fund or redemption or purchase account, if any, to
be provided for such class or series of Common Stock or Preferred Stock.
Any and all shares of the corporations preferred stock authorized or issued and
outstanding are hereby canceled and any class of preferred stock created prior
to the date hereof is hereby abolished and such shares are hereby considered
undesignated and part of the preferred stock hereby created and authorized. The
designations, preferences, and relative, participating, optional or other
special rights, the qualifications, limitations or restrictions thereof, of each
additional series, if any, may differ from those of any and all other series
already outstanding. Further, the Board of Directors shall have the power to fix
the number of shares constituting any classes or series and thereafter to
increase or decrease the number of shares of any such class or series subsequent
to the issue of shares of that class or series but not above the number of
shares of that class or series then authorized. The total number of shares of
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all classes of stock which the Corporation shall have authority to issue is
Seventy-Five Million, Sixty Million of which shares are of a class designated as
"Common Stock" having a par value of $.001 per share and Fifteen Million of
which shares are of a class designated as "Preferred Stock" having a par value
of $.001 per share. As of the date hereof, there are no shares of Preferred
Stock issued or outstanding.
FIFTH: The limitations and relative rights of the Common Stock are as
follows:
5.1 VOTING RIGHTS. Except as otherwise required by law or expressly
provided herein, each share of Common Stock shall entitle the holder
thereof to one vote on each matter submitted to a vote of the
stockholders of the Corporation. No cumulative voting is permitted in
the election of directors.
5.2 DIVIDEND RIGHTS. Subject to provisions of law and of this Articles of
Incorporation, the holders of Common Stock shall be entitled to
receive dividends at such times and in such amounts as may be
determined by the Board of Directors of the Corporation.
5.3 NONASSESSABLITY. Except as otherwise required by law, the Common Stock
issued hereunder shall not be subject to any assessments whatsoever.
5.4 PREEMPTIVE RIGHTS. Except as otherwise required by law, the Common
Stock issued hereunder shall not be entitled to Preemptive Rights.
5.5 LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary
(sometimes referred to herein as liquidation), after payment or
provision for payment to the debts and other liabilities of the
Corporation and the preferential amounts (if any) to which holders
of any outstanding Preferred Stock now or hereafter authorized shall
be entitled upon liquidation, the holders of Common Stock shall be
entitled to share ratably on a per share basis, together and on an
equal basis with the holders of Preferred Stock, in the remaining
assets of the Corporation.
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SIXTH: The Board of Directors is authorized, subject to limitations
prescribed by law and the provisions of Article FOURTH, 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 qualifications, limitations or restrictions thereof.
6.1 SPECIFIC AUTHORITY. 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 or interest rate to be paid on the shares of that
series, whether dividends shall be cumulative, and, if so, from
which date or dates, the relative rights of priority, if any, of
the payment of dividends on shares of that series, and whether
dividend/interest payments may be paid with Common Stock as well
as cash.
(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 amounts
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 date upon or after which they shall be
redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and
at different redemption dates;
(f) 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 to shares of that series;
(g) Any other relative rights, preferences and/or limitations of
that series.
6.2 DIVIDEND RIGHTS. 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 the
shares of Common Stock with respect to the same dividend period.
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6.3 LIQUIDATION RIGHTS. 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.
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute and unless otherwise provided herein, the Board of Directors is, by
action of the Board of Directors, expressly authorized to make, alter or repeal
the by-laws of the Corporation. The number of directors may from time to time be
increased or decreased as specified in the by-laws of the Corporation, provided,
however, that the number of directors shall not be less than one.
EIGHTH: Meetings of the stockholders may be held within or outside of the
State of Nevada, as the by-laws of the Corporation may provide. The books of the
Corporation may be kept outside the State of Nevada at such place or places as
may be designated from time to time by the Board of Directors of the Corporation
or in the by-laws of the Corporation. Election of the directors need not be by
written ballot unless the by-laws of the Corporation so provide.
NINTH: To the fullest extent permitted by Nevada Revised Statute 78.037 as
the same exists or may hereafter be amended, no officer or director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of his fiduciary duty as a director; provided,
however, that this provision shall not eliminate or limit the liability of a
director (1) for any breach of the director's duty of loyalty to the Corporation
or its stockholders, (2) for any acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (3) under the
General Corporation Law of the State of Nevada, or (4) for any transaction from
which the director derived an improper personal benefit.
TENTH: The Corporation shall indemnify, in accordance with and to the full
extent now or hereafter permitted by law, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, an action by or in the right of the
Corporation), by reason of his acting as a director or officer of the
Corporation (and the Corporation, in the discretion of the Board of Directors,
may so indemnify a person by reason of the fact that he is or was an employee of
the Corporation or is or was serving at the request of the Corporation in any
other capacity for or on behalf of the Corporation) against any liability or
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expense actually and reasonably incurred by such person in respect thereof. Such
indemnification is not exclusive of any other right to indemnification provided
by law or otherwise. Expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit, or proceeding upon
receipt of an undertaking by or on behalf of such officer or director to repay
such amount if it shall ultimately be determined that such officer or director
is not entitled to be indemnified. The right to indemnification and advancement
of expenses on the condition specified herein conferred by this
Article shall be deemed to be a contract between the Corporation and each person
referred to herein.
ELEVENTH: No amendment to or repeal of Article NINTH OR TENTH of this
Articles of Incorporation shall apply to or have any effect on the rights of any
individual referred to in Article NINTH OR TENTH for or with respect to acts or
omissions of such individual occurring prior to such amendment or repeal.
TWELFTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
12.1 The Board of Directors shall have power without the assent or vote of
the stockholders:
(a) To make, alter, amend, change, add to or repeal the by-laws of
the Corporation; to fix and vary the amount of capital or
shares of the Corporation's capital stock to be reserved or
issued for any proper purpose; to authorize and cause to be
executed mortgages and liens upon all or any part of the
property of the Corporation; to determine the use and
disposition of any surplus or net profits; and to fix the times
for the declaration and payment of dividends.
(b) To determine from time to time whether, and to what times and
places, and under what conditions the accounts and books of the
Corporation (other than the stock ledger) or any of them, shall
be open to the inspection of the stockholders.
12.2 The directors in their discretion may submit any contract or act for
approval or ratification at any annual meeting of the stockholders or
any meeting of the stockholders called for the purpose of considering
any such act or contract, and any contract or act that shall be
approved or be ratified by the vote of the holders of a majority of
the stock of the Corporation which is represented in person or by
proxy at such meeting and entitled to vote thereat (provided that a
lawful quorum of stockholders be there represented in person or by
proxy) shall be as valid and as binding upon the Corporation and upon
all the stockholders as though it has been approved or ratified by
every stockholder of the Corporation, whether or not the contract or
act would otherwise be open to legal attack because of directors'
interest, or for any other reason.
12.3 In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation; subject, nevertheless, to the
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provisions of the statutes of Nevada, of this certificate, and to
any by-laws from time to time made by the stockholders; provided,
however, that no by-laws so made shall invalidate any prior act of
the directors which would have been valid if such by-law had not been
made.
12.4 The holders of one-third of the voting power of the shares entitled
to vote at a meeting, represented either in person or by proxy, shall
constitute a quorum for the transaction of business at any regular or
special meeting of shareholders.
12.5 Cumulative voting by the shareholders of this Corporation shall not
be permitted in any election of directors.
THIRTEENTH: The Articles of Incorporation of the Corporation, as herein
amended, shall constitute a restatement of and shall supersede the Articles of
Incorporation of the Corporation, as previously amended and restated.
IN WITNESS WHEREOF, the Corporation has caused this restated Articles of
Incorporation to be signed by it authorized Director and Secretary, hereunto
duly authorized, this 27th day of September, 1999.
Xplorer, S.A.
By: /s/ Steven B. Mortensen
Steven B. Mortensen
President & Director
ATTEST:
/s/ Jon L. Lawver
Jon L. Lawver
Secretary & Director
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EXHIBIT 4.4 (a)
AMENDMENT TO THE "B" WARRANT AGREEMENT
This Amendment to the "B" Warrant Agreement ("Amendment"), dated August 5,
1999 (the "Warrant Agreement") is made this 1st day of October 1999, but
effective retroactive to the date of the Warrant Agreement, by and between
XPLORER, S.A., a Nevada corporation (the "Company") and Atlantic Pacific Trust
LLC, a Nevada Limited Liability Company, ("Warrantholder").
WHEREAS, pursuant to the "B" Warrant Agreement, Warrantholder has the right
to purchase up to 355,000 shares of the Company's common stock (the "Warrant
Shares") at a price of $2.00 per share; and,
WHEREAS, the Company is simultaneously effecting a one-for-forty reverse
(1:40) split of its issued and outstanding shares of common stock (the "Reverse
Split") which, according to the Warrant Agreement in its present form, requires
a reduction in the number of Warrant Shares and an increase in the exercise
price of each share of the Company's common stock underlying the subject
warrants by a factor of forty (40); and,
WHEREAS, the Company has not yet been able to timely file and become
current on its reporting requirements under the Securities Exchange Act of 1934
(the "Exchange Act") and, as a result, Warrantholder and the Company are
uncertain that the Warrant Shares will be exercisable at the current price prior
to the expiration of the Warrant Agreement giving effect to the Reverse Split;
and,
WHEREAS, the Company has agreed with Warrantholder to extend the term of
the Warrants and modify the exercise price of the shares of common stock
underlying upon the terms and conditions hereof.
NOW, THEREFORE, in consideration for the covenants and promises made
herein, and for other good and valuable consideration, the sufficiency and
adequacy of which is hereby mutually acknowledged and agreed by the parties
hereto, Warrantholder and the Company hereby agree as follows:
1. The parties mutually agree and the Warrant Agreement is hereby extended:
the Warrant Agreement shall expire on September 30, 2002.
2. The parties mutually agree that notwithstanding the Reverse Split, the
number of Warrant Shares underlying the B Warrants shall not change, and
shall remain at 355,000 shares.
3. The parties mutually agree and the exercise price of the Warrant Shares is
hereby amended: the purchase price for each of the Warrant Shares
unexercised as of the date hereof, shall hereafter be Ten Dollars ($10.00)
per share.
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4. Except as amended and modified by this Amendment, the terms and conditions
of the Warrant Agreement shall otherwise remain in force and effect as
stated therein.
5. A facsimile, telecopy or other reproduction of this instrument may be
executed by one or more parties hereto and such executed copy may be
delivered by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen, and such execution and delivery shall be considered valid, binding
and effective for all purposes. At the request of any party hereto, all
parties agree to execute an original of this instrument as well as any
facsimile, telecopy or other reproduction hereof.
The "Company"
XPLORER, S.A.
By: /s/ Steven B. Mortensen
Name: Steven B. Mortensen
Title: President
"Warrantholder"
ATLANTIC PACIFIC TRUST LLC
By: /s/ William M. Moreland
Name: William M. Moreland
Title: Manager
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EXHIBIT 4.5 (a)
AMENDMENT TO "C" WARRANT AGREEMENT
This Amendment to the "C" Warrant Agreement ("Amendment"), dated August 5,
1999 (the "Warrant Agreement") is made this 1st day of October 1999, but
effective retroactive to the date of the Warrant Agreement, by and between
XPLORER, S.A., a Nevada corporation (the "Company") and Atlantic Pacific Trust
LLC, a Nevada Limited Liability Company, ("Warrantholder").
WHEREAS, pursuant to the "C" Warrant Agreement, Warrantholder has the right
to purchase up to 355,000 shares of the Company's common stock (the "Warrant
Shares") at a price of $3.00 per share; and,
WHEREAS, the Company is simultaneously effecting a one-for-forty reverse
(1:40) split of its issued and outstanding shares of common stock (the "Reverse
Split") which, according to the Warrant Agreement in its present form, requires
a reduction in the number of Warrant Shares and an increase in the exercise
price of each share of the Company's common stock underlying the subject
Warrants by a factor of forty (40); and,
WHEREAS, the Company has not yet been able to timely file and become
current on its reporting requirements under the Securities Exchange Act of 1934
(the "Exchange Act") and, as a result, Warrantholder and the Company are
uncertain that the Warrant Shares will be exercisable at the current price prior
to the expiration of the Warrant Agreement giving effect to the Reverse Split;
and,
WHEREAS, the Company has agreed with Warrantholder to extend the term of
the Warrants and modify the exercise price of the shares of common stock
underlying upon the terms and conditions hereof.
NOW, THEREFORE, in consideration for the covenants and promises made
herein, and for other good and valuable consideration, the sufficiency and
adequacy of which is hereby mutually acknowledged and agreed by the parties
hereto, Warrantholder and the Company hereby agree as follows:
1. The parties mutually agree and the Warrant Agreement is hereby extended:
the Warrant Agreement shall expire on September 30, 2002.
2. The parties mutually agree that notwithstanding the Reverse Split, the
number of Warrant Shares underlying the C Warrants shall not change, and
shall remain at 355,000 shares.
3. The parties mutually agree and the exercise price of the Warrant Shares is
hereby amended: the purchase price for each of the Warrant Shares
unexercised as of the date hereof, shall hereafter be Fifteen Dollars
($15.00) per share.
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4. Except as amended and modified by this Amendment, the terms and conditions
of the Warrant Agreement shall otherwise remain in force and effect as
stated therein.
5. A facsimile, telecopy or other reproduction of this instrument may be
executed by one or more parties hereto and such executed copy may be
delivered by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen, and such execution and delivery shall be considered valid, binding
and effective for all purposes. At the request of any party hereto, all
parties agree to execute an original of this instrument as well as any
facsimile, telecopy or other reproduction hereof.
The "Company"
XPLORER, S.A.
By: /s/ Steven B. Mortensen
Name: Steven B. Mortensen
Title: President
"Warrantholder"
ATLANTIC PACIFIC TRUST LLC
By: /s/ William M. Moreland
Name: William M. Moreland
Title: Manager
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Exhibit 4.6
AMENDMENT TO
"UNITS OF REORGANIZED DEBTOR'S SECURITIES"
("UNIT")
This Amendment ("Amendment") to the REORGANIZED DEBTOR'S SECURITIES (aka
"Bankruptcy Unit" or "Unit") is entered into this 1st day of October, 1999, by
and between XPLORER, S.A., a Nevada corporation (the "Company"), and those
parties ("Unitholder", whether one or more) holding beneficial interest in the
Units (as defined below).
WHEREAS, pursuant to the Third Amended Plan of Reorganization (the "Plan")
of the Company filed as part of its Chapter 11 bankruptcy proceedings, and
confirmed on August 6, 1996 (the "Confirmation Date"), the Company is authorized
to create and issue certain securities, titled "Units", consisting of one (1)
share of its common stock and two (2) warrants ("Bankruptcy Warrants"), each
with the right to purchase one (1) share of its common stock (together a "Unit")
to creditors in Class 11 of the Company's bankruptcy proceedings exercisable at
Two Dollars ($2.00) and Three Dollars ($3.00), respectively, ("Unitholders");
and,
WHEREAS, pursuant to the Plan the Company is, concurrently with the
execution of this Amendment, issuing 311,658 shares of its common stock and
623,316 Bankruptcy Warrants, for the purpose of this Amendment divided into two
(2) separate classes of 311,658 each one, titled "D" Warrants and the other
titled "E" Warrants; and,
WHEREAS, the Company is simultaneously effecting a one-for-forty reverse
(1:40) split of its issued and outstanding shares of common stock (the "Reverse
Split") which, according to the Warrant Agreement in its present form, requires
a reduction in the number of Warrant Shares and an increase in the exercise
price of each share of the Company's common stock underlying the subject
warrants by a factor of forty (40); and,
WHEREAS, the Company has not yet been able to timely file and become
current on its reporting requirements under the Securities Exchange Act of 1934
(the "Exchange Act") and, as a result, the Company's common stock underlying the
Units and the Bankruptcy Warrants have not yet been issued and cannot be
exercised at the current price giving effect to the Reverse Split prior to the
expiration of the Bankruptcy Warrants; and,
WHEREAS, the Company has agreed with the Unitholder to extend the term of
the Bankruptcy Warrants and modify the exercise price of the shares of common
stock underlying such warrants, upon the terms and conditions hereof.
NOW, THEREFORE, in consideration for the covenants and promises made
herein, and for other good and valuable consideration, the sufficiency and
adequacy of which is hereby mutually acknowledged and agreed by the parties
hereto, Unitholders and the Company hereby agree as follows:
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6. The parties mutually agree that the expiration of the Bankruptcy Warrants
are hereby extended: the Bankruptcy Warrants shall expire on September 30,
2002.
7. The parties mutually agree that notwithstanding the Reverse Split, the
number of Bankruptcy Warrants shall not change, and shall remain at
623,316.
8. The parties mutually agree and the exercise price of the Bankruptcy
Warrants is hereby amended: the purchase price for each share of the
Company's common stock underlying unexercised "D" Warrants as of the date
hereof, shall hereafter be Ten Dollars ($10.00) per share and the purchase
price for each share of the Company's common stock underlying the E
Warrants unexercised as of the date hereof, shall hereafter be Fifteen
Dollars ($15.00) per share.
9. Except as amended and modified by this Amendment, the terms and conditions
of the Units as set forth in the Plan shall otherwise remain in force and
effect as stated therein.
10. A facsimile, telecopy or other reproduction of this instrument may be
executed by one or more parties hereto and such executed copy may be
delivered by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen, and such execution and delivery shall be considered valid, binding
and effective for all purposes. At the request of any party hereto, all
parties agree to execute an original of this instrument as well as any
facsimile, telecopy or other reproduction hereof.
"The Company"
XPLORER, S.A.
By: /s/ Steven B. Mortensen
Name: Steven B. Mortensen
Title: President
"Unitholder"
By: /s/ William M. Moreland
Name: William M. Moreland
Title: Manager
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EXHIBIT 10.8 (a)
AMENDMENT TO
XPLORER, S.A.
1997 STOCK INCENTIVE PLAN
(filed with SEC on June 13, 1997)
This Amendment to the "XPLORER, S.A. 1997 STOCK INCENTIVE PLAN" and "STOCK
OPTION AGREEMENT" (collectively referred to herein as the "OPTION PLAN") is
entered into and becomes effective this 1st day of October, 1999 by Xplorer,
S.A. (The "Company"). This Amendment is entered herein by the President of the
Company with authority granted to him pursuant to a Consent to Action by the
Board of Directors dated October 1, 1999, a copy of which is attached hereto and
made a part hereof. This Amendment is intended to amend the option "Purchase
Price" for all shares and/or options that have been issued to date, or that will
be issued, pursuant to the OPTION PLAN. A copy of the XPLORER S.A. 1997 STOCK
INCENTIVE PLAN, the SEC Form 8 filing, and a copy of the STOCK OPTION AGREEMENT,
is attached hereto and made a part hereof by reference.
RECITALS
WHEREAS, pursuant to the OPTION PLAN filed on June 13, 1997 with the
Securities and Exchange Commission, and confirmed on June 18, 1997 (the
"Confirmation Date"), the Company is authorized to amend the "Purchase Price"
defined in the STOCK OPTION AGREEMENT attached. Each option, if exercised,
entitled the holder to purchase one (1) fully paid and non- assessable share of
common stock of XPLORER, S.A. at a Purchase Price of $0.50 (fifty cents) per
share.
WHEREAS, the Company is effecting a one-for-forty reverse (1:40) split of
its issued and outstanding shares of common stock (the "Reverse Split") which,
according to the OPTION PLAN in its present form, requires a reduction in the
number of Options and an increase in the exercise price of each share of the
Company's common stock underlying the subject Option by a factor of forty (40);
and,
WHEREAS, the Company has not yet been able to timely file and become
current on its reporting requirements under the Securities Exchange Act of 1934
(the "Exchange Act") and, as a result, the Company's common stock underlying the
Options have not yet been issued and cannot be exercised at the current price
giving effect to the Reverse Split.; and,
WHEREAS, the Company has agreed with the Option Holder to amend the terms
of the OPTION PLAN and modify the exercise price of the shares of common stock
underlying such Options, upon the terms and conditions hereof.
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NOW, THEREFORE, in consideration for the covenants and promises made
herein, and for other good and valuable consideration, the sufficiency and
adequacy of which is hereby mutually acknowledged and agreed by the parties
hereto, the Company hereby agree as follows:
1. The Company agrees that the expiration date of the OPTION PLAN shall hereby
remain the same: the OPTION PLAN currently allows the Options to be
executed on or before January 24, 2007.
2. The Company agrees that notwithstanding the Reverse Split, the number of
Options available to be issued pursuant to the 1997 STOCK INCENTIVE PLAN
shall remain at 1,500,000 shares of which 680,000 Option have been issued
to date with a remaining 820,000 options that can still be issued pursuant
to the 1997 STOCK INCENTIVE PLAN.
3. The Company agrees that the "Purchase Price" of the common stock that
underlies the OPTION PLAN is hereby amended as follows: the "Purchase
Price" for each share of the Company's common stock underlying unexercised
Options that have been issued or that shall be issued pursuant to the
OPTION PLAN as of the date hereof, shall hereafter be Two Dollars ($2.00)
per share.
4. Except as amended and modified by this Amendment, the terms and conditions
of the OPTION PLAN as set forth shall otherwise remain in force and effect
as stated therein.
5. A facsimile, telecopy or other reproduction of this instrument may be
executed by one or more parties hereto and such executed copy may be
delivered by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party can be
seen, and such execution and delivery shall be considered valid, binding
and effective for all purposes. At the request of any party hereto, all
parties agree to execute an original of this instrument as well as any
facsimile, telecopy or other reproduction hereof.
"The Company"
XPLORER, S.A.
By: /s/ Steven B. Mortensen
Name: Steven B. Mortensen
Title: President
"The Company"
XPLORER, S.A.
By: /s/ Leonard J. Roman
Name: Leonard J. Roman
Title: Chief Financial Officer
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EXHIBIT 10.9
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT ("Agreement") is made effective the 25th day of
June 1999, by and between Fred G. Luke doing business as NuVen Advisors, Inc., a
Nevada corporation (collectively, "Advisor") and XPLORER, S.A., a Nevada
corporation (the "Company").
WHEREAS, Advisor and Advisor's Personnel (as defined below) have experience
in evaluating and effecting mergers and acquisitions, supervising corporate
management, and in performing general administrative duties for publicly-held
companies and development stage investment ventures; and,
WHEREAS, the Company desires to retain Advisor to advise and assist the
Company in restructuring and in its continued development on the terms and
conditions set forth below.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and Advisor
agree as follows:
1. Engagement
The Company hereby retains Advisor to act as exclusive financial advisor
to the Company in connection with the proposed restructuring of the
Company and its subsidiaries whereby Advisor will assist the Company
and its professional advisors in (a) in the preparation of documentation,
(b) merger, acquisition and settlement negotiations, (c) the preparation
and filing with the Securities and Exchange Commission (the
"Commission") of disclosure statements pursuant to the Securities Act of
1933, as amended (the "Securities Act") or the Securities Exchange Act of
1934 (the "Exchange Act") on which the Company may currently be delinquent
or other activities mutually agreed between Advisor and the Company
pertaining to the Restructuring as outlined in Exhibit "A" (collectively,
the "Restructuring"). The documentation related to the restructuring as
setout in Exhibit "A" and the delinquent Exchange Act reports, if any, are
hereinafter collectively referred to as the "Restructuring Documents."
In addition, the Company hereby retains Advisor as the exclusive financial
advisor in connection with (i) the purchase of other businesses
("Business Opportunities") or joint venture or merger between the Company
and an enterprise or individual currently not an Affiliate of the Company,
as that term as defined in Regulations S-X of the Exchange Act
(collectively, a "Merger Transaction"), and (ii) the potential sale of all
or a portion of the Company's assets (a "Sale Transaction").
2. Information on the Company
In connection with Advisor's activities hereunder, the Company will furnish
Advisor and its counsel with all material and information regarding the
business and financial condition of the Company (all such information so
furnished being referred to herein as the "Information"). The Company
recognizes and acknowledges that Advisor (a) will use and rely solely on
the Information, and on information available from generally recognized
public sources, in performing the services contemplated by this Agreement
without having independently verified the same; (b) does not assume
responsibility for the accuracy or completeness of the Information; (c)
will not make an appraisal of any assets or liabilities of the Company; and
(d) retains the right to continue to conduct due diligence on the term of
this Agreement.
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3. Use of Advice
Except as required by applicable state or federal securities rules and
regulatory, no statements made or advice rendered by Advisor in connection
with the services performed by the Advisor pursuant to this Agreement will
be quoted by, nor will any such statements or advice be referred to, in any
report, document, release or other communication, whether written or oral,
prepared, issued or transmitted by the Company or any person or corporation
controlling, controlled by or under common control with, the Company or any
director, officer, employee, agent or representative of any such person,
without the prior written authorization of Advisor, which may be given or
withheld in its sole discretion. However, the Company may disclose or
refer to such advice or statements without being required to obtain consent
to the extent required by law (in which case the appropriate party shall so
advise Advisor in writing prior to such disclosure or use and shall consult
with Advisor with respect to the form and timing of disclosure).
4. Term
Unless terminated earlier pursuant to paragraph 14 below, this Agreement
shall have an initial term of two (2) years (the "Primary Term"), with an
effective date retroactive to the date the Services were first performed by
Advisor, which was on or about June 21, 1999 (the "Effective Date"). At
the conclusion of the Primary Term this Agreement will automatically be
extended on an annual basis (the "Extension Period") unless Advisor or the
Company shall serve written notice on the other party terminating the
Agreement. Any notice to terminate given hereunder shall be in writing and
shall be delivered at least thirty (30) days prior to the end of the
Primary Term or any subsequent Extension Period.
5. Time and Effort of Advisor
Advisor shall allocate time and Advisors Personnel as it deems necessary to
provide the Services. The particular amount of time may vary from day to
day or week to week. Except as otherwise agreed, Advisor's monthly
statement identifying, in general, tasks performed for the Company shall
be conclusive evidence that the Services have been performed.
Additionally, in the absence of willful misfeasance, bad faith, negligence
or reckless disregard for the obligations or duties hereunder by Advisor,
neither Advisor nor Advisor's Personnel shall be liable to the Company or
any of its shareholders for any act or omission in the course of or
connected with rendering the Services, including but not limited to losses
that may be sustained in any corporate act involved in respect to any
Restructuring, Sale Transaction or Merger Transaction with a Business
Opportunity undertaken by the Company as a result of introductions or
advice provided by Advisor or Advisor's Personnel.
6. Compensation
The Company agrees to pay Advisor a fee for the services provided by
Advisor pursuant to this Agreement, as follows:
A. Restructuring Fee. As to the Restructuring, the Company shall pay
Advisor a fee (the "Restructuring Fee") by way of the issuance by the
Company of One Million Five Hundred Thousand (1,500,000) shares of the
Company's common stock, with such shares to be registered as set forth
herein; and
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B. Merger Fee. As to services by Advisor related to the introduction of
Business Opportunities which result in a Merger Transaction, or the
Company acquiring, or otherwise obtaining an equity interest or
interest as a creditor, equity holder or otherwise in another business
or enterprise not currently an Affiliate of the Company, the Company
agrees to pay Advisor a transaction fee (the "Merger Fee"). The
Merger Fee shall be equal to ten percent (10%) of the value of such
transaction as agreed between the respective parties, or the amount of
the investment (including assumed debt) made by the Company in such
Business Opportunities, negotiated as a result of Advisor's
introduction or efforts. One third (1/3) of the Merger Fee shall be
due and payable upon execution of the definitive agreement(s) related
to each Transaction, and the balance shall be due and payable
concurrently with a closing of each Transaction; and
C. Advisory Fee. In addition to the introduction of Business
Opportunities, subject to completion of the Restructuring, but
retroactive to the Effective Date, the Company shall pay Advisor a
monthly fee ("Advisory Fee") equal to Ten Thousand Dollars ($10,000),
payable monthly in advance in cash or shares of the Company's common
stock, at the Company's election, with such shares to be registered as
set forth herein; and
D. Transaction Fee. As to services by Advisor related to the sale of the
Company's assets, other than as contemplated by the Restructuring, or
as a result of a Merger as set forth above, the Company agrees to pay
Advisor a fee ("Transaction Fee") equal to five percent (5%) of the
net proceeds received by the Company on the sale of any of the
Company's assets to anyone other than an Affiliate of the Company as
of the date hereof.
E. Option to Purchase Shares. Further, as additional incentive to
execute this Agreement, the Company hereby grants to Advisor an option
to purchase one million (1,000,000) shares of the Company's common
stock exercisable at a price per share of one hundred ten percent
(110%) of the average moving closing bid price for such shares for the
thirty (30) days prior to the Effective Date (the "Option"). The
Option shall be evidenced and governed by the Option Agreement in form
and substance as that attached hereto as Exhibit "B" and incorporated
herein by reference. The right of Advisor to exercise the Option will
vest to Advisor upon execution hereof.
The Company and Advisor acknowledge that in the event Advisor, as a
result of this Agreement, receives shares of the Company's common
stock in lieu of cash for the Restructuring Fee, the Merger Fee, the
Transaction Fee or the Advisory Fee, it may be considered an affiliate
subject to Section 16(b) of the Securities Exchange Act of 1934 (the
"Exchange Act"). In this regard the Company and Advisor agree, that
for purposes of any "profit" computation under Section 16(b) of the
Exchange Act, the price paid for such shares is equal to the
Restructuring Fee, the Merger Fee, the Transaction Fee or the Advisory
Fee, as the case may be.
7. Indemnification
In partial consideration of the services to be rendered hereunder the
Company shall indemnify Advisor and its officer, directors, and agents,
(each and "Indemnified Person") against any action brought against Advisor
or and Indemnified Person by the Company, any shareholder, creditor or
party related to the Company in connection with this engagement, the
Restructuring, or any merger or transaction affected by Advisor unless such
action or proceeding is based solely upon willful misconduct or the bad
faith or gross negligence of Advisor or any such Indemnified Person.
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8. Registration of Shares
No later than ten (10) days following the date hereof as to the
Restructuring Fee, the Merger Fee, the Transaction Fee or the Advisory Fee
(if paid in shares) and the Option Shares, the shares issued to satisfy
such fees, and the shares underlie the Option, shall be registered by the
Company with the Commission under a Form S-8 or other applicable
registration statement, and the Company shall cause such registration
statement to remain effective at all times while the Option or any portion
of it remains unexercised or for a period of six (6) months following the
payment by the Company of all outstanding fees due to Advisor pursuant to
this Agreement. At Advisor's election, such shares may be issued prior to
registration in reliance on exemptions from registration provided by
Section 4(2) of the Securities Act, Regulation D of the Securities Act, and
applicable state securities laws. Such issuance or reservation of shares
shall be in reliance on representations and warranties of Advisor set forth
herein. Failing to register such shares, or maintain the effectiveness of
the applicable registration statement, the Company shall satisfy any
outstanding Restructuring Fee, Transaction Fee, Merger Fee or Advisory Fee
in cash within ten (10) days of receipt of Advisor's statement setting out
the amount and type of fee then due and payable.
9. Costs and Expenses
All third party and out-of-pocket expenses incurred by Advisor in the
performance of the Services shall be paid by the Company, or Advisor shall
be reimbursed if paid by Advisor on behalf of the Company, within ten (10)
days of receipt of written notice by Advisor; provided, however, that the
Company must approve in advance all such expenses.
10. Place of Services
The Services provided by Advisor or Advisor's Personnel hereunder will be
performed at Advisor's offices except as otherwise mutually agreed by
Advisor and the Company.
11. Independent Contractor
Advisor and Advisor's Personnel will act as an independent contractor in
the performance of its duties under this Agreement. Accordingly, Advisor
will be responsible for payment of all federal, state, and local taxes on
compensation paid under this Agreement, including income and social
security taxes, unemployment insurance, and any other taxes due relative to
Advisor's Personnel, and any and all business license fees as may be
required. This Agreement neither expressly nor impliedly creates a
relationship of principal and agent, or employee and employer, between
Advisor's Personnel and the Company. Neither Advisor nor Advisor's
Personnel are authorized to enter into any agreements on behalf of the
Company. The Company expressly retains the right to approve, in its sole
discretion, each Business Opportunity introduced by Advisor, and to make
all final decisions with respect to affecting a transaction on any Business
Opportunity.
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12. Rejected Business Opportunity
If, during the Primary Term of this Agreement or any Extension Period, the
Company elects not to proceed to acquire, participate or invest in any
Business Opportunity identified and/or selected by Advisor, notwithstanding
the time and expense the Company may have incurred reviewing such
transaction, such Business Opportunity shall revert back to and become
proprietary to Advisor, and Advisor shall be entitled to acquire or broker
the sale or investment in such rejected Business Opportunity for its own
account, or submit such assets or Business Opportunity elsewhere. In such
event, Advisor shall be entitled to any and all profits or fees resulting
from Advisor's purchase, referral or placement of any such rejected
Business Opportunity, or the Company's subsequent purchase or financing
with such Business Opportunity in circumvention of Advisor.
13. No Agency Express or Implied
This Agreement neither expressly nor impliedly creates a relationship of
principal and agent between the Company and Advisor, or employee and
employer as between Advisor's Personnel and the Company.
14. Termination
The Company and Advisor may terminate this Agreement prior to the
expiration of the Primary Term upon thirty (30) days written notice with
mutual written consent. Failing to have mutual consent, without prejudice
to any other remedy to which the terminating party may be entitled, if
any, either party may terminate this Agreement with thirty (30) days
written notice under the following conditions:
A. By the Company.
(i) In the event the Company for any reason has not or cannot
provide Advisor with the documentation necessary to allow
Advisor to effect the Restructuring; or,
(ii) If during the Primary Term of this Agreement or any Extension
Period, Advisor is unable to provide the services as set forth
herein for thirty (30) consecutive business days because of
illness, accident, or other incapacity of Advisor's Personnel;
or,
(iii) If Advisor willfully breaches or neglects the duties required
to be performed hereunder.
B. By Advisor.
(i) If the Company breaches this Agreement or fails to make any
payments or provide information required hereunder; or,
(ii) Other than in the Restructuring, if the Company ceases
business, or sells a controlling interest to a third party, or
agrees to a consolidation or merger of itself with or into
another corporation, or enters into such a transaction outside
of the scope of this Agreement, or sells substantially all of
its assets to another corporation, entity or individual
outside of the scope of this Agreement; or,
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(iii) If the Company has a receiver appointed for its business or
assets, or otherwise becomes insolvent or unable to timely
satisfy its obligations in the ordinary course of business,
including but not limited to the obligation to pay the
Restructuring Fee, a Transaction Fee, a Merger Fee, or the
Advisory Fee; or,
(iv) If the Company institutes, makes a general assignment for the
benefit of creditors, has instituted against it any bankruptcy
proceeding for reorganization for rearrangement of its
financial affairs, files a petition in a court of bankruptcy,
or is adjudicated a bankrupt; or,
(v) If any of the disclosures made herein or subsequent hereto by
the Company to Advisor are determined to be materially false
or misleading.
In the event Advisor elects to terminate without cause or this
Agreement is terminated prior to the expiration of the Primary Term or
any Extension Period by mutual written agreement, or by the Company
for the reasons set forth in A(i) and (ii) above, the Company shall
only be responsible to pay Advisor for unreimbursed expenses,
the Restructuring Fee and Merger Fee, Advisory Fee and any
Transaction Fees accrued up to and including the effective date of
termination. If this Agreement is terminated by the Company for any
other reason, or by Advisor for reasons set forth in B(i) through
(v) above, Advisor shall be entitled to any outstanding unpaid
portion of reimbursable expenses, if any, and any unpaid
Restructuring Fee and the Merger Fee, Transaction Fees, and the
Advisory Fee for the remainder of the unexpired portion of the
applicable term (Primary Term or Extension Period) of the Agreement.
15. Confidentiality and Non-Circumvention
XPLORER acknowledges and agrees that non-public information concerning
NuVen's plans, strategies, and overall business operations, and the
identity and sources of NuVen's Business Opportunities and the language and
structure of the Restructuring Documents, is highly confidential and
proprietary to NuVen ("Confidential Information").
XPLORER acknowledges that such Confidential Information represents a
legitimate, valuable, and protectable interest of NuVen and gives NuVen a
competitive advantage, which would otherwise be lost if the Confidential
Information was improperly disclosed. XPLORER further acknowledges that
unauthorized or improper disclosure or use of Confidential Information
would cause NuVen irreparable harm and injury. XPLORER therefore agrees
that, for a period of two (2) years following the later of the date hereof
or the termination of this Agreement, it will not disclose or threaten to
disclose the Confidential Information, except as required by law, to any
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person, partnership, company, corporation or to any other business or
governmental organization or agency, as the case may be, without the
express written consent of NuVen. XPLORER further agrees not to use or
threaten to use the Confidential Information in any way contrary to the
interests of NuVen. XPLORER further agrees that all ownership rights to
the Confidential Information are retained by NuVen, and that no right of
ownership shall pass to XPLORER by virtue of this Agreement.
16. Remedies
Advisor and the Company acknowledge that in the event of a breach of this
Agreement by either party, money damages would be inadequate and the
non-breaching party would have no adequate remedy at law. Accordingly, in
the event of any controversy concerning the rights or obligations under
this Agreement, such rights or obligations shall be enforceable in a court
of equity by a decree of specific performance. Such remedy, however, shall
be cumulative and non-exclusive and shall be in addition to any other
remedy to which the parties may be entitled.
17. Miscellaneous
A. Subsequent Events. Advisor and the Company each agree to notify the
other party if, subsequent to the date of this Agreement, either
party incurs obligations which could compromise its efforts and
obligations under this Agreement.
B. Amendment. This Agreement may be amended or modified at any time and
in any manner only by an instrument in writing executed by the
parties hereto.
C. Further Actions and Assurances. At any time and from time to time,
each party agrees, at its or their expense, to take actions and to
execute and deliver documents as may be reasonably necessary to
effectuate the purposes of this Agreement.
D. Waiver. Any failure of any party to this Agreement to comply with
any of its obligations, agreements, or conditions hereunder may be
waived in writing by the party to whom such compliance is owed. The
failure of any party to this Agreement to enforce at any time any of
the provisions of this Agreement shall in no way be construed to be a
waiver of any such provision or a waiver of the right of such party
thereafter to enforce each and every such provision. No waiver of
any breach of or non-compliance with this Agreement shall be held to
be a waiver of any other or subsequent breach or non-compliance.
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E. Assignment. Neither this Agreement nor any right created by it shall
be assignable by either party without the prior written consent of
the other.
F. Notices. Any notice or other communication required or permitted by
this Agreement must be in writing and shall be deemed to be properly
given when delivered in person to an officer of the other party, when
deposited in the United States mails for transmittal by certified or
registered mail, postage prepaid, or when deposited with a public
telegraph company for transmittal, or when sent by facsimile
transmission charges prepared, provided that the communication is
addressed:
(i) In the case of the Company:
XPLORER, S.A.
2929 South Maryland Parkway
Las Vegas, Nevada 89109-2217
Telephone: (702) 699-5400
Facsimile: (702) 699-5462
(ii) In the case of Advisor:
NuVen Advisors Inc.
4695 MacArthur Court, Suite #530
Newport Beach, CA 92660
Telephone: (949) 833-2094
Telefax: (949) 833-7854
With copy to:
Richard O. Weed
Archer & Weed
4695 MacArthur Court, Suite #530
Newport Beach, CA 92660
Telephone: (949) 475-7739
Telefax: (949) 475-7735
or to such other person or address designated in writing by the
Company or Advisor to receive notice.
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G. Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
H. Governing Law. This Agreement was negotiated and is being contracted
for in the United States, State of Nevada, and shall be governed by
the laws of the State of Nevada, and United States of America,
notwithstanding any conflict-of-law provision to the contrary.
I. Binding Effect. This Agreement shall be binding upon the parties
hereto and inure to the benefit of the parties, their respective
heirs, administrators, executors, successors, and assigns.
J. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto and supersedes any and all prior
agreements, arrangements, or understandings between the parties
relating to the subject matter of this Agreement. No oral
understandings, statements, promises, or inducements contrary to the
terms of this Agreement exist. No representations,The following
table sets forth the range of Bid and Ask prices for the Common Stock
during the periods indicated, and represents inter-dealer prices,
which do not include retail mark-ups and mark-downs, or any
warranties, covenants, or conditions, express or implied, other than
as set forth herein, have been made by any party.
K. Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force
and effect.
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L. Counterparts. A facsimile, telecopy, or other reproduction of this
Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument, by one or more parties
hereto and such executed copy may be delivered by facsimile of
similar instantaneous electronic transmission device pursuant to
which the signature of or on behalf of such party can be seen. In
this event, such execution and delivery shall be considered valid,
binding and effective for all purposes. At the request of any party
hereto, all parties agree to execute an original of this Agreement as
well as any facsimile, telecopy or other reproduction hereof.
M. Time is of the Essence. Time is of the essence of this Agreement and
of each and every provision hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date above written.
"NuVen"
Fred G. Luke, individually and
doing business as
NuVen Advisors, Inc.
By: /s/ Fred G. Luke
Name: Fred G. Luke
Title: President and Sole Shareholder
The "Company"
XPLORER, S.A.
By: /s/ Steven B. Mortensen
Name: Steven B. Mortensen
Title: President
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EXHIBIT 10.9 (a)
ACKNOWLEDGMENT OF ASSIGNMENT
AND
FIRST AMENDMENT
TO THE
ADVISORY AGREEMENT
THIS ACKNOWLEDGMENT OF ASSIGNMENT AND FIRST AMENDMENT TO THE ADVISORY
AGREEMENT ("Amendment") is made effective this 1st day of October 1999, by and
between Fred G. Luke, individually and as President of NuVen Advisors, Inc., a
Nevada corporation (collectively, "Advisor") and Xplorer, S.A., a Nevada
corporation (the "Company").
WHEREAS, the Company and Advisor are parties to the agreement effective
June 30, 1999, a copy of which is attached hereto as Exhibit "A" (the "Advisory
Agreement") pursuant to which Advisor has been providing the Company with
Services (as defined in the Advisory Agreement).
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and Advisor
agree to modify the Advisory Agreement as follows:
1. Paragraph 6, "Compensation," shall be amended as follows:
The Company agrees to pay Advisor a fee for the services provided by
Advisor pursuant to this Agreement, as follows:
B. Merger Fee: As to Services provided by Advisor related to the
introduction of Business Opportunities which results in a Merger
Transaction or which the Company acquires or otherwise obtains an
equity interest or interest as a creditor, the Company agrees to pay
Advisor a transaction fee (the "Merger Fee"). The Merger Fee shall be
equal to ten percent (10%) of the asset value or investment made in
the Company (including assumed debt) in such Business Opportunity as a
result of Advisor's introduction or efforts. One third (1/3) of the
Merger Fee shall be due and payable upon completion of the definitive
agreements related to each transaction, and the balance shall be
issued upon closing;
C. Advisory Fee: The Company shall pay Advisor a monthly fee ("Advisory
Fee") equal to Three Thousand Five Hundred Dollars ($3,500), payable
monthly in advance, in cash or shares of the Company's common stock,
at the Company's election, with such shares to be registered as set
forth herein;
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D. Merger Fee: As to Services provided by Advisor related to the
introduction of Business Opportunities which results in a Merger
Transaction or which the Company acquires or otherwise obtains an
equity interest or interest as a creditor, the Company agrees to pay
Advisor a transaction fee (the "Merger Fee"). The Merger Fee shall be
equal to ten percent (10%) of the asset value or investment made in
the Company (including assumed debt) in such Business Opportunity as a
result of Advisor's introduction or efforts. One third (1/3) of the
Merger Fee shall be due and payable upon completion of the definitive
agreements related to each transaction, and the balance shall be
issued upon closing.
2. A new paragraph, "Paragraph 18. Compliance With Exchange Act
Requirements," shall be added, to read as follows:
18. Compliance With Exchange Act Requirements
The Company and Advisor acknowledge that in the event Advisor, as a
result of this Agreement, receives shares of the Company's common
stock in lieu of cash for fees it may be considered an affiliate
subject to Section 16(b) of the Securities Exchange Act of 1934 (the
"Exchange Act"). In this regard the Company and Advisor agree, that
for purposes of any profit computation under section 16(b) of the
Exchange Act, the price paid for such shares is equal to the
respective fee.
3. The Company acknowledges and consents to the assignment of the Advisory
Agreement, Option Agreement and this Amendment by Advisor to NuVen Advisors
Limited Partnership ("NuVen LP") effective immediately following the
effective date of this Amendment. Further, all other provisions, terms and
conditions of the Advisory Agreement, other than those amended hereby,
shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this First Amendment to the
Advisory Agreement effective on the date above written.
"Advisor"
Fred G. Luke, individually and as President of
NuVen Advisors, Inc.
By: /s/ Fred G. Luke
The "Company"
Xplorer, S.A.
By: /s/ Steven B. Mortensen
Name: Steven B. Mortensen
Title: President
2
<PAGE>
EXHIBIT 10.10
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (the "Agreement") is entered into this 5th day of
November 1999, by and between Scientific NRG Incorporated, a Minnesota
corporation ("SNRG") and Xplorer, S.A., a Nevada corporation ("Xplorer").
WHEREAS, SNRG desires to acquire from Xplorer the One Million Two Hundred
Seventy Four Thousand Nine Hundred Sixty (1,274,960) membership units (the
"Units") of Atlantic Pacific Trust LLC, a Nevada limited liability company
("Atlantic") which Xplorer owns; and,
WHEREAS, Xplorer hereby agrees to sell the Units to SNRG subject to the
terms and conditions set forth below.
NOW, THEREFORE, for and in consideration of the mutual promises herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Purchase and Sale
Xplorer hereby sells, assigns and agrees to exchange the Units for the
Securities (as defined below) for a purchase price (the "Purchase Price")
equal to the greater of (a) one hundred twenty percent (120%) of Xplorer's
adjusted cost basis in the Units at December 31, 1998, or (b) Five Hundred
Thousand Dollars ($500,000), such value to be determined prior to Closing
(as defined herein) by Xplorer's financial auditors as set forth in
Xplorer's audited financial statements at December~31,
1998.
2. Securities
The Purchase Price shall consist of investment securities comprised of
promissory notes or common stock of US publicly-held companies
("Securities") acceptable to Xplorer and having a market value equal to the
Purchase Price. All references in this letter to the "Market Value" as to
shares of capital stock shall mean the thirty (30) day moving average
closing "bid" price for the Securities as quoted by the national Quotation
Bureau or NASDAQ Stock Market, as applicable. If and whenever the
Securities are adjusted as the result of a stock split, reverse stock
split, stock dividend, recapitalization, reclassification, merger of
similar capital change, then the number of shares and Market Price will be
adjusted correspondingly. Market Value as to promissory notes shall mean
the amount of the outstanding principal due under such note(s) at the time
of transfer to the Company.
3. Xplorer Stockholder Approval
It shall be a condition precedent to the Closing of the exchange that the
majority of the shareholders of Xplorer shall approve such exchange of the
Units for the Securities at its next annual or special meeting of
shareholders, or by written consent without a meeting pursuant to the laws
of Nevada, which shall be accomplished as soon as reasonably possible after
the execution hereof.
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<PAGE>
4. Closing
4.1 Date and Place. The closing of the delivery and transfer of the
Units (the "Closing") shall occur on a date ("Closing DAte") to be
mutually agreed upon by Xplorer and SNRG after exchange of all
books, records, financial information, documents, and other materials
on Atlandtic reasonably deemed necessary by SNRG to complete the
transaaction contemplated under this Agreement. Exchange of
documents under this Agreement sahll begin as soon as possible after
execution. In any case, the Closing Date shall be no later than
November 30, 1999.
4.2 Transaction and Document Exchange at Closing. At the Closing, the
following transactions shall occur and documents shall be exchanged,
all of which shall be deemed to occur simulataneously:
(A) By Xplorer. Xplorer will deliver, or cause to be delivered, to
SNRG:
(1) The documents necessary to transfer the Units to SNRG
pursuant to this Agreement, in proper form and substance
reasonably acceptable to SNRG;
(2) The opinion of counsel as set forth herein;
(3) Such other documents, instruments, and/or certificates, if
any, as are required to be delivered pursuant to the
provisions of this Agreement, or which are reasonably
determined by the parties to be required to effectuate the
transactions contemplated in this Agreement, or as
otherwise may be reasonably requested by SNRG to further
the intent of this Agreement;
(4) Financial statements of Atlantic dated as of its most
recent year end prior to the Closing Date covering all
operations since the inception. Such financial statements
shall be prepared by a certified public accounting firm.
Xplorer shall also deliver or cause to be delivered copies
of all books and records of Atlantic to the extent
available and necessary for SNRG to conduct proper due
diligence prior to the Closing Date, which books and
records shall present fairly the financial condition and
results of operations of Atlantic since the date of
inception, in accordance with generally accepted
accounting principles applied on a basis consistent with
prior accounting periods.
2
<PAGE>
(5) A certificate dated within 30 days of the Closing Date from
the Secretary of State of Nevada to the effect that Xplorer
is in good standing in the State of Nevada;
(6) All federal and state income payroll tax and sales tax
returns filed by Xplorer and all correspondence related
thereto;
(B) By SNRG. SNRG will deliver, or cause the following to be
delivered, to Xplorer:
(1) The Securities;
(2) A certificate dated at or within 30 days of the date
of the Closing from the Secretary of state of Nevada
to the effect that SNRG is a corporation duly
organized, validly existing, and in good standing
under the laws of the State of Nevada;
(3) The opinion of counsel as set forth herein;
(4) Such other documents, instruments, and/or certificates, if
any, as are required to be delivered pursuant to the
provisions of this Agreement, or which are reasonably
determined by the parties to be required to effectuate the
transactions contemplated in this Agreement, or as
otherwise may be reasonably requested by the Selling
Shareholders in furtherance of the intent of this
Agreement.
4.3 Post-Closing Documents. From time to time after the Closing, upon
the reasonable request of any party, the party to whom the request is
made shall deliver such other and further documents, instruments,
and/or certificates as may be necessary to more fully vest in the
requesting party the consideration provided for in this Agreement or
to enable the requesting party to obtain the rights and benefits
contemplated by this Agreement, including but not limited to delivery
of copies of the records of all books and records of Atlantic since
inception.
3
<PAGE>
5. Representations and Warranties of Xplorer
Xplorer hereby covenants with and represents and warrants to SNRG that:
A. The Units. The Units are and will be as of the Closing Date, owned,
of record and beneficially, by Xplorer free and clear of liens,
claims and encumbrances, and Xplorer has all necessary right and
power to enter into and perform this Agreement and to assign and sell
the Units to SNRG as provided herein. Further, any necessary approval
of Xplorer's transfer and sale of the Units, if required, shall be
approved by the requisite number of Atlantic's members and will be
obtained prior to Closing.
Additionally, the Units are validly issued by Atlantic; there
is no "stop transfer" order in effect or pending, nor is there any
claim by Atlantic which would serve to restrict the transfer or
exchange of the Units as contemplated herein; and, Xplorer has not
created any option, security interest or encumbrance involving the
Units that would give rise to any claims by third parties or
otherwise conflict with or preclude the exchange as contemplated
herein.
B. Organization. Xplorer is a corporation validly existing and in good
standing under the laws of Nevada, with the power and authority to
carry on its business as now being conducted. The execution and
delivery of this Agreement and the consummation of the transaction
contemplated in this Agreement have been, or will be prior to Closing,
duly authorized by all requisite corporate action on the part of
Xplorer. This Agreement has been duly executed and delivered
by Xplorer and constitutes a binding, and enforceable obligation of
Xplorer;
4
<PAGE>
C. Third Party Consent No authorization, consent, or approval of, or
registration or filing with, any governmental authority or any other
person is required to be obtained or made by Xplorer in connection
with the execution, delivery, or performance of this Agreement or
the transfer of the Units, or if required Xplorer has or will obtain
same prior to Closing;
D. Litigation. Xplorer is not a defendant against whom a claim has been
made or a judgement rendered in any litigation or proceedings before
any local, state or U.S. government, or any department, board, body or
agency thereof, which could result in a claim against the Units;
E. Authority. This Agreement has been duly executed by Xplorer, and the
execution and performance of this Agreement will not violate, or
result in a breach of, or constitute a default in any agreement,
instrument, judgement, order or decree to which Xplorer is a party or
to which the Units are subject.
6. Conditions Precedent to SNRG Closing
All obligations of SNRG under this Agreement, and as an inducement to SNRG
to enter into this Agreement, are subject to Xplorer's covenants and
agreement to each of the following:
A. Transfer and Delivery of the Units. Xplorer shall have taken all action
necessary to deliver the Units to SNRG.
B. Acceptance of Documents. All instruments and documents delivered to SNRG
pursuant to this Agreement or reasonably requested by SNRG to verify the
representations and warranties of Xplorer herein, shall be satisfactory to
SNRG and its legal counsel.
C. Representations and Warranties. The representations and warranties by
Xplorer set forth in this Agreement shall be true and correct at and as of
the Closing Date, with the same force and effect as though made at and as
of the date hereof, except for changes permitted or contemplated by this
Agreement. Xplorer shall deliver to SNRG upon Closing a certificate to this
effect.
5
<PAGE>
D. No Breach or Default. Xplorer shall have performed and complied with all
covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
E. No Dilution by Atlantic. In the event the sale of Units is consummated,
then each of the Selling Shareholders agrees to such sale and waives,
surrenders, and agrees not to exercise any rights which such Selling
Shareholders might have to purchase any Units or have SNRG redeem any
Units.
F. Maintenance of Capital Structure. Up until the Closing Date, or termination
hereof, whichever is the earlier, except as disclosed herein or required
under the terms of this Agreement, no change shall be made in the Articles
of Incorporation or Bylaws of the Company, or the authorized capital stock
of the Company.
G. Avoidance of Distributions. Up until the Closing Date, the Company shall
not declare any dividends, make any payments or distributions to its
stockholders or purchase for cash or redeem any of its shares of capital
stock.
H. Conduct of Business as Usual. Up until the Closing Date, the Company
Shareholders shall conduct its operations only in the usual and ordinary
course, and that no change will be made to such operations which might
adversely affect the value of the Company.
I. Opinion of Counsel. Xplorer shall have delivered to SNRG, if requested, an
opinion of counsel dated the date of Closing to the effect that:
(i) Xplorer is duly organized, validly existing, and in good standing
under the laws of the United States, State of Nevada.
(ii) Xplorer has the corporate power to conduct business and,
specifically, to carry on its business as then being conducted
and, further, it is duly qualified to do business in the United
States, State of Nevada.
(iii) All corporate action, stockholder and/or director approval has
been properly obtained and completed by Xplorer, to the extent,
if any, that they are necessary, to sell and transfer the Units
to SNRG.
6
<PAGE>
7. Effective Date of Exchange
Notwithstanding the date of Closing, the effective date of the sale of
the Units shall be September 30, 1999 (the "Effective Date").
8. Assignment
The rights to acquire the Units contained in this Agreement may be
assigned in whole or in part by SNRG to third parties who acknowledge
and agree to be bound by the terms and conditions of this Agreement;
provided however, that the right to assign is expressly limited to an
"Affiliate" or subsidiary, or as the result of a corporate
reorganization or recapitalization. For the purpose of this Agreement
the term "Affiliate" shall be defined as a person or enterprise that
directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with the assigning
party.
9. Counterparts
A facsimile, telecopy or other reproduction of this instrument may be
executed by one or more parties hereto and such executed copy may be
delivered by facsimile or similar instantaneous electronic transmission
device pursuant to which the signature of or on behalf of such party
can be seen, and such execution and delivery shall be considered valid,
binding and effective for all purposes. At the request of any party
hereto, all parties agree to execute an original of this instrument as
well as any facsimile, telecopy or other reproduction hereof.
10. Further Documentation
Each party hereto agrees to execute such additional instruments and
take such action as may be reasonably requested by the other party to
affect the transaction, or otherwise to carry out the intent and
purposes of this Agreement.
11. Notices
All notices and other communications hereunder shall be in writing and
shall be sent by prepaid first class mail to the parties at the
following addresses, as amended by the parties with written notice to
the other:
7
<PAGE>
To SNRG: Scientific NRG Incorporated
4001 South Decatur, #399
Las Vegas, Nevada 89103
Telephone: (702) 871-9080
Telefax: (702) 875-5945
With copy to: Archer & Weed
4695 MacArthur Court, Suite 530
Newport Beach, California 92660
Telephone: (714) 833-5363
Facsimile: (714) 833-5384
To Xplorer: Xplorer, S.A.
2929 South Maryland Parkway
Las Vegas, Nevada 89109-2217
Telephone: (702) 699-5400
Facsimile: (702) 699-5462
12. Counterparts
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemeD an original, but all of
which together shall constitute one and the same instrument.
13. Governing Law
This Agreement was negotiated, and shall be governed by the laws of
Nevada notwithstanding any conflict-of-law provision to the contrary.
14. Entire Agreement
This Agreement sets forth the entire understanding between the parties
hereto and no other prior written or oral statement or agreement shall
be recognized or enforced.
15. Severability
If a court of competent jurisdiction determines that any clause or
provision of this Agreement is invalid, illegal or unenforceable, the
other clauses and provisions of the Agreement shall remain in full
force and effect and the clauses and provision which are determined to
be void, illegal or unenforceable shall be limited so that they shall
remain in effect to the extent permissible by law.
8
<PAGE>
16. Amendment or Waiver
Every right and remedy provided herein shall be cumulative with every
other right and remedy, whether conferred herein, at law, or in equity,
and may be enforced concurrently herewith, and no waiver by any party
of the performance of any obligation by the other shall be construed as
a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to Closing, this
Agreement may be amended by a writing signed by all parties hereto.
17. Headings
The section and subsection headings in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
Xplorer, S.A.
a Nevada corporation
By /s/ Steven B. Mortensen
Name: Steven B. Mortensen
Title: President
Scientific NRG Inc.,
a Minnesota corporation
By /s/ Jon L. Lawver
Name: Jon L. Lawver
Title: Secretary
9
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 3,495
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,495
<PP&E> 2,705
<DEPRECIATION> (2,705)
<TOTAL-ASSETS> 3,495
<CURRENT-LIABILITIES> 473,632
<BONDS> 0
0
0
<COMMON> 1,281
<OTHER-SE> (3,071,649)
<TOTAL-LIABILITY-AND-EQUITY> 3,495
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 344,197
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (344,197)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (344,197)
<EPS-BASIC> (0.41)
<EPS-DILUTED> (0.41)
</TABLE>
