U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File Number 33-32341-D
WORLDPORT COMMUNICATIONS, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 84-1127336
(State or other jurisdiction of (I.R.S. Employer ID Number)
incorporation or organization)
100 California St. Suite 1400, San Francisco, CA 94111
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (415) 393-0724
Sage Resources, Inc. 10 Exchange Place, Suite 309, Salt Lake City, UT 84111
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the
preceding 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.
[ X ] Yes [ ] No
Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years.
Indicated by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act
subsequent to the distribution of securities under a plan confirmed by a court.
[ ] Yes [ ] No
Applicable only to corporate issuers.
As of September 30, 1996, Registrant had 4,060,000 shares common stock
par value $.001 outstanding.
1
<PAGE>
WORLDPORT COMMUNICATIONS, INC.
(A Development Stage Company)
INDEX
Page
Number
Part I. Financial Information
Item I. Financial Statements
Condensed Balance Sheets as of September 30,
1996 (Unaudited) and December 31, 1995 3
CondensedStatements of Operations, Three Months
Ended September 30, 1996 and 1995 and for
the period from January 6, 1989 (Inception)
to September 30, 1996.
(Unaudited) 4
CondensedStatements of Operations, Nine Months Ended
September 30, 1996 and 1995 and for the
period from January 6, 1989 (Inception) to
September 30, 1996.
(Unaudited) 5
CondensedStatements of Cash Flows, Three Months
Ended September 30, 1996 and 1995 and for
the period from January 6, 1989 (Inception)
to September 30, 1996.
(Unaudited) 6
CondensedStatements of Cash Flows, Nine Months Ended
September 30, 1996 and 1995 and for the
period from January 6, 1989 (Inception) to
September 30, 1996.
(Unaudited) 7
Notes to Condensed Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Conditions and Results of
Operations 10
Part II. Other Information 11
2
<PAGE>
WORLDPORT COMMUNICATIONS, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
Current Assets:
<CAPTION>
<S> <C> <C>
Cash $ 643 $ 14,539
Subscription receivable (Note 1) 160 -
Interest receivable (Note 1) 12,500 -
Note receivable (Note 1) 500,000 -
-------------------- --------------------
TOTAL ASSETS $ 513,303 $ 14,539
==================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable $ 920 $ -
Interest payable (Note 1) 12,500 -
Note payable (Note 1) 500,000 -
-------------------- --------------------
Total Current Liabilities 513,420 -
-------------------- --------------------
Stockholders' Equity (Deficit):
Preferred stock - -
Common stock (Note 1) 164,947 50,547
(Deficit) accumulated during
development stage (165,064) (36,008)
-------------------- --------------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (117) 14,539
-------------------- --------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 513,303 $ 14,539
==================== ====================
</TABLE>
Note: The balance sheet at December 31, 1995, has been taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
WORLDPORT COMMUNICATIONS, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
January
Three Months Three Months 6, 1989
Ended Ended (Inception) to
September 30, September 30, September 30,
1996 1995 1996
Revenue:
<CAPTION>
<S> <C> <C> <C>
Interest income $ 12,639 $ 148 $ 19,237
--------------------- -------------------- --------------------
Operating Expenses:
Rent - 750 20,750
Consulting fees related
party - - 110,000
Legal & accounting 5,325 185 24,583
Interest expense 12,500 - 12,500
Stock issued for
consulting services - - 4,240
Other 3,700 125 12,228
--------------------- -------------------- --------------------
Total Operating Expense 21,525 1,060 184,301
--------------------- -------------------- --------------------
Net (Loss) $ (8,886) $ (912) $ (165,064)
===================== ==================== ====================
Net (Loss) per share $ nil $ (.02) $ (.04)
===================== ==================== ====================
Weighted average number of
shares outstanding 4,220,000 60,000 4,220,000
===================== ==================== ====================
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
WORLDPORT COMMUNICATIONS, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
January
Nine Months Nine Months 6, 1989
Ended Ended (Inception) to
September 30, September 30, September 30,
1996 1995 1996
Revenue:
<CAPTION>
<S> <C> <C> <C>
Interest income $ 12,765 $ 465 $ 19,237
--------------------- -------------------- --------------------
Operating Expenses:
Rent 1,000 2,250 20,750
Legal & accounting 9,979 2,361 24,583
Interest expense 12,500 - 12,500
Consulting fees related
party 110,000 - 110,000
Stock issued for consult-
ing services 4,240 - 4,240
Other 4,102 2,309 12,228
--------------------- -------------------- --------------------
Total Operating Expense 141,821 6,920 184,301
--------------------- -------------------- --------------------
Net (Loss) $ (129,056) $ (6,455) $ (165,064)
===================== ==================== ====================
Net (Loss) per share $ (.06) $ (.11) $ (.04)
===================== ==================== ====================
Weighted average number of
shares outstanding 2,140,000 60,000 4,220,000
===================== ==================== ====================
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
WORLDPORT COMMUNICATIONS, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
January
Three Months Three Months 6, 1989
Ended Ended (Inception) to
September 30, September 30, September 30,
1996 1995 1996
Operating Activities:
<CAPTION>
<S> <C> <C> <C>
Net (loss) $ (8,886) $ (912) $ (165,064)
Adjustments to reconcile net
loss to net cash provided by
(used in) operating activities:
Amortization - - 200
(Increase) in subscription
receivable - - (160)
Increase in accounts payable,
accrued rent and other 25 1,060 920
-------------------- -------------------- --------------------
Net Cash Provided by (Used in)
Operating Activities (8,861) 148 (164,104)
-------------------- -------------------- --------------------
Investing Activities:
Organization costs - - (200)
-------------------- -------------------- --------------------
Net Cash (Used in)
Investing Activities - - (200)
-------------------- -------------------- --------------------
Financing Activities:
Proceeds from issuance of
common stock - - 182,600
Deferred offering costs - - (17,653)
-------------------- -------------------- --------------------
Net Cash Provided by
Financing Activities - - 164,947
-------------------- -------------------- --------------------
Increase (Decrease) in Cash (8,861) 148 643
Cash, Beginning of Period 9,504 18,140 -
-------------------- -------------------- --------------------
Cash, End of Period $ 643 $ 18,288 $ 643
==================== ==================== ====================
Cash paid for income taxes $ - $ - $ -
==================== ==================== ====================
Cash paid for interest expense $ - $ - $ -
==================== ==================== ====================
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
WORLDPORT COMMUNICATIONS, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
January
Nine Months Nine Months 6, 1989
Ended Ended (Inception) to
September 30, September 30, September 30,
1996 1995 1996
Operating Activities:
<CAPTION>
<S> <C> <C> <C>
Net (loss) $ (129,056) $ (6,455) $ (165,064)
Adjustments to reconcile net
loss to net cash provided by
(used in) operating activities:
Amortization - - 200
(Increase) in subscription
receivable (160) - (160)
Increase in accounts payable,
accrued rent and other 920 1,838 920
-------------------- -------------------- --------------------
Net Cash (Used in) Operating
Activities (128,296) (4,617) (164,104)
-------------------- -------------------- --------------------
Investing Activities:
Organization costs - - (200)
-------------------- -------------------- --------------------
Net Cash (Used in)
Investing Activities - - (200)
-------------------- -------------------- --------------------
Financing Activities:
Proceeds from issuance of
common stock 114,400 - 182,600
Deferred offering costs - - (17,653)
-------------------- -------------------- --------------------
Net Cash Provided by
Financing Activities 114,400 - 164,947
-------------------- -------------------- --------------------
Increase (Decrease) in Cash (13,896) (4,617) 643
Cash, Beginning of Period 14,539 22,905 -
-------------------- -------------------- --------------------
Cash, End of Period $ 643 $ 18,288 $ 643
==================== ==================== ====================
Cash paid for income taxes $ - $ - $ -
==================== ==================== ====================
Cash paid for interest expense $ - $ - $ -
==================== ==================== ====================
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
WORLDPORT COMMUNICATIONS, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
December 31, 1995 and September 30, 1996 (Unaudited)
(1) Condensed Financial Statements
The condensed balance sheet of Worldport Communications, Inc. (formerly
Sage Resources, Inc.) as of September 30, 1996, the condensed
statements of operations and the condensed statements of cash flows for
the periods ended September 30, 1996 and 1995, have been prepared by
the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary
to present fairly the financial position, results of operations and
cash flows at September 30, 1996 and for all periods presented have
been made.
Certain information and footnote disclosures normally included in the
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
financial statements should be read in conjunction with the financial
statements and notes thereto included in Sage Resources, Inc.'s
December 31, 1995, Form 10-K. The results of operations for the three
month periods ended September 30, 1996 and 1995, are not necessarily
indicative of the operating results for the full years.
The Company borrowed $500,000 from Maroon Bells Capital Partners, Inc.
("Maroon Bells"), a shareholder of the Company, and loaned this amount
to Com Tech International Corporation ("Com Tech"). The note payable to
Maroon Bells bears interest at 10% per annum, is collateralized by an
assignment of the Com Tech note receivable and is due on December 1,
1996.
The Com Tech note receivable was due October 26, 1996, bears interest
at 10% per annum and is collateralized by an assignment of all rights,
title and interest that Com Tech has pursuant to a joint venture
agreement between Com Tech and Datamax de Mexico, S.A.de C.V. The note
is in default and represents a material credit risk. Failure to collect
all or part of this note and accrued interest could result in a loss of
up to $512,500 plus collection expenses. The value, if any, of the
collateral is unknown. The ultimate resolution of the matter and the
related loss, if any, cannot presently be determined.
(2) Change of Control and Related Transactions
Effective April 24, 1996 the controlling stockholder of the Company
sold 17,000 shares of its common stock and entered 15,000 additional
shares into a voting trust agreement which transferred control of the
Company to Exchange Place Capital Partners, LLC, a Utah limited
liability company ("Exchange").
The Company agreed to pay Exchange $110,000 for consulting services and
granted an option to Exchange allowing Exchange the right to purchase
160,000 shares of Sage's common stock for $160.
The financial statements as of September 30, 1996 include the issuance
of the 160,000 shares. The difference between the $160 option price of
the shares and the $4,400 value of the shares determined based upon the
price per share paid for the 4,000,000 shares (issued June 27, 1996
described below) was accounted for as an expense in the financial
statements of September 30, 1996 and shown as stock issued for
consulting services. The $160 option price has been shown as stock
subscriptions receivable at September 30, 1996 and was collected
subsequent to September 30, 1996.
Effective June 27, 1996, the Company issued 4,000,000 shares of its
common stock for $110,000 in cash. Pursuant to this transaction, Maroon
Bells and certain related parties received sixty-one percent (61%) of
the issued and outstanding shares of the Company.
8
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company was formed on January 6, 1989, to evaluate, structure and complete a
merger with, or acquisition of, other entities. In October 1996, the Company
changed its domicile to Delaware and changed its name to Worldport
Communications, Inc.
Plan of Operations
The Company is a development stage company that has not generated revenues other
than interest income since inception. The Company does not have any current
operations. The Company's strategy is to develop its business through strategic
acquisitions of telecommunication services companies. Thus, Management
anticipates that the Company will not earn any revenues until after the
conclusion of a merger or acquisition, if any. Interest income for the three
months ended September 30, 1996 was $12,639 compared to $148 for the same period
in 1995. The increase was due to the interest from the Com Tech Note which has
been accrued but has currently not yet been paid.
Liquidity and Capital Resources
The Company has limited working capital and is currently seeking additional
equity financing through a private placement of its common stock to fund its
acquisition of telecommunication services businesses. Failure to obtain
sufficient capital could adversely affect the Company's acquisition strategy.
Additionally, there can be no assurance that the Company will be able to obtain
additional financing on reasonable terms, if at all.
On July 1, 1996 the Company borrowed $500,000 from Maroon Bells (the "Maroon
Bells Note") and loaned this amount to Com Tech (the "Com Tech Note"). The
Maroon Bells Note bears interest at 10% per annum, is collateralized by an
assignment of the Com Tech Note and is due on December 1, 1996. On October 3,
1996, the Company was notified by Maroon Bells that it had assigned $80,000
principal amount of the Maroon Bells Note, to certain offshore entities (the
"Assignees").
The Com Tech Note was due October 26, 1996, bears interest at 10% per annum and
is collateralized by an assignment of all rights, title and interest that Com
Tech has pursuant to a joint venture agreement between Com Tech and DataMax de
Mexico, S.A.deC.V. The Com Tech Note is in default and represents a material
credit risk. Failure to collect all or part of this Note and accrued interest
could result in a loss of up to $512,500 plus collection expenses. The value, if
any, of the collateral is unknown. The ultimate resolution of the matter and the
related loss, if any, cannot presently be determined.
On July 15, 1996, the Company entered into certain consulting agreements with
various consultants, who at the time were also shareholders of the Company, in
which the consultants agreed to render certain consulting services in exchange
for a total of 650,000 shares of common stock. Two of the consultants, Jonathan
Y. Hicks and Edward P. Mooney, were recently appointed to serve as officers and
directors of the Company. It is anticipated that such shares will be issued in
November 1996.
Subsequent Events
Change of Domicile and Reincorporation Merger
On October 1, 1996, Sage changed its state of domicile from Colorado to Delaware
through the merger of Sage into
9
<PAGE>
WorldPort Communications, Inc., a wholly owned Delaware subsidiary
("WorldPort"), with WorldPort being the surviving corporation (the
"Reincorporation Merger"). As part of the Reincorporation Merger, Sage changed
its name to WorldPort to have a name which more fully describes Sage's
activities in the international telecommunications industry. Upon completion of
the Reincorporation Merger, each issued and outstanding share of Sage common
stock was automatically converted into one share of WorldPort common stock. See
Proxy Statement attached hereto as Exhibit 22.1.
Election of Directors and Officers
On October 1, 1996, the shareholders of the Company elected Edward P. Mooney,
Jonathan Y. Hicks and Daniel P. McGinnis as directors of the Company to serve
until the next annual meeting of shareholders or until their respective
successors are elected and qualified. This new Board of Directors then elected
Edward P. Mooney as President of the Company and Jonathan Y. Hicks as
Secretary/Treasurer of the Company. See Proxy Statement attached hereto as
Exhibit 22.1.
Long-Term Incentive Plan
At October 1, 1996, the Company adopted the WorldPort Communications, Inc.
Long-Term Incentive Plan (the "Incentive Plan") for employees and consultants of
the Company. The Company will use the Incentive Plan as a means to promote the
success and enhance the value of the Company through (i) linking the personal
interests of its key employees and consultants to those of the shareholders,
(ii) providing employees with an incentive for outstanding performance, and
(iii) providing the Company flexibility in its ability to attract and retain the
services of its employees and contractors. The Incentive Plan authorizes grants
of Incentive Stock Options, Non-qualified Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Shares, and Dividend Equivalents. The
Company has reserved 2,000,000 shares of WorldPort common stock for use as
grants under the Incentive Plan. As of November 19, 1996, the Company has issued
stock options to certain employees to acquire 75,000 shares of Common Stock at
$.08 per share. See Proxy Statement attached hereto as Exhibit 22.1.
Issuance of Stock
On October 15, 1996, the Company negotiated a cancellation of certain
indebtedness with the Assignees in exchange for the issuance of 1,000,000 shares
of Company common stock, pursuant to Regulation S.
In November 1996, the Company commenced a private offering of up to 4,000,000
shares of common stock for $1.50 per share pursuant to an offering memorandum
dated November 1, 1996. As of November 19, 1996, the Company has sold 473,333
shares for a total of $710,000.
Financial Advisory Agreement
On October 31, 1996, the Company entered into an agreement with Dinton Trader
S.A. ("Dinton Trader") under which Dinton Trader will provide certain financial
advisory services to the Company in exchange for an advisory fee of $360,000
payable no later than June 30, 1997.
10
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On November 8, 1996, the Company filed a lawsuit against Com Tech
International Corporation in the United States District Court in the Northern
District of California (Case No. C-96-4055). The Company filed the lawsuit to
collect $500,000 plus interest and attorney's fees for money that Com Tech
borrowed from the Company that is now due, owing and unpaid.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
An annual and special meeting of the shareholders of the Company was
held on September 30, 1996. Of the 4,060,000 issued and outstanding shares of
the Company, 3,502,800 were represented at the meeting by proxy. One hundred
percent (100%) of the shares represented at the meeting approved (1) the change
of domicile and Reincorporation of the Company from Colorado to Delaware, (2)
the adoption of the WorldPort Communications, Inc. Long Term Incentive Plan for
employees and consultants of the Company, and (3) the election of Jonathan Y.
Hicks, Edward P. Mooney, and Daniel P. McGinnis as the new board of directors.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
10.1 Financial Advisory Agreement between the
Registrant and Dinton Trader S.A. dated
October 31, 1996.
10.2 Loan Agreement between Com Tech International
Corporation and the Registrant dated June 27,
1996.
10.3 Assignment, Pledge & Security Agreement
between Com Tech International Corporation
and the Registrant dated June 27, 1996.
10.4 Convertible Secured Promissory Note between
the Registrant and Maroon Bells Capital
Partners, Inc. dated July 1, 1996.
10.5 Loan Agreement between the Registrant and
Maroon Bells Capital Partners, Inc. datd
July 1, 1996.
10.6 Assignment, Pledge & Security Agreement
between the Registrant and Maroon Bells
Capital Partners, Inc. dated July 1, 1996.
10.7 Secured Promissory Note between the
Registrant and Com Tech International
Corporation dated June 27, 1996.
22.1 Notice of Annual and Special Meeting of
Shareholders and Proxy Statement dated
September 18, 1996.
Reports on Form 8-K
None.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WORLDPORT COMMUNICATIONS, INC.
Date By /s/ Edward P. Mooney
Edward P. Mooney
Title President
12
<PAGE>
SAGE RESOURCES, INC.
10 Exchange Place, #309
Salt Lake City, UT 84111
September 18, 1996
Dear Shareholders:
You are cordially invited to attend the annual and special
meeting of the shareholders of Sage Resources, Inc. (the "Company") to be held
at the corporate office of the Company located at 111 E. Broadway, Suite 900,
Salt Lake City, UT 84111 on September 30, 1996, at 10:00 a.m. local time. The
purpose of the meeting is:
1. To approve a change of domicile and reincorporation of the Company
from Colorado to Delaware. The change of domicile will be accomplished
by means of a reincorporation merger (the "Merger") of the Company
with and into WorldPort Communications, Inc. ("WorldPort"), a newly
formed, wholly owned Delaware subsidiary of the Company. Upon
completion of the merger each outstanding share of no par common stock
of the Company ("Company Common Stock") will be converted into one
share of WorldPort common stock, $.0001 par value ("WorldPort Common
Stock"). As a result of the Merger, the existing shareholders of the
Company will automatically become shareholders of WorldPort.
2. Toapprove the adoption of the WorldPort Communications, Inc. Long Term
Incentive Plan for employees and consultants of the Company.
3. To elect three directors of the Company to serve until the next Annual
Meeting of Shareholders or until their respective successors are
elected and qualified.
The Board of Directors has fixed the close of business on September 9, 1996
as the record date (the "Record Date") for the determination of shareholders
entitled to notice of and to vote at the Meeting. Only holders of Common Stock
at the close of business on the Record Date will be entitled to vote at the
Meeting. The affirmative vote of a majority of the shares represented in person
or by proxy at the Meeting is needed for approval of the proposals. The election
of directors will be made by a plurality of the votes cast at the meeting. The
Board of Directors believes the adoption of the above described proposals is in
the best interest of the Company and its shareholders. Whether or not you expect
to attentd the meeting, and regardless of the number of shares you own, we urge
you to read the attached proxy statement and to promptly date, sign and mail the
enclosed proxy in the envelope provided.
<PAGE>
Sincerely,
Jonathan Winters
President and Chief Executive Officer
59842.7
2
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
|X| Filed by the Registrant
|_| Filed by a Party other than the Registrant
Check the appropriate box:
|_| Preliminary Proxy Statement
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
SAGE RESOURCES, INC.
(Name of Registrant as Specified in its Charter)
SAGE RESOURCES, INC.
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(l), or 14a-6(j)(2).
|_| $500 per each party to the controversy pursuant to Exchange Act Rules
14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6-(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
Not Applicable*
2) Aggregate number of securities to which transaction applies:
Not Applicable*
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: Not Applicable*
4) Proposed maximum aggregate value of transaction:
Not Applicable*
---------------
* Pursuant to Exchange Act Rule 0-11(c)(1)(ii), no computation of
the underlying value of the transaction is required.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
59842.7
3
<PAGE>
SAGE RESOURCES, INC.
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
AND
PROXY STATEMENT
TO BE HELD SEPTEMBER 30, 1996
To the Shareholders of Sage Resources, Inc.
NOTICE IS HEREBY GIVEN that the annual and special meeting
(the "Meeting") of the Shareholders of Sage Resources, Inc. (the "Company") will
be held at the corporate office of the Company located at 111 E. Broadway, Suite
900 Salt Lake City, UT 84111 on September 30, 1996 at 10:00 a.m. local time for
the following purposes:
1. To approve a change of domicile and reincorporation of the Company from
Colorado to Delaware. The change of domicile will be accomplished by means
of a reincorporation merger (the "Merger") of the Company with and into
WorldPort Communications, Inc. ("WorldPort"), a newly formed, wholly owned
Delaware subsidiary of the Company. Upon completion of the merger each
outstanding share of no par common stock of the Company ("Company Common
Stock") will be converted into one share of WorldPort common stock, $.0001
par value ("WorldPort Common Stock"). As a result of the Merger, the
existing shareholders of the Company will automatically become shareholders
of WorldPort.
2. To approve the adoption of the WorldPort Communications, Inc. Long Term
Incentive Plan for employees and consultants of the Company.
3. To elect three directors of the Company to serve until the next Annual
Meeting of Shareholders or until their respective successors are elected.
The Board of Directors has fixed the close of business on September 9,
1996 as the record date (the "Record Date") for the determination of
shareholders entitled to notice of and to vote at the Meeting. Only holders of
Common Stock at the close of business on the Record Date will be entitled to
vote at the Meeting. The affirmative vote of a majority of the shares
represented in person or by proxy at the Meeting is needed for approval of the
proposals. The election of directors will be made by a plurality of the votes
cast at the meeting. The Board of Directors believes the adoption of the above
described proposals is in the best interest of the Company and its shareholders.
Whether or not you expect to attend the meeting, and regardless of the number of
shares you own, we urge you to read the attached proxy statement and to promptly
date, sign and mail the enclosed proxy in the envelope provided.
59842.7
1
<PAGE>
If the Merger is consummated, shareholders of the Company who object to
the reincorporation of the Company in Delaware will have the right to dissent
and obtain an appraised value for their shares by complying with all of the
requirements of the Colorado Corporation Code, as described in the accompanying
Proxy Statement.
Please sign, date, and return your proxy in the enclosed envelope so
that your shares may be voted at the meeting. If the shares are held in more
than one name, all holders of record must sign. If you plan to attend the
Meeting, please notify me so that identification can be prepared for you. Thank
you for your interest and consideration.
By Order of the Board of Directors,
LISA VALERIO
Corporate Secretary
THE VOTE OF EACH SHAREHOLDER WILL BE IMPORTANT AT THIS MEETING. YOU ARE URGED TO
COMPLETE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED
POSTAGE-PAID ENVELOPE AS SOON AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. SUCH ACTION WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON SHOULD YOU
CHOOSE TO ATTEND THE MEETING.
Approximate date of mailing to shareholders: September 19, 1996.
59842.7
2
<PAGE>
SAGE RESOURCES, INC.
10 Exchange Place, #309
Salt Lake City, UT 84111
PROXY STATEMENT
ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS
To Be Held September 30, 1996
This Proxy Statement is furnished in connection with the solicitation
of Proxies by the Board of Directors of Sage Resources, Inc., a Colorado
corporation (the "Company") to be voted at the annual and special meeting of
Shareholders to be held on September 30, 1996, and any adjournment thereof (the
"Meeting"). The Meeting will be held at 111 E. Broadway, Suite 900, Salt Lake
City, UT 84111, at 10:00 A.M., local time. Solicitations will be made by mail
(beginning approximately September 19, 1996) and expenses in connection with the
solicitation will be borne by the Company. At the Meeting the shareholders will
vote upon the following:
1. A proposal to approve a change of domicile and reincorporation of the
Company from Colorado to Delaware. The change of domicile will be
accomplished by means of a reincorporation merger (the "Merger") of the
Company with and into WorldPort Communications, Inc. ("WorldPort"), a newly
formed, wholly owned Delaware subsidiary of the Company. Upon completion of
the merger each outstanding share of no par common stock of the Company
("Company Common Stock") will be converted into one share of WorldPort
common stock, $.0001 par value ("WorldPort Common Stock"). As a result of
the Merger, the existing shareholders of the Company will automatically
become shareholders of WorldPort.
2. A proposal to approve the adoption of the WorldPort Communications, Inc.
Long Term Incentive Plan (the "LTI Plan") for employees and consultants of
the Company.
3. A proposal to elect three directors of the Company to serve until the next
Annual Meeting of Shareholders or until their respective successors are
elected and qualified.
59842.7
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VOTING OF PROXIES
When the enclosed proxy is executed properly and returned, the shares
it represents will be voted at the Meeting and at any adjournments thereof in
accordance with the instructions indicated by the shareholder executing the
proxy, unless it is earlier revoked. If no directions are given on the proxy
with respect to any particular matter to be acted upon at the Meeting or at any
adjournments thereof, the shares represented by the proxy will be voted FOR the
described proposals and FOR the persons named below as management's nominees for
directors of the Company. Any shareholder executing and delivering the proxy has
the right, at any time before the authority granted thereby is exercised, to
revoke it by the execution of another proxy bearing a later date or by written
notification to the Secretary of the Company. Shareholders who are present in
person at the Meeting may revoke their proxies and vote in person if they so
desire. All determinations as to the proper execution and delivery of proxies,
or as to the validity of proxies, shall be made by the Board of Directors.
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the materials enclosed herewith and all costs of soliciting
proxies will be paid by the Company. Employees of the Company may solicit
proxies by further mailing, by telephone, facsimile machine, or by personal
conversation. No special compensation will be paid to such persons for these
tasks.
The Company may reimburse brokerage firms, other custodians, nominees,
fiduciaries and others for their out-of-pocket expenses in forwarding
solicitation material to the beneficial owners of the stock entitled to be voted
at the meeting.
REQUIRED VOTE
The Company's Board of Directors has set the close of business,
September 9, 1996, as the Record Date for the determination of shareholders
entitled to notice of and to vote at the Meeting. On September 9, 1996, there
were 4,060,000 shares of the Company Common Stock issued and outstanding, each
of which entitles the holder thereof to one vote on all matters which may come
before the Meeting.
The Company's By-Laws provide that the holders of a majority of the
issued and outstanding shares of the Company entitled to vote, represented in
person or by proxy, constitute a quorum at any shareholders' meeting. The
affirmative vote of a majority of the shares represented in person or by proxy
at the Meeting is needed for approval of the proposals. All elections of
directors will be decided by a plurality of the votes cast at the meeting in
respect thereof. If no voting direction is indicated on the Proxy Card, the
shares will be considered votes FOR the presented proposals and FOR election
of the named nominees for director.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth as of September 9, 1996, the stock ownership of
each person known by the Company to be the beneficial owner of five percent or
more of the Company Common Stock, each executive officer and director, each
nominee for director and all directors and executive officers of the Company as
a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME AND ADDRESS OF NUMBER OF SHARES(1) OUTSTANDING SHARES
BENEFICIAL OWNER BENEFICIALLY OWNED OF COMMON STOCK IN
<CAPTION>
<S> <C> <C>
Dulac Consultants Ltd. 500,000 12.32%
c/o The Africa House Group
Africa House, Box 15
Douglas, Isle of Man lM99lAW
Le Chevalier Noir Ltd. 500,000 12.32%
c/o The Africa House Group
Africa House, Box 15
Douglas, Isle of Man lM99lAW
Phillip S. Magiera 500,000 12.32%
1 Colonial Road
Dover, MA 02030
Maroon Bells Capital Partners, Inc.(2) 1,000,000 24.64%
101 North Waukegan, Suite 930
Lake Bluff, IL 60044
Paul A. Moore 500,000 12.32%
101 North Waukegan, Suite 930
Lake Bluff, IL 60044
Redfirn Pacific Inc. (BVI) Corp. 500,000 12.32%
Via Cantonale 16
Casella Postale 2820
CH-6901 Lugano Switzerland
Theodore H. Swindells 500,000 12.32%
100 California Street, Suite 1400
San Francisco, CA 94111
Jonathan Winters 0 0
10 Exchange Place #309
Salt Lake City, UT 84111
Lisa Valerio 0 0
10 Exchange Place #309
Salt Lake City, UT 84111
Mike Labertew 0 0
10 Exchange Place #309
Salt Lake City, UT 84111
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Jonathan Y. Hicks(2) 0 0
101 Waukegan, Suite 930
Lake Bluff, IL 60044
Edward P. Mooney(2) 0 0
100 California Street, Suite 1400
San Francisco, CA 94111
Daniel P. McGinnis(2) 0 0
14403 Fair Knoll Way
Houston, TX 77062
Total Officers and Directors as a Group (3 0 0
persons)
</TABLE>
- -------------------------
(1) Except as otherwise indicated each person has sole voting and investment
power with respect to the shares shown
(2) Nominee director, Edward Mooney and Jonathan Hicks are employees of Maroon
Bells Capital Partners, Inc.
59842.7
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<PAGE>
PROPOSAL 1
CHANGE OF DOMICILE AND REINCORPORATION
OF THE COMPANY
FROM COLORADO TO DELAWARE
On September 19, 1996 the Board of Directors of the Company approved a
proposal to change the Company's state of incorporation from Colorado to
Delaware and to submit such proposal to the Company's shareholders. This change
of domicile of the Company will be accomplished by means of a reincorporation
merger (the "Merger" or the "Reincorporation") of the Company with and into
WorldPort Communications, Inc. ("WorldPort"), a newly formed, wholly owned
Delaware subsidiary of the Company formed solely for this purpose. As part of
this transaction, the Company will change its name to WorldPort Communications,
Inc. A copy of the Agreement and Plan of Merger (the "Merger Agreement") between
the Company and WorldPort is attached hereto as Exhibit A.
Upon completion of the Merger on October 1, 1996 (the "Effective Time")
each outstanding share of no par common stock of the Company ("Company Common
Stock") will be converted into one share of WorldPort common stock, $.0001 par
value ("WorldPort Common Stock"). As a result of the Merger, the existing
shareholders of the Company will automatically become shareholders of WorldPort.
The Merger Agreement provides that the Merger may be abandoned by the Board of
Directors of the Company at any time prior to the Effective Time. In addition,
the Merger Agreement may be amended prior to the Effective Time; provided,
however, that the Merger Agreement may not be amended if such amendment would
(i) alter or change the amount or kind of shares to be received by the
shareholders in the Merger, (ii) alter or change any term of the Certificate of
Incorporation of WorldPort, or (iii) effect any alteration or change that would
adversely affect the shareholders.
The affirmative vote of the holders of at least a majority of all
shares represented in person or by proxy at the Meeting will be required for the
adoption of the Merger. The Merger Agreement provides that the Board of
Directors has the right to terminate the Merger Agreement and abandon the Merger
for any reason, notwithstanding shareholder approval.
WorldPort will be governed by the Delaware Business Corporation Act
("Delaware Law") and by a new Certificate of Incorporation and new Bylaws, which
will replace the Company's current Articles of Incorporation and Bylaws. These
changes may alter the rights of shareholders of the Company. (See "Charter
Documents Governing the Company and WorldPort" and "Certain Differences and
Similarities Between the Corporate Law of Colorado and Delaware"). The
Certificate of Incorporation and Bylaws of WorldPort are attached hereto as
Exhibit B and C respectively. The rights of any shareholder of the Company who
dissent are described below under "Rights of Dissenting Shareholders."
59842.7
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<PAGE>
As a result of the Merger, the existence of the Company will cease and
WorldPort will succeed to all business, properties, assets and liabilities of
the Company. The Merger will not result in any material change to the Company's
business, management, assets, liabilities or net worth. The officers and
directors of the Company at the Effective Time of the Merger, will serve in
their respective capacities as officers and directors of WorldPort. Stock
certificates of the Company will be deemed to represent the same number of
shares of WorldPort as were represented by such stock certificates of the
Company immediately prior to the Merger, however, shareholders are encouraged to
exchange their stock certificates in the Company for new stock certificates of
WorldPort. The exchange can be accomplished by sending the stock certificates of
the Company to the Company's transfer agent American Securities Transfer &
Trust, Inc., located at 1825 Lawrence Street, Suite 444, Denver, CO 80202-1817
along with a letter of instruction requesting the exchange. Delivery of existing
stock certificates representing Company Common Stock will constitute "good
delivery" of shares of WorldPort Common Stock in transactions subsequent to the
Merger.
Pursuant to the terms of the Merger Agreement, each option to purchase
Company Common Stock outstanding immediately prior to the Effective Time of the
Merger will become an option to purchase WorldPort Common Stock, subject to the
same terms and conditions as set forth in the applicable option plan or other
agreement pursuant to which such option was granted. All other employee benefit
plans and other agreements and arrangements with the Company will be continued
by WorldPort upon the same terms and subject to the same conditions, including
the LTI Plan, described herein at Proposal 2, subject to approval of the
shareholders.
Reasons for Change of Domicile
The change of domicile to Delaware will allow the Company to be
governed by Delaware's comprehensive and flexible corporation law, which is
periodically updated and revised to meet changing business needs. Delaware
courts have developed considerable expertise in dealing with corporate issues
and have generated a substantial body of case law construing Delaware Law and
establishing public policies with respect to Delaware corporations. As a result,
in Delaware, there is a much greater predictability with respect to corporate
legal affairs. Consequently, many corporations throughout the United States have
initially chosen Delaware or have subsequently reincorporated in Delaware in a
manner similar to the Company's proposed Reincorporation. The Board of Directors
of the Company believes the flexibility and predictability provided by Delaware
Law and the Delaware courts is not currently available under Colorado Law.
For these reasons, the Company believes that the Merger is in the best
interests of the Company and its shareholders. Following the Merger,
shareholders may, in some instances, have fewer rights and therefore less
protection than under Colorado Law. See "Charter Documents Governing the Company
and WorldPort," "Certain Differences and Similarities Between the Corporate Law
of Colorado and Delaware" and "Anti-takeover Legislation."
59842.7
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<PAGE>
Change of Name
As part of the Merger, the Company's name will be changed to that of
its subsidiary -- WorldPort Communications, Inc. The reason for the name change
is to provide the Company with a name that more fully describes the Company's
proposed activities in the international telecommunications industry.
Charter Documents Governing the Company and WorldPort
The internal affairs of WorldPort, as the surviving corporation after
the Merger, will be governed by its Certificate of Incorporation and By-Laws,
which are attached hereto as Exhibit B and C, respectively. All descriptions
herein concerning such documents are qualified in their entirety by reference to
such documents.
The Articles of Incorporation of the Company and the Certificate of
Incorporation of WorldPort differ in that WorldPort will have the authority to
issue only 75,000,000 shares, consisting of 65,000,000 shares of $.0001 par
value common stock and 10,000,000 shares of $.0001 par value preferred stock; as
opposed to the 760,000,000 shares, consisting of 750,000,000 shares of common
stock, no par value, and 10,000,000 shares of preferred stock, no par value,
which the Company is authorized to issue. The Board of Directors believes such
action to be in the best interest of the Company because the original
760,000,000 shares are not expected to be required in the foreseeable future and
WorldPort's future franchise tax in Delaware will be lower if it has fewer
shares of authorized capital stock.
The Company's Articles of Incorporation provide that preferred stock
may be issued in one or more series with such preferences, voting, dividend,
liquidation, redemption and conversion rights, designations and other terms and
conditions as the Board of Directors of the Company may determine. Thus, the
Board of Directors of the Company, without shareholder approval, may issue
preferred stock with voting and conversion rights that could affect the voting
power of holders of Company Common Stock. As of September 1996, there were no
shares of preferred stock of the Company issued and outstanding. WorldPort's
Certificate of Incorporation and Bylaws contain similar provisions allowing its
Board of Directors to establish the terms of any series or class of preferred
stock the Board decides to issue.
Certain Differences and Similarities Between the Corporate Law of Colorado and
Delaware.
There are a number of significant differences between the applicable
corporate laws of the States of Colorado and Delaware. Although no attempt has
been made to summarize all differences in the corporate laws of such states,
management believes the following to be a fair summary of the significant
differences in the corporation laws of the States of Colorado and Delaware which
could affect the Company's shareholders.
59842.7
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<PAGE>
Preemptive Rights
Under Colorado corporation laws, shareholders of the Company
are permitted to have preemptive rights to purchase new shares unless
prohibited in the Articles of Incorporation; the Company's Articles of
Incorporation prohibit such rights. Under Delaware Law, shareholders do
not have such preemptive rights unless there is a specific provision
granting such rights in the Certificate of Incorporation. The
Certificate of Incorporation of WorldPort does not contain such a
provision. Accordingly, the Reincorporation will not have a practical
impact on the preemptive rights of shareholders. Management of the
Company believes that not providing for mandatory preemptive rights in
the Certificate of Incorporation of WorldPort is desirable to afford
greater flexibility in possible future financing. Although the Board
has no present plans for any financing which would give rise to
preemptive rights, satisfaction of such rights would probably represent
an undesirable impediment to the use of such financing.
Examination of Books and Records
Under Colorado corporation law, a person must have been a
shareholder for at least three (3) months, or be the holder of record
of at least five percent of all outstanding shares of any class of
stock of a corporation to examine certain records of the corporation,
including the minutes of meetings of the board of directors and board
committees, accounting records and shareholder records. Under Delaware
Law, any shareholder with a proper purpose may demand inspection of the
records of the corporation.
Dividends
Under Delaware Law, a corporation may pay dividends to its
shareholders either out of surplus (net assets in excess of stated
capital), or in case there is no surplus, out of net profits for the
then current fiscal year and the preceding fiscal year, with certain
limitations. Under Colorado corporation law, dividends may be paid out
of net assets available after providing for satisfaction of
preferential rights of shareholders whose preferential rights are
superior to those receiving the dividend.
Votes of Shareholders
Colorado corporation law provides that the vote of a majority
of the outstanding shares entitled to vote is required to amend the
corporate charter, to dissolve a corporation, to effect a merger or
consolidation, or to sell, lease or exchange all or substantially all
of the corporation's assets. Both Delaware Law and the Certificate of
Incorporation of WorldPort have substantially similar requirements.
Under both Colorado and Delaware laws, action by the Board of
Directors, as well as the shareholders, is required to amend the
corporate charter, effect a merger or consolidation or the sale, lease
or exchange of its assets. Accordingly, the Reincorporation will not
have a practical impact on the vote of shareholders necessary to
approve significant corporate transactions.
59842.7
8
<PAGE>
Cumulative Voting
Delaware Law permits a corporation to provide cumulative
voting by including a provision to that effect in its Certificate of
Incorporation. The Certificate of Incorporation of WorldPort will not
have a provision permitting cumulative voting. Under Colorado
corporation law, shareholders have cumulative voting unless prohibited
in the Articles of Incorporation. The Articles of Incorporation of the
Company currently prohibit cumulative voting; accordingly, the
Reincorporation will not have a practical impact on such rights of
shareholders.
Action by Written Consent Without a Meeting
Under Colorado corporation law, shareholders may take action
without meetings by unanimous written consent of the shareholders
entitled to vote. Under Delaware Law, shareholders may take action
without meetings by written consent signed by the holders of
outstanding stock having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted.
Anti-takeover Legislation
Delaware has enacted a statute which prevents a "business
combination" between an "interested shareholder" and a Delaware
corporation for a period of three years after such shareholder became
an interested shareholder, unless certain conditions are met. Colorado
corporation law does not contain a parallel provision. The Delaware
statute defines a business combination as any merger or consolidation,
any sale, lease, exchange or other disposition of ten percent or more
of a corporation's assets, or any transaction (subject to certain
exceptions) which results in the transfer of stock of a corporation to
the interested shareholder, increases such shareholder's proportionate
ownership of a corporation's stock or results in such interested
shareholder receiving the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the
corporation. The Delaware statute defines an interested shareholder as
(subject to certain exceptions) any person who is the owner of fifteen
percent or more of the outstanding voting stock of the corporation or a
person who is an affiliate or associate of the corporation who became
the owner of fifteen percent or more of the outstanding voting stock of
the corporation within the three-year period prior to the date on which
it is sought to determine whether such shareholder is interested. A
business combination is exempt from the effect of the statute if, among
other things, either (i) prior to the date the shareholder became
interested, the board of directors approved either the business
combination or the transaction that resulted in the shareholder
becoming interested, (ii) upon consummation of the transaction that
resulted in the shareholder becoming interested, such shareholder owned
at least eighty-five percent of the corporation's voting stock
outstanding at the time the transaction commenced, or (iii) on
59842.7
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<PAGE>
or after the date the shareholder becomes interested, the business
combination is approved by the board of directors and authorized at an
annual or special meeting of shareholders by the affirmative vote of at
least two-thirds of the outstanding voting stock not owned by the
interested shareholder.
The anti-takeover statute provides that a Delaware corporation
may elect in its Certificate of Incorporation not to be governed by the
statute. The Certificate of Incorporation of WorldPort does not include
such a provision.
The effect of the Reincorporation in Delaware which subjects
the Company to the anti-takeover statute will make it more difficult
for a person who seeks to acquire control of the Company or to effect a
business combination with the Company, such as a tender offer, to do so
without management's approval, thereby making it more difficult to
remove existing Company management. The Delaware statute could,
therefore, potentially have an adverse impact on shareholders who wish
to participate in any such tender offer or other transactions even
where such transaction may be favorable to the interests of
shareholders.
The Reincorporation could have the effect of discouraging
hostile tender offers, proxy contests or other transactions by forcing
potential acquirers to negotiate with incumbent management. The
disadvantages to shareholders of the Reincorporation in Delaware
include the reduction of the likelihood of a hostile tender offer at a
premium over market price. The Reincorporation will have a practical
effect on shareholders by making it more difficult to remove existing
management without such management's approval.
Indemnification of Directors and Officers
A significant effect of the Reincorporation will be to broaden
the indemnification protection give to directors and officers. Delaware
Law permits corporations to adopt much broader rights of
indemnification for management than does Colorado. In recent years,
many corporations have found it increasingly difficult to attract and
retain qualified directors and senior management, due to the increased
risks of lawsuits and related liability. At the same time, it has
become increasingly difficult and expensive to obtain insurance
protecting directors and officers from such liabilities. As a result,
many corporations are utilizing expanded rights of indemnification as a
means to attract, retain and protect directors and senior management.
WorldPort may also enter into separate indemnification agreements with
management in the future.
Both the Colorado and Delaware laws makes indemnification
available to directors, officers, employees and agents of a
corporation. In addition, both Colorado and Delaware laws permit a
corporation to provide by agreement, by-law provision, vote of
shareholders or disinterested directors or otherwise, for
indemnification of certain parties not otherwise
59842.7
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<PAGE>
provided by statute. Under Colorado law, expenses can be advanced to a
director, officer or employee only upon, among other things, a written
affirmation of such person's good faith belief that such person has met
the applicable standard of conduct for indemnification. Delaware Law
contains no such requirements. Colorado Law requires that shareholders
be given notice of the payment of indemnification if such payment
arises out of a proceeding by or in the right of the corporation, and
Colorado Law limits such payments to expenses only. Delaware Law
contains no such requirements and the By-Laws of Worldport, as
permitted by Delaware Law, provide indemnification in derivative suits
for fines, judgments and amounts paid in settlement. Under Colorado
law, a director who is adjudged liable to the corporation for deriving
an improper personal benefit can only be reimbursed for expenses and
only upon a determination of a court that indemnification is proper. In
Delaware, such a director can also be indemnified for fines, judgments
and amounts paid in settlement and a court determination is not
necessary.
The Certificate of Incorporation and By-Laws of Worldport
contain broad indemnification provisions which (i) obligate Worldport
to indemnify any of its officers, directors, employees or agent for all
expenses (including legal fees) and liabilities (including fines,
judgments and amounts paid in settlement) incurred in connection with
any pending or completed suit, action or proceeding, including
derivative suits; provided, however, that such person is entitled to
indemnification only if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best
interest of Worldport, and with respect to any criminal action or
proceeding, had no reasonable cause to believe such person's conduct
was unlawful; (ii) provides for indemnification rights for as long as
any such person shall be subject to any possible claim or threatened
suit or proceeding by reason of the fact that such person was or is a
director, officer, employee or agent of Worldport; (iii) requires
Worldport to advance expenses to any person entitled to indemnification
provided that such person undertakes to repay the amount advanced if it
is ultimately determined that such person is not entitled to
indemnification; (iv) provides for the determination of whether
indemnification is proper because the requisite standard of conduct has
been met to be made by a majority vote of a quorum of directors who
were not parties to such action, suit or proceeding, or by independent
legal counsel or by the shareholders of Worldport; and (v) provides
that such charter and by-law provisions shall not be deemed exclusive
of any other rights to which those seeking indemnification or
advancement of expenses may legally be entitled. The Company Articles
of Incorporation provide the same indemnification as is permitted under
the Colorado corporate law in effect at the time of the conduct by the
person.
To the knowledge of management of the Company, no actions are
pending or threatened which would affect in any way the rights of any
person entitled to indemnification, whether under Colorado or Delaware
law.
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Dissolution
Under Colorado corporation law, the Company can voluntarily
dissolve upon its board of directors adopting a resolution setting
forth a proposal to dissolve which proposal is approved by a majority
of the shareholders entitled to vote thereon. Under Delaware Law, a
corporation can voluntarily dissolve if its board of directors and a
majority of the shareholders entitled to vote thereon approve the
dissolution, or without approval of the board of directors if all the
shareholders entitled to vote approve the dissolution.
Liability of Directors
Under Delaware Law, directors are jointly and severally liable
to a corporation for willful or negligent violations of statutory
provisions relating to the purchase or redemption of a corporation's
own shares or the payment of dividends, for a period of six (6) years
from the date of such unlawful act. Directors who were either absent or
dissented from the taking of such action may exonerate themselves from
liability by causing their dissent to be entered in the corporation's
minutes at the time the same was done, or immediately after such
directors have notice of the same. Under Colorado law, directors are
jointly and severally liable to the corporation if they vote for or
assent to acts which violate statutory provisions relating to the
purchase of a corporation's own shares, the payment of dividends, the
distribution of assets in liquidation or any loans or guarantees made
to a director, until the repayment thereof.
Rights of Dissenting Shareholders
Shareholders of the Company are presently entitled under
Colorado corporation law to receive payment for their shares if they
dissent from certain corporate actions such as mergers, consolidations
or sales of all or substantially all of the Company's assets. Under
Delaware Law, there is no such right to receive payment for shares in a
sale of assets and there is no such right to receive payment in a
merger or consolidation if the common stock of the surviving
corporation in the merger or consolidation is listed on a national
securities exchange or held of record by 2,000 or more persons and the
only consideration that the shareholders receive in the merger or
consolidation is stock of the corporation resulting from the merger or
consolidation or stock of a listed company with 2,000 or more
shareholders and cash in lieu of fractional shares.
Right of Dissenting Shareholders to Receive Payment for Shares
The following is a summary of appraisal rights available to
shareholders of the Company, which summary is not intended to be a
complete statement of the applicable Colorado law. For more detailed
information with respect to such appraisal rights see Article 113 of
the Colorado Business Corporation Act, set forth in its entirety as
Exhibit D hereto.
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<PAGE>
Any shareholder of the Company wishing to dissent from the
Merger and obtain cash payment for such shareholder's shares must file
with the Company, prior to the vote on the Merger, a written notice of
such shareholder's intention to demand that such shareholder be paid
fair compensation for such shareholder shares if the Merger is
effectuated and must refrain from voting such shareholder's shares in
approval of the Merger.
If the Merger is approved by the required vote at the meeting,
the Company will mail within ten (10) days after the consummation of
the Merger a notice to all shareholders who gave due notice of
intention to demand payment and who refrained from voting, providing
instructions as to how to obtain payment for their shares. A
shareholder who fails to demand payment or fails to deposit such
shareholder's certificate for payment within thirty (30) days of
mailing of such notice by the Company will have no right to receive
payment for such shareholder's shares but will retain all other rights
of a shareholder of the Company and will become a shareholder of
WorldPort on the consummation of the Merger.
Immediately upon effectuation of the Merger or upon receipt of
demand for payment, if the Merger has already been effectuated, the
Company will remit (the "Remittance") to a dissenter who has made
demand and who has deposited such dissenter's certificates, the amount
the Company estimates to be the fair value of the dissenter's shares,
with accrued interest, if any. The Remittance will be accompanied by
certain financial information of the Company and a statement regarding
the Company's estimate of the fair value of the shares, together with a
notice of the dissenter's rights to demand supplemental payment and a
copy of the appraisal provisions of the Colorado Business Corporation
Act.
If the Company fails to remit payment for the dissenter's
shares as required by the preceding paragraph or if the dissenter
believes that the amount remitted is less than the fair value of such
dissenter's shares or that the interest is not correctly determined,
such dissenter may, within thirty (30) days after the date of mailing
of the Remittance, mail to the Company such dissenter's own estimate of
the value of the shares or of the interest and demand payment of the
deficiency. If such dissenter fails to do so, such dissenter shall be
entitled to no more than the Remittance.
If the Company's calculation and the dissenting shareholder's
calculation of fair value of the shares remains unsettled, the Company
shall file in an appropriate court, within sixty (60) days of the
dissenting shareholder's request for payment, a petition requesting
that the fair value of the shares and interest thereon be determined by
the court. Dissenters who have not settled their demands will be
entitled to participate in such proceeding. If the Company fails to
file a petition as provided in this paragraph, each dissenter who has
made a demand and who has not already settled such dissenter's claim
against the Company shall be paid by the Company the amount demanded by
such dissenter with interest.
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<PAGE>
Federal Income Tax Consequences
Under current Federal income tax law, the Company, Worldport
and the shareholders of the Company who do not exercise their rights as
dissenting shareholders pursuant to Section 7-113-102 of the Colorado
Business Corporation Act will not, by reason of the Merger, realize any
gain or loss which will be recognized for Federal income tax purposes.
With respect to each dissenting shareholder's shares of Common Stock,
immediately after the Merger (i) the tax basis of such shares will
equal the tax basis of such shareholder's shares immediately before the
Merger and (ii) the holding period for such shares will include the
shareholder's holding period for the shares before the Merger. Any gain
or loss realized by shareholders of the Company who exercise their
rights to appraisal will be recognized for Federal income tax purposes.
Generally, such recognized gain or loss will be equal to the difference
between a shareholder's tax basis in such shareholder's shares and the
amount such shareholder receives for such shareholder's shares.
However, if a dissenting shareholder continues to own an interest in
Worldport, directly or indirectly, after the Merger then the amount
received upon exercise of appraisal rights might be taxed as a
dividend.
Recommendation of the Board of Directors
The Board of Directors unanimously recommends that the
shareholders vote in favor of the Merger since it believes that the
changes resulting from the Merger will be in the best interests of the
Company and its shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE CHANGE OF DOMICILE AND
REINCORPORATION OF THE COMPANY FROM COLORADO TO DELAWARE.
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PROPOSAL 2
LONG-TERM INCENTIVE PLAN
The Board of Directors of the Company has approved and recommended the
approval and adoption by the shareholders of the Long-Term Incentive Plan, to be
known as the WorldPort Long- Term Incentive Plan, for key employees of the
Company and any subsidiary and consultants providing services to the Company and
any subsidiary (the "LTI Plan"). The LTI Plan authorizes grants of Incentive
Stock Options ("ISOs"), Non-qualified Stock Options ("NQSOs"), Stock
Appreciation Rights ("SARs"), Restricted Stock, Performance Shares, and Dividend
Equivalents. The total number of shares of Company Common Stock available for
awards under the LTI Plan is 2,000,000.
The Board believes that the use of long-term incentives as authorized
under the LTI Plan is beneficial to the Company as a means of promoting the
success and enhancing the value of the Company by linking the personal interests
of its key employees and consultants to those of its shareholders and by
providing them with an incentive for outstanding performance. These incentives
also provide the Company flexibility in its ability to attract and retain the
services of employees and contractors upon whose judgement, interest, and
special effort the successful conduct of operations is largely dependent. The
LTI Plan will become effective on the date of shareholders approval. The
following summary of the LTI Plan is qualified in its entirety by reference to
the LTI Plan, a copy of which is attached as Exhibit E.
The LTI Plan will be administered by a committee appointed by the
Board. This committee will have the exclusive authority to administer the LTI
Plan, including the power to determine eligibility, the types and sizes of
awards, and the price and timing of awards. As of the date of this Proxy
Statement, no determination has yet been made regarding the allocation of
benefits under the LTI Plan, or the exercise prices, expiration dates or other
material conditions of options issuable under the LTI Plan.
Description of Available Awards
Incentive Stock Options
An ISO is a stock option that satisfies the requirements specified in
Section 422 of the Internal Revenue Code (the "Code"). Under the Code, ISOs may
only be granted to employees. In order for an option to qualify as an ISO, the
price payable to exercise the option must equal or exceed the fair market value
of the stock at the date of the grant, the option must lapse no later than 10
years from the date of the grant, and the stock subject to ISOs that are first
exercisable by an employee in any calendar year must not have a value of more
than $100,000 as of the date of grant. Certain other requirements must also be
met.
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An optionee will not be treated as receiving taxable income upon either
the grant of an ISO or upon the exercise of an ISO. However, the difference
between the exercise price and the fair market value on the date of exercise
will be an item of tax preference at the time of exercise in determining
liability for the alternative minimum tax, assuming that the common stock is
either transferable or subject to a substantial risk of forfeiture under Section
83 of the Code. If at the time of exercise, the common stock is both
nontransferable and is subject to a substantial risk of forfeiture, the
difference between the exercise price and the fair market value of the common
stock (determined at the time the common stock becomes either transferable or
not subject to a substantial risk of forfeiture) is a tax preference item in the
year in which the common stock becomes either transferable or not subject to a
substantial risk of forfeiture.
If common stock acquired by the exercise of an ISO is not sold or
otherwise disposed of within two years from the date of its grant and is held
for at least one year after the date such common stock is transferred to the
optionee, any gain or loss resulting from its disposition will be treated as
long-term capital gain or loss. If such common stock is disposed of before the
expiration of the above-mentioned holding periods, a "disqualifying disposition"
will occur. If a disqualifying disposition occurs, the optionee will realize
ordinary income in the year of the disposition in an amount equal to the
difference between the fair market value of the common stock on the date of
exercise and the exercise price, or the selling price of the common stock and
the exercise price, whichever is less. The balance of the optionee's gain on a
disqualifying disposition, if any, will be taxed as capital gain.
In the event an optionee exercises an ISO using common stock acquired
by a previous exercise of an ISO, unless the stock exchange occurs after the
required holding periods, such exchange shall be deemed a disqualifying
disposition of the stock exchanged.
The Company will not be entitled to any tax deduction as a result of
the grant or exercise of an ISO, or on a later disposition of the common stock
received, except that in the event of a disqualifying disposition, the Company
will be entitled to a deduction equal to the amount of ordinary income realized
by the optionee.
Non-Qualified Stock Options
A NQSO is any stock option other than an Incentive Stock Option. Such
options are referred to as "non-qualified" because they do not meet the
requirements of, and are not eligible for, the favorable tax treatment provided
by Section 422 of the Code.
No taxable income will be realized by an optionee upon the grant of an
NQSO, nor is the Company entitled to a tax deduction by reason of such grant.
Upon the exercise of an NQSO, the optionee will realize ordinary income in an
amount equal to the excess of the fair market value of the common stock on the
date of exercise over the exercise price and the Company will be entitled
59842.7
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to a corresponding tax deduction, provided the Company deducts and withholds
applicable taxes from amounts paid to the optionee.
Upon a subsequent sale or other disposition of common stock acquired
through exercise of an NQSO, the optionee will realize short-term or long-term
capital gain or loss to the extent of any intervening appreciation or
depreciation. Such a resale by the optionee will have no tax consequence to the
Company.
Stock Appreciation Rights
A SAR is the right granted to an employee to receive the appreciation
in the value of a share of common stock over a certain period of time. Under the
LTI Plan, the Committee shall determine the form of consideration payable at the
time of the grant of the Award and the form of consideration shall be reflected
in the Award Agreement.
A recipient who receives a SAR award is not subject to tax at the time
of the grant and the Company is not entitled to a tax deduction by reason of
such grant. At the time such award is exercised, the recipient must include in
income the appreciation inherent in the SARs (i.e., the difference between the
fair market value of the common stock on the date of grant and the fair market
value of the common stock on the date the SAR is exercised). The Company is
entitled to a corresponding tax deduction in the amount equal to the income
includible by the recipient in the year in which the recipient recognizes
taxable income with respect to the SAR, provided that it withholds taxes from
the associate on the amount recognized upon exercise of the SARs.
Performance Shares
Under the LTI Plan, the Committee may grant performance share units to
a key employee or consultant. Typically, each performance share unit will be
deemed to be the equivalent of one share of common stock.
A recipient of a Performance Share Award will not realize taxable
income at the time of grant, and the Company will not be entitled to a deduction
by reason of such grant. Instead, a recipient of Performance Shares will
recognize ordinary income equal to the fair market value of the Shares at the
time the performance goals related to the Performance Shares are attained and
paid to the recipient. The Company is entitled to a tax deduction equal to the
amount of income recognized by the recipient in the year in which the
performance goals are achieved, provided that the Company withholds applicable
taxes.
Restricted Stock Awards
Under the Restricted Stock feature of the LTI Plan, a key employee or
consultant may be granted a specified number of shares of common stock. However,
59842.7
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vested rights to such stock are subject to certain restrictions or are
conditioned on the attainment of certain performance goals. If the employee
violates any of the restrictions during the period specified by the Committee or
the performance standards fail to be satisfied, the stock is forfeited.
A recipient of a Restricted Stock Award will recognize ordinary income
equal to the fair market value of the common stock ("Restricted Stock") at the
time the restrictions lapse. the Company is entitled to a tax deduction equal to
the amount of income recognized by the recipient in the year in which the
restrictions lapse, provided that the Company withholds applicable taxes.
Instead of postponing the income tax consequences of a Restricted Stock
Award, the recipient may elect to include the fair market value of the common
stock in income in the year the award is granted. This election is made under
Section 83(b) of the Code. This Section 83(b) election is made by filing a
written notice with the Internal Revenue Service office with which the recipient
files his or her Federal income tax return. The notice must be filed within 30
days of the date of grant and must meet certain technical requirements.
The tax treatment of the subsequent disposition of Restricted Stock
will depend upon whether the recipient has made a Section 83(b) election to
include the value of the common stock in income when awarded. If the recipient
makes a Section 83(b) election, any disposition thereafter will result in a
capital gain or loss equal to the difference between the selling price of the
common stock and the fair market value of the common stock on the date of grant.
Such capital gain or loss will be a long-term or short-term capital gain or loss
depending upon the period the Restricted common stock is held. If no Section
83(b) election is made, any disposition thereafter will result in a capital gain
or loss equal to the difference between the selling price of the common stock
and the fair market value of the common stock on the date the restrictions
lapsed. Again, such capital gain or loss will be a long-term or short-term
capital gain or loss depending upon the period the Restricted Stock is held.
During the period in which a recipient holds Restricted Stock, if
dividends are declared prior to the lapse of the restrictions, the dividends
will be treated for tax purposes by the recipient and the Company in the
following manner: if the recipient makes a Section 83(b) election to recognize
income at the time of the Restricted Stock Award, the dividends will be taxed as
dividend income to the recipient when the restrictions lapse. Under such
circumstances, the Company will not be entitled to a tax deduction, nor will it
be required to withhold for applicable taxes. If no such election is made by the
recipient, the dividends will be taxed as compensation to the recipient at the
time the restrictions lapse and will be deductible by the Company and subject to
income tax withholding at that time.
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Dividend Equivalents
The LTI Plan also allows for the granting of dividend equivalent rights
in conjunction with the grant of options or SARs. These rights entitle the
employee or consultant to receive an additional amount of stock upon exercising
the underlying option or SAR.
A recipient of a Dividend Equivalent Award will not realize taxable
income at the time of grant, and the Company will not be entitled to a deduction
by reason of such grant. Instead, when the option upon which the Dividend
Equivalent Award is paid is exercised, the recipient must include in ordinary
income the fair market value of the common stock issued in payment of the
Dividend Equivalent Award at the time the award is paid.
The Company will be entitled to a tax deduction in an amount, and at
the time, that the participant recognizes ordinary income due to the payment of
the Dividend Equivalent Award. However, to receive that tax deduction, the
Company must deduct and withhold taxes from amounts paid to the optionee.
The amount included as ordinary income in the optionee's income becomes
the optionee's tax basis for determining gains or losses on the subsequent sale
of the common stock.
Other Stock Based Awards
The LTI Plan also allows for the granting of such other awards that are
payable in, valued in whole or part by reference to, or otherwise based on or
related to the common stock of the Company, including without limitation, shares
of common stock awarded purely as a "bonus" and not subject to restrictions,
convertible or exchangeable debt securities, or other rights convertible or
exchangeable into shares of common stock.
Registration of Shares
Management anticipates that the Company will register the shares
available under the LTI Plan with the Securities and Exchange Commission
pursuant to the provisions of Form S-8. It is anticipated that the filing will
be made in the fourth quarter of 1996.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE LTI PLAN
59842.7
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PROPOSAL 3
ELECTION OF DIRECTORS
General
At the Meeting, the holders of Common Stock will elect the directors of the
Company. Each director will hold office until such director's successor is
elected and qualified. Cumulative voting is not permitted in the election of
directors. IN THE ABSENCE OF INSTRUCTION TO THE CONTRARY, THE PERSON NAMED IN
THE ACCOMPANYING PROXY WILL VOTE IN FAVOR OF THE PERSONS NAMED BELOW AS THE
COMPANY'S NOMINEES FOR DIRECTORS OF THE COMPANY. None of the nominees are
presently members of the Board of Directors. Each of the nominees has consented
to be named herein and to serve if elected. It is not anticipated that any
nominee will become unable or unwilling to accept nomination or election, but if
such should occur, the persons named in the proxy intend to vote for the
election in such nominee's stead of such other person as management of the
Company may recommend.
Nominees for Directors
The nominees for Directors of the Company and their ages as of September 30,
1996, are as follows:
Name Age Position
Jonathan Y. Hicks 30 Director
Edward P. Mooney 36 Director
Daniel P. McGinnis 50 Director
Jonathan Y. Hicks - Since 1994, Mr. Hicks has served as an Associate
Director of Maroon Bells Capital Partners, Inc. ("MBCP"), an international
merchant bank which concentrates on the financing of emerging telecommunications
and technology businesses. At MBCP Mr. Hicks specializes in strategic analysis,
business planning and corporate valuation, with a focus on emerging businesses
in the United States and Latin America. In 1993, Mr. Hicks served as a market
analyst at ARDIS, a wireless data operator now wholly owned by Motorola. Mr.
Hicks joined MBCP after completing a Masters of Management at Northwestern's
J.L. Kellogg Graduate School of Management (1992- 1994). Between 1988 and 1992,
Mr. Hicks was involved in international trade through positions with Sea-Land
Service, Inc., an international transportation operator, and Tradefin, S.A., an
Argentine trading company. Mr. Hicks received his bachelors degree from
Georgetown University in 1988.
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Edward P. Mooney - Since 1993, Mr. Mooney has served as an Associate
Director of MBCP. For MBCP, Mr. Mooney specializes in strategic planning,
corporate valuations, corporate governance, and financial analysis. From 1989
until 1992, Mr. Mooney served as Director of Research for American Business
Ventures, Inc. ("ABV"), a business development and management consulting firm
that was responsible for the creation, development, financing and executive
management of publicly-traded and privately-held companies. During this period
he also served as an officer and a director of companies affiliated with ABV.
From 1984 to 1989, Mr. Mooney was a research assistant for A.B. Laffer
Associates, an economic research and consulting firm which advises investment
funds, banks and other financial institutions with regard to asset allocation,
portfolio strategies and public policy trends. He has also held managerial and
administrative positions with municipal, regional and national transportation
firms. Mr. Mooney holds a Bachelor of Arts degree in Geography from San
Francisco State University and Master of Arts degree in Education from
California State University, Long Beach.
Daniel P. McGinnis - Since 1995 Mr. McGinnis has served as a General
Manager of Marketing and Product Development at Time Telekom, the second
national telephone company in Malaysia. Time Telekom operates a fully digital
fiber optic network that provides alternative access, voice and data services on
a local, national and international basis. Mr. McGinnis successfully designed
and implemented a sales, marketing and reseller strategy that resulted in the
sales and installation of over 5,000 business lines for new customers and
several hundred high-speed data circuits (i.e. 64kb and higher speeds to 2 me).
From 1992 until 1995, Mr. McGinnis successfully reorganized and managed the
sales and marketing staff of Houston Cellular. From 1991 until 1992, Mr.
McGinnis served as General Manager of a major commercial division of Australia's
national telephone company, TELSTRA. Previously, Mr. McGinnis was National
Director of Sales and Direct Marketing for a start up marketing company in the
Western United States which delivered the "Seiko Receptor Messagewatch" to the
consumer electronics marketplace (1988-1990). Mr. McGinnis was educated at Hiram
Scott College in Nebraska.
Executive Compensation
No officer of the Company currently receives or is accruing any salary for
such officer's services.
Employment Agreements
The Company currently has no employment agreement with any of its
employees.
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Certain Relationships and Related Transactions
On June 25, 1996, the Company entered into a Stock Purchase Agreement in
which the following parties agreed to purchase a total of 4,000,000 shares of
Company Common Stock for $110,000: Theodore H. Swindells (500,000 shares), Paul
A. Moore (500,000 shares), Phillip S. Magiera (500,000 shares), DuLac
Consultants Ltd. (500,000 shares), Maroon Bells Capital Partners, Inc.
(1,000,000 shares), Redfirn Pacific, Inc. (BVI) Corp. (500,000 shares), and Le
Chevalier Noir, Ltd. (500,000 shares).
On July 1, 1996, MBCP, a principal shareholder of the Company, made a loan
(the "Loan") to the Company in the amount of $500,000 bearing interest at ten
percent (10%) per annum and payable on October 29, 1996. This Loan is secured by
an Assignment, Pledge and Security Agreement whereby the Company has pledged to
MBCP its rights, title, and interest in that certain Secured Promissory Note of
Com Tech International Corporation, dated June 27, 1996, together with all
rights of the Company under the Loan Agreement and Assignment, Pledge and
Security Agreement entered into in connection therewith.
OTHER MATTERS
The Company's management knows of no other matters that may properly be, or
which are likely to be, brought before the Meeting. However, if any other
matters are properly brought before the Meeting, the persons named in the
enclosed proxy, or their substitutes, will vote in accordance with their best
judgment on such matters.
STOCKHOLDER PROPOSALS
WorldPort (or the Company, if the Merger is not consummated) intends to
conduct an Annual Meeting of shareholders in June 1997. Proposals by
shareholders intending to be present at the 1997 Annual Meeting must be received
by April 11, 1997. Such proposals should be addressed to the Secretary of the
Company at 10 Exchange Place, #309, Salt Lake City, UT 84111.
Sage Resources, Inc.
LISA VALERIO
Corporate Secretary
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AGREEMENT AND PLAN OF MERGER
By and Between
WORLDPORT COMMUNICATIONS, INC.
a Delaware corporation
and
SAGE RESOURCES, INC.
a Colorado corporation
October 1, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE I Reincorporation Merger..................................... 2
1.01 Surviving Corporation...................................... 2
1.02 Certificate of Incorporation and Bylaws.................... 2
1.03 Directors and Officers..................................... 2
1.04 Terms of Merger............................................ 3
ARTICLE II Miscellaneous.............................................. 4
2.01 Consent to Service of Process.............................. 4
2.02 Accounting Matters......................................... 4
2.03 Further Assurances......................................... 4
2.04 Approval................................................... 4
2.05 Termination and Abandonment................................ 4
2.06 Amendment.................................................. 4
2.07 Governing Law; Interpretation; Paragraph Headings.......... 5
2.08 Counterparts............................................... 5
EXHIBITS
A - Articles of Incorporation of Sage Resources, Inc.
B - Certificate of Incorporation of WorldPort Communications, Inc.
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is made as of October 1, 1996, by and
among Sage Resources Inc., a Colorado corporation ("Sage") and WorldPort
Communications, Inc., a Delaware corporation ("WorldPort").
W I T N E S S E T H:
WHEREAS, Sage is a corporation duly organized and existing under the
laws of the State of Colorado (see Articles of Incorporation attached hereto as
Exhibit "A");
WHEREAS, WorldPort is a newly formed corporation duly organized and
existing under the laws of the State of Delaware (see Certificate of
Incorporation attached hereto as Exhibit "B");
WHEREAS, the authorized capital stock of Sage is 750,000,000 shares of
common stock, no par value ("Sage Common Stock"), of which 4,060,000 shares are
issued and outstanding; and 10,000,000 shares of preferred stock, no par value,
of which no shares are issued and outstanding;
WHEREAS, the authorized capital stock of WorldPort will be, prior to
the Effective Time (as defined herein) 65,000,000 shares of common stock, $
.0001 par value ("WorldPort Common Stock"), of which 1,000 shares are issued and
outstanding and owned by Sage; and 10,000,000 shares of preferred stock, $ .0001
par value, of which no shares are issued and outstanding;
WHEREAS, the Boards of Directors of Sage and WorldPort deem it
advisable and in the best interests of their respective corporations and
shareholders that Sage be merged with and into WorldPort, with WorldPort being
the surviving corporation (the "Reincorporation Merger");
WHEREAS, the Boards of Directors of Sage and WorldPort have approved
this Agreement by resolutions duly adopted by their respective Boards of
Directors in accordance with the laws of their respective jurisdictions of
incorporation; and
WHEREAS, Sage and WorldPort desire to effect the Reincorporation Merger
as a plan of reorganization in accordance with the provisions of Section
368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and in accordance with applicable law, the parties hereto
agree as follows:
1
<PAGE>
ARTICLE I
Reincorporation Merger
1.01 Surviving Corporation.
(a) The effective time of the Reincorporation Merger (the
"Effective Time") shall occur at the latest of (i) the time and date that a
majority of the shareholders of Sage approve this Agreement and the
Reincorporation Merger, (ii) the time and date that a certificate of merger is
duly filed with the Secretary of State of Delaware with respect to the
Reincorporation Merger or such later date and time as is set forth therein, and
(iii) the time and date that articles of merger are duly filed with the
Secretary of State of the State of Colorado with respect to the Reincorporation
Merger or such later date and time as is set forth therein.
(b) At the Effective Time, Sage shall be merged with and into
WorldPort, with WorldPort being the surviving corporation ("Surviving
Corporation") of the Reincorporation Merger. At the Effective Time, the
corporate existence of Sage shall cease and WorldPort shall succeed to all the
business, properties, assets, and liabilities of Sage and WorldPort.
1.02 Certificate of Incorporation and Bylaws.
(a) From and after the Effective Time, the Certificate of
Incorporation of WorldPort, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation,
until altered, amended, or repealed in accordance with the laws of the State of
Delaware.
(b) From and after the Effective Time, the Bylaws of
WorldPort, as in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Corporation, until altered, amended, or repealed in
accordance with the laws of the State of Delaware.
1.03 Directors and Officers.
(a) The directors of Sage immediately prior to the Effective
Time shall be the directors of WorldPort from and after the Effective Time and
shall hold office from and after the Effective Time in accordance with the
Bylaws of WorldPort until their respective successors are duly appointed or
elected and qualified.
(b) The officers of Sage immediately prior to the Effective
Time shall be the officers of WorldPort from and after the Effective Time and
shall hold the same offices from and after the Effective Time in accordance
with the Bylaws of WorldPort until their respective successors are duly
appointed or elected and qualified.
2
<PAGE>
1.04 Terms of Merger.
(a) At the Effective Time, the shares of capital stock of Sage
shall be converted into shares of capital stock of WorldPort as follows:
(i) each share of Sage Common Stock issued and outstanding
immediately prior to the Effective Time shall, automatically and without further
act of Sage, WorldPort, or any holder thereof, be extinguished and converted
into one issued and outstanding and fully paid and nonassessable share of
WorldPort Common Stock subject to the same terms, conditions, and restrictions,
if any, as existed immediately prior to the Effective Time; and
(ii) each share of Sage Common Stock held in the treasury
immediately prior to the Effective Time shall, automatically and without further
act of Sage, WorldPort, or any holder thereof, be extinguished and converted
into one fully paid and nonassessable share of WorldPort Common Stock to be held
in the treasury of WorldPort subject to the same terms, conditions, and
restrictions, if any, as existed immediately prior to the Effective Time;
(b) Each person who, as a result of the Reincorporation
Merger, holds one or more certificates representing one or more shares of Sage
Common Stock may surrender any such certificate to WorldPort, and, upon such
surrender, WorldPort shall, within a reasonable time, deliver to such person, in
substitution and exchange therefor, one or more certificates evidencing the
number of shares of WorldPort Common Stock, that such person is entitled to
receive in accordance with the terms of this Agreement, in substitution for the
number of shares of Sage Common Stock represented by each certificate so
surrendered; provided, however, that no such holder shall be required to
surrender any such certificate until such certificate otherwise would be
surrendered for transfer on the books of the issuing corporation in the ordinary
course of business.
(c) At the Effective Time, all of the shares of capital stock
of WorldPort issued or outstanding immediately prior to the Effective Time
shall, automatically and without further act of Sage, WorldPort, or any holder
thereof, be cancelled and cease to exist, without any consideration being
payable therefor.
(d) At the Effective Time, each option to purchase shares of
Sage Common Stock outstanding immediately prior to the Effective Time shall,
automatically and without further act of Sage, WorldPort, or any holder thereof,
become an option to purchase shares of WorldPort Common Stock, subject to the
same terms and conditions and at the same option price applicable to such option
immediately prior to the Effective Time.
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<PAGE>
ARTICLE II
Miscellaneous
2.01 Consent to Service of Process. WorldPort hereby consents and
agrees, effective as of the Effective Time, to be sued and served with process
in the State of Colorado in any proceeding for the enforcement of any
obligations of Sage and in any proceeding for the enforcement of the rights, if
any, of a dissenting shareholder of Sage against WorldPort. WorldPort hereby
appoints The Corporation Company, 1675 Broadway, Denver, Colorado, 80202, as its
agent to accept service of process in any such proceeding from and after the
Effective Time. WorldPort hereby agrees that it will pay to the dissenting
shareholders of Sage the amount, if any, to which they shall be entitled under
Colorado Revised Statutes Sections 7-113-101 to 7-113-302 with respect to
dissenting shareholders.
2.02 Accounting Matters. Except as herein provided with respect to the
cancellation of the outstanding shares of Sage, WorldPort agrees upon the
Effective Time, that the assets, liabilities, reserves, and accounts of Sage
shall be taken up or continued on the books of WorldPort in the amounts at which
such assets, liabilities, reserves, and accounts shall have been carried on the
books of Sage immediately prior to the Effective Time, subject to such
adjustments, and such elimination of intercompany items, as may be appropriate
to give effect to the Reincorporation Merger.
2.03 Further Assurances. If, at any time from and after the Effective
Time, WorldPort shall consider or be advised that any further assignment or
assurance in law is necessary or desirable to vest in WorldPort the title to any
property or rights of Sage, the proper officers of WorldPort are hereby
authorized, in the name of Sage or otherwise, to execute and make all such
proper assignments and assurances in law, and to do all other things necessary
or proper to vest such property or rights in WorldPort and otherwise to carry
out the purposes of this Agreement.
2.04 Approval. This Agreement shall be submitted for approval by the
holders of a majority of Sage Common Stock and this Agreement constitutes the
approval thereof by written consent of Sage in its capacity as sole shareholder
of WorldPort.
2.05 Termination and Abandonment. At any time prior to the Effective
Time and for any reason, this Agreement may be terminated and abandoned by the
Board of Directors of Sage, notwithstanding approval of this Agreement by the
shareholders of Sage and WorldPort. Upon any such termination, this Agreement
shall become null and void and have no effect, without any liability to any
person on the part of Sage or WorldPort or their shareholders, directors, or
officers.
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<PAGE>
2.06 Amendment. At any time prior to the Effective Time and for any
reason, this Agreement may be amended, notwithstanding approval of this
agreement by the shareholders of Sage or WorldPort, by an agreement in writing
executed in the same manner as this Agreement; provided, however, that after
approval of this Agreement by the shareholders of Sage, this Agreement may not
be amended, without such further approval as is required by law, to the extent
that such amendment would (i) alter or change the amount or kind of shares to be
received by the shareholders of Sage in the Reincorporation Merger, (ii) alter
or change any term of the Certificate of Incorporation of WorldPort, or (iii)
effect any alteration or change that would adversely affect the shareholders of
Sage or WorldPort.
2.07 Governing Law; Interpretation; Paragraph Headings. This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware. The table of contents hereto and the section headings
contained herein are for the purposes of convenience only and will not be deemed
to constitute a part of this Agreement or to affect the meaning or
interpretation of this Agreement in any way.
2.08 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.
SAGE RESOURCES, INC.
a Colorado corporation
Attest:
By: By:
Secretary Its:
WORLDPORT COMMUNICATIONS, INC.
a Delaware corporation
Attest:
By: By:
Secretary Its:
5
<PAGE>
CERTIFICATE OF INCORPORATION
OF
WORLDPORT COMMUNICATIONS, INC.
ARTICLE ONE
The name of the corporation is WorldPort Communications, Inc.
ARTICLE TWO
The address of the corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington,
County of New Castle, Delaware 19801. The name of its registered agent at such
address is Corporation Trust Company.
ARTICLE THREE
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE FOUR
The corporation shall have authority to issue shares as follows:
A. Common Stock. Sixty-Five Million (65,000,000) shares of common
stock, with par value at $.0001 per share, to be issued as and when the Board of
Directors shall determine.
B. Preferred Stock. Ten Million (10,000,000) shares of Preferred Stock,
with par value of $.0001 per share. The Board of Directors is expressly
authorized to provide for the issuance of all or any shares of Preferred Stock
in one or more classes or series, and to fix for each such class or series such
voting powers, full or limited, or not voting powers, and such distinctive
designations, preferences and relative, participating, optional or other special
rights and such qualifications, limitations or restrictions thereof, as shall be
stated and expressed in the resolutions adopted by the Board of Directors
providing for the issuance of such class or series and as may be permitted by
Delaware General Corporation Law, including, without limitation, the authority
to provide that any such class or series may be (i) subject to redemption of
such time or times and at such price or prices; (ii) entitled to receive
dividends (which may be cumulative or non-cumulative) at such rates, on such
conditions, and at such times, and payable in preference to, or in such relation
to, the dividends payable on any other class or classes or any other series; or
(iii) entitled to such rights upon the dissolution of, or
60133.1
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<PAGE>
upon any distribution of the assets of, the Corporation, all as may be stated in
such resolution or resolutions.
ARTICLE FIVE
The Board of Directors of the corporation shall have the power to
adopt, amend, and repeal any or all of the Bylaws of the corporation.
ARTICLE SIX
Meetings of the stockholders of the corporation may be held within or
without the State of Delaware, as the Bylaws may provide. The books of the
corporation may be kept (subject to any provision contained in the Delaware
General Corporation Law) outside the State of Delaware at such place or places
as may be designated from time to time by the Board of Directors or in the
Bylaws of the corporation.
ARTICLE SEVEN
To the fullest extent permitted by Delaware General Corporation Law as
the same exists or may hereafter be amended: (i) a director shall not be liable
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, (ii) the corporation shall indemnify, defend and
hold harmless any and all of its existing and former directors, advisory
directors, officers, employees and agents from and against any and all losses,
claims, damages, expenses, fees, or liabilities, whether joint or several,
incurred by each of them, including but not limited to all legal fees,
judgments, penalties or amounts paid in defense, settlement or compromise, all
of which may arise or be incurred, rendered, or levied in any legal action, or
administrative proceeding brought or threatened against any of them by reason of
the fact that such person is or was a director, advisory director, officer,
employee or agent of the corporation.
ARTICLE EIGHT
The name and mailing address of the incorporator is as follows:
Edward P. Mooney
100 California Street, Suite 1400
San Francisco, CA 94111
60133.1
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<PAGE>
ARTICLE NINE
The initial Board of Directors of the corporation shall consist of
three (3) person(s). The names and mailing address(es) of the person(s) to serve
as the initial director(s) are:
Edward P. Mooney
Maroon Bells Capital Partners, Inc.
100 California Street, Suite 1400
San Francisco, CA 94111
Jonathan Y. Hicks
Maroon Bells Capital Partners, Inc.
101 North Waukegan, Suite 930
Lake Bluff, IL 60044
Daniel P. McGinnis
14403 Fair Knoll Way
Houston, TX 77062
ARTICLE TEN
The corporation reserves the right to amend, alter, change, or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by the Delaware General Corporation Law.
I, THE UNDERSIGNED, for the purposes of forming a corporation under the
laws of the State of Delaware, do make, file and record this Certificate, and do
certify that the facts herein stated are true.
DATED this day of __________________, 1996.
Edward P. Mooney, Incorporator
60133.1
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<PAGE>
B Y L A W S
O F
WORLDPORT COMMUNICATIONS, INC.
A Delaware Corporation
60185.2
<PAGE>
TABLE OF CONTENTS
ARTICLE I - Offices.......................................................... 1
Section 1.01. Offices.............................................. 1
ARTICLE II - Shares.......................................................... 1
Section 2.01. Shares............................................... 1
ARTICLE III - Preemptive Rights.............................................. 1
Section 3.01. Preemptive Rights.................................... 1
ARTICLE IV - Perpetual Existence............................................. 2
Section 4.01. Perpetual Existence.................................. 2
ARTICLE V - Non-Liability of Shareholders.................................... 2
Section 5.01. Non-Liability of Shareholders........................ 2
ARTICLE VI - Indemnification................................................. 2
Section 6.01. Indemnification...................................... 2
ARTICLE VII - Meeting of Shareholders........................................ 3
Section 7.01. Place of Meeting..................................... 3
Section 7.02. Annual Meeting....................................... 3
Section 7.03. Special Meetings..................................... 3
Section 7.04. Notice of Meetings................................... 3
Section 7.05. Quorum, Manner of Acting and
Adjournment.................................... 3
Section 7.06. Organization......................................... 4
Section 7.07. Notice of Business................................... 4
60185.2
<PAGE>
Section 7.08. Voting; Proxies...................................... 5
Section 7.09. Voting Lists......................................... 6
Section 7.10. Consent of Shareholders in Lieu of
Meeting..................................... 6
ARTICLE VIII - Board of Directors............................................ 7
Section 8.01. Powers............................................... 7
Section 8.02. Number, Term of Office and
Qualification............................... 7
Section 8.03. Nomination of Directors.............................. 7
Section 8.04. Vacancies............................................ 9
Section 8.05. Resignations......................................... 9
Section 8.06. Organization......................................... 9
Section 8.07. Place of Meeting..................................... 9
Section 8.08. Organization Meeting................................. 10
Section 8.09. Regular Meetings..................................... 10
Section 8.10. Special Meetings..................................... 10
Section 8.11. Quorum, Manner of Acting and
Adjournment................................. 10
Section 8.12. Action by Unanimous Written
Consent..................................... 10
Section 8.13. Interested Directors or Officers..................... 11
Section 8.14. Compensation......................................... 11
Section 8.15. Committees........................................... 11
ARTICLE IX - Notices - Waivers - Meetings.................................... 12
<PAGE>
Section 9.01. What Constitutes Notice.............................. 12
Section 9.02. Waivers of Notice.................................... 13
Section 9.03. Conference Telephone Meetings........................ 13
ARTICLE X - Officers......................................................... 13
Section 10.01. Number, Qualifications and
Designation................................. 13
Section 10.02. Election and Term of Office......................... 13
Section 10.03. Subordinate Officers, Committees
and Agents.................................. 14
Section 10.04. Resignations........................................ 14
Section 10.05. Removal............................................. 14
Section 10.06. Vacancies........................................... 14
Section 10.07. General Powers...................................... 14
Section 10.08. The President....................................... 14
Section 10.09. The Chairman........................................ 15
Section 10.10. The Vice Presidents................................. 15
Section 10.11. The Secretary....................................... 15
Section 10.12. The Treasurer....................................... 15
Section 10.13. Officer's Bonds..................................... 16
Section 10.14. Compensation........................................ 16
ARTICLE XI - Certificates of Stock, Transfer, Etc............................ 16
Section 11.01. Issuance............................................ 16
Section 11.02. Transfer............................................ 16
<PAGE>
Section 11.03. Stock Certificates.................................. 17
Section 11.04. Lost, Stolen, Destroyed, or
Mutilated Certificates...................... 17
Section 11.05. Record Holder of Shares............................. 17
Section 11.06. Determination of Shareholders of
Record...................................... 17
ARTICLE XII - Indemnification of Directors, Officers, Etc.................... 18
Section 12.01. Directors and Officers; Third Party
Actions...................................... 18
Section 12.02. Directors and Officers; Derivative
Actions...................................... 19
Section 12.03. Employees and Agents................................ 19
Section 12.04. Procedure for Effecting
Indemnification.............................. 19
Section 12.05. Advancing Expenses.................................. 20
Section 12.06. Scope of Article.................................... 20
ARTICLE XIII - Insurance..................................................... 21
Section 13.01. Insurance Against Liability Asserted
Against Directors, Officers, Etc............. 21
ARTICLE XIV - Miscellaneous.................................................. 21
Section 14.01. Corporate Seal...................................... 21
Section 14.02. Checks.............................................. 21
Section 14.03. Contracts........................................... 21
Section 14.04. Inspection.......................................... 22
Section 14.05. Fiscal Year......................................... 22
<PAGE>
ARTICLE XV - Amendments...................................................... 22
Section 15.01. Amendments.......................................... 22
60185.2
<PAGE>
BYLAWS
OF
WORLDPORT COMMUNICATIONS, INC.
ARTICLE I
Offices
Section 1.01. Offices. The corporation may have offices at such places
within or without the State of Delaware as the Board of Directors may from time
to time determine or the business of the corporation may require, provided that
the corporation maintains a registered office within the State of Delaware.
ARTICLE II
Shares
Section 2.01. Shares. The Board of Directors shall have authority to
authorize the issuance, from time to time without any vote or other action by
the shareholders, of any or all shares of stock of the corporation of any class
at any time authorized, and any securities convertible into or exchangeable for
any such shares, in each case to such persons and for such consideration, and on
such terms as the Board of Directors from time to time in its discretion
lawfully may determine. Shares so issued, for which the consideration has been
paid to the corporation, shall be fully paid stock and the holders of such stock
shall not be liable for any further call or assessment thereon.
ARTICLE III
Preemptive Rights
Section 3.01. Preemptive Rights. No common shareholder of this
corporation shall by reason of such shareholder holding common shares of any
class have any preemptive or preferential rights of purchase to subscribe to any
shares of any class of this corporation, now or hereafter to be authorized, or
any notes, debentures, bonds or other securities convertible into or carrying
<PAGE>
options or warrants to purchase shares of any class, now or hereafter to be
authorized, whether or not the issuance of any such shares, or such notes,
debentures, bonds or other securities, would adversely affect the dividend or
voting rights of such shareholder, other than such rights, if any, as the Board
of Directors, in its discretion from time to time, may grant and at such price
as the Board of Directors in its discretion may fix; and the Board of Directors
may issue shares of any class of this corporation, or any notes, debentures,
bonds, or other securities convertible into or carrying options or warrants to
purchase shares of any class, without offering any such shares of any class,
either in whole or in part, to the existing shareholders of any class.
ARTICLE IV
Perpetual Existence
Section 4.01. Perpetual Existence. The corporation is to have perpetual
existence.
ARTICLE V
Non-Liability of Shareholders
Section 5.01. Non-Liability of Shareholders. The private property of the
shareholders shall not be subject to the payment of corporate debts to any
extent whatsoever.
ARTICLE VI
Indemnification
Section 6.01. Indemnification. The corporation shall have power to
indemnify any person, including present or former directors, officers, trustees,
employees or agents of the corporation or any person who is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, to
the extent permitted by the General Corporation Law of Delaware and/or the
Bylaws of the corporation. Such indemnification shall be in addition to all
other rights to which those indemnified may be entitled under any statute,
bylaw, agreement, vote of shareholders or otherwise.
<PAGE>
ARTICLE VII
Meeting of Shareholders
Section 7.01. Place of Meeting. All meetings of the shareholders of the
Corporation shall be held in Wilmington, Delaware, or at such other place within
or without the State of Delaware as shall be designated by the Board of
Directors in the notice of such meeting.
Section 7.02. Annual Meeting. The Board of Directors may fix the date
and time of the annual meeting of the shareholders, but if no such date and time
is fixed by the Board of Directors, the meeting for any calendar year shall be
held on the second Tuesday of June, if not a legal holiday, and if a legal
holiday, then on the next succeeding day which is not a legal holiday. At the
annual meeting, the shareholders then entitled to vote shall elect by written
ballot directors and shall transact such other business as may properly be
brought before the meeting.
Section 7.03. Special Meetings. Except as provided in the corporation's
Certificate of Incorporation, special meetings of the shareholders of the
corporation for any purpose or purposes for which meetings may lawfully be
called, may be called at any time for any purpose or purposes by the Board of
Directors or by any person or committee expressly so authorized by the Board of
Directors and by no other person or persons. At any time, upon written request
of any person or persons who have duly called a special meeting, which written
request shall state the purpose or purposes of the meeting, it shall be the duty
of the Secretary to fix the date of the meeting to be held at such date and time
as the Secretary may fix, not less than ten (10) nor more than sixty (60) days
after the receipt of the request, and to give due notice thereof. If the
Secretary shall neglect or refuse to fix the time and date of such meeting and
give notice thereof, the person or persons calling the meeting may do so.
Section 7.04. Notice of Meetings. Written notice of the place, date and
hour of every meeting of the shareholders, whether annual or special, shall be
given not less than ten (10) nor more than sixty (60) days before the date of
the meeting to each shareholder of record entitled to vote at the meeting. Every
notice of a special meeting shall state the purpose or purposes thereof.
Section 7.05. Quorum, Manner of Acting and Adjournment. The holders of
a majority of the stock issued and outstanding (not including treasury stock)
and entitled to vote at a meeting of the shareholders, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
shareholders for the transaction of business except as otherwise provided by
<PAGE>
statute, by the Certificate of Incorporation or by these Bylaws. If, however, a
quorum shall not be present or represented at any meeting of the shareholders,
the shareholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At any such adjourned meeting, at which a quorum shall be present
or represented, any business may be transacted which might have been transacted
at the meeting as originally noticed. If the adjournment is for more than thirty
(30) days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting. When a quorum is present
at any meeting, the vote of the holders of the majority of the stock having
voting power present in person or represented by proxy shall decide any
questions brought before such meeting, unless the question is one upon which, by
express provision of the applicable statute, the Certificate of Incorporation or
these Bylaws, a different vote is required, in which case such express provision
shall govern and control the decision of such question. Except upon those
questions governed by the aforesaid express provisions, the shareholders present
in person or by proxy at a duly organized meeting can continue to do business
until adjournment, notwithstanding withdrawal of enough shareholders to leave
less than a quorum.
Section 7.06. Organization. At every meeting of the shareholders, the
President, or in the case of vacancy in office or absence of the President, such
person as may be designated by the Board of Directors, shall act as Chairman of
such meeting, and the Secretary, or, in the Secretary's absence, an assistant
secretary, or in the absence of both the Secretary and the assistant
secretaries, a person appointed by the Chairman of the Meeting shall act as
Secretary.
Section 7.07. Notice of Business. No business may be transacted at an
annual meeting of shareholders, other than business that is either (a) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors (or any duly authorized committee thereof),
(b) otherwise properly brought before the annual meeting by or at the direction
of the Board of Directors (or any duly authorized committee thereof), or (c)
otherwise properly brought before the annual meeting by any shareholder of the
Corporation (i) who is a shareholder of record on the date of the giving of the
notice provided for herein, and on the record date for the determination of
shareholders entitled to vote at such annual meeting, and (ii) who complies with
the notice procedures set forth below.
In addition to any other applicable requirements, for business to be
properly brought before an annual Meeting by a shareholder, such shareholder
must have given timely notice thereof in proper written form to the Secretary of
the Corporation.
<PAGE>
To be timely, a shareholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
not less than sixty (60) days nor more than ninety (90) days prior to the
anniversary date of the immediately preceding annual meeting of shareholders;
provided, however, that in the event that the annual meeting is called for a
date that is not within thirty (30) days before or after such anniversary date,
notice by the shareholder to be timely must be so received not later than the
close of business on the tenth (10th) day following the day on which such notice
of the date of the annual meeting was mailed or such public disclosure of the
date of the annual meeting was made, whichever first occurs.
To be in proper written form, a shareholder's notice to the Secretary
must set forth as to each matter such shareholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
Annual Meeting, (ii) the name and record address of such shareholder, (iii) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by such shareholder, (iv) a description of
all arrangements or understandings between such shareholder and any other person
or persons (including their names) in connection with the proposal of such
business by such shareholder and any material interest of such shareholder in
such business, and (v) a representation that such shareholder intends to appear
in person or by proxy at the annual meeting to bring such business before the
meeting.
No business shall be conducted at the annual meeting of shareholders
except business brought before the annual meeting in accordance with the
procedures set forth herein; provided, however, that, once business has been
properly brought before the annual meeting in accordance with such procedures,
nothing in this paragraph shall be deemed to preclude discussion by any
shareholder of any such business. If the Chairman of an annual meeting
determines that business was not properly brought before the annual meeting in
accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.
Section 7.08. Voting; Proxies. Each shareholder shall at every meeting
of the shareholders be entitled to one vote in person or by proxy for each share
of common stock and the number of votes per share as designated in the
designation of rights adopted with respect to each share of preferred stock
registered in such shareholder's name on the books of the corporation on the
record date for such meeting. All elections of directors shall be by written
<PAGE>
ballot, unless waived by the shareholders present or unless action is taken
pursuant to Section 7.09 of the Bylaws. The vote upon any other matter need not
be by ballot. No proxy shall be voted after three (3) years from its date,
unless the proxy provides for a longer period. Every proxy shall be executed in
writing by the shareholder or by such shareholder's duly authorized
attorney-in-fact and filed with the Secretary of the corporation. A proxy,
unless coupled with an interest, shall be revocable at will, notwithstanding any
other agreement or any provisions in the proxy to the contrary, but the
revocation of a proxy shall not be effective until notice thereof has been given
to the Secretary of the corporation. A duly executed proxy shall be irrevocable
if it states that it is irrevocable and if, and only as long as, it is coupled
with an interest sufficient in law to support an irrevocable power. A proxy may
be made irrevocable regardless of whether the interest with which it is coupled
is an interest in the stock itself or an interest in the corporation generally.
A proxy shall not be revoked by the death or incapacity of the maker unless,
before the vote is counted or the authority is exercised, written notice of such
death or incapacity is given to the Secretary of the corporation.
<PAGE>
Section 7.09. Voting Lists. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten (10) days before
every meeting of shareholders, a complete list of the shareholders entitled to
vote at the meeting. The list shall be arranged in alphabetical order showing
the address of each shareholder and the number of shares registered in the name
of each shareholder. Such list shall be open to the examination of any
shareholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the meeting either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any shareholder who is present.
Section 7.10. Consent of Shareholders in Lieu of Meeting. Unless
otherwise provided in the Certificate of Incorporation, any action required by
law to be taken at any annual or special meeting of shareholders of the
corporation, or any action which may be taken at any annual or special meeting
of such shareholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those shareholders who
have not consented in writing.
<PAGE>
ARTICLE VIII
Board of Directors
Section 8.01. Powers. The management of the corporation shall be under
the direction of the Board of Directors; and all powers of the corporation,
except those specifically reserved or granted to the shareholders by statute,
the Certificate of Incorporation or these Bylaws, are hereby granted to and
vested in the Board of Directors.
Section 8.02. Number, Term of Office and Qualification. The Board of
Directors shall consist of such number of directors, not less than three (3) or
more than nine (9), as may be determined from time to time by the Board of
Directors subject to the provisions of the Certificate of Incorporation. The
term of each director shall be for one year from the date of such director's
election; however, each director shall serve until such director's successor
shall have been duly elected and qualified, unless such director shall resign,
become disqualified, disabled or shall otherwise be removed. At each annual
election, the directors chosen to succeed those whose terms then expire shall be
for the same term as the directors they succeed.
Section 8.03. Nomination of Directors. Only persons who are nominated
in accordance with the following procedures shall be eligible for election as
directors of the corporation, except as may be otherwise provided in the
Certificate of Incorporation, or otherwise, with respect to the right of holders
of preferred stock to nominate and elect a specified number of directors in
certain circumstances. Nominations of persons for election to the Board of
Directors, or at any Special Meeting of shareholders called for the purpose of
electing directors, may be made (a) by or at the direction of the Board of
Directors (or any duly authorized committee thereof), or (b) by any shareholder
of the corporation (i) who is a shareholder of record on the date of the giving
of the notice provided for herein and on the record date for the determination
of shareholders entitled to vote at such meeting, and (ii) who complied with the
notice procedures set forth in this paragraph 8.03.
In addition to any other applicable requirements, for a nomination to
be made by a shareholder, such shareholder must have given timely notice thereof
in proper written form to the Secretary of the Corporation.
To be timely, a shareholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
<PAGE>
(a) in the case of an annual Meeting, not less than sixty (60) days nor more
than ninety (90) days prior to the anniversary date of the immediately preceding
Annual Meeting of shareholders; provided, however, that in the event that the
Annual Meeting is called for a date that is not within thirty (30) days before
or after such anniversary date, notice by the shareholder in order to be timely
must be so received not later than the close of business on the tenth (10th) day
following the date on which such notice of the date of the Annual Meeting was
mailed or such public disclosure of the date of the Annual Meeting was made,
whichever first occurs; and (b) in the case of a Special Meeting of shareholders
called for the purpose of electing directors, not later than the close of
business on the tenth (10th) day following the day on which notice of the date
of the Special Meeting was mailed or public disclosure of the date on the
Special Meeting was made, whichever first occurs.
To be in proper written form, a shareholder's notice to the Secretary
must set forth (a) as to each person whom the shareholder proposes to nominate
for election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by the person, and (iv)
any other information relating to the person that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant to
Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder; and (b) as to the
shareholder giving the notice (i) the name and record address of such
shareholder, (ii) the class or series and number of shares of capital stock of
the Corporation which are owned beneficially or of record by such shareholder,
(iii) the description of all arrangements or understandings between such
shareholder and each proposed nominee and any other person or persons (including
their names) pursuant to which the nomination(s) are to be made by such
shareholder, (iv) a representation that such shareholder intends to appear in
person or by proxy at the meeting to nominate the persons named in its notice,
and (v) any other information relating to such shareholder that would be
required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a written consent of
each proposed nominee consenting to being named as a nominee and to serve as a
director if elected.
No person shall be eligible for election as a director of the
Corporation unless nominated in accordance with the procedures set forth in this
paragraph 8.03. If the Chairman of the meeting determines that a nomination was
<PAGE>
not made in accordance with the foregoing procedures, the Chairman shall declare
to the meeting that the nomination was defective and such defective nomination
shall be disregarded.
Section 8.04. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the director so chosen shall hold office until
such director's successor shall have been duly elected and qualified unless such
director shall resign, become disqualified, disabled or shall otherwise be
removed. If there are no directors in office, then an election of directors may
be held in the manner provided by statute. If, at the time of filling any
vacancy or any newly created directorship, the directors then in office shall
constitute less than a majority of the whole Board of Directors (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any shareholder or shareholders holding at least ten percent
(10%) of the total number of the shares at the time outstanding having the right
to vote for such directors, summarily order an election to be held to fill any
such vacancies or newly created directorships, or to replace the directors
chosen by the directors then in office.
Section 8.05. Resignations. Any director of the corporation may resign
at any time by giving written notice to the Chairman of the Board or the
Secretary of the corporation. Such resignation shall take effect at the date of
the receipt of such notice or at any later time specified therein and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
Section 8.06. Organization. At every meeting of the Board of Directors,
the Chairman of the Board, if there be one, or, in the case of a vacancy in the
office or absence of the Chairman of the Board, one of the following officers
present in the order stated: the President; the Vice President; or a Chairman
chosen by a majority of the directors present, shall preside, and the Secretary,
or, in the Secretary's absence, an Assistant Secretary, or in the absence of the
Secretary and the Assistant Secretaries, any person appointed by the Chairman of
the meeting, shall act as Secretary.
Section 8.07. Place of Meeting. The Board of Directors may hold its
meetings, both regular and special, at such place or places within or without
the State of Delaware as the Chairman of the Board or the Board of Directors may
from time to time determine, or as may be designated in the notice calling the
meeting.
Section 8.08. Organization Meeting. Immediately after each annual
<PAGE>
election of directors or other meeting at which the entire Board of Directors is
elected, the newly elected Board of Directors shall meet for the purpose of
organization, election of officers, and the transaction of other business, at
the place where said election of directors was held. Notice of such meeting need
not be given. Such organization meeting may be held at any other time or place
which shall be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors, or as shall be specified in a written waiver
signed by all of the directors.
Section 8.09. Regular Meetings. Regular meetings of the Board of
Directors shall be held without notice at such time and at such place as shall
be determined from time to time by the Board of Directors. Notice of any regular
meeting shall be given in the manner prescribed for special meetings of the
Board of Directors.
Section 8.10. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board of
Directors, the President or on the written request of three (3) or more of the
directors. Notice of each such meeting shall be given to each director in
writing, or by telephone personally, at least twenty-four (24) hours before the
time at which the meeting is to be held. Each such notice shall state the time
and place of the meeting to be so held.
Section 8.11. Quorum, Manner of Acting and Adjournment. At all meetings
of the Board of Directors a majority of the total number of directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the Board of Directors, except as may be otherwise specifically provided by
statute or by the Certificate of Incorporation. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 8.12. Action by Unanimous Written Consent. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting, if all members of the
Board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board or
committee as the case may be.
Section 8.13. Interested Directors or Officers. No contract or
transaction between the corporation and one or more of its directors or
officers, or between the corporation and any other corporation, partnership,
<PAGE>
association, or other organization in which one or more of its directors or
officers are directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the director or officer is
present at or participates in the meeting of the Board or committee thereof
which authorized the contract or transaction, or solely because such director's
or officer's votes are counted for such purpose, if:
(1) The material facts as to such director's or officer's relationship or
interest and as to the contract or transaction are disclosed or are known
to the Board of Directors or the committee, and the Board or committee in
good faith authorizes the contract or transaction by the affirmative votes
of a majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
(2) The material facts as to such director's or officer's relationship or
interest and as to the contract or transaction are disclosed or are known
to the shareholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
shareholders; or
(3) The contract or transaction is fair as to the corporation as of the time it
is authorized, approved or ratified by the Board of Directors, a committee
thereof, or the shareholders.
Common or interested directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee which authorizes
the contract or transaction.
Section 8.14. Compensation. Each director who is not also an employee
of the corporation or any subsidiary thereof shall be paid such compensation for
such director's services and shall be reimbursed for such expenses as may be
fixed by the Board of Directors.
Section 8.15. Committees. The Board of Directors may, by resolution
passed by a majority of the whole Board of Directors, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee. In the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether o r not they constitut e a quorum, may
<PAGE>
unanimously appoint another member of the Board of Directors to act at the
meeting in place of any such absent or disqualified member. Any such committee,
to the extent provided in the resolution of the Board of Directors, shall have
and may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may require it; but no
such committee shall have power or authority in reference to amending the
certificate of incorporation, adopting an agreement of merger or consolidation,
recommending to the shareholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
shareholders a dissolution of the corporation or a revocation of dissolution,
removing or indemnifying directors or amending these Bylaws; and unless the
resolution expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Unless
the Board of Directors otherwise provides, each committee may adopt, amend and
repeal rules for the conduct of its business. In the absence of a provision by
the Board of Directors or a provision in the rules of such committee to the
contrary, a majority of the entire authorized number of members of such
committee shall constitute a quorum for the transaction of business, the vote of
a majority of the members present at a meeting at the time of such vote if a
quorum is present shall be the act of such committee, and in other respects each
committee shall conduct its business in the same manner as the Board of
Directors conducts its business.
ARTICLE IX
Notices - Waivers - Meetings
Section 9.01. What Constitutes Notice. Whenever, under the provisions
of the statutes or of the Certificate of Incorporation or of these Bylaws,
written notice is required to be given to any director or shareholder, such
notice may be given to such person, either personally or by sending a copy
thereof through the mail, by telegraph, by private delivery service, or by
facsimile transmission, charges prepaid, to such person's address appearing on
the books of the corporation. If the notice is sent by mail, by telegraph or by
private delivery service, it shall be deemed to have been given to the person
entitled thereto when deposited in the United States mail or with a telegraph
office or private delivery service for transmission to such person. If the
notice is sent by facsimile transmission, it shall be deemed to have been given
upon transmission, if transmission occurs before 12:00 noon at the place of
receipt, and upon the day following transmission, if transmission occurs after
12:00 noon.
Section 9.02. Waivers of Notice. Whenever any written notice is
required to be given under the provisions of the Certificate of Incorporation,
<PAGE>
these Bylaws, or by statute, a waiver thereof in writing, signed by the person
or persons entitled to such notice, whether before or after the time stated
therein, shall be deemed equivalent to the giving of such notice. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the shareholders, directors, or members of a committee of directors need be
specified in any written waiver of notice of such meeting. Attendance of a
person, either in person or by proxy, at any meeting, shall constitute a waiver
of notice of such meeting, except when a person attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting was not lawfully called or
convened.
Section 9.03. Conference Telephone Meetings. One or more directors may
participate in a meeting of the Board, or of a committee of the Board, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other. Participation in a
meeting pursuant to this Section shall constitute presence in person at such
meeting.
ARTICLE X
Officers
Section 10.01. Number, Qualifications and Designation. The officers of
the corporation shall be chosen by the Board of Directors and shall be a
President, one or more Vice Presidents, a Secretary, a Treasurer, and such other
officers as may be elected in accordance with the provisions of Section 10.03 of
this Article. One person may hold more than one office. Officers may be, but
need not be, directors or shareholders of the corporation.
Section 10.02. Election and Term of Office. The officers of the
corporation, except those elected by delegated authority pursuant to Section
10.03 of this Article, shall be elected annually by the Board of Directors, and
each such officer shall hold such officer's office until such officer's
successor shall have been elected and qualified, or until such officer's earlier
resignation or removal.
Section 10.03. Subordinate Officers, Committees and Agents. The Board
of Directors may from time to time, elect such other officers, employees or
other agents as it deems necessary, who shall hold their offices for such terms
and shall exercise such powers and perform such duties as are provided in these
Bylaws, or as the Board of Directors may from time to time determine. The Board
of Directors may delegate to any officer or committee the power to elect
<PAGE>
subordinate officers and to retain or appoint employees or other agents, or
committees thereof, and to prescribe the authority and duties of such
subordinate officers, committees, employees or other agents.
Section 10.04. Resignations. Any officer or agent may resign at any
time by giving written notice to the Board of Directors, or to the President or
the Secretary of the corporation. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 10.05. Removal. Any officer, committee, employee or other agent
of the corporation may be removed, either for or without cause, by the Board of
Directors or other authority which elected or appointed such officer, committee
or other agent whenever in the judgment of such authority the best interests of
the corporation will be served thereby.
Section 10.06. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification, or any other cause, shall be filled by
the Board of Directors or by the officer or committee to which the power to fill
such officer has been delegated pursuant to Section 10.03 of this Article, as
the case may be, and if the office is one for which these Bylaws prescribe a
term, shall be filled for the unexpired portion of the term.
Section 10.07. General Powers. All officers of the corporation, as
between themselves and the corporation, shall, respectively, have such authority
and perform such duties in the management of the property and affairs of the
corporation as may be determined by these Bylaws, or in the absence of
controlling provisions in the Bylaws, as may be provided by resolution of the
Board of Directors.
Section 10.08. The President. The President shall, subject to the
control of the Board of Directors, have general and active supervision of the
affairs, business, officers and employees of the corporation. The President
shall have authority to sign, execute, and acknowledge, in the name of the
corporation deeds, mortgages, bonds, contracts or other instruments, authorized
by the Board of Directors, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors, or these Bylaws,
to some other officer or agent of the corporation. The President shall, from
time to time, in the President's discretion or at the order of the Board, submit
to the Board reports of the operations and affairs of the corporation. The
President shall also perform such other duties and have such other powers as may
be assigned to the President from time to time by the Board of Directors.
<PAGE>
Section 10.09. The Chairman. The Chairman of the Board shall preside at
all meetings of the shareholders and of the Board of Directors, and shall
perform such other duties as may from time to time be assigned to the Chairman
by the Board of Directors.
Section 10.10. The Vice Presidents. The corporation may have one or
more Vice Presidents, having such duties as from time to time may be determined
by the Board of Directors or by the President.
Section 10.11. The Secretary. The Secretary shall keep full minutes of
all meetings of the shareholders and of the Board of Directors; shall be ex
officio Secretary of the Board of Directors; shall attend all meetings of the
shareholders and of the Board of Directors; shall record all the votes of the
shareholders and of the directors and the minutes of the meetings of the
shareholders and of the Board of Directors and of committees of the Board in a
book or books to be kept for that purpose. The Secretary shall give, or cause to
be given, notices of all meetings of the shareholders of the corporation and of
the Board of Directors; shall be the custodian of the seal of the corporation
and see that it is affixed to all documents to be executed on behalf of the
company under its seal; shall have responsibility for the custody and
safekeeping of all permanent records and other documents of the corporation;
and, in general, shall perform all duties incident to the office of Secretary
and such other duties as may be prescribed by the Board of Directors or by the
President, under whose supervision the Secretary shall be. The Board of
Directors may elect one or more Assistant Secretaries to perform such duties as
shall from time to time be assigned to them by the Board of Directors or the
President.
Section 10.12. The Treasurer. The Treasurer shall have or provide for
the custody of all funds, securities and other property of the corporation;
shall collect and receive or provide for the collection or receipt of money
earned by or in any manner due to or received by the corporation; shall deposit
or cause to be deposited all said moneys in such banks or other depositories as
the Board of Directors may from time to time designate; shall make disbursements
of corporate funds upon appropriate vouchers; shall keep full and accurate
accounts of transactions of the Treasurer's office in books belonging to the
corporation; shall, whenever so required by the Board of Directors, render an
accounting showing the Treasurer's transactions as Treasurer, and the financial
condition of the corporation; and, in general, shall discharge any other duties
as may from time to time be assigned to the Treasurer by the Board of Directors.
The Board of Directors may elect one or more Assistant Treasurers to perform the
duties of the Treasurer as shall from time to time be assigned to them by the
Board of Directors or the Treasurer.
<PAGE>
Section 10.13. Officer's Bonds. Any officer shall give a bond for the
faithful discharge of such officer's duties in such sum, if any, and with such
surety or sureties as the Board of Directors shall require. The corporation may
obtain such bonds at its expense as the Board of Directors shall require.
Section 10.14. Compensation. The compensation of the officers and
agents of the corporation be fixed from time to time by the Board of Directors
or by such committee as may be designated by the Board of Directors to fix
salaries or other compensation of officers.
ARTICLE XI
Certificates of Stock, Transfer, Etc.
Section 11.01. Issuance. The certificate for stock of the corporation
shall be numbered and registered in the stock ledger and transfer books or
equivalent records of the corporation as they are issued. They shall be signed
by the President, or a Vice President, and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, and shall bear the
corporate seal, which may be a facsimile, engraved or printed. Any of or all the
signatures upon such certificate may be a facsimile, engraved or printed if such
certificate of stock is signed or countersigned by a transfer agent or by a
registrar. In case any officer, transfer agent or registrar who has signed, or
whose facsimile signature has been placed upon any share certificate shall have
ceased to be such officer, transfer agent or registrar before the certificate is
issued, it may be issued with the same effect as if such officer, transfer agent
or registrar were such officer, transfer agent or registrar at the date of its
issue.
Section 11.02. Transfer. Transfers of shares of stock of the
corporation shall be made on the books of the corporation upon surrender of the
certificates therefor, endorsed by the person named in the certificate or by
attorney lawfully constituted in writing. No transfer shall be made inconsistent
with the provisions of the Uniform Commercial Code, Article 8 of Title 5A of the
Delaware Code, and its amendments and supplements.
Section 11.03. Stock Certificates. Stock certificates of the
corporation shall be in such form as provided by statute and approved by the
Board of Directors. The stock record books and the blank stock certificate books
shall be kept by the Secretary or by any agency designated by the Board of
Directors for that purpose.
<PAGE>
Section 11.04. Lost, Stolen, Destroyed, or Mutilated Certificates. The
Board of Directors may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of the fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or such owner's legal representative, to give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
Section 11.05. Record Holder of Shares. The corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on it books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
Section 11.06. Determination of Shareholders of Record. In order that
the corporation may determine the shareholders entitled to notice of or to vote
at any meeting of shareholders or any adjournment thereof, or entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock or for the purpose of any other lawful action, the Board of
Directors may fix, in advance, a record date, which shall not be more than sixty
(60) nor less than ten (10) days before the date of such meeting, nor more than
sixty (60) days prior to any other action. If no record date is fixed:
(1) The record date for determining shareholders entitled
to notice of or to vote at a meeting of shareholders
shall be at the close of business on the day next
preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day
next preceding the day on which the meeting is held.
(2) The record date for determining shareholders for any
other purpose shall be at the close of business on
the day on which the Board of Directors adopts the
resolution relating thereto.
<PAGE>
Only such shareholders as shall be shareholders on the record date fixed or
determined as aforesaid shall be entitled to notice of or to vote at such
meeting or adjournment, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action. A determination of shareholders of record entitled to
notice of or to vote at a meeting of shareholders shall apply to any adjournment
of the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
ARTICLE XII
Indemnification of Directors, Officers, Etc.
Section 12.01. Directors and Officers; Third Party Actions. To the
fullest extent of Delaware law, the corporation shall indemnify any director or
officer of the corporation 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 (other than an action
by or in the right of the corporation) by reason of the fact such director or
officer is or was an authorized representative of the corporation (which, for
the purposes of this Article and Article XIII of these Bylaws, shall mean a
director, officer, employee or agent of the corporation, or a person who is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise) for, from and against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such director or officer in connection with such action, suit or proceeding
if such director or officer acted in good faith and in a manner such director or
officer reasonably believed to be in, or not opposed to, the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such director's or officer's conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which such director or officer reasonably believed to be
in, or not opposed to, the best interests of the corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that such
director's or officer's conduct was unlawful.
Section 12.02. Directors and Officers; Derivative Actions. The
corporation shall indemnify any director or officer of the corporation who was
<PAGE>
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such director or officer is or
was an authorized representative of the corporation, for, from and against
expenses (including attorneys' fees) actually and reasonably incurred by such
director or officer in connection with the defense or settlement of such action
or suit if such director or officer acted in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of such director's or
officer's duty to the corporation unless and only to the extent that the Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other courts shall deem proper.
Section 12.03. Employees and Agents. To the extent that an authorized
representative of the company who neither was nor is a director or officer of
the corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 12.01 and 12.02 of this
Article or in defense of any claim, issue or matter therein, he shall be
indemnified by the corporation for, from and against expenses (including
attorneys' fees) actually and reasonably incurred by such authorized
representative in connection therewith. Such an authorized representative may,
at the discretion of the Board of Directors, be indemnified by the corporation
in any other circumstances to any extent if the corporation would be required by
Sections 12.01 and 12.02 of this Article to indemnify such person in such
circumstances to such extent if such authorized representative were or had been
a director or officer of the corporation.
Section 12.04. Procedure for Effecting Indemnification. Indemnification
under Section 12.01, 12.02 or 12.03 of this Article shall be made when ordered
by a court and shall be made in a specific case upon a determination that
indemnification of the authorized representative is required or proper in the
circumstances because such authorized representative has met the applicable
standard of conduct set forth in Sections 12.01 or 12.02 of this Article. Such
determination shall be made:
(1) By the Board of Directors by a majority vote of a
quorum consisting of directors who were not parties
to such action, suit or proceeding, or
<PAGE>
(2) If such a quorum is not obtainable, or, even if
obtainable a majority vote of a quorum of
disinterested directors so directs, by independent
legal counsel in a written opinion, or
(3) By the shareholders.
If a claim under this Article XII is not paid in full by the corporation within
ninety (90) days after a written claim has been received by the corporation, the
claimant may at any time thereafter bring suit against the corporation to
recover the unpaid amount of the claim and if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any action, suit or
proceeding in advance of its final disposition where the required undertaking
has been tendered to the corporation) that the claimant has not met the
standards of conduct which make it permissible for the corporation to indemnify
the claimant for the amount claimed, but the burden of proving such defense
shall be on the corporation. Neither the failure of the corporation (including
its Board of Directors, independent legal counsel or its shareholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because such
claimant had met the applicable standard of conduct, nor an actual determination
by the corporation (including its Board of Directors, independent legal counsel,
or its shareholders) that the claimant has not met such applicable standard of
conduct shall be a defense to the action or create a presumption that claimant
had not met the applicable standard of conduct.
Section 12.05. Advancing Expenses. Expenses (including attorneys' fees)
incurred in defending a civil or criminal action, suit or proceeding may be paid
by the corporation in advance of the final disposition of such action, suit or
proceeding, as authorized by the Board of Directors in a specific case or if
requested by the Board of Directors upon a written opinion of independent legal
counsel, upon receipt of an undertaking by or on behalf of an authorized
representative to repay such amount unless it shall ultimately be determined
that such authorized representative is entitled to be indemnified by the
corporation as required in this Article or authorized by law.
Section 12.06. Scope of Article. Each person who shall act as an
authorized representative of the corporation, shall be deemed to be doing so in
reliance upon such rights of indemnification as are provided in this Article.
The indemnification provided by the Article shall not be deemed exclusive of any
other rights to which those seeking indemnification may be entitled under any
agreement, vote of shareholders or disinterested directors, statute or
<PAGE>
otherwise, both as to action in such authorized representative's official
capacity and as to action in another capacity while holding such office or
position, and shall continue as to a person who has ceased to be an authorized
representative of the corporation and shall insure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE XIII
Insurance
Section 13.01. Insurance Against Liability Asserted Against Directors,
Officers, Etc. The corporation, whenever so authorized by the Board of
Directors, may purchase and maintain insurance on behalf of any authorized
representative, as said term is defined in Section 12.01 of these Bylaws,
against any liability asserted against such authorized representative and
incurred by such authorized representative in such capacity, or arising out of
such authorized representative's status as such, whether or not the corporation
would be authorized or required to indemnify such authorized representative by
law or Article XII of these Bylaws.
ARTICLE XIV
Miscellaneous
Section 14.01. Corporate Seal. The corporate seal of the corporation
shall have inscribed thereon the name of the corporation, the year of its
incorporation and the words "Corporate Seal, Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or otherwise
reproduced.
Section 14.02. Checks. All checks, notes, bills of exchange or other
orders in writing shall be signed by such person or persons as the Board of
Directors, or officer or officers authorized by resolution of the Board of
Directors may, from time to time, designate.
Section 14.03. Contracts. Except as otherwise provided in these Bylaws,
the Board of Directors may authorize any officer or officers including the
President and any Vice President, or any agent or agents, to enter into any
contract or to execute or deliver any instrument on behalf of the corporation
and such authority may be general or confined to specific instances.
Section 14.04. Inspection. The books, accounts and records of the
corporation may be kept (subject to any provision in the Delaware General
Corporation Law) outside the State of Delaware at such place or places as may be
<PAGE>
designated from time to time by the Board of Directors and shall be open for
inspection in person by any member of the Board of Directors at all times.
Section 14.05. Fiscal Year. The fiscal year of the corporation shall
be determined by the Board of Directors.
ARTICLE XV
Amendments
Section 15.01. Amendments. These Bylaws may be amended or repealed,
and new Bylaws adopted, by the Board of Directors.
60185.2
<PAGE>
EXHIBIT D
ARTICLE 113
Dissenters' Rights
PART I
Right of Dissent--Payment for Shares
7-113-101 DEFINITIONS--For purposes of this article:
(1) "Beneficial shareholder" means the beneficial owner of shares held
in a voting trust or by a nominee as the record shareholder.
(2) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring domestic or foreign
corporation, by merger or share exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under section 7-113-102 and who exercises that right at the
time and in the manner required by part 2 of this article.
(4) "Fair value" with respect to a dissenter's shares, means the value
of the shares immediately before the effective date of the corporate action to
which the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action except to the extent that exclusion would
be inequitable.
(5) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at the legal rate as
specified in section 5-12-101, C.R.S.
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation of the beneficial owner of shares
that are registered in the name of a nominee to the extent such owner is
recognized by the corporation as the shareholder as provided in section
7-107-204.
(7) "Shareholder" means either a record shareholder or a beneficial
shareholder.
60171.1
<PAGE>
7-113-102 RIGHT TO DISSENT:
(1) A shareholder, whether or not entitled to vote, is entitled to
dissent and obtain payment of the fair value of his or her shares in the event
of any of the following corporate actions:
(a) Consummation of a plan of merger to which the
corporation is a party
if:
(I) Approval by the shareholders of that
corporation is required for the merger by
section 7-111-103 or 7-111-104 or by the
articles of incorporation, or
(II) The corporation is a subsidiary that
is merged with its parent corporation under
section 7-111-104;
(b) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be
acquired.
(c) Consummation of a sale, lease, exchange, or other
disposition of all, or substantially all, of the property of
the corporation for which a shareholder vote is required under
section 7-112-102(1); and
(d) Consummation of a sale, lease, exchange, or other
disposition of all, or substantially all, of the property of
an entity controlled by the corporation if the shareholders of
the corporation were entitled to vote upon the consent of the
corporation to the disposition pursuant to section
7-112-102(2).
(2) A shareholder, whether or not entitled to vote, is entitled to
dissent and obtain payment of the fair value of the shareholder's shares in the
event of:
(a) An amendment to the articles of incorporation that
materially and adversely affects rights in respect of the
shares because it:
(I) Alters or abolishes a preferential
right of the shares; or
(II) Creates, alters, or abolishes a right
in respect of redemption of the shares, including a
provision respecting a sinking fund for their
redemption or repurchase; or
(b) An amendment to the articles of incorporation that
affects rights in respect of the shares because it:
<PAGE>
(I) Excludes or limits the right of the
shares to vote on any matter, or to cumulate votes,
other than a limitation by dilution through issuance
of shares or other securities with similar voting
rights; or
(II) Reduces the number of shares owned by
the shareholder to a fraction of a share or to scrip
if the fractional share or scrip so created is to be
acquired for cash or the scrip is to be voided under
section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment of the fair
value of the shareholder's shares in the event of any corporate action to the
extent provided by the bylaws or a resolution of the board of directors.
(4) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this article may not challenge the corporate action
creating such entitlement unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
7-113-103 DISSENT BY NOMINEES AND BENEFICIAL OWNERS
(1) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in the record shareholder's name only if the record
shareholder dissents with respect to all shares beneficially owned by any one
person and causes the corporation to receive written notice which states such
dissent and the name, address, and federal taxpayer identification number, if
any, of each person on whose behalf the record shareholder asserts dissenters'
rights. The rights of a record shareholder under this subsection (1) are
determined as if the shares as to which the record shareholder dissents and the
other shares of the record shareholder were registered in the names of different
shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to
the shares held on the beneficial shareholder's behalf only if;
(a) The beneficial shareholder causes the corporation to
receive the record shareholder's written consent to the
dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all
shares beneficially owned by the beneficial shareholder.
(3) The corporation may require that, when a record shareholder
dissents with respect to the shares held by any one or more beneficial
shareholders, each such beneficial shareholder must certify to the corporation
that the beneficial shareholder and the record shareholder or record
<PAGE>
shareholders of all shares owned beneficially by the beneficial shareholder have
asserted, or will timely assert, dissenters' rights as to all such shares as to
which there is no limitation on the ability to exercise dissenters' rights. Any
such requirement shall be stated in the dissenters' notice given pursuant to
section 7-113-203.
PART 2
Procedure for Exercise of Dissenters' Rights
7-113-201 NOTICE OF DISSENTERS' RIGHTS
(1) If a proposed corporate action creating dissenters' rights under
section 7-113- 102 is submitted to a vote at a shareholders' meeting, the notice
of the meeting shall be given to all shareholders, whether or not entitled to
vote. The notice shall state that shareholders are or may be entitled to assert
dissenters' rights under this article and shall be accompanied by a copy of this
article and the materials, if any, that under articles 101 to 117 of this title,
are required to be given to shareholders entitled to vote on the proposed action
at the meeting. Failure to give notice as provided by this subsection (1) to
shareholders not entitled to vote shall not affect any action taken at the
shareholders' meeting for which the notice was to have been given.
(2) If a proposed corporate action creating dissenters' rights under
section 7-113- 102 is authorized without a meeting of shareholders pursuant to
section 7-107-104, any written or oral solicitation of a shareholder to execute
a writing consenting to such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that shareholders are or may
be entitled to assert dissenters' rights under this article, by a copy of this
article, and by the materials, if any, that, under articles 101 to 117 of this
title, would have been required to be given to shareholders entitled to vote on
the proposed action if the proposed action were submitted to a vote at a
shareholders' meeting. Failure to give notice as provided by this subsection (2)
to shareholders not entitled to vote shall not affect any action taken pursuant
to section 7-107-104 for which the notice was to have been given.
7-113-202 NOTICE OF INTENT TO DEMAND PAYMENT
(1) If a proposed corporate action creating dissenters' rights under
section 7-113- 102 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights shall:
(a) Cause the corporation to receive, before the vote is
taken, written notice of the shareholder's intention to demand
payment for the shareholder's shares if the proposed corporate
action is effectuated; and
(b) Not vote the shares in favor of the proposed corporate
action.
<PAGE>
(2) If a proposed corporate action creating dissenters' rights under
section 7-113- 102 is authorized without a meeting of shareholders pursuant to
section 7-107-104, a shareholder who wishes to assert dissenters' rights shall
not execute a writing consenting to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of subsection
(1) or (2) of this action is not entitled to demand payment for the
shareholder's shares under this article.
7-113-203 DISSENTERS' NOTICE
(1) If a proposed corporate action creating dissenters' rights under
section 7-113- 102 is authorized, the corporation shall give a written
dissenters' notice to all shareholders who are entitled to demand payment for
their shares under this article.
(2) The dissenter's notice required by subsection (1) of this section
shall be given no later than ten days after the effective date of the corporate
action creating dissenters' rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state
the effective date or proposed effective date of the corporate action;
(b) State an address at which the corporation will receive
payment demands and the address of a place where certificates for
certificated shares must be deposited;
(c) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment demand is
received;
(d) Supply a form for demanding payment, which form shall
request a dissenter to state an address to which payment is to be made;
(e) Set the date by which the corporation must receive the
payment demand and certificates for certificated shares, which date
shall not be less than thirty days after the date the notice required
by subsection (1) of this section is given;
(f) State the requirement contemplated in section 7-113-103
(3), if such requirement is imposed; and
(g) Be accompanied by a copy of this article.
60171.1
<PAGE>
7-113-204 PROCEDURE TO DEMAND PAYMENT
(1) A shareholder who is given a dissenters' notice pursuant to section
7-113-203 and who wishes to assert dissenters' rights shall, in accordance with
the terms of the dissenters' notice:
(a) Cause the corporation to receive a payment demand, which
may be the payment demand form contemplated in section 7-113-102(2)(d),
duly completed, or may be stated in another writing; and
(b) Deposit the shareholder's certificates for certificated
shares.
(2) A shareholder who demands payment in accordance with subsection (1)
of this section retains all rights of a shareholder, except the right to
transfer the shares, until the effective date of the proposed corporate action
giving rise to the shareholder's exercise of dissenters' rights and has only the
right to receive payment for the shares after the effective date of such
corporate action.
(3) Except as provided in section 7-113-207 or 7-113-209(1)(b), the
demand for payment and deposit of certificates are irrevocable.
(4) A shareholder who does not demand payment and deposit the
Shareholder's share certificates as required by the date or dates set in the
dissenters' notice is not entitled to payment for the shares under this article.
7-113-205 UNCERTIFICATED SHARES
(1) Upon receipt of a demand for payment under section 7-113-204 from a
shareholder holding uncertificated shares, and in lieu of the deposit of
certificates representing the shares, the corporation may restrict the transfer
thereof.
(2) In all other respects, the provisions of section 7-113-204 shall be
applicable to shareholders who own uncertificated shares.
7-113-206 PAYMENT
(1) Except as provided in section 7-113-208, upon the effective date of
the corporate action creating dissenters' rights under section 7-113-102 or upon
receipt of a payment demand pursuant to section 7-113-204, whichever is later,
the corporation shall pay each dissenter who complied with section 7-113-204, at
the address stated in the payment demand, or if no such address is stated in the
<PAGE>
payment demand, at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares, the
amount the corporation estimates to be the fair value of the dissenter's shares,
plus accrued interest.
(2) The payment made pursuant to subsection (1) of this section shall
be accompanied by:
(a) The corporation's balance sheet as of the end of its most
recent fiscal year or, if that is not available, the corporation's
balance sheet as of the end of a fiscal year ending not more than
sixteen months before the date of payment, an income statement for that
year, and, if the corporation customarily provides such statements to
shareholders, a statement of changes in shareholders' equity for that
year and a statement of cash flow for that year, which balance sheet
and statements shall have been audited if the corporation customarily
provides audited financial statements to shareholders, as well as the
latest available financial statements, if any, for the interim or
full-year period, which financial statements need not be audited;
(b) A statement of the corporation's estimate of the fair
value of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment
under section 7-113-209; and
(e) A copy of this article.
7-113-207 FAILURE TO TAKE ACTION
(1) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 does not occur within sixty days after the date
set by the corporation by which the corporation must receive the payment demand
as provided in section 7-113-203, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on uncertificated
shares.
(2) If the effective date of the corporate action creating dissenters'
rights under section 7-113-102 occurs more than sixty days after the date set by
the corporation by which the corporation must receive the payment demand as
provided in section 7-113-203, then the corporation shall send a new dissenters'
notice, as provided in section 7-113-203, and the provisions of sections
7-113-204 to 7-113-209 shall again be applicable.
60171.1
<PAGE>
7-113-208 SPECIAL PROVISIONS RELATING TO SHARES ACQUIRED
AFTER ANNOUNCEMENT OF PROPOSED CORPORATE ACTION
(1) The corporation may, in or with the dissenters' notice given
pursuant to section 7-113-203, state the date of the first announcement to news
media or to shareholders of the terms of the proposed corporate action creating
dissenters' rights under section 7-113- 102 and state that the dissenter shall
certify in writing, in or with the dissenter's payment demand under section
7-113-204, whether or not the dissenter (or the person on whose behalf
dissenters' rights are asserted) acquired beneficial ownership of the shares
before that date. With respect to any dissenter who does not so certify in
writing, in or with the payment demand, that the dissenter or the person on
whose behalf the dissenter asserts dissenters' rights acquired beneficial
ownership of the shares before such date, the corporation may, in lieu of making
the payment provided in section 7-113-206, offer to make such payment if the
dissenter agrees to accept it in full satisfaction of the demand.
(2) An offer to make payment under subsection (1) of this section shall
include or be accompanied by the information required by section 7-113-206(2).
7-113-209 PROCEDURE IF DISSENTER IS DISSATISFIED WITH PAYMENT
OR OFFER
(1) A dissenter may give notice to the corporation in writing of the
dissenter's estimate of the fair value of the dissenter's shares and of the
amount of interest due and may demand payment of such estimate, less any payment
made under section 7-113-206, or reject the corporation's offer under section
7-113-208 and demand payment of the fair value of the shares and interest due,
if:
(a) The dissenter believes that the amount paid under section
7-113-206 or offered under section 7-113-208 is less than the fair
value of the shares or that the interest due was incorrectly
calculated;
(b) The corporation fails to make payment under section
7-113-206 within sixty days after the date set by the corporation by
which the corporation must receive the payment demand; or
(c) The corporation does not return the deposited certificates
or release the transfer restrictions imposed on uncertificated shares
as required by section 7-113- 207(1).
(2) A dissenter waives the right to demand payment under this section
unless the dissenter causes the corporation to receive the notice required by
subsection (1) of this section within thirty days after the corporation made or
offered payment for the dissenter's shares.
<PAGE>
PART 3
Judicial Appraisal of Shares
7-113-301 COURT ACTION
(1) If a demand for payment under section 7-113-209 remains unresolved,
the corporation may, within sixty days after receiving the payment demand,
commence a proceeding and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the proceeding
within the sixty-day period, it shall pay to each dissenter whose demand remains
unresolved the amount demanded.
(2) The corporation shall commence the proceeding described in
subsection (1) of this section in the district court of the county in this state
where the corporation's principal office is located or, if it has no principal
office in this state, in the district court of the county in which its
registered office is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic corporation
merged into, or whose shares were acquired by, the foreign corporation was
located.
(3) The corporation shall make all dissenters, whether or not residents
of this state, whose demands remain unresolved parties to the proceeding
commenced under subsection (2) of this section as in an action against their
shares, and all parties shall be served with a copy of the petition. Service on
each dissenter shall be by registered or certified mail, to the address stated
in such dissenter's payment demand, or if no such address is stated in the
payment demand, at the address shown on the corporation's current record of
shareholders for the record shareholder holding the dissenter's shares, or as
provided by law.
(4) The jurisdiction of the court in which the proceeding is commenced
under subsection (2) of this section is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers have the powers described
in the order appointing them, or in any amendment to such order. The parties to
the proceeding are entitled to the same discovery rights as parties in other
civil proceedings.
(5) Each dissenter made a party to the proceeding commenced under
subsection (2) of this section is entitled to judgment for the amount, if any,
by which the court finds the fair value of the dissenter's shares, plus
interest, exceeds the amount paid by the corporation, or for the fair value,
plus interest, of the dissenter's shares for which the corporation elected to
withhold payment under section 7-113-208.
60171.1
<PAGE>
7-113-302 COURT COSTS AND COUNSEL FEES
(1) The court in an appraisal proceeding commenced under section
7-311-301 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation; except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously, or not
in good faith in demanding payment under section 7-113-209.
(2) The court may also assess the fees and expenses of counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any dissenters if
the court finds the corporation did not substantially comply with the
requirements of part 2 of this article; or
(b) Against either the corporation or one or more dissenters,
in favor of any other party, if the court finds that the party against
whom the fees and expenses are assessed acted arbitrarily, vexatiously,
or not in good faith with respect to the rights provided by this
article.
(3) If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to said counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefitted.
60171.1
<PAGE>
DISSENTER'S DEMAND FOR PAYMENT
TO: Sage Resources, Inc.
10 Exchange Place, #309
Salt Lake City, UT 84111
THE UNDERSIGNED, being the beneficial owner of _____________ shares of
common stock of Sage Resources, Inc. hereby dissents to the merger of the
Company into its newly formed Delaware subsidiary -- WorldPort Communications,
Inc. and hereby exercises dissenter's rights pursuant to Section 7-113-102 of
the Colorado General Corporation Law. Demand is hereby made for fair market
value of the shares described above to be paid to the Undersigned as the
following address:
--------------------------------------
--------------------------------------
.
Enclosed herewith is Stock Certificate No. _____ representing beneficial
ownership of _____ shares of common stock of the Company, to be deposited with
the Company pursuant to the requirements of Colorado law.
----------------------------------------
59842.7
<PAGE>
WORLDPORT COMMUNICATIONS, INC.
LONG-TERM INCENTIVE PLAN
SLC - 60160.1
<PAGE>
TABLE OF CONTENTS
Page
PURPOSE...................................................................... 1
EFFECTIVE DATE............................................................... 1
DEFINITIONS AND CONSTRUCTION................................................. 1
ADMINISTRATION............................................................... 4
SHARES SUBJECT TO THE PLAN................................................... 5
ELIGIBILITY.................................................................. 6
STOCK OPTIONS................................................................ 6
STOCK APPRECIATION RIGHTS.................................................... 8
PERFORMANCE SHARES........................................................... 8
RESTRICTED STOCK AWARDS...................................................... 9
DIVIDEND EQUIVALENTS......................................................... 9
OTHER STOCK-BASED AWARDS..................................................... 9
PROVISIONS APPLICABLE TO AWARDS.............................................. 10
CHANGES IN CAPITAL STRUCTURE................................................. 11
AMENDMENT, MODIFICATION AND TERMINATION...................................... 12
GENERAL PROVISIONS........................................................... 13
SLC - 60160.1
i
<PAGE>
WORLDPORT COMMUNICATIONS, INC.
LONG-TERM INCENTIVE PLAN
1. PURPOSE.
(a) General. The purpose of the WorldPort Communications, Inc.
Long-Term Incentive Plan (the "Plan") is to promote the success, and enhance the
value, of WorldPort Communications, Inc. (the "Company") by linking the personal
interests of its key employees to those of Company shareholders and by providing
its key employees with an incentive for outstanding performance. The Plan is
further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of employees upon whose judgment,
interest, and special effort the successful conduct of the Company's operation
is largely dependent. Accordingly, the Plan permits the grant of incentive
awards from time to time to selected officers, key employees and outside
consultants.
2. EFFECTIVE DATE.
(a) Effective Date. The Plan is effective as of October 1, 1996 (the
"Effective Date"). Within one year after the Effective Date, the Plan shall be
submitted to the shareholders of the Company for their approval. The Plan will
be deemed to be approved by the shareholders if it receives the affirmative vote
of the holders of a majority of the shares of stock of the Company present, or
represented, and entitled to vote at a meeting duly held (or by the written
consent of the holders of a majority of the shares of stock of the Company
entitled to vote) in accordance with the applicable provisions of Delaware law
and the Company's Bylaws and Articles of Incorporation. Any awards granted under
the Plan prior to shareholder approval are effective when made (unless the
Committee specifies otherwise at the time of grant), but no Award may be
exercised or settled and no restrictions relating to any Award may lapse before
shareholder approval. If the shareholders fail to approve the Plan, any Award
previously made shall be automatically canceled without any further act.
3. DEFINITIONS AND CONSTRUCTION. When a word or phrase appears in this
Plan with the initial letter capitalized, and the word or phrase does not
commence a sentence, the word or phrase shall generally be given the meaning
ascribed to it in this paragraph or paragraphs 1(a) or 2(a) unless a clearly
different meaning is required by the context. The following words and phrases
shall have the following meanings:
(a) "Award" means any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Share Award, Dividend Equivalent Award, or Other
Stock-Based Award, or any other right or interest relating to Stock or cash,
granted to a Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract, or other
instrument or document evidencing an Award.
<PAGE>
(c) "Board" means the Board of directors of the Company.
(d) "Change of Control" means and includes each of the following:
(i) A change of control of the Company of a nature that would
be required to be reported in response to Item 6(e) of Schedule 14A of
the 1934 Act regardless of whether the Company is subject to such
reporting requirement;
(ii) A change of control of the company through a transaction
or series of transactions, such that any person (as that term is used
in Section 13 and 14(d)(2) of the 1934 Act), excluding affiliates of
the Company as of the Effective date, is or becomes the beneficial
owner (as that term is used in Section 13(d) of the 1934 Act) directly
or indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding securities;
(iii) Any consolidation or liquidation of the Company in which
the Company is not the continuing or surviving corporation or pursuant
to which Shares would be converted into cash, securities or other
property, other than a merger of the company in which the holders of
the Shares immediately before the merger have the same proportionate
ownership of common stock of the surviving corporation immediately
after the merger;
(iv) The shareholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company; or
(v) Substantially all of the assets of the Company are sold or
otherwise transferred to parties that are not within a "controlled
group of corporations" (as defined in Section 1563 of the Code) in
which the Company is a member.
The foregoing events shall not be deemed to be a Change in Control if the
transaction or transactions causing such change shall have been approved by the
affirmative vote of at least a majority of the members of the Board in office as
of the Effective Date ("Incumbents"), those serving on the Board pursuant to
nomination or appointment thereto by a majority of Incumbents ("Successors"),
and those serving on the Board pursuant to nomination or appointment thereto by
a majority of a Board composed of Incumbents and/or Successors.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" means the committee of the Board described in
paragraph 4.
(g) "Disability" shall mean any illness or other physical or mental
condition of a Participant which renders the Participant incapable of performing
his customary and usual duties for the Company, or any medically determinable
illness or other physical or mental condition resulting from a bodily injury,
<PAGE>
disease or mental disorder which in the judgment of the Committee is permanent
and continuous in nature. The Committee may require such medical or other
evidence as it deems necessary to judge the nature and permanency of the
Participant's condition.
(h) "Dividend Equivalent" means a right granted to a Participant under
paragraph 11.
(i) "Fair Market Value" means with respect to Stock or any other
property, the fair market value of such Stock or other property determined by
such methods or procedures as may be established from time to time by the
Committee. Unless otherwise determined by the Committee, the Fair Market Value
of the Stock as of any date shall be the closing price for the Stock as reported
on the NASDAQ National Market System (or on any national securities exchange on
which the Stock is then listed) for that date or, if no closing price is so
reported for that date, the closing price on the next preceding date for which a
closing price was reported.
(j) "Incentive Stock Option" means an Option that is intended to meet
the requirements of Section 422 of the Code or any successor provision thereto.
(k) "Non-Qualified Stock Option" means an Option that is not intended
to be an Incentive Stock Option.
(l) "Option" means a right granted to a Participant under paragraph 7
of the Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a Non-Qualified
Stock Option.
(m) "Other Stock-Based Award" means a right, granted to a Participant
under paragraph 12, that relates to or is valued by reference to Stock or other
Awards relating to Stock.
(n) "Participant" means a person who, as an officer, key employee or
outside consultant of the Company or any Subsidiary, has been granted an Award
under the Plan.
(o) "Performance Share" means a right granted to a Participant under
paragraph 9, to receive cash, Stock, or other Awards, the payment of which is
contingent upon achieving certain performance goals established by the
Committee.
(p) "Plan" means the WorldPort Communications, Inc. Long-Term Incentive
Plan, as amended from time to time.
(q) "Restricted Stock Award" means Stock granted to a Participant under
paragraph 10 that is subject to certain restrictions and to risk of forfeiture.
(r) "Retirement" means a Participant's termination of employment with
the Company after attaining any normal or early retirement age specified in any
pension, profit sharing or other retirement program sponsored by the Company.
<PAGE>
(s) "Stock" means the common stock of the Company and such other
securities of the Company that may be substituted for Stock pursuant to
paragraph 12.
(t) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under paragraph 8 to receive a payment equal to the difference
between the Fair Market Value of a share of Stock as of the date of exercise of
the SAR over the grant price of the SAR, all as determined pursuant to paragraph
8.
(u) "Subsidiary" means any corporation of which a majority of the
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.
4. ADMINISTRATION.
(a) Committee. The Plan shall be administered by a Committee that is
appointed by, and shall serve at the discretion of, the Board. The Committee
shall consist of at least one individual who is a member of the Board who is a
"disinterested person," as such term is defined in Rule 16b-3 promulgated under
Section 16 of the Securities Exchange Act of 1934 (the "1934 Act") or any
successor provision, except as may be otherwise permitted under Section 16 of
the 1934 Act and the regulations and rules promulgated thereunder.
(b) Action by the Committee. A majority of the Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present and acts approved in writing by a majority
of the Committee in lieu of a meeting shall be deemed the acts of the Committee.
Each member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other
employee of the Company or any Subsidiary, the Company's independent certified
public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.
(c) authority of Committee. The Committee has the exclusive power,
authority and discretion to:
(i) Designate Participants;
(ii) Determine the type or types of Awards to be granted
to each Participant;
(iii) Determine the number of Awards to be granted and the
number of shares of Stock to which an Award will relate;
(iv) Determine the terms and conditions of any Award granted
under the Plan including but not limited to, the exercise price, grant
price, or purchase price, any restrictions or limitations on the Award,
any schedule for lapse of forfeiture restrictions or restrictions on
the exercisability of an Award, and accelerations or waivers thereof,
based in each case on such considerations as the Committee in its sole
discretion determines;
<PAGE>
(v) Determine whether, to what extent, and under what
circumstances an Award may be settled in, or the exercise price of an
Award may be paid in, cash, Stock, other Awards, or other property, or
an Award may be canceled, forfeited, or surrendered;
(vi) Prescribe the form of each Award Agreement, which need
not be identical for each Participant;
(vii) Decide all other matters that must be determined in
connection with an Award;
(viii) Establish, adopt or revise any rules and regulations as
it may deem necessary or advisable to administer the Plan; and
(ix) Make all other decisions and determinations that may be
required under the Plan or as the Committee deems necessary or
advisable to administer the Plan.
(d) Decisions Binding. The Committee's interpretation of the Plan,
any Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
5. SHARES SUBJECT TO THE PLAN.
(a) Number of Shares. Subject to adjustment provided in paragraph 14(a)
the aggregate number of shares of Stock reserved and available for Awards or
which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Share
Award) shall be 2,000,000.
(b) Lapsed Awards. To the extent that an Award terminates, expires or
lapses for any reason, any shares of Stock subject to the Award will again be
available for the grant of an Award under the Plan and shares subject to SARs or
other Awards settled in cash will be available for the grant of an Award under
the Plan, in each case to the full extent available pursuant to the rules and
interpretations of the Securities and Exchange Commission under Section 16 of
the 1934 Act, as amended.
(c) Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
(d) Limitation on Number of Shares Subject to Awards. Notwithstanding
any provision in the Plan to the contrary, the maximum number of shares of Stock
with respect to one or more Awards that may be granted to any one Participant
over the term of the Plan shall be 750,000.
<PAGE>
6. ELIGIBILITY.
(a) General. Awards may be granted only to individuals who are
officers, key employees or outside consultants of the Company or a Subsidiary,
as determined by the Committee.
7. STOCK OPTIONS.
(a) General. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock
under an Option shall be determined by the Committee, provided that the
exercise price for any Option shall not be less than the Fair Market
Value as of the date of grant;
(ii) Time and Conditions of Exercise. The Committee shall
determine the time or times at which an Option may be exercised in
whole or in part, provided that no Option may be exercisable prior to
six months following the date of the grant of such Option. The
Committee also shall determine the performance or other conditions, if
any, that must be satisfied before all or part of an Option may be
exercised;
(iii) Payment. The Committee shall determine the methods by
which the exercise price of an Option may be paid, the form of payment,
including, without limitation, cash, shares of Stock, or other property
(including "cashless exercise" arrangements, and the methods by which
shares of Stock shall be delivered or deemed to be delivered to
Participants. Without limiting the power and discretion conferred on
the Committee pursuant to the preceding sentence, the Committee may, in
the exercise of its discretion, but need not, allow a Participant to
pay the Option price by directing the Company to withhold from the
shares of Stock that would otherwise be issued upon exercise of the
Option that number of shares having a Fair Market Value on the exercise
date equal to the Option price, all as determined pursuant to rules and
procedures established by the Committee;
(iv) Evidence of Grant. All Options shall be evidenced by a
written Award Agreement between the Company and the Participant. The
Award Agreement shall include such provisions as may be specified by
the Committee.
(b) Incentive Stock Options. The terms of any Incentive Stock
Options granted under the Plan must comply with the following additional rules:
(i) Exercise Price. The exercise price per share of Stock
shall be set by the Committee, provided that the exercise price for any
Incentive Stock Option may not be less than the Fair Market Value as of
the date of the grant;
(ii) Exercise. In no event, may any Incentive Stock Option
be exercisable for more than ten years from the date of its grant;
<PAGE>
(iii) Lapse of Option. An Incentive Stock Option shall lapse
under the following circumstances":
(1) The Incentive Stock Option shall lapse ten years
after it is granted, unless an earlier time is set in the
Award Agreement;
(2) The Incentive Stock Option shall lapse three
months after the Participant's termination of employment, if
the termination of employment was attributable to (a)
Disability, (b) Retirement, or (c) for any other reason,
provided that the Committee has approved, in writing, the
continuation of any Incentive Stock Option outstanding on the
date of the Participant's termination of employment;
(3) If the Participant separates from employment
other than as provided in paragraph 7(b)(iii)(2), the
Incentive Stock Option shall lapse at the time of the
Participant's termination of employment;
(4) If the Participant dies before the Option lapses
pursuant to paragraph 7(b)(iii)(1), 7(b)(iii)(2) or
7(b)(iii)(3), above, the Incentive Stock Option shall lapse,
unless it is previously exercised, on the earlier of (a) the
date on which the Option would have lapsed had the Participant
lived and had his employment status (i.e., whether the
Participant was employed by the Company on the date of his
death or had previously terminated employment) remained
unchanged; or (b) 15 months after the date of the
Participant's death. Upon the Participant's death, any
exercisable Incentive Stock Options may be exercised by the
Participant's legal representative or representatives, by the
person or persons entitled to do so under the Participant's
last will and testament, or, if the Participant shall fail to
make testamentary disposition of such Incentive Stock Option
or shall die intestate, by the person or persons entitled to
receive said Incentive Stock Option under the applicable laws
of descent and distribution.
(c) Individual Dollar Limitation. The aggregate Fair market Value
(determined as of the time an Award is made) of all shares of Stock with respect
to which Incentive Stock Options are first exercisable by a Participant in any
calendar year may not exceed $100,000.00.
(d) Ten Percent Owners. An Incentive Stock Option shall be granted to
any individual who, at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of Stock of the
Company only if such Option is granted at a price that is not less than 110% of
Fair Market Value on the date of grant and the Option is exercisable for no more
than five years from the date of grant.
(e) Expiration of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to this Plan after October 1, 2006.
(f) Right to Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant.
<PAGE>
8. STOCK APPRECIATION RIGHTS.
(a) Grant of SARs. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
(i) Right to Payment. Upon the exercise of a Stock
Appreciation Right, the Participant to whom it is granted has the right
to receive the excess, if any, of:
(1) The Fair Market Value of one share of Stock on
the date of exercise; over
(2) The grant price of the Stock Appreciation Right
as determined by the Committee, which shall not be less than
the Fair Market Value of one share of Stock on the date of
grant in the case of any SAR related to any Incentive Stock
Option.
(b) Other Terms. All awards of Stock Appreciation Rights shall be
evidenced by an Award Agreement. The terms, methods of exercise, methods of
settlement, form of consideration payable in settlement, and any other terms and
conditions of any Stock Appreciation Right shall be determined by the Committee
at the time of the grant of the Award and shall be reflected in the Award
Agreement.
9. PERFORMANCE SHARES.
(a) Grant of Performance Shares. The Committee is authorized to
grant Performance Shares to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Shares granted to each Participant. All
Awards of Performance Shares shall be evidenced by an Award Agreement;
(b) Right to Payment. A grant of Performance Shares gives the
Participant rights, valued as determined by the Committee, and payable to, or
exercisable by, the Participant to whom the Performance Shares are granted, in
whole or in part, as the Committee shall establish at grant or thereafter. The
Committee shall set performance goals and other terms or conditions to payment
of the Performance Shares in its discretion which, depending on the extent to
which they are met, will determine the number and value of Performance Shares
that will be paid to the Participant, provided that the time period during which
the performance goals must be met shall, in all cases, exceed six months;
(c) Other Terms. Performance Shares may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.
<PAGE>
10. RESTRICTED STOCK AWARDS.
(a) Grant of Restricted Stock. The Committee is authorized to make
Awards of Restricted Stock to Participants in such amounts and subject to such
terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement;
(b) Issuance and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, or otherwise, as the Committee
determines at the time of the grant of the Award or thereafter;
(c) Forfeiture. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period, Restricted Stock that is at that time
subject to restrictions shall be forfeited and reacquired by the Company,
provided, however, that the Committee may provide in any award Agreement that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from specified
causes, and the Committee may in other cases waive in whole or in part
restrictions or forfeiture conditions relating to Restricted Stock;
(d) Certificates for Restricted Stock. Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock, and
the Company shall retain physical possession of the certificate until such time
as all applicable restrictions lapse.
11. DIVIDEND EQUIVALENTS.
(a) Grant of Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to Participants subject to such terms and conditions as may
be selected by the Committee. Dividend Equivalents shall entitle the Participant
to receive payments equal to dividends with respect to all or a portion of the
number of shares of Stock subject to an Option Award or SAR Award, as determined
by the Committee. The Committee may provide that Dividend Equivalents be paid or
distributed when accrued or be deemed to have been reinvested in additional
shares of Stock, or otherwise reinvested.
12. OTHER STOCK-BASED AWARDS.
(a) Grant of Other Stock-Based Awards. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to shares of Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including without limitation shares
<PAGE>
of Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Stock, and Awards valued by reference
to book value of shares of Stock or the value of securities of or the
performance of specified Subsidiaries. The Committee shall determine the terms
and conditions of such Awards.
13. PROVISIONS APPLICABLE TO AWARDS.
(a) Stand-Alone, Tandem, and Substitute Awards. Awards granted under
the Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan, if an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards;
(b) Exchange Provisions. The Committee may at any time offer to
exchange or buy out any previously granted Award for a payment in cash, Stock,
or another Award (subject to paragraph 13(a), based on the terms and conditions
the Committee determines and communicates to the Participant at the time the
offer is made;
(c) Term of Award. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant;
(d) Form of Payment for Awards. Subject to the terms of the Plan and
any applicable law or Award Agreement, payments or transfers to be made by the
Company or a Subsidiary on the grant or exercise of an Award may be made in such
forms as the Committee determines at or after the time of grant, including
without limitation, cash, Stock, other Awards, or other property, or any
combination, and may be made in a single payment or transfer, in installments,
or on a deferred basis, in each case determined in accordance with rules adopted
by, and at the discretion of, the Committee;
(e) Limits on Transfer. No right or interest of a Participant in any
Award may be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided below, no Award shall be
assignable or transferable by a Participant other than by will or the laws of
descent and distribution or, except in the case of an Incentive Stock Option,
pursuant to a court order that would otherwise satisfy the requirements to be a
domestic relations order as defined in Section 414(p)(1)(B) of the Code, if the
order satisfies Section 414(p)(1)(A) of the Code notwithstanding that such an
order relates to the transfer of a stock option rather than an interest in an
employee benefit pension plan. In the Award Agreement for any Award other than
an Award that includes an Incentive Stock Option, the Committee may allow a
<PAGE>
Participant to Assign or otherwise transfer all or a portion of the rights
represented by the Award to specified individuals or classes of individuals, or
to a trust benefitting such individuals or classes of individuals, subject to
such restrictions, limitations, or conditions as the Committee deems to be
appropriate;
(f) Beneficiaries. Notwithstanding paragraph 13(e), a Participant may,
in the manner determined by the Committee, designate a beneficiary to exercise
the rights of the Participant and to receive any distribution with respect to
any Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the
participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If the Participant is married, a designation of a person other
than the Participant's spouse as his beneficiary with respect to more than 50
percent of the Participant's interest in the Award shall not be effective
without the written consent of the Participant's spouse. If no beneficiary has
been designated or survives the Participant, payment shall be made to the person
entitled thereto under the Participant's will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a participant at any time provided the change or revocation is
filed with the Committee;
(g) Stock Certificates. All Stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with federal or state securities laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on with the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock;
(h) Tender Offers. In the event of a public tender for all or any
portion of the Stock, or in the event that a proposal to merge, consolidate, or
otherwise combine with another company is submitted for shareholder approval,
the Committee may in its sole discretion declare previously granted Options to
be immediately exercisable. To the extent that this provision causes Incentive
Stock Options to exceed the dollar limitation set forth in paragraph 7(c), the
excess Options shall be deemed to be Non-Qualified Stock Options;
(i) Acceleration Upon a Change of Control. If a Change of Control
occurs, all outstanding Options, Stock Appreciation Rights, and other Awards in
the nature of rights that may be exercised shall become fully exercisable and
all restrictions on outstanding Awards shall lapse.
14. CHANGES IN CAPITAL STRUCTURE.
(a) General. In the event a stock dividend is declared upon the Stock,
the shares of Stock then subject to each Award (and the number of shares subject
thereto) shall be increased proportionately without any change in the aggregate
purchase price therefor. In the event the Stock shall be changed into or
exchanged for a different number or class of shares of Stock or of another
corporation, whether through reorganization, recapitalization, stock split-up,
combination of shares, merger or consolidation, there shall be substituted for
each such share of Stock then subject to each Award (and for each share of Stock
then subject thereto) the number and class of shares of Stock into which each
outstanding share of Stock shall be so exchanged, all without any change in the
aggregate purchase price for the shares then subject to each Award;
(b) Merger. Subject to the Change of Control provision in paragraph
13(i), a dissolution or liquidation of the Company or a merger or consolidation
in which the Company is not the surviving or resulting corporation, shall, in
the sole discretion of the Committee:
(i) Cause every Award outstanding hereunder to terminate,
except that the surviving or resulting corporation, in its absolute and
uncontrolled discretion, may tender an option or options to purchase
its shares or exercise such rights on terms and conditions, as to the
number of shares and rights and otherwise, which shall substantially
preserve the rights and benefits of any Award then outstanding
thereunder; or
(ii) Give each Participant the right to exercise Awards prior
to the occurrence of the event otherwise terminating the Awards over
such period as the Committee, in its sole and absolute discretion,
shall determine. To the extent that this provision causes Incentive
Stock Options to exceed the dollar limitation set forth in paragraph
7(c), the excess Options shall be deemed to be Non-Qualified Stock
Options.
15. AMENDMENT, MODIFICATION AND TERMINATION.
(a) Amendment, Modification and Termination. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan. However, without approval of the shareholders of the Company or
other conditions (as may be required by the Code, by insider trading rules of
Section 16 of the 1934 Act, by any national securities exchange or system on
which the Stock is listed or reported, or by a regulatory body having
jurisdiction), no such termination, amendment, or modification may:
(i) Materially increase the total number of shares of Stock that may be
issued under the Plan, except as provided in paragraph 14(a);
(ii) Materially modify the eligibility requirements for participation in
the Plan; or
(iii) Materially increase the benefits accruing to Participants under the
Plan.
(b) Awards Previously Granted. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant.
<PAGE>
16. GENERAL PROVISIONS.
(a) No Rights to Awards. No Participant or employee shall have any claim to
be granted any Award under the Plan, and neither the Company nor the Committee
is obligated to treat Participants and employees uniformly;
(b) No Stockholders Rights. No Award gives the Participant any of the
rights of a shareholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award;
(c) Withholding. The Company or any Subsidiary shall have the authority and
the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy Federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withhold
with respect to any taxable event arising as a result of this Plan. With respect
to withholding required upon any taxable event under the Plan, Participants may
elect, subject to the Committee's approval, to satisfy the withholding
requirement, in whole or in part, by having the Company or any Subsidiary
withhold shares of Stock having a Fair Market Value on the date of withholding
equal to the amount to be withheld for tax purposes in accordance with such
procedures as the Committee establishes. The Committee may, at the time any
Award is granted, require that any and all applicable tax withholding
requirements be satisfied by the withholding of shares of Stock as set forth
above;
(d) No Right to Employment. Nothing in the Plan or any Award Agreement
shall interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company or any
Subsidiary;
(e) Unfunded Status of Awards. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Subsidiary;
(f) Indemnification. To the extent allowable under applicable law, each
member of the Committee or of the Board shall be indemnified and held harmless
by the Company form any loss, cost, liability, or expense that may be imposed
upon or reasonably incurred by such member in connection with or resulting from
any claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action or failure to act under
the Plan and against and from any and all amounts paid by him or her in
satisfaction of judgment in such action, suite, or proceeding against him or her
provided he or she gives the Company an opportunity, at its own expense, to
handle and defend the same before he or she undertakes to handle and defend it
on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or Bylaws, as a matter of
law, or otherwise, or any power that the Company may have to indemnify them or
hold them harmless;
<PAGE>
(g) Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or other benefit plan of the
Company or any Subsidiary;
(h) Expenses. The expenses of administering the Plan shall be borne by the
Company and its Subsidiaries;
(i) Titles and Headings. The titles and headings of the paragraphs in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control;
(j) Fractional Shares. No fractional shares of stock shall be issued and
the Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up;
(k) Securities Law Compliance. With respect to any person who is, on
the relevant date, obligated to file reports under Section 16 of the 1934 Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of the Plan or action by the Committee fails to so comply, it shall be
void to the extent permitted by law and voidable as deemed advisable by the
Committee;
(l) Government and Other Regulations. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register under the
Securities Act of 1933, as amended (the "1933 Act"), any of the shares of Stock
paid under the Plan. If the shares paid under the Plan may in certain
circumstances be exempt from registration under the 1933 Act, the Company may
restrict the transfer of such shares in such manner as it deems advisable to
ensure the availability of any such exemption;
(m) Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the State of Delaware.
SLC - 60160.1
<PAGE>
WorldPort, Dinton Trader
October 31, 1996
Page 1
WorldPort Communications, Inc.
100 California Street, Suite 1400
San Francisco, California 94111
Telephone (415) 393-0724
Facsimile (415) 393-0721
October 31, 1996
Mr. Robert Richman
Dinton Trader S.A.
c/o Dinton Trader U.K. Ltd.
4 William Street
London, United Kingdom Sw1X 9HL
Dear Mr. Richman:
When executed by both parties where indicated below, this letter will form an
Agreement commencing October 31, 1996 between WorldPort Communications, Inc.
("WorldPort"), a Delaware corporation, and Dinton Trader S.A. ("Dinton Trader")
whereby Dinton Trader will
provide certain financial advisory services to WorldPort.
A. SERVICES TO BE PERFORMED FOR WORLDPORT:
1. Dinton Trader will assist WorldPort in the identification of
companies that may be potential merger or acquisition candidates.
Dinton Trader as needed, will contact such companies, in structuring,
negotiating, and closing merger or acquisition transactions. Dinton
Trader will, as needed, participate in due diligence review of
potential acquisitions.
2. Dinton Trader will assist WorldPort in developing and implementing a
corporate financial strategy including market research, financial
analysis and capitalization strategies.
3. Dinton Trader will assist WorldPort in identifying additional
management personnel for WorldPort.
4. Dinton Trader will review and analyze all existing WorldPort
business plans and corporate literature and all new corporate materials
to be created while this Agreement is in effect.
B. COMPENSATION AND FEES PAYABLE
1. Advisory Fee: WorldPort will agree to pay to Dinton Trader an
advisory fee of
<PAGE>
WorldPort, Dinton Trader
October 31, 1996
Page 2
$360,000 for the services described herein, when and if such services
are completed in a manner satisfactory to WorldPort, payable no later
than June 30, 1997.
2. Reimbursement of Expenses: WorldPort will reimburse Dinton Trader
for expenses related to its performance under this Agreement, such
expenses not to exceed $10,000.
C. TERM OF AGREEMENT; SURVIVORSHIP
1. The term of this Agreement shall commence on October 31, 1996 and
shall be in effect until the sooner of (a) when Dinton Trader has
performed the services described herein to the satisfaction of
WorldPort or (b) June 30, 1997.
D. INDEMNIFICATION
Dinton Trader and WorldPort agree to indemnify each other against
claims resulting from actions or omissions in connection with this
engagement or arising out of misstatement of material facts by the
other party or its affiliates, as follows:
In consideration of this agreement, WorldPort hereby agrees to
indemnify and hold harmless Dinton Trader and its affiliates, the
respective directors, officers, principals, partners, agents and
employees of Dinton Trader and its affiliates from any and all losses,
claims, damages or liabilities (or actions in respect thereof) related
to or arising out of WorldPort's actions or omissions in connection
with this engagement or arising out of misstatement of material facts
by WorldPort or its representatives relating to Dinton Trader's
engagement hereunder. WorldPort will also reimburse Dinton Trader for
all expenses (including reasonable counsel fees) as they are incurred
by Dinton Trader in connection with pending or threatened litigation
arising out of this agreement in which Dinton Trader is a party and for
which WorldPort is obligated to indemnify Dinton Trader pursuant to the
preceding sentence. WorldPort will not, however, be responsible for any
claims, liabilities, losses, damages or expenses that result from bad
faith, gross negligence or willful misconduct by Dinton Trader or any
of its affiliates or approved assignees.
Dinton Trader hereby represents and warrants that during the course of
its engagement it will not knowingly make any misstatement of material
fact or omit to state any material fact necessary to make any statement
not misleading, to induce an investor to purchase WorldPort's
securities, nor will Dinton Trader take any action deemed to be a
general solicitation or offer to the public of securities in any
jurisdiction and Dinton Trader agrees to comply with relevant
securities laws in any jurisdiction in which securities are offered to
potential investors in connection with the transaction
Calldd\SLC\27369.1
<PAGE>
WorldPort, Dinton Trader
October 31, 1996
Page 3
contemplated pursuant to this engagement agreement. Dinton Trader
hereby agrees to indemnify, defend, and hold harmless WorldPort and its
directors, officers, agents and employees from any and all losses,
claims, damage or liabilities (or actions in respect thereof) related
to or arising out of a breach by Dinton Trader of the representations
and warranties made in the preceding sentence or by any act of bad
faith, gross negligence or willful misconduct on the part of Dinton
Trader or its principals, directors, and employees.
Dinton Trader and WorldPort, and in particular the signatories hereto,
affirm that they each have all requisite corporate authority to execute
and deliver this engagement agreement for the services contemplated
herein, and the execution and delivery of this engagement letter by
Dinton Trader and WorldPort and the engagement for performance of
services contemplated herein does not constitute a material breach or
violate the provisions of any agreement, engagement, law, rule,
regulation, or court order to which Dinton Trader or WorldPort or any
of their respective assets, properties, or representatives are bound.
E. GOVERNING LAW
This Agreement shall be governed by the laws of the State of
California.
F. SIGNATURES
By their authorized signatures below, Dinton Trader and WorldPort do
agree to be bound by the terms of this Agreement. This Agreement may be
signed in counterparts, including fax signatures.
ACCEPTED FOR WORLDPORT COMMUNICATIONS, INC.
\s\ On this date: October 31, 1996
Mr. Edward P. Mooney
Its: President
ACCEPTED FOR DINTON TRADER S.A. BY:
\s\ On this date: November 1, 1996
Mr. Robert Richman
Its:
Calldd\SLC\27369.1
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of June 27, 1996, by
and between COM TECH INTERNATIONAL CORPORATION (referred to herein as the
"Borrower"), and SAGE RESOURCES, INC. (referred to herein as the "Lender").
R E C I T A L S
A. Lender has agreed to lend up to Five Hundred Thousand Dollars
($500,000) to Borrower pursuant to a Secured Promissory Note dated June 27, 1996
(the "Note").
NOW, THEREFORE, in consideration of the covenants and conditions herein
contained, the parties agree as follows:
1. DEFINITIONS.
(a) As used herein, the following terms shall have the meanings
set forth below:
"Agreement" shall mean this Loan Agreement, as the same may be
amended and supplemented as hereinafter provided.
"Assignment, Pledge and Security Agreement" means that certain
Assignment, Pledge and Security Agreement of even date between Borrower
and Lender.
"Event of Default" shall mean the occurrence of any of the
events listed in paragraph 6(a) and the expiration of any applicable
notice and cure period provided therein.
"Interest Rate" shall mean ten percent (10%) per annum.
"Loan" shall mean the loan from Lender to Borrower described
in this Agreement in the principal amount of the Loan Amount.
"Loan Amount" shall mean the amount of Five Hundred Thousand
Dollars ($500,000).
"Loan Documents" shall mean this Agreement, the Assignment,
Pledge and Security Agreement, and the Note.
"Maturity Date" shall mean the date of Closing as contemplated
in the proposed Stock Purchase Agreement between Lender and the
Shareholders of Borrower unless such Closing does not occur within
thirty (30) days from the date hereof. If such Closing does not occur
within the thirty (30) day time frame, the maturity date will be ninety
(90) days thereafter.
<PAGE>
"Person" shall mean any natural person, any unincorporated
association, any corporation, any partnership, any joint venture, any
trust, any other legal entity, or any governmental authority.
(b) Accounting Terms. For purposes of this Agreement, all
accounting terms not otherwise defined herein or in the Recitals shall
have the meanings assigned to them in conformity with generally
acceptable accounting practices and principles.
2. THE LOAN
(a) Agreement to Lend and Borrow. Subject to the terms and
conditions of this Agreement, Lender agrees to lend to Borrower and
Borrower agrees to borrow from Lender the Loan Amount. The Loan
proceeds shall be used for working capital liquidity for Borrower's
business ventures;
(b) Evidence of Indebtedness. The Loan shall be evidenced by
the Note. In the event of any inconsistency between the Note and this
Agreement, the provisions of this Agreement shall prevail;
(c) Security for Obligations. The Loan shall be secured by an
Assignment, Pledge and Security Agreement whereby Borrower shall pledge
to Lender its rights, title and interest in the Datamax Joint Venture,
as described in the Telecommunications Service Agreement dated March
20, 1996, including but not limited to (a) shares or other interests in
the Joint Venture already issued to COM TECH, (b) COM TECH's rights to
participate as a shareholder based on contributions of cash and or
services or both, and (c) all rights granted to COM TECH to carry and
terminate traffic from the Datamax Joint Venture or its affiliates and
subsidiaries;
(d) Interest. Interest at the Interest Rate shall accrue and
become due and payable pursuant to the terms of the Note. Interest
shall be calculated on the basis of a 360-day year and 30-day month;
(e) Payment of Principal and Interest. If the Closing
contemplated by the proposed Stock Purchase Agreement between the
Shareholders of Borrower and Lender does not occur, the outstanding
principal balance of the Loan, together with all unpaid accrued
interest thereon, and all other amounts payable by Borrower with
respect to the Note or pursuant to the terms of any other Loan
Documents, shall be due and payable in lawful money of the United
States of America at #10 Exchange Place, Suite 309, Salt Lake City, UT
84111, or such other address as Lender may direct in writing, in same
day funds, not later than the Maturity Date in accordance with the
Note. If the Closing described above does occur, the outstanding
balance of the Loan will be deducted at such Closing from Lender's $3.5
million new equity financing requirement described in said Stock
Purchase Agreement in accordance with the Note;
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<PAGE>
(f) Prepayment of Principal. Borrower shall have the right
to prepay the Loan, in whole or in part, at any time, without premium
or penalty.
3. LOAN CLOSING
(a) Closing. The transactions contemplated in this Agreement
shall close on June 27, 1996, or at such later date and time as the
parties shall agree;
(b) Conditions Precedent. Lender's obligation to disburse the
Loan and to perform the remainder of its obligations under this
Agreement are expressly conditioned upon Borrower's delivery to Lender
of the following documents, in form and content satisfactory to Lender,
duly executed (and acknowledged where necessary) by the appropriate
parties thereto:
(i) This Agreement;
(ii) The Note; and
(iii) The Assignment, Pledge and Security Agreement.
4. REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Lender that the following statements are true, correct and complete
as of the date hereof, and will be true, correct and complete as of the date of
closing:
(a) Organization, Standing and Qualification. COM TECH is duly
organized, validly existing and in good standing under the laws of the
State of Washington and is authorized and qualified to own and operate
its properties and assets and conduct its business in all jurisdictions
where such properties and assets are owned and operated and such
business is conducted. COM TECH has duly filed any and all certificates
and reports required to be filed to date by the laws of Washington and
to the best of COM TECH's knowledge any other applicable law. COM TECH
has all franchises, permits, licenses, and any similar authority
material to the conduct of COM TECH's business in its present
condition, the lack of which could materially adversely affect the
business, properties, prospects, or its financial condition. COM TECH
is not in default in any material respect under any of such franchises,
permits, licenses or other similar authority.
(b) Capitalization. As of the date of Closing, the authorized
capital stock of COM TECH consists of 1 million shares of common stock,
no par value, of which 200,000 shares are issued and outstanding. All
of the outstanding shares of COM TECH common stock were duly authorized
and validly issued and are fully paid and nonassessable. Except as
disclosed in Schedule 4(b), there are no outstanding subscriptions,
options, warrants, calls, contracts, demands, commitments, convertible
securities or other rights, agreements or arrangements of any character
or nature whatsoever relating to COM TECH's issuance of common stock or
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<PAGE>
other securities. No holder of any COM TECH security is entitled to
any preemptive or similar rights to purchase any COM TECH securities.
(c) Subsidiaries. Except as disclosed in Schedule 4(c),
COM TECH has no subsidiaries, no investment in any entity, and no
participation in any joint venture, partnership or other similar
arrangement.
(d) Corporate Records. COM TECH's minute books and other
corporate record books are in good order, complete, accurate, up to
date, with all necessary signatures for the Datamax Joint Venture and
this Loan Agreement.
(e) No Defaults. Except as disclosed in Schedule 4(e), COM
TECH is not in default under or in violation of any provisions of its
Articles of Incorporation or Bylaws or any restriction, lien,
encumbrance, indenture, contract, lease, sublease, loan agreement, note
or other obligation or liability relating to COM TECH's business.
(f) No Conflict. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby
will conflict with or result in a breach of or constitute a default
under any provision of COM TECH's Articles of Incorporation or Bylaws,
any law, rule, regulation, judgment, decree, order or other such
requirement, or under any material restriction, lien, encumbrance,
indenture, contract, lease, sublease, loan agreement, note or other
material obligation or liability to which COM TECH is a party or by
which it is bound, or to which any of its assets are subject, or result
in the creation of any lien or encumbrance upon such assets.
(g) Consents and Approvals. COM TECH's execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby do not require COM TECH to obtain any consent,
approval or action of, or make any filing with or give notice to any
corporation, person or firm or any public, governmental or judicial
authority except: (i) such as have been duly obtained or made, as the
case may be, and are in full force and effect on the date hereof, (ii)
those which the failure to obtain or make would have no material
adverse effect on the transactions contemplated hereby or on COM TECH's
business or financial condition, and (iii) any filings required under
the Securities Act, or any applicable state securities laws.
(h) Related-Party Transactions. Except as disclosed in
Schedule 4(h), no COM TECH employee, officer, or director or member of
his or her immediate family is indebted to COM TECH, nor is COM TECH
indebted (or committed to make loans or extend or guarantee credit) to
any of such individuals. None of such individuals has any direct or
indirect ownership interest in any firm or corporation with which COM
TECH is affiliated or with which COM TECH has a business relationship,
or any firm or corporation that competes with COM TECH, except that
employees, officers, or directors of COM TECH and members of their
immediate families may own stock in publicly traded companies that may
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<PAGE>
compete with COM TECH. No member of the immediate family of any COM
TECH officer or director is directly or indirectly interested in any
material contract with COM TECH.
(i) Safety Laws. COM TECH is not in violation of any
applicable statute, law or regulation relating to occupational health
and safety (including, but not limited to, OSHA and any similar state
laws), and COM TECH is not aware of any material expenditures that are
or will be required to comply with any such existing statute, law or
regulation.
(j) Environmental Compliance. All property owned, leased or
occupied by COM TECH is free from, and has always been free from, all
material, waste, substances, pollutants, or contaminants which may pose
a risk of injury or threat to the health of the environment and is not
now, and has never been in violation of any federal, state or local
law, statue, ordinance, or requirement pertaining to health, industrial
hygiene, or environmental conditions.
(k) Compliance With Law. To the best of COM TECH's knowledge,
neither COM TECH nor any of its directors, officers, fiduciaries,
agents or employees, is in violation of any applicable law, rule,
regulation or requirement of any governmental authority in any way
relating to COM TECH's business.
(l) Financial Statements. COM TECH's Financial Statements for
the periods ending December 31, 1993, December 31, 1994, and December
31, 1995, are correct and complete and present fairly in all material
respects COM TECH's financial condition as of the dates described
therein, and have been prepared in accordance with Generally Accepted
Accounting Principles consistently applied. COM TECH's books and
records are complete in all material respects and are in an auditable
condition such that a complete audit of COM TECH can be performed as of
the Closing without unreasonable cost or expense.
(m) Properties and Assets. The properties and assets presently
owned by COM TECH and shown on its books include all properties and
assets of every kind, class and description, real and personal,
tangible and intangible, known and unknown, used in COM TECH's business
and necessary to the conduct of its business as presently conducted.
Except as disclosed on Schedule 4(m), COM TECH has good and
indefeasible title to and possession of all such known properties and
assets, free and clear of all liens, claims, security interests,
encumbrances, restrictions and rights, title and interests in others,
and there are no existing agreements, options or commitments or rights
with, to or in any third party to acquire any of COM TECH's properties
or assets or any interest therein, except for those entered into in the
ordinary course of business and not materially adversely affecting COM
TECH's properties, assets or rights. COM TECH's assets on the closing
date shall include all of the assets described hereinabove or otherwise
reflected on the Financial Statements, adjusted only for inventory and
other assets acquired or disposed of in the ordinary course of business
after December 31, 1995 and before the closing date.
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<PAGE>
(n) Intellectual Property. To COM TECH's knowledge, COM TECH
has full rights of use for all unregistered trademarks and service
marks and does not infringe on any third party rights, and COM TECH
owns or has acquired by license or otherwise all U.S. or foreign,
inventions, franchises, discoveries, ideas, research, engineering,
methods, practices, processes, systems, formulae, designs, drawings,
products, projects, improvements, developments, know-how, and trade
secrets which are used in or necessary for the conduct of its business
(collectively the "Proprietary Rights"), without conflict or
infringement in any material respect of any patent, copyright, trade
secret or other lawful proprietary right of any other party, and
subject to no restriction, lien, encumbrance, right, title or interest
in others. All of the foregoing Proprietary Rights that are not in the
public domain stand solely in COM TECH's name and not in the name of
any stockholder, director, officer, agent, partner or employee or
anyone else known to COM TECH, and none of the same has any right,
title, interest, restriction, lien or encumbrance therein or thereon or
thereto. COM TECH's ownership and use of the proprietary rights do not
and will not infringe upon, conflict with or violate in any material
respect any patent, copyright, trade secret or other lawful proprietary
right of any other party, and no claim is pending or, to the best
knowledge of COM TECH, threatened to the effect that the operations of
COM TECH infringe upon or conflict with the asserted rights of any
other person under any Proprietary Right, and there is no reasonable
basis for any such claim (whether or not pending or threatened). No
claim is pending or, to the best of COM TECH's knowledge, threatened to
the effect that any such Proprietary Rights owned or licensed by COM
TECH, or which COM TECH otherwise has the right to use, is invalid or
unenforceable by COM TECH, and, to the best of COM TECH's knowledge,
there is no reasonable basis for any such claim (whether or not pending
or threatened). COM TECH has not granted or assigned to any other
person or entity any right to manufacture, have manufactured, assemble
or sell the products or proposed products or to provide COM TECH's
services or proposed services. To the best of COM TECH's knowledge, all
patents, copyrights, trademarks, service marks and federal, state and
foreign registrations thereof, are valid and in full force and effect
and are not subject to any taxes, maintenance fees, or actions falling
due within ninety (90) days after the date hereof.
(o) Material Contracts. COM TECH does not have any material
obligation, contract, agreement, lease, sublease, commitment or
understanding of any kind, nature or description, oral or written,
fixed or contingent, due or to become due, existing or inchoate, other
than as disclosed on COM TECH's Financial Statements or as provided on
Schedule 4(o), or consisting of customer purchase orders or service
contracts, all of which are either reflected in the Financial
Statements for the periods such were in effect, or which impose upon
COM TECH a liability of less than $5,000 individually or $25,000 in the
aggregate.
(p) No Undisclosed Liabilities. COM TECH does not have any
material liabilities or obligations, including, without limitation,
contingent liabilities for the performance of any obligation, except
for liabilities or obligations which are disclosed or fully provided
for in COM TECH's Financial Statements.
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56246.3
<PAGE>
(q) Litigation. Except as disclosed on Schedule 4(q), there
are no suits or proceedings at law or in equity, or before or by any
governmental agency or arbitrator, pending, or to COM TECH's knowledge,
threatened, anticipated or contemplated, which, if decided against COM
TECH, would have a material adverse effect on its business or financial
condition, and there are no unsatisfied or outstanding judgments,
orders, decrees or stipulations which in any way affect COM TECH or its
properties or assets or to which it is or may become a party. There are
no claims against COM TECH pending, or to COM TECH's knowledge
threatened, anticipated, or contemplated which, if valid, would
constitute or result in a breach of any representation, warranty or
agreement set forth herein.
(r) Taxes. COM TECH has duly filed all federal, state, local
and other tax returns and reports required to be filed by COM TECH on
or prior to the date hereof with respect to all taxes withheld by or
imposed upon COM TECH. All such returns or reports reflect in all
material respects COM TECH's liability for such taxes as computed
therein for the periods indicated, and all taxes shown on such returns
or reports and all assessments received by COM TECH have been paid, or
fully reserved for, to the extent that such taxes have become due.
There are no waivers or agreements by COM TECH for the extension of
time for the assessment of such taxes. There are no material questions
of taxation which are, as of the date hereof, the subject of dispute
with any taxing authority. With respect to any period through the date
hereof for which tax returns have not yet been filed, or for which
taxes are not yet due or owing, COM TECH has made adequate reserves,
determined in accordance with Generally Accepted Accounting Principles,
for all liabilities for taxes as set forth in its Financial Statements.
COM TECH is not presently the subject of any tax audit by any taxing
authority.
(s) Employee Benefit Plans. COM TECH does not have any
employee benefit plans within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (A)
sponsored by COM TECH, (B) to which COM TECH contributes on behalf of
its employees, (C) with respect to which COM TECH participates on
behalf of its employees, or (D) previously sponsored or contributed to
by COM TECH on behalf of its employees within the three years preceding
the date hereof.
(t) No Adverse Change. Since December 31, 1995 there has
not been:
(i) any material adverse change in the properties,
assets, business, affairs, material contracts or prospects of
COM TECH and, to COM TECH's knowledge, no such changes
currently are threatened, anticipated or contemplated;
(ii) any actual or, to COM TECH's knowledge,
threatened, anticipated or contemplated damage, destruction,
loss, conversion, termination, cancellation, default or taking
by eminent domain or other action by governmental authority,
which has affected or may hereafter affect the properties,
assets, business, affairs, contracts or prospects of COM TECH;
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<PAGE>
(iii) any material and adverse dispute pending or, to
COM TECH's knowledge, threatened, anticipated or contemplated,
of any kind with any customer, supplier, source of financing,
employee, landlord, subtenant or licensee of COM TECH, or any
pending or, to COM TECH's knowledge, threatened, anticipated
or contemplated occurrence or situation of any kind, nature or
description which is reasonably likely to result in any
material reduction in the amount, or any change in the terms
or conditions, of business with any substantial customer,
supplier or source of financing;
(iv) any pending or, to COM TECH's knowledge,
threatened, anticipated or contemplated occurrence or
situation of any kind, nature or description peculiar to the
business of COM TECH and materially and adversely affecting
its properties, assets, business, affairs or prospects; or
(v) any material reduction of capital, or any
redemption of stock or dividend or distribution by COM TECH.
(u) Accuracy of Information Furnished. COM TECH has not made
any material misstatement of fact or omitted to state any material fact
necessary or desirable to make complete, accurate and not misleading
the representations, warranties and agreements set forth herein.
(v) Availability of Documents. Borrower has made available to
Lender copies of all documents, including without limitation all
agreements, contracts, commitments, insurance policies, leases, plans,
instruments, undertakings, authorizations, permits, licenses, patents,
trademarks, tradenames, service marks, copyrights and applications
therefor, referred to herein. Such copies are true and complete and
include all amendments, supplements and modifications thereto or
waivers currently in effect thereunder.
(w) Other Loan Documents. Each of the representations and
warranties of Borrower contained in any of the other Loan Documents is
true and correct in all material respects. All of such representations
and warranties are incorporated herein for the benefit of Lender.
5. COVENANTS OF BORROWER. As an inducement to Lender to execute
this Agreement and to disburse the Loan, Borrower hereby covenants as set forth
in this paragraph 5, which covenants shall remain in effect so long as the Note
shall remain unpaid;
(a) Lender Inspections. Throughout the term of the Loan,
Borrower will permit Lender and Lender's representatives, inspectors
and consultants to audit, examine and copy all contracts and records
(including, but not limited to, financial and accounting records
pertaining to the Loan) and to discuss the affairs, finances and
accounts of Borrower with representatives of Borrower;
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<PAGE>
(b) Financial Statements and Reports. As soon as available, and in any
event within sixty (60) days of the end of each fiscal quarter of Borrower,
Borrower shall furnish to Lender a copy of its unaudited financial statements;
(c) Representations and Warranties. Until repayment of the Note, the
representations and warranties of paragraph 4 shall remain true and complete;
(d) Further Assurances. Borrower shall execute and deliver from time to
time, promptly after any request therefor by Lender, any and all instruments,
agreements and documents and shall take such other action as may be necessary or
desirable in the opinion of Lender to maintain, perfect or insure Lender's
security provided for herein and in the other Loan Documents, all as Lender
shall reasonably require, and Borrower shall pay all fees and expenses
(including reasonable attorneys' fees) related thereto;
(e) Notice of Litigation. Borrower will give, or cause to be given, prompt
written notice to Lender of (i) any action or proceeding which is instituted by
or against it in any Federal or state court or before any commission or other
regulatory body, Federal, state or local, foreign or domestic, or any such
proceedings which are threatened against it which, if adversely determined,
could have a material and adverse effect upon its business, operations,
properties, assets, management, ownership or condition (financial or otherwise),
and (ii) any other action, event or condition of any nature which may have a
material and adverse effect upon its business, operations, management, assets,
properties, ownership or condition (financial or otherwise), or which, with
notice or lapse of time or both, would constitute an Event of Default or a
default under any other contract, instrument or agreement to which it is a party
or to which it or any of its properties or assets may be bound or subject;
(f) Line of Credit Payment. Contemporaneously with the closing of this
Loan, Borrower will pay in full Borrower's $50,000 Key Bank Line of Credit and
provide to Lender adequate and sufficient evidence of Key Bank's release of the
assets securing such Line of Credit;
(g) No Impairment. The Borrower will not, by amendment of its Certificate
of Incorporation or Bylaws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of the Loan Documents, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such actions as may
be necessary or appropriate to protect the rights of the Lender hereunder.
6. EVENTS OF DEFAULT AND REMEDIES
(a) Events of Default. The occurrence of any one or more
of the following shall constitute an Event of Default under this
Agreement:
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<PAGE>
(i) Failure by Borrower to pay any monetary amount
when due under any Loan Document;
(ii) Failure by Borrower to perform any obligation
not involving the payment of money, or to comply with any
other term or condition applicable to Borrower, under any Loan
Document and the expiration of thirty (30) days after written
notice of such failure by Lender to Borrower;
(iii) Failure by Borrower to perform any obligation,
or to comply with any other term or condition applicable to
Borrower, under any agreement entered into between the
Shareholders of Borrower and Lender;
(iv) Any representation or warranty by Borrower in
any Loan Document is materially false, incorrect, or
misleading as of the date made;
(v) The occurrence of any event (including, without
limitation, a change in the financial condition, business, or
operations of Borrower for any reason whatsoever) that
materially and adversely affects the ability of Borrower to
perform any of its obligations under the Loan Documents;
(vi) Borrower (1) is unable or admits in writing its
inability to pay its monetary obligations as they become due,
(2) makes a general assignment for the benefit of creditors,
or (3) applies for, consents to, or acquiesces in, the
appointment of a trustee, receiver, or other custodian for
Borrower or the property of Borrower or any part thereof, or
in the absence of such application, consent, or acquiescence,
a trustee, receiver, or other custodian is appointed for
Borrower or the property of Borrower or any part thereof, and
such appointment is not discharged within sixty (60) days;
(vii) Commencement of any case under the Bankruptcy
Code, Title 11 of the United States Code, or commencement of
any other bankruptcy arrangement, reorganization,
receivership, custodianship, or similar proceeding under any
federal, state, or foreign law by or against Borrower and with
respect to any such case or proceeding that is involuntary,
such case or proceeding is not dismissed with prejudice within
sixty (60) days of the filing thereof;
(viii) Any litigation or proceeding is commenced
before any governmental authority against or affecting
Borrower or the property of Borrower or any part thereof and
such litigation or proceeding is not defended diligently and
in good faith by Borrower;
(ix) All or any part of the property of Borrower is
attached, levied upon, or otherwise seized by legal process,
and such attachment, levy, or seizure is not quashed, stayed,
or released within twenty (20) days of the date thereof;
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<PAGE>
(x) The occurrence of any Event of Default, as such
term is defined in any other Loan Document.
(b) Remedies. Notwithstanding any provision to the contrary
herein or any of the other Loan Documents, upon the happening of any
Event of Default under this Agreement, or upon an Event of Default
under any of the other Loan Documents, Lender shall have, at its
option, and in addition to any other remedies provided in the Loan
Document breached by Borrower, (i) the option to declare all
outstanding indebtedness to be immediately due and payable without
presentment, demand, protest or notice of any kind; (ii) the right, at
its option, to apply any of Borrower's funds in its possession to the
outstanding indebtedness under the Note, whether or not such
indebtedness is then due; and (iii) the right to exercise all rights
and remedies available to it under any or all of the Loan Documents.
Nothing contained in this Agreement or in any of the Loan Documents
shall in any way restrict or limit the rights, remedies and recourse to
all assets for Borrower for all amounts due and payable with respect to
the Loan and all other amounts due under the Loan Documents.
7. MISCELLANEOUS
(a) Assignment. Borrower shall not assign any of its rights
under this Agreement;
(b) Notices. All notices, requests, demands and consents to be
made hereunder to the parties hereto shall be in writing and shall be
delivered by hand or sent by registered mail or certified mail, postage
prepaid, return receipt requested, through the United States Postal
Service to the addresses shown below or such other address which the
parties may provide to one another in accordance herewith. Such
notices, requests, demands and consents, if sent by mail shall be
deemed given two (2) business days after deposit in the United States
mail, and if delivered by hand, shall be deemed given when delivered:
To Lender: Sage Resources, Inc.
#10 Exchange Place, Suite 309
Salt Lake City, Utah 84111
To Borrower: COM TECH International Corp.
2001 6th Avenue, Suite 2801
Seattle, Washington 98121
(c) Exclusive Dealing. For a period of thirty (30) days,
Borrower shall not directly or indirectly, through any representative
or otherwise, solicit or entertain offers from, negotiate with, or in
any manner encourage, discuss, accept, or consider any proposal of any
other person relating to the acquisition of Borrower's common stock or
Borrower's assets or businesses, in whole or in part, whether through
direct purchase,
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<PAGE>
merger, consolidation, or other business combination (other than sales
of inventory in the ordinary course);
(d) Authority to File Notices. Borrower irrevocably appoints
Lender as its attorney-in-fact, with full power of substitution, to
file for record, at the Borrower's cost and expense and in Borrower's
name, any notices that Lender considers necessary or desirable to
protect its security in the Datamax Joint Venture;
(e) Inconsistencies with the Loan Documents. In the event
of any inconsistencies between the terms of this Agreement and any
terms of any of the Loan Documents, the terms of this Agreement shall
govern and prevail;
(f) Lender Approval of Instruments and Parties. All
proceedings taken in accordance with transactions provided for herein,
all surveys, appraisals and documents required or contemplated by this
Agreement and the persons responsible for the execution and preparation
thereof, shall be satisfactory to and subject to approval by Lender.
Lender's counsel shall be provided with copies of all documents which
they may reasonably request in connection with the Agreement;
(g) Lender Determination of Facts. Lender shall at all times
be free to establish independently, to its satisfaction, the existence
or nonexistence of any fact or facts, the existence or nonexistence of
which is a condition of this Agreement;
(h) Incorporation of Preamble, Recitals and Exhibits. The
preamble, recitals and exhibits hereto are hereby incorporated into
this Agreement;
(i) Payment of Expenses. Borrower shall pay all taxes and
assessments and all expenses, charges, costs and fees provided for in
this Agreement or relating to the Loan, including, without limitation,
fees of any consultants, documentation and processing fees, printing
and duplicating expenses, and air freight charges. Borrower shall also
pay a maximum of $5,000 for all attorney fees and expenses related to
the making of this Loan. Borrower hereby authorizes Lender to disburse
the proceeds of the Loan to pay such expenses, charges, costs and fees
notwithstanding that Borrower may not have requested a disbursement of
such amount. Such disbursement shall be added to the outstanding
principal balance of the Note. The authorization hereby granted shall
be irrevocable, and no further direction or authorization from Borrower
shall be necessary for Lender to make such disbursements. However, the
provision of this paragraph shall not prevent Borrower from paying such
expense, charges, costs and fees from its own funds. All such expenses,
charges, costs and fees shall be Borrower's obligation regardless of
whether or not Borrower has requested and met the conditions for the
disbursement of the Loan;
(j) Disclaimer by Lender. Borrower is not and shall not be
an agent of Lender for any purpose. Lender is not a joint venture
partner with Borrower or with the constituent partners in Borrower in
any manner whatsoever. Approvals granted by
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<PAGE>
Lender for any matters covered under this Agreement shall be narrowly
construed to cover only the parties and facts identified in any written
approval or, if not in writing, such approvals shall be solely for the
benefit of Borrower;
(k) Indemnification. To the fullest extent permitted by law,
Borrower agrees to protect, indemnify, defend and save harmless Lender,
its directors, officers, agents and employees for, from and against any
and all liability, expense or damage of any kind or nature and for,
from and against any suits, claims or demands, including reasonable
legal fees and expenses on account of any matter or thing or action or
failure to act by Lender, whether in suit or note, arising out of this
Agreement or in connection herewith. Upon receiving knowledge of any
suit, claim or demand asserted by a third party that Lender believes is
covered by this indemnity, Lender shall give Borrower notice of the
matter and an opportunity to defend it, at Borrower's sole cost and
expense, with legal counsel satisfactory to Lender. Lender may also
require Borrower to so defend the matter. The obligations on the part
of Borrower under this paragraph 7(k) shall survive the closing of the
Loan and the repayment thereof;
(l) Titles and Headings. The headings at the beginning of each
paragraph of this Agreement are solely for convenience and are not part
of this Agreement. Unless otherwise indicated, each reference in this
Agreement to a paragraph or an exhibit is a reference to the respective
paragraph herein or exhibit hereto;
(m) Change, Discharge, Termination, or Waiver. No provision of
this Agreement may be changed, discharged, terminated, or waived except
in writing signed by the party against whom enforcement of the change,
discharge, termination, or waiver is sought. No failure on the part of
Lender to exercise and no delay by Lender in exercising any right or
remedy under the Loan Documents or under the law shall operate as a
waiver thereof;
(n) Choice of Law. This Agreement and the transaction
contemplated hereunder shall be governed by and construed in accordance
with the laws of the State of California without giving effect to
conflict of laws principles;
(o) Time is of the Essence. Time is of the essence of this
Agreement;
(p) Attorneys' Fees. Borrower agrees to pay all costs of
enforcement and collection and preparation for any Event of Default or
any action taken by Lender (including, without limitation, reasonable
attorneys' fees) whether or not any action or proceeding is brought
(including, without limitation, all such costs incurred in connection
with any bankruptcy, receivership, or other court proceedings, whether
at the trial or appellate level), together with interest thereon from
the date of demand at the default interest rate;
(q) Consent to Jurisdiction. Borrower and Lender hereby
irrevocably consent and agree that any legal action, suit or proceeding
arising out of or in any way in
- 13 -
56246.3
<PAGE>
connection with this Agreement, or which is an appeal therefrom, may be
instituted or brought in the Federal District Court for the District of
California and Borrower and Lender hereby irrevocably consent and
submit to, for themselves and in respect of their property, generally
and unconditionally, the jurisdiction of such Court, and to all
proceedings in such Court. Further, Borrower and Lender irrevocably
consent to actual receipt of any summons and/or legal process at their
respective addresses as set forth in this Agreement as constituting in
every respect sufficient and effective service of process in any such
legal action or proceeding. Borrower and Lender further agree that
final judgment in any such legal action, suit or proceeding shall be
conclusive and may be enforced in any other jurisdiction, whether
within or outside the United States of America, by suit under judgment,
a certified or exemplified copy of which will be conclusive evidence of
the fact and the amount of the liability;
(r) Provisional Remedies; Self Help; and Foreclosure. No
provision of paragraph 7(q) shall limit the right of any party to
exercise self-help remedies, to foreclose against any real or personal
property collateral, or to obtain any provisional or ancillary remedies
(including but not limited to injunctive relief or the appointment of a
receiver) from a court of competent jurisdiction. The institution and
maintenance of any remedy permitted above shall not constitute a waiver
of the rights to submit any controversy or claim to arbitration. The
statute of limitations, estoppel, waiver, laches, and similar doctrines
which would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding;
(s) Integration. The Loan Documents contain the complete
understanding and agreement of Borrower and Lender and supersede all
prior representations, warranties, agreements, arrangements,
understandings, and negotiations;
(t) Binding Effect. The Loan Documents will be binding
upon, and inure to the benefit of, Borrower and Lender and their
respective successors and assigns. Borrower may not delegate its
obligations under the Loan Documents;
(u) Survival. The representations, warranties, and covenants
of the Borrower and the Loan Documents shall survive the execution and
delivery of the Loan Documents and the making of the Loan;
(v) Counterparts. This Agreement may be executed in any number
of counterparts each of which shall be deemed an original, but all such
counterparts together shall constitute but one agreement.
- 14 -
56246.3
<PAGE>
IN WITNESS WHEREOF, Lender and Borrower have caused this Agreement to
be duly executed and delivered as of the date first above written.
"BORROWER"
COM TECH INTERNATIONAL CORP.
By: _________________________________
Name: _______________________________
Title: ______________________________
"LENDER"
SAGE RESOURCES, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
- 15 -
56246.3
<PAGE>
Schedule 4(b)
Arrangements Relating to Common Stock
- 16 -
56246.3
<PAGE>
Schedule 4(c)
COM TECH Arrangements
1. COM TECH is a participant in the Datamax Joint Venture dated March 20, 1996.
- 17 -
56246.3
<PAGE>
Schedule 4(e)
Defaults
- 18 -
56246.3
<PAGE>
Schedule 4(h)
Related Party Transactions
- 19 -
56246.3
<PAGE>
Schedule 4(m)
Properties and Asset
- 20 -
56246.3
<PAGE>
Schedule 4(o)
Material Contracts
- 21 -
56246.3
<PAGE>
Schedule 4(q)
Litigation
1. COM TECH is involved in a dispute with Fox Communication with a maximum
potential liability of $100,000, plus attorneys' fees and expenses.
- 22 -
56246.3
<PAGE>
ASSIGNMENT, PLEDGE
AND SECURITY AGREEMENT
THIS ASSIGNMENT, PLEDGE AND SECURITY AGREEMENT (this
"Agreement"), dated June 27, 1996, is made by COM TECH INTERNATIONAL
CORPORATION ("Borrower") in favor of SAGE RESOURCES, INC. ("Lender").
W I T N E S S E T H
WHEREAS, pursuant to a Secured Promissory Note dated June 27, 1996 (as
amended, supplemented or otherwise modified from time to time, the "Note")
executed by Borrower contemporaneously herewith, Lender has made a loan to
Borrower upon the terms and conditions set forth therein;
WHEREAS, Lender has agreed to make a loan to Borrower in the face
amount of the Note upon execution of the Note and upon the execution and
delivery to Lender of this Agreement;
WHEREAS, it is in the best interests of Borrower that Lender make th
loan and accept the Note;
NOW, THEREFORE, in consideration of the premises and to induce Lender
to make the loan to Borrower in exchange for the Note, Borrower hereby agrees
with Lender as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms which
are defined in the Note and used herein are so used as so defined; and as used
herein the following terms shall have the following meanings:
"Agreement" shall mean this Assignment, Pledge and Security
Agreement, as amended, supplemented or otherwise modified from time to
time;
"Code" shall mean the Uniform Commercial Code as from time to
time in effect in the State of California;
"Collateral" shall mean all of Borrower's right, title and
interest in the Datamax Joint Venture, as described in the
Telecommunications Service Agreement dated March 20, 1996, including
but not limited to (a) shares or other interests in the Joint Venture
already issued to COM TECH, (b) COM TECH's rights to participate as a
shareholder based on contributions of cash and or services or both, and
(c) all rights granted to COM TECH to carry and terminate traffic from
the Datamax joint venture or its affiliates and subsidiaries;
"Obligations" shall mean all obligations and liabilities of
Borrower to Lender under the Note and this Agreement, whether on
account of principal, interest,
- 1 -
<PAGE>
reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all reasonable fees and disbursements
of counsel to Lender) or otherwise.
2. ASSIGNMENT, PLEDGE AND GRANT OF SECURITY INTEREST. As collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations,
Borrower hereby grants to Lender a security interest in all of the Collateral
and hereby assigns and pledges to Lender all of Borrower's right, title and
interest in and to the Collateral. The foregoing assignment shall be for
security purposes only and is made for the purpose of allowing Lender to
exercise all of the rights of Borrower with respect to the Collateral to more
fully maximize and perfect the interests of Lender in the Collateral. Until the
Obligations are paid in full, this assignment and pledge shall operate to
transfer to Lender the right to possession and use of the Collateral and all
other rights of Borrower with respect to the Collateral. All amounts received by
Lender under the Collateral will be applied to payment of the Obligations in the
following order: First, to the payment of all costs, fees, indebtedness or
expenses (including attorneys' fees); Second, to interest; and Third, to
repayment of principal. Upon the fulfillment of all Obligations hereunder,
Lender will promptly reassign the Collateral to Borrower, and have no further
rights therein or with respect thereto.
3. COVENANTS. Borrower covenants and agrees with Lender that,
from and after the date of this Agreement until the Obligations are paid in
full:
(a) Further Documentation; Pledge of Instruments and Chattel
Paper. At any time and from time to time, upon the written request of
Lender, and at the sole expense of Borrower, Borrower will promptly and
duly execute and deliver such further instruments and documents and
take such further action as Lender may reasonably request for the
purpose of obtaining or preserving the full benefits of this Agreement
and of the rights and powers herein granted;
(b) Indemnification. To the fullest extent permitted by law,
Borrower agrees to protect, indemnify, defend and save harmless Lender,
its directors, officers, agents and employees for, from and against any
and all liability, expense or damage of any kind or nature and for,
from and against any suits, claims or demands, including reasonable
legal fees and expenses on account of any matter or thing or action or
failure to act by Lender, whether in suit or note, arising out of this
Agreement or in connection herewith. Upon receiving knowledge of any
suit, claim or demand asserted by a third party that Lender believes is
covered by this indemnity, Lender shall give Borrower notice of the
matter and an opportunity to defend it, at Borrower's sole cost and
expense, with legal counsel satisfactory to Lender. Lender may also
require Borrower to so defend the matter. The obligations on the part
of Borrower under this paragraph shall survive the closing of the Loan
and the repayment thereof;
(c) Payment of Obligations. Borrower will pay promptly when
due all taxes, assessments and governmental charges or levies with
respect to the Collateral, as well as
- 2 -
SLC1 - GIBBSW - 56256.2
<PAGE>
all claims of any kind against or with respect to the Collateral,
except that no such charge need be paid if (i) the amount or validity
thereof is being contested in good faith by appropriate proceedings,
and (ii) such proceedings do not involve any material danger of the
sale, forfeiture or loss of the Collateral or any interest therein;
(d) Limitation on liens on Collateral. Other than (i) the lien
created hereby, (ii) other liens in favor of Lender and (iii) liens
permitted under the Note, Borrower will not create, incur or permit to
exist, will defend the Collateral against, and will take such other
action as is necessary to remove, any lien or claim on or to the
Collateral, and will defend the right, title and interest of Lender in
and to any of the Collateral against the claims and demands of all
persons whomsoever;
(e) Limitations on Dispositions of Collateral. Borrower wil
not sell, assign, transfer, or otherwise dispose of the Collateral;
(f) Notices. Borrower will advise Lender promptly, in
reasonable detail, at its address or transmission number set forth
under its signature below, (i) of any lien on, or claim asserted
against, any of the Collateral, and (ii) of the occurrence of any other
event which could reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or on the lien created
hereunder;
(g) Preservation of Contracts. Borrower shall take all actions
and do all things as are required under the terms of the agreements
which are part of the Collateral, to observe, protect and preserve the
rights granted thereby to Borrower. Borrower shall take no actions
which shall result in or have the effect of, in any material way,
releasing, derogating or otherwise adversely impacting any contract
rights arising under the Collateral;
(h) Notice of Assignment. Borrower hereby agrees to direct any
party liable for any payment under any of the Collateral to make
payment of any and all moneys due or to become due thereunder directly
to Lender or as Lender shall direct.
4. LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Powers. Upon an Event of Default hereunder or under the
Note, Borrower hereby irrevocably constitutes and appoints Lender and
any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Borrower and in the name of
Borrower or in its own name, from time to time in Lender's discretion,
for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the
purposes of this Agreement. Borrower hereby ratifies all that said
attorneys shall lawfully do or cause to be done by virtue hereof. This
power of attorney is a power coupled with an interest and shall be
irrevocable until all of the Obligations shall be paid in full and this
Agreement shall be terminated;
- 3 -
SLC1 - GIBBSW - 56256.2
<PAGE>
(b) No Duty on Lender's Part. The powers conferred on Lender
hereunder are solely to protect Lender's interests in the Collateral
and shall not impose any duty upon it to exercise any such powers.
Lender shall be accountable only for amounts that it actually receives
as a result of the reasonable and legal exercise of such powers, and
neither it nor any of its officers, directors, employees or agents
shall be responsible to Borrower for any act or failure to act
hereunder, except to the extent of its own negligence or willful
misconduct.
5. PERFORMANCE BY LENDER OF BORROWER'S OBLIGATIONS. If
Borrower fails to perform or comply with any of its agreements contained herein
and Lender, as provided for by the terms of this Agreement, shall itself perform
or comply, or otherwise cause performance or compliance, with such agreement,
the expenses of Lender incurred in connection with such performance or
compliance, together with interest thereon at a rate per annum equal to 18%
shall be payable by Borrower to Lender on demand and shall constitute
Obligations secured hereby.
6.DEFAULT. The occurrence of any of the following events (an "Event of
Default") shall constitute a default hereunder:
(a) Failure by Borrower to pay any monetary amount when due
under any Loan Document;
(b) Failure by Borrower to perform any obligation not
involving the payment of money, or to comply with any other term or
condition applicable to Borrower, under any Loan Document and the
expiration of ten (10) days after written notice of such failure by
Lender to Borrower;
(c) Failure by Borrower to perform any obligation, or to
comply with any other term or condition applicable to Borrower, under
any agreement entered into between the Shareholders of Borrower and
Lender;
(d) Any representation or warranty by Borrower in any Loan
Document is materially false, incorrect, or misleading as of the date
made;
(e) The occurrence of any event (including, without
limitation, a change in the financial condition, business, or
operations of Borrower for any reason whatsoever) that materially and
adversely affects the ability of Borrower to perform any of its
obligations under the Loan Documents;
(f) Borrower (1) is unable or admits in writing its inability
to pay its monetary obligations as they become due, (2) makes a general
assignment for the benefit of creditors, or (3) applies for, consents
to, or acquiesces in, the appointment of a trustee, receiver, or other
custodian for Borrower or the property of Borrower or any part thereof,
or in the absence of such application, consent, or acquiescence, a
trustee,
- 4 -
SLC1 - GIBBSW - 56256.2
<PAGE>
receiver, or other custodian is appointed for Borrower or the property
of Borrower or any part thereof, and such appointment is not discharged
within sixty (60) days;
(g) Commencement of any case under the Bankruptcy Code, Title
11 of the United States Code, or commencement of any other bankruptcy
arrangement, reorganization, receivership, custodianship, or similar
proceeding under any federal, state, or foreign law by or against
Borrower and with respect to any such case or proceeding that is
involuntary, such case or proceeding is not dismissed with prejudice
within sixty (60) days of the filing thereof;
(h) Any litigation or proceeding is commenced before any
governmental authority against or affecting Borrower or the property of
Borrower or any part thereof and such litigation or proceeding is not
defended diligently and in good faith by Borrower;
(i) All or any part of the property of Borrower is attached,
levied upon, or otherwise seized by legal process, and such attachment,
levy, or seizure is not quashed, stayed, or released within twenty (20)
days of the date thereof;
(j) The occurrence of any Event of Default, as such term is
defined in any other Loan Document.
7. PROCEEDS. If an Event of Default shall occur, and be continuing, (a)
all proceeds received by Borrower consisting of cash, checks and other near-cash
items shall be held by Borrower in trust for Lender, segregated from other funds
of Borrower, and shall, forthwith upon receipt by Borrower, be turned over to
Lender in the exact form received by Borrower (duly endorsed by Borrower to
Lender, if required), and (b) any and all such proceeds received by Lender
(whether from Borrower or otherwise) may, in the sole discretion of Lender, be
held by Lender as collateral security for, and/or then or at any time thereafter
may be applied by Lender against the Obligations (whether matured or unmatured),
such application to be in such order as Lender shall elect. Any balance of such
proceeds remaining after the Obligations shall have been paid in full shall be
paid over to Borrower or to whomever may be lawfully entitled to receive the
same.
8. REMEDIES. If an Event of Default shall occur and be continuing,
Lender may exercise, in addition to all other rights and remedies granted to it
in this Agreement, all rights and remedies of a secured party under the Code.
Borrower shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the Obligations and
the reasonable fees and disbursements of any attorneys employed by Lender to
collect such deficiency.
9. LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL.
Lender's sole duty with respect to the custody and safekeeping of the Collateral
in its possession, under Section 9-207 of the Code or otherwise, shall be to
deal with it in the same manner as Lender deals with similar property for its
own account. Neither Lender
- 5 -
SLC1 - GIBBSW - 56256.2
<PAGE>
nor any of its directors, officers, employees or agents shall be liable for
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of Borrower or otherwise.
10. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest; provided that such authorizations and agencies shall
terminate upon the repayment of the principal amount of, and accrued interest
on, the Note and the payment of all other Obligations.
11. SEVERABILITY. In the event any provision of this Agreement is found
to be unenforceable or invalid, such provision shall be severable from this
Agreement if it is capable of being identified with and apportioned to
reciprocal consideration or to the extent that it is a provision which is not
essential and the absence of which would not have prevented the parties from
entering into this Agreement. The unenforceability or invalidity of a provision
which has been performed shall not be grounds for invalidation of this Agreement
under circumstances in which the true controversy between the parties does not
involve such provision.
12. PARAGRAPH HEADINGS. The paragraph headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
13. WAIVER; CUMULATIVE REMEDIES. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by Borrower and Lender. Lender shall not by any
act (except by a written instrument pursuant to this paragraph 13), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Event of Default or in any breach of any
of the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of Lender, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by Lender of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Lender would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any rights or remedies provided at law
or in equity.
14. NOTICES. Notices by Lender to Borrower may be given by mail, by
telex or by facsimile transmission, addressed or transmitted to Borrower at its
address or transmission number set forth under its signature below and shall be
effective (a) in the case of mail, three (3) days after deposit in the postal
system, registered or certified mail, postage pre-paid, and (b) in the case of
telex or facsimile notices, when received.
15. ASSIGNMENT. Borrower shall not assign its rights or delegate its
duties hereunder without the prior written consent of Lender.
- 6 -
SLC1 - GIBBSW - 56256.2
<PAGE>
16. SUCCESSORS AND ASSIGNS; GOVERNING LAW. This Agreement shall be
binding upon the successors and assigns of Borrower and shall inure to the
benefit of Lender and its successors and assigns. This Agreement shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of California, and each of the parties hereto hereby consents to the
jurisdiction of the state and federal courts located in the State of California
as having exclusive jurisdiction to any disputes arising under this Agreement or
the Note and to service of process by mail, or as otherwise provided in the
Federal Rules of Civil Procedure in such state.
- 7 -
SLC1 - GIBBSW - 56256.2
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
BORROWER:
COM TECH INTERNATIONAL CORPORATION
By:_________________________________
Its:________________________________
LENDER:
SAGE RESOURCES, INC.
By: ____________________________________
Its:____________________________________
- 8 -
SLC1 - GIBBSW - 56256.2
<PAGE>
CONVERTIBLE SECURED PROMISSORY NOTE
$500,000 July 1, 1996
FOR VALUE RECEIVED, the undersigned SAGE RESOURCES, INC., a Colorado
corporation ("Borrower"), hereby promises to pay to MAROON BELLS CAPITAL
PARTNERS, INC. ("Holder"), or order, at 100 California Street, Suite 1400, San
Francisco, California, 94111, or at such other place as Holder may designate in
writing from time to time, the sum of $500,000, together with interest thereon
from the date hereof, at the rate of ten percent (10%) per annum, calculated on
the basis of a 360-day year and a 30-day month.
Interest and principal under this Note shall be due and payable in full
on the date of Closing contemplated by the proposed Stock Purchase Agreement
between the Shareholders of COM TECH International Corporation and Borrower
unless such Closing does not occur within thirty (30) days from the date hereof.
If such Closing does not occur within such thirty (30) day time frame, the
interest and principal under this Note shall be due and payable in full ninety
(90) days thereafter.
From and after the date on which all sums owing on this Note become due
and payable, by acceleration or otherwise, all sums owing on this Note shall
bear interest, until all such sums are paid in full, at a default rate equal to
twelve percent (12%) per annum (based on a 360-day year and charged on the basis
of actual days elapsed). At such time as a judgment is obtained for any amounts
owing under this Note or any document or instrument securing this Note, interest
shall continue to accrue on the amount of the judgment until paid, at the rate
of eighteen percent (18%) per annum.
All payments shall be credited first toward interest then due and the
remainder toward principal. This Note may be prepaid in full or in part at any
time without penalty.
This Note is secured by an Assignment, Pledge and Security Agreement of
even date herewith between Borrower and Holder.
If an Event of Default occurs under the Loan Agreement of even date
between Holder and Borrower, incorporated herein by this reference, Holder shall
be entitled to all remedies set forth in said Loan Agreement.
If an attorney is engaged by Holder to enforce or construe any
provision of this Note or as a consequence of any default, with or without the
filing of any legal action or proceeding, then Borrower shall immediately pay,
on demand, all attorneys' fees and all other costs incurred by Holder, together
with interest thereon from the date of such demand until paid, at the default
interest rate.
No previous waiver and no failure or delay by Holder in acting with
respect to the terms of this Note shall constitute a waiver of any breach,
default, or failure of condition thereunder or the obligations secured thereby.
<PAGE>
Any waiver of any term of this Note must be made with the consent of
both Borrower and Holder and shall be limited to the express written terms of
such waiver. In the event of any inconsistencies between the terms of this Note
and the terms of any other document related to the loan evidenced by this Note,
the terms of this Note shall prevail.
Except as expressly provided herein, Borrower hereby waives:
presentment; demand; notice of dishonor; notice of default or delinquency;
notice of acceleration; notice of protest and nonpayment; notice of costs,
expenses or losses and interest thereon; notice of late charges; and diligence
in taking any action to collect any sums owing under this Note or in proceeding
against any of the rights or interests in or to any collateral securing payment
of this Note. The right of the undersigned to plead any and all statutes of
limitation as a defense to any demand on this Note is expressly waived to the
fullest extent permitted by law. Time is of the essence with respect to every
provision hereof, except that Borrower expressly agrees that this Note or any
payment hereunder may be extended from time to time at Holder's sole option.
This Note has been executed and delivered in the State of Utah and
shall be construed and enforced in accordance with the laws of the State of Utah
and the United States of America. All persons and entities in any manner
obligated under this Note consent to the jurisdiction of any federal or state
court within the State of Utah and also consent to service of process by any
means authorized by Utah or federal law.
The obligations of Borrower under this Note shall be absolute, and
Borrower waives any and all rights to offset, deduct or withhold any payments or
charges due under this Note for any reason whatsoever.
All terms and conditions of this Note shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, successors and
assigns.
If any provision of this Note is unenforceable, invalid, or violates
applicable law, such provision shall be deemed stricken and shall not affect the
enforceability of any other provisions of this Note. Holder and Borrower agree
that none of the terms and provisions contained herein shall be construed to
create a contract for the use, forbearance or detention of money requiring
payment of interest at a rate in excess of the maximum interest rate permitted
to be charged by applicable law. If any holder of this Note shall collect moneys
which are deemed to constitute interest which would otherwise increase the
effective interest rate on this Note to a rate in excess of the maximum rate
permitted to be charged by applicable laws, all such sums deemed to constitute
interest in excess of such maximum rate shall, at the option of Holder, be
credited to the payment of other amounts payable hereunder.
If the Closing contemplated by the proposed Stock Purchase Agreement
between the Shareholders of COM TECH International Corporation and Borrower has
occurred, upon demand by Holder, all of the unpaid principal and interest of
this Note shall be converted into 250,000 shares of fully paid and nonassessable
Common Stock of Borrower. Such shares will have one-time demand registration
rights and piggy-back registration rights as set forth in the Registration
Rights Agreement attached to the Loan Agreement. No fractional shares will be
issued upon
- 2 -
56257.2
<PAGE>
conversion of this Note. The conversion of this Note, and number of securities
issuable upon conversion of this Note, shall be subject to the following:
1. ADJUSTMENT PROVISIONS. In case Borrower shall (a) declare a dividend
on its Common Stock in shares of Common Stock or make a distribution in shares
of Common Stock, (b) subdivide its outstanding shares of Common Stock, (c)
combine its outstanding shares of Common Stock into a smaller number of shares
of Common Stock or (d) issue by reclassification of its shares of Common Stock
other securities of Borrower (including any such reclassification in connection
with a consolidation or merger in which Borrower is the continuing corporation),
then the number of shares of Common Stock issuable upon conversion of this Note
immediately prior thereto shall be adjusted so that the holder of this Note
shall be entitled to receive the kind and number of shares of Common Stock of
Borrower which it would have owned or have been entitled to receive after the
happening of any of the events described above, had this Note been converted
immediately prior to the happening of such event or any record date with respect
thereto. Any adjustment made pursuant to this paragraph shall become effective
immediately after the effective date of such event retroactive to immediately
after the record date, if any, for such event.
2. NOTICE. Whenever the number of shares of Common Stock issuable upon
the conversion of this Note is adjusted, the Borrower shall promptly mail by
first class mail, postage prepaid, to each holder, notice of such adjustment or
adjustments.
3. AVAILABILITY OF STOCK ISSUABLE UPON CONVERSION.
Borrower shall at all times keep available such amount of shares of common stock
as shall from time to time be sufficient to effect the conversion of this Note
as provided above.
Upon conversion of part or all of this Note as provided above, the
respective unpaid principal amount hereof shall be deemed paid, as if such
amount were prepaid hereunder.
- 3 -
56257.2
<PAGE>
SAGE RESOURCES, INC.
By: __________________________________
Its: __________________________________
- 4 -
56257.2
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of July 1, 1996, by
and between SAGE RESOURCES, INC. (referred to herein as the "Borrower"), and
MAROON BELLS CAPITAL PARTNERS, INC. (referred to herein as the "Lender").
R E C I T A L S
A. Lender has agreed to lend up to Five Hundred Thousand Dollars
($500,000) to Borrower pursuant to a Convertible Secured Promissory Note dated
July 1, 1996 (the "Note").
NOW, THEREFORE, in consideration of the covenants and conditions herein
contained, the parties agree as follows:
1. DEFINITIONS.
(a) As used herein, the following terms shall have the
meanings set forth below:
"Agreement" shall mean this Loan Agreement, as the same may be
amended and supplemented as hereinafter provided.
"Assignment, Pledge and Security Agreement" means that certain
Assignment, Pledge and Security Agreement of even date between Borrower
and Lender.
"Event of Default" shall mean the occurrence of any of the
events listed in paragraph 6(a) and the expiration of any applicable
notice and cure period provided therein.
"Interest Rate" shall mean ten percent (10%) per annum.
"Loan" shall mean the loan from Lender to Borrower described
in this Agreement in the principal amount of the Loan Amount.
"Loan Amount" shall mean the amount of Five Hundred Thousand
Dollars ($500,000).
"Loan Documents" shall mean this Agreement, the Assignment,
Pledge and Security Agreement, and the Note.
"Maturity Date" shall mean the date of Closing as contemplated
in the proposed Stock Purchase Agreement between the Shareholders of
COM TECH International Corporation and Borrower unless such Closing
does not occur within thirty (30) days from the date hereof. If such
Closing does not occur within the thirty (30) day time frame, the
Maturity Date will be ninety (90) days thereafter.
<PAGE>
"Person" shall mean any natural person, any unincorporated
association, any corporation, any partnership, any joint venture, any
trust, any other legal entity, or any governmental authority.
(b) Accounting Terms. For purposes of this Agreement, all
accounting terms not otherwise defined herein or in the Recitals shall
have the meanings assigned to them in conformity with Generally
Acceptable Accounting Practices and Principles.
2. THE LOAN
(a) Agreement to Lend and Borrow. Subject to the terms and
conditions of this Agreement, Lender agrees to lend to Borrower and
Borrower agrees to borrow from Lender the Loan Amount;
(b) Evidence of Indebtedness. The Loan shall be evidenced
by the Note. In the event of any inconsistency between the Note and
this Agreement, the provisions of this Agreement shall prevail;
(c) Security for Obligations. The Loan shall be secured by an
Assignment, Pledge and Security Agreement whereby Borrower shall pledge
to Lender its rights, title and interest in that certain Secured
Promissory Note of COM TECH, dated June 27, 1996, together with all
rights of Borrower under the Loan Agreement and Assignment, Pledge and
Security Agreement entered into in connection herewith;
(d) Interest. Interest at the Interest Rate shall accrue
and become due and payable pursuant to the terms of the Note. Interest
shall be calculated on the basis of a 360-day year and 30-day month;
(e) Payment of Principal and Interest. The outstanding
principal balance of the Loan, together with all unpaid accrued
interest thereon, and all other amounts payable by Borrower with
respect to the Note or pursuant to the terms of any other Loan
Documents, shall be due and payable in lawful money of the United
States of America at 100 California Street, Suite 1400, San Francisco,
California, 94111 in same day funds, not later than the Maturity Date
in accordance with the Note. If the Closing contemplated by the
proposed Stock Purchase Agreement between the Shareholders of COM TECH
International Corporation and Borrower occurs, Lender may elect to
convert the unpaid principal and interest of the Loan into 250,000
shares of Borrower's Common Stock at such Closing in accordance with
the Note. Such shares will have one-time demand registration rights and
piggy-back registration rights, as set forth in the Registration Rights
Agreement attached hereto as Exhibit "A" and incorporated herein by
this reference;
(f) Prepayment of Principal. Borrower shall have the right to
prepay the Loan, in whole or in part, at any time, without premium or
penalty.
- 2 -
56259.2
<PAGE>
3. LOAN CLOSING
(a) Closing. The transactions contemplated in this Agreement
shall close on July 1, 1996, o r at such later date and time as the
parties shall agree;
(b) Conditions Precedent. Lender's obligation to disburse the
Loan and to perform the remainder of its obligations under this
Agreement are expressly conditioned upon Borrower's delivery to Lender
of the following documents, in form and content satisfactory to Lender,
duly executed (and acknowledged where necessary) by the appropriate
parties thereto:
(i) This Agreement;
(ii) The Note;
(iii) The Assignment, Pledge and Security Agreement; and
(iv) Such other documents as Lender may reasonably require.
4. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Lender that the representations and warranties contained in the proposed Stock
Purchase Agreement between Borrower and the Shareholders of COM TECH
International Corporation, incorporated herein by this reference, are true,
correct and complete as of the date hereof, and will be true, correct and
complete as of the date of closing.
5. COVENANTS OF BORROWER. As an inducement to Lender to execute this
Agreement and to disburse the Loan, Borrower hereby covenants as set forth in
this paragraph 5, which covenants shall remain in effect so long as the Note
shall remain unpaid;
(a) Lender Inspections. Throughout the term of the Loan,
Borrower will permit Lender and Lender's representatives, inspectors
and consultants to audit, examine and copy all contracts and records
(including, but not limited to, financial and accounting records
pertaining to the Loan) and to discuss the affairs, finances and
accounts of Borrower with representatives of Borrower;
(b) Financial Statements and Reports. As soon as available,
and in any event within sixty (60) days of the end of each fiscal
quarter of Borrower, Borrower shall furnish to Lender a copy of its
financial statements as filed with the Securities and Exchange
Commission;
(c) Representations and Warranties. Until repayment of the
Note, the representations and warranties of paragraph 4 shall remain
true and complete;
(d) Trade Names. Borrower shall immediately notify Lender in
writing of any change in the legal, trade or fictitious business names
used by Borrower and shall, upon
- 3 -
56259.2
<PAGE>
Lender's request, execute any additional financing statements and other
certificates necessary to reflect the change in trade names or
fictitious business names;
(e) Further Assurances. Borrower shall execute and deliver
from time to time, promptly after any request therefor by Lender, any
and all instruments, agreements and documents and shall take such other
action as may be necessary or desirable in the opinion of Lender to
maintain, perfect or insure Lender's security provided for herein and
in the other Loan Documents, all as Lender shall reasonably require,
and Borrower shall pay all fees and expenses (including reasonable
attorneys' fees) related thereto;
(f) Notice of Litigation. Borrower will give, or cause to be
given, prompt written notice to Lender of (i) any action or proceeding
which is instituted by or against it in any Federal or state court or
before any commission or other regulatory body, Federal, state or
local, foreign or domestic, or any such proceedings which are
threatened against it which, if adversely determined, could have a
material and adverse effect upon its business, operations, properties,
assets, management, ownership or condition (financial or otherwise),
and (ii) any other action, event or condition of any nature which may
have a material and adverse effect upon its business, operations,
management, assets, properties, ownership or condition (financial or
otherwise), or which, with notice or lapse of time or both, would
constitute an Event of Default or a default under any other contract,
instrument or agreement to which it is a party or to which it or any of
its properties or assets may be bound or subject;
(g) No Impairment. The Borrower will not, by amendment of its
Certificate of Incorporation or Bylaws or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of the Loan Documents,
but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of the Lender hereunder.
6. EVENTS OF DEFAULT AND REMEDIES
(a) Events of Default. The occurrence of any one or more
of the following shall constitute an Event of Default under this
Agreement:
(i) Failure by Borrower to pay any monetary amount
when due under any Loan Document;
(ii) Failure by Borrower to perform any obligation
not involving the payment of money, or to comply with any
other term or condition applicable to Borrower, under any Loan
Document and the expiration of ten (10) days after written
notice of such failure by Lender to Borrower;
- 4 -
56259.2
<PAGE>
(iii) Failure by Borrower to perform any obligation,
or to comply with any other term or condition applicable to
Borrower, under any agreement entered into between Borrower
and COM TECH International Corporation;
(iv) Any representation or warranty by Borrower in any
Loan Document is materially false, incorrect, or misleading as
of the date made;
(v) The occurrence of any event (including, without
limitation, a change in the financial condition, business, or
operations of Borrower for any reason whatsoever) that
materially and adversely affects the ability of Borrower to
perform any of its obligations under the Loan Documents;
(vi) Borrower (1) is unable or admits in writing its
inability to pay its monetary obligations as they become due,
(2) makes a general assignment for the benefit of creditors,
or (3) applies for, consents to, or acquiesces in, the
appointment of a trustee, receiver, or other custodian for
Borrower or the property of Borrower or any part thereof, or
in the absence of such application, consent, or acquiescence,
a trustee, receiver, or other custodian is appointed for
Borrower or the property of Borrower or any part thereof, and
such appointment is not discharged within sixty (60) days;
(vii) Commencement of any case under the Bankruptcy
Code, Title 11 of the United States Code, or commencement of
any other bankruptcy arrangement, reorganization,
receivership, custodianship, or similar proceeding under any
Federal, state, or foreign law by or against Borrower and with
respect to any such case or proceeding that is involuntary,
such case or proceeding is not dismissed with prejudice within
sixty (60) days of the filing thereof;
(viii) Any litigation or proceeding is commenced
before any governmental authority against or affecting
Borrower or the property of Borrower or any part thereof and
such litigation or proceeding is not defended diligently and
in good faith by Borrower;
(ix) All or any part of the property of Borrower is
attached, levied upon, or otherwise seized by legal process,
and such attachment, levy, or seizure is not quashed, stayed,
or released within twenty (20) days of the date thereof;
(x) The occurrence of any Event of Default, as such
term is defined in any other Loan Document.
(b) Remedies. Notwithstanding any provision to the contrary
herein or any of the other Loan Documents, upon the happening of any
Event of Default under this Agreement, or upon an Event of Default
under any of the other Loan Documents, Lender shall have, at its
option, and in addition to any other remedies provided in the Loan
Document breached by Borrower, (i) the option to declare all
outstanding
- 5 -
56259.2
<PAGE>
indebtedness to be immediately due and payable without presentment,
demand, protest or notice of any kind; (ii) the right, at its option,
to apply any of Borrower's funds in its possession to the outstanding
indebtedness under the Note, whether or not such indebtedness is then
due; and (iii) the right to exercise all rights and remedies available
to it under any or all of the Loan Documents. Nothing contained in this
Agreement or in any of the Loan Documents shall in any way restrict or
limit the rights, remedies and recourse to all assets for Borrower for
all amounts due and payable with respect to the Loan and all other
amounts due under the Loan Documents.
7. MISCELLANEOUS
(a) Assignment. Borrower shall not assign any of its rights
under this Agreement;
(b) Notices. All notices, requests, demands and consents to be
made hereunder to the parties hereto shall be in writing and shall be
delivered by hand or sent by registered mail or certified mail, postage
prepaid, return receipt requested, through the United States Postal
Service to the addresses shown below or such other address which the
parties may provide to one another in accordance herewith. Such
notices, requests, demands and consents, if sent by mail shall be
deemed given two (2) business days after deposit in the United States
mail, and if delivered by hand, shall be deemed given when delivered;
To Lender: Maroon Bells Capital Partners, Inc.
100 California Street, Suite 1400
San Francisco, California, 94111
To Borrower: Sage Resources, Inc.
#10 Exchange Place, Suite 309
Salt Lake City, Utah 84111
(c) Authority to File Notices. Borrower irrevocably appoints
Lender as it attorney-in-fact, with full power of substitution, to
file for record, at the Borrower's cost and expense and in Borrower's
name, any notices that Lender considers necessary or desirable to
protect its security;
(d) Inconsistencies with the Loan Documents. In the event of
any inconsistencies between the terms of this Agreement and any terms
of any of the Loan Documents, the terms of this Agreement shall govern
and prevail;
(e) Lender Approval of Instruments and Parties. All
proceedings taken in accordance with transactions provided for herein;
all surveys, appraisals and documents required or contemplated by this
Agreement and the persons responsible for the execution and preparation
thereof; shall be satisfactory to and subject to approval by Lender.
- 6 -
56259.2
<PAGE>
Lender's counsel shall be provided with copies of all documents which
they may reasonably request in connection with the Agreement;
(f) Lender Determination of Facts. Lender shall at all times
be free to establish independently, to its satisfaction, the existence
or nonexistence of any fact or facts, the existence or nonexistence of
which is a condition of this Agreement;
(g) Incorporation of Preamble, Recitals and Exhibits. The
preamble, recitals and exhibits hereto are hereby incorporated into
this Agreement;
(h) Payment of Expenses. Borrower shall pay all taxes and
assessments and all expenses, charges, costs and fees provided for in
this Agreement or relating to the Loan, including, without limitation,
fees of any consultants, reasonable fees and expenses of Lender's
counsel, documentation and processing fees, printing and duplicating
expenses, and air freight charges. Borrower hereby authorizes Lender to
disburse the proceeds of the Loan to pay such expenses, charges, costs
and fees notwithstanding that Borrower may not have requested a
disbursement of such amount. Such disbursement shall be added to the
outstanding principal balance of the Note. The authorization hereby
granted shall be irrevocable, and no further direction or authorization
from Borrower shall be necessary for Lender to make such disbursements.
However, the provision of this paragraph shall not prevent Borrower
from paying such expense, charges, costs and fees from its own funds.
All such expenses, charges, costs and fees shall be Borrower's
obligation regardless of whether or not Borrower has requested and met
the conditions for the disbursement of the Loan;
(i) Disclaimer by Lender. Borrower is not and shall not be an
agent of Lender for any purpose. Lender is not a joint venture partner
with Borrower or with the constituent partners in Borrower in any
manner whatsoever. Approvals granted by Lender for any matters covered
under this Agreement shall be narrowly construed to cover only the
parties and facts identified in any written approval or, if not in
writing, such approvals shall be solely for the benefit of Borrower;
(j) Indemnification. To the fullest extent permitted by law,
Borrower agrees to protect, indemnify, defend and save harmless Lender,
its directors, officers, agents and employees for, from and against any
and all liability, expense or damage of any kind or nature and for,
from and against any suits, claims or demands, including reasonable
legal fees and expenses on account of any matter or thing or action or
failure to act by Lender, whether in suit or note, arising out of this
Agreement or in connection herewith. Upon receiving knowledge of any
suit, claim or demand asserted by a third party that Lender believes is
covered by this indemnity, Lender shall give Borrower notice of the
matter and an opportunity to defend it, at Borrower's sole cost and
expense, with legal counsel satisfactory to Lender. Lender may also
require Borrower to so defend the matter. The obligations on the part
of Borrower under this paragraph 7(j) shall survive the closing of the
Loan and the repayment thereof;
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56259.2
<PAGE>
(k) Titles and Headings. The headings at the beginning of each
paragraph of this Agreement are solely for convenience and are not part
of this Agreement. Unless otherwise indicated, each reference in this
Agreement to a paragraph or an exhibit is a reference to the respective
paragraph herein or exhibit hereto;
(l) Change, Discharge, Termination, or Waiver. No provision of
this Agreement may be changed, discharged, terminated, or waived except
in writing signed by the party against whom enforcement of the change,
discharge, termination, or waiver is sought. No failure on the part of
Lender to exercise and no delay by Lender in exercising any right or
remedy under the Loan Documents or under the law shall operate as a
waiver thereof;
(m) Choice of Law. This Agreement and the transaction
contemplated hereunder shall be governed by and construed in accordance
with the laws of the State of Utah without giving effect to conflict of
laws principles;
(n) Time is of the Essence. Time is of the essence of this
Agreement;
(o) Attorneys' Fees. Borrower agrees to pay all costs of
enforcement and collection and preparation for any Event of Default or
any action taken by Lender (including, without limitation, reasonable
attorneys' fees) whether or not any action or proceeding is brought
(including, without limitation, all such costs incurred in connection
with any bankruptcy, receivership, or other court proceedings, whether
at the trial or appellate level), together with interest thereon from
the date of demand at the default interest rate;
(p) Consent to Jurisdiction. Borrower and Lender hereby
irrevocably consent and agree that any legal action, suit or proceeding
arising out of or in any way in connection with this Agreement, or
which is an appeal therefrom, may be instituted or brought in the
Federal District Court for the District of Utah and Borrower and Lender
hereby irrevocably consent and submit to, for themselves and in respect
of their property, generally and unconditionally, the jurisdiction of
such Court, and to all proceedings in such Court. Further, Borrower and
Lender irrevocably consent to actual receipt of any summons and/or
legal process at their respective addresses as set forth in this
Agreement as constituting in every respect sufficient and effective
service of process in any such legal action or proceeding. Borrower and
Lender further agree that final judgment in any such legal action, suit
or proceeding shall be conclusive and may be enforced in any other
jurisdiction, whether within or outside the United States of America,
by suit under judgment, a certified or exemplified copy of which will
be conclusive evidence of the fact and the amount of the liability;
(q) Provisional Remedies; Self Help; and Foreclosure. No
provision of paragraph 7(p) shall limit the right of any party to
exercise self-help remedies, to foreclose against any real or personal
property collateral, or to obtain any provisional or ancillary remedies
(including but not limited to injunctive relief or the appointment of a
- 8 -
56259.2
<PAGE>
receiver) from a court of competent jurisdiction. The institution and
maintenance of any remedy permitted above shall not constitute a waiver
of the rights to submit any controversy or claim to arbitration. The
statute of limitations, estoppel, waiver, laches, and similar doctrines
which would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding;
(r) Integration. The Loan Documents contain the complete
understanding and agreement of Borrower and Lender and supersede all
prior representations, warranties, agreements, arrangements,
understandings, and negotiations;
(s) Binding Effect. The Loan Documents will be binding upon,
and inure to the benefit of, Borrower and Lender and their respective
successors and assigns. Borrower may not delegate its obligations under
the Loan Documents;
(t) Survival. The representations, warranties, and covenants
of the Borrower and the Loan Documents shall survive the execution and
delivery of the Loan Documents and the making of the Loan.
(u) Counterparts. This Agreement may be executed in any
number of counterparts each of which shall be deemed an original, but
all such counterparts together shall constitute but one agreement;
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56259.2
<PAGE>
IN WITNESS WHEREOF, Lender and Borrower have caused this Agreement to
be duly executed and delivered as of the date first above written.
"BORROWER"
SAGE RESOURCES, INC.
By: _________________________________
Name: _______________________________
Title: ________________________________
"LENDER"
MAROON BELLS CAPITAL PARTNERS, INC.
By: _________________________________
Name: _______________________________
Title: ________________________________
- 10 -
56259.2
<PAGE>
EXHIBIT "A"
REGISTRATION RIGHTS AGREEMENT
- 11 -
56259.2
<PAGE>
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement"), is entered into
this July 1, 1996, by and between SAGE RESOURCES, INC.(the "Company") and MAROON
BELLS CAPITAL PARTNERS, INC. (the "Stockholder").
WHEREAS, pursuant to a Loan Agreement and Secured Convertible
Promissory Note of even date herewith, the Stockholder has the right to acquire
certain shares of Restricted Common Stock of the Company;
WHEREAS, as a condition to the loan by the Stockholder to the Company,
the Company has agreed to execute this Agreement in favor of the Stockholder.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS.
(a) "Shares" shall mean and include any of the following
securities: (i) up to 250,000 shares of common stock of the Company
(the "Common Stock") which will be acquired from the Company upon
conversion of that certain Convertible Secured Promissory Note, dated
July 1, 1996 executed in favor of Stockholder (the "Note"), or (ii) any
additional securities issued to the Stockholder with respect to the
foregoing upon any stock split, stock dividend, recapitalization,
dilution, adjustment or similar event;
2. "REGISTRATION RIGHTS".
(a) Piggyback Registration. If at any time the Company shall
propose to file with the Securities and Exchange Commission (the
"Commission") on behalf of the Company or any other stockholder a
registration statement under the Securities Act of 1933, as amended
(the "Act"), with respect to any class of security (as defined in
Section 3(a)(10) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")), other than a registration statement approved by
the Board of Directors on Form S-4 or S-8, or such amended or
alternative form for Form S-4 or S-8 as the Commission may from time to
time require, the Company shall in each case timely notify the
Stockholder and include in such registration statement any or all of
the shares of Common Stock as the Stockholder may request within twenty
(20) days after the Company's giving of such notice, subject to the
conditions set forth herein;
(b) One-Time Demand Registration. If at any time after the
date which is six (6) months following any underwritten public offering
of the Company's Common Stock or other equity securities, and all or a
portion of the Common Stock of the Stockholder is excluded by the
underwriter in such offering pursuant to the terms and conditions of
this Agreement, and the Company shall receive a written request from
the Stockholder that the Company effect a registration with respect to
the issuance of the Shares underlying the Note on conversion of the
Note by the Stockholder, the Company shall promptly, subject
<PAGE>
to the conditions and in accordance with the procedures hereinafter set
forth, prepare and file a registration statement on an appropriate form
as expeditiously as reasonable with respect to such Shares. The request
for registration pursuant to this Section shall specify the number of
shares to be registered and the manner of sale, including the name and
address of any proposed underwriter. The principal underwriter or
underwriters for any such offering shall be selected by the
Stockholder, subject to the reasonable acceptance of the Company. The
rights of the Stockholder to demand registration under this paragraph
2(b) shall expire upon the filing of the Registration Statement by the
Company after the initial demand made by the Stockholder;
(c) Registration Procedures. If, pursuant to Sections 2(a) or
2(b) hereof, the Company is required to include any Shares in a
registration statement proposed to be filed, the Company will, as
expeditiously as possible: (i) prepare and file such registration
statement under the Act on an appropriate form and use its reasonable
efforts to cause such registration statement to become effective; (ii)
prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Act
and the Exchange Act with respect to the offer of the securities
covered by such registration statement during the period required for
distribution of such securities (but in no case longer than ninety (90)
days); (iii) furnish to the holder of such Shares such number of copies
of such registration statement and all amendments thereto and of such
prospectus (including each preliminary, amended or supplemental
prospectus) as such holders may reasonably request in order to
facilitate the sale or transfer of the securities covered by such
registration statement; (iv) use its reasonable efforts to register or
qualify the securities covered by any such registration statement in
such jurisdictions as such holders may reasonably request; (v) furnish,
at the request of the Stockholder, on the date that such Shares are
delivered to the underwriters for sale pursuant to such registration
or, if such Shares are not being sold through underwriters, on the date
such registration statement becomes effective (A) an opinion, dated on
such date, in a form customary to such transactions, of the independent
counsel representing the Company for the purposes of such registration,
addressed to the underwriters, if any, and to the Stockholder making
such request, reasonably acceptable in form and substance to such
underwriter and the Stockholder, and (B) a letter, dated on such date,
from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and the Stockholder, stating
that they are independent certified public accountants within the
meaning of the Act and that in the opinion of such accountants, the
financial statements and other financial data of the Company included
in the registration statement or the prospectus, or any amendment or
supplement thereto (including, in each case, documents incorporated by
reference thereto), comply as to form in all material respects with the
applicable accounting requirements of the Act; such opinion of counsel
shall additionally cover such other legal matters with respect to the
registration statement and the Company as the underwriters, if any, or
the Stockholder may reasonably request; and such letter from the
independent certified public accountants shall additionally cover such
other financial matters (including information as to the period ending
not more than five (5) business days prior to the date of such letter)
with respect to the registration statement
- 2 -
56262.2
<PAGE>
and the Company as the underwriters, if any, or the Stockholder may
reasonably request; (vi) use its best efforts to keep such registration
and qualification effective until all exercises, sales and
distributions contemplated by the requests made pursuant to Sections
2(a) or 2(b) hereof shall have been completed, but not in any event for
a period in excess of ninety (90) days; and (vii) pay all expenses
incurred by the Company in complying with this Section 2(c), including
without limitation (A) all registration and filing fees; (B) all
printing expenses; (C) all fees and disbursements of counsel and
independent public accountants for the Company; (D) all Blue Sky fees
and expenses (including fees and expenses of counsel in connection with
Blue Sky surveys); and (E) the entire expense of any special audits
incident to or required by any such registration. Notwithstanding the
foregoing, the Company shall not be obligated to pay any underwriter's
discounts or commissions or attorneys' fees or expenses of the
Stockholder;
(d) Certain Conditions to Registration. The right of the
Stockholder to have any shares included in any registration statement
pursuant to the provisions of Sections 2(a) or 2(b) hereof shall be
subject to the following further conditions: (i) should the request for
registration be pursuant to Section 2(a), and should the registration
statement proposed by the Company relate to an underwritten offering of
securities of the Company, and should the managing underwriter for the
Company render a recommendation to the effect that such registration of
all or a part of the Shares would materially impair the Company's
ability to sell the securities being registered by the Company, then
the Stockholder shall be entitled to participate pro rata with all
other stockholders entitled to registration rights of equal priority
("Other Stockholder"), if any, based upon the number of shares owned by
or issuable to the Stockholder and each Other Stockholder in the
maximum amount of shares that such underwriter determines may be sold
without such impairment, after the Company has included all stock that
it desires to sell; (ii) the Stockholder shall furnish to the Company
in writing such information and documents as, in the opinion of counsel
to the Company, may be reasonably required to properly prepare and file
such registration statement in accordance with applicable provisions of
the Act; and (iii) if the Stockholder desires to sell and distribute
securities over a period of time, or from time to time at the
prevailing market prices pursuant to a registration statement to be
filed by the Company under the Act, then the Stockholder shall execute
and deliver to the Company such written undertakings as the Company and
its counsel may reasonably require in order to assure full compliance
with relevant provisions of the Act and the Exchange Act;
(e) Notices of Registration Statements, Etc. The Company
shall not file any registration statement under the Act covering any
debt or equity securities unless it shall first have given the
Stockholder written notice thereof;
3. EXPENSES. Except for underwriting discounts and commissions,
the Company shall pay any and all registration expenses.
- 3 -
56262.2
<PAGE>
4. TRANSFER OF REGISTRATION RIGHTS. The registration rights granted
hereunder may not be assigned or otherwise transferred, without the prior
written consent of the Company.
5. TERMINATION OF REGISTRATION RIGHTS. The Piggyback Registration
rights granted pursuant to paragraph 2(a) shall terminate two (2) years from the
date hereof. The registration rights granted pursuant to Section 2(b) of this
Agreement shall terminate and be of no force and effect as to the Stockholder
and any subsequent transferee upon the earlier to occur of (i) the effective
date of a registration statement filed upon the demand of the Stockholder
pursuant to paragraph 2(b), or (ii) the expiration of two (2) years from the
date of this Agreement.
6. "MARKET STANDOFF" AGREEMENT. The Stockholder agrees that, if
requested by the Company and an underwriter of Common Stock (or other
securities) of the Company, it will not sell or otherwise transfer or dispose of
any Common Stock (or other securities) of the Company held by the Stockholder
during the period beginning seven (7) days prior to and ending 180 days
following the date of the final prospectus of the Company filed under the Act,
provided that such agreement shall be in writing in a form satisfactory to the
Company and such underwriter. The Company may impose stop-transfer instructions
with respect to the Common Stock (or other securities) subject to the foregoing
restriction until the end of said 180 day period.
7. MODIFICATION AND WAIVER. The parties may amend, modify or supplement
this Agreement only by the written agreement of each party hereto. The failure
of any party at any time or times to require performance of any provision hereof
shall in no manner affect such party's right at a later date to enforce the
same. No waiver by any party of a breach of this Agreement, whether by conduct
or otherwise, in any one or more instances shall be, or shall be deemed to be, a
further or continuing waiver of such breach or a waiver of any condition or of
any other breach of this Agreement.
8. NOTICES. Any notices or other communications required or permitted
hereunder shall be deemed to have been duly given when delivered personally or
sent by registered or certified mail, postage prepaid (return receipt
requested), to the party to whom such notice or communication is addressed at
the following addresses (or at such other address for a party as shall be
specified by like notice):
To the Stockholder: MAROON BELLS CAPITAL PARTNERS, INC.
100 California Street, Suite 1400
San Francisco, California 94111
To the Company: #10 Exchange Place, Suite 309
Salt Lake City, Utah 84111
Attn: President
- 4 -
56262.2
<PAGE>
With a copy to: William C. Gibbs, Esq.
SNELL & WILMER
111 East Broadway, Suite 900
Salt Lake City, Utah 84111
9. GENDER AND NUMBER, ETC. All words or terms used in this Agreement,
regardless of the number or gender in which they are used, shall be deemed to
include any other number and any other gender as the context may require.
"Hereof," "herein," and "hereunder" and words of similar import shall be
construed to refer to this Agreement as a whole, and not to any particular
paragraph or provisions, unless expressly so stated.
10. SUCCESSORS AND ASSIGNS. All rights hereunder may be assigned or
otherwise conveyed to any permitted transferee or assignee. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the parties hereto.
11. COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon the same instrument.
12. ENTIRE AGREEMENT AND CAPTIONS. This Agreement sets forth the entire
understanding of the parties hereto and supersedes all prior agreements,
arrangements and communications, whether oral or written, between or among the
parties with respect to the subject matter hereof. Captions appearing in this
Agreement are for convenience of reference only and shall not be deemed to
explain, limit or amplify the provisions hereof.
13. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Utah.
14. SEVERABILITY. If any provisions contained in this Agreement shall
for any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not invalidate the entire
Agreement. Such provision shall be deemed to be modified to the extent necessary
to render it valid and enforceable and if no such modification shall render it
valid and enforceable then the Agreement shall be construed as if not containing
such provision.
15. NO THIRD PARTY BENEFICIARIES. Nothing herein expressed or implied
is intended to confer upon any person, other than the parties hereto or their
respective permitted assigns, successors, heirs and legal representatives, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
16. NO PARTNERSHIP OR JOINT VENTURE. Notwithstanding anything to the
contrary contained herein, nothing contained herein shall be construed as
creating a partnership or joint venture relationship between the parties hereto,
and the parties hereto shall be deemed to
- 5 -
56262.2
<PAGE>
have made any elections necessary under any applicable law, rule or regulation
to prevent their being considered or deemed to be a partnership or joint
venture.
17. NO IMPAIRMENT. The Company will not take any action, or fail to
take any action, avoid or seem to avoid the observance or performance of any of
the terms to be performed by the Company hereunder and the Company will at all
times act in good faith to assist the Stockholder in the carrying out of the
provisions of this Agreement as may be necessary to preserve and protect the
registration rights of the Stockholder under this Agreement.
- 6 -
56262.2
<PAGE>
THE COMPANY:
SAGE RESOURCES, INC.
By: __________________________________
Its: ___________________________________
THE STOCKHOLDER:
MAROON BELLS CAPITAL PARTNERS, INC.
By: __________________________________
Its: ___________________________________
- 7 -
56262.2
<PAGE>
ASSIGNMENT, PLEDGE
AND SECURITY AGREEMENT
THIS ASSIGNMENT, PLEDGE AND SECURITY AGREEMENT (this
Agreement"), dated July 1, 1996, is made by SAGE RESOURCES, INC. ("Borrower") in
favor of MAROON BELLS CAPITAL PARTNERS, INC. ("Lender").
W I T N E S S E T H
WHEREAS, pursuant to a Convertible Secured Promissory Note dated July
1, 1996 (as amended, supplemented or otherwise modified from time to time, the
"Note") executed by Borrower contemporaneously herewith, Lender has made a loan
to Borrower upon the terms and conditions set forth therein;
WHEREAS, Lender has agreed to make a loan to Borrower in the face
amount of the Note upon execution of the Note and upon the execution and
delivery to Lender of this Agreement;
WHEREAS, it is in the best interests of Borrower that Lender make the
loan and accept the Note;
NOW, THEREFORE, in consideration of the premises and to induce Lender
to make the loan to Borrower in exchange for the Note, Borrower hereby agrees
with Lender as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms which are
defined in the Note and used herein are so used as so defined; and as used
herein the following terms shall have the following meanings:
"Agreement" shall mean this Assignment, Pledge and Security
Agreement, as amended, supplemented or otherwise modified from time to
time;
"Code" shall mean the Uniform Commercial Code as from time to
time in effect in the State of Utah;
"Collateral" shall mean all of Borrower's right, title and
interest in and to that certain Secured Promissory Note of COM TECH
International Corporation, dated June 27, 1996, together with all
rights of Borrower under this Agreement and the Loan Agreement entered
into in connection herewith;
"Obligations" shall mean all obligations and liabilities of
Borrower to Lender under the Note and this Agreement, whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including, without limitation, all
reasonable fees and disbursements of counsel to Lender) or otherwise.
<PAGE>
2. ASSIGNMENT, PLEDGE AND GRANT OF SECURITY INTEREST. As collateral
security for the prompt and complete payment and performance when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations,
Borrower hereby grants to Lender a security interest in all of the Collateral
and hereby assigns and pledges to Lender all of Borrower's right, title and
interest in and to the Collateral. The foregoing assignment shall be for
security purposes only and is made for the purpose of allowing Lender to
exercise all of the rights of Borrower with respect to the Collateral to more
fully maximize and perfect the interests of Lender in the Collateral. Until the
Obligations are paid in full, this assignment and pledge shall operate to
transfer to Lender the right to possession and use of the Collateral and all
other rights of Borrower with respect to the Collateral. All amounts received by
Lender under the Collateral will be applied to payment of the Obligations in the
following order: First, to the payment of all costs, fees, indebtedness or
expenses (including attorneys' fees); Second, to interest; and Third, to
repayment of principal. Upon the fulfillment of all Obligations hereunder,
Lender will promptly reassign the Collateral to Borrower, and have no further
rights therein or with respect thereto.
3. COVENANTS. Borrower covenants and agrees with Lender that, from
and after the date of this Agreement until the Obligations are paid in full:
(a) Further Documentation; Pledge of Instruments and Chattel
Paper. At any time and from time to time, upon the written request of
Lender, and at the sole expense of Borrower, Borrower will promptly and
duly execute and deliver such further instruments and documents and
take such further action as Lender may reasonably request for the
purpose of obtaining or preserving the full benefits of this Agreement
and of the rights and powers herein granted;
(b) Indemnification. Borrower agrees to pay, and to save
Lender harmless from, any and all liabilities, costs and expenses
(including, without limitation, reasonable legal fees and expenses) (i)
with respect to, or resulting from any delay in paying any and all
income or other taxes which may be payable or determined to be payable
with respect to any of the Collateral, (ii) with respect to, or
resulting from any delay in complying with, any requirement of law
applicable to any of the Collateral, and (iii) resulting from any
breach of this Agreement or the Note by Borrower;
(c) Payment of Obligations. Borrower will pay promptly when
due all taxes, assessments and governmental charges or levies with
respect to the Collateral, as well as all claims of any kind against or
with respect to the Collateral, except that no such charge need be paid
if (i) the amount or validity thereof is being contested in good faith
by appropriate proceedings, and (ii) such proceedings do not involve
any material danger of the sale, forfeiture or loss of the Collateral
or any interest therein;
(d) Limitation on liens on Collateral. Other than (i) the lien
created hereby, (ii) other liens in favor of Lender, and (iii) liens
permitted under the Note, Borrower will not create, incur or permit to
exist, will defend the Collateral against, and will take such other
action as is necessary to remove, any lien or claim on or to the
Collateral, and will
- 2 -
56260.2
<PAGE>
defend the right, title and interest of Lender in and to any of thE
Collateral against the claims and demands of all persons whomsoever;
(e) Limitations on Dispositions of Collateral. Borrower will
not sell, assign, transfer, or otherwise dispose of the Collateral;
(f) Notices. Borrower will advise Lender promptly, in
reasonable detail, at its address or transmission number set forth
under its signature below, (i) of any lien on, or claim asserted
against, any of the Collateral and (ii) of the occurrence of any other
event which could reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or on the lien created
hereunder;
(g) Preservation of Contracts. Borrower shall take all actions
and do all things as are required under the terms of the agreements
which are part of the Collateral, to observe, protect and preserve the
rights granted thereby to Borrower. Borrower shall take no actions
which shall result in or have the effect of, in any material way,
releasing, derogating or otherwise adversely impacting any contract
rights arising under the Collateral;
(h) Notice of Assignment. Borrower hereby agrees to direct any
party liable for any payment under any of the Collateral to make
payment of any and all moneys due or to become due thereunder directly
to Lender or as Lender shall direct.
4. LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Powers. Upon an Event of Default hereunder or under the
Note, Borrower hereby irrevocably constitutes and appoints Lender and
any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Borrower and in the name of
Borrower or in its own name, from time to time in Lender's discretion,
for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the
purposes of this Agreement. Borrower hereby ratifies all that said
attorneys shall lawfully do or cause to be done by virtue hereof. This
power of attorney is a power coupled with an interest and shall be
irrevocable until all of the Obligations shall be paid in full and this
Agreement shall be terminated;
(b) No Duty on Lender's Part. The powers conferred on Lender
hereunder are solely to protect Lender's interests in the Collateral
and shall not impose any duty upon it to exercise any such powers.
Lender shall be accountable only for amounts that it actually receives
as a result of the reasonable and legal exercise of such powers, and
neither it nor any of its officers, directors, employees or agents
shall be responsible to Borrower for any act or failure to act
hereunder, except to the extent of its own negligence or willful
misconduct.
- 3 -
56260.2
<PAGE>
5. PERFORMANCE BY LENDER OF BORROWER'S OBLIGATIONS. If
Borrower fails to perform or comply with any of its agreements contained herein
and Lender, as provided for by the terms of this Agreement, shall itself perform
or comply, or otherwise cause performance or compliance, with such agreement,
the expenses of Lender incurred in connection with such performance or
compliance, together with interest thereon at a rate per annum equal to 18%
shall be payable by Borrower to Lender on demand and shall constitute
Obligations secured hereby.
6. DEFAULT. The occurrence of any of the following events (an "Event
of Default") shall constitute a default hereunder:
(a) Failure by Borrower to pay any monetary amount when due
under any Loan Document;
(b) Failure by Borrower to perform any obligation not
involving the payment of money, or to comply with any other term or
condition applicable to Borrower, under any Loan Document and the
expiration of ten (10) days after written notice of such failure by
Lender to Borrower;
(c) Failure by Borrower to perform any obligation, or to
comply with any other term or condition applicable to Borrower, under
any agreement entered into between Borrower and COM TECH International
Corporation;
(d) Any representation or warranty by Borrower in any Loan
Document is materially false, incorrect, or misleading as of the date
made;
(e) The occurrence of any event (including, without
limitation, a change in the financial condition, business, or
operations of Borrower for any reason whatsoever) that materially and
adversely affects the ability of Borrower to perform any of its
obligations under the Loan Documents;
(f) Borrower (1) is unable or admits in writing its inability
to pay its monetary obligations as they become due, (2) makes a general
assignment for the benefit of creditors, or (3) applies for, consents
to, or acquiesces in, the appointment of a trustee, receiver, or other
custodian for Borrower or the property of Borrower or any part thereof,
or in the absence of such application, consent, or acquiescence, a
trustee, receiver, or other custodian is appointed for Borrower or the
property of Borrower or any part thereof, and such appointment is not
discharged within sixty (60) days;
(g) Commencement of any case under the Bankruptcy Code, Title
11 of the United States Code, or commencement of any other bankruptcy
arrangement, reorganization, receivership, custodianship, or similar
proceeding under any federal, state, or foreign law by or against
Borrower and with respect to any such case or proceeding that is
involuntary, such case or proceeding is not dismissed with prejudice
within sixty (60) days of the filing thereof;
- 4 -
56260.2
<PAGE>
(h) Any litigation or proceeding is commenced before any
governmental authority against or affecting Borrower or the property of
Borrower or any part thereof and such litigation or proceeding is not
defended diligently and in good faith by Borrower;
(i) All or any part of the property of Borrower is attached,
levied upon, or otherwise seized by legal process, and such attachment,
levy, or seizure is not quashed, stayed, or released within twenty (20)
days of the date thereof;
(j) The occurrence of any Event of Default, as such term is
defined in any other Loan Document.
7. PROCEEDS. If an Event of Default shall occur, and be continuing, (a)
all proceeds received by Borrower consisting of cash, checks and other near-cash
items shall be held by Borrower in trust for Lender, segregated from other funds
of Borrower, and shall, forthwith upon receipt by Borrower, be turned over to
Lender in the exact form received by Borrower (duly endorsed by Borrower to
Lender, if required), and (b) any and all such proceeds received by Lender
(whether from Borrower or otherwise) may, in the sole discretion of Lender, be
held by Lender as collateral security for, and/or then or at any time thereafter
may be applied by Lender against the Obligations (whether matured or unmatured),
such application to be in such order as Lender shall elect. Any balance of such
proceeds remaining after the Obligations shall have been paid in full shall be
paid over to Borrower or to whomever may be lawfully entitled to receive the
same.
8. REMEDIES. If an Event of Default shall occur and be continuing,
Lender may exercise, in addition to all other rights and remedies granted to it
in this Agreement, all rights and remedies of a secured party under the Code.
Borrower shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the Obligations and
the reasonable fees and disbursements of any attorneys employed by Lender to
collect such deficiency.
9. LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL. Lender's
sole duty with respect to the custody and safekeeping of the Collateral in its
possession, under Section 9-207 of the Code or otherwise, shall be to deal with
it in the same manner as Lender deals with similar property for its own account.
Neither Lender nor any of its directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of Borrower or
otherwise.
10. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest; provided that such authorizations and agencies shall
terminate upon the repayment of the principal amount of, and accrued interest
on, the Note and the payment of all other Obligations.
- 5 -
56260.2
<PAGE>
11. SEVERABILITY. In the event any provision of this Agreement is found
to be unenforceable or invalid, such provision shall be severable from this
Agreement if it is capable of being identified with and apportioned to
reciprocal consideration or to the extent that it is a provision which is not
essential and the absence of which would not have prevented the parties from
entering into this Agreement. The unenforceability or invalidity of a provision
which has been performed shall not be grounds for invalidation of this Agreement
under circumstances in which the true controversy between the parties does not
involve such provision.
12. PARAGRAPH HEADINGS. The paragraph headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
13. WAIVER; CUMULATIVE REMEDIES. None of the terms or provisions of
this Agreement may be waived, amended, supplemented or otherwise modified except
by a written instrument executed by Borrower and Lender. Lender shall not by any
act (except by a written instrument pursuant to this paragraph 13), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Event of Default or in any breach of any
of the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of Lender, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by Lender of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Lender would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any rights or remedies provided at law
or in equity.
14. NOTICES. Notices by Lender to Borrower may be given by mail, by
telex or by facsimile transmission, addressed or transmitted to Borrower at its
address or transmission number set forth under its signature below and shall be
effective (a) in the case of mail, three (3) days after deposit in the postal
system, registered or certified mail, postage pre-paid and (b) in the case of
telex or facsimile notices, when received.
15. ASSIGNMENT. Borrower shall not assign its rights or delegate its
duties hereunder without the prior written consent of Lender.
16. SUCCESSORS AND ASSIGNS; GOVERNING LAW. This Agreement shall be
binding upon the successors and assigns of Borrower and shall inure to the
benefit of Lender and its successors and assigns. This Agreement shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of Utah, and each of the parties hereto hereby consents to the
jurisdiction of the state and federal courts located in the State of Utah as
having exclusive jurisdiction to any disputes arising under this Agreement or
the Note and to service of process by mail, or as otherwise provided in the
Federal Rules of Civil Procedure in such state.
- 6 -
56260.2
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
BORROWER:
SAGE RESOURCES, INC.
By:_________________________________
Its:________________________________
Address_____________________________
------------------------------------
LENDER:
MAROON BELLS CAPITAL PARTNERS, INC.
By: ____________________________________
Its:____________________________________
Address_________________________________
----------------------------------------
- 7 -
56260.2
<PAGE>
SECURED PROMISSORY NOTE
(SAGE/COM TECH)
$500,000 June 27, 1996
FOR VALUE RECEIVED, the undersigned COM TECH INTERNATIONAL CORPORATION
("Borrower") hereby promises to pay to SAGE RESOURCES, INC.
("Holder"), or order, at #10 Exchange Place, Suite 309, Salt Lake City, Utah,
84111, or at such other place as Holder may designate in writing from time to
time, the sum of $500,000, together with interest thereon from the date hereof,
at the rate of ten percent (10%) per annum, calculated on the basis of a 360-day
year and a 30-day month.
Interest and principal under this Note shall be due and payable in full
at the time of Closing as defined in the proposed Stock Purchase Agreement
between the Shareholders of Borrower and the Holder unless such Closing does not
occur within thirty (30) days from the date hereof. If such Closing does not
occur within such thirty (30) day time frame, the interest and principal under
this Note shall be due and payable in full ninety (90) days thereafter. If such
Closing occurs, the interest and principal due under this Note will be deducted
from Holder's $3.5 million new equity financing requirement described in said
Stock Purchase Agreement on the date of such Closing.
From and after the date on which all sums owing on this Note become due
and payable, by acceleration or otherwise, all sums owing on this Note shall
bear interest, until all such sums are paid in full, at a default rate equal to
twelve percent (12%) per annum (based on a 360-day year and charged on the basis
of actual days elapsed). At such time as a judgment is obtained for any amounts
owing under this Note or any document or instrument securing this Note, interest
shall continue to accrue on the amount of the judgment until paid, at the rate
of eighteen percent (18%) per annum.
All payments shall be credited first toward interest then due and the
remainder toward principal. This Note may be prepaid in full or in part at any
time without penalty.
If an Event of Default occurs under the Loan Agreement of even date
between Holder and Borrower, Holder shall be entitled to all remedies set forth
in the Loan Agreement.
If an attorney is engaged by Holder to enforce or construe any
provision of this Note or as a consequence of any Borrower default, with or
without the filing of any legal action or proceeding, then Borrower shall
immediately pay, on demand, all attorneys' fees and all other costs incurred by
Holder, together with interest thereon from the date of such demand until paid,
at the default interest rate.
No previous waiver and no failure or delay by Holder in acting with
respect to the terms of this Note shall constitute a waiver of any breach,
default, or failure of condition thereunder or the obligations secured thereby.
<PAGE>
Any waiver of any term of this Note must be made with the consent of
both Borrower and Holder and shall be limited to the express written terms of
such waiver. In the event of any inconsistencies between the terms of this Note
and the terms of any other document related to the loan evidenced by this Note,
the terms of this Note shall prevail.
Except as expressly provided herein, Borrower hereby waives:
presentment; demand; notice of dishonor; notice of default or delinquency;
notice of acceleration; notice of protest and nonpayment; notice of costs,
expenses or losses and interest thereon; notice of late charges; and diligence
in taking any action to collect any sums owing under this Note or in proceeding
against any of the rights or interests in or to any collateral securing payment
of this Note. The right of the undersigned to plead any and all statutes of
limitation as a defense to any demand on this Note is expressly waived to the
fullest extent permitted by law. Time is of the essence with respect to every
provision hereof, except that Borrower expressly agrees that this Note or any
payment hereunder may be extended from time to time at Holder's sole option.
This Note has been executed and delivered in the State of California
and shall be construed and enforced in accordance with the laws of the State of
California. All persons and entities in any manner obligated under this Note
consent to the jurisdiction of any federal or state court within the State of
California and also consent to service of process by any means authorized by
California or federal law.
The obligations of Borrower under this Note shall be absolute, and
Borrower waives any and all rights to offset, deduct or withhold any payments or
charges due under this Note for any reason whatsoever. This Note is secured by
an Assignment, Pledge and Security Agreement, of even date herewith, executed by
Borrower in favor of Holder.
All terms and conditions of this Note shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, successors and
assigns.
If any provision of this Note is unenforceable, invalid, or violates
applicable law, such provision shall be deemed stricken and shall not affect the
enforceability of any other provisions of this Note. Holder and Borrower agree
that none of the terms and provisions contained herein shall be construed to
create a contract for the use, forbearance or detention of money requiring
payment of interest at a rate in excess of the maximum interest rate permitted
to be charged by applicable law. If any holder of this Note shall collect moneys
which are deemed to constitute interest which would otherwise increase the
effective interest rate on this Note to a rate in excess of the maximum rate
permitted to be charged by applicable laws, all such sums deemed to constitute
interest in excess of such maximum rate shall, at the option of Holder, be
credited to the payment of other amounts payable hereunder.
- 2 -
56261.3
<PAGE>
COM TECH INTERNATIONAL CORPORATION
By:___________________________________
Its: _________________________________
- 3 -
56261.3
<PAGE>
