As Filed with the Securities and Exchange Commission on January 3, 2005.
Registration No. ____- _______
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
KENTEX PETROLEUM, INC.
----------------------
(Exact name of registrant as specified in its charter)
Nevada 6770 87-0645378
------ ---- ----------
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number)Identification Number)
organization)
4685 Highland Drive, Suite 202
Salt Lake City, Utah 84117
(801) 278-9424
--------------
(Address, including Zip Code, and telephone number, including
area code, of registrant's principal executive offices)
Branden T. Burningham, Esq.
Leonard W. Burningham, Esq.
Burningham & Burningham
Hermes Building Suite 205
Salt Lake City, Utah 84111
(801) 363-7411
--------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Joel M. Handel, Esq.
Brown Raysman Millstein Felder & Steiner LLP
900 Third Avenue
New York, NY 10022
(212) 895-2000
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective and certain
other conditions under the Merger Agreement are met or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement number for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Each Maximum Maximum Amount of
Class Security Amount To Be Offering Price Aggregate Registration
To Be Registered Registered Per Unit(2) Offering Price Fee
Common stock 26,596,643(1) $.0001 $2,659.67 $0.31
$.001 Par value
(1) Represents the number of shares of common stock of the surviving company
to be issued upon consummation of the Merger contemplated by the Agreement and
Plan of Merger by and between VidRev Technologies, Inc. and Kentex Petroleum,
Inc.
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(f)(2) of the Securities Act of 1933, as amended (the
"Securities Act").
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act or until the Registration Statement shall
become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
The information in this registration statement and joint information
statement/prospectus is not complete and may be changed. These securities may
not be sold until this registration statement filed with the Securities and
Exchange Commission is effective. This registration statement and joint
information statement/prospectus is not an offer to sell these securities and
it is not soliciting an offer to buy these securities in any state where the
offer is not permitted.
Subject to Completion ______________, 2005
JOINT INFORMATION STATEMENT/PROSPECTUS
____________________
KENTEX PETROLEUM, INC.
4685 Highland Drive, Suite 202
Salt Lake City, Utah 84117
(801) 278-9424
and
VIDREV TECHNOLOGIES, INC.
1880 Century Park East
Suite 700
Los Angeles, California 90067
(310) 407-5352
____________________
NOTICE OF ACTION TAKEN BY WRITTEN CONSENT
Dealer Prospectus Delivery Obligation
Until __________, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY. THE ACTIONS, DESCRIBED BELOW, HAVE ALREADY BEEN APPROVED BY THE WRITTEN
CONSENT OF HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES ENTITLED TO VOTE ON
THESE MATTERS. A VOTE OF THE REMAINING STOCKHOLDERS IS NOT NECESSARY.
The purpose of this joint Information Statement/Prospectus is to
register 26,596,643 shares of common stock and to inform holders of record, as
of close of business on ___________, ___ 2005 (the "Record Date"), of shares
of common stock of Kentex Petroleum, Inc. (the "Company" or "Kentex") and
VidRev Technologies, Inc. ("VidRev") that the holders of approximately 92.5%
of the common stock of Kentex and the holders of approximately 96.8% of the
common stock of VidRev, have consented in writing as of December 14, 2004 to
the following corporate actions:
1. As to Kentex:
* Adopt the Agreement and Plan of Merger, dated as of December
20, 2004, by and between VidRev and Kentex, a copy of which
is attached hereto as Annex A to this joint Information
Statement/Prospectus (the "Merger Agreement"). Adoption of
the Merger Agreement also will constitute approval of the
Merger and the other transactions contemplated by the Merger
Agreement.
* Change the name of Kentex to "VidRev Technologies, Inc.,"
which would occur at the effective time of the Merger.
* Elect six Directors to the Board of Directors, to serve
until the next meeting of the stockholders.
* Adopt the 2005 Stock Option Plan.
2. As to VidRev:
* Adopt the Merger Agreement. Adoption of the Merger
Agreement also will constitute approval of the Merger and
the other transactions contemplated by the Merger Agreement.
Pursuant to the Merger Agreement, VidRev will merge with and into Kentex
(the "Merger"). Kentex will continue as the surviving company under the name
"VidRev Technologies, Inc." and its business will be that of VidRev, which is
the exclusive United States licensee and distributor of video compression
technology from TTA Technologies Ltd. ("TTA"), VidRev's controlling
stockholder. TTA is a Bahamian corporation that provides video conferencing,
video telephony and video security solutions. Each outstanding share of
VidRev common stock will be exchanged for shares of the surviving company's
common stock on a one for one basis. Each current share of Kentex common
stock will continue to represent shares of common stock of the surviving
company on a one for one basis. The shares of the surviving company's common
stock will be identical in all respects to Kentex common stock other than they
will be in Kentex's new name, which will be "VidRev Technologies, Inc." The
surviving company, upon consummation of the transactions contemplated by the
Merger Agreement and when this joint Information Statement/Prospectus is
mailed to the stockholders of Kentex and VidRev, will issue 26,596,643 shares
of the surviving company's common stock on a one to one basis to the
stockholders of VidRev. Under federal securities laws, the Articles of Merger
cannot be filed, and the Merger cannot be effected, until at least 20 days
after the mailing of this joint Information Statement/Prospectus. The parties
have also agreed to file a subsequent registration statement to register the
resale by TTA of up to 1,000,000 shares of the surviving company's common
stock to be received in the Merger and to register for sale and issuance by
the surviving company of up to 1,000,000 shares of its common stock.
Approval of the Merger requires the affirmative vote of the holders of
the majority of the outstanding shares of each of Kentex's common stock and
VidRev's common stock. Four stockholders, who collectively own 2,180,640
shares or approximately 92.5% of Kentex's common stock, have consented in
writing to the Merger and the other actions described in this joint
Information Statement/Prospectus. TTA, which owns 29,374,500 shares or 96.8%
of VidRev's common stock, has consented in writing to the Merger and the other
actions described in this joint Information Statement/Prospectus.
Accordingly, we will not submit these actions to the other stockholders of
Kentex and VidRev for a vote, and a Special Meeting of the stockholders to
approve the actions described in this joint Information Statement/Prospectus
is unnecessary.
This document is a prospectus of the surviving company relating to the
issuance of shares of the surviving company's common stock in connection with
the Merger and a joint Information Statement for both Kentex and VidRev. It
contains answers to frequently asked questions beginning on page 1 and a
summary description of the Merger beginning on page 3, followed by a more
detailed discussion of the Merger and related matters. You should also
consider the matters discussed under "RISK FACTORS" commencing on page 6 of
the enclosed joint Information Statement/Prospectus. We urge you to review the
entire document carefully.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this joint Information Statement/Prospectus. Any
representation to the contrary is a criminal offense.
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE MERGER . . . . . . . . . . . . .1
Q: Why are Kentex and VidRev performing the Merger?. . . .1
Q: What will Kentex stockholders receive in the Merger?. .1
Q: What will VidRev stockholders receive in the Merger?. .1
Q: Was a fairness opinion sought to determine if the
Merger is fair to you? . . . . . . . . . . . . . . . .1
Q: What stockholder approvals are required?. . . . . . . .1
Q: Do Kentex stockholders have appraisal rights? . . . . .2
Q: Do VidRev stockholders have appraisal rights? . . . . .2
Q: Should I send in my stock certificates now? . . . . . .2
Q: Who can help answer my questions? . . . . . . . . . . .2
SUMMARY OF JOINT INFORMATION STATEMENT/PROSPECTUS. . . . . . . .3
Each of VidRev and Kentex's Majority Stockholders has
Consented to Approve the Merger . . . . . . . . . . . .3
The Companies . . . . . . . . . . . . . . . . . . . . . . .3
The Merger. . . . . . . . . . . . . . . . . . . . . . . . .3
Kentex's Reasons for the Merger . . . . . . . . . . . . . .4
Votes Required. . . . . . . . . . . . . . . . . . . . . . .4
Income Tax Consequences of the Merger . . . . . . . . . . .4
Appraisal Rights. . . . . . . . . . . . . . . . . . . . . .5
Certain Differences in the Stockholders . . . . . . . . . .5
Government Regulation . . . . . . . . . . . . . . . . . . .6
Related Transactions to the Merger. . . . . . . . . . . . .6
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . .6
VidRev's auditors have issued a "going concern" audit
opinion. . . . . . . . . . . . . . . . . . . . . . . .6
VidRev's financial statements as of September 30, 2004
have been prepared on the assumption that it will
continue as a going concern. . . . . . . . . . . . . .6
The surviving company will be relying on VidRev's business
plan to succeed. . . . . . . . . . . . . . . . . . . .7
The surviving company will likely need to raise additional
capital in the future and if it cannot meet its future
capital requirements, it may not be able to conduct
its business as planned. . . . . . . . . . . . . . . .7
Kentex and VidRex have agreed that the surviving company
will offer 1,000,000 shares of its common stock for
sale immediately following the closing of the Merger
which will dilute you percentage of ownership in the
surviving corporation . . . . . . . . . . . . . . . . 7
The surviving company will license its technology from its
controlling stockholder, TTA, and loss of this license
would prevent or delay sales and/or sublicenses of its
products; the surviving company will be dependent on
TTA for its technology. . . . . . . . . . . . . . . . 8
VidRev's license from TTA will prohibit the surviving
company from selling products and distributing
sublicenses outside the continental United States and
in certain markets within the United States. . . . . .8
VidRev's business plan, which will be the business plan of
the surviving company after the Merger, is dependent
on the sales and marketing efforts of third parties. .8
The surviving company's ability to reach its sales goals
is dependent upon the sales and marketing efforts of
VidRev's existing and future third-party marketers
and distributors. . . . . . . . . . . . . . . . . . . 8
Existing or new competitors may develop competing or
superior videoconferencing technology . . . . . . . . 8
VidRev's auditors have expressed concern regarding
VidRev's internal control procedures . . . . . . . . .9
Dependence on management. . . . . . . . . . . . . . . . . .9
Managing growth . . . . . . . . . . . . . . . . . . . . . .9
TTA may not be successful in protecting its intellectual
property and proprietary rights, which would harm the
surviving company. . . . . . . . . . . . . . . . . . 10
Others may bring infringement actions against TTA or the
surviving company which could be time-consuming and
expensive to defend. . . . . . . . . . . . . . . . . 10
If the surviving company's software disrupts the
functioning of other applications, the surviving
company may experience customer dissatisfaction, loss
of customers, or both, and be exposed to lawsuits. . 10
TTA will own a substantial percentage of the common stock
of the surviving company after the Merger and will be
able to control all matters requiring stockholder
approval . . . . . . . . . . . . . . . . . . . . . . 11
Risks of financial forecasts. . . . . . . . . . . . . . . 11
There is currently no market for Kentex or VidRev common
stock and there can be no assurance that one will
develop for the common stock of the surviving company11
FORWARD LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . 12
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION. . . . . . 12
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET SEPTEMBER 30, 2004 13
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2004 . . . . . . . . . . . . . 14
SUMMARY PER SHARE FINANCIAL DATA . . . . . . . . . . . . . . . 15
PROPOSAL ONE -- THE MERGER . . . . . . . . . . . . . . . . . . 16
The Background of the Merger. . . . . . . . . . . . . . . 16
Kentex's Reasons for the Merger . . . . . . . . . . . . . 16
VidRev's Reasons for the Merger . . . . . . . . . . . . . 16
Accounting Treatment. . . . . . . . . . . . . . . . . . . 16
Federal Income Tax Consequences . . . . . . . . . . . . . 16
Rights of Dissenting Stockholders . . . . . . . . . . . . 17
Interest of Certain Persons in the Merger . . . . . . . . 20
Interests of Named Experts and Counsel. . . . . . . . . . 21
Primary Terms of the Merger Agreement . . . . . . . . . . 22
Other Provisions of the Merger Agreement. . . . . . . . . 22
COMPARISON OF STOCKHOLDER RIGHTS . . . . . . . . . . . . . . . 27
General . . . . . . . . . . . . . . . . . . . . . . . . . 27
Capitalization. . . . . . . . . . . . . . . . . . . . . . 28
Voting Rights . . . . . . . . . . . . . . . . . . . . . . 28
Number of Directors . . . . . . . . . . . . . . . . . . . 28
Removal of Directors. . . . . . . . . . . . . . . . . . . 28
Filling Vacancies on the Board of Directors . . . . . . . 28
Charter Amendments. . . . . . . . . . . . . . . . . . . . 28
Amendments to Amended and Restated Bylaws . . . . . . . . 29
Action by Written Consent . . . . . . . . . . . . . . . . 29
Notice of Stockholder Meetings. . . . . . . . . . . . . . 29
Right to Call Special Meeting of Stockholders . . . . . . 30
Limitation of Personal Liability of Directors . . . . . . 30
Dividends . . . . . . . . . . . . . . . . . . . . . . . . 31
Conversion. . . . . . . . . . . . . . . . . . . . . . . . 32
Liquidation . . . . . . . . . . . . . . . . . . . . . . . 32
FEDERAL SECURITIES LAWS CONSEQUENCES; RESALE RESTRICTIONS;
PIGGYBACK REGISTRATION RIGHTS . . . . . . . . . . . . . . 33
THE COMPANIES. . . . . . . . . . . . . . . . . . . . . . . . . 34
KENTEX PETROLEUM, INC.. . . . . . . . . . . . . . . . . . 34
Qualitative and Quantitative Disclosures about Market Risk36
DESCRIPTION OF KENTEX CAPITAL STOCK . . . . . . . . . . . . . .36
Common Stock. . . . . . . . . . . . . . . . . . . . . . . 36
Dividends . . . . . . . . . . . . . . . . . . . . . . . . 37
KENTEX'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . 37
VIDREV TECHNOLOGIES, INC. . . . . . . . . . . . . . . . . 37
Growth in the use of videoconferencing. . . . . . . . . . 38
VidRev's Technology . . . . . . . . . . . . . . . . . . . 38
Products and Marketing. . . . . . . . . . . . . . . . . . 39
Qualitative and Quantitative Disclosures about Market Risk43
DESCRIPTION OF VIDREV CAPITAL STOCK. . . . . . . . . . . . . . 43
Common Stock. . . . . . . . . . . . . . . . . . . . . . . 43
Dividends . . . . . . . . . . . . . . . . . . . . . . . . 43
VIDREV'S MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . 44
TTA TECHNOLOGIES LTD. . . . . . . . . . . . . . . . . . . 45
PROPOSAL TWO -- APPROVAL OF NAME CHANGE. . . . . . . . . . . . 46
PROPOSAL THREE -- ELECTION OF DIRECTORS. . . . . . . . . . . . 47
Information Concerning the Nominees . . . . . . . . . . . 47
Meetings of the Board; Committees of the Board. . . . . . 48
Involvement in Certain Legal Proceedings. . . . . . . . . 49
Transactions with Management and Others . . . . . . . . . 49
Security Ownership of Kentex Shares By Certain Beneficial
Stockholders. . . . . . . . . . . . . . . . . . . . . . . 49
Pro Forma Beneficial Ownership. . . . . . . . . . . . . . 50
Management. . . . . . . . . . . . . . . . . . . . . . . . 51
Executive Compensation of Directors and Officers. . . . . 51
Employment and Consulting Agreements. . . . . . . . . . . 52
Long-Term Incentive Plans . . . . . . . . . . . . . . . . 54
Certain Relationships and Related Transactions. . . . . . 54
Compliance with Section 16(a) of the Exchange Act . . . . 54
PROPOSAL FOUR -- APPROVAL OF STOCK OPTION PLAN . . . . . . . . 55
Background. . . . . . . . . . . . . . . . . . . . . . . . 55
Shares Available. . . . . . . . . . . . . . . . . . . . . 55
Administration. . . . . . . . . . . . . . . . . . . . . . 55
Eligibility for Participation . . . . . . . . . . . . . . 56
Types of Awards . . . . . . . . . . . . . . . . . . . . . 56
Stock Option Grants . . . . . . . . . . . . . . . . . . . 56
Adjustments . . . . . . . . . . . . . . . . . . . . . . . 57
Amendment of the Stock Option Plan. . . . . . . . . . . . 57
Termination of the Stock Option Plan. . . . . . . . . . . 57
Federal Tax Treatment . . . . . . . . . . . . . . . . . . 57
WHERE TO FIND MORE INFORMATION . . . . . . . . . . . . . . . . 58
Experts . . . . . . . . . . . . . . . . . . . . . . . . . 58
Validity of Our Common Stock. . . . . . . . . . . . . . . 58
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 59
ANNEX A. . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
ANNEX B. . . . . . . . . . . . . . . . . . . . . . . . . . . .B-1
ANNEX C. . . . . . . . . . . . . . . . . . . . . . . . . . . .C-1
ANNEX D. . . . . . . . . . . . . . . . . . . . . . . . . . . .D-1
ANNEX E. . . . . . . . . . . . . . . . . . . . . . . . . . . .E-1
ANNEX F. . . . . . . . . . . . . . . . . . . . . . . . . . . .F-1
Item 20. Indemnification of Directors and Officers.. . . 60
Exhibit No. Document . . . . . . . . . . . . . . . . . . 61
Item 22. Undertakings. . . . . . . . . . . . . . . . . . 62
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . 64
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: Why are Kentex and VidRev performing the Merger?
A: The boards of directors of Kentex and VidRev expect a public trading
market to develop for the stock of the surviving company that would enable the
surviving company to provide liquidity to both Kentex and VidRev stockholders,
should they want to sell their stock, and to provide VidRev with the
advantages of a public company in raising funds and making acquisitions.
Kentex's current stockholders should also benefit as a result of being
acquired by a business with a potential for growth. However, it cannot be
assured that the surviving company will be able to develop such a trading
market or that the operations of the surviving company will be viable
following the Merger.
Q: After the Merger, what will the surviving entity be called and what will
its business be?
A: Kentex will continue as the surviving company under the name "VidRev
Technologies, Inc." and its business will be that of VidRev, which is the
exclusive United States licensee and distributor of video compression
technology from TTA Technologies Ltd. ("TTA"), VidRev's controlling
stockholder.
Q: What will Kentex stockholders receive in the Merger?
A: In exchange for each share of Kentex common stock that you hold, you will
receive one share of the surviving company's common stock. Such shares will
be identical in all respects to Kentex common stock other than they will be in
Kentex's new name, which is "VidRev Technologies, Inc."
Q: What will VidRev stockholders receive in the Merger?
A: In exchange for each share of VidRev common stock that you hold, you will
receive one share of the surviving company's common stock. Such shares will
be identical in all respects to Kentex common stock other than they will be in
Kentex's new name, which is "VidRev Technologies, Inc." The surviving company
will issue 26,596,643 shares of common stock to the stockholders of VidRev on
a one for one basis. The shares of common stock to be issued in the Merger
will be registered with the Securities and Exchange Commission (the "SEC")
pursuant to this Registration Statement. In addition, under the Merger
Agreement, the parties have agreed to file a subsequent registration statement
to register the sale by TTA of up to 1,000,000 shares of the surviving
company's common stock it will receive in the Merger and to register for sale
and issuance by the surviving company of up to 1,000,000 shares of its common
stock.
Q: Was a fairness opinion sought to determine if the Merger is fair to you?
A: No. We did not seek a fairness opinion or engage a financial advisor
because the relative value of the transaction would be less than the cost of
obtaining a fairness opinion.
Q: What stockholder approvals are required?
A: The affirmative vote of the holders of a majority of each of Kentex and
VidRev's outstanding shares are required to adopt the Merger Agreement and to
carry out the transactions contemplated by the Merger Agreement. Each share
of Kentex common stock is entitled to one vote. Each share of VidRev common
1
stock is entitled to one vote. As of the record date, the holders of
2,180,640 shares or approximately 92.5% of Kentex's outstanding common stock
have consented to the Merger and the holders of 29,374,500 shares or
approximately 96.8% of VidRev's outstanding common stock have consented to the
Merger. Accordingly, we will not submit these actions to the other
stockholders of Kentex and VidRev for a vote, and a Special Meeting of the
stockholders to approve the actions described in this joint Information
Statement/Prospectus is unnecessary.
Q: Do Kentex stockholders have appraisal rights?
A: Yes. If you are a Kentex stockholder and you were not asked to consent to
the Merger, you are entitled to appraisal rights under the Nevada Revised
Statutes (the "NRS") requiring the surviving company to purchase the shares of
dissenting stockholders for their appraised value as determined under Sections
92.A300 et seq. of the NRS. See "The Merger - Rights of Dissenting
Stockholders - Kentex" on page 17.
Q: Do VidRev stockholders have appraisal rights?
A: Yes. If you are a VidRev stockholder and you were not asked to consent to
the Merger, you are entitled to appraisal rights under the Florida Business
Corporation Act ("Florida Law"). Florida Law provides you with the right to
demand and receive cash for the fair value of your shares of VidRev common
stock instead of receiving shares of the surviving company's common stock. To
perfect these appraisal rights with respect to the Merger, you must follow the
required procedures precisely. A copy of Sections 607.1301 to 607.1333 of the
Florida Law is attached to this joint Information Statement/Prospectus as
Annex F. See "The Merger - Rights of Dissenting Stockholders - VidRev"
on page 19.
Q: Should I send in my stock certificates now?
A: No. After the Merger is completed, we will send you written instructions
for exchanging your stock certificates for new certificates in the surviving
company.
Q: Who can help answer my questions?
A: If you have any questions about the Merger or any other action
described in this joint Information Statement/Prospectus, you should contact:
If you are a Kentex stockholder:
Kentex Petroleum, Inc.
4685 Highland Drive, Suite 202
Salt Lake City, Utah 84117
(801) 278-9424
If you are a VidRev stockholder:
VidRev Technologies, Inc.
1880 Century Park East
Suite 700
Los Angeles, California 90067
(310) 407-5352
2
SUMMARY OF JOINT INFORMATION STATEMENT/PROSPECTUS
The following summary highlights selected information from the entire
joint Information Statement/Prospectus and may not contain all of the
information that is important to you. You should carefully read this entire
joint Information Statement/Prospectus, including the "Risk Factors," the
financial statements and the related notes and all the attachments for a
complete understanding of the Merger. In particular, you should read the
Merger Agreement, which is attached hereto as Annex A. When we refer to "pro
forma" financial results, we mean our financial results as if the Merger
between Kentex and VidRev and the issuance and purchase of the shares
described below had occurred at the beginning of the relevant time period.
Each of VidRev and Kentex's Majority Stockholders has Consented to Approve the
Merger
- ------
The majority of stockholders of each of Kentex and VidRev has consented
to the Merger and the other proposals described in this joint Information
Statement/Prospectus. Accordingly, the Merger and the other proposals have
been approved. You are strongly encouraged to familiarize yourself with the
changes that will be occurring in the future of Kentex and VidRev as a result
of the Merger.
The Companies
- -------------
Kentex Petroleum, Inc. is a Nevada corporation that currently has no
operations or employees. Kentex currently has a class of securities
registered under the Securities Exchange Act of 1934 and exists for the
purpose of either merging with or acquiring an operating company. Kentex's
principal executive offices are located at 4685 Highland Drive, Suite 202,
Salt Lake City, Utah 84117, and its phone number is (801) 287-9424.
VidRev Technologies, Inc., was incorporated under the laws of the state
of Florida on February 3, 2004. VidRev is the exclusive United States
licensee and distributor of certain video compression technology licensed by
TTA, VidRev's controlling stockholder. VidRev's principal executive offices
are located at 1880 Century Park East, Suite 700, Los Angeles, California
90067, and its phone number is (310) 407-5352. VidRev's website address is
www.vdvr.com. The information found on VidRev's website is not a part of this
joint Information Statement/Prospectus.
TTA Technologies Ltd. was organized under the laws of the Bahamas on
December 3, 2003. TTA has invested in and licenses software used for video
conferencing, video telephony, security and compression and transmission of
electronic files in connection with the World Wide Web. TTA's principal
executive offices are located at First Commercial Center, East Mall Drive and
Pioneers Way, P.O. Box F 44656, Freeport, GBI, The Bahamas and its phone
number is (242) 373-3405.
The Merger
- ----------
On the effective date of the Merger, Kentex will acquire VidRev pursuant
to the terms and subject to the conditions of the Merger Agreement. VidRev
will merge with and into Kentex, and Kentex will survive the Merger, with TTA
as its controlling stockholder. Each outstanding share of VidRev common stock
will be converted into shares of the surviving company's common stock on a one
for one basis on the effective date. Each current share of Kentex common
stock will continue to represent shares of common stock of the surviving
3
company on a one for one basis. Such shares will be identical in all respects
to Kentex common stock other than they will be in Kentex's new name, which
will be "VidRev Technologies, Inc." The parties have also agreed to file a
subsequent registration statement to register the resale by TTA of up to
1,000,000 shares of the surviving company's common stock to be received in the
Merger and to register for sale and issuance by the surviving company of up to
1,000,000 shares of its common stock.
Market Price
- ------------
There are no public markets for either Kentex common stock or VidRev
common stock. Kentex has not declared any cash dividends with respect to its
common stock. Upon completion of the Merger, the dividend policy of VidRev
will become the dividend policy of Kentex.
Kentex's Reasons for the Merger
- -------------------------------
In evaluating the proposed Merger, Kentex's management considered
criteria such as the technology that VidRev possesses, VidRev's management and
business plan and VidRev's future ability to compete in its market. Based on
these criteria, Kentex determined that the Merger was in the best interest of
its stockholders.
VidRev's Reasons for the Merger
- -------------------------------
The management of VidRev believes that being a public company will allow
it greater flexibility to raise additional capital when required for the
execution of its business strategy. In addition, VidRev believes that if the
surviving company's application to be listed on the Over the Counter Bulletin
Board (the "OTCBB") is approved by the National Association of Securities
Dealers ("NASD"), it will provide access to added liquidity for its current
stockholders.
Votes Required
- --------------
Kentex. The affirmative vote of a majority of the stockholders is
required to approve the Merger Agreement. There are 2,357,997 shares of
Kentex's common stock outstanding, of which directors, officers and their
affiliates hold 1,478,640 shares, or 62.7% of Kentex's currently outstanding
shares. Four stockholders, who collectively own approximately 92.5% of
Kentex's common stock, have consented in writing to the Merger and the other
proposals described in this joint Information Statement/Prospectus.
Therefore, the Merger and the other proposals have been approved.
VidRev. A majority of votes is required to approve the Merger
Agreement. There are 30,356,000 shares of VidRev's common stock outstanding,
of which directors, officers and their affiliates hold 29,899,500 shares, or
approximately 98.5% of VidRev's currently outstanding shares. TTA, which owns
approximately 96.8% of VidRev's common stock, has consented in writing to the
Merger. Therefore, the Merger has been approved.
Income Tax Consequences of the Merger
- -------------------------------------
In the opinion of Kentex and VidRev's management, neither the
stockholders of Kentex nor VidRev will recognize gain or loss for federal
income tax purposes as a result of the Merger. No opinion of counsel has been
obtained in this regard. You should consult with your own tax advisors
concerning the tax consequences of the Merger, including any state, local or
foreign tax consequences.
4
Appraisal Rights
- ----------------
Kentex. If you are a Kentex stockholder and you were not asked to
consent to the Merger, you are entitled to appraisal rights under the Nevada
Revised Statutes (the "NRS") requiring the surviving company to purchase the
shares of dissenting stockholders for their appraised value as determined
under Sections 92.A300 et seq. of the NRS. A copy of Sections 92.A300 et seq.
of the NRS is attached to this joint Information Statement/Prospectus as
Annex E. See "The Merger - Rights of Dissenting Stockholders - Kentex" on
page 17.
VidRev. If you are a VidRev stockholder and you were not asked to
consent to the Merger, you are entitled to appraisal rights under the Florida
Business Corporation Act ("Florida Law"). Florida Law provides you with the
right to demand and receive cash for the fair value of your shares of VidRev
common stock instead of receiving shares of the surviving company's common
stock. To perfect these appraisal rights with respect to the Merger, you must
follow the required procedures precisely. A copy of Sections 607.1301 to
607.1333 of the Florida Law is attached to this joint Information
Statement/Prospectus as Annex F. See "The Merger - Rights of Dissenting
Stockholders - VidRev" on page 19.
Certain Differences in the Stockholders
- ---------------------------------------
As a result of the Merger, Kentex and VidRev stockholders will become
stockholders of the surviving company, and your rights will be governed by the
Amended and Restated Articles of Incorporation and Amended and Restated Bylaws
of the surviving company, which are attached hereto as Annex B and C,
respectively. Summaries of material differences between the rights of Kentex
stockholders and VidRev stockholders are discussed beginning on Page 27.
Federal Securities Laws Consequences; Resale Restrictions; Piggyback
Registration Rights
- -------------------
All shares of the surviving company's common stock that will be
distributed to VidRev stockholders in the Merger will be freely transferable,
except for restrictions applicable to "affiliates" of Kentex and VidRev.
Persons who are deemed to be affiliates of VidRev may resell shares of the
surviving company's common stock received by them only in transactions
permitted by the resale provisions of Rule 145 or as otherwise permitted under
the Securities Act of 1933. Persons who may be deemed to be affiliates of
VidRev generally include executive officers, directors and significant
stockholders of VidRev. Persons who are deemed to be affiliates of Kentex may
sell their shares in the surviving company only in transactions permitted by
the resale provisions of Rule 144 or as otherwise permitted under the
Securities Act of 1933. Persons who may be deemed to be affiliates of Kentex
generally include executive officers, directors and significant stockholders
of Kentex.
As a condition to closing the Merger, piggyback registration rights will
be granted to several Kentex stockholders. The amount of shares subject to
such piggyback registration rights may be reduced or eliminated from any
particular registration if their inclusion would adversely affect the
marketability of the surviving company's securities to be sold.
5
Government Regulation
- ---------------------
The Merger between Kentex and VidRev is not subject to federal or state
regulatory review.
Related Transactions to the Merger
- ----------------------------------
Name Change
- -----------
Kentex will change its name to "VidRev Technologies, Inc.", effective
and conditioned upon the closing of the Merger.
Change of the Board of Directors
- --------------------------------
The current directors of Kentex will resign in seriatim and the current
Board of Directors of VidRev will be appointed to the Board of Directors of
the surviving company, effective and conditioned upon the closing of the
Merger.
Adoption of 2005 Stock Option Plan
- ----------------------------------
Kentex will adopt the 2005 Stock Option Plan, effective and conditioned
upon the closing of the Merger, which is set forth as Annex D attached hereto.
RISK FACTORS
You should carefully consider the following risk factors relating to the
Merger and all of the information set forth in this joint Information
Statement/Prospectus. While considering the Merger and the transactions
contemplated by the Merger Agreement, you should also consider the following
risks related to the Merger and the surviving company's business and financial
condition. The risks and uncertainties described below are not the only ones
applicable to the surviving company. Additional risks currently not known or
deemed immaterial may also impair the surviving company's business. If any of
the following risks actually occur, the surviving company's business,
financial condition or results of operations could be materially and adversely
affected. This joint Information Statement/Prospectus also contains forward-
looking statements that involve risks and uncertainties.
VidRev's auditors have issued a "going concern" audit opinion
- -------------------------------------------------------------
VidRev's financial statements as of September 30, 2004 have been
prepared on the assumption that it will continue as a going concern. VidRev's
independent auditors have issued a report dated November 8, 2004 stating
that its recurring net losses and net operating cash deficiencies, and
insufficient funds on hand to meet VidRev's current debt obligations raise
substantial doubt as to VidRev's ability to continue as a going concern. You
should review carefully the report of Davis, Monk & Company. There can be no
assurance that the surviving company will be able to continue as a going
concern. If it is unable to do so, the surviving company's common stock may
have little or no value.
6
The surviving company will be relying on VidRev's business plan to succeed
- --------------------------------------------------------------------------
Kentex currently has no active business operations. The success of the
surviving company will depend on VidRev's business plan. We cannot assure you
that the surviving company will be able to implement this business plan
successfully. In addition, even if this business plan ultimately succeeds,
considerable time may be required to do so.
The surviving company will likely need to raise additional capital in the
future and if it cannot meet its future capital requirements, it may not be
able to conduct its business as planned
- ---------------------------------------
The surviving company's future capital requirements will depend on many
factors, including but not limited to: (1) the success of its anticipated
offering of 1,000,000 shares following the closing of the Merger, (2) the
willingness of TTA to fund the operations of the surviving company, if
necessary, (3) the market acceptance of its products and sublicenses, (4) the
levels of promotion and marketing required to attain a competitive position in
the marketplace, (5) the extent to which it and TTA invests in new technology
and improvements on VidRev's existing technology, and (6) the response of
competitors to its products and sublicenses. To the extent that the surviving
company's resources and revenue from sales of its products and sublicenses and
the proceeds of its intended offering of 1,000,000 shares of common stock are
insufficient to fund its activities over the long-term, the surviving company
may need to raise additional funds through additional equity or debt financing
or from other sources. The sale of convertible debt or additional equity may
result in dilution of your ownership in the surviving company, and such
securities may have rights, preferences or privileges senior to the common
stock you will receive in the surviving company pursuant to the Merger
Agreement and transactions contemplated thereunder. To the extent that the
surviving company relies upon debt financing, it will incur the obligation to
repay the funds borrowed with interest and may become subject to covenants and
restrictions that restrict operating flexibility. No assurances can be given
that equity or debt financing will be available or that, if available, it can
be obtained on terms favorable to the surviving company. Failure to obtain
necessary financing could have a material adverse effect on the surviving
company's business, financial condition and results of operations.
Kentex and VidRev have agreed that the surviving company will offer 1,000,000
shares of its common stock for sale immediately following the closing of the
Merger, which will dilute your percentage of ownership in the surviving
corporation
- -----------
Pursuant to the Merger Agreement, Kentex and VidRev have agreed to file
a Registration Statement on Form SB-2 to register for sale and issuance by the
surviving company of up to 1,000,000 shares of its common stock to raise
additional cash for working capital. You will experience dilution in your
percentage of ownership in the surviving corporation upon the sale and
issuance of these shares.
7
The surviving company will license its technology from its controlling
stockholder, TTA, and loss of this license would prevent or delay sales and/or
sublicenses of its products; the surviving company will be dependent on TTA
for its technology
- ------------------
The technology that VidRev incorporates in its products is licensed from
TTA, its controlling stockholder. The surviving company's loss of this
license would prevent sales of its products and sublicenses and increase its
costs until it can develop or identify and license substitute technologies and
successfully integrate those technologies into its products. Even if
substitute technologies were available, the surviving company may be unable to
license those technologies on commercially reasonable terms, if at all. It is
likely that the surviving company will license additional technologies from
TTA in the future, which will create similar risks.
Moreover, the surviving company will act primarily as the United States
distributor and licensee of technology offered by TTA and generally will not
create, develop, license or sell its own technology. The surviving company
will be dependent on TTA for its technology. There can be no assurance that
TTA will obtain and license successful products or marketable technologies to
the surviving company and any inability to do so would have a material adverse
effect on the surviving company's business, results of operations and
financial condition.
VidRev's license from TTA will prohibit the surviving company from selling
products and distributing sublicenses outside the continental United States
and in certain markets within the United States
- -----------------------------------------------
The license that TTA has granted VidRev will prohibit the surviving
company from selling products or distributing sublicenses outside the
continental United States or within the United States if the product or use of
the sublicense is for pornographic or adult entertainment purposes. The
restrictions on this license will limit the revenue sources of the surviving
company's technology and its potential for growth.
VidRev's business plan, which will be the business plan of the surviving
company after the Merger, is dependent on the sales and marketing efforts of
third parties
- -------------
The surviving company's ability to reach its sales goals is dependent
upon the sales and marketing efforts of VidRev's existing and future third-
party marketers and distributors. The surviving company will be dependent
upon these parties to sell, market and distribute its products effectively.
If the surviving company cannot provide proper incentive to its sales,
marketing and distribution partners, or if these parties fail to sell and
market its products effectively, the surviving company's business, results of
operations and financial condition will be materially adversely effected.
Existing or new competitors may develop competing or superior
videoconferencing technology
- ----------------------------
Just as TTA has invested in the development of new videoconferencing
technology, other entities, including existing competitors and unknown start-
up ventures may develop superior technologies, which may render the surviving
company's licensed technology obsolete or economically uncompetitive. There
can be no assurance that competing videoconferencing technologies will not
emerge and prevent the surviving company from achieving or sustaining
profitable operations.
8
The market for videoconferencing technology and applications is
extremely competitive with both large, international companies, including AT&T
Corp., Sony Corporation, Polycom, Inc. and Cisco Systems, Inc., and smaller
firms developing new technologies. These large companies have the capital,
technology, personnel and marketing strength to support their existing
products and develop new products to meet the market's needs for inexpensive,
easy to use and high quality videoconferencing tools and services.
Additionally, many of the surviving company's smaller competitors have
significant financial, technical and marketing resources to develop and market
new products and services.
VidRev's auditors have expressed concern regarding VidRev's internal control
procedures.
- -----------
VidRev currently has only one full-time employee who carries out all
corporate functions, including cash receipts and disbursements and all
accounting functions. VidRev's independent auditors have issued a letter to
VidRev's management stating that such lack of segregation of duties creates a
material weakness in VidRev's internal control procedures in that one person
has access to the assets of VidRev and to the accounting records. If not
addressed after the Merger, such weakness in internal control procedures could
adversely affect the surviving company's ability to initiate, record, process
and report financial data consistent with the assertions of management in its
financial statements.
Dependence on management
- ------------------------
The surviving company's ability to achieve profitable operations depends
upon its ability to retain, hire and train essential personnel. Since there
is competition for talented personnel, there is no assurance that the
surviving company will be successful in this regard. VidRev's current
management will comprise most of the surviving company's skill base in the
near future. The loss of services of one or more of the executive officers,
whether because of death, disability or otherwise, could have a material
adverse effect upon the business of the surviving company.
Managing growth
- ---------------
The surviving company's future success will be highly dependent upon its
ability to successfully manage the expansion of its operations. The surviving
company's ability to manage and support its growth effectively will be
substantially dependent on its ability to implement adequate improvements to
its financial and management controls, reporting systems and other procedures
and to hire sufficient technical, marketing, sales, financial, accounting,
administrative and management personnel. There can be no assurance that the
surviving company will be able to identify, attract and retain experienced
personnel. The surviving company's future operating results will depend on
the ability of its management and other key employees to implement and improve
its systems for operations, financial control and information management, and
to recruit, train and manage its employee base. There can be no assurance
that the surviving company will be able to achieve or manage any such growth
successfully or implement and maintain adequate financial and management
controls and procedures, and any inability to do so would have a material
adverse effect on its business, results of operations and financial condition.
9
TTA may not be successful in protecting its intellectual property and
proprietary rights, which would harm the surviving company.
- -----------------------------------------------------------
The surviving company's success will depend in part on TTA's ability to
secure and/or license patents and TTA and the surviving company's ability to
preserve other intellectual property rights. TTA and the surviving company
will attempt to protect proprietary information with contractual arrangements
and under patent and trade secret laws. In addition, the surviving company
and TTA will require their respective employees and consultants to enter into
agreements containing provisions with respect to confidentiality and the
assignment of their intellectual property. If these measures fail to
adequately protect TTA and the surviving company's intellectual property
rights, the surviving company's business will not be successful.
Others may bring infringement actions against TTA or the surviving company
which could be time-consuming and expensive to defend.
- ------------------------------------------------------
In recent years, there has been significant litigation in the United
States involving patents and other intellectual property rights. TTA and the
surviving company may, from time to time, receive notifications of claims that
either TTA or the surviving company or companies through which they have
secured patents may be infringing on patents or intellectual property rights
owned by third parties. While there is currently no intellectual property
litigation pending against TTA or VidRev, TTA or the surviving company may
become a party to this type of litigation in the future. Such lawsuits could
subject the surviving company to significant liability for damages and
invalidate TTA and the surviving company's proprietary rights. Any potential
intellectual property litigation also could force the surviving company to do
one or more of the following:
* stop selling or licensing its products or using technology that
contains the allegedly infringing intellectual property;
* attempt to obtain a license to the relevant intellectual property,
which license may not be available on reasonable terms or at all;
and
* attempt to redesign those products that contain the allegedly
infringing intellectual property.
If the surviving company is forced to take any of the foregoing actions,
the surviving company may be unable to sell and/or sublicense its products and
technology. In addition, TTA and the surviving company may not be able to
develop, license or acquire non-infringing technology under reasonable terms,
if at all. These developments would adversely affect the surviving company's
business.
If the surviving company's software disrupts the functioning of other
applications, the surviving company may experience customer dissatisfaction,
loss of customers, or both, and be exposed to lawsuits
- ------------------------------------------------------
Complex software products, such as VidRev's, often contain defects,
particularly when first introduced or updated, which can adversely affect
performance or result in inaccurate data. Any errors in the surviving
company's software products or sublicensed technology could result in adverse
publicity, loss of reputation or credibility, loss of or delay in market
acceptance and claims by customers against the surviving company. Any of these
results could seriously harm its business, results of operations and financial
condition. The surviving company may not discover software defects that
adversely affect its products until after they are deployed. The surviving
company's sublicense agreements will typically contain provisions that attempt
to limit its liability, but these provisions may not be enforceable in all
circumstances. In some circumstances, the surviving company may be liable for
damages caused by those errors, which could seriously harm its business. The
surviving company intends to carry only limited amounts of product liability
insurance, which may be insufficient to protect it from all losses it suffers.
10
TTA will own a substantial percentage of the common stock of the surviving
company after the Merger and will be able to control all matters requiring
stockholder approval
- --------------------
Following the Merger, TTA will own approximately 93.6% of the then
outstanding stock of the surviving company. TTA will be able to control
virtually all matters requiring stockholder approval after the Merger,
including the election of directors and the determination of significant
corporate actions. This concentration of ownership could depress the
surviving company's stock price or prevent a change in control that might
otherwise be beneficial to the surviving company's stockholders.
Risks of financial forecasts
- ----------------------------
Financial forecasts for the surviving company's business are prepared
based on the assumptions stated therein. Actual operating results, especially
in the early expansion stage of companies with limited operating histories,
are impossible to predict. No representation of any kind exists regarding the
future accuracy or completeness of these forecasts. It is almost certain that
actual results will be different from those forecast and the differences could
be material.
There is currently no market for Kentex or VidRev common stock and there can
be no assurance that one will develop for the common stock of the surviving
company
- -------
There has been no trading market for Kentex or VidRev common stock.
Although the surviving company will apply to list its common stock on the
OTCBB, there can be no assurance that its application will be granted or that
an active market will develop for its common stock. Therefore, it may be
difficult to sell the shares you receive in the surviving company if you
should desire or need to sell. In addition, even if you are able to sell such
common stock, its market price may fluctuate significantly due to a number of
factors, some of which will be beyond the surviving company's control,
including but not limited to:
1. the potential absence of securities analysts covering the
surviving company and distributing research and recommendations
about it;
2. changes in earnings estimates by securities analysts or the
surviving company's ability to meet those estimates;
3. the operating results and stock price performance of other
comparable companies;
4. overall stock market fluctuations; and
5. economic conditions generally and in the technology sector in
particular.
11
Any of these factors could have a significant and adverse impact on the
market price of the surviving company's common stock. In addition, the stock
market in general has experienced extreme volatility and rapid decline that
has often been unrelated or disproportionate to the operating performance of
particular companies. These broad market fluctuations may adversely affect
the trading price of the surviving company's common stock, regardless of the
surviving company's actual operating performance.
FORWARD LOOKING STATEMENTS
This joint Information Statement/Prospectus contains forward-looking
statements. Forward-looking statements include statements concerning the
surviving company's plans, objectives, goals, strategies, future events,
future revenues or performance, capital expenditures, financing needs, and
other information that is not historical information. Many of these
statements appear, in particular, under the headings "Summary of Joint
Information Statement/Prospectus", "Risk Factors" and "VidRev's Management
Discussion and Analysis of Financial Condition and Results of Operations."
When used in this joint Information Statement/Prospectus, the words
"believes," "anticipates," "plans," "expects," "intends," "estimates,"
"projects" and variations of such words or similar expressions are intended to
identify forward-looking statements. All forward-looking statements are based
on current expectations and assumptions. Important factors that could cause
the surviving company's actual results to differ materially from the forward-
looking statements are set forth in this joint Information
Statement/Prospectus, including under the heading "Risk Factors," and include,
among others:
* the failure of the surviving company's business plan;
* the inability of the surviving company to raise additional
capital;
* the loss of the surviving company's technology license from TTA;
* the development of competing or superior videoconferencing
technology;
* the impact of intellectual property litigation and infringement
claims; and
* the failure of the surviving company to manage successfully the
expansion of its operations.
All forward-looking statements included in this joint Information
Statement/Prospectus are based on information available to us on the date of
this joint Information Statement/Prospectus. We undertake no obligation to
publicly update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise. All subsequent written and
oral forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by the cautionary statements
contained throughout this prospectus.
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following Unaudited Pro forma Financial Statements have been prepared
in order to present the consolidated financial position and results of
operations for us and VidRev as if the Merger had occurred as of September 30,
2004.
Pursuant to the Merger Agreement, Kentex will acquire VidRev by the
exchange of one share of VidRev common stock for one share of Kentex common
stock. Kentex is an inactive publicly registered shell corporation with no
significant assets or operations. Kentex will be the surviving company in the
Merger. The transaction is accounted for by using the purchase method of
accounting.
The unaudited pro forma condensed financial data has been prepared by
Kentex management and the management of VidRev based on the financial
statements included elsewhere herein. This pro forma data may not be
indicative of the results that actually would have occurred if the Merger had
been in effect on the dates indicated or which may be obtained in the future.
The pro forma financial statements should be read in conjunction with the
accompanying notes and the historical financial information for Kentex and for
VidRev (including the notes thereto) included in this joint Information
Statement/Prospectus. See "Financial Statements."
12
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
SEPTEMBER 30, 2004
Pro Forma
-------------------
VidRev Kentex Pro Forma Combined
Technologies, Inc. Petroleum, Inc. Adjustments Balance
ASSETS
Current Assets $17,427 $ $ $17,427
Fixed Assets (net) 22,343 22,343
Other Assets 13,068 13,068
------- -------
Total Assets $52,837 $ 0 $ $52,837
======= ========= ======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities $264,249 $ 26,336 $ $290,585
Non-Current Liabilities 0 0 0
Total Liabilities $264,249 $ 26,336 $290,585
-------- --------- --------
Stockholders' Equity:
Common Stock $ 3,010 $ 2,358 $21,228 $ 27,320
Additional Paid
in Capital 105,658 2,073,802 (21,228) 2,157,508
Retained Deficit (2,041,500) (2,041,500)
Deficit Accumulated
During the
Development Stage (320,080) (60,996) (381,076)
--------- ---------- ----------
Total liabilities and
Stockholders' Equity $ 52,837 $ 0 $ 0 $ 52,837
========= ========== ====== ==========
See accompanying notes to unaudited pro forma condensed combined financial
statements.
13
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
Pro Forma
-------------------
VidRev Kentex Pro Forma Combined
Technologies, Inc. Petroleum, Inc. Adjustments Balance
Revenues $ 25,000 $ 0 $ 0 $25,000
Cost of Sales 11,205 11,205
--------- -------
Gross Profit 13,795 13,795
Expenses:
Selling General
Administrative 333,875 12,876 (A)(120,477) 226,274
--------- ------- --------
Net Income (Loss) (320,080) (12,876) (212,479)
Income (Loss) per share $ (.02) $ (.01) $ 0 $ (.01)
Weighted average shares
outstanding 23,363,223 2,357,997 25,721,220
See accompanying notes to unaudited pro forma condensed combined financial
statements.
Notes To Pro Forma Condensed Financial Statements
(A) Pro Forma Adjustments.
Non-recurring legal fees related to the Merger and preparation of this
registration statement have been eliminated in the pro forma data.
(B) Expected Non-Recurring Costs in next Twelve Months.
Additional non-recurring legal fees of approximately $77,500 are anticipated
in the next twelve months.
(C) Income Tax Effect. Because of the uncertainly of recovering the tax
benefit of net operating losses, no tax effect is included.
14
SUMMARY PER SHARE FINANCIAL DATA
The following table sets forth certain historical per share data for
VidRev and Kentex at and for the periods specified, and certain pro forma per
share data for the surviving company at and for the periods specified,
assuming the Merger of VidRev into Kentex. See "Unaudited Pro Forma Combined
Financial Information" and "Financial Information."
Nine Months Ended, September 30, 2004
VidRev (Historical)
Loss from continuing operations per share $(.02)
Book value per share $(.01)
Dividends per share ---
Year Ended December 31,
2003 2002 2001
Kentex (Historical)
Loss from continuing operations per share $(.01) $(.01) $(.01)
Book value per share $ -0- $ -0- $ -0-
Dividends per share --- --- ---
September 30, 2004
Surviving Company (Pro Forma)
Loss from continuing operations per share $(.01)
Book value per share $(.01)
Dividends per share ---
15
PROPOSAL ONE
THE MERGER
The Background of the Merger
- ----------------------------
In connection with the normal business practice of Kentex, Kentex
continuously reviews its strategic business opportunities and in August 2004,
Kentex was contacted by Mr. Stan Elbaum. Mr. Elbaum is a business
acquaintance of Mr. John Bloom, the controlling stockholder of TTA, which is
the controlling stockholder of VidRev. Mr. Elbaum had been beta testing
VidRev's products and through discussions with Mr. Bloom, was aware that
VidRev was seeking to merge with a public shell. Mr. Elbaum is not receiving
any consideration for the introduction of the parties. VidRev will issue
200,000 "unregistered" and "restricted" shares of its common stock to Kelly
Trimble in consideration of his introduction of the principals of VidRev and
Kentex. Mr. Trimble has no formal relationship with any of the parties to the
Merger. For approximately 20 years, he has had a social relationship with the
Chief Executive Officer of Jenson Services, which beneficially owns
approximately 40% of Kentex's outstanding shares. Mr. Trimble has been a
business acquaintance of Mr. Elbaum for approximately one year.
From August 2004 through the execution of the Merger Agreement, ongoing
discussions were held between the representatives of Kentex and VidRev. The
respective managements of each of Kentex and VidRev did not seek a fairness
opinion or engage a financial advisor because the relative value of the
transaction would be less than the cost of obtaining a fairness opinion.
Kentex's Reasons for the Merger
- -------------------------------
The Board of Directors of Kentex based its decision to enter into the
transaction on its perception that the surviving company would be successful
and would enhance stockholder value. However, there can be no assurance that
this will be the case.
VidRev's Reasons for the Merger
- -------------------------------
The management of VidRev believes that being a public company will allow
it greater flexibility to raise additional capital when required for the
execution of its business strategy. In addition, VidRev's management believes
that if the surviving company's application to be listed on the OTCBB is
approved by the NASD, it will obtain access to added liquidity for
stockholders of the surviving company.
Accounting Treatment
- --------------------
The Merger will be accounted for under the purchase method of accounting
and in accordance with FASB Statement of Financial Accounting Standards No.
141 - Business Combinations, Kentex will be the acquiring entity.
Federal Income Tax Consequences
- -------------------------------
Neither Kentex nor VidRev has received a tax opinion or has sought a
ruling from the Internal Revenue Service in connection with the tax
consequences of the Merger. In the opinion of Kentex and VidRev management,
neither Kentex stockholders nor VidRev stockholders will recognize gain or
loss for federal income tax purposes as a result of the Merger. You should
consult with your own tax advisors concerning the tax consequences of the
Merger, including any state, local or foreign tax consequences.
16
Rights of Dissenting Stockholders
- ---------------------------------
Kentex
- ------
Owners of Kentex common stock that do not consent to the Merger have the
right to dissent from the Merger and obtain cash payment for the "fair value"
of their shares, as determined in accordance with the Nevada Revised Statutes
("NRS"). Set forth below is a description of the steps that Kentex
stockholders must take if they wish to exercise dissenters' rights with
respect to the Merger under NRS Sections 92A.300 to 92A.500, the Nevada
dissenters' rights statutes. The text of these statutes is set forth in Annex
E included with this joint Information Statement/Prospectus. If you are a
Kentex stockholder and are considering exercising your dissenters' rights, you
should review NRS Sections 92A.300 to 92A.500 carefully, particularly the
steps required to perfect dissenters' rights, and consult with your legal
advisor.
To exercise your right to dissent, you must:
(a) No later than _________, deliver written notice to Kentex at 4685
Highland Drive, Suite 202, Salt Lake City, Utah 84117, Attn: Sarah
E. Jenson, stating that you intend to demand payment for your
shares if the Merger is completed; and
(b) not vote your shares in favor of the Merger.
If you satisfy those conditions, we will send you a written dissenter's
notice within 10 days after the Merger is effective. This dissenter's notice
will:
(a) specify where you should send your payment demand and where and
when you must deposit your stock certificates, if any;
(b) supply a form of payment demand that includes the date the Merger
was first publicly announced and the date by which you must have
acquired beneficial ownership of your shares in order to dissent;
(c) set a date by which we must receive the payment demand, which may
not be less than 30 days or more than 60 days after the date the
dissenters' notice is delivered; and
(d) provide you a copy of Nevada's dissenters' rights statute.
After you have received a dissenter's notice, if you still wish to
exercise your dissenters' rights, you must:
(a) demand payment either through the delivery of the payment demand
form to be provided or other comparable means;
(b) certify whether you have acquired beneficial ownership of the
shares before the date set forth in the dissenter's notice; and
(c) deposit your certificates, if any, in accordance with the terms of
the dissenter's notice.
17
FAILURE TO DEMAND PAYMENT IN THE PROPER FORM OR WITHIN THE TIME PERIOD
DESCRIBED ABOVE, OR FAILIURE TO DEPOSIT YOUR CERTIFICATES AS DESCRIBED IN THE
DISSENTER'S NOTICE WILL TERMINATE YOUR RIGHT TO RECEIVE PAYMENT FOR YOUR
SHARES PURSUANT TO NEVADA'S DISSENTERS' RIGHTS STATUTE. YOUR RIGHTS AS A
STOCKHOLDER WILL CONTINUE UNTIL THOSE RIGHTS ARE CANCELLED OR MODIFIED BY THE
COMPLETION OF THE MERGER.
Within 30 days after receiving your properly executed payment demand,
Kentex will pay you what we determine to be the fair value of your shares,
plus accrued interest (computed from the effective date of the Merger until
the date of payment). The payment will be accompanied by:
(a) Kentex's balance sheet as of the end of a fiscal year ended not
more than 16 months before the date of payment, an income
statement for that year, a statement of changes in stockholders'
equity for that year, and the latest available interim financial
statements, if any;
(b) an explanation of how we estimated the fair value of the shares
and how the interest was calculated;
(c) information regarding your right to challenge the estimated fair
value; and
(d) a copy of Nevada's dissenters' rights statute.
We may elect to withhold payment from you if you became the beneficial
owner of the shares on or after the date set forth in the dissenter's notice.
If we withhold payment, after the consummation of the Merger, we will estimate
the fair value of the shares, plus accrued interest, and offer to pay this
amount to you in full satisfaction of your demand. The offer will contain a
statement of our estimate of the fair value, an explanation of how the
interest was calculated, and a statement of dissenters' rights to demand
payment under NRS Section 92A.480.
If you believe that the amount we pay in exchange for your dissenting
shares is less than the fair value of your shares or that the interest is not
correctly determined, you can demand payment of the difference between your
estimate and ours. You must make such demand within 30 days after we have
made or offered payment; otherwise, your right to challenge our calculation of
fair value terminates.
If there is still disagreement about the fair market value within 60
days after we receive your demand, we will petition the District Court of
Clark County, Nevada to determine the fair value of the shares and the accrued
interest. If we do not commence such legal action within the 60-day period,
we will have to pay the amount demanded for all unsettled demands. All
dissenters whose demands remain unsettled will be made parties to the
proceeding, and are entitled to a judgment for either:
(a) the amount of the fair value of the shares, plus interest, in
excess of the amount we paid; or
(b) the fair value, plus accrued interest, of the after-acquired
shares for which we withheld payment.
We will pay the costs and expenses of the court proceeding, unless the
court finds the dissenters acted arbitrarily, vexatiously or in bad faith, in
which case the costs will be equitably distributed. Attorney fees will be
divided as the court considers equitable.
18
Failure to follow the steps required by NRS Sections 92A.400 through
92A.480 for perfecting dissenters' rights may result in the loss of such
rights. If dissenters' rights are not perfected, you will be entitled to
receive the consideration receivable with respect to such shares in accordance
with the Merger Agreement. In view of the complexity of the provisions of
Nevada's dissenters' rights statute, if you are considering objecting to the
merger you should consult your own legal advisor.
VidRev
- ------
If you are a VidRev stockholder and did not consent to the Merger you
are entitled to demand payment and receive fair value in cash for your shares
instead of shares of the surviving company's common stock under Sections
607.1301 to 607.1333 of the Florida Law. If you hold VidRev common stock, in
order to perfect your appraisal rights, you must fully comply with the
statutory procedures in Sections 607.1301 to 607.1333 of the Florida Law
summarized below, the full text of which is set forth in Annex F included with
this joint Information Statement/Prospectus. You are urged to read those
sections in their entirety and to consult with your legal advisor.
In order to assert these appraisal rights, you must deliver to the
person and address indicated below written notice of your intent to demand
payment for your shares if the Merger is completed:
VidRev Technologies, Inc.
Errol Gerson
Chief Operating Officer and Interim President
1875 Century Park East #700
Los Angeles, CA. 90067
This notice must not be sent later than __________, 2005. If you file
with VidRev the foregoing notice of intent to demand payment for your shares,
and the Merger is consummated, VidRev will send you the written appraisal
notice and form required under Section 607.1322 of the Florida Law within 10
days after the Articles of Merger are filed with the Florida Department of
State, which will consummate the Merger. The appraisal notice and form will
contain, among other things, VidRev's offer to purchase your shares of VidRev
common stock at the fair value for the shares as estimated by the board of
directors of VidRev. The determination of fair value will be made by the board
of directors in its reasonable judgment. If deemed appropriate by the board,
it may rely on an independent third party to provide an appraisal of the
shares. To receive payment for your shares, VidRev must receive from you, at
any time before the expiration of the date specified in the notice (which
deadline may not be less than 40 days nor more than 60 days after the date the
appraisal notice and form are sent to you), the following:
(a) the completed appraisal notice and form in which you either
(i) accept VidRev's offer or (ii) reject the offer and instead state your
estimated fair value for the shares and a demand for payment of your estimated
value plus interest, and
(b) your stock certificates for VidRev common stock.
If you do not complete and sign the appraisal notice and form and
deposit your stock certificates with VidRev within the prescribed time period,
you will have forfeited your rights to receive payment for your shares and
will instead receive common stock of the surviving company in lieu of your
VidRev shares. If your properly completed and signed appraisal notice and
form and stock certificates are filed with VidRev in accordance within the
prescribed time period, you will be entitled to payment of the fair value of
the shares, in accordance with the discussion below. You will not be entitled
to vote or exercise any other rights of a stockholder (unless you subsequently
withdraw your demand, as also discussed below).
19
If you accept VidRev's offer for your shares in accordance with the
specified procedures, VidRev will make payment for your shares within 90 days
of its receipt of the appraisal notice and form indicating your acceptance. If
you indicate on the appraisal notice and form that you do not accept VidRev's
offer, but fail to demand payment for the shares at your estimated value plus
interest, you will have waived your right to demand payment of your estimated
value and interest and, instead you will be entitled only to the payment
offered by VidRev in the appraisal notice and form it sent to you. If you
make a demand for payment of your estimated value and the issue of fair value
remains unsettled thereafter, either you or VidRev may, but are not required
to, commence a court proceeding and petition the court for a determination of
the fair value of the shares and accrued interest.
You may decline to exercise appraisal rights and withdraw from the
appraisal process by notifying VidRev in writing before the expiration of a
date that will be specified in the notice and form sent to you. You will not
be able to withdraw from the process after such date without the surviving
company's written consent. If you withdraw from the appraisal process in
conformance with the foregoing, you will again have the same rights you had
prior to signing and returning the notice and form to VidRev in that you will
be entitled to receive one share of common stock of the surviving company for
each share of your VidRev common stock. Further, if VidRev for any reason
does not proceed with the consummation of the Merger, your appraisal rights
will cease and your status as a stockholder of VidRev will be restored.
You must take each step in the indicated order and in strict
compliance with the statute to assert your appraisal rights. If you fail to
follow the steps, you will lose the right to demand fair value for your shares
and you will receive one share of the surviving company common stock for each
share of your VidRev common stock.
The discussion in this section is only a summary of the rights and
obligations of stockholders wishing to demand payment for their shares, and is
qualified in its entirety by reference to the applicable provisions of
Sections 607.1301 through 607.1333 of the Florida Law, which are reproduced
and attached hereto as Annex F.
Failure to follow the procedures set forth in Sections 607.1301 through
607.1333 of the Florida Law regarding appraisal rights will constitute a
waiver of any such rights. Stockholders may wish to consult independent
counsel before exercising their appraisal rights.
Interest of Certain Persons in the Merger
- -----------------------------------------
Kentex
- ------
Except as indicated below, no director, officer, nominee to become such,
or any associate of any of the foregoing persons, has any substantial
interest, direct or indirect, by security holdings or otherwise, in the Merger
which is not shared by all other stockholders, pro rata, and in accordance
with their respective interests in Kentex. Under the Merger Agreement,
certain persons are to receive shares of common stock in consideration of the
payment of all costs in connection with the Merger and satisfaction of all
costs and expenses then owed by Kentex, with the exception of part of Kentex's
legal fees, estimated at $25,000. In addition, Kentex's current legal counsel
will receive 80,000 "unregistered" and "restricted" shares of common stock in
consideration of legal services rendered. Such shares have piggyback
registration rights. The issuance of 200,000 restricted shares to Kelly
Trimble is also a condition to closing of the Merger.
20
VidRev
- ------
Except as indicated below, no director, officer, nominee to become such,
or any associate of any of the foregoing persons, has any substantial
interest, direct or indirect, by security holdings or otherwise, in the Merger
which is not shared by all other stockholders, pro rata, and in accordance
with their respective interests in VidRev.
Mr. Sy Eisenberg, the former interim President and current member of the
Board of Directors of VidRev, holds 300,000 shares of the common stock of
VidRev, which will be exchanged for 300,000 shares of the surviving company's
common stock in connection with the Merger. Mr. Eisenberg is eligible to
receive additional shares of the surviving company's common stock pursuant to
the terms of his consulting agreement with VidRev.
Mr. Errol Gerson, the Chief Operating Officer, current interim
President, and member of the Board of Directors of VidRev, holds 20,000 shares
of the common stock of VidRev, which will be exchanged for 20,000 shares of
the surviving company's common stock in connection with the Merger. Mr.
Gerson is to receive up to an additional 95,000 shares of the surviving
company's common stock pursuant to the terms of his employment agreement with
VidRev.
Mr. Ed Rollins, a member of the Board of Directors of VidRev, holds
10,000 shares of the common stock of VidRev, which will be exchanged for
10,000 shares of the surviving company's common stock in connection with the
Merger. Mr. Rollins is to receive up to an additional 30,000 shares of the
surviving company's common stock pursuant to the terms of his consulting
agreement with VidRev.
Peter Brown, Esq., a member of the Board of Directors and Vice President
and Secretary of VidRev and who also serves as intellectual property counsel
for VidRev, holds 20,000 shares of the common stock of VidRev, which will be
exchanged for 20,000 shares of the surviving company's common stock in
connection with the Merger. Mr. Brown also has an equity interest in BRMFS
Holdings, LLC, which holds 20,000 shares of the common stock of VidRev, which
will be exchanged for 20,000 shares of the surviving company's common stock in
connection with the Merger, and 1,000 shares of TTA. Mr. Brown also serves as
a Director and Secretary of TTA. As of December 15, 2004, TTA holds
29,374,500 shares or 96.8% of VidRev's outstanding common stock.
Interests of Named Experts and Counsel
- --------------------------------------
Kentex
- ------
Kentex has included its financial statements as of December 31, 2003 and
2002, in reliance on the reports of Mantyla McReynolds of Salt Lake City,
Utah, independent certified public accountants. Mantyla McReynolds has no
interest, direct or indirect, in Kentex.
VidRev has included its financial statements as of September 30, 2004,
in reliance on the reports of Davis, Monk & Company of Gainesville, Florida,
independent certified public accountants. Davis, Monk & Company has no
interest, direct or indirect, in VidRev.
Leonard W. Burningham, Esq. and Branden T. Burningham, Esq., lawyers, of
Salt Lake City, Utah, are co-counsel for Kentex and have prepared this joint
Information Statement/Prospectus and will provide any legal opinions with
respect to the validity of the shares offered hereby. Leonard W. Burningham
is to receive 80,000 "unregistered" and "restricted" shares of Kentex common
stock in payment of legal fees incurred in connection with the Merger. Such
shares have piggyback registration rights.
Neither Kentex nor VidRev has hired any expert or counsel on a
contingent basis. Except as indicated above, no expert or counsel will
receive a direct or indirect interest in Kentex or VidRev, and no such person
was a promoter, underwriter, voting trustee, director, officer or employee of
Kentex or VidRev.
21
AGREEMENT AND PLAN OF MERGER
This section describes various material provisions of the Merger
Agreement. Because the description of the Merger Agreement contained in this
joint Information Statement/Prospectus is a summary, it does not contain all
the information that may be important to you. You should read carefully the
entire Merger Agreement attached as Annex A to this joint Information
Statement/Prospectus and incorporated herein by reference.
Primary Terms of the Merger Agreement
- -------------------------------------
The Merger
- ----------
Subject to the terms and conditions of the Merger Agreement, at closing,
each share of the common stock of Kentex issued and outstanding shall continue
to represent one validly issued, fully paid and nonassessable share of common
stock of the surviving company and each share of the common stock of VidRev
issued and outstanding shall be exchanged for one validly issued, fully paid
and nonassessable share of common stock of the surviving company. As a result
of the Merger, the separate corporate existence of VidRev shall cease and
Kentex shall continue as the surviving company. The surviving company shall
provide notice of dissenters' appraisal rights to the VidRev and Kentex
stockholders in accordance with Florida Law and the NRS respectively.
Kentex and VidRev have agreed to file a Registration Statement on Form
SB-2 to register the resale by TTA Technologies Ltd. of up to one million
shares of the stock of the surviving company that it will receive in the
Merger and to register for sale and issuance by the surviving company of up to
one million shares of the common stock of the surviving company.
Other Provisions of the Merger Agreement
- ----------------------------------------
Representations and Warranties
- ------------------------------
In the Merger Agreement, Kentex and VidRev each make a number of
customary representations and warranties including, but not limited to,
corporate existence, capital structure, corporate power and authority,
financial statements, absence of certain changes or events, taxes, compliance
with laws and court orders, permits, litigation, absence of liens and
encumbrances, agreements, contracts, commitments, board approval and broker's
or finder's fees. The accuracy and completeness of these representations and
warranties are, among other things, conditions of the other party's
obligations to complete the Merger.
22
Kentex's representations and warranties to VidRev also include, but are
not limited to:
* the execution, delivery and performance of the Merger Agreement
and related agreements have been duly authorized by all necessary
corporate action on the part of Kentex and Kentex will not violate
any laws, contracts or the charter documents of Kentex;
* no filings or approvals are required in order for Kentex to enter
into and perform its obligations under the Merger Agreement and
the related agreements, except for (i) the filing of the
Certificate of Merger with the Secretary of State of the State of
Nevada and the Secretary of State of the State of Florida, (ii)
such consents, approvals, orders, authorizations, registrations,
declarations and filings (if any) as may be required under
applicable federal and state securities laws and the securities or
antitrust laws of any foreign country, (iii) the filing of
Kentex's Registration Statement on Form S-4 with the SEC and (iv)
such other consents, authorizations, filings, approvals and
registrations (if any) which if not obtained or made would not be
material to Kentex or VidRev or have a material adverse effect, as
defined in the Merger Agreement, on the ability of the parties to
consummate the Merger;
* the capitalization of Kentex is as set forth in the Merger
Agreement;
* the financial statements of Kentex that have been provided to
VidRev comply as to form in all material respects with the
published rules and regulations of the SEC with respect thereto
and have been prepared in accordance with generally accepted
accounting principles ("GAAP") accepted in the United States;
* since December 31, 2003, Kentex has conducted its business only in
the ordinary course and no events or changes have occurred that
have had or would reasonably be expected to have a material
adverse effect on Kentex;
* Kentex has good and valid title to, or in the case of leased
properties and assets, valid leasehold interests in, all of its
material tangible properties and assets, real, personal and mixed,
used in its business, free and clear of any liens or encumbrances
except as reflected in Kentex's SEC reports and except for liens
for taxes not yet due and payable and such imperfections of title
and encumbrances, if any, which would not be material to Kentex;
* there is no litigation, pending or threatened, against Kentex that
would reasonably be expected to have a material adverse effect on
Kentex or the transactions contemplated by the Merger Agreement;
* assuming compliance with the application procedures of the OTCBB,
Kentex is not aware of any fact that would prevent Kentex's common
stock to be listed on the OTCBB; and
* Kentex has filed all required reports with the SEC and is current
in its SEC filings and no form filed with the SEC contained any
untrue statement of a material fact or omitted to state any
material fact.
23
VidRev's representations and warranties to Kentex also include, but are
not limited to:
* the execution, delivery and performance of the Merger Agreement
have been duly authorized by all necessary corporate action on the
part of VidRev and will not violate any laws, contracts or the
charter documents of VidRev;
* no filings or approvals are required in order for VidRev to enter
into and perform its obligations under the Merger Agreement except
for (i) the filing of the Certificate of Merger with the Secretary
of State of the State of Nevada and the Secretary of State of the
State of Florida and such consent, approvals, orders,
authorizations, registrations, declarations and filings (if any)
as may be required under applicable federal and state securities
laws and the securities or antitrust laws of any foreign
country(ii) such consents, approvals, orders, authorizations,
registrations, declarations and filings (if any) as may be
required under applicable federal and state securities laws and
the securities or antitrust laws of any foreign country, and
(iii) such other consents, authorizations, filings, approvals and
registrations (if any) which if not obtained or made would not be
material to VidRev or have a material adverse effect on the
ability of Kentex or VidRev to consummate the Merger;
* the capitalization of VidRev is as set forth in the Merger
Agreement;
* the financial statements of VidRev that have been provided to
Kentex fairly present, in all material respects, the financial
condition and results of operations of VidRev as of the date
indicated; and
* there is no litigation, pending or threatened, against VidRev that
would reasonably be expected to have a material adverse effect on
VidRev or the transactions contemplated by the Merger Agreement.
Covenants
- ---------
In the Merger Agreement, Kentex and VidRev have agreed to certain
negative and affirmative covenants including, among other things, that, unless
otherwise expressly provided for in the Merger Agreement, until the earlier of
the closing of the Merger or the termination of the Merger Agreement, each of
Kentex and VidRev will:
* conduct its business in the ordinary and usual course and
consistent with past practice, except as contemplated by the
Merger Agreement;
* not amend or propose to amend its charter or bylaws except as
contemplated by the Merger Agreement;
* not split, combine or reclassify its outstanding capital stock;
24
* not declare, set aside or pay any dividend or distribution payable
in cash, stock, property or otherwise, except as contemplated by
the Merger Agreement;
* not make any loans, advances or capital contributions to, or
investment in, any other person or entity;
* not adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of Kentex (other than in connection with the
Merger);
* not solicit, initiate, encourage or cooperate in connection with
any other proposal for a merger or other business combination;
* consult with each other and obtain the prior consent of the other
party before issuing any press release or otherwise making any
public statement with respect to the Merger and the Merger
Agreement;
* agree that upon the closing of the Merger, the current directors
and officers of Kentex will resign from all offices and the Board
of Directors of the surviving company and the directors and
officers of VidRev immediately prior to the closing of the Merger
shall be the initial directors and officers of Kentex;
* use its reasonable commercial efforts to take all actions
necessary or desirable to comply promptly with all legal
requirements which may be imposed on them with respect to the
consummation of the transactions contemplated by the Merger
Agreement;
* provide prompt notice to one another of the occurrence, or failure
to occur, of any event, which occurrence or failure to occur would
be reasonably likely to cause any representation or warranty
contained in the Merger Agreement to be untrue or inaccurate in
any material respect at any time from the date of the Merger
Agreement to the closing of the Merger or any material failure of
Kentex or VidRev to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it under the
Merger Agreement; and
* file a Registration Statement on Form SB-2 to register the resale by
TTA of up to 1,000,000 shares of the surviving company's common
stock and to register for sale and issuance by the surviving company
of up to 1,000,000 shares of its common stock.
Kentex further covenants, that, unless otherwise expressly provided for
in the Merger Agreement, Kentex will:
* within four (4) days after the execution of the Merger Agreement
and the consummation of the Merger, file with the SEC a Current
Report on Form 8-K.
Conditions to the Merger
- ------------------------
The obligations of the parties to consummate the Merger are subject to
the satisfaction of the following conditions:
25
* no governmental entity shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order which is in effect or
which has the effect of making the Merger illegal or otherwise
prohibited;
* an Amended and Restated Articles of Incorporation of Kentex
required to give effect to the name change shall have been duly
filed and made effective with the Secretary of State of Nevada;
and
* VidRev shall have entered into a Registration Rights Agreement
which provides certain piggyback registration rights.
The obligations of Kentex to consummate the Merger are subject to the
satisfaction or waiver of a number of additional conditions, including but not
limited to:
* the representations and warranties of VidRev contained in the
Merger Agreement and in any certificate or writing delivered by
VidRev pursuant to the Merger Agreement shall be true in all
material respects at and as of the closing as if made at and as of
such time;
* VidRev shall have performed, in all material respects, all of
their respective obligations under the Merger Agreement required
to be performed by them at or prior to the closing;
* VidRev shall have obtained assurance to its sole satisfaction that
the surviving company's common stock will be listed on the OTCBB;
* TTA Technologies Ltd., the owner of 29,374,500 shares of VidRev
common stock, shall have tendered 3,959,357 of its shares of
VidRev common stock to VidRev and VidRev shall have cancelled such
shares;
* VidRev shall have issued to Kelly Trimble, 200,000 restricted
shares of VidRev common stock in consideration of his introduction
of the principals of VidRev and Kentex in connection with the
Merger; and
* VidRev shall have received from the Burningham and Burningham,
counsel for Kentex, an opinion, dated as of the closing of the
Merger.
The obligations of VidRev to consummate the Merger are subject to the
satisfaction or waiver of a number of additional conditions, including but not
limited to:
* the representations and warranties of Kentex contained in the
Merger Agreement and in any certificate or writing delivered by
Kentex pursuant to the Merger Agreement shall be true in all
material respects at and as of the closing as if made at and as of
such time;
* Kentex shall have performed, in all material respects, all of
their respective obligations under the Merger Agreement required
to be performed by them at or prior to the closing;
* Kentex shall file a final joint information statement/registration
statement with the SEC on Form S-4 with respect to the sale and
issuance of its common stock and the SEC shall declare such
registration statement effective; and
26
* Kentex shall have received from Brown Raysman Millstein Felder &
Steiner LLP, counsel for VidRev, an opinion, dated as of the
closing of the Merger.
Termination, Amendment and Waiver of the Merger Agreement
- ---------------------------------------------------------
The Merger Agreement may be terminated at any time before the effective
date of the Merger, for specified reasons, including but not limited to:
* by the mutual written consent of Kentex and VidRev;
* by either Kentex or VidRev if the Merger shall not have been
consummated by June 30, 2005;
* by either Kentex or VidRev if the stockholder approval
contemplated by the Merger Agreement shall not have been obtained
by reason of the failure to obtain the required vote;
* by Kentex, upon a breach of any representation, warranty, covenant
or agreement on the part of VidRev set forth in the Merger
Agreement, or if any representation or warranty of VidRev shall
have become untrue, provided that such inaccuracy or breach in
VidRev's representations and warranties is curable by VidRev
through the exercise of its commercially reasonable efforts, then
Kentex may not terminate the Merger Agreement, provided that
VidRev continue to exercise such commercially reasonable efforts
to cure such breach; or
* by VidRev, upon a breach of any representation, warranty, covenant
or agreement on the part of Kentex set forth in the Merger
Agreement, or if any representation or warranty of Kentex shall
have become untrue, provided that such inaccuracy or breach in
Kentex representations and warranties is curable by Kentex through
the exercise of their commercially reasonable efforts, then VidRev
may not terminate the Merger Agreement provided that Kentex
continue to exercise such commercially reasonable efforts to cure
such breach.
COMPARISON OF STOCKHOLDER RIGHTS
General
- -------
After the Merger, VidRev stockholders will become stockholders of
Kentex, the surviving corporation. Both VidRev stockholders and Kentex's
stockholders will be governed by Kentex's Amended and Restated Articles of
Incorporation, attached hereto as Annex B, Kentex's Amended and Restated
Bylaws, attached hereto as Annex C, and the Nevada Revised Statues (the
"NRS"). Currently, VidRev stockholders are governed by its Articles of
Incorporation and the Florida Business Corporations Act ("Florida Law").
The following summary describes the material differences that may affect
the rights of holders of VidRev common stock and Kentex common stock, which
will be the stock of the surviving company. This summary is not, however, a
complete statement of all differences between rights of the holders of VidRev
common stock and Kentex common stock and is qualified by the NRS, the Florida
Business Corporations Act, and the various documents referred to in this joint
Information Statement/Prospectus.
27
Capitalization
- --------------
Kentex. Kentex is authorized to issue 50,000,000 shares of common
stock. As of December 15, 2004, 2,357,997 shares of Kentex common stock were
issued and outstanding.
VidRev. VidRev is authorized to issue 50,000,000 shares of common stock.
As of December 15, 2004, 30,356,000 shares of VidRev common stock were issued
and outstanding.
Voting Rights
- -------------
Kentex. Each holder of Kentex common stock is entitled to one vote for
each share.
VidRev. Each holder of VidRev common stock is entitled to one vote for
each share.
Number of Directors
- -------------------
Kentex. Under the NRS, Kentex is required to have at least one
director. The Amended and Restated Bylaws of Kentex provide for a minimum of
three directors and a maximum of nine directors. Each director shall hold
office until the next annual meeting of stockholders and until his or her
successor is elected and qualified.
VidRev. The VidRev bylaws provide that the VidRev board shall consist of
between one and ten directors as shall be fixed from time to time by action of
the stockholders, with each director serving for the term for which he or she
is elected. The number of directors of VidRev currently designated is six.
Removal of Directors
- --------------------
Kentex. The NRS provides that a director of a Nevada corporation may be
removed from office by the vote of stockholders holding not less than two-
thirds of the voting power of the company's issued and outstanding voting
securities.
VidRev. Any director or the entire board may be removed from office,
with or without cause pursuant to the Florida Law.
Filling Vacancies on the Board of Directors
- -------------------------------------------
Kentex. Under the NRS, all vacancies on a Nevada corporation's Board of
Directors, including those caused by an increase in the number of directors,
may be filled by a majority of the remaining directors. Kentex's Amended and
Restated Bylaws mirror this provision of the NRS.
VidRev. Vacancies occurring in the board may be filled by vote of a
majority of the directors then in office, whether or not less than a quorum,
or by a sole remaining director.
Charter Amendments
- ------------------
Kentex. The NRS requires the Board of Directors of a Nevada corporation
to adopt a resolution setting forth the amendment proposed and to call a
special meeting of stockholders to vote on the amendment or to provide for the
amendment to be considered at the next annual meeting of stockholders.
28
VidRev. In order to amend the articles of incorporation of a Florida
corporation, Florida Law generally requires that, unless the articles of
incorporation provide for a greater vote, the votes cast in favor of such an
amendment must exceed the votes cast against such an amendment at a meeting at
which a quorum is present; provided, however, that a majority of the
outstanding votes entitled to be cast on the amendment is required with
respect to amendments that would create dissenters' rights under Florida law.
Further, under Florida law stockholder approval is not required for certain
non-material amendments.
Amendments to Amended and Restated Bylaws
- -----------------------------------------
Kentex. Article XI of Kentex's Amended and Restated Bylaws provides
that no bylaws adopted or amended by the stockholders shall be altered or
repealed by the Board of Directors. In addition, no bylaws shall be adopted
by the Board of Directors which shall require more than a majority of the
voting shares for a quorum at a meeting of stockholders, or more than a
majority of the votes cast to constitute action by the stockholders, except
where higher percentages are required by law; provided, however that (i) if
any bylaw regulating an impending election of directors is adopted or amended
or repealed by the Board of Directors, there shall be set forth in the notice
of the next meeting of stockholders for the election of directors, the bylaws
so adopted or amended or repealed, together with a concise statement of the
changes made; and (ii) no amendment, alteration or repeal of Article XI shall
be made except by the stockholders.
VidRev. The bylaws may be altered, amended or repealed by the VidRev
stockholders or the board. Any bylaw adopted, amended or repealed by the
VidRev stockholders may be amended or repealed by the board, unless the
resolution of the stockholders adopting such bylaw expressly reserves the
right to amend or repeal it to the stockholders.
Action by Written Consent
- -------------------------
Kentex. The NRS permits the stockholders of a corporation to take
action by the written consent of the number of stockholders that would be
required to approve such action if it were submitted to a vote at a meeting of
the stockholders. The Amended and Restated Bylaws of Kentex also contain a
provision to this effect.
VidRev. Any action required or permitted to be taken by stockholders may
be taken by written consent in lieu of a meeting.
Notice of Stockholder Meetings
- ------------------------------
Kentex. The NRS requires that written notice of stockholder meetings be
given no less than 10 days and no more than 60 days prior to the date of the
meeting. The notice must state the purpose of the meeting, the time and place
of the meeting and the means of electronic communication, if any, by which
stockholders and proxies shall be deemed to be present in person and to vote.
The Amended and Restated Bylaws of Kentex provide that the meeting notice must
be given no more than 50 days before the date of the meeting. Kentex's
stockholders may also waive notice of any meeting.
29
VidRev. Written notice of the date, time, place and purpose of each
meeting of the stockholders is required. If the stockholder will attend the
meeting in person or by proxy, or provides written waiver of the right to
receive notice, notice of such meeting is not necessary, except when the
stockholder attends the meeting to object to (i) the transaction of any
business on the grounds the meeting was not lawfully called or convened or
(ii) the consideration of a particular matter at the meeting that is not
within the purpose described in the notice.
Right to Call Special Meeting of Stockholders
- ---------------------------------------------
Kentex. The NRS authorizes the entire Board of Directors, any two
directors, or the president of a Nevada corporation to call special meetings
of the stockholders. The Amended and Restated Bylaws of Kentex contain a
similar provision, but they also authorize a special meeting of the
stockholders to be called by any vice president or by the secretary on the
written request of the holders of not less than one-tenth of the voting power
of the securities entitled to vote at the meeting.
VidRev. VidRev's bylaws provide that special meetings of stockholders
may be called by the directors or the chairman of the board, the vice chairman
of the board, the president or the secretary or by any officer instructed by
the directors or the President to call the meeting.
Limitation of Personal Liability of Directors
- ---------------------------------------------
Kentex. Section 78.7502(1) of the NRS authorizes a Nevada corporation
to indemnify any director, officer, employee, or corporate agent "who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, except an action by or in the right of the corporation" due
to his corporate role. Section 78.7502(1) extends this protection "against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with the
action, suit or proceeding if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful." Section 78.7502(2) of
the NRS also authorizes indemnification of the reasonable defense or
settlement expenses of a corporate director, officer, employee or agent who is
sued, or is threatened with a suit, by or in the right of the corporation. The
party must have been acting in good faith and with the reasonable belief that
his actions were not opposed to the corporation's best interests. Unless the
court rules that the party is reasonably entitled to indemnification, the
party seeking indemnification must not have been found liable to the
corporation.
To the extent that a corporate director, officer, employee, or agent is
successful on the merits or otherwise in defending any action or proceeding
referred to in Section 78.7502(1) or 78.7502(2), Section 78.7502(3) of the NRS
requires that he be indemnified "against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the defense."
Section 78.751(1) of the NRS limits indemnification under Sections
78.7502(1) and 78.7502(2) to situations in which either (1) the stockholders,
(2) the majority of a disinterested quorum of directors, or (3) independent
legal counsel determine that indemnification is proper under the
circumstances.
30
Pursuant to Section 78.751(2) of the NRS, the corporation may advance an
officer's or director's expenses incurred in defending any action or
proceeding upon receipt of an undertaking. Section 78.751(3)(a) provides that
the rights to indemnification and advancement of expenses shall not be deemed
exclusive of any other rights under any bylaw, agreement, stockholder vote or
vote of disinterested directors. Section 78.751(3)(b) extends the rights to
indemnification and advancement of expenses to former directors, officers,
employees and agents, as well as their heirs, executors, and administrators.
Regardless of whether a director, officer, employee or agent has the
right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his behalf against liability resulting from his
corporate role.
Article VIII of Kentex's Amended and Restated Bylaws contains
substantially similar provisions to those of the NRS.
VidRev. Florida law permits a corporation to indemnify a director or
officer who was or is a party to any threatened, pending or completed action,
suit or other type of proceeding other than an action by or in the right of
the corporation by reason of the fact that he is or was a director or officer
or is now serving at the request of the corporation as a director or officer
of another entity against expenses, including attorneys' fees, judgments,
fines, penalties and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding. These
indemnification rights apply if the director or officer acted in good faith
and in a manner in which he reasonably believed to be in or not opposed to the
best interest of the corporation and, with respect to a criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. In
addition, under Florida law, VidRev may indemnify and hold harmless an officer
or director who is a party in an action by or in the right of the corporation
against expenses, including attorneys' fees, and certain amounts paid in
settlement, actually and reasonably incurred in connection with the defense or
settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if the director or officer has acted in
good faith and in a manner in which he reasonably believed to be in or not
opposed to the best interest of the corporation, except indemnification is not
authorized where there is an adjudication of liability, unless a court
determines, in view of all the circumstances, that such person is fairly and
reasonably entitled to indemnity for such expenses.
Dividends
- ---------
Kentex. The Amended and Restated Bylaws of Kentex permit the Board of
Directors to declare, and Kentex to pay, dividends on its outstanding shares.
VidRev. Florida Law generally provides that a corporation may make
distributions to its stockholders unless after giving effect thereto (i) the
corporation would not be able to pay its debts as they become due in the usual
course of business or (ii) the corporation's total assets would be less than
the sum of its total liabilities plus the amount that would be needed upon the
dissolution of the corporation to satisfy the preferential rights of
stockholders having superior preferential rights to those stockholders
receiving the distribution. VidRev's articles of incorporation do not contain
any restrictions on the payment of dividends or the making of distributions to
stockholders.
31
Conversion
- ----------
Kentex. Holders of Kentex common stock have no right to convert their
shares into any other shares of capital stock of Kentex or any other
securities.
VidRev. Holders of VidRev common stock have no right to convert their
shares into any other shares of capital stock of VidRev or any other
securities.
Liquidation
- -----------
Kentex. Upon dissolution or liquidation of Kentex, whether voluntary or
involuntary, holders of Kentex common stock will be entitled to receive all
assets of Kentex available for distribution to its stockholders.
VidRev. Upon dissolution or liquidation of VidRev, whether voluntary or
involuntary, holders of VidRev common stock will be entitled to receive all
assets of VidRev available for distribution to its stockholders.
32
FEDERAL SECURITIES LAWS CONSEQUENCES; RESALE RESTRICTIONS; PIGGYBACK
REGISTRATION RIGHTS
All shares of the surviving company's common stock that will be
distributed to VidRev stockholders in the Merger will be freely transferable,
except for restrictions applicable to "affiliates" of Kentex and VidRev.
Persons who are deemed to be affiliates of VidRev may resell shares of the
surviving company's common stock received by them only in transactions
permitted by the resale provisions of Rule 145 or as otherwise permitted under
the Securities Act of 1933. Persons who may be deemed to be affiliates of
Kentex generally include executive officers, directors and significant
stockholders of Kentex. Persons who are deemed to be affiliates of Kentex may
sell their shares in the surviving company only in transactions permitted by
the resale provisions of Rule 144 or as otherwise permitted under the
Securities Act of 1933. Persons who may be deemed to be affiliates of Kentex
generally include executive officers, directors and significant stockholders
of Kentex.
As a condition to closing the Merger, piggyback registration rights will
be granted to several Kentex stockholders. The amount of shares subject to
such piggyback registration rights may be reduced or eliminated from any
particular registration if their inclusion would adversely affect the
marketability of the surviving company's securities to be sold.
33
THE COMPANIES
KENTEX PETROLEUM, INC.
Business Development.
- ---------------------
Organization, Charter Amendments and General History
----------------------------------------------------
Kentex was organized under the laws of the State of Nevada on February
10, 1983. It currently has four beneficial holders who collectively own
approximately 92.4% of its outstanding common stock: Jenson Services, Inc.,
Duane S. Jenson, Travis T. Jenson and Thomas J. Howells. Under the terms of
the Merger Agreement, each of these stockholders is to tender his/its shares
to Kentex for cancellation. As of December 15, 2004, these shares represented
2,234,640 of the 2,357,997 shares then outstanding. The Merger Agreement also
provides that Jenson Services and certain of its affiliates are to receive a
total of 520,000 "unregistered" and "restricted" shares of Kentex's common
stock in consideration of Jenson Services' payment of all costs incident to
the Merger and satisfaction of all costs and expenses then owed by Kentex,
with the exception of part of Kentex's legal fees, estimated at $25,000.
On May 8, 1999, John Myung, Kentex's President, Treasurer and director
resigned and designated James Doolin as a director.
On May 30, 1999, Alan Reedy, Kentex's Secretary and director, resigned
and designated Jason Jenson as a director.
On September 27, 1999, Jason Jenson, Kentex's director, resigned and
designated Shane Thueson as a director.
On September 28, 1999, Luke Bradley was appointed as a director of
Kentex by a quorum of its directors. On the same date, James Doolin was
elected President, Luke Bradley was elected Vice President, and Shane Thueson
was elected Secretary. Kentex's officers were elected by the entire
membership of the Board of Directors.
On December 31, 2002, Messrs. Doolin, Bradley and Thueson accepted the
appointment of Sarah Jenson as President and director, Victoria Jenson as Vice
President and director, and Lisa Howells as Secretary/Treasurer and director,
and in seriatim, resigned from their respective positions with Kentex.
Business
- --------
Kentex was organized for the purpose of engaging in any lawful activity.
In March of 1983, it completed a merger. It then began pursuing opportunities
in the development and production of oil well facilities, including entering
into leases and partnerships and acting as general partner of ventures. These
operations proved to be unsuccessful and ended over 10 years ago. Since then,
there have been no further operations.
Principal Products or Services and their Markets
- ------------------------------------------------
Kentex does not currently have any products or services. If the Merger
is completed, Kentex's operations will become the operations of VidRev.
Competition
- -----------
Management believes that there are literally thousands of "blank check"
companies engaged in endeavors similar to those engaged in by Kentex; many of
these companies have substantial current assets and cash reserves.
Competitors also include thousands of other publicly-held companies whose
business operations have proven unsuccessful, and whose only viable business
opportunity is that of providing a publicly-held vehicle through which a
private entity may have access to the public capital markets. If the Merger
is completed, Kentex will face the same competitive pressures that VidRev
faces in its industry.
34
Sources and Availability of Raw Materials and Names of Principal Suppliers
- --------------------------------------------------------------------------
None; Not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements of
Labor Contracts
- ---------------
None; Not applicable.
Need for any Governmental Approval of Principal Products of Services
- --------------------------------------------------------------------
None; Not applicable.
Effect of Existing or Probable Governmental Regulations on Business
- -------------------------------------------------------------------
The integrated disclosure system for small business issuers adopted by
the SEC in Release No. 34-30968 and effective as of August 13, 1992,
substantially modified the information and financial requirements of a "Small
Business Issuer," defined to be an issuer that has revenues of less than $25
million, is a U.S. or Canadian issuer, is not an investment company, and if a
majority-owned subsidiary, the parent is also a small business issuer;
provided, however, that an entity is not a small business issuer if it has a
public float (the aggregate market value of the issuer's outstanding
securities held by non-affiliates) of $25 million or more. Kentex is deemed
to be a "small business issuer."
The SEC, state securities commissions and the North American Securities
Administrators Association, Inc. ("NASAA") have expressed an interest in
adopting policies that will streamline the registration process and make it
easier for a small business issuer to have access to the public capital
markets.
Sarbanes-Oxley Act
- ------------------
On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act
of 2002 (the "Sarbanes-Oxley Act"). The Sarbanes-Oxley Act imposes a wide
variety of new regulatory requirements on publicly-held companies and their
insiders. Many of these requirements affect us. For example:
* Our chief executive officer and chief financial officer must
certify the accuracy of all of our periodic reports that contain
financial statements;
* Our periodic reports must disclose our conclusions about the
effectiveness of our disclosure controls and procedures; and
* We may not make any loan to any director or executive officer and
we may not materially modify any existing loans.
The Sarbanes-Oxley Act has required us to review our current procedures
and policies to determine whether they comply with the Sarbanes-Oxley Act and
the regulations promulgated thereunder. We will continue to monitor our
compliance with all regulations adopted under the Sarbanes-Oxley Act and will
take whatever actions are necessary to ensure that we are in compliance.
35
Research and Development
- ------------------------
None; Not applicable. If the Merger is completed, Kentex's research and
development activities will be those of VidRev.
Cost and Effects of Compliance with Environmental Laws
- ------------------------------------------------------
None; Not applicable.
Number of Employees
- -------------------
Kentex does not currently have any employees.
Regulation and Taxation
- -----------------------
Kentex believes that it has structured the Merger in such a manner as to
minimize federal and state tax consequences to Kentex and to VidRev and its
stockholders.
Property
- --------
Kentex's principal executive offices are located at 4685 Highland Drive,
Suite 202, Salt Lake City, Utah 84117 and Kentex's phone number is (801) 278-
9424.
Legal Proceedings
- -----------------
Kentex is not a party to any pending legal proceeding. To the knowledge
of current management, no federal, state or local governmental agency is
presently contemplating any proceeding against Kentex. No director, executive
officer or affiliate of Kentex or owner of record or beneficially of more than
five percent of its common stock is a party adverse to Kentex or has a
material interest adverse to Kentex in any proceeding.
Qualitative and Quantitative Disclosures about Market Risk
- ----------------------------------------------------------
Kentex has not considered or conducted any research concerning
qualitative and quantitative market risk because Kentex is an inactive
corporation with no significant assets or operations.
Description of Kentex Capital Stock
-----------------------------------
Common Stock
- ------------
Kentex is authorized to issue up to 50,000,000 shares of common stock,
$.001 par value per share. As of December 15, 2004, there were 2,357,997
common shares issued and outstanding held by 414 stockholders. There is no
public market for Kentex's common stock. Following the completion of the
Merger, the surviving corporation is expected to apply to have its common
stock quoted on the Over the Counter Bulletin Board of the National
Association of Securities Dealers, Inc. However, there can be no assurance
that it will be successful in this regard or that it will be able to establish
or maintain any public market for its securities.
36
All outstanding shares of Kentex's common stock are duly authorized,
validly issued, fully paid and nonassessable. Upon liquidation, dissolution or
winding up, the holders of common stock are entitled to share ratably in all
net assets available for distribution to stockholders after payment to
creditors. Kentex's common stock is not redeemable and has no preemptive or
conversion rights. Holders of Kentex's common stock have cumulative voting
rights in the election of directors.
Dividends
- ---------
Kentex has not declared any cash dividends with respect to its common
stock and does not intend to declare dividends in the foreseeable future.
There are no material restrictions limiting, or that are likely to limit, its
ability to pay dividends on its common stock.
KENTEX'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Kentex has not engaged in any material operations or had any revenues
from operations during the last two fiscal years. Its plan of operation for
the next 12 months is to complete the Merger with VidRev, after which the
operations of VidRev will be the operations of Kentex. If Kentex is unable to
complete this Merger, it will continue to seek out the acquisition of assets,
property or a business that may be beneficial to Kentex and its stockholders.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
During its two most recent fiscal years, and to date, Kentex's principal
independent accountant has not resigned, declined to stand for re-election or
been dismissed.
VIDREV TECHNOLOGIES, INC.
Organization and General History
- --------------------------------
VidRev Technologies, Inc., was incorporated under the laws of the state
of Florida on February 3, 2004. VidRev is the exclusive United States
licensee and distributor of certain video compression technology from TTA
Technologies Ltd. ("TTA"), a Bahamian company, which owns approximately 96.8%
of VidRev's outstanding common stock. Under the terms of the Merger
Agreement, TTA is to tender 3,959,357 shares to VidRev for cancellation prior
to the effective date of the Merger. As of December 15, 2004, these shares
represented approximately 13% of the 30,356,000 shares then outstanding.
Business
- --------
VidRev seeks to provide powerful, reliable and user-friendly software
solutions for videoconferencing, video broadcast, video security and peer-to-
peer video communication.
With video compression technology that VidRev licenses from TTA, VidRev
has created a suite of software solutions that it believes are more powerful
and advanced than similar products in the market in terms of picture size and
resolution, bandwidth requirements, audio/video synchronization, and
application features.
37
In addition to meeting the videoconferencing needs of home and corporate
users, VidRev plans to partner with large original equipment manufacturers
("OEMs") by offering them low-maintenance, high-margin software packages. By
carefully selecting strategic partners and resellers, VidRev hopes to reach a
substantial number of customers and businesses while maintaining a very low
overhead.
VidRev believes its software applications deliver near-television
quality, up to full-screen video over the Internet at a fraction of the
normally required bandwidth. VidRev's products provide crisp, synchronized
audio and visual with almost no pixilation. With VidRev's software, a
customer only needs a web cam and an Internet connection (preferably
high-speed for optimal performance) to videoconference.
VidRev has four main applications:
* VidPhone - for one-on-one conversations;
* VidConference - for multiple-user conferencing;
* VidBroadcast - for broadcasting live feeds to thousands of users;
and
* VidSecure - for remote security-feed monitoring.
VidRev believes its products eliminate the need for bulky and costly
hardware, reduce the long lead-times for setup, and remove the distribution
complications encountered with multi-site rollouts.
Growth in the use of videoconferencing
- --------------------------------------
While interest in videoconferencing has grown steadily in the past five
years, its relatively low use to date can be attributed to two factors.
First, the transmission Compression/Decompression technology ("Codec") used in
videoconferencing has been inefficient, and as a result has produced low
resolution, jerky video and poor sound. Second, broadband had not reached a
large number of U.S. businesses and homes. However, as of October 2004,
broadband penetration now stands at 51.3% of all U.S. households, and is
projected to reach 80% by June 2006. Further, according to the research firm
Frost & Sullivan Inc., the growth for videoconferencing is expected to
increase from a $1.9 billion U.S. market in 2000 to a $5.4 billion U.S. market
in 2005.
Although the videoconferencing industry has seen advances to improve
audio and video quality and ease-of-use, VidRev believes the leading standards
and protocols being utilized in the transmission of videoconferencing data are
still too expensive or lack audio and video transmission quality.
VidRev's Technology
- -------------------
VidRev believes that the Codec it licenses from TTA alters the way in
which voice and video are transmitted. This technology allows VidRev's
products to deliver smooth, near-television quality streaming video over the
Internet at a cost-effective rate, without the need for expensive hardware.
VidRev's believes its products can compress video compact disc or digital
video disk data by as much as 10-20% of its original size in real time. This
efficiency allows the stream to reduce any need for buffering, and as a
result, the VidRev compression allows for very thin client-side live streaming
(with full screen capability). This compression technology, coupled with
VidRev's intellectual property resolution platform, makes live video
broadcasting across WANs or LANs attainable to ordinary users.
38
Current releases of the Codec are software-based and run on the Windows
environment. VidRev anticipates that a Linux version will be available by the
second quarter of 2005. In 2005, VidRev plans to release a hardware chipset
encoded VidPhone produced and licensed to VidRev by TTA.
Products and Marketing
- ----------------------
VidRev's management has developed a plan under which all direct and
indirect sales and marketing expenses will be borne by its licensees and
distributors. VidRev anticipates entering into agreements with
telecommunication companies and OEMs, as well as direct sales organizations
("DSOs"), which will in turn market VidRev's products with their own existing
sales-force. VidRev anticipates that these entities will bear all of the
costs of sales, marketing, the collection of monthly fees, and deployment of
infrastructure. By using this strategy, VidRev believes it can reduce its
costs dramatically as it will compensate these parties through commission on
earned revenue and through stock incentive plans. To this end, VidRev
anticipates that it may issue up to 500,000 shares of restricted common stock
to a limited number of sales and distribution partners within the next 24
months. VidRev believes that such a strategy will allow it to accomplish two
crucial elements for its success:
* Fast and affordable access and deployment of a large trained sales
force selling into an installed base of customers; and
* Substantial reduction of capital requirements involved in
recruiting, training and deploying an effective sales force.
VidRev has already signed a licensing and distribution agreement with a
DSO in Florida. As of November 2004, this DSO is marketing VidRev's products
through their network of 35 full time sales associates and 300 agents and is
responsible for support and installation of the products and for all sales and
collection costs. Under the terms of its agreement, VidRev will receive
approximately 58% of the gross revenue generated and earned by the DSO in
return for a non-exclusive license to distribute the family of VidRev
products.
In addition, VidRev has also entered into a letter of intent with a
marketing and distribution company in the telecom sector. It is the intention
of the parties that this company will have the rights to market the family of
VidRev products to Competitive Local Exchange Carriers, telecommunications
companies and other communication providers in the State of Florida on an
exclusive basis, and outside Florida on a non-exclusive basis.
VidRev is also targeting its efforts at the on-line dating industry,
which it believes is a potentially large market for VidRev's products. VidRev
will begin its marketing efforts to this industry in early first quarter of
2005. VidRev anticipates using a licensing arrangement with this sector.
VidRev's four products are as follows:
VidPhone. VidPhone is a peer-to-peer voice and video over internet
protocol product, which allows two individuals to be connected to the Internet
through a broadband connection to communicate using real time synchronized
voice and video at "near television" quality. VidRev has developed four
service levels for the Vidphone family of products:
39
* VidPhone Basic is a one-way VidPhone that is provided without
charge to telecommunication companies and DSOs as a promotional
tool (with a maximum number of uses built in to prevent improper
usage). The Vidphone Basic user can call a VidPhone-3, VidPhone-
Pro or VidPhone Pro Plus user and be able to see and hear that
person. The VidPhone-3, VidPhone-Pro or VidPhone Pro Plus user
cannot see the VidPhone Basic user but can have a clear voice
conversation.
* VidPhone-3 is a two-way video product that permits both parties to
have a peer-to-peer video meeting. VidPhone-3 is priced at $19.95
per month, and has the added features of being able to take a
still picture of the other party or record the entire video
meeting and play it back.
* VidPhone-Pro is not only a two-way video product that permits both
parties to have a "peer-to-peer" video meeting, but VidPhone-Pro
has the added features of being able to take a still picture of
the other party or record the entire video meeting and play it
back. Additionally, VidPhone-Pro also permits the user(s) to roam
and use the product anywhere in the world where there is access to
either a fixed high-speed Internet line or access to a wireless
hot spot. VidPhone-Pro is priced at $29.95 per month and is aimed
at the business user who needs the added benefit of portability.
* VidPhone Pro Plus has all the features of the VidPhone Pro, and
has the added benefit of unlimited Voice Over Internet Protocol
("VOIP") with no long-distance or toll charges of any kind,
thereby creating what VidRev believes is a cost-effective
communication device for both regular telephone calls to anyone in
the U.S. and Canada over VOIP as well as videoconferencing. For
those areas outside of U.S and Canada, VidRev provides a bundled
VOIP service at a price of $0.05 per minute. The VidPhone Pro
Plus is priced at $39.95 per month.
VidConference
-------------
VidConference is VidRev's software-based videoconference system that
allows real time audio and video to be shared among 11 attendees, regardless
of their geographic location. VidRev believes potential markets for
VidConference will be both large enterprises that seek a low-cost, high-
quality videoconferencing, as well as small companies that will purchase
'one-off' videoconferences from licensed distributors. VidConference will be
sold to large enterprises on a license basis (based on the number of seats) as
well as on a per minute basis to smaller companies and individuals.
VidBroadcast
------------
VidBroadcast is professional video client end software that will be used
to communicate with VidRev Video Servers and Video Broadcast Centers.
VidBroadcast can control and record 16 cameras and an unlimited number of
connections and users. VidRev believes potential customers for VidBroadcast
include:
* Financial public relations for corporate communication to multiple
personnel;
40
* Political messaging for fund raising and team communication;
* Corporate multicasting for a variety of communication needs; and
* University e-learning and distance-based learning.
VidSecure
---------
VidSecure is a product that provides real-time secure streaming feeds
from multiple cameras with minimal hardware to anywhere in the world over the
Internet. The VidSecure solution can work with fixed cameras, with roving
cameras or with operator driven high speed PTZ (pan-tilt-zoom) cameras, analog
or digital.
While there are a number of competitive products in the marketplace
today, VidRev believes VidSecure has the benefit of a larger and clearer image
and smaller bandwidth and server utilization. VidRev believes VidSecure
offers a solution to anyone seeking to secure a single location or multiple
locations around the world at a low cost. Some potential users and
applications of VidSecure include:
* Security monitoring companies;
* Corporate security monitoring systems;
* Nanny-cam installed in the home for protection of children; and
* Hospitals, nursing homes, convalescent homes and heath care
facilities.
Competition
- -----------
The competition for videoconferencing is made up of two distinct and
completely different vendors. On the one hand there is a small group of "high-
end" expensive systems from such companies as:
* AT&T Corp.
* Polycom, Inc.
* Tandberg, Inc.
* V-Con, Inc.
* Sony Electronics, Inc.
* VTEL Products Corporation
* WEBEX Communications, Inc.
These companies are well established and well recognized in the video
conferencing industry and have substantial sales and a proven track record of
success. The second tier is comprised of companies who are selling software-
based videoconferencing products, and include:
* Eyeball Networks Inc.
* Genesys Conferencing, Inc.
41
* HQ Global Workplaces
* IB Productions Inc.
* LiveOffice Corp.
* InData Group, Inc.
* PictureTel Corp.
Sources and Availability of Raw Materials and Names of Principal Suppliers
- --------------------------------------------------------------------------
None; Not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements of
Labor Contracts
- ---------------
VidRev is the exclusive United States licensee and distributor of
certain video compression technology from TTA, VidRev's controlling
stockholder.
Under its License and Distribution Agreement with TTA, TTA grants VidRev
an exclusive right to distribute and further license certain video compression
technology in the continental United States for an initial term of 50 years.
Excluded from the license is the right to distribute or further license the
technology for pornographic or adult entertainment purposes. Pricing is to be
determined annually by VidRev and TTA. For each sublicense granted by VidRev
or a third party distributor of VidRev to an end user, VidRev is required to
pay a fee to TTA of eighteen percent (18%) of the license or use fee for each
product sublicensed.
Need for any Governmental Approval of Principal Products of Services
- --------------------------------------------------------------------
None; Not applicable.
Effect of Existing or Probable Governmental Regulations on Business
- -------------------------------------------------------------------
If VidRev completes the Merger, the surviving company will be subject to
the regulatory requirements and rules of a publicly-held company.
Research and Development
- ------------------------
VidRev currently has no research and development expenses. VidRev's
technology is licensed to VidRev by TTA. Therefore, TTA and its related
companies currently bear the cost of such research and development. It is
anticipated that VidRev will be responsible for a research and development
royalty fee to TTA for the hardware chipset version of the VidPhone, which is
expected to be launched in 2005. The terms and conditions of the royalty fee
will be negotiated prior to the launch of the product.
Cost and Effects of Compliance with Environmental Laws
- ------------------------------------------------------
None; Not applicable.
42
Number of Employees
- -------------------
VidRev currently has one employee, Errol Gerson, the Chief Operating
Officer and Interim President.
Regulation and Taxation
- -----------------------
VidRev believes that it has structured the Merger in such a manner as to
minimize federal and state tax consequences to it and to Kentex and its
stockholders.
Property; Website
- -----------------
VidRev's principal executive offices are located at 1880 Century Park
East, Suite 700, Los Angeles, California 90067 and its phone number is (310)
407-5352. VidRev's website address is www.vdvr.com. The information found on
VidRev's website is not a part of this joint Information Statement/Prospectus.
Qualitative and Quantitative Disclosures about Market Risk
- ----------------------------------------------------------
VidRev has not considered nor conducted any research concerning
qualitative and quantitative market risk.
DESCRIPTION OF VIDREV CAPITAL STOCK
Common Stock
- ------------
VidRev is authorized to issue up to 50,000,000 shares of common stock,
$.0001 par value per share. As of December 15, 2004, there were 30,356,000
common shares issued and outstanding held by 25 stockholders and no preferred
stock issued. There is no public market for VidRev common stock.
All outstanding shares of common stock of VidRev are duly authorized,
validly issued, fully paid and nonassessable. Upon liquidation, dissolution or
winding up, the holders of VidRev common stock are entitled to share ratably
in all net assets available for distribution to stockholders after payment to
creditors. The common stock is not redeemable and has no preemptive or
conversion rights.
Dividends
- ---------
VidRev has not paid any dividends on its common stock and does not
anticipate paying any cash dividends in the foreseeable future.
43
VIDREV'S MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
VidRev is a development stage company. As of September 30, 2004, VidRev
had a net loss in the amount of $320,080 for the period from inception to
September 30, 2004. As of that date, VidRev had current liabilities of
$264,249 with current assets in the amount of $17,246.
VidRev's management has developed a plan under which all direct and
indirect sales and marketing expenses will be borne by its licensees and
distributors. To this end, VidRev anticipates that it may issue up to 500,000
shares of restricted common stock to a limited number of sales and
distribution partners within the next 24 months. Sales efforts on the part of
VidRev's first licensees/distributors began in November 2004 and VidRev's
management is optimistic that these efforts will begin to generate revenue to
sustain the operations of VidRev.
VidRev's operations have been primarily funded by TTA. As of December
27, 2004, VidRev has been advanced a total of $153,400 from TTA, the
controlling stockholder of VidRev and the licensor of its technology. This
debt is evidenced by demand promissory notes that bear interest at the rate of
five percent (5%) per annum. It is the intention of VidRev to repay these
demand promissory notes as soon as sufficient capital has been accumulated.
VidRev's future capital requirements will depend on many factors, including
but not limited to: the market acceptance of its products and sublicenses; the
levels of promotion and marketing required to attain a competitive position in
the marketplace, the extent to which it and TTA invest in new technology and
improvements on VidRev's existing technology, and the response of competitors
to its products and sublicenses.
Pursuant to the Merger Agreement, the surviving company will file a
subsequent registration statement to register the re-sale by TTA of up to
1,000,000 shares of the surviving company's common stock and to register for
sale and issuance by the surviving company of up to 1,000,000 shares of its
common stock. VidRev will use any funds obtained in its offering of 1,000,000
shares to fund the operations of the surviving company.
VidRev expects that it will require only minimal additional funding for
2005. However, to the extent that any funds VidRev may receive from the sales
of its stock, products and sublicenses are insufficient to fund its activities
over the long-term, VidRev may need to raise additional funds through
additional equity or debt financing or from other sources.
44
TTA TECHNOLOGIES LTD.
General
- -------
TTA Technologies Ltd. was organized under the laws of the Bahamas on
December 3, 2003. TTA has invested in and licenses software used for video
conferencing, video telephony, security and compression and transmission of
electronic files in connection with the World Wide Web. TTA has licensed the
video over intellectual property compression technology in the United States
to VidRev. TTA's principal executive offices are located at First Commercial
Center, East Mall Drive and Pioneers Way, P.O. Box F 44656, Freeport, GBI, The
Bahamas and its phone number is (242) 373-3405.
Beneficial Ownership of TTA Technologies Ltd.
- ---------------------------------------------
The following table presents certain information as of December 20, 2004
with respect to the beneficial ownership of shares of TTA by: (i) all
stockholders of TTA who are beneficial owners of more than 5% of its
outstanding shares, (ii) each director and officer of TTA, and (iii) all
directors and officers of TTA as a group.
Name and Address Amount and Nature of Percentage
of Beneficial Owner Director/Officer Beneficial Ownership of class
------------------- ---------------- -------------------- --------
John Bloom Director & Chairman 249,500 (1) 49.9%
Silver Point
Apartment 43
Acacia Road
Freeport, GBI
The Bahamas
Henry Ni Director & President 249,500 49.9%
1/22 Russell Street
Camberwell,
VIC 3124 Australia
Peter Brown Director & Secretary 1,000 (2) *
279 East 44th Street
Apt. 14A
New York, NY 10019
Directors and Officers as a Group 100%
* less than 1%
(1) Mr. Bloom's wife, Anne Bloom, is the record owner of 100,000 of these
shares. Mrs. Bloom is not an officer or director of TTA.
(2) Peter Brown, Esq., owns an equity interest in BRMFS Holdings, LLC, which
is the record owner of these shares. The address of BRMFS Holdings, LLC is
900 Third Avenue, New York, NY 10022.
45
PROPOSAL TWO
APPROVAL OF NAME CHANGE
Pursuant to the Merger Agreement, on December 9, 2004, Kentex's Board of
Directors voted unanimously to authorize and recommend that Kentex
stockholders approve an Amended and Restated Articles of Incorporation to
change Kentex's name to VidRev Technologies, Inc. On December 14, 2004,
consenting Kentex stockholders owning approximately 92.5% of the issued and
outstanding shares of Kentex common stock approved the Amended and Restated
Articles of Incorporation and the name change. The Amended and Restated
Articles of Incorporation will be filed with the Nevada Secretary of State and
it is conditioned upon the closing of the Merger. A copy of the Amended and
Restated Articles of Incorporation is attached as Annex B to this joint
Information Statement/Prospectus. The Board of Directors and Kentex's
consenting stockholders believe that this name change more accurately reflects
the nature of the surviving company's business, which is to provide software
and technology solutions for videoconferencing.
46
PROPOSAL THREE
ELECTION OF DIRECTORS
Under the Merger Agreement, Kentex and VidRev have agreed that upon
closing of the Merger, the current directors of Kentex will resign in seriatim
and the surviving company's Board of Directors will consist of six members.
Each director shall serve until the end of the one-year term to which he is
elected and until his successor has been elected, or until his earlier
resignation or removal.
On December 14, 2004, consenting Kentex stockholders owning 92.5% of the
issued and outstanding shares of Kentex common stock elected the following
individuals. Such election is conditional upon the closing of the Merger.
Name Age Position
Peter Brown 58 Director
David Clare 49 Director
Sy Eisenberg 74 Director
Errol Gerson 59 Director
Michael Noshay 55 Director
Ed Rollins 61 Director
All of the above persons are current directors of VidRev.
Information Concerning the Nominees
- -----------------------------------
The background and experience of the nominees for directors are as
follows:
Peter Brown has served as a director of VidRev since May 2004. He also
serves as Vice President and Secretary of VidRev. Mr. Brown is a founding and
managing partner at the law firm of Brown Raysman Millstein Felder & Steiner
LLP. Mr. Brown speaks and writes extensively on intellectual property and
technology issues. He co-authors a monthly column for the New York Law Journal
and has co-authored two books: Emerging Technologies and the Law: Forms &
Analysis and Computer Law: Drafting and Negotiating Forms and Agreements. He
has served as an expert witness on technology law matters in federal
litigations and arbitrations. Mr. Brown has also served as an Adjunct
Professor of Computer Law at Dartmouth College and as Co-Chair of the American
Bar Association's Computer Litigation Committee. He is the former Chair of the
Computer Law Committee of the Association of the Bar of the City of New York
and is a member of the Board of Directors of the Computer Law Association. Mr.
Brown is a graduate of Dartmouth College and received his J.D. at Columbia
University School of Law.
David Clare has served as a director of VidRev since July 2004. Mr.
Clare is currently the Chairman and Senior Vice President of Champ Car World
Series, LLC, a leading open-wheeled street car racing series. Mr. Clare is
formerly the Chief Operating Officer of Championship Auto Racing Teams, Inc.,
a New York Stock Exchange listed company and predecessor of Champ Car World
Series, LLC. Mr. Clare was also a director and officer of CART, Inc., a
subsidiary Championship Auto Racing Teams, Inc., when CART, Inc. filed for
bankruptcy protection in December 2003. From 2000 to 2002, Mr. Clare served
as Director of Sports Marketing at Merit/Burson-Marsteller, a global public
relations and public affairs firm in Seoul, Korea. Mr. Clare is also a
founder and former Managing Director of Event Promotion International Limited,
where he was responsible for the company's management and development in areas
such as sports marketing, event management and licensing. Mr. Clare attended
the University of Leeds in the United Kingdom.
47
Sy Eisenberg has served as a director of VidRev since February 2004. He
also served as President of VidRev until May 2004. Mr. Eisenberg is President
and director of Eisenberg Insurance Group and is a Florida licensed commercial
real estate broker. He has been President and director of the IMF Corporation,
American First Capital and the First Wall Street Corp. companies, which were
involved in investment banking and financial services. He was Senior Vice-
President of The Washington Group specializing in financial consulting, real
estate and asset management. He served as President and director of Tolin
Manufacturing Corp and Vice-President and director of Odell Inc., publicly
held corporations that were merged with Papercraft Corp., a New York Stock
Exchange listed company. Mr. Eisenberg is a former Vice Mayor and
Commissioner and Chairman of the Finance Committee for the City of Miami
Beach, Florida and was elected for four terms. He also served on the Board of
Directors for the Florida League of Cities Finance and Taxation Committee and
was a member of the Policy Steering Committee of the National League of
Cities. He served on the Board of Governors for the State of Florida Joint
Underwriting Association and as a member of the Board of Governors of Barry
University. He is the co-founder of the Center for International Security in
Washington D.C. Mr. Eisenberg is a veteran of the U.S. Army and served with
the Combat Engineers. He is a member of the Veterans of Foreign Wars and the
American Legion.
Errol Gerson has served as a director, Chief Operating Officer and
Interim President of VidRev since May 2004. Mr. Gerson is the former Chief
Operating Officer of National Lampoon Networks, Inc., a college television
network, from July 2001 through May 2004. From 1997 through 2001, Mr. Gerson
served as director of New Media at Creative Artists Agency, where he was
responsible for integrating New Media into the existing core business and
acquiring new clients. In 1992 he created Cow Interactive, one of the first
Internet design and consulting companies in the United States, developing
Internet sites for clients. Mr. Gerson is a graduate of the University of
Southern California and received a Bachelor of Science in Accounting and his
M.B.A. in Finance.
Michael Noshay has served as a director of VidRev since August 2004.
Mr. Noshay co-founded IDS Telcom, a telecommunications service provider in
1989. With over 15 years experience in the telecommunications industry in
executive and leadership positions, Michael Noshay is the President of IDS
Telcom. In his capacity as President, he is responsible for developing new
business opportunities for the company and negotiating all interconnection
agreements with other telecom and related entities of the telecommunications
industry. Prior to co-founding IDS, Mr. Noshay served in ownership/leadership
roles in various businesses including construction, real estate,
manufacturing, distribution and the hotel industry. He currently serves as a
member on the Board of Directors of USAT, LLC and as a Partner in a financial
services company. Michael Noshay graduated with honors from Franklin &
Marshall College in 1971 and later attended the University of Miami Law
School.
Ed Rollins has served as a director of VidRev since February 2004. Mr.
Rollins is a political commentator and strategist and was most recently the
Co-Chairman and Campaign Manager of the Ross Perot Presidential Campaign. He
has served in the administrations of three Presidents - Richard Nixon, Gerald
Ford and Ronald Reagan and served as the National Campaign Director for
President Regan's 1984 re-election campaign. Mr. Rollins has also served in
the California legislature as the Republican Chief of Staff, Principal
Assistant to the Republican Leader, and Assistant to the Speaker of the
California State Assembly. Mr. Rollins is a graduate of the California State
University system where he also completed graduate studies in Political
Science and Public Administration.
Meetings of the Board; Committees of the Board
- ----------------------------------------------
The Board of Directors of Kentex met on September 28, 2004, to evaluate
the due diligence materials provided by VidRev in connection with the Merger
and on December 9, 2004 to approve the Merger and the transactions related
thereto. Kentex does not have any committees of its Board of Directors.
48
Involvement in Certain Legal Proceedings
- ----------------------------------------
Except as indicated below, during the past five years, none of Kentex's
present or former directors, executive officers or persons nominated to become
directors or executive officers:
* was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
* was convicted in a criminal proceeding or named subject to a
pending criminal proceeding, excluding traffic violations and
other minor offenses;
* was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; or
* was found by a court of competent jurisdiction in a civil action,
by the SEC or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
Mr. David Clare, currently a member of the board of directors of VidRev,
and who will become a member of the board of the surviving company upon the
closing of the Merger, was a director and officer of CART, Inc. when it filed
for bankruptcy protection in December 2003.
Transactions with Management and Others
- ---------------------------------------
During the past two years, there have been no material transactions,
series of similar transactions or currently proposed transactions, to which
Kentex was, or is, to be a party, in which the amount involved exceeded
$60,000 and in which any director or executive officer, promoter or founder or
any security holder who is known to Kentex to own of record or beneficially
more than five percent of Kentex's common stock, or any member of the
immediate family of any of the foregoing persons, or any promoter or founder
had a material interest.
Termination of Employment and Change of Control Arrangements
- ------------------------------------------------------------
None.
Security Ownership of Kentex Shares By Certain Beneficial Stockholders
- ----------------------------------------------------------------------
The following table presents certain information regarding beneficial
ownership of Kentex common stock as of December 15, 2004.
49
Name and Address of Amount of Beneficial Percent of
Beneficial Owner Ownership Class
- ---------------- --------- -----
Sarah E. Jenson 364,000 (1) 15.4%
8842 Highfield Rd.
Park City, UT 84098
Victoria Jenson - -
89 Lone Hollow Dr.
Sandy, UT 84092
Lisa Howells 182,000 (2) 7.7%
8495 S. Terrace Dr.
Sandy, UT 94093
Directors and Officers as a
Group 546,000 23.1%
(1) Ms. Jenson's husband, Travis T. Jenson, is the record owner of these
shares.
(2) Ms. Howells' husband, Thomas J. Howells, is the record owner of these
shares.
After the Merger, Kentex's stockholders will own 923,357 shares or
approximately 3.35% of the surviving company.
Pro Forma Beneficial Ownership
- ------------------------------
The following table sets forth, on a pro forma basis, as of December 20,
2004, certain information with respect to the beneficial ownership of shares
of the surviving company's common stock of (i) all stockholders Kentex and
VidRev believe will be beneficial owners of more than 5% of the surviving
company's outstanding common stock, (ii) each prospective director of the
surviving company and each prospective executive officer of the surviving
company and (iii) all prospective directors and prospective officers of the
surviving company as a group when, the cancellation of 3,959,357 shares of
VidRev common stock held by TTA has taken place, the Merger has been effected,
and the new directors and officers are appointed.
Name and Address of Amount of Beneficial Percent of
Beneficial Owner Director/Officer Ownership Class
- ---------------- ---------------- --------- -----
TTA Technologies Ltd. - 25,415,143(1) 93.6%
First Commercial Center
East Mall Drive and
Pioneers Way
P.O. Box F 44656,
Freeport, GBI
The Bahamas
Sy Eisenberg Director 300,000 1.1%
5025 Collins Ave
Apt. 704
Miami Beach, FL 33140
Peter Brown Director, 40,000(2) *
279 East 44th Street Vice President and
Apt. 14A Secretary
New York, NY 10019
50
Errol Gerson Director, 20,000 *
9947 Robbins Drive Chief Operating
Suite 201 Officer and
Beverly Hills, CA 90212 Interim President
Ed Rollins Director 10,000 *
301 East 66th Street
Apt. 6L
New York, NY 10021
David Clare Director 5,000 *
8826 Worthing Circle
Indianapolis, IN 46298
Michael Noshay Director - -
1525 NW 167th Street
Miami, FL 33169
Directors and Officers
as a Group 375,000 1.4%
(1) Mr. Henry Ni and Mr. John Bloom are the controlling stockholders of TTA.
Mr. Bloom's wife, Anne Bloom, is the record owner of 150,000 of these shares.
(2) Mr. Brown also owns an equity interest in BRMFS Holdings, LLC, which is
the record owner of 20,000 of these shares. The address of BRMFS Holdings,
LLC is 900 Third Avenue, New York, NY 10022.
* Beneficial ownership is less than 1%.
Management
- ----------
Kentex's current directors and executive officers are: Sarah E. Jenson
(President and director), Victoria Jenson (Vice President and director), and
Lisa Howells (Secretary/Treasurer and director). Each current director and
executive officer is to resign her positions upon completion of the Merger.
The executive officers of the surviving company after the Merger will
be: Errol Gerson (Chief Operating Officer and Interim President), and Peter
Brown (Vice President and Secretary). Each currently serves in those
positions for VidRev.
Executive Compensation of Directors and Officers
- ------------------------------------------------
No director or executive officer of Kentex has received any compensation
from Kentex in the last two calendar years.
Except for directors who are also employees of the surviving company, it
is intended that each member of the Board of Directors of the surviving
company will receive $2,500 plus out-of-pocket expenses and 500 shares of the
surviving company's common stock for each meeting such non-employee director
attends.
51
Employment and Consulting Agreements
- ------------------------------------
Errol M. Gerson Employment Agreement
------------------------------------
VidRev entered into an employment agreement with Errol M. Gerson on May
25, 2004, which will be assumed by the surviving company in the Merger. The
employment agreement provides that Mr. Gerson shall serve as VidRev's Chief
Operating Officer and shall hold the title of Interim President until such
time as a President is employed by VidRev. Mr. Gerson's employment agreement
states that he is entitled to an annual base salary of $160,000. Upon the
consummation of outside financing to VidRev and/or the completion of the sale
of securities by VidRev in an amount of not less than five million dollars in
the aggregate, Mr. Gerson's base salary shall be increased to an annual rate
of $180,000. Thereafter, Mr. Gerson's base salary will be subject to
review on an annual basis, however, there is no guarantee of any future
increase. VidRev also paid Mr. Gerson an aggregate of $9,500 for certain
consulting services provided by Mr. Gerson for VidRev prior to the execution
of the employment agreement.
Mr. Gerson's employment agreement shall continue in effect until May 31,
2006. Subsequent to this initial expiration date, the employment agreement
shall automatically renew for perpetual twelve-month terms unless either party
provides written notice of intent not to renew no less than three months prior
to expiration of the term.
The employment agreement also provides long-term incentive compensation
to Mr. Gerson through the grant of 95,000 restricted shares of common stock of
VidRev, which is subject to a three-year vesting schedule. Except to the
extent such shares are vested, the shares shall be subject to forfeiture by
Mr. Gerson if termination for cause occurs. Mr. Gerson was also granted a
signing bonus, whereby 20,000 shares of common stock of VidRev was granted.
This signing bonus of 20,000 shares of common stock is not subject to a
vesting schedule and vested immediately.
Mr. Gerson's employment agreement states that VidRev may, without cause,
and Mr. Gerson may, for good reason, terminate the agreement such that Mr.
Gerson would receive his annual base salary through the end of the term of the
employment agreement and such benefits as have accrued and are unpaid as of
his termination date. In addition, all unvested shares of the long-term
incentive compensation grant would vest immediately, and would become freely
transferable.
Lastly, the employment agreement stipulates that Mr. Gerson shall hold
all confidential information in strict confidence and he shall refrain from
competing with VidRev for a period of eighteen months from the date of
termination.
Pursuant to an amendment effective on December 1, 2004, Mr. Gerson
agreed that the salary requirements of his employment contract will be amended
as follows: the gross monthly compensation due to Mr. Gerson will be $11,000
per month until such time as VidRev has begun to earn not less than $25,000
per month of gross revenue, upon which he will assume his salary under his
original employment agreement.
Edward J. Rollins Consulting Agreement
--------------------------------------
VidRev entered into a consulting agreement with Edward J. Rollins on May
12, 2004, which will be assumed by the surviving company in the Merger. Mr.
Rollins will provide consulting services to VidRev relating to the promotion
of VidRev, including, the marketing of VidRev's products, managing general
public relations and press relations, assisting in negotiating and
implementing license agreements with clients, recruiting officers and
executives for VidRev and other services that may be requested by VidRev.
52
In consideration for his consulting services, Mr. Rollins will receive
50,000 shares of VidRev common stock as follows: (a) 10,000 shares issued
upon executing the consulting agreement and (b) 10,000 shares on each of
November 1, 2004, May 1, 2005, November 1, 2005 and May 6, 2006, provided that
the consulting agreement is in effect on those dates and that Mr. Rollins in
VidRev's judgment is exercising reasonable efforts to fulfill his duties under
the agreement. VidRev also reserves the right to adjust the number of shares
to be issued to Mr. Rollins.
The consulting agreement anticipates that Mr. Rollins will serve on the
Board of Directors of VidRev and that Mr. Rollins will attend approximately
four Board meetings per year. VidRev agrees to pay Mr. Rollins $2,500 per
meeting as well as reasonable travel expenses. VidRev will also issue 500
shares of common stock of VidRev for each meeting attended.
Mr. Rollins' consulting agreement shall continue in effect until May 11,
2006. Subsequent to this initial expiration date, the consulting agreement
shall automatically renew for perpetual one-year terms. Either party may
terminate the consulting agreement for any reason provided that 30 days
written notice of termination is given.
Lastly, the consulting agreement stipulates that Mr. Rollins shall hold
all confidential information in strict confidence and he shall refrain from
rendering services to any existing or potential competitors of VidRev for the
duration of the agreement and for a period of 3 months from the date of
termination.
Sy Eisenberg Consulting Agreement
---------------------------------
VidRev entered into a consulting agreement with Sy Eisenberg on November
12, 2004, which will be assumed by the surviving company in the Merger. Mr.
Eisenberg will provide consulting services to VidRev relating to the promotion
of VidRev, including, the marking of VidRev's products, assisting in
negotiating and implementing license agreements with clients, recruiting
officers and executives for VidRev and other services that may be requested by
VidRev.
In consideration for his consulting services, Mr. Eisenberg received
300,000 restricted shares of VidRev common stock upon executing the consulting
agreement. Mr. Eisenberg is also eligible to receive additional compensation,
in the form of restricted VidRev common stock, for introducing clients to
VidRev and successfully negotiating license agreements between VidRev and such
clients.
The consulting agreement anticipates that Mr. Eisenberg will serve on
the Board of Directors of VidRev for an initial two-year term and that Mr.
Eisenberg will attend approximately four Board meetings per year. VidRev
agrees to pay Mr. Eisenberg $2,500 per meeting as well as reasonable travel
expenses. VidRev will also issue 500 restricted shares of common stock of
VidRev for each meeting attended.
Mr. Eisenberg's consulting agreement shall continue in effect until
November 11, 2006. Subsequent to this initial expiration date, the consulting
agreement shall automatically renew for perpetual one-year terms. Either
party may terminate the consulting agreement for any reason provided that 30
days written notice of termination is given.
53
Lastly, the consulting agreement stipulates that Mr. Eisenberg shall
hold all confidential information in strict confidence and shall refrain from
disclosing such confidential information to any person or using such
confidential information for his own account or for the account of any person.
While Mr. Eisenberg may perform services for persons or entities other than
VidRev provided that such service does not conflict with the consulting
agreement, he may not provide services to any existing or potential
competitors of VidRev for the duration of the agreement and for a period of 3
months from the date of termination.
Long-Term Incentive Plans
- -------------------------
Kentex has no long-term incentive compensation plans.
Certain Relationships and Related Transactions
- ----------------------------------------------
Kentex
- ------
None; not applicable.
VidRev
- ------
As of December 27, 2004, VidRev has been advanced a total of $153,400
from TTA, the controlling stockholder of VidRev and the licensor of its
technology. This debt is evidenced by demand promissory notes that bear
interest at the rate of five percent (5%) per annum. It is the intention of
VidRev to repay these demand promissory notes as soon as sufficient capital
has been accumulated.
Peter Brown, Esq., a member of the Board of Directors, Vice President
and Secretary of VidRev and a stockholder of VidRev, is the managing partner
of Brown Raysman Millstein Felder & Steiner LLP, which serves as counsel to
VidRev. It is anticipated that Brown Raysman Millstein Felder & Steiner LLP
will render legal services to VidRev in excess of $175,000 this fiscal year.
Mr. Brown holds 20,000 shares of the common stock of VidRev. Mr. Brown also
has an equity interest in BRMFS Holdings, LLC, which holds 20,000 shares of
the common stock of VidRev and 1,000 shares of TTA. Mr. Brown also serves as
a director and Secretary of TTA. TTA holds 29,374,500 shares or 96.8% of
VidRev's outstanding common stock.
VidRev has entered into an employment agreement with Mr. Errol Gerson, a
member of the Board of Directors of VidRev and VidRev's Chief Operating
Officer and Interim President. VidRev has also entered into consultant
agreements with Mr. Edward J. Rollins and Mr. Sy Eisenberg, both members of
the Board of Directors of VidRev.
Compliance with Section 16(a) of the Exchange Act
- -------------------------------------------------
Each of Kentex's directors, executive officers and 10% owners have filed
an Initial Statement of Beneficial Ownership of Securities on Form 3 with the
SEC as follows:
Name Filing Date
---- -----------
Sarah E. Jenson December 17, 2004
Victoria Jenson December 17, 2004
Lisa J. Howells December 17, 2004
Duane S. Jenson December 17, 2004
In addition, each of the following directors have filed a Statement of
Changes in Beneficial Ownership of Securities on Form 4 with the SEC on or
about the dates indicated:
Name Filing Date
---- -----------
Sarah E. Jenson December 17, 2004
Lisa J. Howells December 17, 2004
54
PROPOSAL FOUR
APPROVAL OF STOCK OPTION PLAN
Background
- ----------
Pursuant to the Merger Agreement, on December 14, 2004 the Board of
Directors recommended that the stockholders approve the VidRev Technologies,
Inc. 2005 Stock Option Plan (the "Stock Option Plan"). On December 9, 2004,
consenting Kentex stockholders owning 92.5% of the issued and outstanding
shares of Kentex common stock approved by written consent the Stock Option
Plan, which will, assuming and contingent upon the completion of the Merger,
be the stock option plan for the surviving company. The purpose of the Stock
Option Plan is to provide an incentive to key employees and non-employee
directors of, and consultants and other independent advisors to the surviving
company or any of its affiliates, who are in a position to contribute
materially to the long-term success of the surviving company, to increase
their interest in the welfare of the surviving company and its affiliates and
to aid in attracting and retaining employees, directors and consultants of
outstanding ability. Stockholder approval of the Stock Option Plan permits
the granting of incentive stock options under the Stock Option Plan and will
enable certain stock options granted under the Stock Option Plan to qualify
for deductibility under Section 162(m) of the Internal Revenue Code.
A summary of the principal features of the Stock Option Plan is provided
below, but is qualified by reference to the full text of the Stock Option Plan
that is attached to this joint Information Statement/Prospectus under Annex D.
Shares Available
- ----------------
2,500,000 shares of common stock of the surviving company are reserved
under the Stock Option Plan for stock option grants. However, commencing as
of January 1, 2006, should the total number of shares of common stock of the
surviving company that is issued and outstanding increase, the maximum number
of shares reserved for issuance under the Stock Option Plan will automatically
increase for the next succeeding year to ensure that the number of shares of
common stock reserved for issuance under the Stock Option Plan is always equal
to 10% of the total number of issued and outstanding shares of common stock of
the surviving company. If a stock option shall expire and terminate for any
reason, in whole or in part, without being exercised, the number of shares of
common stock as to which such expired or terminated stock option shall not
have been exercised may again become available for the grant of new stock
options under the Stock Option Plan. No employee may receive one or more
stock options in any calendar year for the purchase of more than 500,000
shares.
Administration
- --------------
The Stock Option Plan will be administered by committees designated by
the Board of Directors (the "Committees"). Among the Committees' powers will
be the authority to determine the eligibility of employees, directors and
consultants to participate in the Stock Option Plan, to grant stock options
under the Stock Option Plan and to determine whether stock options granted
under the Stock Option Plan to employees shall be non-qualified stock options
or incentive stock options, to interpret the Stock Option Plan, to prescribe,
amend, and rescind rules and regulations relating to the Stock Option Plan, to
determine the terms and provisions of stock option agreements and to make all
other determinations necessary or advisable for the administration of the
Stock Option Plan.
55
A special committee comprised of two or more individuals who are both
(i) "non-employee directors" (as defined in Rule 16b-3(b)(3) promulgated by
the SEC under the Securities Exchange Act of 1934, as amended) and (ii)
"outside directors" (as such term is defined in Treasury Regulation Section
1.162-27(e)(3)), shall administer the Stock Option Plan with respect to stock
option grants issued under the Stock Option Plan to employees and directors
who are subject to Section 16 of the Securities Exchange Act of 1934, as
amended, and/or (b) employees who are "covered employees" within the meaning
of Section 162(m)(3) of the Internal Revenue Code of 1986, as amended. For
all other purposes of the Stock Option Plan, the regular committee shall
administer the Stock Option Plan.
Eligibility for Participation
- -----------------------------
Employees, directors and consultants of the surviving company are
eligible to participate in the Stock Option Plan. The selection of eligible
participants is within the discretion of the Committees.
Types of Awards
- ---------------
The Stock Option Plan provides for the grant of stock options, including
incentive stock options and non-qualified stock options.
The Board of Directors may, at any time, alter, amend, suspend,
discontinue, or terminate the Stock Option Plan; provided, however, that no
such action shall adversely affect the right of any stock option grantee under
any stock option previously granted thereto under the Stock Option Plan.
Stock Option Grants
- -------------------
The Committees may grant options qualifying as incentive stock options
under the Internal Revenue Code (to employees only) and non-qualified stock
options. The term of an option will be fixed by the Committees, but will not
exceed ten years; provided, however, that any incentive stock option granted
to a ten percent stockholder of the surviving company shall not be exercisable
more than five years from the date the incentive stock option was granted.
The option price for any option, whether an incentive stock option or a non-
qualified stock option, will not be less than the fair market value of the
surviving company's common stock on the date of grant; and, provided, further,
that the purchase price of each share of stock subject to an incentive stock
option granted to a ten percent stockholder of the surviving company shall not
be less than 110% of the fair market value of the surviving company's common
stock on the date of grant. Generally, the fair market value will be the
closing price of the surviving company's common stock on the applicable
trading market. Payment for shares purchased upon exercise of a stock option
shall be payable in cash or by certified check, bank draft or postal or
express money order. In addition, the Committees, in their discretion, may
permit an option grantee to make partial or full payment of the purchase price
by utilization of a "cashless exercise" or any other method made available by
the Committees under the Stock Option Plan.
56
Adjustments
- -----------
In the event of any change in capitalization affecting the common stock
of the surviving company, including, without limitation, a stock dividend or
other distribution, stock split, reverse stock split, recapitalization,
consolidation, subdivision, split-up, spin-off, split-off combination or
exchange of shares or other form of reorganization or recapitalization, or any
other change affecting the common stock of the surviving company, the Board of
Directors shall authorize and make such proportionate adjustments, if any, as
the Board of Directors shall deem appropriate to reflect such change,
including, without limitation, with respect to the aggregate number of shares
of common stock of the surviving company for which stock options in respect
thereof may be granted under the Stock Option Plan, the number of shares of
common stock of the surviving company covered by each outstanding stock
option, and the purchase price per share of common stock of the surviving
company in respect of outstanding stock options.
In the event the surviving company is a party to a Merger or other
reorganization, the Board of Directors shall determine the treatment of
outstanding stock options, which treatment may include the assumption of
outstanding stock options by the successor company or its parent, their
continuation by the surviving company (if the surviving company is the
successor), accelerated vesting and/or accelerated expiration or settlement in
cash.
Amendment of the Stock Option Plan
- ----------------------------------
The Board of Directors has the right and power to amend the Stock Option
Plan. However, the Board of Directors may not amend the Stock Option Plan in
a manner which would impair or adversely effect the rights of the holder of
stock options previously granted thereto under the Stock Option Plan.
Termination of the Stock Option Plan
- ------------------------------------
The Stock Option Plan may be terminated at any time by the Board of
Directors. Termination will not adversely affect the right of any grantee
under any stock option previously granted thereto under the Stock Option Plan.
Federal Tax Treatment
- ---------------------
Neither the grant nor the exercise of an incentive stock option granted
under the Stock Option Plan will have any immediate tax consequences to the
participant. If the participant makes no disposition of the shares acquired
pursuant to an incentive stock option before the later of two years from the
date of grant and one year from the date of exercise, any gain or loss
realized on a subsequent disposition of the shares will be treated as long-
term capital gain or loss. Under these circumstances the surviving company
will not be entitled to any deduction for federal income tax purposes.
The grant of a non-qualified stock option under the Stock Option Plan
will have no immediate tax consequences to the participant. The exercise of
the option by the participant will result in taxable income to the
participant, as compensation, in an amount equal to the amount by which the
fair market value of the acquired shares on the exercise date exceeds the
option price. The participant will have a tax basis in the acquired shares in
an amount equal to the fair market value of the shares on the date of
exercise. Upon a subsequent sale or taxable exchange of such shares, the
participant will recognize long or short-term capital gain or loss equal to
the difference between the amount realized on the sale and the tax basis of
such shares. The surviving company will be entitled to a deduction in the
amount of any compensation income that a participant recognizes in connection
with an option.
57
WHERE TO FIND MORE INFORMATION
Copies of our reports, proxy statements and other information may be
inspected and copied at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-
0330 for further information on the public reference rooms. Our SEC filings
are also available to the public from commercial document retrieval services
and at the web site maintained by the SEC at http://www.sec.gov.
Experts
- -------
The audited financial statements for Kentex for the period ended
December 31, 2003, and the unaudited financial statements for the period ended
September 30, 2004, included in this joint Information Statement/Prospectus
have been provided by Mantyla McReynolds, independent accountant, of Salt Lake
City, Utah, and have been so included in reliance on the report of Mantyla
McReynolds, independent accountant, given on its authority as an expert in
auditing and accounting.
The audited financial statements for the period ended September 30,
2004, included in this joint Information Statement/Prospectus have been
provided by Davis, Monk & Company, independent accountant, of Gainesville,
Florida, and have been so included in reliance on the report of Davis, Monk &
Company, independent accountant, given on its authority as an expert in
auditing and accounting.
Validity of Our Common Stock
- ----------------------------
The validity of the common stock subject to this offering will be passed
upon for Kentex by Burningham & Burningham, Salt Lake City, Utah.
58
FINANCIAL STATEMENTS
Independent Auditors' Report
Balance Sheet -- December 31, 2003
Statements of Operations for the years ended December 31, 2003 and 2002 and
for the period from Reactivation [May 8, 1999] through December 31, 2003
Statements of Stockholders' Deficit for the period from Reactivation [May 8,
1999] through December 31, 2003.
Statements of Cash Flows for the years ended December 31, 2003 and 2002 and
for the period from Reactivation [May 8, 1999] through December 31, 2003
Notes to Financial Statements
59
Kentex Petroleum, Inc.
[A Development Stage Company]
Financial Statements and Independent Auditors' Report
December 31, 2003
Kentex Petroleum, Inc.
[A Development Stage Company]
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Balance Sheet -- December 31, 2003 2
Statements of Operations for the years ended December 31, 2003 and
2002 and for the period from Reactivation [May 8, 1999] through
December 31, 2003 3
Statements of Stockholders' Deficit for the period from Reactivation
[May 8, 1999] through December 31, 2003. 4
Statements of Cash Flows for the years ended December 31, 2003 and
2002 and for the period from Reactivation [May 8, 1999] through
December 31, 2003 5
Notes to Financial Statements 6 -- 9
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Kentex Petroleum, Inc.[a development stage company]
We have audited the accompanying balance sheet of Kentex Petroleum, Inc.
[a development stage company] as of December 31, 2003, and the related
statements of operations, stockholders' deficit, and cash flows for the
years ended December 31, 2003 and 2002 and for the period from Reactivation
[May 8, 1999] through December 31, 2003. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with U.S. generally accepted
auditing standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Kentex
Petroleum, Inc. [a development stage company] as of December 31, 2003,
and the results of operations and cash flows for the periods ended
December 31, 2003 and 2002, in conformity with U.S. generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2
to the financial statements, the Company has accumulated losses from
operations, no assets, and a net working capital deficiency that raise
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Mantyla McReynolds
Salt Lake City, Utah
March 5, 2004
F-1
Kentex Petroleum, Inc.
[A Development Stage Company]
Balance Sheet
December 31, 2003
ASSETS
Assets $ 0
---------------------
Total Assets $ 0
=====================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities:
Current Liabilities:
Shareholder loan - NOTE 5 $ 13,460
---------------------
Total Current Liabilities 13,460
---------------------
Total Liabilities 13,460
Stockholders' Deficit:
Capital Stock -- 100,000,000 shares
authorized having a par value of $.001
per share; 2,357,997 shares issued
and outstanding - NOTE 4 2,358
Additional Paid-in Capital 2,073,802
Accumulated Deficit (2,041,500)
Deficit accumulated during development stage (48,120)
---------------------
Total Stockholders' Deficit (13,460)
---------------------
Total Liabilities and Stockholders'
Deficit $ 0
=====================
See accompanying notes to financial statements.
F-2
Kentex Petroleum, Inc.
[A Development Stage Company]
Statements of Operations
For the years ended December 31, 2003 and 2002 and for the period from
Reactivation [May 8, 1999] through December 31, 2003
Reactivation
through
December
2003 2002 31, 2003
------------ ----------- -------------
Revenues $ 0 $ 0 $ 0
General & Administrative Expenses 2,872 3,012 48,120
------------ ----------- -------------
Operating Loss (2,872) (3,012) (48,120)
Other Income or Expense 0 0 0
------------ ----------- -------------
Net Loss Before Income Taxes (2,872) (3,012) (48,120)
Current Year Provision for Income
Taxes 0 0 0
------------ ----------- -------------
Net Loss $ (2,872) $ (3,012) $ (48,120)
============ =========== =============
Basic and Diluted Loss Per Share $ (0.01) $ (0.01) $ (0.02)
============ =========== =============
Weighted Average Shares Outstanding 2,357,997 2,357,997 2,143,318
============ =========== =============
See accompanying notes to financial statements.
F-3
Kentex Petroleum, Inc.
[A Development Stage Company]
Statements of Stockholders' Deficit
For the Period from Reactivation [May 8, 1999] through December 31, 2003
Additional Net
Common Common Paid-in Accumulated Stockholders'
Shares Stock Capital Deficit Deficit
------------------------------------------------------
Balance, May 8, 1999
(Reactivation) 10,423,368 $ 10,423 $2,031,077 $(2,041,500)$ 0
Issued stock to
shareholder for
debt, September 28,
1999 1,410,000 1,410 1,410
Issued stock to
Directors for services,
September 30, 1999 13,500,000 13,500 13,500
Reverse split 1 for
250 shares, October 5,
1999 (25,232,035) (25,232) 25,232 0
Issued post split
shares for expenses,
October 5, 1999 1,950,000 1,950 17,550 19,500
Issued post-split
shares for expenses,
November 15, 1999 250,000 250 250
Net loss for the Year
Ended December 31, 1999 (34,660) (34,660)
----------- -------- ---------- ----------- ----------
Balance,
December 31, 1999 2,301,333 2,301 2,073,859 (2,076,160) 0
Issued shares
attributable to rounding
in 1999 reverse split 56,664 57 (57) 0
Net loss for the Year
Ended December 31, 2000 (4,878) (4,878)
----------- -------- ---------- ----------- ----------
Balance,
December 31, 2000 2,357,997 2,358 2,073,802 (2,081,038) (4,878)
Net loss for the Year
Ended December 31, 2001 (2,698) (2,698)
----------- -------- ---------- ----------- ----------
Balance,
December 31, 2001 2,357,997 2,358 2,073,802 (2,083,736) (7,576)
Net loss for the Year
Ended December 31, 2002 (3,012) (3,012)
----------- -------- ---------- ----------- ----------
Balance,
December 31, 2002 2,357,997 $ 2,358 $2,073,802 $(2,086,748)$ (10,588)
Net loss for the Year
Ended December 31, 2003 (2,872) (2,872)
----------- -------- ---------- ----------- ----------
Balance,
December 31, 2003 2,357,997 $ 2,358 $2,073,802 $(2,089,620)$ (13,460)
=========== ======== ========== =========== ==========
See accompanying notes to financial statements.
F-4
Kentex Petroleum, Inc.
[A Development Stage Company]
Statements of Cash Flows
For the years ended December 31, 2003 and 2002, and for the period from
Reactivation [May 8, 1999] through December 31, 2003
Reactivation
through
December
2003 2002 31, 2003
------------ ----------- -------------
Cash Flows Provided by/(Used for)
Operating Activities
Net Loss $ (2,872) $ (3,012) $ (48,120)
Adjustments to reconcile net
income to net cash provided by
operating activities:
Increase in shareholder loan 2,872 3,012 13,460
Stock issued for services/expenses 0 0 34,660
------------ ----------- -------------
Net Cash Used for Operating
Activities 0 0 0
Net Increase/(Decrease) in Cash 0 0 0
Beginning Cash Balance 0 0 0
------------ ----------- -------------
Ending Cash Balance $ 0 $ 0 $ 0
============ =========== =============
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for
interest $ 0 $ 0 $ 0
Cash paid during the year for
income taxes $ 0 $ 0 $ 0
============ =========== =============
See accompanying notes to financial statements.
F-5
Kentex Petroleum, Inc.
[A Development Stage Company]
Notes to Financial Statements
December 31, 2003
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
Kentex Petroleum, Inc. (Company) was originally an oil and gas
company incorporated under the laws of the State of Nevada in February,
1983. The Company engaged in various operations through 1990. These
operating activities were unsuccessful and the Company became dormant. In
May of 1999, the Company became active again as new directors and officers
were elected. The Company is now in the development stage as it is seeking
new business opportunities.
The financial statements of the Company have been prepared in
accordance with U.S. generally accepted accounting principles. The following
summarizes the more significant of such policies:
(b) Income Taxes
The Company applies the provisions of Statement of Financial
Accounting Standards No. 109 [the Statement], Accounting for Income Taxes.
The Statement requires an asset and liability approach for financial
accounting and reporting for income taxes, and the recognition of deferred tax
assets and liabilities for the temporary differences between the financial
reporting bases and tax bases of the Company's assets and liabilities at
enacted tax rates expected to be in effect when such amounts are realized
or settled.
(c) Net Loss Per Common Share
Loss per common share is based on the weighted-average number of
shares outstanding. Diluted loss per share is computed using weighted average
number of common shares plus dilutive common share equivalents outstanding
during the period using the treasury stock method. There are no common stock
equivalents outstanding, thus, basic and diluted loss per share calculations
are the same.
(d) Statement of Cash Flows
For purposes of the statements of cash flows, the Company considers cash
on deposit in the bank to be cash. The Company had $0 cash at December 31,
2002.
F-6
Kentex Petroleum, Inc.
[A Development Stage Company]
Notes to Financial Statements
December 31, 2003
[Continued]
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[continued]
(e) Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with U. S.
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
NOTE 2 LIQUIDITY/GOING CONCERN
The Company has accumulated losses since Reactivation through December
31, 2003 amounting to $48,120, has no assets, and has a net working
capital deficiency at December 31, 2003. These factors raise substantial doubt
about the Company's ability to continue as a going concern.
Financing for the Company's limited activities to date has been
provided primarily by the issuance of stock and by advances from a
stockholder(see NOTE 4). The Company's ability to achieve a level of
profitable operations and/or additional financing impacts the Company's
ability to continue as it is presently organized. Management continues
to develop its planned principal operations or may find a well-
capitalized merger candidate to commence its operations. Should management
be unsuccessful in its operating activities, the Company may experience
material adverse effects. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
F-7
Kentex Petroleum, Inc.
[A Development Stage Company]
Notes to Financial Statements
December 31, 2003
[Continued]
NOTE 3 INCOME TAXES
Below is a summary of deferred tax asset calculations on net operating
loss carry forward amounts. Loss carry forward amounts expire at various
times through 2023. A valuation allowance is provided when it is more likely
than not that some portion of the deferred tax asset will not be realized.
NOL
Description Balance Tax Rate
- ------------------------------------------------------------------------------
Federal Income Tax $48,120 $7,218 15%
Valuation allowance (7,218)
------
Deferred tax asset 12/31/03 $ 0
The valuation allowance has decreased $123,029 from $130,247 at December
31, 2002. The decrease is due to expiration of net operating loss carry
forwards.
NOTE 4 COMMON STOCK/RELATED PARTY TRANSACTION
The Company issued shares of common stock during 1999 as compensation or
as reimbursement for expenses paid on behalf of the Company. The table
below summarizes the various transactions.
Pre-split Post-split Purpose for Issuance Recipient
Shares Shares
- -----------------------------------------------------------------------------
Reimbursed expenses Shareholder
1,410,000 5,640
Compensation/services Directors
13,500,000 54,000 Reimbursed expenses Consultant /
Shareholder
2,200,000
- ---------- ---------
14,910,000 2,259,640
========== =========
On October 5, 1999, the Company resolved to reverse split the
then outstanding 25,333,368 shares of common stock on the basis of 1 for
250. With the reverse split, the Company retained the current authorized
capital and par value, with appropriate adjustments in the stated capital
and capital surplus accounts. However, the split provided that no
stockholder of record owning 100 shares or more, computed on a per stock
certificate basis, on the effective date should be reduced to less than 100
shares and no stockholder owning less than 100 shares on the effective date
would be
F-8
Kentex Petroleum, Inc.
[A Development Stage Company]
Notes to Financial Statements
December 31, 2002
[Continued]
NOTE 4 COMMON STOCK/RELATED PARTY TRANSACTION[continued]
affected by the reverse split; additional shares were issued by the Company to
provide the minimum 100 shares, all fractional shares to be rounded up to the
nearest whole share. In 2000, the Company issued 56,664 shares of common
stock to cover rounding in the reverse split.
NOTE 5 RELATED PARTY TRANSACTIONS
A shareholder has paid general and administrative expenses on behalf of
the Company, through December 31, 2003, of $13,460. The Company has
recorded a liability for this amount which is payable on demand and is
non-interest bearing.
F-9
KENTEX PETROLEUM, INC.
BALANCE SHEETS
September 30, 2004 and December 31, 2003
9/30/2004 12/31/2003
------------- -------------
[Unaudited]
ASSETS
Assets $ 0 $ 0
------------- -------------
Total Assets $ 0 $ 0
============= =============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Loans from stockholders $ 16,336 $ 13,460
Accounts Payable 10,000 0
Accrued Interest 0 0
------------- -------------
Total Current Liabilities 26,336 13,460
Total Liabilities 26,336 13,460
------------- -------------
Stockholders' Deficit:
Common Stock, $.001 par value;
authorized 50,000,000 shares; issued and
outstanding, 2,357,997 shares 2,358 2,358
Paid-in Capital 2,073,802 2,073,802
Accumulated Deficit, prior to development stage(2,041,500) (2,041,500)
Deficit accumulated during development stage (60,996) (48,120)
------------- -------------
Total Stockholders' Deficit (26,336) (13,460)
------------- -------------
Total Liabilities and Stockholders'
Deficit $ 0 $ 0
============= =============
NOTES TO FINANCIAL STATEMENTS: Interim financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the periods. The December 31, 2003, balance sheet
has been derived from the audited financial statements. These interim
financial statements conform with the requirements for interim financial
statements and consequently do not include all the disclosures normally
required by generally accepted accounting principles.
F-1
KENTEX PETROLEUM, INC.
STATEMENTS OF OPERATIONS
For the Three and Nine Month Periods Ended Septmber 30, 2004, 2003 and
for the Period from Reactivation [May 8, 1999] through September 30, 2004
From the Beginning of
Three Months Nine Months Reactivation on
Ended Ended May 8, 1999 through
September 30, September 30, September 30,
2004 2003 2003 2004 2004
--------------------------------------------------------
[Unaudited][Unaudited][Unaudited][Unaudited][Unaudited]
REVENUE
Income $ 0 $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ---------- ------------
NET REVENUE 0 0 0 0 0
Operating Expenses
General and
Administrative 10,668 330 12,876 2,417 60,996
---------- ---------- ---------- ---------- ------------
Total Operating
Expenses 10,668 330 12,876 2,417 60,996
---------- ---------- ---------- ---------- ------------
Net Income Before
Taxes $ (10,668)$ (330)$ (12,876)$ (2,417)$ (60,996)
========== ========== ========== ========== ============
Income/Franchise taxes 0 0 0 0
Net loss (10,668) (330) (12,876) (2,417)
Loss Per Share $ (0.01)$ (0.01)$ (0.01)$ (0.01)
========== ========== ========== ==========
Weighted Average
Shares Outstanding 2,357,997 2,357,997 2,357,997 2,357,997
========== ========== ========== ==========
F-2
KENTEX PETROLEUM, INC.
STATEMENTS OF CASH FLOWS
For the Three and Nine Month Periods Ended Septmber 30, 2004, 2003 and
for the Period from Reactivation [May 8, 1999] through September 30, 2004
From the Beginning of
Three Months Nine Months Reactivation on
Ended Ended May 8, 1999 through
September 30, September 30, September 30,
2004 2003 2003 2004 2004
--------------------------------------------------------
[Unaudited][Unaudited][Unaudited][Unaudited][Unaudited]
Cash Flows Used For
Operating Activities
- --------------------
Net Loss $ (10,668)$ (330)$ (12,876)$ (2,417)$ (60,996)
Adjustments to
reconcile net loss to
net cash used in
operating activities:
Shares issued for
services 0 0 0 0 34,660
Increase/(Decrease)
in accounts payable 10,000 0 10,000 0 10,000
Increase/(Decrease)
in Shareholder Loans 668 330 2,876 2,417 16,336
---------- ---------- ---------- ---------- ------------
Net Cash Used For
Operating Activities 0 0 0 0 0
========== ========== ========== ========== ============
Cash Flows Provided
by Financing Activities
- -----------------------
Net Cash Provided by
Financing Activities 0 0 0 0
Net Increase In Cash 0 0 0 0
Beginning Cash Balance 0 0 0 0
Ending Cash Balance $ 0 $ 0 $ 0 $ 0
---------- ---------- ---------- ----------
F-3
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS'
REPORT
VIDREV
TECHNOLOGIES, INC.
FROM INCEPTION
TO SEPTEMBER 30, 2004
CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 1
BALANCE SHEET 2
STATEMENT OF INCOME AND RETAINED EARNINGS 3
STATEMENT OF CASH FLOWS 4
NOTES TO FINANCIAL STATEMENTS 5
INDEPENDENT AUDITORS' REPORT
Board of Directors
VidRev Technologies, Inc.
Los Angeles, California
We have audited the accompanying balance sheet of VidRev Technologies, Inc.
(the "Company"), a development stage company, as of September 30, 2004, and
the related statements of income and retained earnings, and cash flows for the
period from inception to September 30, 2004. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of September
30, 2004, and the results of its operations and its cash flows for the period
then ended in conformity with accounting principles generally accepted in the
United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's significant operating loss and lack of
working capital raise substantial doubt about its ability to continue as a
going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/Davis, Monk & Company
November 8, 2004
Gainesville, Florida
F-1
BALANCE SHEET
SEPTEMBER 30, 2004
VIDREV TECHNOLOGIES, INC.
ASSETS
CURRENT ASSETS
Cash $ 17,426
FIXED ASSETS
Property and Equipment 22,343
OTHER ASSETS
Deposits 3,655
Web Development Costs, Net of $1,882 Accumulated
Amortization 9,413
----------
TOTAL OTHER ASSETS 13,068
----------
TOTAL ASSETS $ 52,837
==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts Payable $166,249
Advances From TTA Technologies 98,000
--------
TOTAL LIABILITIES 264,249
STOCKHOLDERS' EQUITY (DEFICIT)
Capital Stock, $.0001 par value, 50,000,000 shares
authorized, 30,100,000 shares issued and outstanding 3,010
Additional Paid-in-Capital 105,658
Retained Earnings (Deficit) (320,080)
---------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (211,412)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 52,837
=========
The accompanying "Notes to Financial Statements"
form an integral part of this statement.
F-2
STATEMENT OF INCOME AND RETAINED EARNINGS
FROM INCEPTION TO SEPTEMBER 30, 2004
VIDREV TECHNOLOGIES, INC.
REVENUE
Sub-Licensing Revenue $ 25,000
COST OF SALES 11,205
---------
GROSS PROFIT 13,795
GENERAL AND ADMINISTRATIVE EXPENSES
Professional Fees 159,447
Consulting Services and Salaries 90,115
Other General and Administrative Costs 84,313
---------
TOTAL GENERAL AND ADMINISTRATIVE EXPENSES 333,875
---------
NET LOSS (320,080)
RETAINED EARNINGS (DEFICIT), Beginning --
---------
RETAINED EARNINGS (DEFICIT), Ending $(320,080)
=========
The accompanying "Notes to Financial Statements"
form an integral part of this statement.
F-3
STATEMENT OF CASH FLOWS
FROM INCEPTION TO SEPTEMBER 30, 2004
VIDREV TECHNOLOGIES, INC.
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(320,080)
Adjustments to Reconcile Net Loss to Net Cash Used In
Operating Activities:
Depreciation and Amortization 4,882
Changes in Assets and Liabilities:
Increase in Security Deposits (3,665)
Increase in Accounts Payable 166,249
---------
NET CASH USED IN OPERATING ACTIVITIES (152,604)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (25,343)
Web Development Costs (11,295)
---------
NET CASH USED IN INVESTING ACTIVITIES (36,638)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances From TTA Technologies 98,000
Sale of Capital Stock 108,668
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 206,668
---------
NET INCREASE IN CASH 17,426
CASH AT BEGINNING OF PERIOD --
---------
CASH AT END OF PERIOD $ 17,426
=========
The accompanying "Notes to Financial Statements"
form an integral part of this statement.
F-4
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION TO September 30, 2004
VIDREV TECHNOLOGIES, INC.
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
-----------
VidRev Technologies, Inc., a Florida corporation ("VidRev" or
the "Company"), is a development stage company. VidRev is the
exclusive United States licensee and distributor of video
compression technology from its controlling shareholder, TTA
Technologies, Ltd. ("TTA"), a Bahamian company. TTA owns
approximately 99% of the outstanding stock of the Company.
During the first nine months of 2004, the Company has been
involved in the development of marketing opportunities for the
distribution of its technology. The Company has also been
involved in the testing of the product, and making
recommendations for changes based on the results of these tests.
VidRev produces four main applications:
* VidPhone, for one-on-one conversations
* VidConference, for multiple-user conferencing
* VidBroadcast, for broadcasting live feeds to thousands of
users
* VidSecure, for remote security-feed monitoring
Cash
----
For purposes of the statement of cash flows, the Company
considers money market accounts to be cash equivalents.
Depreciation
------------
Depreciation expense is spread over estimated useful lives of
the assets ranging from 3 to 5 years using the straight line
method.
Intangible Assets
-----------------
The Company has unamortized Web development costs that are being
amortized over 36 months.
Revenue Recognition
-------------------
The Company's revenue is derived from the marketing efforts of
licensees and distributors, who market the VidRev family of
video conferencing products. The Company's agreement with
licensees states that there are no additional obligations of the
Company after the delivery of the software. Accordingly, the
revenue is recognized when the sale to the licensee or
distributor occurs.
Property and Equipment
----------------------
Property and equipment are stated at cost.
F-5
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION TO September 30, 2004
VIDREV TECHNOLOGIES, INC.
NOTE 2 GOING CONCERN
-------------
As shown in the accompanying financial statements, the Company
had a net loss in the amount of $320,080 for the period from
inception to September 30, 2004. As of that date the Company had
current liabilities of $264,249 with current assets in the
amount of $17,426. These factors, as well as the uncertainty
about the conditions the Company faces regarding its demand
promissory notes (as discussed in Note 3) create an uncertainty
about the Company's ability to continue as a going concern.
Management of the Company has developed a plan that is in place,
under which all direct and indirect sales and marketing expenses
will be borne by the licensees and distributors. Furthermore,
the Company is in the process of merging with a public company,
and hopes that as a result of the merger, the Company will be
able to issue common stock and raise operating capital.
Additionally, with the beginning of sales efforts on the part of
the Company's first two licensees/distributors in November,
management is optimistic that these entities will begin to
generate sufficient revenue to sustain the operations of the
Company.
NOTE 3 NOTES PAYABLE
-------------
The Company has been advanced a total of $98,000 from TTA, the
controlling shareholder of the Company and the licensor of its
technology. These demand promissory notes bear interest at the
rate of five percent (5%) interest per annum. It is the
intention of the Company to repay these notes as soon as
sufficient capital has been accumulated. The interest will be
paid at the year-end of the Company.
NOTE 4 INCOME TAXES
------------
The Company's year-end has not yet been elected, and with the
existing net operating loss, no liability for Federal or State
income tax is expected. Because of the uncertainty that the
Company will be able to use the loss carryforward (expiring in
2025), no tax benefit has been recognized.
NOTE 5 OPERATING LEASES
----------------
The Company leases offices in Miami Beach, Florida and Los
Angeles, California. The leases of the Los Angeles office will
terminate on December 31, 2004, and will be on a month-to-month
tenancy after that time. The Company leases space in a "Managed
Suite" facility catering to month-to-month tenants. The lease in
Miami Beach will terminate on February 15, 2005 and the Company
will then move its location to a South Florida facility at no
expense to the Company.
The Company has also entered into a 12-month lease with
VitalStream, a California based Internet Service Provider.
VitalStream leases four IBM servers to the Company, and also
provides bandwidth necessary for the provisioning of the video
conferences. The amount due under this lease agreement is $4,023
per month. The lease was signed on July 11, 2004.
F-6
NOTES TO FINANCIAL STATEMENTS
FROM INCEPTION TO September 30, 2004
VIDREV TECHNOLOGIES, INC.
NOTE 5 OPERATING LEASES (concluded)
---------------------------
The minimum lease payments due under the leases are:
2005 $16,852
2006 24,138
-------
Total $40,990
=======
NOTE 6 FIXED ASSETS
------------
Estimated Accumulated
Asset Type Useful Life Cost Depreciation Net
Computer Equipment 5 $16,988 $1,698 $15,290
Software 5 2,188 275 1,913
Leasehold Improvements 3 6,167 1,027 5,140
------- ------ -------
Total $25,343 $3,000 $22,343
Depreciation expense for the period was $3,000.
NOTE 7 STOCKHOLDERS' EQUITY (DEFICIT)
-----------------------------
Beginning Balance Additions Ending Balance
----------------- -------------- --------------
Shares Amount Shares Amount Shares Amount
Capital Stock -- $ -- 30,100,000 $ 3,010 30,100,000 $ 3,010
Additional
Paid-in-Capital -- -- -- 105,658 -- 105,658
Retained Earnings
(Deficit) -- -- -- (320,080) -- (320,080)
------- ----- ---------- --------- ---------- --------
Total -- $ -- 30,100,000 $(211,412)30,100,000$(211,412)
======= ===== ========== ========= ========== ========
NOTE 8 RELATED PARTY TRANSACTIONS
--------------------------
Peter Brown, Esq., a member of the Board of Directors, Vice President and
Assistant Secretary of the Company, and a stockholder of the Company, is the
managing partner of Brown Raysman Millstein Felder & Steiner LLP, which serves
as counsel to the Company. As of September 30, 2004, Brown Raysman Millstein
Felder & Steiner LLP has rendered legal services in the amount of $131,602 to
the Company. Mr. Brown also has an equity interest in BRMFS Holding LLC, which
holds 1,000 shares of TTA. Mr. Brown also serves as a Director and Secretary
of TTA.
F-7
ANNEX A
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER is made and entered into as of
December 20, 2004 by and between VidRev Technologies, Inc., a Florida
corporation ("VidRev") and Kentex Petroleum, Inc., a Nevada corporation (the
"Company" and collectively, the "Parties").
A. Upon the terms and subject to the conditions of this Agreement and
in accordance with the Florida Business Corporation Act ("Florida Law") and
the Nevada Business Corporation Act ("Nevada Law"), VidRev and the Company
intend to enter into a business combination transaction.
B. The Parties wish to provide for the terms and conditions of a
merger of VidRev with and into the Company, in a transaction that is intended
to qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code") and provide for the
representations, warranties, agreements and conditions applicable to the
Merger.
C. The Parties intend that this Agreement constitutes a "plan of
reorganization" for the purposes of Section 368 of the Code.
D. The Board of Directors and the stockholders of the Company (i)
have determined that the Merger is consistent with and in furtherance of the
long-term business strategy of the Company and fair to, and in the best
interests of the Company and its stockholders, and (ii) have approved this
Agreement, the Merger and the other transactions contemplated by this
Agreement.
E. The Board of Directors and the stockholders of VidRev (i) have
determined that the Merger is consistent with and in furtherance of the long-
term business strategy of VidRev and fair to, and in the best interests of
VidRev and its stockholders and (ii) have approved this Agreement, the Merger
and the other transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Nevada Law and Florida Law, VidRev shall be merged
with and into the Company (the "Merger"), the separate corporate existence of
VidRev shall cease and the Company shall continue as the surviving company
(the "Surviving Company").
1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the Parties shall cause the Merger to be consummated by filing a
Certificate of Merger, substantially in the form of Exhibit A hereto (the
"Certificate of Merger"), with the Secretary of State of the State of Nevada
and the Secretary of State of the State of Florida, in accordance with the
relevant provisions of Nevada Law and Florida Law (the time of such filing;
(or such later time as may be agreed in writing by the Parties and specified
in the Certificate of Merger) being the "Effective Time", as soon as
A-1
practicable on or after the Closing Date (as defined herein)). Unless the
context otherwise requires, the term "Agreement" as used herein refers
collectively to this Agreement and Plan of Merger and the Certificate of
Merger. The closing of the Merger (the "Closing") shall take place at the
offices of Brown Raysman Millstein Felder & Steiner LLP, 900 Third Avenue,
New York, New York 10022, immediately following the time when all conditions
to the Merger set forth in Article V herein have been satisfied or waived by
the respective parties or at such other time and date to be mutually agreed by
the Parties (the "Closing Date").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Nevada Law and Florida Law. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and VidRev shall vest in the
Surviving Company, and all debts, liabilities and duties of the Company and
VidRev shall become the debts, liabilities and duties of the Surviving
Company.
1.4 Articles of Incorporation; Bylaws.
(a) At the Effective Time, the Amended and Restated Articles of
Incorporation of the Company, which shall reflect the change in the name of
the Surviving Company to "VidRev Technologies, Inc." (the "Name Change") and
in substantially the form attached as Exhibit B hereto, shall be the Articles
of Incorporation of the Surviving Company until thereafter amended as provided
by law.
(b) The Amended and Restated Bylaws of the Company, which shall
reflect the Name Change and in substantially the form attached as Exhibit
Chereto, shall be, at the Effective Time, the Bylaws of the Surviving Company
until thereafter amended.
1.5 Effect on Capital Stock.
(a) Each share of Common Stock, par value $.0001 per share, of
VidRev (the "VidRev Common Stock") issued and outstanding immediately prior to
the Effective Time shall be exchanged for one validly issued, fully paid and
nonassessable share of Common Stock, $.001 par value, of the Surviving Company
("Surviving Company Common Stock").
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall continue to represent one
validly issued, fully paid and nonassessable share of Surviving Company Common
Stock.
1.6 Tax Consequences.
It is intended by the Parties that the Merger shall constitute a
reorganization within the meaning of Section 368 of the Code. The Parties
adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
1.7 Dissenters Rights of Appraisal. The Surviving Company shall
provide notice of dissenter's rights to the VidRev and the Company's
stockholders in accordance with Florida Law and Nevada Law, respectively.
A-2
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to VidRev, subject to the exceptions
specifically disclosed in writing and referencing a specific representation in
the disclosure letter supplied by the Company to VidRev dated as of the date
hereof (the "Company Disclosure Letter"), as follows:
2.1 Organization of the Company.
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation; has
the corporate power and authority to own, lease and operate its assets and
property and to carry on its business as now being conducted and as proposed
to be conducted; and is duly qualified or licensed to do business and is in
good standing in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its activities makes such
qualification or licensing necessary.
(b) The Company has no subsidiaries.
(c) The Company has delivered or made available to VidRev a true and
correct copy of the Articles of Incorporation and Bylaws of the Company, as
amended to date, and each such instrument is in full force and effect. The
Company is not in violation of any of the provisions of its Articles of
Incorporation or Bylaws or equivalent governing instruments.
2.2 Company Capital Structure. The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock, of which there
were 2,357,997 shares issued and outstanding as of the date of this Agreement.
All outstanding shares of Company Common Stock are duly authorized, validly
issued, fully paid and nonassessable and are not subject to preemptive rights
created by statute, the Articles of Incorporation or Bylaws of the Company or
any agreement or document to which the Company is a party or by which it is
bound. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or contracts
of the Company that could require the Company to issue, sell, or otherwise
cause to become outstanding any of its capital stock or any other securities
convertible into or evidencing the right to subscribe for any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to the Company.
Except as described in the Company Disclosure Letter, at and as of the
Closing, the Company will not be a party to any agreement relating to the
registration of shares of capital stock of the Company or any successor
entity.
2.3 Authority.
(a) The Company has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, and the issuance of the Surviving
Company Common Stock in accordance with the terms hereof, have been duly
authorized by all necessary corporate action on the part of the Company,
subject only to the filing of the Certificate of Merger. This Agreement has
been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by VidRev, constitutes a valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy and other similar laws
and general principles of equity. The execution and delivery of this
Agreement by the Company and the issuance of the Surviving Company Common
Stock does not, and the performance of this Agreement by the Company will not,
(i) conflict with or violate the Articles of Incorporation or Bylaws of the
A-3
Company, (ii) subject to compliance with the requirements set forth in Section
2.3(b) below, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or by which its or any of their
respective properties is bound or affected, or (iii) assuming the receipt of
all material consents, waivers and approvals referred to in the last sentence
of this Section 2.3(a), result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or impair the Company's rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company pursuant to, any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company is a
party or by which the Company or its properties are bound or affected.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality, foreign or domestic
("Governmental Entity"), is required by or with respect to the Company in
connection with the execution and delivery of this Agreement or the
consummation of the Merger, except for (i) the filing of the Certificate of
Merger with the Secretary of State of the State of Nevada and the Secretary of
State of the State of Florida, (ii) such consents, approvals, orders,
authorizations, registrations, declarations and filings (if any) as may be
required under applicable federal and state securities laws and the securities
or antitrust laws of any foreign country, (iii) the filing of the Company's
Form S-4 as described in Section 5.3(d) and (iv) such other consents,
authorizations, filings, approvals and registrations (if any) which if not
obtained or made would not be material to the Company or VidRev or have a
Material Adverse Effect on the ability of the Parties to consummate the
Merger. The term "Material Adverse Effect" means, for purposes of this
Agreement, any change, event or effect that is materially adverse to the
business, assets (including intangible assets), financial condition or results
of operations.
2.4 SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents required to
be filed with the Securities and Exchange Commission (the "SEC") since July 6,
2000 and has made available to VidRev such forms, reports and documents in the
form filed with the SEC. All such required forms, reports and documents
(including those that the Company may file subsequent to the date hereof) are
referred to herein as the "Company SEC Reports." As of their respective dates,
the Company SEC Reports (i) were prepared in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Reports, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports (the
"Company Financials") (x) complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, (y) was
prepared in accordance with generally accepted accounting principles accepted
in the United States ("GAAP") applied on a consistent basis throughout the
A-4
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-QSB under the Exchange Act) and (z) fairly presented the financial
position of the Company as at the respective dates thereof and the results of
the Company's operations and cash flows for the periods indicated, except that
the unaudited interim financial statements may not contain footnotes and were
or are subject to normal and recurring year-end adjustments. The balance sheet
of the Company contained in the Company SEC Reports as of December 31, 2003 is
hereinafter referred to as the "Company Balance Sheet." Except as disclosed in
the Company Financials, since the date of the Company Balance Sheet, the
Company has no liabilities (absolute, accrued, contingent or otherwise) of a
nature required to be disclosed on a balance sheet or in the related notes to
the consolidated financial statements prepared in accordance with GAAP which
are, individually or in the aggregate, material to the business, results of
operations or financial condition of the Company and its subsidiaries taken as
a whole, except liabilities (i) provided for in the Company Balance Sheet, or
(ii) incurred since the date of the Company Balance Sheet in the ordinary
course of business consistent with past practices.
2.5 Absence of Certain Changes or Events. Since the date of the
Company Balance Sheet, the Company has conducted its business as ordinarily
conducted consistent with past practice and there has not occurred any change,
event or condition (whether or not covered by insurance) that has resulted in,
or would reasonable be expected to result in any Material Adverse Effect on
the Company.
2.6 Taxes. The Company has timely filed all tax returns that it
was required to file and such tax returns were correct and complete in all
material respects. All taxes that the Company is or was required by law to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper governmental entity or deposited in
accordance with the law.
2.7 Intellectual Property. The Company owns or is validly licensed or
otherwise has the right to use, free and clear of all liens, claims and
restrictions of any kind or nature, the patents, trademarks, trade names,
service marks, copyrights, trade secrets, technology, know-how and processes
(collectively, "Intellectual Property") listed in Section 2.7 of the Company
Disclosure Letter.
2.8 Compliance; Permits; Restrictions.
(a) The Company is not in any material respect, in conflict with, or
in default or violation of (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or by which the Company or any of its
respective properties is bound or affected, or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company is a party or by which the
Company or its properties is bound or affected. No investigation or review by
any Governmental Entity is pending or, to the Company's knowledge, threatened
against the Company, nor has any Governmental Entity indicated an intention to
conduct the same. There is no agreement, judgment, injunction, order or decree
binding upon the Company which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of the
Company, any acquisition of material property by the Company or the conduct of
business by the Company as currently conducted.
A-5
(b) The Company holds all permits, licenses, variances, exemptions,
orders and approvals from governmental authorities which are material to the
operation of the business of the Company (collectively, the "Company
Permits"). The Company is in compliance in all material respects with the
terms of the Company Permits.
(c) The Company has no knowledge of any pending regulatory action of
any sort against the Company. The Company has not committed or permitted to
exist any violation of the rules and regulations of any regulatory agency or
any other duly authorized governmental authority.
2.9 Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation pending, or as to which the Company has received
any notice of assertion nor, to the Company's knowledge, is there a threatened
action, suit, proceeding, claim, arbitration or investigation against the
Company which would be likely to be material to the Company, or which in any
manner challenges or seeks to prevent, enjoin, alter or delay any of the
transactions contemplated by this Agreement.
2.10 Employee Benefit Plans. The Company has no employee benefit
plans, pension plans or multi-employee plans.
2.11 Absence of Liens and Encumbrances. The Company has good and
valid title to, or, in the case of leased properties and assets, valid
leasehold interests in, all of its material tangible properties and assets,
real, personal and mixed, used in its business, free and clear of any liens or
encumbrances except as reflected in the Company Financials and except for
liens for taxes not yet due and payable and such imperfections of title and
encumbrances, if any, which would not be material to the Company.
2.12 Environmental Matters. The Company has complied and is in
compliance with all Federal, State, and local material environmental, health
and safety requirements.
2.13 Labor Matters. The Company has no employees.
2.14 Agreements, Contracts and Commitments. Except as set forth in
Section 2.13 of the Company Disclosure Letter, the Company is not a party to
and is not bound by:
(a) any employment or consulting agreement, contract or commitment
with any officer or director level employee or member of the Company's Board
of Directors;
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will
be accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be calculated
on the basis of any of the transactions contemplated by this Agreement;
(c) any agreement of indemnification or guaranty not entered into in
the ordinary course of business other than indemnification agreements between
the Company and any of its officers or directors;
(d) any agreement, contract or commitment currently in force relating
to the disposition or acquisition of assets not in the ordinary course of
business or any ownership interest in any corporation, partnership, joint
venture or other business enterprise; or
(e) any other material contract.
A-6
Neither the Company, nor to the Company's knowledge any other party to a
Company Contract (as defined herein), has breached, violated or defaulted
under, or received notice that it has breached, violated or defaulted under,
any of the material terms or conditions of any of the agreements, contracts or
commitments to which the Company is a party or by which it is bound of the
type described in clauses (a) through (e) above (any such agreement, contract
or commitment, a "Company Contract") in such a manner as would permit any
other party to cancel or terminate any such Company Contract, or would permit
any other party to seek damages, which would be reasonably likely to be
material to the Company.
2.15 Board Approval. The Board of Directors of the Company has, as of
the date of this Agreement, determined that the Merger is fair to, and in the
best interests of the Company and its stockholders.
2.16 Stockholder Approval. To the extent required by applicable law
and by the requisite vote required by applicable law, the stockholders of the
Company have duly approved (i) this Agreement and the Merger (ii) the Name
Change (iii) the election of current VidRev members of the board of directors
to the Surviving Company's board of directors, and (iv) the 2005 Stock Option
Plan attached in the form hereto as Exhibit D, each of (ii) (iv) above to
be effective and conditional upon the Closing.
2.17 Brokers or Finders. Except as set forth in Section 2.17 of the
VidRev Disclosure Schedule, neither the Company nor any of its representatives
has incurred any obligation or liability, contingent or otherwise, for
brokerage or finders' fees transactions contemplated by this Agreement for
which VidRev will or could be liable or responsible.
2.18 Over the Counter Bulletin Board Listing. Assuming compliance with
the application procedures of the Over the Counter Bulletin Board ("OTCBB"),
the Company is not aware of any fact that would prevent the Surviving Company
Common Stock to be listed on the OTCBB.
2.19 Information. All written information provided to VidRev by or on
behalf of the Company or any of its representatives (including, without
limitation, each representation and warranty of the Company set forth in this
Agreement) is, and the Company covenants that any such information provided
hereafter shall be, true and correct in all material respects and does not, or
shall not, omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that no representation or warranty is made
by the Company as to any financial forecasts or projections previously
furnished to VidRev by the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
VIDREV
VidRev represents and warrants to the Company, subject to the exceptions
specifically disclosed in writing and referencing a specific representation in
the disclosure letter supplied by VidRev to the Company dated as of the date
hereof (the "VidRev Disclosure Letter"), as follows:
3.1 Organization of VidRev.
(a) VidRev is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation; has the
corporate power and authority to own, lease and operate its assets and
property and to carry on its business as now being conducted and as proposed
A-7
to be conducted; and is duly qualified or licensed to do business and is in
good standing in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified would not have a Material Adverse Effect on VidRev.
(b) VidRev has delivered or made available to the Company a true and
correct copy of the Articles of Incorporation and Bylaws of VidRev and similar
governing instruments, as amended to date, and such instrument is in full
force and effect. VidRev is not in violation of any of the provisions of its
Certificate of Incorporation or Bylaws or equivalent governing instruments.
3.2 VidRev Capital Structure. The authorized capital stock of VidRev
consists of 50,000,000 shares of VidRev Common Stock, of which there were
30,356,000 shares issued and outstanding as of the date of this Agreement.
All outstanding shares of VidRev Common Stock are duly authorized, validly
issued, fully paid and nonassessable. Except as set forth in the VidRev
Disclosure Letter, there are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts of VidRev that could require VidRev to issue, sell, or
otherwise cause to become outstanding any of its capital stock or any other
securities convertible into or evidencing the right to subscribe for any of
its capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to VidRev.
At and as of the Closing, except as set forth in the VidRev Disclosure Letter,
VidRev will not be a party to any agreement relating to the registration of
shares of capital stock of the Company or any successor entity.
3.3 Authority.
(a) VidRev has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of VidRev, subject only to the filing of the
Certificate of Merger. This Agreement has been duly executed and delivered by
VidRev and, assuming the due authorization, execution and delivery by the
Company, constitutes the valid and binding obligation of each VidRev,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy and other similar laws and general principles of equity.
The execution and delivery of this Agreement by VidRev does not, and the
performance of this Agreement by VidRev will not (i) conflict with or violate
the Certificate of Incorporation or Bylaws of VidRev or the Certificate of
Incorporation or Bylaws of VidRev, (ii) subject to compliance with the
requirements set forth in Section 3.3(b) below, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to VidRev or by
which it or any of their respective properties is bound or affected, or (iii)
assuming the receipt of all material consents, waivers and approvals referred
to in the last sentence of this Section 3.3(a), result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or impair VidRev's rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of VidRev
pursuant to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which VidRev is a party or by which VidRev or any of their respective
properties are bound or affected.
A-8
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity is required by or with
respect to VidRev in connection with the execution and delivery of this
Agreement or the consummation of the Merger, except for (i) the filing of the
Certificate of Merger with the Secretary of State of the State of Nevada and
the Secretary of State of the State of Florida, (ii) such consents, approvals,
orders, authorizations, registrations, declarations and filings (if any) as
may be required under applicable federal and state securities laws and the
securities or antitrust laws of any foreign country, and (iii) such other
consents, authorizations, filings, approvals and registrations (if any) which
if not obtained or made would not be material to VidRev or have a Material
Adverse Effect on the ability of the Parties to consummate the Merger.
3.4 VidRev Financial Statements. Vidrev has delivered to Company
certain financial statements (including, in each case, any related notes
thereto) of VidRev as attached in Schedule 3.4 in the VidRev Disclosure Letter
(the "VidRev Financials") and the VidRev Financials, (x) were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, and (y) fairly presented the financial
position of VidRev as of and at the respective dates thereof and the results
of VidRev's operations and cash flows for the periods indicated, except that
the unaudited interim financial statements may not contain footnotes and were
or are subject to normal and recurring year-end adjustments. The balance sheet
of VidRev as of September 30, 2004 is hereinafter referred to as the "VidRev
Balance Sheet." Except as disclosed in VidRev Financials, since the date of
VidRev Balance Sheet, VidRev has no liabilities (absolute, accrued, contingent
or otherwise) of a nature required to be disclosed on a balance sheet or in
the related notes to the financial statements prepared in accordance with GAAP
which are, individually or in the aggregate, material to the business, results
of operations or financial condition of VidRev taken as a whole, except
liabilities (i) provided for in VidRev Balance Sheet, or (ii) incurred since
the date of VidRev Balance Sheet in the ordinary course of business consistent
with past practices.
3.5 Absence of Certain Changes or Events. Since the date of VidRev
Balance Sheet, VidRev has conducted its business as ordinarily conducted
consistent with past practice and there has not occurred any change, event or
condition (whether or not covered by insurance) that has resulted in, or would
reasonable be expected to result in any Material Adverse Effect on VidRev.
3.6 Tax. VidRev has timely filed all tax returns that it was required
to file and such tax returns were correct and complete in all material
respects. All taxes that VidRev is or was required by law to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the proper governmental entity or deposited in accordance with
the law.
3.7 Compliance; Permits; Restrictions.
(a) VidRev is not, in any material respect, in conflict with, or in
default or violation of (i) any law, rule, regulation, order, judgment or
decree applicable to VidRev or by which VidRev or any of its is bound or
affected, or (ii) except as set forth in Section 3.7 of the VidRev Disclosure
Letter, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which VidRev
is a party or by which VidRev or its properties is bound or affected. No
investigation or review by any Governmental Entity is pending or, to VidRev's
knowledge, threatened against VidRev, nor has any Governmental Entity
indicated an intention to conduct the same. There is no agreement, judgment,
injunction, order or decree binding upon VidRev which has or could reasonably
be expected to have the effect of prohibiting or materially impairing any
business practice of VidRev, any acquisition of material property by VidRev or
the conduct of business by VidRev as currently conducted.
A-9
(b) VidRev holds all permits, licenses, variances, exemptions, orders
and approvals from governmental authorities which are material to the
operation of the business of VidRev (collectively, the "VidRev Permits").
VidRev is in compliance in all material respects with the terms of the VidRev
Permits.
(c) Except as disclosed in Section 3.7(c) of the VidRev Disclosure
Letter, VidRev has no knowledge of any pending regulatory action of any sort
against VidRev by any regulatory agency or any other duly authorized
governmental authority in any jurisdiction which could have a Material Adverse
Effect on VidRev. Except as set forth on Section 3.7(c) of the VidRev
Disclosure Letter, VidRev has not knowingly committed or permitted to exist
any violation of the rules and regulations of any regulatory agency or any
other duly authorized governmental authority.
3.8 Litigation. Except as disclosed in Section 3.8 of the VidRev
Disclosure Letter, there is no action, suit, proceeding, claim, arbitration or
investigation pending, or as to which VidRev has received any notice of
assertion nor, to VidRev's knowledge, is there a threatened action, suit,
proceeding, claim, arbitration or investigation against VidRev which
reasonably would be likely to be material to VidRev, or which in any manner
challenges or seeks to prevent, enjoin, alter or delay any of the transactions
contemplated by this Agreement.
3.9 Agreements, Contracts and Commitments. Except as set forth in
Section 3.9 of the VidRev Disclosure Letter, VidRev is neither a party to nor
is bound by:
(a) any employment or consulting agreement, contract or commitment
with any officer or director level employee or member of VidRev's Board of
Directors, other than those that are terminable by VidRev on no more than
thirty days notice without liability or financial obligation;
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of the
benefits of which will be increased, or the vesting of benefits of which will
be accelerated, by the occurrence of any of the transactions contemplated by
this Agreement or the value of any of the benefits of which will be calculated
on the basis of any of the transactions contemplated by this Agreement;
(c) any agreement of indemnification or guaranty not entered into in
the ordinary course of business other than indemnification agreements between
VidRev and any of its officers or directors;
(d) any agreement, contract or commitment currently in force relating
to the disposition or acquisition of assets not in the ordinary course of
business or any ownership interest in any corporation, partnership, joint
venture or other business enterprise; or
(e) any other material contract.
Neither VidRev, nor to VidRev's knowledge any other party to a VidRev
Contract (as defined below), has breached, violated or defaulted under, or
received notice that it has breached violated or defaulted under, any of the
material terms or conditions of any of the agreements, contracts or
A-10
commitments to which VidRev is a party or by which it is bound of the type
described in clauses (a) through (e) above (any such agreement, contract or
commitment, a "VidRev Contract") in such a manner as would permit any other
party to cancel or terminate any such VidRev Contract, or would permit any
other party to seek damages, which would be reasonably likely to be material
to VidRev.
3.10 Board Approval. The Board of Directors of VidRev has, as of the
date of this Agreement, determined that the Merger is fair to, and in the best
interests of VidRev and their respective stockholders.
3.11 Stockholder Approval. To the extent required by applicable law and
by the requisite vote required by applicable law, the stockholders of VidRev
have duly approved the Merger.
3.11 Brokers or Finders. Except as set forth in the VidRev
Disclosure Letter, neither VidRev nor any of its representatives have incurred
any obligation or liability, contingent or otherwise, for brokerage or
finders' fees transactions contemplated by this Agreement for which the
Company will or could be liable or responsible.
3.12 Information. All written information provided to the Company by
or on behalf of the VidRev or any of its representatives (including, without
limitation, each representation and warranty of the VidRev set forth in this
Agreement) is, and VidRev covenants that any such information provided
hereafter shall be, true and correct in all material respects and does not, or
shall not, omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that no representation or warranty is made
by VidRev as to any financial forecasts or projections previously furnished to
the Company by VidRev.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 Public Disclosure. The Parties will consult with each other before
issuing any press release or otherwise making any public statement with
respect to the Merger and this Agreement and will not issue any such press
release or make any such public statement without the prior consent of the
other party, except as may be required by law, rule or regulation.
4.2 Legal Requirements. Each of VidRev and the Company will use its
respective reasonable commercial efforts to take all actions necessary or
desirable to comply promptly with all legal requirements which may be imposed
on them with respect to the consummation of the transactions contemplated by
this Agreement (including furnishing all information required in connection
with approvals by or filings with any Governmental Entity), and will act in
good faith in the performance or satisfaction of all legal requirements and
promptly cooperate with and furnish information to any party hereto necessary
in connection with any such filings with or investigations by any Governmental
Entity, and any other such requirements imposed upon any of them or their
respective subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement. The Company will use its
commercially reasonable efforts to take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of the Surviving Company Common Stock pursuant
hereto, at the sole cost and expense of VidRev prior to the Effective Time,
and the Surviving Company, thereafter.
A-11
4.3 Notification of Certain Matters. VidRev will give prompt notice to
the Company, and the Company will give prompt notice to VidRev, of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be reasonably likely to cause (a) any representation or warranty
contained in this Agreement and made by it to be untrue or inaccurate in any
material respect at any time from the date of this Agreement to the Effective
Time such that the conditions set forth in Section 5.2 or 5.3, as the case may
be, would not be satisfied as a result thereof or (b) any material failure of
VidRev or the Company, as the case may be, or of any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it under this Agreement.
Notwithstanding the above, the delivery of any notice pursuant to this Section
will not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
4.4 Board of Directors and Certain Officers of the Surviving
Company. Immediately prior to the Effective Time, each of the current members
of the board of directors of the Company and each of the officers of the
Company shall resign. The directors and officers of VidRev immediately prior
to the Effective Time shall be the initial directors and officers of the
Surviving Company, each to hold office in accordance with the Articles of
Incorporation and By-laws of the Surviving Company.
4.5 Current Report on Form 8-K. Within four (4) days after (i) the
execution of this Agreement and (ii) the consummation of the Merger, the
Company shall file with the SEC a Current Report on Form 8-K describing the
transactions contemplated by this Agreement, together with a copy of this
Agreement and any other information and exhibits that may be required by
applicable law.
4.6 Conduct of Business Pending the Merger. Except as otherwise
contemplated by this Agreement, after the date hereof and prior to the Closing
Date or earlier termination of this Agreement, unless the other party shall
otherwise agree in writing, each of the Parties:
(a) conduct its business in the ordinary and usual course of business
and consistent with past practice;
(b) not (i) amend or propose to amend its charter or by-laws, (ii)
except as contemplated by this Agreement, split, combine or reclassify its
outstanding capital stock or (iii) declare, set aside or pay any dividend or
distribution payable in cash, stock, property or otherwise;
(c) not make any loans, advances or capital contributions to, or
investment in, any other person or entity;
(d) not adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company (other than in connection with the Merger) or any of its
subsidiaries;
(e) not take any action, engage in any transaction or enter into any
agreement which would cause any of the representations or warranties of such
party set forth in this Agreement to be untrue as of the Effective Time; and
(f) not agree, in writing or otherwise, to take any of the foregoing
actions.
4.7 No Reverse Splits. All stockholders of the Company shall be
protected against any reverse split that occurs in the Surviving Company for a
period of two years following Closing, and in the event of any such reverse
split, such stockholders shall be entitled to have the Surviving Company issue
to them additional shares to increase their respective stock holdings as
though such reverse split had never been effected.
A-12
4.8 No Solicitation. Until the Closing or termination of this
Agreement as set forth in Section 6.1 herein, neither the Company nor VidRev
will (nor will either of them permit any agent or affiliate to) solicit,
initiate or encourage any Acquisition Proposal (as hereinafter defined) or
furnish any information to, or cooperate with, any person, corporation, firm
or other entity with respect to an Acquisition Proposal. As used herein
"Acquisition Proposal" means a proposal for a merger or other business
combination involving such entity or for the acquisition of a substantial
equity interest in, or a substantial portion of the assets of such entity
other than the Merger.
4.9 SB-2 Registration Statement. The Parties agree, at the sole cost
and expense of VidRev, to file as soon as practicable a Registration Statement
on Form SB-2 to register the resale by TTA Technologies Ltd. of up to
1,000,000 shares of the Surviving Company Common Stock it will receive in the
Merger and to register for sale and issuance by the Surviving Company of up to
1,000,000 shares of Surviving Company Common Stock.
ARTICLE V
CONDITIONS TO THE MERGER
5.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each Party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) No Order. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which has the effect of making the Merger
illegal or otherwise prohibiting consummation of the Merger.
5.2 Additional Conditions to Obligations of the Company. The
obligations of the Company to consummate and effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of each of the
following conditions, any of which may be waived, in writing, exclusively by
the Company:
(a) Representations and Warranties. The representations and warranties
of VidRev contained in this Agreement shall have been true and correct in all
material respects as of the date of this Agreement. In addition, the
representations and warranties of VidRev contained in this Agreement shall be
true and correct in all material respects on and as of the Effective Time
except for changes contemplated by this Agreement and except for those
representations and warranties which address matters only as of a particular
date (which shall remain true and correct as of such particular date), with
the same force and effect as if made on and as of the Effective Time, except
in such cases where the failure to be so true and correct would not have a
Material Adverse Effect on VidRev. The Company shall have received a
certificate with respect to the foregoing signed on behalf of VidRev by a duly
authorized officer of VidRev.
(b) Agreements and Covenants. VidRev shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to the
Effective Time, and the Company shall have received a certificate to such
effect signed on behalf of VidRev by a duly authorized officer of VidRev.
A-13
(c) Cancellation/Issuance of Shares. TTA Technologies Ltd., which
owns 29,374,500 shares of VidRev Common Stock shall have tendered 3,959,357 of
its shares of VidRev Common Stock to VidRev for cancellation and VidRev shall
cancel such shares. VidRev shall issue to Kelly Trimble 200,000 restricted
shares of VidRev Common Stock prior to the Effective Time as a finder's fee in
connection with the Merger. VidRev shall have 26,596,643 shares of VidRev
Common Stock issued and outstanding immediately prior to the Effective Time.
(d) Opinion of Counsel for VidRev. The Company shall have received an
opinion from Brown Raysman Millstein Felder & Steiner LLP, counsel for VidRev,
dated as of the Closing, relating to the transactions contemplated herein, in
form and substance reasonably acceptable to the Company.
(e) Registration Rights Agreement. VidRev shall have entered into a
Registration Rights Agreement, in the form attached hereto as Exhibit E, which
provides certain piggyback registration rights with respect to the Piggyback
Shares.
5.3 Additional Conditions to the Obligations of VidRev. The
obligations of VidRev to consummate and effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, exclusively by VidRev:
(a) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement shall have been true and correct in
all material respects as of the date of this Agreement. In addition, the
representations and warranties of the Company contained in this Agreement
shall be true and correct in all material respects on and as of the Effective
Time except for changes contemplated by this Agreement and except for those
representations and warranties which address matters only as of a particular
date (which shall remain true and correct as of such particular date), with
the same force and effect as if made on and as of the Effective Time. VidRev
shall have received a certificate with respect to the foregoing signed on
behalf of the Company by a duly authorized officer of the Company.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time, and VidRev shall have received a certificate to such effect
signed on behalf of the Company by a duly authorized officer of the Company.
(c) Information Statement. The Company shall file a preliminary joint
Information Statement/Registration Statement on Form S-4 with the SEC and
shall use its best efforts to receive and respond to the comments of the SEC
and to cause a final joint Information Statement/Registration Statement on
Form S-4 (the "Definitive Information Statement/Form S-4") to be mailed to the
Company's stockholders and VidRev's stockholders, all at the earliest
practicable time. The Company shall notify VidRev promptly of the receipt of
the comments of the SEC, and of any request by the SEC for amendments or
supplements to the preliminary and Definitive Information Statement/Form S-4
or for additional information.
If at any time prior to the Closing any event relating to the Parties
should be discovered which should be set forth in an amendment of, or a
supplement to, the Definitive Information Statement/Form S-4, the Parties
shall use their best efforts to take any necessary action as promptly as
practicable to permit an appropriate amendment or supplement to be transmitted
to the Company and VidRev's stockholders, and the Parties shall transmit such
amendment or supplement as promptly as practicable.
A-14
(d) The Company's Form S-4. The Company shall file the Definitive
Information Statement/Form S-4 with respect to the sale and issuance of
Surviving Company Common Stock and the SEC shall declare such registration
statement effective.
(e) Over the Counter Bulletin Board Listing. VidRev has obtained
assurance to its sole satisfaction that the Surviving Company Common Stock
will be listed on the OTCBB.
(f) Opinion of Counsel for The Company. VidRev shall have received an
opinion from Burningham & Burningham, counsel for the Company, dated as of
the Closing, relating to the transactions contemplated herein, in the form and
substance reasonably acceptable to VidRex.
(g) Cancellation/Issuance of Shares. Certain Kentex stockholders, who
collectively own 2,234,640 shares of Company Common Stock shall have tendered
all of their shares Company Common Stock to the Company for cancellation and
the Company shall cancel such shares. The Company shall issue to Jenson
Services, Inc., a Utah corporation ("Jenson Services"), 520,000 restricted
shares of Company Common Stock ("Jenson Shares") in consideration of Jenson
Services payment of all the Company's costs associated with the Merger and for
its forgiveness of all past indebtedness of the Company to Jenson Services.
The Company shall also issue to its legal counsel, Burningham & Burningham,
80,000 restricted shares of Company Common Stock (the "Burningham Shares", and
together with the Jenson Shares, the "Piggyback Shares") in consideration of
legal services rendered. The Company shall have 723,357 shares of Company
Common Stock issued and outstanding immediately prior to the Effective Time.
(h) No Outstanding Liabilities. The Company Financials shall reflect
no liabilities and no such liabilities shall exist, or to the extent any
liabilities do exist, the Company shall provide to VidRev satisfactory
evidence of payment or waiver of such liabilities, including, but not limited
to, payment or waiver of any and all liabilities of any type or nature
whatsoever owed to Jenson Services, by the Company.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time of the Merger:
(a) by mutual written consent duly authorized by the Boards of
Directors of VidRev and the Company;
(b) by either the Company or VidRev if the Merger shall not have been
consummated by June 30, 2005.
(c) by either the Company or VidRev if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action (an "Order"),
in any case having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger, which order, decree or ruling is final and
nonappealable;
(d) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of VidRev set forth in this Agreement, or if
any representation or warranty of VidRev shall have become untrue, in either
case such that the conditions set forth in Section 5.2(a) or Section 5.2(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided that if such
A-15
inaccuracy in VidRev's representations and warranties or breach by VidRev is
curable by VidRev through the exercise of its commercially reasonable efforts,
then the Company may not terminate this Agreement under this Section 6.1(d)
provided VidRev continues to exercise such commercially reasonable efforts to
cure such breach, which shall be in the sole discretion of the Company; or
(e) by VidRev, upon a breach of any representation, warranty, covenant
or agreement on the part of the Company set forth in this Agreement, or if any
representation or warranty of the Company shall have become untrue, in either
case such that the conditions set forth in Section 5.3(a) or Section 5.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided that if such
inaccuracy in the Company's representations and warranties or breach by the
Company is curable by the Company through the exercise of its commercially
reasonable efforts, then VidRev may not terminate this Agreement under this
Section 6.1(e) provided the Company continues to exercise such commercially
reasonable efforts to cure such breach, which shall be in the sole discretion
of VidRev.
6.2 Notice of Termination; Effect of Termination. Any termination of
this Agreement under Section 6.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties. In
the event of the termination of this Agreement as provided in Section 6.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 6.2, Section 6.3 and Article 7, each of which shall survive
the termination of this Agreement, and (ii) nothing herein shall relieve any
party from liability for any breach of this Agreement.
6.3 Fees and Expenses. All fees and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses whether or not the Merger is consummated.
ARTICLE VII
GENERAL PROVISIONS
7.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the Parties at
the following addresses or telecopy numbers (or at such other address or
telecopy numbers for a party as shall be specified by like notice):
(a) if to VidRev, to:
Vidrev Technologies, Inc.
1875 Century Park East #700
Los Angeles, CA. 90067
Telephone: (310) 407-5352
Fax:
Attention: Errol Gerson
with a copy to:
Brown Raysman Millstein Felder & Steiner
LLP
900 Third Avenue
New York, New York 10022
Telephone: (212) 895-2000
Fax: (212) 895-2900
Attention: Joel M. Handel, Esq.
A-16
(b) if to the Company, to:
Kentex Petroleum, Inc.
4685 Highland Drive
Suite 2002
Salt Lake City, Utah 84117
Telephone: (801) 278-9424
Fax:
Attention: Sarah E. Jenson
with copy to:
Burningham & Burningham
Hermes Building
Suite 205
455 East Fifty South
Salt Lake City, Utah 84111
Telephone: (801) 363-7411
Fax: (801) 355-7126
Attention: Leonard W. Burningham, Esq.
7.2 Indemnification for Material Misstatements or Omissions.
(a) VidRev agrees to indemnify, defend and save the Company and its
directors, officers, employees, owners, agents and affiliates and their
successors and assigns or heirs and personal representatives, as the case may
be (each a "Company Indemnified Party"), harmless from and against, and to
promptly pay to a Company Indemnified Party or reimburse a Company Indemnified
Party for any and all losses, damages, expenses (including, without
limitation, court costs, amounts paid in settlement, judgments, reasonable
attorneys' fees or other expenses for investigating and defending, including,
without limitation, those arising out of the enforcement of this Agreement),
suits, actions, claims, deficiencies, liabilities or obligations
(collectively, the "Losses") sustained or incurred by such Company Indemnified
Party relating to, caused by or resulting from any untrue or allegedly untrue
statement of a material fact contained in any Registration Statement, any
prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein (in the case of any prospectus or
form of prospectus or supplement thereto, in light of the circumstances under
which they were made) not misleading, except to the extent, but only to the
extent, that such untrue statements or omissions are based solely upon
information regarding VidRev included by VidRev or its management or
affiliates therein.
(b) The Company agrees to indemnify, defend and save VidRev and its
directors, officers, employees, owners, agents and affiliates and their
successors and assigns or heirs and personal representatives, as the case may
be (each a "VidRev Indemnified Party"), harmless from and against, and to
promptly pay to a VidRev Indemnified Party or reimburse a VidRev Indemnified
Party for any and all Losses sustained or incurred by such VidRev Indemnified
Party relating to, caused by or resulting from any untrue or allegedly untrue
statement of a material fact contained in any Registration Statement, any
prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein (in the case of any prospectus or
form of prospectus or supplement thereto, in light of the circumstances under
which they were made) not misleading, except to the extent, but only to the
extent, that such untrue statements or omissions are based solely upon
information regarding the Company included by the Company or its management or
affiliates therein.
A-17
7.3 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the Parties and delivered to the other party, it being understood that all
Parties need not sign the same counterpart.
7.4 Entire Agreement; Third Party Beneficiaries. This Agreement and
the documents and instruments and other agreements among the Parties as
contemplated by or referred to herein, including the Company Disclosure Letter
and the VidRev Disclosure Letter (a) constitute the entire agreement among the
Parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the Parties with
respect to the subject matter hereof; and (b) are not intended to confer upon
any other person any rights or remedies hereunder.
7.5 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the Parties. The Parties further agree to
replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
7.6 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The Parties agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of
the United States or any state having jurisdiction, this being in addition to
any other remedy to which they are entitled at law or in equity.
7.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Nevada, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law
thereof; provided that issues involving the corporate governance of any of the
Parties shall be governed by their respective jurisdictions of incorporation.
7.8 Rules of Construction. The Parties agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule
of construction providing that ambiguities in an agreement or other document
will be construed against the party drafting such agreement or document.
7.9 Assignment. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the Parties. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the Parties and their
respective successors and permitted assigns.
[Remainder of page intentionally left blank]
A-18
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
VIDREV TECHNOLOGIES, INC.
By: /s/ Errol M. Gerson
-------------------
Name: Errol M. Gerson
Title: President & C.O.O
KENTEX PETROLEUM, INC.
By: /s/ Sarah E. Jenson
-------------------
Name: Sarah E. Jenson
Title: President
A-19
ANNEX B
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
VIDREV TECHNOLOGIES, INC.
The undersigned, __________________, the ______________ of VidRev
Technologies, Inc., a corporation duly incorporated under the laws of the
State of Nevada, hereby certifies as follows:
FIRST: The name of the corporation (hereinafter called the "Corporation")
is "VidRev Technologies, Inc." The original Articles of
Incorporation of the Corporation were filed with the Secretary of
State of the State of Nevada on the 10th day of February 1983.
SECOND: These Amended and Restated Articles of Incorporation have been duly
adopted in accordance with Section 78.390 of the Nevada Revised
Statutes (the "Revised Statutes") and by the written consent of the
stockholders of the Corporation in accordance with Sections 78.320
and 78.390 of the Revised Statutes.
THIRD: These Amended and Restated Articles of Incorporation amend and
restate in their entirety the Articles of Incorporation of the
Corporation to read as follows:
ARTICLE ONE - NAME
The name of the Corporation is "VidRev Technologies, Inc."
ARTICLE TWO -- REGISTERED AGENT/LOCATION
The name of the Corporation's resident agent in the State of Nevada is
CSC Services of Nevada, Inc., and the street address of the said resident
agent where process may be served on the Corporation is 502 East John Street,
Room E, Carson City, Nevada 89706. The mailing address and the street address
of the said resident agent are identical.
ARTICLE THREE -- CAPITALIZATION
The aggregate number of shares which this Corporation shall have
authority to issue is 50,000,000 shares of common stock of a par value of
$.001 per share.
ARTICLE FOUR -- GOVERNING BOARD
The governing board of the Corporation shall be styled as a "Board of
Directors," and any member of said Board shall be styled as a "Director." The
Board of Directors shall manage and/or direct the business and affairs of the
Corporation.
The number of directors of the Corporation may be increased or decreased
in the manner provided in the Bylaws of the Corporation; provided, that the
number of directors shall never be less than one. In the interim between
elections of directors by stockholders entitled to vote, all vacancies,
including vacancies caused by an increase in the number of directors and
including vacancies resulting from the removal of directors for any reason,
may be filled by the remaining directors, though less than a quorum.
B-1
ARTICLE FIVE -- DURATION
The Corporation shall have perpetual existence.
ARTICLE SIX -- ELIMINATING PERSONAL LIABILITY
The personal liability of the directors and officers of the Corporation
is hereby eliminated to the fullest extent permitted by the General
Corporation Law of the State of Nevada, as the same may be amended and
supplemented.
ARTICLE SEVEN -- INDEMNIFICATION
The Corporation shall, to the fullest extent permitted by the General
Corporation Law of the State of Nevada, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have power to
indemnify under said law from and against any and all of the expenses,
liabilities, or other matters referred to in or covered by said law, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any Bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE EIGHT -- PURPOSE
The nature of the business of the Corporation and the objects or purposes
to be transacted, promoted, or carried on by it are to engage in and conduct
any lawful business, activity or enterprise for which corporations may be
organized under the General Corporation Law of the State of Nevada.
ARTICLE NINE -- AMENDMENT OF ARTICLES OF INCORPORATION
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Amended and Restated Articles of Incorporation in
the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
To the full extent permitted under the General Corporation Law of the
State of Nevada, the Board of Directors shall also have the power and other
authority to amend, alter, change or repeal any provision in the Corporation's
Amended and Restated Articles of Incorporation.
In addition, the Board of Directors, without stockholder approval, may
take action to change the Corporation's capitalization by a reverse-stock
split or forward stock split, only so long as such capitalization adjustment
does not require an amendment to the Corporation's Amended and Restated
Articles of Incorporation.
ARTICLE TEN -- CONTROL SHARES ACQUISITIONS
The Corporation expressly opts-out of, or elects not to be governed by,
the "Acquisition of Controlling Interest" provisions contained in NRS Sections
78.378 through 78.3793 inclusive all as permitted under NRS Section 78.378.1.
B-2
ARTICLE ELEVEN -- COMBINATIONS WITH
INTERESTED STOCKHOLDERS
The Corporation expressly opts-out of, and elects not to be governed by,
the "Combinations with Interested Stockholders" provisions contained in NRS
Section 78.411 through 78.444, inclusive all as permitted under NRS Section
78.434.
ARTICLE TWELVE -- CONFLICTS OF INTEREST
To the full extent contemplated by the General Corporation Law of the
State of Nevada, no contract or other transaction between this Corporation and
any other corporation, entity or person shall be affected by the fact that a
director or officer of this Corporation is interested in, or is a director or
other officer of such other corporation. Any director or officer,
individually or with others, may be a party to or may be interested in any
transaction of this Corporation or any transaction in which this Corporation
is interested. Each person who is now or may become a director or officer of
this Corporation is hereby relieved from and indemnified against any liability
that might otherwise obtain in the event such director or officer contracts
with the Corporation for the benefit of such director, officer or any firm,
association or corporation in which such director or officer may be interested
in any way, provided such director or officer acts in good faith.
ARTICLE THIRTEEN -- BYLAWS
Amended and Restated Bylaws of this Corporation may be adopted by the
Board of Directors, which may also have the power to alter, amend or repeal
the same from time to time as permitted under the General Corporation Law of
the State of Nevada.
ARTICLE FOURTEEN -- AUTHORITY OF BOARD OF DIRECTORS TO
CHANGE CORPORATE NAME
The Board of Directors shall have the right to change the name of the
Corporation without shareholder approval to a name that reflects the industry
or business in which the Corporation's business operations are conducted or to
a name that will promote or conform to any principal product, technology or
other asset of the Corporation that the Board of Directors, in its sole
discretion, deems appropriate.
IN WITNESS WHEREOF, the undersigned officer hereby executes these
Amended and Restated Articles of Incorporation of VidRev Technologies, Inc., a
Nevada corporation, on this ___ day of _________, 2005.
_____________________________
Name:
Title:
B-3
ANNEX C
AMENDED AND RESTATED
BYLAWS
OF
VIDREV TECHNOLOGIES, INC.
ARTICLE I
OFFICES
Section 1.01 Location of Offices. The corporation may maintain such
offices within or without the State of Nevada as the Board of Directors may
from time to time designate or require.
Section 1.02 Principal Office. The address of the principal office of
the corporation shall be at the address of the registered office of the
corporation as so designated in the office of the Lieutenant
Governor/Secretary of State of the state of incorporation, or at such other
address as the Board of Directors shall from time to time determine.
ARTICLE II
SHAREHOLDERS
Section 2.01 Annual Meeting. The annual meeting of the shareholders
shall be held in May of each year or at such other time designated by the
Board of Directors and as is provided for in the notice of the meeting, for
the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the election of directors shall
not be held on the day designated for the annual meeting of the shareholders,
or at any adjournment thereof, the Board of Directors shall cause the election
to be held at a special meeting of the shareholders as soon thereafter as may
be convenient.
Section 2.02 Special Meetings. Special meetings of the shareholders
may be called at any time by the president, or by the 2 directors on the Board
of Directors, or in their absence or disability, by any vice president, and
shall be called by the president or, in his or her absence or disability, by a
vice president or by the secretary on the written request of the holders of
not less than one-tenth of all the shares entitled to vote at the meeting,
such written request to state the purpose or purposes of the meeting and to be
delivered to the president, each vice-president, or secretary. In case of
failure to call such meeting within 60 days after such request, such
shareholder or shareholders may call the same.
Section 2.03 Place of Meetings. The Board of Directors may designate
any place, either within or without the state of incorporation, as the place
of meeting for any annual meeting or for any special meeting called by the
Board of Directors. A waiver of notice signed by all shareholders entitled to
vote at a meeting may designate any place, either within or without the state
of incorporation, as the place for the holding of such meeting. If no
designation is made, or if a special meeting be otherwise called, the place of
meeting shall be at the principal office of the corporation.
Section 2.04 Notice of Meetings. The secretary or assistant secretary,
if any, shall cause notice of the time, place, and purpose or purposes of all
meetings of the shareholders (whether annual or special), to be mailed at
least ten days, but not more than 50 days, prior to the meeting, to each
shareholder of record entitled to vote.
C-1
Section 2.05 Waiver of Notice. Any shareholder may waive notice of any
meeting of shareholders (however called or noticed, whether or not called or
noticed and whether before, during, or after the meeting), by signing a
written waiver of notice or a consent to the holding of such meeting, or an
approval of the minutes thereof. Attendance at a meeting, in person or by
proxy, shall constitute waiver of all defects of call or notice regardless of
whether waiver, consent, or approval is signed or any objections are made.
All such waivers, consents, or approvals shall be made a part of the minutes
of the meeting.
Section 2.06 Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any annual meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend or in order to make a determination of shareholders
for any other proper purpose, the Board of Directors of the corporation may
provide that the share transfer books shall be closed, for the purpose of
determining shareholders entitled to notice of or to vote at such meeting, but
not for a period exceeding fifty (50) days. If the share transfer books are
closed for the purpose of determining shareholders entitled to notice of or to
vote at such meeting, such books shall be closed for at least ten (10) days
immediately preceding such meeting.
In lieu of closing the share transfer books, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than fifty (50) and, in
case of a meeting of shareholders, not less than ten (10) days prior to the
date on which the particular action requiring such determination of
shareholders is to be taken. If the share transfer books are not closed and
no record date is fixed for the determination of shareholders entitled to
notice of or to vote at a meeting or to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof. Failure to comply with
this Section shall not affect the validity of any action taken at a meeting of
shareholders.
Section 2.07 Voting Lists. The officer or agent of the corporation
having charge of the share transfer books for shares of the corporation shall
make, at least ten (10) days before each meeting of shareholders, a complete
list of the shareholders entitled to vote at such meeting or any adjournment
thereof, arranged in alphabetical order, with the address of, and the number
of shares held by each, which list, for a period of ten (10) days prior to
such meeting, shall be kept on file at the registered office of the
corporation and shall be subject to inspection by any shareholder during the
whole time of the meeting. The original share transfer book shall be prima
facia evidence as to the shareholders who are entitled to examine such list or
transfer books, or to vote at any meeting of shareholders.
Section 2.08 Quorum. One-half of the total voting power of the
outstanding shares of the corporation entitled to vote, represented in person
or by proxy, shall constitute a quorum at a meeting of the shareholders. If a
quorum is present, the affirmative vote of the majority of the voting power
represented by shares at the meeting and entitled to vote on the subject shall
constitute action by the shareholders, unless the vote of a greater number or
voting by classes is required by the laws of the state of incorporation of the
corporation or the Articles of Incorporation. If less than one-half of the
outstanding voting power is represented at a meeting, a majority of the voting
power represented by shares so present may adjourn the meeting from time to
time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might
have been transacted at the meeting as originally noticed.
C-2
Section 2.09 Voting of Shares. Each outstanding share of the
corporation entitled to vote shall be entitled to one vote on each matter
submitted to vote at a meeting of shareholders, except to the extent that the
voting rights of the shares of any class or series of stock are determined and
specified as greater or lesser than one vote per share in the manner provided
by the Articles of Incorporation.
Section 2.10 Proxies. At each meeting of the shareholders, each
shareholder entitled to vote shall be entitled to vote in person or by proxy;
provided, however, that the right to vote by proxy shall exist only in case
the instrument authorizing such proxy to act shall have been executed in
writing by the registered holder or holders of such shares, as the case may
be, as shown on the share transfer of the corporation or by his or her or her
attorney thereunto duly authorized in writing. Such instrument authorizing a
proxy to act shall be delivered at the beginning of such meeting to the
secretary of the corporation or to such other officer or person who may, in
the absence of the secretary, be acting as secretary of the meeting. In the
event that any such instrument shall designate two or more persons to act as
proxies, a majority of such persons present at the meeting, or if only one be
present, that one shall (unless the instrument shall otherwise provide) have
all of the powers conferred by the instrument on all persons so designated.
Persons holding stock in a fiduciary capacity shall be entitled to vote the
shares so held and the persons whose shares are pledged shall be entitled to
vote, unless in the transfer by the pledge or on the books of the corporation
he or she shall have expressly empowered the pledgee to vote thereon, in which
case the pledgee, or his or her or her proxy, may represent such shares and
vote thereon.
Section 2.11 Written Consent to Action by Shareholders. Any action
which may be taken at any annual or special meeting of stockholders may be
taken without a meeting and without prior notice, if one or more consents in
writing, setting forth the actions so taken, shall be signed by the holders of
outstanding shares having not less than the minimum number of votes that would
be necessary to authorize or take the action at a meeting at which all shares
entitled to vote thereon were entitled to be present and to vote.
ARTICLE III
DIRECTORS
Section 3.01 General Powers. The property, affairs, and business of
the corporation shall be managed by its Board of Directors. The Board of
Directors may exercise all the powers of the corporation whether derived from
law or the Articles of Incorporation, except such powers as are by statute, by
the Articles of Incorporation or by these Bylaws, vested solely in the
shareholders of the corporation.
Section 3.02 Number, Term, and Qualifications. The Board of Directors
shall consist of three to nine persons. Increases or decreases to said number
may be made, within the numbers authorized by the Articles of Incorporation,
as the Board of Directors shall from time to time determine by amendment to
these Bylaws. An increase or a decrease in the number of the members of the
Board of Directors may also be had upon amendment to these Bylaws by a
majority vote of all of the shareholders, and the number of directors to be so
increased or decreased shall be fixed upon a majority vote of all of the
shareholders of the corporation. Each director shall hold office until the
next annual meeting of shareholders of the corporation and until his or her
successor shall have been elected and shall have qualified. Directors need
not be residents of the state of incorporation or shareholders of the
corporation.
C-3
Section 3.03 Classification of Directors. In lieu of electing the
entire number of directors annually, the Board of Directors may provide that
the directors be divided into either two or three classes, each class to be as
nearly equal in number as possible, the term of office of the directors of the
first class to expire at the first annual meeting of shareholders after their
election, that of the second class to expire at the second annual meeting
after their election, and that of the third class, if any, to expire at the
third annual meeting after their election. At each annual meeting after such
classification, the number of directors equal to the number of the class whose
term expires at the time of such meeting shall be elected to hold office until
the second succeeding annual meeting, if there be two classes, or until the
third succeeding annual meeting, if there be three classes.
Section 3.04 Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this bylaw immediately
following, and at the same place as, the annual meeting of shareholders. The
Board of Directors may provide by resolution the time and place, either within
or without the state of incorporation, for the holding of additional regular
meetings without other notice than such resolution.
Section 3.05 Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the president, vice president,
or any two directors. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within or without
the state of incorporation, as the place for holding any special meeting of
the Board of Directors called by them.
Section 3.06 Meetings by Telephone Conference Call. Members of the
Board of Directors may participate in a meeting of the Board of Directors or a
committee of the Board of Directors by means of conference telephone or
similar communication equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to
this Section shall constitute presence in person at such meeting.
Section 3.07 Notice. Notice of any special meeting shall be given at
least ten (10) days prior thereto by written notice delivered personally or
mailed to each director at his or her regular business address or residence,
or by telegram. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Any
director may waive notice of any meeting. Attendance of a director at a
meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting solely for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 3.08 Quorum. A majority of the number of directors shall
constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but if less than a majority is present at a meeting, a
majority of the directors present may adjourn the meeting from time to time
without further notice.
Section 3.09 Manner of Acting. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors, and the individual directors shall have no power as such.
C-4
Section 3.10 Vacancies and Newly Created Directorship. If any
vacancies shall occur in the Board of Directors by reason of death,
resignation or otherwise, or if the number of directors shall be increased,
the directors then in office shall continue to act and such vacancies or newly
created directorships shall be filled by a vote of the directors then in
office, though less than a quorum, in any way approved by the meeting. Any
directorship to be filled by reason of removal of one or more directors by the
shareholders may be filled by election by the shareholders at the meeting at
which the director or directors are removed.
Section 3.11 Compensation. By resolution of the Board of Directors,
the directors may be paid their expenses, if any, of attendance at each
meeting of the Board of Directors, and may be paid a fixed sum for attendance
at each meeting of the Board of Directors or a stated salary as director. No
such payment shall preclude any director from serving the corporation in any
other capacity and receiving compensation therefor.
Section 3.12 Presumption of Assent. A director of the corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his or her or her dissent shall be entered in the minutes of the
meeting, unless he or she shall file his or her or her written dissent to such
action with the person acting as the secretary of the meeting before the
adjournment thereof, or shall forward such dissent by registered or certified
mail to the secretary of the corporation immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a director who voted in
favor of such action.
Section 3.13 Resignations. A director may resign at any time by
delivering a written resignation to either the president, a vice president,
the secretary, or assistant secretary, if any. The resignation shall become
effective on its acceptance by the Board of Directors; provided, that if the
board has not acted thereon within ten days from the date presented, the
resignation shall be deemed accepted.
Section 3.14 Written Consent to Action by Directors. Any action
required to be taken at a meeting of the directors of the corporation or any
other action which may be taken at a meeting of the directors or of a
committee, may be taken without a meeting, if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors, or all of
the members of the committee, as the case may be. Such consent shall have the
same legal effect as a unanimous vote of all the directors or members of the
committee.
Section 3.15 Removal. At a meeting expressly called for that purpose,
one or more directors may be removed by a vote of not less than two thirds of
the shares of outstanding stock of the corporation entitled to vote at an
election of directors.
ARTICLE IV
OFFICERS
Section 4.01 Number. The officers of the corporation shall be a
president, one or more vice-presidents, as shall be determined by resolution
of the Board of Directors, a secretary, a treasurer, and such other officers
as may be appointed by the Board of Directors. The Board of Directors may
elect, but shall not be required to elect, a chairman of the board and the
Board of Directors may appoint a general manager.
C-5
Section 4.02 Election, Term of Office, and Qualifications. The
officers shall be chosen by the Board of Directors annually at its annual
meeting. In the event of failure to choose officers at an annual meeting of
the Board of Directors, officers may be chosen at any regular or special
meeting of the Board of Directors. Each such officer (whether chosen at an
annual meeting of the Board of Directors to fill a vacancy or otherwise) shall
hold his or her office until the next ensuing annual meeting of the Board of
Directors and until his or her successor shall have been chosen and qualified,
or until his or her death, or until his or her resignation or removal in the
manner provided in these Bylaws. Any one person may hold any two or more of
such offices, except that the president shall not also be the secretary. No
person holding two or more offices shall act in or execute any instrument in
the capacity of more than one office. The chairman of the board, if any,
shall be and remain a director of the corporation during the term of his or
her office. No other officer need be a director.
Section 4.03 Subordinate Officers, Etc. The Board of Directors from
time to time may appoint such other officers or agents as it may deem
advisable, each of whom shall have such title, hold office for such period,
have such authority, and perform such duties as the Board of Directors from
time to time may determine. The Board of Directors from time to time may
delegate to any officer or agent the power to appoint any such subordinate
officer or agents and to prescribe their respective titles, terms of office,
authorities, and duties. Subordinate officers need not be shareholders or
directors.
Section 4.04 Resignations. Any officer may resign at any time by
delivering a written resignation to the Board of Directors, the president, or
the secretary. Unless otherwise specified therein, such resignation shall
take effect on delivery.
Section 4.05 Removal. Any officer may be removed from office at any
special meeting of the Board of Directors called for that purpose or at a
regular meeting, by vote of a majority of the directors, with or without
cause. Any officer or agent appointed in accordance with the provisions of
Section 4.03 hereof may also be removed, either with or without cause, by any
officer on whom such power of removal shall have been conferred by the Board
of Directors.
Section 4.06 Vacancies and Newly Created Offices. If any vacancy shall
occur in any office by reason of death, resignation, removal,
disqualification, or any other cause, or if a new office shall be created,
then such vacancies or new created offices may be filled by the Board of
Directors at any regular or special meeting.
Section 4.07 The Chairman of the Board. The Chairman of the Board, if
there be such an officer, shall have the following powers and duties.
(a) He or she shall preside at all shareholders' meetings;
(b) He or she shall preside at all meetings of the Board of Directors;
and
(c) He or she shall be a member of the executive committee, if any.
Section 4.08 The President. The president shall have the following
powers and duties:
C-6
(a) If no general manager has been appointed, he or she shall be the
chief executive officer of the corporation, and, subject to the direction of
the Board of Directors, shall have general charge of the business, affairs,
and property of the corporation and general supervision over its officers,
employees, and agents;
(b) If no chairman of the board has been chosen, or if such officer is
absent or disabled, he or she shall preside at meetings of the shareholders
and Board of Directors;
(c) He or she shall be a member of the executive committee, if any;
(d) He or she shall be empowered to sign certificates representing
shares of the corporation, the issuance of which shall have been authorized by
the Board of Directors; and
(e) He or she shall have all power and shall perform all duties
normally incident to the office of a president of a corporation, and shall
exercise such other powers and perform such other duties as from time to time
may be assigned to him or her by the Board of Directors.
Section 4.09 The Vice Presidents. The Board of Directors may, from
time to time, designate and elect one or more vice presidents, one of whom may
be designated to serve as executive vice president. Each vice president shall
have such powers and perform such duties as from time to time may be assigned
to him or her by the Board of Directors or the president. At the request or
in the absence or disability of the president, the executive vice president
or, in the absence or disability of the executive vice president, the vice
president designated by the Board of Directors or (in the absence of such
designation by the Board of Directors) by the president, the senior vice
president, may perform all the duties of the president, and when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
president.
Section 4.10 The Secretary. The secretary shall have the following
powers and duties:
(a) He or she shall keep or cause to be kept a record of all of the
proceedings of the meetings of the shareholders and of the board or directors
in books provided for that purpose;
(b) He or she shall cause all notices to be duly given in accordance
with the provisions of these Bylaws and as required by statute;
(c) He or she shall be the custodian of the records and of the seal of
the corporation, and shall cause such seal (or a facsimile thereof) to be
affixed to all certificates representing shares of the corporation prior to
the issuance thereof and to all instruments, the execution of which on behalf
of the corporation under its seal shall have been duly authorized in
accordance with these Bylaws, and when so affixed, he or she may attest the
same;
(d) He or she shall assume that the books, reports, statements,
certificates, and other documents and records required by statute are properly
kept and filed;
C-7
(e) He or she shall have charge of the share books of the corporation
and cause the share transfer books to be kept in such manner as to show at any
time the amount of the shares of the corporation of each class issued and
outstanding, the manner in which and the time when such stock was paid for,
the names alphabetically arranged and the addresses of the holders of record
thereof, the number of shares held by each holder and time when each became
such holder or record; and he or she shall exhibit at all reasonable times to
any director, upon application, the original or duplicate share register. He
or she shall cause the share book referred to in Section 6.04 hereof to be
kept and exhibited at the principal office of the corporation, or at such
other place as the Board of Directors shall determine, in the manner and for
the purposes provided in such Section;
(f) He or she shall be empowered to sign certificates representing
shares of the corporation, the issuance of which shall have been authorized by
the Board of Directors; and
(g) He or she shall perform in general all duties incident to the
office of secretary and such other duties as are given to him or her by these
Bylaws or as from time to time may be assigned to him or her by the Board of
Directors or the president.
Section 4.11 The Treasurer. The treasurer shall have the following
powers and duties:
(a) He or she shall have charge and supervision over and be responsible
for the monies, securities, receipts, and disbursements of the corporation;
(b) He or she shall cause the monies and other valuable effects of the
corporation to be deposited in the name and to the credit of the corporation
in such banks or trust companies or with such banks or other depositories as
shall be selected in accordance with Section 5.03 hereof;
(c) He or she shall cause the monies of the corporation to be disbursed
by checks or drafts (signed as provided in Section 5.04 hereof) drawn on the
authorized depositories of the corporation, and cause to be taken and
preserved property vouchers for all monies disbursed;
(d) He or she shall render to the Board of Directors or the president,
whenever requested, a statement of the financial condition of the corporation
and of all of this transactions as treasurer, and render a full financial
report at the annual meeting of the shareholders, if called upon to do so;
(e) He or she shall cause to be kept correct books of account of all
the business and transactions of the corporation and exhibit such books to any
director on request during business hours;
(f) He or she shall be empowered from time to time to require from all
officers or agents of the corporation reports or statements given such
information as he or she may desire with respect to any and all financial
transactions of the corporation; and
(g) He or she shall perform in general all duties incident to the
office of treasurer and such other duties as are given to him or her by these
Bylaws or as from time to time may be assigned to him or her by the Board of
Directors or the president.
Section 4.12 General Manager. The Board of Directors may employ and
appoint a general manager who may, or may not, be one of the officers or
directors of the corporation. The general manager, if any shall have the
following powers and duties:
(a) He or she shall be the chief executive officer of the corporation
and, subject to the directions of the Board of Directors, shall have general
charge of the business affairs and property of the corporation and general
supervision over its officers, employees, and agents:
C-8
(b) He or she shall be charged with the exclusive management of the
business of the corporation and of all of its dealings, but at all times
subject to the control of the Board of Directors;
(c) Subject to the approval of the Board of Directors or the executive
committee, if any, he or she shall employ all employees of the corporation, or
delegate such employment to subordinate officers, and shall have authority to
discharge any person so employed; and
(d) He or she shall make a report to the president and directors as
often as required, setting forth the results of the operations under his or
her charge, together with suggestions looking toward improvement and
betterment of the condition of the corporation, and shall perform such other
duties as the Board of Directors may require.
Section 4.13 Salaries. The salaries and other compensation of the
officers of the corporation shall be fixed from time to time by the Board of
Directors, except that the Board of Directors may delegate to any person or
group of persons the power to fix the salaries or other compensation of any
subordinate officers or agents appointed in accordance with the provisions of
Section 4.03 hereof. No officer shall be prevented from receiving any such
salary or compensation by reason of the fact that he or she is also a director
of the corporation.
Section 4.14 Surety Bonds. In case the Board of Directors shall so
require, any officer or agent of the corporation shall execute to the
corporation a bond in such sums and with such surety or sureties as the Board
of Directors may direct, conditioned upon the faithful performance of his or
her duties to the corporation, including responsibility for negligence and for
the accounting of all property, monies, or securities of the corporation which
may come into his or her hands.
ARTICLE V
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY,
AND DEPOSIT OF CORPORATE FUNDS
Section 5.01 Execution of Instruments. Subject to any limitation
contained in the Articles of Incorporation or these Bylaws, the president or
any vice president or the general manager, if any, may, in the name and on
behalf of the corporation, execute and deliver any contract or other
instrument authorized in writing by the Board of Directors. The Board of
Directors may, subject to any limitation contained in the Articles of
Incorporation or in these Bylaws, authorize in writing any officer or agent to
execute and delivery any contract or other instrument in the name and on
behalf of the corporation; any such authorization may be general or confined
to specific instances.
Section 5.02 Loans. No loans or advances shall be contracted on behalf
of the corporation, no negotiable paper or other evidence of its obligation
under any loan or advance shall be issued in its name, and no property of the
corporation shall be mortgaged, pledged, hypothecated, transferred, or
conveyed as security for the payment of any loan, advance, indebtedness, or
liability of the corporation, unless and except as authorized by the Board of
Directors. Any such authorization may be general or confined to specific
instances.
C-9
Section 5.03 Deposits. All monies of the corporation not otherwise
employed shall be deposited from time to time to its credit in such banks and
or trust companies or with such bankers or other depositories as the Board of
Directors may select, or as from time to time may be selected by any officer
or agent authorized to do so by the Board of Directors.
Section 5.04 Checks, Drafts, Etc. All notes, drafts, acceptances,
checks, endorsements, and, subject to the provisions of these Bylaws,
evidences of indebtedness of the corporation, shall be signed by such officer
or officers or such agent or agents of the corporation and in such manner as
the Board of Directors from time to time may determine. Endorsements for
deposit to the credit of the corporation in any of its duly authorized
depositories shall be in such manner as the Board of Directors from time to
time may determine.
Section 5.05 Bonds and Debentures. Every bond or debenture issued by
the corporation shall be evidenced by an appropriate instrument which shall be
signed by the president or a vice president and by the secretary and sealed
with the seal of the corporation. The seal may be a facsimile, engraved or
printed. Where such bond or debenture is authenticated with the manual
signature of an authorized officer of the corporation or other trustee
designated by the indenture of trust or other agreement under which such
security is issued, the signature of any of the corporation's officers named
thereon may be a facsimile. In case any officer who signed, or whose
facsimile signature has been used on any such bond or debenture, should cease
to be an officer of the corporation for any reason before the same has been
delivered by the corporation, such bond or debenture may nevertheless be
adopted by the corporation and issued and delivered as through the person who
signed it or whose facsimile signature has been used thereon had not ceased to
be such officer.
Section 5.06 Sale, Transfer, Etc. of Securities. Sales, transfers,
endorsements, and assignments of stocks, bonds, and other securities owned by
or standing in the name of the corporation, and the execution and delivery on
behalf of the corporation of any and all instruments in writing incident to
any such sale, transfer, endorsement, or assignment, shall be effected by the
president, or by any vice president, together with the secretary, or by any
officer or agent thereunto authorized by the Board of Directors.
Section 5.07 Proxies. Proxies to vote with respect to shares of other
corporations owned by or standing in the name of the corporation shall be
executed and delivered on behalf of the corporation by the president or any
vice president and the secretary or assistant secretary of the corporation, or
by any officer or agent thereunder authorized by the Board of Directors.
ARTICLE VI
CAPITAL SHARES
Section 6.01 Share Certificates. Every holder of shares in the
corporation shall be entitled to have a certificate, signed by the president
or any vice president and the secretary or assistant secretary, and sealed
with the seal (which may be a facsimile, engraved or printed) of the
corporation, certifying the number and kind, class or series of shares owned
by him or her in the corporation; provided, however, that where such a
certificate is countersigned by (a) a transfer agent or an assistant transfer
agent, or (b) registered by a registrar, the signature of any such president,
vice president, secretary, or assistant secretary may be a facsimile. In case
any officer who shall have signed, or whose facsimile signature or signatures
shall have been used on any such certificate, shall cease to be such officer
of the corporation, for any reason, before the delivery of such certificate by
C-10
the corporation, such certificate may nevertheless be adopted by the
corporation and be issued and delivered as though the person who signed it, or
whose facsimile signature or signatures shall have been used thereon, has not
ceased to be such officer. Certificates representing shares of the
corporation shall be in such form as provided by the statutes of the state of
incorporation. There shall be entered on the share books of the corporation
at the time of issuance of each share, the number of the certificate issued,
the name and address of the person owning the shares represented thereby, the
number and kind, class or series of such shares, and the date of issuance
thereof. Every certificate exchanged or returned to the corporation shall be
marked "Canceled" with the date of cancellation.
Section 6.02 Transfer of Shares. Transfers of shares of the
corporation shall be made on the books of the corporation by the holder of
record thereof, or by his or her attorney thereunto duly authorized by a power
of attorney duly executed in writing and filed with the secretary of the
corporation or any of its transfer agents, and on surrender of the certificate
or certificates, properly endorsed or accompanied by proper instruments of
transfer, representing such shares. Except as provided by law, the
corporation and transfer agents and registrars, if any, shall be entitled to
treat the holder of record of any stock as the absolute owner thereof for all
purposes, and accordingly, shall not be bound to recognize any legal,
equitable, or other claim to or interest in such shares on the part of any
other person whether or not it or they shall have express or other notice
thereof.
Section 6.03 Regulations. Subject to the provisions of this Article VI
and of the Articles of Incorporation, the Board of Directors may make such
rules and regulations as they may deem expedient concerning the issuance,
transfer, redemption, and registration of certificates for shares of the
corporation.
Section 6.04 Maintenance of Stock Ledger at Principal Place of
Business. A share book (or books where more than one kind, class, or series
of stock is outstanding) shall be kept at the principal place of business of
the corporation, or at such other place as the Board of Directors shall
determine, containing the names, alphabetically arranged, of original
shareholders of the corporation, their addresses, their interest, the amount
paid on their shares, and all transfers thereof and the number and class of
shares held by each. Such share books shall at all reasonable hours be
subject to inspection by persons entitled by law to inspect the same.
Section 6.05 Transfer Agents and Registrars. The Board of Directors
may appoint one or more transfer agents and one or more registrars with
respect to the certificates representing shares of the corporation, and may
require all such certificates to bear the signature of either or both. The
Board of Directors may from time to time define the respective duties of such
transfer agents and registrars. No certificate for shares shall be valid
until countersigned by a transfer agent, if at the date appearing thereon the
corporation had a transfer agent for such shares, and until registered by a
registrar, if at such date the corporation had a registrar for such shares.
Section 6.06 Closing of Transfer Books and Fixing of Record Date.
(a) The Board of Directors shall have power to close the share books of
the corporation for a period of not to exceed 50 days preceding the date of
any meeting of shareholders, or the date for payment of any dividend, or the
date for the allotment of rights, or capital shares shall go into effect, or a
date in connection with obtaining the consent of shareholders for any purpose.
C-11
(b) In lieu of closing the share transfer books as aforesaid, the Board
of Directors may fix in advance a date, not exceeding 50 days preceding the
date of any meeting of shareholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital shares shall go into effect, or a date in
connection with obtaining any such consent, as a record date for the
determination of the shareholders entitled to a notice of, and to vote at, any
such meeting and any adjournment thereof, or entitled to receive payment of
any such dividend, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of capital stock,
or to give such consent.
(c) If the share transfer books shall be closed or a record date set
for the purpose of determining shareholders entitled to notice of or to vote
at a meeting of shareholders, such books shall be closed for, or such record
date shall be, at least ten (10) days immediately preceding such meeting.
Section 6.07 Lost or Destroyed Certificates. The corporation may issue
a new certificate for shares of the corporation in place of any certificate
theretofore issued by it, alleged to have been lost or destroyed, and the
Board of Directors may, in its discretion, require the owner of the lost or
destroyed certificate or his or her legal representatives, to give the
corporation a bond in such form and amount as the Board of Directors may
direct, and with such surety or sureties as may be satisfactory to the board,
to indemnify the corporation and its transfer agents and registrars, if any,
against any claims that may be made against it or any such transfer agent or
registrar on account of the issuance of such new certificate. A new
certificate may be issued without requiring any bond when, in the judgment of
the Board of Directors, it is proper to do so.
Section 6.08 No Limitation on Voting Rights; Limitation on Dissenter's
Rights. To the extent permissible under the applicable law of any
jurisdiction to which the corporation may become subject by reason of the
conduct of business, the ownership of assets, the residence of shareholders,
the location of offices or facilities, or any other item, the corporation
elects not to be governed by the provisions of any statute that (i) limits,
restricts, modified, suspends, terminates, or otherwise affects the rights of
any shareholder to cast one vote for each share of common stock registered in
the name of such shareholder on the books of the corporation, without regard
to whether such shares were acquired directly from the corporation or from any
other person and without regard to whether such shareholder has the power to
exercise or direct the exercise of voting power over any specific fraction of
the shares of common stock of the corporation issued and outstanding or (ii)
grants to any shareholder the right to have his or her stock redeemed or
purchased by the corporation or any other shareholder on the acquisition by
any person or group of persons of shares of the corporation. In particular,
to the extent permitted under the laws of the state of incorporation, the
corporation elects not to be governed by any such provision, including the
provisions of the Nevada Control Share Acquisitions Act, Sections 78.378 to
78.3793, inclusive, of the Nevada Revised Statutes, or any statute of similar
effect or tenor.
ARTICLE VII
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 7.01 How Constituted. The Board of Directors may designate an
executive committee and such other committees as the Board of Directors may
deem appropriate, each of which committees shall consist of two or more
directors. Members of the executive committee and of any such other
committees shall be designated annually at the annual meeting of the Board of
C-12
Directors; provided, however, that at any time the Board of Directors may
abolish or reconstitute the executive committee or any other committee. Each
member of the executive committee and of any other committee shall hold office
until his or her successor shall have been designated or until his or her
resignation or removal in the manner provided in these Bylaws.
Section 7.02 Powers. During the intervals between meetings of the
Board of Directors, the executive committee shall have and may exercise all
powers of the Board of Directors in the management of the business and affairs
of the corporation, except for the power to fill vacancies in the Board of
Directors or to amend these Bylaws, and except for such powers as by law may
not be delegated by the Board of Directors to an executive committee.
Section 7.03 Proceedings. The executive committee, and such other
committees as may be designated hereunder by the Board of Directors, may fix
its own presiding and recording officer or officers, and may meet at such
place or places, at such time or times and on such notice (or without notice)
as it shall determine from time to time. It will keep a record of its
proceedings and shall report such proceedings to the Board of Directors at the
meeting of the Board of Directors next following.
Section 7.04 Quorum and Manner of Acting. At all meeting of the
executive committee, and of such other committees as may be designated
hereunder by the Board of Directors, the presence of members constituting a
majority of the total authorized membership of the committee shall be
necessary and sufficient to constitute a quorum for the transaction of
business, and the act of a majority of the members present at any meeting at
which a quorum is present shall be the act of such committee. The members of
the executive committee, and of such other committees as may be designated
hereunder by the Board of Directors, shall act only as a committee and the
individual members thereof shall have no powers as such.
Section 7.05 Resignations. Any member of the executive committee, and
of such other committees as may be designated hereunder by the Board of
Directors, may resign at any time by delivering a written resignation to
either the president, the secretary, or assistant secretary, or to the
presiding officer of the committee of which he or she is a member, if any
shall have been appointed and shall be in office. Unless otherwise specified
herein, such resignation shall take effect on delivery.
Section 7.06 Removal. The Board of Directors may at any time remove
any member of the executive committee or of any other committee designated by
it hereunder either for or without cause.
Section 7.07 Vacancies. If any vacancies shall occur in the executive
committee or of any other committee designated by the Board of Directors
hereunder, by reason of disqualification, death, resignation, removal, or
otherwise, the remaining members shall, until the filling of such vacancy,
constitute the then total authorized membership of the committee and, provided
that two or more members are remaining, continue to act. Such vacancy may be
filled at any meeting of the Board of Directors.
Section 7.08 Compensation. The Board of Directors may allow a fixed
sum and expenses of attendance to any member of the executive committee, or of
any other committee designated by it hereunder, who is not an active salaried
employee of the corporation for attendance at each meeting of said committee.
C-13
ARTICLE VIII
INDEMNIFICATION, INSURANCE, AND
OFFICER AND DIRECTOR CONTRACTS
Section 8.01 Indemnification: Third Party Actions. The corporation
shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action,
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he or she is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees) judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
any such action, suit or proceeding, if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her 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 he or she reasonably believed to be in
or not opposed to the best interests of the corporation, and with respect to
any criminal action or proceeding, he or she had reasonable cause to believe
that his or her conduct was unlawful.
Section 8.02 Indemnification: Corporate Actions. The corporation
shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he or she is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees) actually and reasonably incurred by him
or her in connection with the defense or settlement of such action or suit, if
he or she acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation, except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such a person shall have been adjudged to be liable for negligence or
misconduct in the performance of his or her duty to the corporation, unless
and only to the extent that the court in which the action or suit was brought
shall determine on application that, despite the adjudication of liability but
in view of all circumstances of the case, the person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
Section 8.03 Determination. To the extent that a director, officer,
employee, or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in
Sections 8.01 and 8.02 hereof, or in defense of any claim, issue, or matter
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.
Any other indemnification under Sections 8.01 and 8.02 hereof, shall be made
by the corporation upon a determination that indemnification of the officer,
director, employee, or agent is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in Sections 8.01 and 8.02
hereof. Such determination shall be made either (i) 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 (ii) by independent legal counsel on a
written opinion; or (iii) by the shareholders by a majority vote of a quorum
of shareholders at any meeting duly called for such purpose.
C-14
Section 8.04 General Indemnification. The indemnification provided by
this Section shall not be deemed exclusive of any other indemnification
granted under any provision of any statute, in the corporation's Articles of
Incorporation, these Bylaws, agreement, vote of shareholders or disinterested
directors, or otherwise, both as to action in his or her official capacity and
as to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee, or agent,
and shall inure to the benefit of the heirs and legal representatives of such
a person.
Section 8.05 Advances. Expenses incurred in defending a civil or
criminal action, suit, or proceeding as contemplated in this Section may be
paid by the corporation in advance of the final disposition of such action,
suit, or proceeding upon a majority vote of a quorum of the Board of Directors
and upon receipt of an undertaking by or on behalf of the director, officers,
employee, or agent to repay such amount or amounts unless if it is ultimately
determined that he or she is to indemnified by the corporation as authorized
by this Section.
Section 8.06 Scope of Indemnification. The indemnification authorized
by this Section shall apply to all present and future directors, officers,
employees, and agents of the corporation and shall continue as to such persons
who cease to be directors, officers, employees, or agents of the corporation,
and shall inure to the benefit of the heirs, executors, and administrators of
all such persons and shall be in addition to all other indemnification
permitted by law.
8.07. Insurance. The corporation may purchase and maintain insurance
on behalf of any person who is or was a director, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise against any liability asserted
against him or her and incurred by him or her in any such capacity, or arising
out of his or her status as such, whether or not the corporation would have
the power to indemnify him or her against any such liability and under the
laws of the state of incorporation, as the same may hereafter be amended or
modified.
ARTICLE IX
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE X
DIVIDENDS
The Board of Directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and on
the terms and conditions provided by the Articles of Incorporation and these
Bylaws.
ARTICLE XI
AMENDMENTS
All Bylaws of the corporation, whether adopted by the Board of Directors
or the shareholders, shall be subject to amendment, alteration, or repeal, and
new Bylaws may be made, except that:
(a) No Bylaws adopted or amended by the shareholders shall be altered
or repealed by the Board of Directors.
C-15
(b) No Bylaws shall be adopted by the Board of Directors which shall
require more than a majority of the voting shares for a quorum at a meeting of
shareholders, or more than a majority of the votes cast to constitute action
by the shareholders, except where higher percentages are required by law;
provided, however that (i) if any Bylaw regulating an impending election of
directors is adopted or amended or repealed by the Board of Directors, there
shall be set forth in the notice of the next meeting of shareholders for the
election of directors, the Bylaws so adopted or amended or repealed, together
with a concise statement of the changes made; and (ii) no amendment,
alteration or repeal of this Article XI shall be made except by the
shareholders.
CERTIFICATE OF SECRETARY
The undersigned does hereby certify that he or she is the secretary of
VidRev Technologies, Inc., a corporation duly organized and existing under and
by virtue of the laws of the State of Nevada; that the above and foregoing
Bylaws of said corporation were duly and regularly adopted as such by the
Board of Directors of the corporation at a meeting of the Board of Directors,
which was duly and regularly held on the ___ day of ________, 2005, and that
the above and foregoing Bylaws are now in full force and effect.
DATED THIS ____ day of ___________, 2005.
_________________________________
_____________________, Secretary
C-16
ANNEX D
VIDREV TECHNOLOGIES, INC.
2005 STOCK OPTION PLAN
I. ESTABLISHMENT OF PLAN; DEFINITIONS
1. Purpose. The purpose of this Vidrev Technologies, Inc. 2005
Stock Option Plan is to provide an incentive to key Employees and non-Employee
Directors of, and Consultants and other independent advisors to, Vidrev
Technologies, Inc., a Nevada corporation (the "Company") or any of its
Affiliates, who are in a position to contribute materially to the long-term
success of the Company, to increase their interest in the welfare of the
Company and its Affiliates and to aid in attracting and retaining Employees,
Directors and Consultants of outstanding ability.
2. Definitions. Unless the context clearly indicates
otherwise, the following terms shall have the meanings set forth below:
"Affiliate" shall mean any "subsidiary" (as defined in Section
424(f) of the Code) or "parent" (as defined in Section 424(e) of the
Code) of the Company.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean (i) for a Grantee who is a party to an
employment or consulting agreement with the Company or an Affiliate
which agreement provides for a definition of "Cause" therein, "Cause"
shall have the same meaning as provided for in such agreement, or (ii)
for a Grantee who is not a party to such an agreement, "Cause" shall
mean repeated failure to properly perform assigned duties (after written
notice of at least one such failure had previously been communicated to
the Grantee by the Company), gross negligence, commission of a felony or
any act materially injurious to the Company or an Affiliate involving
dishonesty or breach of any duty of confidentiality or loyalty.
"Change of Control" shall mean (i) for a Grantee who is a party to
an employment or consulting agreement with the Company or an Affiliate
which agreement provides for a definition of "Change of Control"
therein, "Change of Control" shall have the same meaning as provided for
in such agreement, or (ii) for a Grantee who is not a party to such an
agreement, "Change of Control" shall mean the satisfaction of any one or
more of the following conditions (and the "Change of Control" shall be
deemed to have occurred as of the first day that any one or more of the
following conditions shall have been satisfied):
(a) Any person (as such term is used in paragraphs 13(d)
and 14(d)(2) of the Exchange Act, hereinafter in this definition,
"Person"), other than the Company or an Affiliate or an employee benefit
plan of the Company or an Affiliate, becomes the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing more than 30% of the combined
voting power of the Company's then outstanding securities;
(b) The Company's stockholders approve a merger,
consolidation or other business combination (a "Business Combination")
other than a Business Combination in which holders of common stock of
the Company immediately prior to the Business Combination have
substantially the same proportionate ownership of common stock of the
surviving corporation immediately after the Business Combination as
immediately before;
D-1
(c) The Company's stockholders approve either (i) an
agreement for the sale or disposition of all or substantially all of the
Company's assets to any entity that is not an Affiliate, or (ii) a plan
of complete liquidation of the Company; or
(d) The persons who were members of the Board immediately
before a tender offer by any Person other than the Company or an
Affiliate, or before a merger, consolidation or contested election, or
before any combination of such transactions, cease to constitute a
majority of the members of the Board as a result of such transaction or
transactions.
"Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
"Committee" shall mean a committee designated by the Board which
committee shall administer the Plan as set forth in Section 4 of this
Article I of the Plan; provided, however, that if no such committee
shall be so designated, the Board shall serve as the Committee.
"Company" shall mean Vidrev Technologies, Inc., a Nevada
corporation.
"Consultant" shall mean any non-Employee consultant or advisor to
the Company or an Affiliate who has contracted directly with the Company
or an Affiliate to render bona fide consulting or advisory services
thereto.
"Director" shall mean any individual who is a member of the Board
and/or a member of the board of directors of an Affiliate, and who is
not an Employee.
"Disability" shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less
than 12 months, all as described in Section 22(e)(3) of the Code.
"Employee" shall mean any employee, including officers, of the
Company or an Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean on any date, (i) if the Stock is
not listed on a national securities exchange or quoted on Nasdaq, the
fair market value of the Stock on that date as determined by the Board,
or (ii) if the Stock is listed on a national securities exchange or is
quoted on Nasdaq, the closing price reported on the composite tape for
issues listed on such exchange on such date, or the closing price or the
average of the closing dealer "bid" and "asked" prices for the Stock as
quoted on Nasdaq, or if no trades shall have been reported for such
date, on the next preceding date on which there were such trades
reported; provided, however, that if no quotations shall have been made
within the 10 business days immediately preceding such date, Fair Market
Value shall be determined by the Board.
D-2
"Family Member" shall mean, with respect to a Grantee, any child,
stepchild, grandchild, parent, stepparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, brother-in-law or
sister-in-law, including adoptive relationships, any person sharing the
Grantee's household (other than a tenant of the Grantee), a trust in
which such persons have more than 50% of the beneficial interest, a
foundation in which such persons (or the Grantee) control the management
of assets and any other entity in which such persons (or the Grantee)
own more than 50% of the voting interests.
"Grantee" shall mean an Employee, Director or Consultant who has
been granted a Stock Option under the Plan.
"Incentive Stock Option" shall mean a Stock Option granted to an
Employee pursuant to the Incentive Stock Option provisions set forth in
Article II of the Plan.
"Nasdaq" shall mean the National Association of Securities Dealers
Automated Quotation System.
"Non-Qualified Stock Option" shall mean a Stock Option granted to
an Employee, Director or Consultant pursuant to the Non-Qualified Stock
Option provisions set forth in Article III of the Plan.
"Option Period" shall mean the term of a Stock Option as fixed by
the Committee.
"Plan" shall mean this Vidrev Technologies, Inc. 2005 Stock Option
Plan as set forth herein and as amended from time to time.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
Exchange Commission under Section 16, or any successor rule.
"Section 16" shall mean Section 16 of the Exchange Act or any
successor statute.
"Shares" shall mean shares of Stock.
"Stock" shall mean authorized but unissued shares of the common
stock of the Company, par value $0.001 per share, or reacquired shares
of the Company's common stock.
"Stock Option" shall mean an option, which shall include a Non-
Qualified Stock Option and/or Incentive Stock Option, granted pursuant
to the Plan to purchase shares of Stock.
"Stock Option Agreement" shall mean the written instrument
evidencing the grant of one or more Stock Options under the Plan and
which shall contain the terms and conditions applicable to such grant.
"Ten Percent Shareholder" shall mean an Employee who at the time
an Incentive Stock Option is granted thereto owns stock possessing more
than 10% of the total combined voting power of all stock of the Company
or of any of its Affiliates.
3. Shares Subject to the Plan. There are hereby reserved for
issuance under the Plan 2,500,000 Shares; provided, however, that commencing
as of January 1, 2006, should the total number of shares of common stock of
D-3
the Company that is issued and outstanding increase, such maximum number of
shares reserved for issuance under the Plan shall be automatically increased
as of the next succeeding January 1, to ensure that the number of shares of
common stock reserved for issuance under the Plan is always equal to 10% of
the total number of issued and outstanding shares of common stock of the
Company. If a Stock Option shall expire and terminate for any reason, in
whole or in part, without being exercised, the number of Shares as to which
such expired or terminated Stock Option shall not have been exercised may
again become available for the grant of new Stock Options hereunder. No
Employee may receive one or more Stock Options in any calendar year for the
purchase of more than 500,000 Shares. The limitation set forth in the
preceding sentence shall be applied in a manner which shall permit
compensation generated in connection with the exercise of Options to
constitute "performance-based" compensation for purposes of Section 162(m) of
the Code, including, but not limited to, counting against such maximum number
of Shares, to the extent required under Section 162(m) of the Code, any shares
subject to Options that are canceled or repriced.
4. Administration of the Plan. The Plan shall be administered
by the Committee. Subject to the express provisions of the Plan, the
Committee shall have authority to determine the eligibility of Employees,
Directors and Consultants to participate in the Plan, to grant Stock Options
under the Plan and to determine whether Stock Options granted under the Plan
to Employees shall be Non-Qualified Stock Options or Incentive Stock Options,
to interpret the Plan, to prescribe, amend, and rescind rules and regulations
relating to the Plan, to determine the terms and provisions of Stock Option
Agreements and to make all other determinations necessary or advisable for the
administration of the Plan. Any controversy or claim arising out of or
related to the Plan shall be determined unilaterally by and in the sole
discretion of the Committee. Any determination, decision or action of the
Committee in connection with the construction, interpretation, administration,
implementation or maintenance of the Plan shall be final, conclusive and
binding upon all Grantees and all person(s) claiming under or through any
Grantees.
There shall be 2 Committees under the Plan. Solely for the
purpose of Stock Options granted under the Plan to (a) Employees and Directors
who are subject to Section 16, and/or (b) Employees who are "covered
employees" within the meaning of Section 162(m)(3) of the Code, a special
Committee comprised solely of 2 or more individuals who are both (i) "non-
employee directors" (as such term is defined in Rule 16b-3(b)(3) promulgated
by the Securities and Exchange Commission under the Exchange Act), and (ii)
"outside directors" (as such term is defined in Treasury Regulation 1.162-
27(e)(3), shall administer the Plan to satisfy the applicable requirements of
Treasury Regulation 1.162-27(e)(2)(vi) and Rule 16b-3 with respect to such
Employees and Directors. For all other purposes of the Plan, the regular
Committee shall administer the Plan.
Notwithstanding anything contained in this Section 4 to the
contrary, no member of the Committee shall have the authority to render any
decision with respect to his or her participation in or entitlement to
benefits under the Plan.
5. Amendment or Termination. The Board may, at any time,
alter, amend, suspend, discontinue, or terminate the Plan; provided, however,
that no such action shall adversely affect the right of any Grantee under any
Stock Option previously granted thereto hereunder.
6. Effective Date of Plan. The Plan shall become effective
on_________ 2005, subject to the approval by the shareholders of the Company.
D-4
II. INCENTIVE STOCK OPTION PROVISIONS
1. Granting of Incentive Stock Options.
(a) Solely Employees shall be eligible to receive
Incentive Stock Options under the Plan.
(b) When granting an Incentive Stock Option, the Committee
shall determine the purchase price of the Stock subject thereto,
provided that the purchase price of each share of Stock subject to an
Incentive Stock Option shall not be less than 100% of the Fair Market
Value of a share of the Stock on the date the Incentive Stock Option is
granted; and, provided, further, that the purchase price of each share
of Stock subject to an Incentive Stock Option granted to a Ten Percent
Shareholder shall not be less than 110% of the Fair Market Value of a
share of the Stock on the date the Incentive Stock Option is granted.
(c) No Incentive Stock Option shall be exercisable more
than 10 years from the date the Incentive Stock Option was granted;
provided, however, that an Incentive Stock Option granted to a Ten
Percent Shareholder shall not be exercisable more than 5 years from the
date the Incentive Stock Option was granted.
(d) The Committee shall determine and shall designate from
time to time those Employees who are to be granted Incentive Stock
Options and shall specify the number of shares of Stock subject to each
Incentive Stock Option.
(e) Notwithstanding any other provision hereof, the
aggregate Fair Market Value (determined at the time of grant) of the
Stock with respect to which Incentive Stock Options are exercisable for
the first time by an Employee during any calendar year (under all such
plans of the Company and its Affiliates) shall not exceed $100,000.
(f) The Committee, in its sole discretion, shall determine
whether any particular Incentive Stock Option shall become exercisable
in one or more installments, shall specify the installment dates, and,
within the limitations herein provided, shall determine the total period
during which the Incentive Stock Option shall be exercisable. Further,
the Committee may make such other provisions as may be generally
acceptable or desirable in the opinion of the Committee or necessary to
qualify the grants of Incentive Stock Options under the requirements of
Section 422 of the Code.
(g) The Committee may grant at any time new Incentive
Stock Options to an Employee who has previously received Incentive Stock
Options or other Stock Options, whether such prior Incentive Stock
Options or other Stock Options are then outstanding, have previously
been exercised in whole or in part or are canceled in connection with
the issuance of new Incentive Stock Options.
2. Exercise of Incentive Stock Options. The purchase price of
Stock subject to an Incentive Stock Option shall be payable upon its exercise
in cash or by certified check, bank draft or postal or express money order.
In addition, the Committee, in its discretion, may permit a Grantee to make
partial or full payment of the purchase price by utilization of a "cashless
exercise" or any other method made available by the Committee.
3. Termination of Employment. Except as provided otherwise in
the applicable Stock Option Agreement (in which case the provisions of the
Stock Option Agreement shall control over the provisions of this Section 3):
D-5
(a) Except as provided in paragraphs (b) and (c) below, if
a Grantee's employment with the Company or Affiliate is terminated other
than by the Company or Affiliate for Cause, only those Incentive Stock
Options held by the Grantee which were immediately exercisable at the
termination of the Grantee's employment shall be exercisable by the
Grantee following the termination of the Grantee's employment. Such
Incentive Stock Options must be exercised within 30 days following such
termination of employment (but in no event after expiration of the
Option Period) or they shall be forfeited.
(b) Notwithstanding anything to the contrary contained in
paragraph (a) above, if a Grantee's employment with the Company or
Affiliate is terminated by the Company or Affiliate for Cause, all then
outstanding Incentive Stock Options held by the Grantee shall expire
immediately and such Incentive Stock Options shall not be exercisable
after the termination of the Grantee's employment.
(c) Notwithstanding anything to the contrary contained in
paragraphs (a) and (b) above, if a Grantee's employment with the Company
or an Affiliate is terminated on account of the Grantee's death or
Disability, only those Incentive Stock Options held by the Grantee which
were immediately exercisable at the date of the Grantee's death or
Disability, as applicable, shall be exercisable by the Grantee, the
representative of the Grantee's estate or the Grantee's beneficiaries to
whom the Incentive Stock Options have been transferred. Such Incentive
Stock Options must be exercised by the earlier of (i) 6 months from the
date of the Grantee's death or Disability, as applicable, or (ii) the
expiration of the Option Period, or they shall be forfeited.
4. Failure to Satisfy ISO Requirements. Any Incentive Stock
Option granted to an Employee under the Plan which does not satisfy the
applicable requirements of Section 422 of the Code shall thereupon
automatically, to the extent of such failure, be deemed to be a Non-Qualified
Stock Option for all purposes of the Plan.
III. NON-QUALIFIED STOCK OPTION PROVISIONS.
1. Granting of Non-Qualified Stock Options.
(a) Employees, Directors and Consultants shall be eligible
to receive Non-Qualified Stock Options under the Plan.
(b) The Committee shall determine and shall designate from
time to time those Employees, Directors and/or Consultants who are to be
granted Non-Qualified Stock Options and shall specify the number of
shares of Stock subject to each Non-Qualified Stock Option.
(c) The Committee may grant at any time new Non-Qualified
Stock Options to an Employee, Director or Consultant who has previously
received Non-Qualified Stock Options or other Stock Options, whether
such prior Non-Qualified Stock Options or other Stock Options are then
outstanding, have previously been exercised in whole or in part or are
canceled in connection with the issuance of new Non-Qualified Stock
Options.
(d) When granting a Non-Qualified Stock Option, the
Committee shall determine the purchase price of the Stock subject
thereto.
D-6
(e) The Committee, in its sole discretion, shall determine
whether any particular Non-Qualified Stock Option shall become
exercisable in one or more installments, specify the installment dates
and, within the limitations herein provided, determine the total period
during which the Non-Qualified Stock Option shall be exercisable.
Further, the Committee may make such other provisions as may be
generally acceptable or desirable in the opinion of the Committee.
2. Exercise of Non-Qualified Stock Options. The purchase price
of Stock subject to a Non-Qualified Stock Option shall be payable upon its
exercise in cash or by certified check, bank draft or postal or express money
order. In addition, the Committee, in its discretion, may permit a Grantee to
make partial or full payment of the purchase price by utilization of a
"cashless exercise" or any other method made available by the Committee.
3. Termination of Employment, Director Status or Consulting
Engagement. Except as provided otherwise in the applicable Stock Option
Agreement (in which case the provisions of the Stock Option Agreement shall
control over the provisions of this Section 3):
(a) Except as provided in paragraphs (b) and (c) below, if
the employment with the Company or an Affiliate of a Grantee who is an
Employee is terminated other than by the Company or Affiliate for Cause,
only those Non-Qualified Stock Options held by the Grantee which were
immediately exercisable at the termination of the Grantee's employment
shall be exercisable by the Grantee following the termination of the
Grantee's employment. Such Non-Qualified Stock Options must be
exercised within 30 days following such termination of employment (but
in no event after expiration of the Option Period) or they shall be
forfeited.
(b) Notwithstanding anything to the contrary contained in
paragraph (a) above, if the employment with the Company or an Affiliate
of a Grantee who is an Employee is terminated by the Company or
Affiliate for Cause, all then outstanding Non-Qualified Stock Options
held by the Grantee shall expire immediately and such Non-Qualified
Stock Options shall not be exercisable after the termination of the
Grantee's employment.
(c) Notwithstanding anything to the contrary contained in
paragraphs (a) and (b) above, if the employment with the Company or an
Affiliate of a Grantee who is an Employee is terminated on account of
the Grantee's death or Disability, only those Stock Options held by the
Grantee which were immediately exercisable at the date of the Grantee's
death or Disability, as applicable, shall be exercisable by the Grantee,
the representative of the Grantee's estate or the Grantee's
beneficiaries to whom the Non-Qualified Stock Options have been
transferred. Such Non-Qualified Stock Options must be exercised by the
earlier of (i) 6 months from the date of the Grantee's death or
Disability, as applicable, or (ii) the expiration of the Option Period,
or they shall be forfeited.
(d) If a Grantee's status as a Director or engagement as a
Consultant shall terminate other than by the Company or Affiliate for
Cause, without such Grantee thereupon becoming an Employee, only those
Non-Qualified Stock Options held by the Grantee which were immediately
exercisable at the termination of the Grantee's status as a Director or
engagement as a Consultant, as applicable, shall be exercisable by the
D-7
Grantee following such termination. Such Non-Qualified Stock Options
must be exercised within 30 days after such termination (but in no event
after expiration of the Option Period) or they shall be forfeited.
Notwithstanding the foregoing, if a Grantee's status as a Director or
engagement as a Consultant shall terminate for Cause, all then
outstanding Non-Qualified Stock Options held by the Grantee shall expire
immediately and such Non-Qualified Stock Options shall not be
exercisable after the termination of the Grantee's status as a Director
or engagement as a Consultant.
IV. GENERAL PROVISIONS.
1. Recapitalization Adjustments.
(a) In the event of any change in capitalization affecting
the Stock, including, without limitation, a stock dividend or other
distribution, stock split, reverse stock split, recapitalization,
consolidation, subdivision, split-up, spin-off, split-off, combination
or exchange of shares or other form of reorganization or
recapitalization, or any other change affecting the Stock, the Board
shall authorize and make such proportionate adjustments, if any, as the
Board shall deem appropriate to reflect such change, including, without
limitation, with respect to the aggregate number of shares of Stock for
which Stock Options in respect thereof may be granted under the Plan,
the number of shares of Stock covered by each outstanding Stock Option,
and the purchase price per share of Stock in respect of outstanding
Stock Options.
(b) Any provision hereof to the contrary notwithstanding,
in the event the Company is a party to a merger or other reorganization,
the Board shall determine the treatment of outstanding Stock Options,
which treatment may include the assumption of outstanding Stock Options
by the surviving company or its parent, their continuation by the
Company (if the Company is the surviving company), accelerated vesting
and/or accelerated expiration or settlement in cash.
2. General.
(a) Each Stock Option shall be evidenced by a Stock Option
Agreement.
(b) The granting of a Stock Option in any year shall not
give the Grantee any right to similar grants in future years or any
right to be retained as an Employee, Director or Consultant, and all
Grantees shall remain subject to discharge or removal to the same extent
as if the Plan were not in effect.
(c) No Grantee, and no beneficiary or other person
claiming under or through him, shall have any right, title or interest
by reason of any Stock Option to any particular assets of the Company,
or any shares of Stock allocated or reserved for the purposes of the
Plan or subject to any Stock Option, except as set forth herein.
(d) No Stock Option shall or may be sold, exchanged,
assigned, pledged, encumbered, or otherwise hypothecated or disposed of
except by will or the laws of descent and distribution, and a Stock
Option shall be exercisable during the Grantee's lifetime solely by the
Grantee or his conservator. Notwithstanding the immediately preceding
sentence, a Non-Qualified Stock Option may be transferred by the Grantee
as an inter vivos gift to a Family Member.
D-8
(e) Notwithstanding any other provision of the Plan or
agreements made pursuant thereto, the Company's obligation to issue or
deliver any certificate or certificates for shares of Stock under a
Stock Option, and the transferability of Stock acquired by exercise of a
Stock Option, shall be subject to all of the following conditions:
(i) Any registration or other qualification of such
shares under any state or federal law or regulation, or the
maintaining in effect of any such registration or other
qualification which the Board shall, in its absolute
discretion upon the advice of counsel, deem necessary or
advisable;
(ii) The obtaining of any other consent, approval or
permit from any state or federal governmental agency which
the Board shall, in its absolute discretion upon the advice
of counsel, determine to be necessary or advisable; and
(iii) Each stock certificate issued pursuant to a
Stock Option shall bear such legends which the Company shall
determine, in its absolute discretion, are necessary or
advisable, or which in the opinion of counsel to the Company
are required under applicable federal or state securities
laws.
(f) All payments to Grantees or to their legal
representatives shall be subject to any applicable tax, community
property or other statutes or regulations of the United States or of any
state having jurisdiction thereover. If the Grantee is an Employee, the
Grantee may be required to pay to the Company the amount of any
withholding taxes which the Committee, in its sole discretion, deems
necessary to be withheld in order to comply with any applicable statutes
or regulations with respect to a Stock Option or its exercise. In the
event that such payment is not made when due, the Company shall have the
right to deduct, to the extent permitted by law, from any payment or
settlement of any kind otherwise due to such person, all or part of the
amount required to be withheld. The Company shall not be required to
issue Stock pursuant to the exercise of a Stock Option until such
applicable obligations, if any, shall have been satisfied.
(g) The Company shall issue any Stock certificates
required to be issued in connection with the exercise of a Stock Option
with reasonable promptness following such exercise.
(h) The Plan and the grant or exercise of Stock Options
granted under the Plan shall be subject to, and shall in all respects
comply with, the applicable laws of Nevada.
(i) Should the participation of any Employee or Director
in the Plan be subject to Section 16, it is the express intent of the
Company that the Plan and the Stock Options granted under the Plan
satisfy and be interpreted in a manner to achieve the result that the
applicable requirements of Rule 16b-3 shall be satisfied with respect to
such Employees and Directors, with the result that such Employees and
Directors shall be entitled to the benefits of Rule 16b-3 or other
applicable exemptive rules under Section 16. If any provision of the
Plan or of any Stock Option would otherwise frustrate or conflict with
the intent of the Company set forth in the immediately preceding
D-9
sentence, to the extent possible, such provision shall be interpreted
and deemed amended so as to avoid such conflict, and, to the extent of
any remaining irreconcilable conflict with such intent, the provision
shall, solely with respect to Employees and Directors subject to Section
16, be deemed void.
(j) It is the express intention of the Company that the
Plan and the Stock Options granted under the Plan to Employees subject
to the restrictions contained in Section 162(m) of the Code satisfy and
be interpreted in a manner to achieve the result that the grant of such
Stock Options shall constitute "performance-based compensation" for
purposes of Section 162(m) of the Code. If any provision of the Plan or
of any Stock Option would otherwise frustrate or conflict with the
intent of the Company set forth in the immediately preceding sentence,
to the extent possible, such provision shall be interpreted and deemed
amended so as to avoid such conflict, and to the extent of any remaining
irreconcilable conflict with such intent, the provision shall, solely
with respect to Employees subject to the restrictions contained in
Section 162(m) of the Code, be deemed void.
D-10
ANNEX E
RIGHTS OF DISSENTING OWNERS
NRS 92A.300 Definitions. As used in NRS 92A.300 to 92A.500, inclusive,
unless the context otherwise requires, the words and terms defined in NRS
92A.305 to 92A.335, inclusive, have the meanings ascribed to them in those
sections.
(Added to NRS by 1995, 2086)
NRS 92A.305 "Beneficial stockholder" defined. "Beneficial stockholder"
means a person who is a beneficial owner of shares held in a voting trust or
by a nominee as the stockholder of record.
(Added to NRS by 1995, 2087)
NRS 92A.310 "Corporate action" defined. "Corporate action" means the
action of a domestic corporation.
(Added to NRS by 1995, 2087)
NRS 92A.315 "Dissenter" defined. "Dissenter" means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
who exercises that right when and in the manner required by NRS 92A.400 to
92A.480, inclusive.
(Added to NRS by 1995, 2087; A 1999, 1631)
NRS 92A.320 "Fair value" defined. "Fair value," with respect to a
dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.
(Added to NRS by 1995, 2087)
NRS 92A.325 "Stockholder" defined. "Stockholder" means a stockholder of
record or a beneficial stockholder of a domestic corporation.
(Added to NRS by 1995, 2087)
NRS 92A.330 "Stockholder of record" defined. "Stockholder of record"
means the person in whose name shares are registered in the records of a
domestic corporation or the beneficial owner of shares to the extent of the
rights granted by a nominee's certificate on file with the domestic
corporation.
(Added to NRS by 1995, 2087)
NRS 92A.335 "Subject corporation" defined. "Subject corporation" means
the domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective
or the surviving or acquiring entity of that issuer after the corporate action
becomes effective.
(Added to NRS by 1995, 2087)
NRS 92A.340 Computation of interest. Interest payable pursuant to NRS
92A.300 to 92A.500, inclusive, must be computed from the effective date of the
action until the date of payment, at the average rate currently paid by the
entity on its principal bank loans or, if it has no bank loans, at a rate that
is fair and equitable under all of the circumstances.
(Added to NRS by 1995, 2087)
E-1
NRS 92A.350 Rights of dissenting partner of domestic limited
partnership. A partnership agreement of a domestic limited partnership or,
unless otherwise provided in the partnership agreement, an agreement of merger
or exchange, may provide that contractual rights with respect to the
partnership interest of a dissenting general or limited partner of a domestic
limited partnership are available for any class or group of partnership
interests in connection with any merger or exchange in which the domestic
limited partnership is a constituent entity.
(Added to NRS by 1995, 2088)
NRS 92A.360 Rights of dissenting member of domestic limited-liability
company. The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in connection with any merger or exchange in which the
domestic limited-liability company is a constituent entity.
(Added to NRS by 1995, 2088)
NRS 92A.370 Rights of dissenting member of domestic nonprofit
corporation.
1. Except as otherwise provided in subsection 2, and unless otherwise
provided in the articles or bylaws, any member of any constituent domestic
nonprofit corporation who voted against the merger may, without prior notice,
but within 30 days after the effective date of the merger, resign from
membership and is thereby excused from all contractual obligations to the
constituent or surviving corporations which did not occur before his
resignation and is thereby entitled to those rights, if any, which would have
existed if there had been no merger and the membership had been terminated or
the member had been expelled.
2. Unless otherwise provided in its articles of incorporation or
bylaws, no member of a domestic nonprofit corporation, including, but not
limited to, a cooperative corporation, which supplies services described in
chapter 704 of NRS to its members only, and no person who is a member of a
domestic nonprofit corporation as a condition of or by reason of the ownership
of an interest in real property, may resign and dissent pursuant to subsection
1.
(Added to NRS by 1995, 2088)
NRS 92A.380 Right of stockholder to dissent from certain corporate
actions and to obtain payment for shares.
1. Except as otherwise provided in NRS 92A.370 and 92A.390, any
stockholder is entitled to dissent from, and obtain payment of the fair value
of his shares in the event of any of the following corporate actions:
(a) Consummation of a conversion or plan of merger to which the
domestic corporation is a constituent entity:
(1) If approval by the stockholders is required for the
conversion or merger by NRS 92A.120 to 92A.160, inclusive, or the articles of
incorporation, regardless of whether the stockholder is entitled to vote on
the conversion or plan of merger; or
(2) If the domestic corporation is a subsidiary and is merged
with its parent pursuant to NRS 92A.180.
(b) Consummation of a plan of exchange to which the domestic
corporation is a constituent entity as the corporation whose subject owner's
interests will be acquired, if his shares are to be acquired in the plan of
exchange.
E-2
(c) Any corporate action taken pursuant to a vote of the stockholders
to the extent that the articles of incorporation, bylaws or a resolution of
the board of directors provides that voting or nonvoting stockholders are
entitled to dissent and obtain payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment pursuant
to NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action
creating his entitlement unless the action is unlawful or fraudulent with
respect to him or the domestic corporation.
(Added to NRS by 1995, 2087; A 2001, 1414, 3199; 2003, 3189)
NRS 92A.390 Limitations on right of dissent: Stockholders of certain
classes or series; action of stockholders not required for plan of merger.
1. There is no right of dissent with respect to a plan of merger or
exchange in favor of stockholders of any class or series which, at the record
date fixed to determine the stockholders entitled to receive notice of and to
vote at the meeting at which the plan of merger or exchange is to be acted on,
were either listed on a national securities exchange, included in the national
market system by the National Association of Securities Dealers, Inc., or held
by at least 2,000 stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the
shares provide otherwise; or
(b) The holders of the class or series are required under the plan of
merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in lieu
of fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the
plan of merger or exchange, were either listed on a national securities
exchange, included in the national market system by the National Association
of Securities Dealers, Inc., or held of record by a least 2,000 holders of
owner's interests of record; or
(2) A combination of cash and owner's interests of the kind
described in sub-subparagraphs (I) and (II) of subparagraph (1) of paragraph
(b).
2. There is no right of dissent for any holders of stock of the
surviving domestic corporation if the plan of merger does not require action
of the stockholders of the surviving domestic corporation under NRS 92A.130.
(Added to NRS by 1995, 2088)
E-3
NRS 92A.400 Limitations on right of dissent: Assertion as to portions
only to shares registered to stockholder; assertion by beneficial stockholder.
1. A stockholder of record may assert dissenter's rights as to fewer
than all of the shares registered in his name only if he dissents with respect
to all shares beneficially owned by any one person and notifies the subject
corporation in writing of the name and address of each person on whose behalf
he asserts dissenter's rights. The rights of a partial dissenter under this
subsection are determined as if the shares as to which he dissents and his
other shares were registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares
held on his behalf only if:
(a) He submits to the subject corporation the written consent of the
stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the
beneficial stockholder or over which he has power to direct the vote.
(Added to NRS by 1995, 2089)
NRS 92A.410 Notification of stockholders regarding right of dissent.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, the notice of the meeting must
state that stockholders are or may be entitled to assert dissenters' rights
under NRS 92A.300 to 92A.500, inclusive, and be accompanied by a copy of those
sections.
2. If the corporate action creating dissenters' rights is taken by
written consent of the stockholders or without a vote of the stockholders, the
domestic corporation shall notify in writing all stockholders entitled to
assert dissenters' rights that the action was taken and send them the
dissenter's notice described in NRS 92A.430.
(Added to NRS by 1995, 2089; A 1997, 730)
NRS 92A.420 Prerequisites to demand for payment for shares.
1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, a stockholder who wishes to
assert dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1
and NRS 92A.400 is not entitled to payment for his shares under this chapter.
(Added to NRS by 1995, 2089; 1999, 1631)
NRS 92A.430 Dissenter's notice: Delivery to stockholders entitled to
assert rights; contents.
1. If a proposed corporate action creating dissenters' rights is
authorized at a stockholders' meeting, the subject corporation shall deliver a
written dissenter's notice to all stockholders who satisfied the requirements
to assert those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to
what extent the transfer of the shares will be restricted after the demand for
payment is received;
E-4
(c) Supply a form for demanding payment that includes the date of the
first announcement to the news media or to the stockholders of the terms of
the proposed action and requires that the person asserting dissenter's rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(d) Set a date by which the subject corporation must receive the
demand for payment, which may not be less than 30 nor more than 60 days after
the date the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
(Added to NRS by 1995, 2089)
NRS 92A.440 Demand for payment and deposit of certificates; retention of
rights of stockholder.
1. A stockholder to whom a dissenter's notice is sent must:
(a) Demand payment;
(b) Certify whether he or the beneficial owner on whose behalf he is
dissenting, as the case may be, acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and
(c) Deposit his certificates, if any, in accordance with the terms of
the notice.
2. The stockholder who demands payment and deposits his certificates,
if any, before the proposed corporate action is taken retains all other rights
of a stockholder until those rights are cancelled or modified by the taking of
the proposed corporate action.
3. The stockholder who does not demand payment or deposit his
certificates where required, each by the date set forth in the dissenter's
notice, is not entitled to payment for his shares under this chapter.
(Added to NRS by 1995, 2090; A 1997, 730; 2003, 3189)
NRS 92A.450 Uncertificated shares: Authority to restrict transfer after
demand for payment; retention of rights of stockholder.
1. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is
received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are cancelled or modified by the taking of the proposed corporate
action.
(Added to NRS by 1995, 2090)
NRS 92A.460 Payment for shares: General requirements.
1. Except as otherwise provided in NRS 92A.470, within 30 days after
receipt of a demand for payment, the subject corporation shall pay each
dissenter who complied with NRS 92A.440 the amount the subject corporation
estimates to be the fair value of his shares, plus accrued interest. The
obligation of the subject corporation under this subsection may be enforced by
the district court:
(a) Of the county where the corporation's registered office is
located; or
E-5
(b) At the election of any dissenter residing or having its registered
office in this state, of the county where the dissenter resides or has its
registered office. The court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of payment, a statement of
income for that year, a statement of changes in the stockholders' equity for
that year and the latest available interim financial statements, if any;
(b) A statement of the subject 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 rights to demand payment under NRS
92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
(Added to NRS by 1995, 2090)
NRS 92A.470 Payment for shares: Shares acquired on or after date of
dissenter's notice.
1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in
the dissenter's notice as the date of the first announcement to the news media
or to the stockholders of the terms of the proposed action.
2. To the extent the subject corporation elects to withhold payment,
after taking the proposed action, it shall estimate the fair value of the
shares, plus accrued interest, and shall offer to pay this amount to each
dissenter who agrees to accept it in full satisfaction of his demand. The
subject corporation shall send with its offer a statement of its estimate of
the fair value of the shares, an explanation of how the interest was
calculated, and a statement of the dissenters' right to demand payment
pursuant to NRS 92A.480.
(Added to NRS by 1995, 2091)
NRS 92A.480 Dissenter's estimate of fair value: Notification of subject
corporation; demand for payment of estimate.
1. A dissenter may notify the subject corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and
demand payment of his estimate, less any payment pursuant to NRS 92A.460, or
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value
of his shares and interest due, if he believes that the amount paid pursuant
to NRS 92A.460 or offered pursuant to NRS 92A.470 is less than the fair value
of his shares or that the interest due is incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this
section unless he notifies the subject corporation of his demand in writing
within 30 days after the subject corporation made or offered payment for his
shares.
(Added to NRS by 1995, 2091)
NRS 92A.490 Legal proceeding to determine fair value: Duties of subject
corporation; powers of court; rights of dissenter.
E-6
1. If a demand for payment remains unsettled, the subject corporation
shall commence a proceeding within 60 days after receiving the demand and
petition the court to determine the fair value of the shares and accrued
interest. If the subject corporation does not commence the proceeding within
the 60-day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it
shall commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was located.
3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy
of the petition. Nonresidents may be served by registered or certified mail or
by publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced
under subsection 2 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 any amendment thereto. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to
a judgment:
(a) For the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the subject corporation;
or
(b) For the fair value, plus accrued interest, of his after-acquired
shares for which the subject corporation elected to withhold payment pursuant
to NRS 92A.470.
(Added to NRS by 1995, 2091)
NRS 92A.500 Legal proceeding to determine fair value: Assessment of
costs and fees.
1. The court in a proceeding to determine fair value shall determine
all of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess the
costs against the subject 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.
2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all dissenters if
the court finds the subject corporation did not substantially comply with the
requirements of NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter 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 NRS 92A.300 to 92A.500, inclusive.
E-7
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 subject
corporation, the court may award to those counsel reasonable fees to be paid
out of the amounts awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the court
may assess the costs against the subject corporation, except that the court
may assess costs against all or some of the dissenters who are parties to the
proceeding, in amounts the court finds equitable, to the extent the court
finds that such parties did not act in good faith in instituting the
proceeding.
5. This section does not preclude any party in a proceeding
commenced pursuant to NRS 92A.460 or 92A.490 from applying the provisions of
N.R.C.P. 68 or NRS 17.115.
(Added to NRS by 1995, 2092)
E-8
ANNEX F
APPRAISAL RIGHTS PROVISIONS OF THE
FLORIDA BUSINESS CORPORATION ACT
(effective October 1, 2003)
607.1301 APPRAISAL RIGHTS; DEFINITIONS.
------------------------------
The following definitions apply to SS. 607.1302 to 607.1333:
(1) "Affiliate" means a person that directly or indirectly through
one or more intermediaries controls, is controlled by, or is under common
control with another person or is a senior executive thereof. For purposes of
S. 607.1302(2)(d), a person is deemed to be an affiliate of its senior
executives.
(2) "Beneficial shareholder" means a person who is the beneficial
owner of shares held in a voting trust or by a nominee on the beneficial
owner's behalf.
(3) "Corporation" means the issuer of the shares held by a
shareholder demanding appraisal and, for matters covered in SS. 607.1322 to
607.1333, includes the surviving entity in a merger.
(4) "Fair value" means the value of the corporation's shares
determined:
(a) Immediately before the effectuation of the corporate action to
which the shareholder objects.
(b) Using customary and current valuation concepts and techniques
generally employed for similar businesses in the context of the
transaction requiring appraisal, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion
would be inequitable to the corporation and its remaining
shareholders.
(5) "Interest" means interest from the effective date of the
corporate action until the date of payment, at the rate of interest on
judgments in this state on the effective date of the corporate action.
(6) "Preferred shares" means a class or series of shares the
holders of which have preference over any other class or series with respect
to distributions.
(7) "Record shareholder" means the person in whose name shares are
registered in the records of the corporation or the beneficial owner of shares
to the extent of the rights granted by a nominee certificate on file with the
corporation.
(8) "Senior executive" means the chief executive officer, chief
operating officer, chief financial officer, or anyone in charge of a principal
business unit or function.
(9) "Shareholder" means both a record shareholder and a beneficial
shareholder.
F-1
607.1302 RIGHT OF SHAREHOLDERS TO APPRAISAL.
-----------------------------------
(1) A shareholder is entitled to appraisal rights, and to obtain
payment of the fair value of that shareholder's shares, in the event of any of
the following corporate actions:
(a) Consummation of a merger to which the corporation is a party
if shareholder approval is required for the merger by S. 607.1103
and the shareholder is entitled to vote on the merger or if the
corporation is a subsidiary and the merger is governed by S.
607.1104;
(b) Consummation of a share exchange to which the corporation is
a party as the corporation whose shares will be acquired if the
shareholder is entitled to vote on the exchange, except that
appraisal rights shall not be available to any shareholder of the
corporation with respect to any class or series of shares of the
corporation that is not exchanged;
(c) Consummation of a disposition of assets pursuant to S.
607.1202 if the shareholder is entitled to vote on the
disposition, including a sale in dissolution but not including a
sale pursuant to court order or a sale for cash pursuant to a plan
by which all or substantially all of the net proceeds of the sale
will be distributed to the shareholders within 1 year after the
date of sale;
(d) Any other amendment to the articles of incorporation, merger,
share exchange or disposition of assets to the extent provided by
the articles of incorporation, bylaws, or a resolution of the
board of directors, except that no bylaw or board resolution
providing for appraisal rights may be amended or otherwise altered
except by shareholder approval; or
(e) With regard to shares issued prior to October 1, 2003, any
amendment of the articles of incorporation if the shareholder is
entitled to vote on the amendment and if such amendment would
adversely affect such shareholder by:
1. Altering or abolishing any preemptive rights
attached to any of his or her shares;
2. Altering or abolishing the voting rights pertaining
to any of his or her shares, except as such rights may be
affected by the voting rights of new shares then being
authorized or any existing or new class or series of shares;
3. Effecting an exchange, cancellation, or
reclassification of any of his or her shares, when such
exchange, cancellation, or reclassification would alter or
abolish the shareholder's voting rights or alter his or her
percentage of equity in the corporation, or effecting a
reduction or cancellation of accrued dividends or other
arrearages in respect to such shares;
4. Reducing the stated redemption price of any of the
shareholder's redeemable shares, altering or abolishing any
provision relating to any sinking fund for the redemption or
purchase of any of his or her shares, or making any of his
or her shares subject to redemption when they are not
otherwise redeemable;
F-2
5. Making noncumulative, in whole or in part, dividends
of any of the shareholder's preferred shares which had
theretofore been cumulative;
6. Reducing the stated dividend preference of any of
the shareholder's preferred shares; or
7. Reducing any stated preferential amount payable on
any of the shareholder's preferred shares upon voluntary or
involuntary liquidation.
(2) Notwithstanding subsection (1), the availability of appraisal
rights under paragraphs (1)(a), (b), (c) and (d) shall be limited in
accordance with the following provisions:
(a) Appraisal rights shall not be available for the holders of
shares of any class or series of shares which is:
1. Listed on the New York Stock Exchange or the
American Stock Exchange or designated as a national market
system security on an interdealer quotation system by the
National Association of Securities Dealers, Inc.; or
2. Not so listed or designated, but has at least 2,000
shareholders and the outstanding shares of such class or
series has a market value of at least $10 million, exclusive
of the value of such shares held by its subsidiaries, senior
executives, directors and beneficial shareholders owning
more than 10 percent of such shares.
(b) The applicability of paragraph (2)(a) shall be determined as
of:
1. The record date fixed to determine the shareholders
entitled to receive notice of, and to vote at, the meeting
of shareholders to act upon the corporate action requiring
appraisal rights; or
2. If there will be no meeting of shareholders, the
close of business on the day on which the board of directors
adopts the resolution recommending such corporate action.
(c) Paragraph (2)(a) shall not be applicable and appraisal rights
shall be available pursuant to subsection (1) for the holders of
any class or series of shares who are required by the terms of the
corporate action requiring appraisal rights to accept for such
shares anything other than cash or shares of any class or any
series of shares of any corporation, or any other proprietary
interest of any other entity, that satisfies the standards
set forth in paragraph (2)(a) at the time the corporate action
becomes effective.
(d) Paragraph (2)(a) shall not be applicable and appraisal rights
shall be available pursuant to subsection (1) for the holders of
any class or series of shares if:
F-3
1. Any of the shares or assets of the corporation are
being acquired or converted, whether by merger, share
exchange or otherwise, pursuant to the corporate action by a
person, or by an affiliate of a person, who:
a. Is, or at any time in the 1-year period
immediately preceding approval by the board of
directors of the corporate action requiring appraisal
rights was, the beneficial owner of 20 percent or more
of the voting power of the corporation, excluding any
shares acquired pursuant to an offer for all shares
having voting power if such offer was made within
1-year prior to the corporate action requiring
appraisal rights for consideration of the same kind
and of a value equal to or less than that paid in
connection with the corporate action; or
b. Directly or indirectly has, or at any time in the
1-year period immediately preceding approval by the
board of directors of the corporation of the corporate
action requiring appraisal rights had, the power,
contractually or otherwise, to cause the appointment
or election of 25 percent or more of the directors to
the board of directors of the corporation; or
2. Any of the shares or assets of the corporation are
being acquired or converted, whether by merger, share
exchange or otherwise, pursuant to such corporate action by
a person, or by an affiliate of a person, who is, or at any
time in the 1-year period immediately preceding approval by
the board of directors of the corporate action requiring
appraisal rights was, a senior executive or director of the
corporation or a senior executive of any affiliate thereof,
and that senior executive or director will receive, as a
result of the corporate action, a financial benefit not
generally available to other shareholders as such,
other than:
a. Employment, consulting, retirement or similar
benefits established separately and not as part of or
in contemplation of the corporate action;
b. Employment, consulting, retirement or similar
benefits established in contemplation of, or as part
of, the corporate action that are not more favorable
than those existing before the corporate action or, if
more favorable, that have been approved on behalf of
the corporation in the same manner as is provided in
S. 607.0832; or
c. In the case of a director of the corporation who
will, in the corporate action, become a director of
the acquiring entity in the corporate action or one of
its affiliates, rights and benefits as a director that
are provided on the same basis as those afforded by
the acquiring entity generally to other directors of
such entity or such affiliate.
F-4
(e) For the purposes of paragraph (2)(d) only, the term
"beneficial owner" means any person who, directly or indirectly,
through any contract, arrangement, or understanding, other than a
revocable proxy, has or shares the power to vote, or to direct the
voting of, shares, provided that a member of a national securities
exchange shall not be deemed to be a beneficial owner of
securities held directly or indirectly by it on behalf of another
person solely because such member is the record holder of such
securities if the member is precluded by the rules of such
exchange from voting without instruction on contested matters or
matters that may affect substantially the rights or privileges of
the holders of the securities to be voted. When two or more
persons agree to act together for the purpose of voting their
shares of the corporation, each member of the group formed thereby
shall be deemed to have acquired beneficial ownership, as of the
date of such agreement, of all voting shares of the corporation
beneficially owned by any member of the group.
(3) Notwithstanding any other provision of this section, the
articles of incorporation as originally filed or any amendment thereto may
limit or eliminate appraisal rights for any class or series of preferred
shares, but any such limitation or elimination contained in an amendment to
the articles of incorporation that limits or eliminates appraisal rights for
any of such shares that are outstanding immediately prior to the effective
date of such amendment or that the corporation is or may be required to issue
or sell thereafter pursuant to any conversion, exchange, or other right
existing immediately before the effective date of such amendment shall not
apply to any corporate action that becomes effective within 1 year of that
date if such action would otherwise afford appraisal rights.
(4) A shareholder entitled to appraisal rights under this chapter
may not challenge a completed corporate action for which appraisal rights are
available unless such corporate action:
(a) Was not effectuated in accordance with the applicable
provisions of this section or the corporation's articles of
incorporation, bylaws, or board of directors' resolution
authorizing the corporate action; or
(b) Was procured as a result of fraud or material
misrepresentation.
607.1303 ASSERTION OF RIGHTS BY NOMINEES AND BENEFICIAL OWNERS.
------------------------------------------------------
(1) A record shareholder may assert appraisal rights as to fewer
than all the shares registered in the record shareholder's name but owned by a
beneficial shareholder only if the record shareholder objects with respect to
all shares of the class or series owned by the beneficial shareholder and
notifies the corporation in writing of the name and address of each beneficial
shareholder on whose behalf appraisal rights are being asserted. The rights of
a record shareholder who asserts appraisal rights for only part of the shares
held of record in the record shareholder's name under this subsection shall be
determined as if the shares as to which the record shareholder objects and the
record shareholder's other shares were registered in the names of different
record shareholders.
(2) A beneficial shareholder may assert appraisal rights as to
shares of any class or series held on behalf of the shareholder only if such
shareholder:
(a) Submits to the corporation the record shareholder's written
consent to the assertion of such rights no later than the date
referred to in S. 607.1322(2)(b)(2).
F-5
(b) Does so with respect to all shares of the class or series
that are beneficially owned by the beneficial shareholder.
607.1320 NOTICE OF APPRAISAL RIGHTS.
---------------------------
(1) If proposed corporate action described in S. 607.1302(1) is to
be submitted to a vote at a shareholders' meeting, the meeting notice must
state that the corporation has concluded that shareholders are, are not, or
may be entitled to assert appraisal rights under this chapter. If the
corporation concludes that appraisal rights are or may be available, a copy of
SS. 607.1301-607.1333 must accompany the meeting notice sent to those record
shareholders entitled to exercise appraisal rights.
(2) In a merger pursuant to S. 607.1104, the parent corporation
must notify in writing all record shareholders of the subsidiary who are
entitled to assert appraisal rights that the corporate action became
effective. Such notice must be sent within ten days after the corporate action
became effective and include the materials described in section S. 607.1322.
(3) If the proposed corporate action described in S. 607.1302(1) is
to be approved other than by a shareholders' meeting, the notice referred to
in S. 607.1320(1) must be sent to all shareholders at the time that consents
are first solicited pursuant to S. 607.0704, whether or not consents are
solicited from all shareholders and include the materials described in S.
607.1322.
607.1321 NOTICE OF INTENT TO DEMAND PAYMENT.
-----------------------------------
(1) If proposed corporate action requiring appraisal rights under
S. 607.1302 is submitted to a vote at a shareholders' meeting, or is submitted
to a shareholder pursuant to a consent vote under S. 607.0704, a shareholder
who wishes to assert appraisal rights with respect to any class or series of
shares:
(a) Must deliver to the corporation before the vote is taken, or
within 20 days after receiving the notice pursuant to S.
607.1320(3) if action is to be taken without a shareholder
meeting, written notice of the shareholder's intent to demand
payment if the proposed action is effectuated.
(b) Must not vote, or cause or permit to be voted, any shares of
such class or series in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of
subsection (1) is not entitled to payment under this chapter.
607.1322 APPRAISAL NOTICE AND FORM.
--------------------------
(1) If proposed corporate action requiring appraisal rights under
S. 607.1302(1) becomes effective, the corporation must deliver a written
appraisal notice and form required by paragraph (2)(a) to all shareholders who
satisfied the requirements of S. 607.1321. In the case of a merger under S.
607.1104, the parent must deliver a written appraisal notice and form to all
record shareholders who may be entitled to assert appraisal rights.
(2) The appraisal notice must be sent no earlier than the date the
corporate action became effective and no later than 10 days after such date
and must:
F-6
(a) Supply a form that specifies the date that the corporate
action became effective and provides for the shareholder to state:
1. The shareholder's name and address.
2. The number, classes, and series of shares as to
which the shareholder asserts appraisal rights.
3. That the shareholder did not vote for the
transaction.
4. Whether the shareholder accepts the corporation's
offer as stated in subparagraph (2)(b)4.
5. If the offer is not accepted, the shareholder's
estimated fair value of the shares and a demand for payment
of the shareholder's estimated value plus interest.
(b) State:
1. Where the form must be sent and where certificates
for certificated shares must be deposited and the date by
which those certificates must be deposited, which date may
not be earlier than the date for receiving the required form
under subparagraph (2)(b)2.
2. A date by which the corporation must receive the
form, which date may not be fewer than 40 nor more than 60
days after the date subsection (1) appraisal notice and form
are sent, and state that the shareholder shall have waived
the right to demand appraisal with respect to the shares
unless the form is received by the corporation by such
specified date.
3. The corporation's estimate of the fair value of the
shares.
4. An offer to each shareholder who is entitled to
appraisal rights to pay the corporation's estimate of fair
value set forth in subparagraph (2)(b)3.
5. That, if requested in writing, the corporation will
provide to the shareholder so requesting, within ten days
after the date specified in subparagraph (2)(b)2, the number
of shareholders who return the forms by the specified date
and the total number of shares owned by them.
6. The date by which the notice to withdraw under S.
607.1323 must be received, which date must be within 20 days
after the date specified in subparagraph (2)(b)2.
(c) Be accompanied by:
1. Financial statements of the corporation that issued
the shares to be appraised, consisting of a balance sheet as
of the end of the fiscal year ending not more than 15 months
prior to the date of the corporation's appraisal notice, an
income statement for that year, a cash flow statement for
that year, and the latest available interim financial
statements, if any.
2. A copy of SS. 607.1301 607.1333.
F-7
607.1323 PERFECTION OF RIGHTS; RIGHT TO WITHDRAW.
----------------------------------------
(1) A shareholder who wishes to exercise appraisal rights must
execute and return the form received pursuant to S. 607.1322(1) and, in the
case of certificated shares, deposit the shareholder's certificates in
accordance with the terms of the notice by the date referred to in the notice
pursuant to S. 607.1322(2)(b)2. Once a shareholder deposits that shareholder's
certificates or, in the case of uncertificated shares, returns the executed
forms, that shareholder loses all rights as a shareholder, unless the
shareholder withdraws pursuant to subsection (2).
(2) A shareholder who has complied with subsection (1) may
nevertheless decline to exercise appraisal rights and withdraw from the
appraisal process by so notifying the corporation in writing by the date set
forth in the appraisal notice pursuant to S. 607.1322(2)(b)6. A shareholder
who fails to so withdraw from the appraisal process may not thereafter
withdraw without the corporation's written consent.
(3) A shareholder who does not execute and return the form and, in
the case of certificated shares, deposit that shareholder's share certificates
if required, each by the date set forth in the notice described in subsection
(2), shall not be entitled to payment under this chapter.
607.1324 SHAREHOLDER'S ACCEPTANCE OF CORPORATION'S OFFER.
------------------------------------------------
(1) If the shareholder states on the form provided in S.
607.1322(1) that the shareholder accepts the offer of the corporation to pay
the corporation's estimated fair value for the shares, the corporation shall
make such payment to the shareholder within 90 days after the corporation's
receipt of the form from the shareholder.
(2) Upon payment of the agreed value, the shareholder shall cease
to have any interest in the shares.
607.1326 PROCEDURE IF SHAREHOLDER IS DISSATISFIED WITH OFFER.
----------------------------------------------------
(1) A shareholder who is dissatisfied with the corporation's offer
as set forth pursuant to S. 607.1322(2)(b)4 must notify the corporation on the
form provided pursuant to S. 607.1322(1) of that shareholder's estimate of the
fair value of the shares and demand payment of that estimate plus interest.
(2) A shareholder who fails to notify the corporation in writing of
that shareholder's demand to be paid the shareholder's stated estimate of the
fair value plus interest under subsection (1) within the time frame set forth
in S. 607.1322(2)(b)2 waives the right to demand payment under this section
and shall be entitled only to the payment offered by the corporation pursuant
to S. 607.1322(2)(b)4.
607.1331 COURT COSTS AND COUNSEL FEES.
-----------------------------
(1) The court in an appraisal proceeding [commenced under S.
607.1330] 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 shareholders demanding appraisal,
in amounts the court finds equitable, to the extent the court finds such
shareholders acted arbitrarily, vexatiously, or not in good faith with respect
to the rights provided by this chapter.
F-8
(2) The court in an appraisal proceeding 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 or all
shareholders demanding appraisal if the court finds the
corporation did not substantially comply with SS. 607.1320 and
607.1322; or
(b) Against either the corporation or a shareholder demanding
appraisal, 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 chapter.
(3) If the court in an appraisal proceeding finds that the services
of counsel for any shareholder were of substantial benefit to other
shareholders similarly situated, and that the fees for those services should
not be assessed against the corporation, the court may award to such counsel
reasonable fees to be paid out of the amounts awarded the shareholders who
were benefited.
(1) Senate Bill No. 1534, filed on January 20, 2004, is pending
before the Florida legislature, which includes an amendment to
Section 607.1331 deleting the language between the brackets.
(4) To the extent the corporation fails to make a required payment
pursuant to S. 607.1324 the shareholder may sue directly for the amount owed
and, to the extent successful, shall be entitled to recover from the
corporation all costs and expenses of the suit, including counsel fees.
607.1332 DISPOSITION OF ACQUIRED SHARES.
-------------------------------
Shares acquired by a corporation pursuant to payment of the agreed value
thereof or pursuant to payment of the judgment entered therefor, as provided
in this chapter, may be held and disposed of by such corporation as authorized
but unissued shares of the corporation, except that, in the case of a merger
or share exchange, they may be held and disposed of as the plan of merger or
share exchange otherwise provides. The shares of the surviving corporation
into which the shares of such shareholders demanding appraisal rights would
have been converted had they assented to the merger shall have the status of
authorized but unissued shares of the surviving corporation.
607.1333 LIMITATION ON CORPORATE PAYMENT.
--------------------------------
(1) No payment shall be made to a shareholder seeking appraisal
rights if, at the time of payment, the corporation is unable to meet the
distribution standards of S. 607.06401. In such event, the shareholder shall,
at the shareholder's option:
(a) Withdraw his or her notice of intent to assert appraisal
rights, which shall in such event be deemed withdrawn with the
consent of the corporation; or
F-9
(b) Retain his or her status as a claimant against the
corporation and, if it is liquidated, be subordinated to the
rights of creditors of the corporation, but have rights
superior to the shareholders not asserting appraisal rights,
and if it is not liquidated, retain his or her right to be paid
for the shares, which right the corporation shall be obliged to
satisfy when the restrictions of this section do not apply.
(2) The shareholder shall exercise the option under paragraph
(1)(a) or (b) by written notice filed with the corporation within 30 days
after the corporation has given written notice that the payment for shares
cannot be made because of the restrictions of this section. If the shareholder
fails to exercise the option, the shareholder shall be deemed to have
withdrawn his or her notice of intent to assert appraisal rights.
F-10
Item 20. Indemnification of Directors and Officers.
Section 78.7502(1) of the Nevada Revised Statutes authorizes a Nevada
corporation to indemnify any director, officer, employee, or corporate agent
"who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, except an action by or
in the right of the corporation" due to his corporate role. Section 78.7502(1)
extends this protection "against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with the action, suit or proceeding if he acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful."
Section 78.7502(2) of the NRS also authorizes indemnification of the
reasonable defense or settlement expenses of a corporate director, officer,
employee or agent who is sued, or is threatened with a suit, by or in the
right of the corporation. The party must have been acting in good faith and
with the reasonable belief that his actions were not opposed to the
corporation's best interests. Unless the court rules that the party is
reasonably entitled to indemnification, the party seeking indemnification must
not have been found liable to the corporation.
To the extent that a corporate director, officer, employee, or agent is
successful on the merits or otherwise in defending any action or proceeding
referred to in Section 78.7502(1) or 78.7502(2), Section 78.7502(3) of the NRS
requires that he be indemnified "against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the defense."
Section 78.751(1) of the NRS limits indemnification under Sections
78.7502(1) and 78.7502(2) to situations in which either (1) the stockholders,
(2)the majority of a disinterested quorum of directors, or (3) independent
legal counsel determine that indemnification is proper under the
circumstances.
Pursuant to Section 78.751(2) of the NRS, the corporation may advance an
officer's or director's expenses incurred in defending any action or
proceeding upon receipt of an undertaking. Section 78.751(3)(a) provides that
the rights to indemnification and advancement of expenses shall not be deemed
exclusive of any other rights under any bylaw, agreement, stockholder vote or
vote of disinterested directors. Section 78.751(3)(b) extends the rights to
indemnification and advancement of expenses to former directors, officers,
employees and agents, as well as their heirs, executors, and administrators.
Regardless of whether a director, officer, employee or agent has the
right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his behalf against liability resulting from his
corporate role.
Kentex's Amended and Restated Articles of Incorporation and its Amended
and Restated Bylaws, provide for indemnification on substantially the same
terms as the NRS.
60
Exhibit No. Document
2.1 Agreement and Plan of Merger dated as of December 20, 2004 by and between
Kentex Petroleum, Inc. and VidRev Technologies, Inc. Attached as Annex A to
the joint Information Statement/Prospectus which forms a part of this
Registration Statement and incorporated herein by reference.
3.1 Form of Amended and Restated Articles of Incorporation of Kentex
Petroleum, Inc. Attached as Annex B to the joint Information
Statement/Prospectus which forms a part of this Registration Statement.
3.2 Form of Amended and Restated By-Laws of Kentex Petroleum, Inc. Attached
as Annex C to the joint Information Statement/Prospectus which forms a part of
this Registration Statement and incorporated herein by reference.
4.1 Registration Rights Agreement by and among VidRev Technologies, Inc. and
certain Investors named therein.
5.1 *Opinion of Burningham & Burningham regarding legality of securities.
10.1 License and Distribution Agreement, dated June 21, 2004 by and between
TTA Technologies Limited and VidRev Technologies, Inc.
10.2 Consulting Agreement, dated November 12, 2004 by and between VidRev
Technologies, Inc. and Sy Eisenberg.
10.3 Consulting Agreement, dated May 12, 2004 by and between VidRev
Technologies, Inc. and Edward J. Rollins.
10.4 Employment Agreement, dated May 25, 2004 by and between VidRev
Technologies, Inc. and Errol M. Gerson.
23.1 Consent of Mantyla McReynolds.
23.2 Consent of Davis, Monk & Co.
* To be filed by amendment
61
Item 22. Undertakings.
Undertakings Required by Item 512 of Regulation S-B.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in aggregate, represent a
fundamental change in the information set forth in the Registration Statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering. The undersigned Registrant hereby undertakes as follows:
that prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this Registration Statement, by
any person or party which is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition
to the information called for by the other Items of the applicable form.
(4) The Registrant undertakes that every prospectus (i) that is filed
pursuant to the paragraph immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be
filed as a part of an amendment to the Registration Statement and will not be
used until such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
62
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
63
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned; thereunto duly authorized, in Salt Lake City, Utah,
on the 28th day of December, 2004.
Kentex Petroleum, Inc.
By: /s/ Sarah E. Jenson
-------------------
President and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Sarah E. Jenson
- -------------------
President and Director 12/28/04
/s/ Lisa H. Howells
- -------------------
Secretary and Director 12/28/04
64