OR MAYBE ASK THIS PERSON??? LOL!!
The Honorable Patrick O. Keel
P.O. Box 1748
1000 Guadalupe
Suite 514
Austin, Texas 78767
Phone: (512) 854-9374
Fax: (512) 854-9332
March 7, 2003
Re: Request of Ratification of the Asset Purchase Agreement by Loch Harris Shareholders.
Your Honor:
On or about July 24, 2001, an Executive Service Agreement was filed with the Securities and Exchange Commission between CDEX-Inc Corp., Dynamic Management Resolutions LLC and Malcolm Philips, Jr. and Timothy D. Shriver. The Agreement provides that Dynamic Management Resolutions shall make available to CDEX Inc. (a) Malcolm Philips Jr. who will provide services to CDEX-Inc. as President, Chief Executive Officer and Chairman of the Board; (b) Timothy D. Shriver who will provide services to CDEX-Inc. as Vice President of Operations. The Agreement is signed by Timothy D. Shriver as CEO of Dynamic Management Resolutions, LLC and by Mark E. Baker as Director of CDEX Inc. Corp.
As compensation for the services Malcolm H. Philips Jr. received 3,450,000 shares of CDEX and $300,000.00 annual base fee, and Timothy D. Shriver received 1,050,000 shares of CDEX, $250,000.00 annual fee.
Please note that Mark E. Baker signs the Agreement as Director of CDEX Inc.
On or about July 24, 2001, a Consultant Service Agreement was filed with the Securities and Exchange Commission between CDEX-Inc Corp., Dynamic Management Resolutions LLC and Dr. Wade Poteet, Michael Mergenthaler, Larry Spiers and Harold Cauthen. The Agreement provides that Dynamic Management Resolutions shall make available to CDEX Inc., Dr. Wade Poteet, Michael Mergenthaler, Larry Spiers and Harold Cauthen to provide services to CDEX as Consultants. The Agreement is signed by Timothy D. Shriver as CEO of Dynamic Management Resolutions, LLC and by Mark E. Baker as Director of CDEX Inc. Corp.
As compensation for their services Dynamic Management Resolutions LLC received 200,000 shares of CDEX; Dr. Wade Poteet received 700,000 shares of CDEX and $210,000.00 annual fee; Michael Mergenthaler received 600,000 shares of CDEX and $210,000.00 annual fee; Larry Spiers received 600,000 shares of CDEX and $175,000.00 annual fee; Harold Cauthen received 600,000 shares of CDEX and $175,000.00 annual fee.
Please note that Mark E. Baker signs the Agreement as Director of CDEX Inc.
On or about August 3, 2001, a Service Agreement was filed with the Securities and Exchange Commission between CDEX-Inc Corp., and Rodney Boone by which CDEX Inc. agrees to engage Rodney Boone as Consultant. The Agreement is signed by Rodney Boone as self and Malcolm H. Philips, Jr. as CEO of CDEX, Inc.
As compensation for his services Rodney Boone received $100.00 annual fee and 750,000 shares of CDEX, Inc.
On or about August 3, 2001, a Service Agreement was filed with the Securities and Exchange Commission between CDEX-Inc Corp., and Mark E. Baker by which CDEX Inc. agrees to engage Mark E. Baker as Consultant. The Agreement is signed by Mark E. Baker as self and Malcolm H. Philips, Jr. as CEO of CDEX, Inc.
As compensation for his services Mark E. Baker received $100.00 annual fee and 500,000 shares of CDEX, Inc.
Please note that Malcolm H. Philips Jr. signs both Agreements as CEO of CDEX Inc.
On or about August 4, 2001, an Asset Purchase Agreement was filed with the Securities and Exchange Commission between CDEX Inc., and Loch Harris, Inc., and Chem Tech, Inc., a subsidiary of Loch Harris. The Agreement provides the following:
Assets to be transferred. Subject to the terms and conditions of this Agreement, on the Closing Date (as hereinafter defined) Company shall sell, transfer, convey, assign, and deliver to Buyer, and Buyer shall purchase and accept, all of the business, rights, and assets (of every kind, nature, character and description, whether real, personal or mixed, tangible or intangible, accrued, contingent or otherwise, and wherever situated) of Company, used, held for use or acquired or developed for use in the Business, or developed by Company in the course of conducting the Business or by persons employed in the Business or by Contractors for the Business.
Definition of “Business". As used herein, "Business" shall mean (i) any and all research, development, manufacture, production, marketing, distribution, exploitation, use, and sale of any and all proprietary technologies, processes and related products in all fields of use of chemical detection and nanometrology, and technical processes related thereto, which the Company and its affiliates, including all Contractors acting on behalf of the Company, have at any time undertaken, investigated, performed, conducted, planned to conduct or perform, or attempted to conduct or perform, (ii) the technical/business services and various operations carried on by or related to the chemical detection technologies, nanometrology technologies, processes and related products and associated by trade name or otherwise with the Company on the date hereof; and (iii) any and all research, development, manufacture, production, marketing, distribution, exploitation, use, and sale of any and all proprietary technologies, processes and related products in all fields of use in which Wade Poteet, Harold Cauthen, and Henry Blair, acting as independent contractors for Company and the Operations Team as defined in the June 1, 2001 Agreement with Loch Harris had been performing for Company at any time.
The Asset Purchase Agreement is signed by Malcolm H. Philips Jr. as Chief Executive Officer of CDEX Inc., Rodney A. Boone as Chief Executive Officer of Loch Harris Inc., and Rodney A. Boone as Chief Executive Officer of Chem Tech, Inc.
As noted above, all these Agreements were conducted between Mark A. Baker, Rodney Boone, Timothy D. Shriver, and Malcolm H. Philips all of whom were “insiders” of either one or both companies. A total of 8,450,000 CDEX shares were distributed among themselves and $1,320,200.00 a year was compromised. Additionally, 8,325,000 shares of CDEX were provided to fulfill underlying obligations of the Company with respect to establishing complete ownership and clear title to the Business and Purchased Assets, of which Mark E. Baker received an additional 2,500,000 CDEX shares and Rodney A. Boone received 1,600,000 CDEX shares.
Your Honor, all agreements aforementioned have been negotiated and agreed upon by insiders who carried a serious conflict of interest, rendering them as self-deals, benefiting only the negotiators at the expense and in the detriment of Loch Harris shareholders. All agreements are highly questionable, and the Asset Purchase Agreement especially should be voided as a fraudulent transfer of assets. Loch Harris shareholders were never given the opportunity to legally exercise their right to approve or deny the Asset Purchase Agreement through a shareholders meeting.
In the Derivative Action filed with this Court on January 18, 2002, the Plaintiffs complaint states:
25. Because Boone and Baker dominate and control the day-to-day business and corporate affairs of the Company, they have caused the Company to enter into the grossly unfair CDEX Agreement in violation of their fiduciary duties to the Class.
The Derivative Action Plaintiffs, Mari Stassi and Robert Stewart have been shareholders of CDEX via Private Placements at the time the action was filed with the Court, creating from the beginning a conflict of interest, and stand to benefit from the proposed Settlement Agreement, to the detriment of Loch Harris shareholders. They cannot justly and properly represent the interests of common Loch shareholders. Further more, there is no provision in the Settlement Agreement that modifies and/or resolves the “grossly unfair CDEX Agreement”.
On or about February 14, 2003, A Settlement Agreement was filed in this Court. Once again, all discussions and negotiations were conducted between insiders of Loch Harris and Counsel. The Settlement Agreement is unacceptable and unfair to Loch shareholders, as it is another inside deal among those who have benefited from the grossly unfair and fraudulent CDEX Agreement, admitted by Plaintiffs in their pleading.
The Court hereby is asked to reject any Settlement Agreement that does not provide Loch Harris shareholders the opportunity to ratify the Asset Purchase Agreement by shareholders vote. And, as a measure of fairness and justice for shareholders, all insiders voting rights be withheld by Court order.
Respectfully submitted,
Liviu Morovan
lmorovan@aol.com
AI
