AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 2002.
REGISTRATION NO.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Nevada 5999 752941243
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(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation Industrial Classification Identification No.)
or Organization) Code Number)
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Copy to:
Weed & Co. LLP
4695 MacArthur Court, Suite 1430
Newport Beach, CA 92660
Telephone (949) 475-9086
Facsimile (949) 475-9087
Approximate Date of Commencement of Proposed Sale to the Public: as soon as possible after this registration statement becomes effective.
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 earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) 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. [ ]
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. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
Title Of Each Proposed Proposed
Class Of Maximum Maximum
Securities Amount Offering Aggregate Amount Of
To Be To Be Price Offering Registration
Registered Registered Per Unit Price Fee
------------------------- ------------ ------------ ------------ ---------------
Common Stock, 5,000,000 $1.00(1) $5,000,000 $655.00
.001 par value
Common Stock, 4,644,108 $.05(2) $232,206 $30.42
.001 par value
Total 9,644,108 $5,232,206 $685.42
------------------------- ------------ ------------ ------------ ---------------
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This calculation is made solely for the purposes of determining the registration fee pursuant to the provisions of Rule 457(c) under the Securities Act.
(1) 5,000,000 shares of common stock will be offered to the public at a price of $1.00 per share. Since there is no established public market for the shares, the offering price of the shares has been determined by Humitech(TM).
(2) Humitech(TM) is registering 4,644,108 shares for sale by its selling shareholders. Since Humitech(TM) is not yet trading, we have used the book value of the shares at March 31, 2002 as the proposed maximum offering price per share in this calculation.
The registrant amends this registration statement on the 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 then become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on the date as the Commission, acting pursuant to said Section 8(a), may determine.
PROSPECTUS
Humitech(TM) International Group, Inc.
A Nevada Corporation
This prospectus relates to 9,644,108 shares of common stock of Humitech(TM) International Group, Inc., ("Humitech") a Nevada corporation. Up to 5,000,000 shares of common stock of Humitech(TM) may be sold to the public at a price of $1.00 per share. Further, Humitech(TM) is registering 4,644,108 shares which may be resold from time to time by stockholders of the company. Humitech(TM) has been advised by the selling stockholders that they or their successors may sell all or a portion of the securities offered from time to time in the over the counter market, in privately negotiated transactions, or otherwise, including sales through or directly to a broker or brokers. Sales will be at prices and terms then prevailing or at prices related to the then current market prices or at negotiated prices. In connection with any sales, any broker or dealer participating in these sales may be deemed to be an underwriter within the meaning of the Securities Act of 1933. Humitech(TM) will not receive proceeds from the sales by the selling stockholders. Humitech(TM) will bear all expenses incurred in connection with the offering.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 7 OF THIS PROSPECTUS BEFORE PURCHASING ANY OF THE COMMON STOCK OFFERED BY THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Per Share Total
--------- -----
Public offering price $1.00(1) $5,000,000
Proceeds to Humitech $1.00 $5,000,000(2)
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(1) The price of the shares has been determined by Humitech(TM) and not
as the result of arm's-length negotiations.
(2) Before deducting expenses of the offering.
This is a self-underwritten offering. This offering will terminate nine months after the effective date of this registration statement, unless otherwise extended by the company. There are no minimum/maximum purchase requirements and there are no arrangements to place investors' funds in escrow, trust or similar arrangement. If less than the maximum amount is raised, investors will not be entitled to a refund of their investment. There is currently no market for Humitech(TM) common stock.
The registrant may amend this registration statement. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. The registrant and selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This 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 or sale is not permitted.
The date of this prospectus is May 15, 2002.
TABLE OF CONTENTS
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Prospectus Summary.................................................................... 5
Risk Factors..................................................................... 7
Use of Proceeds.......................................................................11
Determination of Offering Price.......................................................12
Dilution..............................................................................13
Selling Security Holders..............................................................13
Plan of Distribution..................................................................19
Legal Proceedings.....................................................................20
Directors, Executive Officers, Promoters and Control Persons..........................20
Security Ownership of Certain Beneficial Owners and Management........................24
Description of Securities.............................................................26
Experts...............................................................................27
Disclosure of Commission Position on Indemnification for Securities Act Liabilities...27
Organization Within Last Five Years...................................................27
Description of Business...............................................................27
Management's Discussion and Analysis or Plan of Operation.............................34
Description of Property...............................................................38
Certain Relationships and Related Transactions........................................38
Market for Common Equity and Related Stockholder Matters..............................38
Executive Compensation................................................................39
Financial Statements..................................................................40
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure..41
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Until _________, 2002, 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 dealer's obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
PROSPECTUS SUMMARY
Humitech(TM) International Group, Inc.
Humitech(TM) International Group, Inc. ("Humitech") was incorporated in Nevada on January 5, 2000 under the name Airsopure International Group, Inc. The company resolved to change its name to Humitech(TM) International Group, Inc. on August 1, 2001. Humitech(TM) provides humidity control systems to restaurants, stores, florists, medical facilities and any other businesses that use coolers to keep their products fresh. Humitech(TM) utilizes a natural mineral product called HUMISORB(TM) Sorbite that has no moving parts and uses no fuel or power, but can regulate humidity within a refrigerated environment.
When place in a refrigerated environment, HUMISORB(TM) Sorbite offers the following benefits:
o It lowers the ambient temperature of enclosed refrigerated environments
by decreasing the humidity within the refrigerated environments.
o It increases the storage life of food by decreasing shrinkage in food
generally found as a result of humidity within the refrigerated
environment.
o It reduces the transfer of odors by trapping airborne bacteria that can
cause odors.
o It reduces defrost cycles by reducing latent heat, which causes
humidity.
o It reduces the spread of bacteria in refrigerated storage areas by
controlling humidity, which is friendly to bacteria.
o It increases the life of compressors and motors associated with
refrigeration by removing the latent heat in the form of humidity.
o It decreases energy use by reducing excess humidity, which reduces the
compressor running time.
Humitech(TM)'s products will be distributed through:
o its own franchise distribution network,
o commercial dealers,
o the Internet,
o direct sales organizations, and
o corporate national accounts.
As of December 31, 2001, Humitech(TM) had generated revenues in the amount of $104,491 and had incurred a net loss of $197,767.
Humitech(TM)'s common stock is currently not trading on any market.
Humitech(TM)'s executive office is located at 15851 Dallas Parkway, Suite 410, Addison, TX 75001, where its telephone number is (972) 490-9393.
THE OFFERING
Common Stock Offered by Selling Stockholders.... 4,644,108 shares
Common Stock Offered by Humitech(TM) 5,000,000 shares at $5,000,000
Price per Share..................... $1.00
Common Stock Currently Outstanding.............. 35,419,494 shares
Investment in the shares
Risk Factors.................................... involves a high degree of risk.
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SELECTED FINANCIAL INFORMATION
The Selected Financial Information should be read in conjunction with the Consolidated Financial Statements and the Notes thereto appearing in this Prospectus.
SUMMARY OF CONSOLIDATED STATEMENTS OF OPERATIONS
Fiscal Year Three Months
Ended Ended March 31
December 31 (unaudited)
2001 2002
------------ --------------
Revenue ......................... $ 104,491 $ 458,190
Net income (loss) ............... $ (197,767) $ 37,565
Net income (loss) per share ..... $ (.03) $ .01
Number of shares outstanding .... 8,207,595 8,420,595
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SUMMARY OF CONSOLIDATED BALANCE SHEETS
At December At March 31,
31, 2001 2002 (unaudited)
------------- ----------------
Current assets ............... $ 199,891 $ 344,469
Current liabilities .......... $ 127,964 $ 190,261
Working capital .............. $ 71,927 $ 154,208
Total assets ................. $ 199,891 $ 344,469
Total liabilities ............ $ 127,964 $ 190,261
Accumulated deficit .......... $ (197,767) $ (160,202)
Stockholders' equity ......... $ 282,805 $ 413,070
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RISK FACTORS
AN INVESTMENT IN THE SHARES OFFERED IN THIS REGISTRATION STATEMENT INVOLVES A HIGH DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS CONCERNING THE BUSINESS OF HUMITECH(TM) AND THE OFFERING, AND SHOULD CONSULT INDEPENDENT ADVISORS AS TO THE TECHNICAL, TAX, BUSINESS AND LEGAL CONSIDERATIONS REGARDING AN INVESTMENT IN THE SHARES.
HUMITECH(TM) HAS A LIMITED OPERATING HISTORY, HAS NOT GENERATED SIGNIFICANT REVENUES AND MAY NOT BE ABLE TO SUCCESSFULLY INTRODUCE ITS PRODUCT TO THE HUMIDITY CONTROL INDUSTRY.
Humitech(TM) is in the early stages of developing its humidity control product and has engaged only in very limited operations, none of which have generated significant revenues. Further, the humidity control industry is still somewhat new to most businesses and people and Humitech(TM) is subject to all the risks inherent in an immature business enterprise, including the absence of an extensive operating history upon which to base a future forecast. Risks to Humitech(TM)'s operations include, but are not limited to:
o inability to manage growth and expanding operations;
o inability to predict interest in the humidity control industry;
o inability to increase brand awareness;
o inability to attract, retain and motivate qualified personnel; and
o inability to maintain current and developing strategic relationships.
Humitech(TM) recorded a net loss of $197,767 and a net income of $37,565, respectively, for the year ended December 31, 2001 and for the quarterly period ended March 31, 2002. Humitech(TM)'s loss is attributable to start-up costs, research and development costs, and other administrative costs. Humitech(TM) may continue to experience losses during the next several years, especially if the company engages in substantial research and development. Humitech(TM) has identified two products, the Series HT-100 and Series HT-200, to incorporate the HUMISORB(TM) Sorbite. Future sales of these products may not be profitable. Further, Humitech(TM) may be unable to identify and market additional products, either on its own behalf or through joint ventures or other collaborative arrangements.
HUMITECH(TM)'S BUSINESS MODEL HAS BEEN DEVELOPED AS A RESULT OF MANAGEMENT'S EXPERIENCE, JUDGMENT AND ASSUMPTIONS; FAILURE BY HUMITECH(TM)'S MANAGEMENT TO ACCURATELY PREDICT MARKET ACCEPTANCE AND PROFITABILITY FOR THE HUMITECH(TM) PRODUCT COULD NEGATIVELY AFFECT HUMITECH(TM)'S OPERATIONS.
Humitech(TM)'s plans for financing and implementing its planned business operations are based solely on the experience, judgment, and assumptions of management. The primary assumption made by management with respect to the potential for market acceptance and profitability for the Humitech(TM) product is that the indoor humidity control industry will expand significantly as demand for humidity control products increases and health conscious end users determine its benefits. However, if management is incorrect in its assumptions, the financial results Humitech(TM) experiences could be significantly adversely affected; and shareholders could lose all or part of their respective investments in Humitech(TM).
Only one member of management has been previously involved in the development of a business similar to Humitech(TM). Accordingly, there is no basis, other than the judgment of, and assumptions made specifically by Humitech(TM)'s management ON which to estimate the volume of sales and the amount of revenues that Humitech(TM)'s planned operations may generate, or regarding other aspects of the planned operations of Humitech(TM).
HUMITECH(TM)'S PRIMARY SOURCE OF REVENUE AND BUSINESS WILL COME FROM THE SALE OF THE SERIES HT-100 AND SERIES HT-200 PANELS, WHICH MAY NOT SUPPORT HUMITECH(TM)'S GROWTH AND THEREFORE, ITS CONTINUED OPERATION.
Humitech(TM) will derive its business and revenues from the sale of its Series HT-100 and Series HT-200 panels, whiCh utilize the HUMISORB(TM) Sorbite mineral. To achieve market acceptance and penetration, Humitech(TM) must continually enhance and improve its products and services, as well as increase its marketing and sales efforts to effectively compete and increase customers' awareness of its products and services. Failure of Humitech(TM) to achieve market success with its paneLs could limit or suspend Humitech(TM)'s business, financial condition, and results of operations. Humitech(TM)'s expanded marketing and sales efforts and increased expenditures may not result in successful commercialization and increased market penetration of Humitech(TM)'s products.
ADDITIONAL FINANCING MAY BE REQUIRED TO IMPLEMENT HUMITECH(TM)'S OPERATING PLANS, WHICH MAY NOT BE AVAILABLE ON FAVORABLE TERMS, IF AT ALL.
Assuming that all shares from this offering are sold, the company believes that the net proceeds of this offering and internally generated funds may be adequate to satisfy Humitech(TM)'s working capital needs for the next twelve months. However, Humitech(TM) may not be able to sell all the shares offered and additional financing may be required to implement Humitech(TM)'s operating plans. If Humitech(TM) is able to raise additional funds by issuing equity securities, holders of its common stock may experience dilution of their ownership interest and holders of these securities may have rights senior to those of the holders of Humitech(TM) common stock. If additional financing is not available when required or is not availabLe on acceptable terms, Humitech(TM) may be unable to fund its expansion, develop or enhance its services or respond to competitive pressures.
HUMITECH(TM) IS DEPENDENT UPON KEY PERSONNEL, PARTICULARLY THOSE INDIVIDUALS WHO HAVE DEVELOPED HUMITECH(TM)'S BUSINESS PLAN, AND LOSS OF THESE INDIVIDUALS COULD SEVERELY CURTAIL THE COMPANY'S ABILITY TO IMPLEMENT ITS BUSINESS PLAN.
Humitech(TM) is substantially dependent upon its present management, including its Chief Executive Officer, C.J. Comu, Chief Financial Officer, Michael Davis, and Executive Vice President and Director of Franchising, Michael Ryan for the execution of its business strategy. The loss of the services of these individuals could have a material adverse effect on the development and marketing of the company's product. Although Humitech(TM) has entered into employment agreements with key employees, it only maintains a key-man life insurance for Mr. Comu, its Chief Executive Officer. Humitech(TM) may hire independent consultants as needed to market the company's products; however, Humitech(TM) may not be able to attract and retain qualified individuals to implement its business plan.
HUMITECH(TM)'S BUSINESS PLAN IS DEPENDENT ON STRATEGIC ALLIANCES WITH VARIOUS SUPPLIERS AND DISTRIBUTORS; FAILURE TO ESTABLISH OR MAINTAIN THESE ALLIANCES MAY INCREASE HUMITECH(TM)'S CAPITAL REQUIREMENTS.
Humitech(TM)'s strategy for the manufacture, marketing and commercialization of the HUMISORB(TM) Sorbite product includes entering into various collaborations with suppliers and distributors. Humitech(TM) has entered into a distributorship agreement which grants it the right to purchase humidity control panels at prices and terms as published periodically by the distributor. The company may not be able to negotiate strategic alliances with other parties on acceptable terms, if it does, these collaborative arrangements may not be successful. To the extent Humitech(TM) cannot establish these arrangementS, or maintain its existing relationships on favorable terms, if at all, it could experience increased capital requirements as a result of it undertaking these activities at its own risk and expense. In addition, Humitech(TM) may encounter significant delays in introducing products or product applications currently under development into the marketplace or find that the development, manufacture or sale of its proposed products are adversely affected by the absence of these collaborative agreements.
Further, Humitech(TM)'s success may depend upon:
o the skills, experience and efforts of Humitech(TM)'s collaborative
partners,
o employees who are responsible for the collaborative project,
o the partners' commitment to the collaborative arrangement, and
o the financial condition of these partners,
all of which are beyond the control of Humitech(TM). If one or more of Humitech(TM)'s collaborative partners defaulted on their obligations under their collaborative arrangements, it could be forced to engage in litigation to enforce those obligations, which could be time consuming and costly, or seek to enter into agreements with other parties upon similar terms, which may not be available.
HUMITECH(TM) MAY BE UNABLE TO OBTAIN TO ACHIEVE OR MAINTAIN EFFECTIVE REGISTRATION FOR ITS INTENDED FRANCHISE DISTRIBUTORSHIP PROGRAM IN SELECTED STATES, WHICH WOULD CURTAIL ITS GOAL OF PROMOTING NAME RECOGNITION AND INCREASING REVENUE.
Humitech(TM) is presently offering franchise distributorships for its product and intends to apply for registration in a total of 48 states. Humitech(TM) will allow franchise distributors to operate under its trade name, which management believes will promote name recognition and Humitech(TM)'s business. However, Humitech(TM) may be unable to obtain or maintain effective registration for its intended franchise distributorship program in those states or in any other states. Further, in the event that one of Humitech(TM)'s distributors engages in an activity that results in negative publicity concerning itS operations, this negative publicity could also affect Humitech(TM) and its ability to sell additional independently owned franchise distributorships.
HUMITECH(TM) MAY BE SUBJECT TO POTENTIAL LIABILITY AS A RESULT OF THE USE OF PRODUCTS INCORPORATING THE HUMISORB(TM) SORBITE MINERAL.
The testing, marketing and sale of the humidity control products and other products which may utilize the HUMISORB(TM) Sorbite mineral may involve risks. The use of any of Humitech(TM)'s potential products in clinical or other
tests OR the use of the mineral in products, may expose Humitech(TM) to potential liability. Liability may result from claims made directly from consumers or by regulatory agencies, companies or others selling Humitech(TM)'s products. Humitech(TM) currently has no clinical trial or product liability insurance coverage. The cost of defending itself against potential claims may be substantial.
THE SUCCESS OF HUMITECH(TM)'S PRODUCTS IS DEPENDANT ON ITS ABILITY TO PROTECT ITS PROPRIETARY RIGHTS, INABILITY TO PROTECT THESE RIGHTS COULD LEAD TO DELAY OR SUSPENSION IN PRODUCTION OF ITS PANELS AND COSTLY LITIGATION.
Humitech(TM) currently has the exclusive distribution rights for the HUMISORB(TM) Sorbite mineral, used in Humitech(TM)'s panels. Humitech(TM)'s strategy is to protect its distribution rights and other proprietary rights through:
o patents,
o copyrights,
o trademarks,
o nondisclosure agreements,
o license agreements, and
o other forms of protection.
Humitech(TM)'s inability to protect these rights could lead to delay or suspension in production of its panels and costly litigation. Humitech(TM) currently has trademark registration pending on the HUMISORB(TM) name and plans to file trademark registrations on the Humitech, FoodSoFresh, and Humitech Franchise Corporation names, which may not result in the issuances of valid trademarks. Further, any pending or future patent application of Humitech(TM) or its licensors may not result in issuance of a patent, and the scope of protection of any patent of Humitech(TM) or its licensors may be held invalid if subsequently challenged. In addition, the laws of foreign countries may not protect Humitech(TM)'s intellectual property rights to the same extent as the laws of the United States.
HUMITECH(TM) FACES SUBSTANTIAL COMPETITION FROM COMPETITORS WITH SIGNIFICANTLY GREATER HUMAN AND FINANCIAL RESOURCES, EXPERIENCE, AND TECHNICAL STAFF, WHICH COULD REDUCE OR ELIMINATE HUMITECH(TM)'S ABILITY TO COMPETE IN A DESIGNATED MARKET.
There are many companies, substantially all with significantly greater resources, including financial resources, experience and technical staff than Humitech(TM). Companies like as Katch All and Gonzo Fridge produce products that are similar to Humitech(TM)'s, have greater resources and a longer operating history. Further other companies have or may successfully develop products which meet some of the needs intended to be met by Humitech(TM)'s proposed products. An inferior competitive position could have a material adverse affect on the productivity, marketability and profitability of Humitech(TM).
HUMITECH(TM)'S GROWTH MAY REQUIRE SUBSTANTIAL EXPENDITURES, WHICH HUMITECH(TM)
MAY NOT BE ABLE TO FUND.
For the fiscal year ended December 31, 2001, Humitech(TM) recorded revenues in the amount of $104,491 and costs and expenses in the amount of $302,258. For the quarterly period ended March 31, 2002, Humitech(TM) recorded revenues in the amount of $458,190 and costs and expenses in the amount of $420,625. Failure to increase revenues and decrease costs could lead to substantial operating losses for Humitech(TM) and a failure to achieve growth. Humitech(TM)'s success and ongoing financial viability is contingent upon the success of its new business model and the generation of related cash flows. Humitech(TM)'s failure to meet these contingencies may cause it to delay or suspend its operations.
THERE IS NO PUBLIC MARKET FOR HUMITECH(TM)'S COMMON STOCK, AND IF A PUBLIC MARKET DOES NOT DEVELOP, YOU MAY NOT BE ABLE TO FIND LIQUIDITY FOR YOUR COMMON STOCK.
There is no established public market for Humitech(TM) common stock and Humitech(TM) cannot predict when, if ever, a public market for Humitech(TM) common stock will develop. Accordingly, shareholders of Humitech(TM) may be unable to finD liquidity for their common stock.
THE CONCURRENT OFFERING OF SHARES BY HUMITECH(TM)'S SELLING SECURITY HOLDERS WITH THE OFFERING OF SHARES TO BE SOLD BY THE COMPANY MAY MAKE IT MORE DIFFICULT FOR HUMITECH(TM) TO SELL ITS SHARES.
Humitech(TM) is selling its shares as well as shares owned by its selling security holders. To the extent that selling security holder and Humitech(TM)'s shares are being offered for sale concurrently, each sale of shares held by its selling security holders may reduce the pool of investors willing to buy its shares and demand for Humitech(TM)'s shares. As a result, Humitech(TM)'s ability to raise capital may be hampered.
FORWARD-LOOKING STATEMENTS
Except for historical information contained in this prospectus, the matters discussed in this prospectus are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in these forward looking statements. These risks and uncertainties include, without limitation, Humitech(TM)'s dependence on the timely development, introduction and customer acceptance of products, the impact of competition and downward pricing pressures, the ability of Humitech(TM) to generate revenues and raise any needed capital, the effect of changing economic conditions, and risks in product development.
USE OF PROCEEDS
The following sets forth the estimated application of proceeds from the sale of shares offered, assuming that all shares offered are sold. Humitech(TM) may change its use of proceeds when and if market conditions or unexpected changes in operating conditions or results occur. Humitech(TM) may, when and if the opportunity arises, acquire other businesses involved in these activities or having product lines that are compatible with Humitech(TM)'s business. Humitech(TM) may also acquire real estate for its manufacturing needs or offices if it deems it appropriate.
Proceeds from Offering $5,000,000 Use of Proceeds Investment Banking/Broker Dealer Fees $ 500,000 10% Legal, Accounting Filing & Registration $ 200,000 4% Inventory of Humitech(TM) HT 100 panels $ 750,000 15% Inventory of Humitech(TM) HT 200 panels $ 750,000 15% National Infomercial Production & Media $ 500,000 10% National Advertising & Print Media Campaign $ 500,000 10% E-Commerce Software & Infrastructure $ 100,000 2% International Market Expansion $ 250,000 5% Research, Development & Product Testing $ 200,000 4% Printing, Artwork & Design $ 250,000 5% Franchise Development Registration Filing $ 250,000 5% Manufacturing Facilities & Materials $ 250,000 5% Salary & Wages $ 240,000 5% Office Lease $ 42,000 1% General and Administrative Expenses $ 218,000 4% TOTAL $ 5,000,000 100% |
The timing and actual use of the proceeds may vary depending upon Humitech(TM)'s rate of growth and other factors. The allocations listed above are, for the most part, estimates and approximations only. If all of the shares are subscribed, Humitech(TM) believes that the net proceeds from this offering and internally generated funds may be adequate to satisfy Humitech(TM)'s working capital needs for the next twelve months. However, Humitech(TM) may not be able to sell all of the shares in this offering, if any, and may be forced to reduce its allocation for use of proceeds. If an adjustment is required, Humitech(TM) will adjust the amounts pro rata accordingly to the percentage allocated.
Further, Humitech(TM) may require additional financing in the future to expand its business. Humitech(TM) is not able at this time to predict the amount or potential source of additional funds, if they are necessary, and has no current commitments to obtain these funds. Additional financing on acceptable terms may not be available to Humitech(TM) when needed, if at all.
DETERMINATION OF OFFERING PRICE
The offering price of the shares has been determined by Humitech(TM) and not as the result of arm's-length negotiations. There is no established public market for the shares.
DILUTION
Humitech(TM)'s existing officers, directors, promoters, and affiliated persons obtained their 3,874,739 shares for consideration of $38,747.39 or $.01 per share. As a comparison, investors in this offering will pay $1.00 per share. Therefore, investors will suffer an immediate dilution of $.99 per share. The net tangible book value per share before this distribution is $.11. After this distribution, net tangible book value will be $.51 per share. As such, there will be a $.40 per share increase in net tangible book value per share attributable to the cash payments made by purchasers of the shares being offered. The purchasers will absorb an immediate dilution of $.49 per share in net tangible book value from the public offering price. The following table illustrates this per share dilution.
Offering price to new investors.............................. $1.00
Average price paid by existing officers, directors,
promoters, and affiliated persons......................... $ .01
Net tangible book value before the offering.................. $ .11
Increase in tangible book attributable to this offering...... $ .40
Pro forma net tangible book value after the offering......... $ .51
Dilution of net tangible book value to new investors......... $ .49
SELLING SECURITY HOLDERS
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The following table provides information with respect to the selling shareholders' beneficial ownership of Humitech(TM)'s common stock as of May 10, 2002, and as adjusted to give effect to the sale of all of the shares offered. Except as set forth below, none of the selling shareholders currently is an affiliate of ours, and none of them has had a material relationship with us during the past three years. None of the selling shareholders are or were affiliated with registered broker-dealers. The selling shareholders possess sole voting and investment power with respect to the securities shown.
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PERCENT OF
NUMBER OF CLASS OF
SHARES SHARES
NUMBER OF SHARES BENEFICIALLY BENEFICIALLY
BENEFICIALLY OWNED NUMBER OWNED AFTER THE OWNED AFTER
PRIOR TO THE OF SHARES OFFERED OFFERING IS THE OFFERING
NAME AND ADDRESS OF SELLING STOCKHOLDER OFFERING HEREBY COMPLETE IS COMPLETE
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
C. J. COMU 2,277,231 1,648,008 629,223 2%
CHIEF EXECUTIVE OFFICER
HUMITECH INTERNATIONAL GROUP, INC.
15851 DALLAS PARKWAY, SUITE 410
ADDISON, TX 75001
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
COMU FAMILY TRUST 1,000,000 1,000,000 0 0
C.J. COMU TTE
HUMITECH INTERNATIONAL GROUP, INC.
15851 DALLAS PARKWAY, SUITE 410
ADDISON, TX 75001
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
13
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PERCENT OF
NUMBER OF CLASS OF
SHARES SHARES
NUMBER OF SHARES BENEFICIALLY BENEFICIALLY
BENEFICIALLY OWNED NUMBER OWNED AFTER THE OWNED AFTER
PRIOR TO THE OF SHARES OFFERED OFFERING IS THE OFFERING
NAME AND ADDRESS OF SELLING STOCKHOLDER OFFERING HEREBY COMPLETE IS COMPLETE
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
MICHAEL DAVIS 25,000 25,000 0 0
CHIEF FINANCIAL OFFICER
HUMITECH INTERNATIONAL GROUP, INC.
15851 DALLAS PARKWAY, SUITE 410
ADDISON, TX 75001
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
MRD CORPORATION* 241,666 241,666 0 0
9730 BURLESONE DRIVE
DALLAS, TX 75243
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
MICHAEL RYAN 253,342 83,334 170,008 <1%
EXECUTIVE VICE PRESIDENT
HUMITECH INTERNATIONAL GROUP, INC.
15851 DALLAS PARKWAY, SUITE 410
ADDISON, TX 75001
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
PAUL STEWART 25,000 25,000 0 0
DIRECTOR
HUMITECH INTERNATIONAL GROUP, INC.
15851 DALLAS PARKWAY, SUITE 410
ADDISON, TX 75001
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
PIERRE KOSHAKJI 27,500 25,000 2,500 <1%
Director
HUMITECH INTERNATIONAL GROUP, INC.
15851 DALLAS PARKWAY, SUITE 410
ADDISON, TX 75001
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
JON KELLEY 25,000 25,000 0 0
DIRECTOR
HUMITECH INTERNATIONAL GROUP, INC.
15851 DALLAS PARKWAY, SUITE 410
ADDISON, TX 75001
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
14
|
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
PERCENT OF
NUMBER OF CLASS OF
SHARES SHARES
NUMBER OF SHARES BENEFICIALLY BENEFICIALLY
BENEFICIALLY OWNED NUMBER OWNED AFTER THE OWNED AFTER
PRIOR TO THE OF SHARES OFFERED OFFERING IS THE OFFERING
NAME AND ADDRESS OF SELLING STOCKHOLDER OFFERING HEREBY COMPLETE IS COMPLETE
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
DAVID WELCH 500,000 500,000 0 0
VICE PRESIDENT OF OPERATIONS
HUMITECH INTERNATIONAL GROUP, INC.
15851 DALLAS PARKWAY, SUITE 410
ADDISON, TX 75001
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
TIM ALPERS 20,000 20,000 0 0
2129 eAST HEIGHTS LANE
ROCHESTER, MN 55906
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
CHASTITY BALLARD 6,000 6,000 0 0
4336 MISSISSIPPI ST
SAN DIEGO, CA 92104
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
FRASER BOLWELL 20,000 20,000 0 0
6323 CHRISTOPHER CREEK ROAD E
JACKSONVILLE, FL 32217
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
CLEMENT CHING 5,000 5,000 0 0
73-4515 OLD MAUKA GOV RD
KAILUA-KONA, HI 96740
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
DEBRA CHING 5,000 5,000 0 0
P.O. BOX 1388
KAILUA-KONA, HI 96740
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
DOUG CHING 140,000 140,000 0 0
78-6534 MAMALAHOA HWY
HONUALOA, HI 96725
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
BOBBY COLLINS 4,000 4,000 0 0
1319 BLACK OAK DRIVE
CARROLLTON, TX 75007
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
RALPH COLTON 30,000 30,000 0 0
101 TANGLEWOOD
LANSDALE, PA 19446
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
JEFF CONGER 10,000 10,000 0 0
1811 GRAND AVE
SAN DIEGO, CA 92109
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
KEVIN COX 5,000 5,000 0 0
413 TAHOE PL.
ALBEQUERQUE, NM 87107
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
DENNIS ERICKSON 25,000 25,000 0 0
100 W. VIA OLIVERA APT 1
PALM SPRINGS, CA 92262
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
15
|
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
PERCENT OF
NUMBER OF CLASS OF
SHARES SHARES
NUMBER OF SHARES BENEFICIALLY BENEFICIALLY
BENEFICIALLY OWNED NUMBER OWNED AFTER THE OWNED AFTER
PRIOR TO THE OF SHARES OFFERED OFFERING IS THE OFFERING
NAME AND ADDRESS OF SELLING STOCKHOLDER OFFERING HEREBY COMPLETE IS COMPLETE
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
JOSEPH FABIAN 5,000 5,000 0 0
740 MARY LANE
LEWISTON, NY 14092
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
EARL FEUCHT 10,000 10,000 0 0
317 WHEATLY AVENUE
PRINCEVILLE, IL 61559
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
VALERIE FIDRICH 20,000 20,000 0 0
34668 WAGON WHEEL TRAIL
ELIZABETH, CO 80107
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
TOM FISCHER 20,000 20,000 0 0
1090 JONES RD
WAPATO, WA 98951
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
CONNIE SISCO HAMBORSKY 5,000 5,000 0 0
3520 BELLAIRE
HOUSTON, TX 77025
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
JAMES HERRING 15,000 15,000 0 0
11216 PEYTON DR
GULFPORT, MS 39503
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
BRAD HICKEY 2,000 2,000 0 0
3313 RALEIGH
FORT WORTH, TX 76123
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
RON / VICTORIA HUFFMAN 2,000 2,000 0 0
210 SANTA FE TRAIL 3034
IRVING, TX 75063
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
DAVID HUTCHINS 10,000 10,000 0 0
2008 AUSTIN
AMARILLO, TX 79109
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
JAMES JONES 100,000 100,000 0 0
368 HUNTERS LANE
BLATRS, VA 24527
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
ROBERT KEITH 20,000 20,000 0 0
THE ROBERT D KEITH & BARBARA KEITH TRV TR
2712 CHADWICK DR
PLANO, TX 75075
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
DAVID LESLIE AND LEORA J/T 20,000 20,000 0 0
6 BRITTANY LN
ODESSA, TX 79761
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
CLAY LOWRY 20,000 20,000 0 0
H CLAY LOWRY & GAIL M LOWRY REV LIV TR
36 W. ILLIANA STREET
ORLANDO, FL 32806
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
16
|
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
PERCENT OF
NUMBER OF CLASS OF
SHARES SHARES
NUMBER OF SHARES BENEFICIALLY BENEFICIALLY
BENEFICIALLY OWNED NUMBER OWNED AFTER THE OWNED AFTER
PRIOR TO THE OF SHARES OFFERED OFFERING IS THE OFFERING
NAME AND ADDRESS OF SELLING STOCKHOLDER OFFERING HEREBY COMPLETE IS COMPLETE
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
LEONARD MARTZ 6,000 6,000 0 0
6823 W 112TH ST
WORTA, IL 60482
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
SCOTT McCLESKEY 20,000 20,000 0 0
500 SHILOT ROAD
SULPHER SPRINGS, TX 75482
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
DENNIS MCQUIRE 5,000 5,000 0 0
10360 MELODY DR
NORTHGLENN, CO 80260
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
KEITH McQUIRE 4,000 4,000 0 0
6304 MERRIT WAY CT
ARLINGTON, TX 76018
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
LARRY MORROW 20,000 20,000 0 0
2817 74th PLACE
LUBBOCK, TX 79423
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
FRANCES P. MORROW 20,000 20,000 0 0
2817 74TH PLACE
LUBBOCK, TX 79423
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
JOSEPH MYERS 10,000 10,000 0 0
5206 W. 96TH STREET
OVERLAND PARK, KS 66207
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
DORR E. NEWTON 5,000 5,000 0 0
115 E. TRAVIS STE 1545
SAN ANTONIO, TX 78205
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
PERRY NICHOLS 5,000 5,000 0 0
1403 NANCY LANE
LIBERTY, MO 64068
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
TOM NOLTA 45,000 45,000 0 0
6971 WILDWOOD
MUNSING, MI 49862
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
LEO PAPPAS 20,000 20,000 0 0
127 PIN OAK CROSSING
ELGIN, TX 78621
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
ALAN PERLMAN 200,000 200,000 0 0
256 S. ROBERTSON ROAD
BEVERLY HILLS, CA 90211
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
FRANK CRAIG PIERSON 5,000 5,000 0 0
12308 E. BROADWAY
SPOKANE, WA 99216
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
JANET POOL 2,000 2,000 0 0
3850 DUNHAVEN RD
DALLAS, TX 75220
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
17
|
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
PERCENT OF
NUMBER OF CLASS OF
SHARES SHARES
NUMBER OF SHARES BENEFICIALLY BENEFICIALLY
BENEFICIALLY OWNED NUMBER OWNED AFTER THE OWNED AFTER
PRIOR TO THE OF SHARES OFFERED OFFERING IS THE OFFERING
NAME AND ADDRESS OF SELLING STOCKHOLDER OFFERING HEREBY COMPLETE IS COMPLETE
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
PAM ROGERS 10,000 10,000 0 0
6 BRITTANY LANE
ODESSA, TX 79761
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
MARK SALTZMAN 20,000 20,000 0 0
1813 CLARENCE STREET
DALLAS, TX 75215
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
PAUL SAUERBIER 10,000 10,000 0 0
3811 OAK LAWN AVE
DALLAS, TX 75219
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
RYAN SILVA 20,000 20,000 0 0
1811 GRAND AVE
SAN DIEGO, CA 92109
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
JANET STEPHENS 10,600 10,600 0 0
601 FM 1856
SWEETWATER, TX 79556
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
TOBY & KARIN STEPHENS 10,500 10,500 0 0
5319 72CND ST
LUBBOCK, TX 79424
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
GLENN STINCHCOMB 10,000 10,000 0 0
12900 PRESTON RD STE 550
DALLAS, TX 75230
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
JOHN SULLIVAN 4,000 4,000 0 0
6315 MERRITT WAY CT
ARLINGTON, TX 76018
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
ARVID WALLER 5,000 5,000 0 0
6237 BEDFORD AVE
FLINT, MI 48507
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
STEVEN WEISMAN 5,000 5,000 0 0
15245 SHADY GROVE RD
ROCKVILLE, MD 20850
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
RICHARD WELLS 10,000 10,000 0 0
211 SE MORGAN
SHELTON, WA 98584
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
ROBERT WATSON 10,000 10,000 0 0
16387 BLANCO ST
SAN LEANDRO, CA 94578
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
RON ZITANI 60,000 60,000 0 0
RONALD J. ZITANI & MARION A. ZITANI J/T
25 LAKEVIEW AVENUE
NEW CANAAN, CT 06840
---------------------------------------------- -------------------- ------------------- ----------------- ----------------
|
* MRD Corporation is controlled by Michael Davis, Humitech(TM)'s Chief Financial Officer.
PLAN OF DISTRIBUTION
4,644,108 SHARES SOLD BY SELLING STOCKHOLDERS
Humitech(TM) is registering 4,644,108 shares of common stock on behalf of the selling stockholders. As used in this prospectus, the term "selling stockholders" includes pledgees, transferees or other successors-in-interest selling shares received from the selling stockholder, as a pledgor, a borrower or in connection with other non-sale-related transfers after the date of this prospectus. This prospectus may also be used by transferees of the selling stockholders, including broker-dealers or other transferees who borrow or purchase the shares to settle or close out short sales of shares of common stock. The selling stockholders will act independently of Humitech(TM) in making decisions with respect to the timing, manner, and size of each sale or non-sale related transfer. Humitech(TM) will not receive any of the proceeds from the sales by the selling stockholders.
The selling stockholders may sell their shares of common stock directly to purchasers from time to time. Alternatively, they may from time to time offer the common stock to or through underwriters, broker/dealers or agents, who may receive compensation in the form of underwriting discounts, concessions or commissions from the selling stockholders or the purchasers of the securities for whom they may act as agents. The selling stockholders and any underwriters, broker/dealers or agents that participate in the distribution of common stock may be deemed to be "underwriters" within the meaning of the Securities Act and any profit on the sale of the securities and any discounts, commissions, concessions or other compensation received by any underwriter, broker/dealer or agent may be deemed to be underwriting discounts and commissions under the Securities Act.
The common stock may be sold from time to time in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale or at negotiated prices. The sale of the common stock may be effected by means of one or more of the following transactions, which may involve block transactions,
o in the over-the-counter market, or
o in transactions otherwise than on exchanges or services, including
transactions pursuant to Rule 144 or another exemption from
registration.
In connection with sales of the common stock or otherwise, the selling stockholders may enter into hedging transactions with broker/dealers, who in turn may engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell common stock short and deliver common stock to close out short positions, or loan or pledge common stock to broker/dealers who in turn may sell the securities.
At the time a particular offering of the common stock is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount common stock being offered and the terms of the offering, including the name or names of any underwriters, broker/dealers or agents, any discounts, commissions and other terms constituting compensation from the
selling stockholders and any discounts, and commissions or concessions allowed or re-allowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable, the common stock will be offered or sold in jurisdictions only through registered or licensed brokers or dealers.
The selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, which provisions may limit the timing of sales of the common stock by the selling stockholders. The foregoing may affect the marketability of the securities.
5,000,000 SHARES TO BE SOLD BY HUMITECH
Humitech(TM) is offering 5,000,000 shares at the purchase price of $1.00 per share on a delayed or continuous offering basis pursuant to Rule 415 of the Securities Act of 1933 Rules. This is a self underwritten offering.
Humitech(TM) reserves the right to use selling agents with the appropriate modification to the registration statement, as necessary. If Humitech(TM) makes arrangements to use selling agents after effectiveness of this registration statement, then Humitech(TM) will need to file a post-effective amendment to the registration statement identifying the broker-dealer, providing the required information on the plan of distribution and use of proceeds, revising the disclosures in the registration statement, and filing the agreement as an exhibit to the registration statement. Further, prior to any involvement of any broker-dealer in the offering, a broker-dealer must seek and obtain clearance of the underwriting compensation and arrangements from the NASD Corporate Finance Department.
LEGAL PROCEEDINGS
None.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth information concerning the directors, executive officers and significant employees of Humitech(TM):
NAME AGE POSITION
---- --- --------
C.J. Comu 41 Chairman, Chief Executive Officer and
Director
20
|
Michael R. Davis, MBA, CPA 38 Chief Financial Officer and Director
Michael G. Ryan 44 Executive Vice President, Director of
Franchising
Candice Dozier 48 Vice President of Investor/Media
Relations
Alison Murray 43 Vice President Marketing
Fredrick Ellis 36 Vice-President of Information Tech &
E-Commerce
Don Michael 41 National Sales Manager
Keith Lawrence 59 National Training Manager
Pierre Koshakji 42 Director
Paul Stewart 49 Director
Jonathan Kelly 45 Director
|
EXECUTIVE OFFICER AND DIRECTORS
C.J. COMU, CHAIRMAN, CHIEF EXECUTIVE OFFICER AND DIRECTOR, OCTOBER 2001 TO
PRESENT
Mr. Comu began his career in the stock and commodities industry as a specialist
in precious metals and currencies. In 1980, he founded MBA Corporate Group, a
financial application software company that developed a mathematical
computerized trading software program called the "Wall Street Analyst." In 1984,
Mr. Comu was President of Credit America Holdings Group, a privately held and
managed investment banking and consulting firm which financed and turned around
several start up and operating companies during his term. In 1990, Mr. Comu
became President of Transworld Leasing Corporation specializing in equipment
financing for the health care and transportation industry, working with lenders
which included GE Capital and Bank One, and vendors which included Computer
Associates and Boeing International- nationwide. In 1994, Mr. Comu founded and
became Chairman and Chief Executive Officer of Airtech International Group,
Inc., which became a publicly traded company in 1998 (Nasdaq/OTCBB: AIRG).
Airtech is a manufacturer and marketer of indoor air quality technology that
incorporates leading edge purification to destroy particles and volatile organic
compounds through a multi step sterilization process. In 2001, the Board of
Directors of Airtech agreed to spin off Humitech, which was a wholly owned subsidiary of Airtech, and Mr. Comu accepted the responsibilities as its Chairman and CEO.
MICHAEL R. DAVIS, CHIEF FINANCIAL OFFICER AND DIRECTOR; JANUARY 2002 TO PRESENT From 1997 to 2001, Mr. Davis was a senior associate at McKinsey & Company, a Dallas, Texas, strategic planning and consulting firm providing financial, business, crisis management and legal consulting solutions. From 1994 to 1997, Mr. Davis was employed as the Chief Financial Officer for Innovax Concepts Corporation, a software development firm located in Irving, Texas. From 1990 to 1994, Mr. Davis served as the Director of Financial Planning and Mergers and Acquisitions for Affiliated Computer Systems (NYSE:ACS), a electronic data processing firm. Mr. Davis has an MBA from Southern Methodist University, a Bachelors of Science degree in Finance & Economics from University of Texas- Austin and a CPA designation from Illinois. Mr. Davis also attended graduate studies at the London School of Economics.
SIGNIFICANT EMPLOYEES
MICHAEL G. RYAN, EXECUTIVE VICE PRESIDENT, DIRECTOR OF FRANCHISING, OCTOBER 2001
TO PRESENT
Mr. Ryan has been involved in the marketing, franchising and distribution of
products associated with the humidity control business since 1995. Prior to
this, Mr. Ryan was Sales Director with Franchises That Sell, a New Jersey
company specializing in franchise consulting and marketing since 1987. Mr. Ryan
has bought and sold a number of business opportunities from Dental Surgical
Products to Golf Putting Greens and is experienced in understanding the process
of sales, distribution and operations of start up business venture. During his
involvement in the Humidity Control business he successfully obtained new
clients including Hyatt Hotels, Marriott, Pappa Johns Pizza and Outback Steak
Houses.
CANDICE DOZIER, VICE PRESIDENT OF MEDIA & INVESTOR RELATIONS, OCTOBER 2001 TO
PRESENT
Ms. Dozier is a Registered Representative that has spent the last 17 years in
the financial services arena, working with both the institutional and retail
investment community. Some of her clients include: Coca Cola Bottling, Coca Cola
Foods, Blue Cross Blue Shield and E-Systems. Ms. Dozier has conducted many
educational seminars on retirement planning, portfolio management, and IRA
protection. From June 2001 to October 2001, Ms. Dozier served as an account
executive for MRI of Lewisville. From February 1984 to February 2001, Ms. Dozier
worked in three different divisions of Northstar Securities in positions ranging
from broker to Director of Startegic Alliance and Insurance Specialist. In 1981,
Ms. Dozier joined the Corporate Management team of the Zoecon Marketing division
of Sandoz, Inc., an international pharmaceutical corp., and spent three years
working with the U.S. markets developing and implementing national marketing
campaigns. She spent 5 years as an executive recruiter in the Financial and IT
fields before joining Sandoz.
ALLISON MURRAY, VICE PRESIDENT, MARKETING, APRIL 2002 TO PRESENT
Ms. Murray began her career in 1981 with Zale Corporation, the world's largest
retail jewelry store chain located in Irving, Texas. During her 17-year tenure
with Zale Corporation, she held various marketing and communications roles from
Coordinator to Director. In 1998, she made a career change to the financial
industry where she became the Marketing Director for Carreker Corporation
located in Dallas, Texas. There she focused on all aspects of marketing and
communications including the re-branding of the company, advertising, special
events, tradeshows, public relations, charitable giving programs, and corporate communications. She currently sits on the BAI Tradeshow Advisory Council. She holds a Bachelor of Arts degree from Eastern Illinois University in Charleston, Illinois.
FREDRICK ELLIS, VICE-PRESIDENT OF INFORMATION TECHNOLOGY & E-COMMERCE, OCTOBER
2001 TO PRESENT
From July 1999 to July 2001, Mr. Ellis was the former Network Administrator,
Systems Administrator and Web Designer for publicly traded Netcommerce Inc.,
(OTCBB:NEET) a full service internet hosting, web based development company
specializing in B2B infrastructure and data management. Prior to his career in
the technology industry, from March 1991 to July 1997, Mr. Ellis worked with the
Department of National Defense as an Officer in the intelligence and
communications division. Mr. Ellis served three six month tours of duty in the
United Nations Protection Force.
DON MICHAEL, NATIONAL SALES MANAGER, OCTOBER 2001 TO PRESENT
Mr. Michael has over 30 years experience in senior management marketing and
sales. From September 2000 to June 2001, Mr. Michael was a sales representative
for Verizon in Irving, Texas. From February 1998 to September 2000, Mr. Michael
was a loan consultant for Customer First Mortgage. From December 1996 to
February 1998, Mr. Michael served as a loan consultant for Savings of America.
Prior to that, Mr. Michael was a licensed real estate broker with Coldwell
Bankers, a mortgage broker with Washington Mutual and the national sales manager
and trainer for Zig Ziglar Corporation. Mr. Michael earned a Bachelor in
Business Administration in Marketing from the University of North Texas.
KEITH LAWRENCE, NATIONAL TRAINER, JANUARY 2002 TO PRESENT
Mr. Lawrence has over 30 years experience in senior management marketing and
sales. From 1998 to 2002, Mr. Lawrence was a sales representative for
Humitech(TM) of Florida. Prior to that Mr. Lawrence was a Produce Broker for
Sutton Trading, servicing restaurants, country clubs, etc.
DIRECTORS
PIERRE KOSHAKJI, DIRECTOR, JANUARY 2002 TO PRESENT
Mr. Koshakji has served as a Director since January 2002. Currently, Mr.
Koshakji is Chief Operating Officer of Monee Group. Prior to forming Monee, Mr.
Koshakji was President of Edge Technologies Inc., (OTCBB:EDGE) from September
2000 to January 2001. From February 1998 to December 1999, Mr. Koshakji served
as President of Odyssey Pictures Corporation (OTCBB: OPIX), a media company. Mr.
Koshakji served as the President of Entertainment Education Enterprise
Corporation, an international investment group with interests in entertainment
and technology holdings, from December 1995 to February 1998.
PAUL STEWART, DIRECTOR, APRIL 2002 TO PRESENT
Mr. Stewart has been President of PSA, a Dallas based corporate franchise
consulting firm, for over 30 years. Mr. Stewart has been a consultant for over
twenty years to the US Small Business Administration (SBA), as an A.C.E. (Active
Corps of Executives) Counselor, under the S.C.O.R.E. (Service Corps of Retired
Executives) program, specializing in franchising, entrepreneurship, and
marketing. During that time Mr. Stewart conducted over 300 seminars and
workshops. Mr. Stewart is also involved in international franchising. He has
attended the International Salon of Franchising in Paris, France, as a
consultant to European franchisors desiring to franchise in the United States
and Canada. Mr. Stewart has been an instructor for market research at Richland
College, Dallas, Texas and is a guest lecturer on advertising, marketing and
franchising at six colleges and universities in the Southwest and in Mexico.
JONATHAN KELLEY, DIRECTOR, APRIL 2002 TO PRESENT
Mr. Kelley joined the Board or Directors of Humitech(TM) in April of 2002. Mr.
Kelley has served in management and development in the Quality Service
Restaurant industry for the past 25 years. He is currently the Vice President of
operations for Baibrook Partnership, LLC, a highly recognized McDonald's
restaurant operator with 44 restaurants in the greater Dallas area.
The members of the Board of Directors receive no compensation for services rendered as members of the board.
There are no family relationships between any of Humitech(TM)'s directors and officers. There are no arrangements or understandings between any director or executive officer and any other person pursuant to which any person has been elected or nominated as a director or executive officer.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 10, 2002, information regarding shares of common stock owned by (a) each person known by management to beneficially own
more than 5% of the outstanding common stock, (b) each of Humitech(TM)'s directors, and (c) all executive officers and directors of Humitech(TM) as a group:
Name and Address of Amount and Nature of Percent of Beneficial Owner Beneficial Shares Owned(1) Ownership(2) C.J Comu 3,277,231(3) 9% Chairman and CEO Humitech(TM) International Group, Inc. 15851 Dallas Parkway, Suite 410 Addison, TX 75001 Michael Davis 266,666(4) <1% Chief Financial Officer Humitech(TM) International Group, Inc. 15851 Dallas Parkway, Suite 410 Addison, TX 75001 Jonathan Kelley 25,000 <1% Humitech(TM) International Group, Inc. Director 15851 Dallas Parkway, Suite 410 Addison, TX 75001 Pierre Koshakji 27,500 <1% Humitech(TM) International Group, Inc. Director 15851 Dallas Parkway, Suite 410 Addison, TX 75001 Paul Stewart 25,000 <1% Humitech(TM) International Group, Inc. Director 15851 Dallas Parkway, Suite 410 Addison, TX 75001 All Officers and Directors 3,621,397 10% as a group |
(1) Unless otherwise indicated, each person has sole voting and investment power
over their shares.
(2) Out of 35,419,494 shares of common stock outstanding at May 10, 2002.
(3) 1,000,000 shares are held by the Comu Family Trust
(4) 41,666 shares are held by MRD Corporation, a company Mr. Davis controls.
DESCRIPTION OF SECURITIES
The following summary is a general description of Humitech(TM)'s Certificate of Incorporation and Bylaws. This summary does not purport to be complete and is subject to, and is qualified in its entirety by, all of the provisions of the Certificate of Incorporation and Bylaws, including the definitions included in these documents.
COMMON STOCK
The authorized capital stock of Humitech(TM) is 100,000,000 shares of common stock, $.001 par value per share. As of May 10, 2002, 35,419,494 shares were currently issued and outstanding. As a holder of common stock you will be entitled to one (1) vote per share on each matter to be voted on by the shareholders of Humitech(TM).
Subject to any superior rights of any outstanding class of preferred stock of the company, the holders of common stock:
o have equal rights to dividends from funds legally available therefore,
when, as and if declared by the Board of Directors of the company;
o are entitled to share ratably in all of the assets of the company
available for distribution to holders of common stock upon liquidation,
dissolution or winding up of the affairs of the company;
o do not have preemptive, subscription or conversion rights and there are
no redemption or sinking fund provisions applicable to these shares;
and
o are entitled to one non-cumulative vote per share on all matters on
which stockholders may vote at all meetings of shareholders.
Holders of common stock of Humitech(TM) do not have cumulative voting rights, which means that the holders of a majority of these outstanding shares, voting for the election of directors, can elect all of the directors to be elected by the holders of the common stock if they so choose and in this event, the holders of the remaining shares will not be able to elect any of Humitech(TM)'s directors. There are no preemptive rights.
PREFERRED STOCK
Humitech(TM)'s Articles of Incorporation authorize the Board of Directors to issue 20,000,000 shares of preferred stock, $0.001 par value per share, of which no shares are currently issued and outstanding. The preferred stock may be issued in the future in one or more classes or series, each class or series of which shall have the voting rights, designations, preferences and relative rights as fixed by resolution of Humitech(TM)'s Board of Directors, without the consent or approval of its shareholders. The preferred stock may rank senior to the common stock as to dividend rights, liquidation preferences, or both, and may have extraordinary or limited voting rights.
TRANSFER AGENT
Signature Stock Transfer, located at 14675 Midway Road, Suite 221, Addison, Texas 75001, will act as the transfer agent for Humitech(TM).
EXPERTS
Turner, Stone & Company, L.L.P. of Dallas, Texas have audited Humitech(TM)'s consolidated financials for the year ended December 31, 2001.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act 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 this indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against these 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 proceeding) is asserted by a 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 whether indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of this issue.
ORGANIZATION WITHIN LAST FIVE YEARS
Not applicable.
DESCRIPTION OF BUSINESS
COMPANY OVERVIEW AND BACKGROUND
Humitech(TM) International Group, Inc. was incorporated in the State of Nevada on January 5, 2000, as Airsopure International Group Inc., a wholly owned subsidiary of Airtech International Group, Inc. ("AIRG"), a publicly traded company. On October 31, 2001, AIRG distributed to its stockholders by means of a tax-free spin-off one share of Airsopure International Group Inc.'s common stock for every ten shares of AIRG owned by the stockholders. The shares distributed represented 100% of AIRG's ownership interest in Airsopure International Group Inc. The company resolved to change its name to Humitech(TM) International, Inc. on August 1, 2001.
Prior to October 1, 2001, Humitech(TM) was inactive. Humitech(TM) is now engaged in the manufacture and sale of humidity control products through an exclusive distributorship throughout the United States and Canada. These products are sold as panels to be used within refrigerated environments to regulate humidity. Humitech(TM) currently has trademark registration pending on the HUMISORB(TM) name and is planning to filed a trademark registration application on the FoodSoFresh(TM) name.
Humitech(TM)'s wholly-owned subsidiary, Health Tech, Inc., a Nevada corporation, has been inactive since inception. However, as funding and opportunities become available, if at all, Humitech(TM) is interested in marketing a health and beauty product line through Health Tech, Inc. Further, in early 2002, Humitech(TM) incorporated FoodSoFresh(TM), Inc. and Humitech Franchise Corporation(TM) in the state of Nevada to operate as wholly-owned subsidiaries of the company. FoodSoFresh(TM) will be used to market the products and fund raising programs of Humitech(TM), and Humitech Franchise Corporation(TM) will market the franchise concept offered by Humitech(TM). These subsidiaries have not yet commenced operations.
BUSINESS OF HUMITECH
The main component of the Humitech(TM) humidity control system is the mineral inside of the panel, called HUMISORB(TM) Sorbite, which is an unrefined mineral that controls humidity. The source of the HUMISORB(TM) Sorbite is a mine discovered in 1978 by two miners. Since then the product has been sold world-wide through a multitude of private dealer distributors until October 2001, when Humitech(TM) obtained the mineral and distribution rights from a private company that controls the lease from the United States Government. Within this leased area, the occurrence of the HUMISORB(TM) Sorbite is present in economically viable amounts. When it is extracted from the earth, HUMISORB(TM) Sorbite is reduced to granular form and packaged in dust-tight air-flow containers. HUMISORB(TM) Sorbite consists of silica, aluminum oxide, calcium oxide, and other minerals. This substance has the unique ability to absorb 40% moisture by weight and desorbs the same quantity. This substance is known to exist only within the area leased by Humitech(TM).
When used in a refrigerated environment, HUMISORB(TM) Sorbite will regulate humidity at optimal levels for better preservation of food. HUMISORB(TM) Sorbite is non-toxic and not restricted in usage to defined temperature ranges. HUMISORB(TM) Sorbite offers the following benefits:
o It lowers the ambient temperature of enclosed refrigerated environments
by decreasing the humidity within the refrigerated environments.
o It increases the storage life of food by decreasing shrinkage in food
generally found as a result of humidity within the refrigerated
environment. Refrigerated environments that contain deficient amounts
of humidity will cause perishable foods to dry out, creating weight
loss.
o It reduces the transfer of odors by trapping airborne bacteria that can
cause odors.
o Humidity contains latent heat. Once this excess humidity is removed,
defrost cycles can be reduced.
o It reduces the spread of bacteria in refrigerated storage areas. Though
the use of HUMISORB(TM) Sorbite, the refrigerated environment will
contain less humidity. Walls, floors and surfaces of these containers
become drier. This results in an environment less friendly to bacteria.
o It increases the life of compressors and motors associated with
refrigeration by removing the latent heat in the form of humidity.
Accordingly, compressors do not have to operate as long, and therefore,
reduce the wear and tear associated with longer cooling cycles.
o It decreases energy use by reducing excess humidity, which reduces the
compressor running time.
HUMISORB(TM) Sorbite is the only known natural mineral that has the ability to absorb and desorb moisture. When applied to a refrigerated environment, laboratory tests sponsored by Humitech(TM) have shown HUMISORB(TM) Sorbite is able to absorb up to 48% of its own weight in moisture. HUMISORB(TM) Sorbite's unique mineralogy allows absorption during periods of high humidity and de-absorption during periods of low humidity. These attributes allow HUMISORB(TM) Sorbite to constantly regulate humidity allowing for an optimal level of humidity for the storage and preservation of foods and perishables. When introduced into a refrigerated environment, HUMISORB(TM) Sorbite takes only approximately 48 hours for the system to begin functioning properly.
Humitech(TM) currently markets a refrigeration mounted HUMISORB(TM) unit for both commercial and residential usage. Humitech(TM) has already shipped products throughout the world and has made installations in some of the most recognized establishments within the United States including:
o Marriott Hotel - Boca Raton, Florida
o Hilton Hotel - Sunrise, Florida
o Hyatt Seasons - Pompano Beach, Florida
o Smith & Wollenstky - South Beach, Florida
o PF Changs - North Miami Beach
o TGI Fridays - Pennsylvania
o Carrabas - Texas
o Outback Steakhouse - Dallas, Texas
o Legal Seafood - Sawgrass and Boca Raton, Florida
o Healthsouth - Sunrise, Florida
o Spago - Los Angeles, California
o Four Seasons Hotel - San Diego, California
o Scottdale Culinary Academy
o Wolfgang Puck's
o The Bellagio, Las Vegas, Nevada
o Harrah's, Las Vegas, Nevada
COMMERCIAL USE OF THE HUMIDITY CONTROL SYSTEMS
Humitech(TM) provides humidity control systems to restaurants, stores, florists, medical facilities, and any other businesses that use coolers to keep their products fresh. Humidity control can save businesses money by:
o helping to control energy costs,
o increasing quality, and
o extending the shelf life of their fresh products.
Without humidity control, most refrigeration units operate above 90% relative humidity. This causes excess energy consumption and ice buildup on the cooling fins. As the refrigeration unit tries to compensate for the lack of heat transfer due to the ice buildup, the compressor works harder and the defrosting cycles tend to become longer, raising electrical power usage. The net effect reduces the efficiency of the refrigeration unit, and causes wider fluctuations in the operating temperature range, and this, in return, adversely affects the food being stored.
Too low of a level of humidity is also detrimental. When the relative humidity drops below 80%, moisture is drawn out of meats and vegetables, which decreases their weight and shortens their shelf life. This is prevented by regulatory characteristics of the HUMISORB(TM) Humidity Control System.
Uncontrolled humidity is present in any type of cooler, in any geographic location. Outside conditions like heat and ambient humidity are not necessarily direct indicators of the humidity conditions inside the cooler. Both new and old coolers are affected equally.
Significantly, and unlike all other known water-absorbing compounds, HUMISORB(TM) Sorbite will also desorb the same quantity, thus, keeping humidity constant. A chemical composition analysis performed on the compound by Rockwell Science Center, a scientific testing facility located in California, concluded that although the product is most likely composed of common compounds, its properties would be extremely difficult to duplicate without extensive research to separate and identify the individual compounds that make up the mixture. The same experts conclude that this exact composition, heat and pressure seldom repeat themselves.
HUMITECH(TM)'S PRODUCTS
SERIES HT-100: The Series HT-100 panel is a portable unit designed for the small refrigeration application that is designed to absorb/desorb gases and reduce temperature and reduce growth of bacteria.
SERIES HT-200: The Series HT-200 panel is a large commercial unit designed for the refrigeration application that is designed to absorb/desorb gases and reduce temperature.
The HT-200 system is rented on a monthly basis. There are no material up-front costs.
DISTRIBUTION METHODS
Humitech(TM) is focused on the development and sale of humidity control products utilizing the HUMISORB(TM) Sorbite mineral in A refrigerated environment. Humitech(TM) is targeting several distribution channels for direct exposure of its products and teaching consumers about the costs and solutions for indoor air contamination. Management is using a carefully mapped multi-channel approach to market its product line. For example, the following channels are being utilized:
1. FRANCHISING - The Humitech(TM) humidity control system will be marketed through a franchise distributorship program where the members purchase the panels and market them to business owners on a monthly rental basis. This makes it readily affordable for the end user and provides a long-term residual income to the member. Presently, Humitech(TM) has signed up over twenty-five markets which include:
o Houston, Texas,
o San Antonio, Texas,
o Austin, Texas,
o Las Vegas, Nevada,
o San Diego, California,
o Orlando, Florida,
o Chicago, Illinois,
o Nashau, New Hampshire,
o Philadelphia, Pennsylvania,
o New Jersey
and is currently reviewing in excess of 100 applications from members desiring to market the Humitech(TM) humidity control system.
2. INTERNATIONAL LICENSES - Humitech(TM) is negotiating licensing the distribution rights to its name and technology in the countries around the world. Humitech, now that it has a full product line to offer, intends to more aggressively pursue international distribution relationships. All sales will be made in U.S. dollars, FOB Dallas. Distribution rights in foreign countries sell for a minimum of $100,000.
3. MANUFACTURER'S REPRESENTATIVES - Humitech(TM) estimates that there are approximately 260,000 HVAC Contractors in the U.S. alone. This unconsolidated group of professionals may account for a significant amount of the current sales of humidity control and cleaning units. Humitech(TM) will make its products available to them, including the Series HT-200. Humitech(TM) believes that the role of the contractor is well suited to offer a humidity control product.
4. INTERNET - Humitech(TM) has created a Strategic Marketing/ Sales Automation System for its home and commercial markets, which includes the web's first traffic generating software designed to support its member's own marketing and advertising campaigns. This package includes
software which turns any website into a dynamic, self-replicating website.
5. RETAIL DISTRIBUTION - Humitech(TM) has developed several strategies, which it believes suitable for retail distribution. Most notable are the HT-100 panels, which have a low price point and appeal to the broad market of consumers.
6. HOME SHOPPING/ INFOMERCIAL - Management of Humitech(TM) intends to distribute the Series HT-100 via a homeshopping medium like QVC or the Home Shopping Network.
7. JOINT VENTURE - Humitech(TM) has begun discussions with several possible joint venture partners for international manufacturing, outsourcing, marketing and distribution. In some countries, the air quality is dramatically worse than it is in the U.S. and Humitech(TM) believes that its products would be highly marketable in these areas. These countries include, but are not limited to Chile, Brazil and Mexico.
8. NETWORK MARKETING - One of Humitech(TM)'s target markets is the residential unit market (HT-100), a worldwide market for small humidity control products. Entry for this product will be gained through relationships with both retail organizations and large network marketing firms. The advantage of this channel is that Humitech(TM) will be able to private label product and drop ship large trucks of finished manufactured goods straight to the network marketing company's warehouse, not acting as the final distribution point or returns center.
9. NATIONAL ACCOUNTS - Humitech(TM) will pursue relationships with national chains of restaurants, hotels, hospitals and other known clients plus many others. Humitech(TM) is pursuing accounts with national hotel chains, plus major cruise lines and several hospitals. It is the intent of Humitech(TM) to pursue these accounts for national distribution as well as an added incentive and revenue source to the franchise network.
10. TRADE SHOWS - There are approximately 24,000 trade shows in the U.S. Some of the shows have begun to experiment with various new business opportunities showcases. It is the intent of Humitech(TM) to demonstrate its unique technology with the intent to seek national account distributorships as well as new prospective franchisees.
SIGNIFICANT AGREEMENTS
Exclusive Distribution and Resale Agreement
On October 1, 2001, Humitech(TM) entered into an exclusive distributorship agreement with HUMICO, Inc., which granted it the right to purchase humidity control panels at prices and terms as published periodically by HUMICO. Further, HUMICO granted Humitech(TM) the right to display, promote and sell the products to customers located within the United States and Canada, excluding a one hundred mile radius around the city of Los Angeles and excluding the state of Hawaii. The agreement is for a period of five years and automatically renews for consecutive three-year terms unless a 30-day notification to the contrary is
given. Humitech(TM) also has the right of first refusal to enter into additional distributorship agreements for the rights to foreign markets on an as "deemed necessary basis."
In exchange for these rights, Humitech(TM) is required to purchase a minimum of 20,000 panels at various during the calendar year ending December 31, 2002. In addition, as a part of the distributorship agreement, Humitech(TM) acquired a 1% interest in the mineral rights to the sorbite mineral used in the humidity control panels. In exchange for 1% of the mineral rights, Humitech(TM) issued 200,000 shares of Humitech(TM) common stock, representing $200,000 in exchange for these mineral rights, to HUMICO.
International Sales Distributor Agreement
On October 1, 2001, Humitech(TM) entered into an international distributor agreement with an Austrian based company, which granted the company the right to purchase Humitech(TM)'s commercial products at prices and terms as published periodically by the Humitech(TM) and the right to display, promote and sell the products to customers located within Austria. The agreement is for a period of three years and automatically renews for consecutive one-year terms unless a 30-day notification to the contrary is given. The agreement also requires purchases of Humitech(TM)'s commercial products totaling $300,000, $400,000 and $500,000 during the twelve-month periods ending October 31, 2002, 2003, and 2004, respectively.
Professional Services Agreements
On March 1, 2002, Humitech(TM) entered into a professional services agreement with Buyside Partners LLC, www.buysidepartners.com, a Dallas based company, who will provide investor relations services to Humitech(TM). The agreement is for a period of one year and automatically renews for consecutive one-year terms unless a 30-day notification to the contrary is given. The fee for Buyside Partners LLC's services is $6,300 per month for one year including a $5,000 retainer. Humitech(TM) has paid for the first twelve months of service with 100,000 shares of company stock.
On April 13, 2002, Humitech(TM) entered into a professional services agreement with Paul Stewart Associates, Inc., a Dallas based law firm, to prepare the franchise documents for Humitech(TM)'s commercial humidity control systems. The fee for this service was $10,000, which has already been paid by Humitech(TM).
Competition
Humitech(TM) is aware of two competitors producing products similar to Humitech, Katch All and Gonzo Fridge. Katch All produces a product called Fridge Care, a product which controls and improves the quality of walk-in reach in coolers. Like Humitech(TM)'s product, Fridge Care lowers humidity and air temperature, reduces energy consumption and mold and bacteria generation and eliminates odor transfer. The main difference between Fridge Care and the Humitech(TM) product is that Humitech(TM) has designed its product for household as well as commercial use. The Humitech(TM) panels naturally absorbs and desorbs humidity creating the ideal humidity level.
Gonzo Fridge produces a product called Freezer Odor Eliminators, which is composed of all-natural odorless volcanic crystals that rid the home or car of unpleasant odors by attracting odors like a magnet. The Freezer Odor Eliminators are contained in mesh bags that range from eight ounces to two pounds. Humitech(TM)'s product differs from the Freezer Odor Eliminators as it controls humidity and is exclusively made for use in a refrigerated environment.
EMPLOYEES OF HUMITECH
Humitech(TM) currently has eleven full time employees and one contract employee.
REPORTS TO SECURITY HOLDERS
Humitech(TM) will voluntarily send an annual report, including audited financial statements, to its security holders.
Humitech(TM) will file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission (SEC). The public may read and copy any materials Humitech(TM) files with the SEC at the SEC's Public Reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that web site is http://www.sec.gov.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
BACKGROUND AND GENERAL
Humitech(TM) International Group, Inc. was incorporated in the state of Nevada on January 5, 2000 under the name Airsopure International Group, Inc. as a wholly owned subsidiary of Airtech International Group, Inc. (AIRG), a publicly traded company (OTCBB: AIRG). On October 31, 2001, AIRG distributed to its stockholders by means of a tax free spin off one share of the Humitech(TM)'s common stock for every ten shares of AIRG owned by the stockholders. The shares distributed represented 100% of AIRG's ownership interest in Humitech(TM) and subsequent to the distribution, Humitech(TM) and AIRG did not have any other business relationships or obligations to each other. Prior to October 31, 2001, Humitech(TM) was inactive. Humitech(TM) IS now engaged in the manufacture and sale of humidity control products through an exclusive distributorship throughout the United States and Canada. This activity constitutes Humitech(TM)'s only operating segment and represents the new operations of the company for the period of October 1, 2001 through March 31, 2002.
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2001 AND THE QUARTERLY PERIOD ENDED MARCH 31, 2002
REVENUES
Humitech(TM)'s consolidated total revenues for the year ending December 31, 2001 and the quarterly period ending March 31, 2002 were $104,491 and $458,190, respectively. In year ended December 31, 2001, the business only operated and generated revenues in the last quarter. As of the date of this prospectus, the revenue stream has primarily been from the sale of distributorships. Humitech(TM) is expecting the source of the revenue stream to change by the third quarter of 2002 as it anticipates signing up national accounts and procuring home unit sales of its product.
COSTS AND EXPENSES
Humitech(TM)'s consolidated total costs and expenses at December 31, 2001 were $302,258 and $420,625 through the first quarter of 2002. The major components of this were:
Salaries and wages decreased $37,280 or 38% from $97,480 at December 31, 2001 to $60,200 for March 31, 2002. This is expected to increase as the result of many factors including increased commissions on sales of Humitech(TM)'s products. In addition, Humitech(TM) increased its staff size and began paying salaries in 2002.
Cost of sales increased $69,849 or 197% to $105,382 for March 31, 2002 as compared to $35,533 for December 31, 2001. This increase is due to the 390% increase in product sales. The percentage cost of goods sold decreased from 34% of sales at December 31, 2001 to 21% of sales for March 31, 2002.
All other expenses have seen minimal changes.
CAPITAL EXPENDITURES
Humitech(TM) does not have any large capital expenditures planned for fiscal year 2002. It is considering product line expansion, which will require approximately $400,000 in capital expenditures. The final decision, however, to expand the product line will be based on estimated sales of the products which will enable it to recover the capital expenditures within nine to twelve months. Any minor capital expenditures will be met with cash on hand. In the event its product sales increase beyond current manufacturing capacities, then additional capital expenditures will be required to increase production capacity. Humitech(TM) anticipates, however, that any additional capital expenditures to increase production capacity would not exceed $500,000. These capital expenditures would also be offset by increased product sales which created the need to increase Humitech's current manufacturing capacities.
Liquidity And Capital Resources
At December 31, 2001 and March 31, 2002, Humitech(TM) had an accumulated deficit of $197,767 and $160,202, respectively.
At December 31, 2001, Humitech(TM) had total current assets of $199,891 less current liabilities of $127,964 which resulted in net current assets of $71,927. As of March 31, 2002, Humitech(TM) had total current assets of $344,469 less current liabilities of $190,261 which resulted in net current assets of
$154,208. It expects to have sufficient funds necessary to finance the manufacture, distribution and sale of its products including management and advertising support for fiscal year 2002. Humitech(TM) also expects that its cash balance and operations are adequate to sustain its continued operations during fiscal year 2002.
Humitech(TM)'s goal is to sign up and build its distributors during fiscal year 2002. While generating franchise fees, these outlets are expected to have a positive impact on product sales. Humitech(TM)'s estimated franchise sales are based upon a good faith estimate of the market for Humitech(TM)'s franchises and products. However, Humitech(TM)'s franchise sales and distributorship sales may not meet its goals.
Humitech(TM) also expects sales of its products to increase in fiscal year 2002. For the first quarter of year 2002, its product sales were $458,190 in comparison to December 31, 2001 where its product sales were approximately $104,491. With the increase in sales Humitech(TM) also experienced a net profit of $37,565 for the first quarter ended March 31, 2002, as compared to a net loss of $197,767 for the year ended December 31, 2001. This trend indicates the sales of its existing product line is increasing. Although Humitech(TM) believes its sales represent a positive trend, Humitech(TM) cannot assure you that this positive trend will continue.
Humitech(TM)'s sales projections are based upon its good faith estimates of the marketability of its products and it may not be to achieve these results during fiscal year 2002.
If all of the shares in this offering are subscribed, Humitech(TM) believes that the net proceeds from this offering and internally generated funds may be adequate to satisfy Humitech(TM)'s working capital needs for the next twelve months. However, Humitech(TM) may not be able to sell all of the shares in this offering, if any. Further, if Humitech(TM)'s current caSH and revenues from franchise and product sales are insufficient to fund its continued growth, it will rely on its external funding sources to provide continued liquidity, which may not be available on reasonable terms, if at all.
During fiscal year 2002, Humitech(TM) intends to focus on the production, marketing and sale of its existing line of humidity control products. For this reason, Humitech(TM) does not project significant expenditures during fiscal year 2002 on its products which are in production and sale. It believes that its existing product line is sufficient to sustain it future sales growth. There are no current plans to increase the number of employees of Humitech(TM) in the next twelve months.
Humitech(TM) does not have a large capital expenditures program planned for fiscal year 2002. Therefore, Humitech(TM) believes that its projected increase in franchise and product sales combined with funds generated from external financing sources will be sufficient to offset any cash losses from operations. If its current and new product sales, distributor/franchise sales, new areas of distribution sales and funds from its external sources are insufficient to maintain operations, the resulting lack of capital could force Humitech(TM) to substantially curtail or cease its operations. Any curtailment of operations would have a material adverse effect on its ability to manufacture and distribute its products and its profitability.
Material Commitments
Operating Leases
Humitech(TM) is currently obligated under noncancelable operating lease for its Dallas office which expires in October 2005. The office lease also provides for payment of Humitech(TM)'s share of operating costs. Minimum future rental payments required under the above operating leases total $197,604. During the year ended December 31, 2001, rent expense totaled $5,534.
Employment Agreements
Humitech(TM) is currently obligated under three employment agreements with officers for annual compensation of $346,000, to be raised to $400,000 in the event the company conducts a successful IPO, and discretionary bonuses to be determined by its board of directors. The agreements expire through October 2011. At December 31, 2001, $62,500 was accrued and payable under these agreements. In addition, the agreements grant the officers options to purchase 2,000,000 common stock shares.
Distributor Agreement
On October 1, 2001, Humitech(TM) entered into a distributorship agreement with HUMICO, Inc., which granted it the right to purchase humidity control panels at prices and terms as published periodically by the distributor. Further, HUMICO granted Humitech(TM) the right to display, promote and sell the products to customers located within the United States and Canada, excluding a one hundred mile radius around the city of Los Angeles and excluding the state of Hawaii. The agreement is for a period of five years and automatically renews for consecutive three-year terms unless a 30-day notification to the contrary is given. Humitech(TM) also has the right of first refusal to enter into additional distributorship agreements for the rights to foreign markets on an as "deemed necessary basis."
In exchange for these rights, Humitech(TM) is required to purchase a minimum of 20,000 panels at various prices per panel during the calendar year ending December 31, 2002. In addition, as a part of the distributorship agreement, Humitech(TM) acquired a 1% interest in the mineral rights to the sorbite mineral used in the humidity control panels. In exchange for 1% of the mineral rights, Humitech(TM) issued 200,000 shares of Humitech(TM) common stock, representing $200,000 in exchange foR these mineral rights, to HUMICO.
International Sales Distributor Agreement
On October 1, 2001, Humitech(TM) entered into an international distributor agreement with an Austrian based company, which granted the company the right to purchase Humitech(TM)'s commercial products at prices and terms as published periodically by the Humitech(TM) and the right to display, promote and sell the products to customers located within Austria. The agreement is for a period of three years and automatically renews for consecutive one-year terms unless a 30-day notification to the contrary is given. The agreement also requires purchases of the company's commercial products totaling $300,000, $400,000 and $500,000 during the twelve-month periods ending October 31, 2002, 2003, and 2004, respectively.
Professional Services Agreement
On March 1, 2002, Humitech(TM) entered into a professional services agreement with Buyside Partners LLC, a Dallas based company, who will provide investor relations services to Humitech(TM). The agreement is for a period of one year and automatically renews for consecutive one-year terms unless a 30-day notification to the contrary is given. The fee for Buyside Partners LLC's services is $6,300 per month for one year including a $5,000 retainer. Humitech(TM) has paid for the first twelve months of service with 100,000 shares of company stock.
DESCRIPTION OF PROPERTY
Humitech(TM) leases a corporate office with 3,000 square feet, located at 15851 Dallas Parkway, Suite 410, Addison, Texas 75001. This lease is noncancelable and expires October 31, 2005. Payment on the lease is as follows:
o July 1,2002 - October 31 2002-$3742.50 a month
o Nov. 1, 2002 - Oct 31, 2003-$4740.50 a month
o Nov. 1, 2003 - Oct 31, 2004-$5114.75 a month
o Nov. 1, 2004 - Oct 31, 2005-$5364.25 a month
Upon expiration of the lease, Humitech(TM) will have the right to renew the lease for an additional 36 months at then prevailing market rates.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Organization Within Last Five Years."
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Humitech(TM) is not currently trading on any public market.
There are 2,000,000 shares of common stock presently subject to options. Although it has no agreement to do so, Humitech(TM) is registering 4,644,108 shares of common stock for the selling stockholders of the company.
There are approximately 1,562 holders of Humitech(TM) common stock. Humitech(TM) has not paid cash dividends on its common stock and does not intend to do so in the foreseeable future. Humitech(TM) intends to retain earnings, if any, to provide funds for its operations. Future dividend policy will be determined by the board of directors based upon conditions then existing including Humitech(TM)'s earnings and financial condition, capital requirements and other relevant factors.
EXECUTIVE COMPENSATION
The following table presents, for the last fiscal year, the annual compensation earned by the chief executive officer and the most highly compensated executive officers and significant employees of Humitech(TM) for the year ended December 31, 2001:
Summary Compensation Table
Annual Long Term
Compensation Compensation
------------------------- ------ -------------- ------- ----------------------
Name and Principal Year Salary Bonus Stock Awards or
Position Other Compensation
------------------------- ------ -------------- ------- ----------------------
C.J. Comu, President 2001 $62,500(1) 0 Options to purchase
and CEO 1,000,000 shares of
common stock at $.01
per share(2)
------------------------- ------ -------------- ------- ----------------------
Michael R. Davis, Chief 2001 0 0 Options to purchase
Financial Officer 500,000 shares of
common stock at 80%
of the fair market
value (3)
------------------------- ------ -------------- ------- ----------------------
Michael G. Ryan, 2001 0 0 Options to purchase
Executive Vice- 500,000 shares of
President common stock at 80%
of the fair market
value (3)
------------------------- ------ -------------- ------- ----------------------
|
(1) The amount has not yet been paid to Mr. Comu. Mr. Comu has agreed to defer
payment of salary until the company begins to generate substantial revenue.
(2) These options expire October 1, 2006.
(3) These options become exercisable after October 1, 2002 and expire October 1,
2004.
Humitech(TM) entered into employment agreements on October 1, 2001 with its key employees, Messrs. Comu, Davis and Ryan, to serve in the positions set forth above. Mr. Comu's employment agreement is for a term of ten years, unless renewed for an additional ten year period. Mr. Comu shall be paid an annual salary of $250,000 per year plus an incentive bonus of $100,000 per year. Mr. Davis's employment contract is for five years, unless renewed in addition five year increments. Mr. Davis will be paid an annual salary of $60,000 in fiscal 2002, to be raised to $90,000 in the event the company conducts a successful IPO. Mr. Davis will also be compensated with performance based bonuses and is entitled to options to purchase 500,000 shares of common stock at an exercise price of 20% discount on the fair market value of the stock.
According to the terms of Mr. Ryan's employment agreement, for a three year period unless later renewed, Mr. Ryan will be paid an annual salary of $36,000 in fiscal 2002, to be raised to $60,000 in the event the company conducts a successful IPO. Mr. Ryan will also be compensated with performance based bonus and commissions on product and distributor sales. In addition, Mr. Ryan is entitled to options to purchase 500,000 shares of common stock at an exercise price of 20% discount on the fair market value of the stock.
Compensation of Directors
Directors of Humitech(TM) will be paid 25,000 shares of Humitech(TM) common stock in 2002, plus an option to purchase 25,000 shares of common stock for an exercise price of 20% of the current market value for Humitech(TM) common stock.
The compensation of officers and directors is subject to review and adjustment from time to time by the board of directors.
2002 COMPANY-WIDE STOCK OPTION PLAN
Humitech(TM) adopted the 2002 Company-Wide Stock Option Plan to encourage ownership of the common stock of Humitech(TM) by all employees of the company and its subsidiaries. This plan is intended to provide an incentive for employees to exert their maximum efforts to achieve the successful operation of the company and is intended to assist the company in attracting and retaining talented personnel by providing an opportunity to benefit from the increased value of the company. There are 1,000,000 shares reserved for option exercise under the Plan. No employee will be granted options under the Plan that would result in the employee receiving more than five percent of the maximum number of shares available for issuance.
The exercise price for each option shall be 100% of the fair market value of a share on the date the option is granted. Each options vests and becomes exercisable in annual twenty-five percent installments commencing on the first anniversary of the date of grant. Unless otherwise provided in the applicable agreement, each option granted hereunder shall have a term of two years, and renewable for another two years. These options are not subject to dilution.
No shares have been issued under the Stock Option Plan.
HUMITECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
YEAR ENDED DECEMBER 31, 2001
C O N T E N T S
AUDITORS' REPORT..............................................................1 CONSOLIDATED BALANCE SHEET...................................................2-3 CONSOLIDATED STATEMENT OF OPERATIONS..........................................4 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY................................5 CONSOLIDATED STATEMENT OF CASH FLOWS..........................................6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..................................7-13 |
The Board of Directors and Stockholders
Humitech International Group, Inc.
and Subsidiaries
Addison, Texas
We have audited the accompanying consolidated balance sheet of Humitech International Group, Inc. and subsidiaries as of December 31, 2001, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended. 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 the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Humitech International Group, Inc. and subsidiaries at December 31, 2001, and the consolidated results of its operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
/s/ Turner, Stone & Company, L.L.P. Certified Public Accountants Dallas, Texas March 4, 2002 |
HUMITECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 2002 AND DECEMBER 31, 2001
Assets
------
March 31, December 31,
2002 2001
----------- -----------
(unaudited)
Current assets:
Cash $ 130,598 $ 123,940
Accounts and employee receivables 160,503 7,515
Advances to AIG - 20,116
Inventory 49,638 44,590
Prepaid expenses 3,730 3,730
----------- -----------
Total current assets 344,469 199,891
Property and equipment, net of accumulated
depreciation of $5,073 and $1,797,
respectively 68,862 32,822
Mineral rights, net of accumulated
amortization of $10,000 and $0, respectively 190,000 200,000
----------- -----------
$ 603,331 $ 432,713
=========== ===========
|
The accompanying notes are an integral part of the consolidated financial statements.
HUMITECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 2002 AND DECEMBER 31, 2001
March 31, December 31,
2002 2001
----------- -----------
(unaudited)
Current liabilities:
Accounts payable, trade $ 107,761 $ 41,594
Accrued salaries and wages 62,500 62,500
Advances from stockholder 20,000 20,000
Current portion of note payable - 3,870
----------- -----------
Total current liabilities 190,261 127,964
Long term note payable, less current portion - 21,944
----------- -----------
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, $.001 par value, 20,000,000
shares authorized, no shares issued or
outstanding, no rights or preferences
determined - -
Common stock, $.001 par value, 100,000,000
shares authorized, 8,420,595 and 8,207,595
shares issued and outstanding, respectively 8,421 8,208
Additional paid in capital 564,851 472,364
Accumulated deficit (160,202) (197,767)
----------- -----------
Total stockholders' equity 413,070 282,805
----------- -----------
$ 603,331 $ 432,713
=========== ===========
|
The accompanying notes are an integral part of the consolidated financial statements.
HUMITECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2002
YEAR ENDED DECEMBER 31, 2001
March 31, December 31,
2002 2001
----------- -----------
(unaudited)
Revenues:
Product sales $ 458,190 $ 103,643
Other revenues - 848
----------- -----------
Total revenues 458,190 104,491
----------- -----------
Costs and expenses:
Compensation expense 60,200 97,480
Cost of sales 105,385 35,533
Advertising and marketing 4,029 14,183
Depreciation and amortization 13,276 1,797
General and administrative expenses 237,735 153,265
----------- -----------
Total costs and expenses 420,625 302,258
----------- -----------
Income (loss) from operations 37,565 (197,767)
Interest expense - -
----------- -----------
Income (loss) before income taxes 37,565 (197,767)
Provision for income taxes - -
----------- -----------
Net income (loss) $ 37,565 $ (197,767)
=========== ===========
Income (loss) per common share - basic $ .01 $ (.03)
=========== ===========
|
The accompanying notes are an integral part of the consolidated financial statements.
HUMITECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2002
YEAR ENDED DECEMBER 31, 2001
Common Stock Paid In Accumulated
Shares Amount Capital Deficit Total
----------- ----------- ----------- ----------- -----------
Balance at December 31, 2000 - $ - $ - $ - $ -
Issuance of common stock
dividend in spin-off
from AIG 4,962,761 4,963 (4,963) -
Issuance of common stock
for cash 1,973,000 1,973 277,527 279,500
Issuance of common stock
in exchange for services 1,071,834 1,072 1,072
Issuance of common stock
for mineral rights 200,000 200 199,800 200,000
Net loss during the year (197,767) (197,767)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 2001 8,207,595 $ 8,208 $ 472,364 $ (197,767) $ 282,805
Issuance of common stock
for cash 213,000 213 92,487 92,700
Net income (unaudited) 37,565 37,565
----------- ----------- ----------- ----------- -----------
Balance at March 31, 2002
(unaudited) 8,420,595 $ 8,421 $ 564,851 $ (160,202) $ 413,070
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of the consolidated
financial statements.
F-5
|
HUMITECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2001
March 31, December 31,
2002 2001
------------- -------------
(unaudited)
Cash flows from operating activities:
Net loss $ 37,565 $ (197,767)
Adjustments to reconcile net income to cash
Depreciation and amortization 13,276 1,797
Stock payments to employees and consultants - 1,072
Changes in operating assets and liabilities
Accounts receivable (152,988) (215)
Inventory (5,048) (44,590)
Prepaid expenses - (3,730)
Accounts payable 66,167 41,594
Accrued salaries and wages - 62,500
------------- -------------
Net cash used in operating activities (41,028) (139,339)
------------- -------------
Cash flows from investing activities:
Purchase of property and equipment 4,191 (34,619)
Advances to employees (7,300)
Repayment of employee advances (3,275) -
Advances to AIG - (20,116)
Repayment of AIG advances (20,116) -
------------- -------------
Net cash used in investing activities (19,200) (62,035)
------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock 92,700 279,500
Proceeds from note payable - 25,814
Repayment of note payable (25,814) -
Advances from stockholder - 20,000
------------- -------------
Net cash provided by financing activities 66,886 325,314
------------- -------------
Increase in cash 6,658 123,940
Cash at beginning of period 123,940 -
------------- -------------
Cash at end of period $ 130,598 $ 123,940
============= =============
Non-cash investing and financing activities
-------------------------------------------
Common stock issued for mineral rights $ - $ 200,000
Note payable exchanged for transportation equipment $ 25,814 $ -
The accompanying notes are an integral part of the consolidated
financial statements.
F-6
|
HUMITECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Humitech International Group, Inc. (HIG) (the Company) was incorporated in the state of Nevada on January 5, 2000 under the name Airsopure International Group, Inc. (ASP) as a wholly owned Subsidiary of Airtech International Group, Inc. (AIG), a publicly traded company (symbol AIRG). On October 31, 2001, AIG distributed to its stockholders by means of a tax-free spin-off one share of the Company's common stock for every ten shares of AIG owned by the stockholders. The shares distributed represented 100% of AIG's ownership interest in the Company and subsequent to the distribution the Company and AIG have no other business relationships or obligations to each other. Prior to October 31, 2001, the Company was inactive. The Company is now engaged in the manufacture and sale of humidity control products through an exclusive distributorship (Note 4) throughout the United States and Canada. This activity constitutes the Company's only operating segment and represents the new operations of the Company for the period October 1 through December 31, 2001. On March 7, 2002, ASP changed its name to HIG.
The accompanying consolidated financial statements include the general accounts of the Company and its wholly owned but inactive Subsidiaries, Health Tech, Inc., FoodSoFresh, Inc. and Humitech Franchise Corp. which has a fiscal year end of December 31. All material intercompany accounts, balances and transactions have been eliminated in the consolidation.
The notes to the interim unaudited financial statements do not present all disclosures required under generally accepted accounting principles but instead, as permitted by Securities and Exchange Commission regulations, presume that users of the interim unaudited financial statements have read or have access to the December 31, 2001 audited financial statements and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context.
The interim unaudited financial statements included herein reflect all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary to a fair presentation of the results for interim periods. The results of operations for the three month periods ended March 31, 2002 are not necessarily indicative of the results to be expected for the full year.
Inventories are carried at the lower of cost or net realizable value (market) and include component parts used in the assembly of the Company's line of air humidifier units. The costs of inventories are based upon specific identification of related direct costs.
At December 31, 2001, inventories consisted of the following:
Finished goods $ 43,340
Component parts 1,250
------------
$ 44,590
============
|
HUMITECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Property and equipment are stated at cost less accumulated depreciation. Depreciation of property and equipment is currently being provided by accelerated methods for financial and tax reporting purposes over estimated useful lives of five to seven years.
Revenues from the Company's operations are recognized at the time products are shipped or services are provided. Revenues from distributorship sales are recognized at the time all material services relating to the sale of a distributorship have been performed by the Company.
Advertising dollars are invested in trade shows, travel and distributorship networking and are expensed as incurred. For the year ended December 31, 2001, advertising expenses totaled $14,183.
The preparation of financial statements in conformity with 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.
For purposes of the statement of cash flows, cash includes demand deposits, time deposits and short-term cash equivalent investments with maturities of less than three months. None of the Company's cash is restricted.
Basic loss per share are based upon 7,282,345 weighted average shares of common stock outstanding. No effect has been given to the assumed exercise of stock options as the effect would be antidilutive.
The Company has adopted Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. This Statement establishes accounting standards for the impairment of long-lived assets, certain identifiable intangibles and goodwill related to those assets to be held and used, and long-lived assets and certain identifiable intangibles to be disposed of. The Company periodically evaluates, using independent appraisals and projected undiscounted cash flows, the carrying value of its long-lived assets and certain identifiable intangibles to be held and used whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In addition, long-lived assets and identifiable intangibles to be disposed of are reported at the lower of carrying value or fair value less cost to sell.
HUMITECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Beginning in 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets. The adoption of this accounting standard will not significantly affect the Company's accounting for its long-lived assets.
2. MINERAL RIGHTS
On October 1, 2001, in connection with the Company's distributorship agreement (Note 4), the Company issued 200,000 common stock shares at a negotiated value of $1 per share in exchange for a 1% interest in the mineral rights to the sorbite mineral used in the humidity control panels. The common stock issued shall be `registered' if and when the Company goes public and if the Company does not go public within one year from the date of the agreement, the mineral rights will revert back to the grantor of the rights and the common stock will be returned to the Company.
The mining company estimates one percent of its total ore body deposit to be approximately 617,000 tons of ore. The mineral rights interest allows the Company to purchase in bulk the mineral used in its humidity control products.
The $200,000 cost of the mineral rights will be amortized over the initial five-year term of the distributorship agreement beginning in 2002.
3. NOTES PAYABLE
On December 13, 2001, the Company borrowed funds under an installment note payable maturing in December 2006. Principal and interest on this note is payable monthly, including interest at 13.75% and the note is secured by the vehicle being financed.
Future principal payments required under the terms of the above note payable are as follows.
Year Ended
December 31, Amount
------------ ------
2002 $ 3,870
2003 4,429
2004 5,070
2005 5,803
2006 6,642
-----------
$ 25,814
===========
|
4. COMMITMENTS AND CONTINGENCIES
The Company is currently obligated under noncancelable operating leases for its Dallas office and a corporate apartment, both of which expire in October 2002. The office lease also provides for payment of the Company's share of operating costs. Minimum future rental payments required under the above operating leases total $44,100. During the year ended December 31, 2001, rent expense totaled $5,534.
HUMITECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company is subject to legal proceedings and claims that arise in the ordinary course of its business. Management does not believe that the outcome of any of those matters will have a material adverse effect on the Company's consolidated financial position, operating results or cash flows.
The Company is currently obligated under three employment agreements with officers for annual compensation of $346,000 (to be raised to $400,000 in the event the Company conducts a successful IPO) and discretionary bonuses to be determined by the Company's board of directors. The agreements expire through October 2011 and contain various renewal provisions. At December 31, 2001, $62,500 was accrued and payable under these agreements. In addition, the agreements granted the officers options to purchase 1,500,000 common stock shares (Note 7).
On October 1, 2001, the Company entered into a distributorship agreement, which granted the Company the right to purchase humidity control panels at prices and terms as published periodically by the distributor and the right to display, promote and sell the products to customers located within a sales territory defined as the contiguous United States and Canada excluding a one hundred mile radius around the city of Los Angeles and excluding the state of Hawaii. The agreement is for a period of five years and automatically renews for consecutive three-year terms unless a 30-day notification to the contrary is given. The Company also has the right of first refusal to enter into additional distributorship agreements for the rights to foreign markets on an as `deemed and necessary basis.'
In exchange for these rights, the Company is required to purchase a minimum of 20,000 panels at prices ranging from $15 to $17 per panel during the calendar year ending December 31, 2002.
In addition, as a part of the distributorship agreement, the Company acquired a 1% interest in the mineral rights to the sorbite mineral used in the humidity control panels (Note 2).
On October 1, 2001, the Company entered into an international distributor agreement, which granted an Austrian based company the right to purchase the Company's commercial products at prices and terms as published periodically by the Company and the right to display, promote and sell the products to customers located within Austria. The agreement is for a period of three years and automatically renews for consecutive one-year terms unless a 30-day notification to the contrary is given. The agreement also requires purchases of the Company's commercial products totaling $300,000, $400,000 and $500,000 during the twelve-month periods ending October 31, 2002, 2003, and 2004, respectively.
HUMITECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. INCOME TAXES
The Company accounts for corporate income taxes in accordance with Statement of Financial Accounting Standards (SFAS) No. 109. Under SFAS No. 109, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, future tax benefits, such as those from net operating loss carry forwards, are recognized to the extent that realization of such benefits is more likely than not. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
A reconciliation of income tax expense at the statutory federal rate of 34% to income tax expense at the Company's effective tax rate for the year ended December 31, 2001 is as follows.
Tax benefits computed at statutory rate $ (67,309)
Increase in valuation allowance 66,674
Permanent differences 635
-----------
$ -
===========
|
As of December 31, 2001, the Company has approximately $198,000 of net operating loss available to offset future taxable income. This carry forward expires in the year 2021. This net operating loss carry forward creates the only component of the Company's deferred tax asset in the amount of $67,674, which is fully offset by a valuation allowance. There are no deferred tax liabilities.
6. RELATED PARTIES
During the year ended December 31, 2001, the Company made cash operating advances of $20,000 to AIG (Note 1). Prior to October 13, 2001, the Company was wholly owned by AIG. The advances bear interest at 7.0%, secured by an automobile, are due March 7, 2002 and may be repaid in cash or by the issuance of AIG's common stock. At December 31, 2001, $116 of interest had accrued.
During the year ended December 31, 2001, the Company received cash operating advances of $20,000 from a stockholder, director and officer of the Company. The advances are non-interest bearing, unsecured and due upon demand as funds are available.
HUMITECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. STOCK OPTION PLANS
During the year ended December 31, 2001, the Company issued stock options to purchase 1,500,000 common stock shares to two officers (Note 4) and adopted the intrinsic value method of accounting for these stock options. The options for 500,000 common stock shares become exercisable after October 1, 2002, expire October 1, 2004 and are exercisable at a price of 80% of the then current market price per share. The options for 1,000,000 common stock shares expire October 1, 2006 and are exercisable at a price of $.01 per share. Because the Company is not currently a public company and there is no organized market for its common stock, the options were valued based upon management estimates excluding any volatility factors and results in compensation expense that is not material. Accordingly, no compensation was recognized in the accompanying financial statements for the issuance of these options.
The following pro forma disclosures reflect the Company's net loss per share amounts assuming the Company accounted for stock options granted using the fair value method pursuant to Statement of Financial Accounting Standards No. 123. The fair value of each option granted was estimated on the date of grant at minimum value.
Year Ended
December 31, 2001
-----------------
Pro forma net loss $ (201,967)
Pro forma net loss per share $ (.027)
|
During the year ended December 31, 2001, the Company also issued 1,071,834 common stock shares in exchange for services. These services were recorded at their fair value of $1,072 and were charged to expense.
8. FINANCIAL INSTRUMENTS
The Company's financial instruments, which potentially subject the Company to credit risks and none of which are held for trading purposes, consist of its cash, accounts and advances receivable, notes payable and convertible debentures.
The Company maintains its cash in bank deposit and other cash equivalent investment accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts, and does not believe it is subject to any credit risks involving its cash. At December 31, 2001, $21,342 of the Company's cash, was in excess of federally insured limits.
HUMITECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company's accounts and advances receivable (Note 3) represent sales not collected at the end of the year and a secured receivable from a related party. Management believes these accounts and advances receivable are fairly stated at estimated net realizable amounts.
Management believes the carrying value of this note (Note 4) represent the fair value of these financial instruments because their terms are similar to those in the lending market for comparable loans with comparable risks.
9. SUBSEQUENT EVENTS
During April and May 2002, the Company issued 3,683,341 common stock shares to officers and directors in exchange for services at a per share fair value of $.01.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Nevada law, a corporation may indemnify its officers, directors, employees and agents under specified circumstances, including indemnification of these persons against liability under the Securities Act of 1933. A true and correct copy of Section 78.7502 of Nevada Revised Statutes that addresses indemnification of officers, directors, employees and agents is attached hereto as Exhibit 99.1.
In addition, Section 78.037 of the Nevada Revised Statutes and Humitech(TM)'s Articles of Incorporation and Bylaws provide that a director of this corporation shall not be personally liable to the corporation or its stockholders for monetary damages due to breach of fiduciary duty as a director except for liability (a) for acts or omissions not in good faith which involve intentional misconduct, fraud or a knowing violation of law; or (b) for the payments of distribution in violation of Nevada Revised Statute 78.300.
The effect of these provisions may be to eliminate the rights of
Humitech(TM) and its stockholders (through stockholders' derivative suit on
behalf of Humitech(TM) to recover monetary damages against a director for breach
of fiduciary duty as a director (including breaches resulting from negligent or
grossly negligent behavior) except in the situations described in clauses (a) -
(b) of the preceding paragraph.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the expenses in connection with the issuance and distribution of the securities being registered, other than underwriting discounts and commissions. Humitech(TM) shall bear all these expenses. All amounts set forth below are estimates, other than the SEC registration fee.
SEC Registration Fee $ 685.42
Legal Fees and Expenses $25,000.00
Accounting Fees and Expenses $15,000.00
Miscellaneous $10,000.00
-----------
TOTAL $50,685.42
|
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On October 1, 2001, in connection with Humitech(TM)'s distributorship agreement, Humitech(TM) issued 200,000 common stock shareS at $1.00 per share in exchanges for a 1% interest in the mineral rights to the sorbite mineral used in the humidity control panels.
During the year ended December 31, 2001, Humitech(TM) issued stock options to purchase 1,500,000 common stock shares to two officers under its stock plan. Options for 500,000 common stock shares become exercisable after October 1, 2002, expire October 1, 2004 and are exercisable at a price of 80% of the then current market price per share. Options for 1,000,000 common stock shares expire October 1, 2006 and are exercisable at a price of $.01 per share. Because Humitech(TM) is not currently a public company and does not have an organized market for its common stock, the options were valued based upon management estimates.
Beginning December 31, 2001, Humitech(TM) conducted a private placement whereby it sold 849,100 shares of its common stock at a price of $1.00 per share to approximately forty-eight investors.
During the year ended December 31, 2001, Humitech(TM) issued 1,071,834 common stock shares in exchange for services. These services were recorded at their fair value of $1,072 and were charged to expense.
On March 1, 2002, Humitech(TM) issued 100,000 shares of common stock for professional services to an investment relations firm.
During April and May 2002, Humitech(TM) issued 3,683,341 common stock shares to officers and directors in exchange foR services at a per share fair value of $.01.
Exemption from registration under the Securities Act of 1933 ("Act") is claimed
for the sale of these securities in reliance upon the exemption offered by
Section 4(2) of the Act, which exempts transactions by issuers not involving a
public offering. Use of this exemption is based on the following facts:
o Neither Humitech(TM) or any person acting on behalf of Humitech(TM)
solicited any offer to buy or sell the securities BY any form of
general solicitation or advertising;
o The purchasers represented that they were acquiring the securities as a
principal for their own account for investment purposes only and
without a view towards distribution or reselling these securities
unless pursuant to an effective registration statement or exemption
from registration in compliance with federal or state securities laws;
and
o The securities were issued with the understanding that they may only be
disposed of pursuant to an effective registration statement or
exemption from registration in compliance with federal or state
securities laws.
AVAILABLE INFORMATION
Humitech(TM) will file annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any document Humitech(TM) files with the Commission at the Commission's Public Reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for further information on the public reference room. Humitech(TM)'s Commission filings are also available to the public at the Commission's web site at http://www.sec.gov.
You may also request a copy of these filings, at no cost, by writing or telephoning as follows:
Humitech(TM) International Group, Inc. 15851 Dallas Parkway, Suite 410 Addison, TX 75001 (972) 490-9393
This prospectus is part of a registration statement on Form SB-2 Humitech(TM) filed with the SEC under the Securities Act. You should rely only on the information or representations provided in this prospectus. Humitech(TM) has not authorized anyone to provide you with different information other than the information contained in this prospectus. Humitech(TM) is not making an offer of these securities in any state where the offer is not permitted.
ITEM 27. EXHIBITS
The following is a list of exhibits required by Item 601 of Regulation S-B that are filed or incorporated by reference. The exhibits are attached hereto and are being filed with the SEC as part of this registration statement.
Exhibit
Number Description of Exhibits
--------------------------------------------------------------------------------
3(i)(a) Articles of Incorporation of Airsopure International Group, Inc.
3(i)(b) Certificate of Amendment to Articles of Incorporation of Airsopure
International Group, Inc.
3(ii) Bylaws of Humitech(TM) International Group, Inc.
4 Form of Common Stock Certificate of Humitech(TM) International Group,
Inc.
5 Opinion of Weed & Co. L.L.P. re: Legality
10.1 Humitech, Inc. Distributor Agreement dated October 1, 2001 with HUMICO,
Inc.
10.2 Humitech, Inc. International Distributor Agreement dated October 1,
2001 with Brown & Lampe
10.3 Lease Agreement between Utah State Retirement Investment Fund, as
Landlord, and Humitech, Inc., a Nevada Corporation, as Tenant
10.4 Employment Agreement with C.J. Comu
10.5 Employment Agreement with Michael Davis
43
|
10.6 Employment Agreement with Mike Ryan
10.7 Humitech(TM) International Group, Inc. 2002 Company-Wide Stock Option
Plan
10.8 Letter of Agreement for Franchise Program Assistance
10.9 Service Agreement with Buyside Partners LLC
21 Subsidiaries of Humitech(TM) International Group, Inc.
23.1 Consent of Independent Auditors, Turner, Stone & Company, L.L.P.
23.2 Consent of Weed & Co. L.L.P.
99 Section 78.7502 of the Nevada Revised Statutes
|
ITEM 28. UNDERTAKINGS.
Humitech(TM) undertakes to:
(a)(1) File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and
(iii) Include any additional or changed material information on the plan of distribution not previously disclosed in the registration statement or any material change to the information provided.
(2) That, for the purpose of determining any liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of these securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advise that in the opinion of the Securities and Exchange Commission indemnification is against public policy as expressed in the Act and is, therefore, unenforceable.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the city of Addison, State of Texas, on May 15, 2002.
Humitech(TM) International Group, Inc.
By: /s/ Michael R. Davis ------------------------------ Name: Michael R. Davis Title: Chief Financial Officer |
In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated.
/s/C.J. Comu Chairman, Chief Executive Officer ------------ and Director May 15, 2002 C.J. Comu /s/Michael R. Davis Chief Financial Officer (Principal ------------------- Accounting Officer) and Director May 15, 2002 Michael Davis /s/Pierre Koshakji Director May 15, 2002 ------------------ Pierre Koshakji |
Exhibit 3(i)(a)
Articles of Incorporation of Airsopure International Group, Inc.
FILED # C-288-00 ARTICLES OF INCORPORATION Filing fee:
(PURSUANT TO NRS 78) Receipt #
January 05, 2000 STATE OF NEVADA
In the Office of SECRETARY OF STATE
Dean Heller
Dean Heller, Secretary of State
IMPORTANT: Read instructions on reverse side before completing this form
TYPE OR PRINT (BLACK INK ONLY)
1. NAME OF CORPORATION: AIRSOPURE INTERNATIONAL GROUP INC
2. RESIDENT AGENT: (designated resident agent and his STREET ADDRESS in Nevada
where process maybe served)
NAME OF RESIDENT AGENT: Nevada First Holdings, Inc.
STREET ADDRESS: Street No.: 4535 W. Sahara Ave., Ste. 100A City: Las Vegas
State: NV Zip: 89102
3. SHARES: (number of shares the corporation is authorized to issue) Number of
shares with par value: 50,000 Par value: $1.00 Number of shares WITHOUT par
value: 0
4. GOVERNING BOARD: shall be styled as (check one):DIRECTORS X TRUSTEES
The FIRST BOARD OF DIRECTORS shall consist of 2 member and the names and
addresses are as follows (attach additional pages if necessary)
Name: C. J. Comu
Address: 15400 Knoll Trail Suite 200 City/State/Zip Dallas, TX 75240
Name: John Potter
Address: 15400 Knoll Trail Suite 200 City/State/Zip Dallas, TX 75240
5. PURPOSE (optional-see reverse side): THE PURPOSE OF THE CORPORATION SHALL
BE: ALL LEGAL ACTIVITIES
6. OTHER MATTERS: This form includes the minimum statutory requirements to
incorporate under NRS 78. You may attach additional information pursuant to
NRS 78.037 or any other information you deem appropriate. If any additional
information is contradictory to this form it cannot be filed and will be
returned to you for correction. NUMBER OF PAGES ATTACHED: 1
7. CERTIFICATE: Include a certificate from the regulatory board showing that
each individual involved in the corporation is licensed and in good
standing at the time of filing.
8. SIGNATURES OF INCORPORATORS: The names and addresses of each of the
incorporators signing the articles: (Signature must be notarized) (Attach
additional if there are more than two incorporators)
Name (print) Wayne Andre Name (print) Address: 4535 W. Sahara Ave. Suite 100a City/State/Zip: Las Vegas, NV 89102 Address /s/ Wayne Andre -------------------------------------------- --------------------------- Signature of Incorporator Signature of Incorporator |
9. CERTIFICATE OF ACCEPTANCE OF APPPOINTMENT OF RESIDENT AGENT
I, Wayne Andre for Nevada First Holdings, Inc. Hereby accept appointment as Resident Agent for the above-named corporation.
/s/ Wayne Andre January 5, 2000 -------------------------------------------- Date Signature of Resident Agent |
Exhibit 3(i)(b)
Certificate of Amendment to Articles of Incorporation of Airsopure International Group, Inc.
FILED # C-288-00
Mar 07 2002
In the Office of
Dean Heller
Dean Heller, Secretary of State
CERTIFICATE OF AMENDMENT
Airsopure International Group, Inc., a corporation of the State of Nevada, whose registered office is located at 4535 W. Sahara Ave., Suite 100A, Las Vegas, NV 89102.
The Secretary, certifies pursuant to the provisions of state law, that
a meeting of the stockholders of said corporation called for the purpose of
amending the articles of incorporation, and held on August 1, 2001, it was
resolved by the vote of the holders of an appropriate majority of the shares of
each class entitled to vote that ARTICLE 1 of the Articles of Incorporation is
amended to read as follows:
ARTICLE 1
Name of Corporation: Humitech International Group, Inc.
It was also resolved by the vote of the holders of an appropriate majority of the shares of each class entitled to vote that ARTICLE 3 of the Articles of Incorporation is amended to read as follows:
ARTICLE 3
Shares: Number of common shares with par value: 100,000,000 Par Value: $.001
Number of Preferred shares with par value: 20,000,000 Par Value: $.001
Number of shares without par value: 0
Signed on August 1, 2001
By: /s/ C.J. Comu
-------------
Secretary
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Exhibit 3(ii) Bylaws of Humitech International, Inc.
BY-LAWS
OF
HUMITECH INTERNATIONAL GROUP
ARTICLE I - OFFICES
The office of the Corporation shall be located in the City and State designated in the Articles of Incorporation. The Corporation may also maintain offices at such other places within or without the United States as the Board of Directors may, from time to time, determine.
ARTICLE II - MEETING OF SHAREHOLDERS
The annual meeting of the shareholders of the Corporation shall be held within five months after the close of the fiscal year of the Corporation, for the purpose of electing directors, and transacting such other business as may properly come before the meeting.
Special meetings of the shareholders may be called at any time by the Board of Directors or by the President, and shall be called by the President or the Secretary at the written request of the holders of ten per cent (10%) of the shares then outstanding and entitled to vote thereat, or as otherwise required under the provisions of the Business Corporation Act.
All meetings of shareholders shall be held at the principal office of the Corporation, or at such other places as shall be designated in the notices or waivers of notice of such meetings.
(a) Except as otherwise provided by Statute, written notice of each meeting of shareholders, whether annual or special, stating the time when and place where it is to be held, shall be served either personally or by 'mail, not less than ten or more than fifty days before the meeting, upon each shareholder of record entitled to vote at such meeting, and to any other shareholder to whom the giving of notice may be required by law. Notice of a special meeting shall also state the purpose or purposes for which the meeting is called, and shall indicate that it is being issued by, or at the direction of, the person or persons calling the meeting. If, at any meeting, action is proposed to be taken that would, if taken, entitle shareholders to receive payment for their shares pursuant to Statute, the notice of such meeting shall include a statement of that purpose and to that effect. If mailed, such notice shall be directed to each such shareholder at his address, as it appears on the records of the shareholders of the Corporation, unless he shall have previously filed with the Secretary of the Corporation a written request that notices intended for him be mailed to the address designated in such request.
(b) Notice of any meeting need not be given to any person who may become a shareholder of record after the mailing of such notice and prior to the meeting, or to any shareholder who attends such meeting, in person or by proxy, or to any shareholder who, in person or by proxy, submits a signed waiver of notice either before or after such meeting. Notice of any adjourned meeting of shareholders need not be given, unless otherwise required by statute.
(a) Except as otherwise provided herein, or by statute, or in the Certificate of Incorporation (such Certificate and any amendments thereof being hereinafter collectively referred to as the "Certificate of Incorporation"), at all meetings of shareholders of the Corporation, the presence at the commencement of such meetings in person or by proxy of shareholders holding of record a majority of the total number of shares of the Corporation then issued and outstanding and entitled to vote, shall be necessary and sufficient to constitute a quorum for the transaction of any business. The withdrawal of any shareholder after the commencement of a meeting shall have no effect on the existence of a quorum, after a quorum has been established at such meeting.
(b) Despite the absence of a quorum at any annual or special meeting of shareholders, the shareholders, by a majority of the votes cast by the holders of shares entitled to vote thereon, may adjourn the meeting. At any such adjourned meeting at which a quorum is present, any business may be transacted at the meeting as originally called if a quorum had been present.
(a) Except as otherwise provided by statute or by the Certificate of Incorporation, any corporate action, other than the election of directors to be taken by vote of the shareholders, shall be authorized by a majority of votes cast at a meeting of shareholders by the holders of shares entitled to vote thereon.
(b) Except as otherwise provided by statute or by the Certificate of Incorporation, at each meeting of shareholders, each holder of record of stock of the Corporation entitled to vote thereat, shall be entitled to one vote for each share of stock registered in his name on the books of the Corporation.
(c) Each shareholder entitled to vote or to express consent or dissent without a meeting, may do so by proxy; provided, however, that the instrument authorizing such proxy to act shall have been executed in writing by the shareholder himself, or by his attorney-in-fact thereunto duly authorized in writing. No proxy shall be valid after the expiration of eleven months from the date of its execution, unless the persons executing it shall have specified therein the length of time it is to continue in force. Such instrument shall be exhibited to the Secretary at the meeting and shall be filed with the records of the Corporation.
(d) Any resolution in writing, signed by all of the shareholders entitled to vote thereon, shall be and constitute action by such shareholders to the effect therein expressed, with the same force and effect as if the same had been duly passed by unanimous vote at a duly called meeting of shareholders and such resolution so signed shall be inserted in the Minute Book of the Corporation under its proper date.
(a) The number of the directors of the Corporation shall be ( ), unless and until otherwise determined by vote of a majority of the entire Board of Directors. The number of Directors shall not be less than three, unless all of the outstanding shares are owned beneficially and of record by less than three shareholders, in which event the number of directors shall not be less than the number of shareholders permitted by statute.
(b) Except as may otherwise be provided herein or in the Certificate of Incorporation, the members of the Board of Directors of the Corporation, who need not be shareholders, shall be elected by a majority of the votes cast at a meeting of shareholders, by the holders of shares, present in person or by proxy, entitled to vote in the election.
(c) Each director shall hold office until the annual meeting of the shareholders next succeeding his election, and until his successor is elected and qualified, or until his prior death, resignation or removal.
The Board of Directors shall be responsible for the control and management of the affairs, property and interests of the Corporation, and may exercise all powers of the Corporation, except as are in the Certificate of Incorporation or by statute expressly conferred upon or reserved to the shareholders.
(a) A regular annual meeting of the Board of Directors shall be held immediately following the annual meeting of the shareholders, at the place of such annual meeting of shareholders.
(b) The Board of Directors, from time to time, may provide by resolution for the holding of other regular meetings of the Board of Directors, and may fix the time and place thereof.
(c) Notice of any regular meeting of the Board of Directors shall not be required to be given and, if given, need not specify the purpose of the meeting; provided, however, that in case the Board of Directors shall fix or change the time or place of any regular meeting, notice of such action shall be given to each director who shall not have been present at the meeting at which such action was taken within the time limited, and in the manner set forth in paragraph (b) of Section 4 of this Article III, with respect to special meetings, unless such notice shall be waived in the manner set forth in paragraph (c) of such Section 4.
(a) Special meetings of the Board of Directors shall be held whenever called by the President or by one of the directors, at such time and place as may be specified in the respective notices or waivers of notice thereof.
(b) Except as otherwise required by statute, notice of special meeting shall be mailed directly to each director, addressed to him at his residence or usual place of business, at least two (2) days before the day on which the meeting is to be held, or shall be sent to him at such place by telegram, radio or cable, or shall be delivered to him personally or given to him orally, not later than the day before the day on which the meeting is to be held. A notice, or waiver. of notice, except as required by Section 8 of this Article III, need not specify the purpose of the meeting.
(c) Notice of any special meeting shall not be required to be given to any director who shall attend such meeting without protesting prior thereto or at its commencement, the lack of notice to him, or who submits a signed waiver of notice, whether before or after the meeting. Notice of any adjourned meeting shall not be required to be given.
At all meetings of the Board of Directors, the Chairman of the Board, if any and if present, shall preside. If there shall be no Chairman, or he shall be absent, then the President shall preside, and in his absence, a Chairman chosen by the directors shall preside.
(a) At all meetings of the Board of Directors, the presence of a majority of the entire Board shall be necessary and sufficient to constitute a quorum for the transaction of business, except as otherwise provided by law, by the Certificate of Incorporation, or by these By-Laws.
(b) A majority of the directors present at the time and place of any regular or special meeting, although less than a quorum, may adjourn the same from time to time without notice, until a quorum shall be present.
(a) At all meetings of the Board of Directors, each director present shall have one vote, irrespective of the number of shares of stock, if any, which he may hold.
(b) Except as otherwise provided by statute, by the Certificate of Incorporation, or these By-Laws, the action of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. Any action authorized in writing, by all of the directors entitled to vote thereon and filed with the minutes of the corporation shall be the act of the Board of Directors with the same force and effect as if the same had been passed by unanimous vote at a duly, called meeting of the Board.
Any vacancy in the Board of Directors occurring by reason of an increase in the number of directors, or by reason of the death, resignation, disqualification, removal (unless a vacancy created by the removal of a director by the shareholders shall be filled by the shareholders at the meeting at which the removal was effected) or inability to act of any director, or other-wise, shall be filled for the unexpired portion of the term by a majority vote of the remaining directors, though less than a quorum, at any regular meeting or special meeting of the Board of Directors called for that purpose.
Any director may resign at any time by giving written notice to the Board of Directors, the President or the Secretary of the Corporation. Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof by the Board of Directors or such officer, and the acceptance of such resignation shall not be necessary to make it effective.
Any director may be removed with or without cause at any time by the affirmative vote of shareholders holding of record in the aggregate at least a majority of the outstanding shares of the Corporation at a special meeting of the shareholders called for that purpose, and may be removed for caused by action of the Board.
No stated salary shall be paid to directors, as such, for their services, but by resolution of the Board of Directors a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board; provided, however, that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.
(a) No contract or other transaction between this Corporation and any other Corporation shall be impaired, affected or invalidated, nor shall any director be liable in any way by reason of the fact that any one or more of the directors of this Corporation is or are interested in, or is a director or officer, or are directors or officers of such other Corporation, provided that such facts are disclosed or made known to the Board of Directors.
(b) Any director, personally and individually, may be a party to or may be interested in any contract or transaction of this Corporation, and no director shall be liable in any way by reason of such interest, provided that the fact of such interest be disclosed or made known to the Board of Directors, and provided that the Board of Directors shall authorize, approve or ratify such contract or transaction by the vote (not counting the vote of any such director) of a majority of a quorum, notwithstanding the presence of any such director at the meeting at which such action is taken. Such director or directors may be counted in determining the presence of a quorum at such meeting. This Section shall not be construed to impair or invalidate or in any way affect any contract or other transaction which would otherwise be valid under the law (common, statutory or otherwise) applicable thereto.
The Board of Directors, by resolution adopted by a majority of the entire Board, may from time to time designate from among its members an executive committee and such other committees, and alternate members thereof, as they deem desirable, each consisting of three or more members, with such powers and authority (to the extent permitted by law) as may be provided in such resolution. Each such committee shall serve at the pleasure of the Board.
(a) The officers of the Corporation shall consist of a President, a Secretary, a Treasurer, and such other officers, including a Chairman of the Board of Directors, and one or more Vice Presidents, as the Board of Directors may from time to time deem advisable. Any officer other than the Chairman of the Board of Directors may be, but is not required to be, a director of the Corporation. Any two or more offices may be held by the same person.
(b) The officers of the Corporation shall be elected by the Board of Directors at the regular annual meeting of the Board following the annual meeting of shareholders.
(c) Each officer shall hold office until the annual meeting of the Board of Directors next succeeding his election, and until his successor shall have been elected and qualified, or until his death, resignation or removal.
Any officer may resign at any time by giving written notice of such resignation to the Board of Directors, or to the President or the Secretary of the Corporation. Unless otherwise specified in such written notice, such resignation shall take effect upon receipt thereof by the Board of Directors or by such officer, and the acceptance of such resignation shall not be necessary to make it effective.
Any officer may be removed, either with or without cause, and a successor elected by a majority of the Board of Directors at any time.
A vacancy in any office by reason of death, resignation, inability to act, disqualification, or any other cause, may at any time be filled for the unexpired portion of the term by the Board of Directors.
Officers of the Corporation shall, unless otherwise provided by the Board of Directors, each have such powers and duties as generally pertain to their respective offices as well as such powers and duties as may be set forth in these By-laws, or may from time to time be specifically conferred or imposed by the Board of Directors. The President shall be the chief executive officer of the Corporation.
In case the Board of Directors shall so require, any officer, employee or agent of the Corporation shall execute to the Corporation a bond in such sum, and with such surety or sureties as the Board of Directors may direct, conditioned upon the faithful performance of his duties to the Corporation, including responsibility for negligence and for the accounting for all property, funds or securities of the Corporation which may come into his hands.
Whenever the Corporation is the holder of shares of any other Corporation, any right or power of the Corporation as such shareholder (including the attendance, acting and voting at shareholders' meetings and execution of waivers, consents, proxies or other instruments) may be exercised on behalf of the Corporation by the President, any Vice President, or such other person as the Board of Directors may authorize.
(a) The certificates representing shares of the Corporation shall be in such form as shall be adopted by the Board of Directors, and shall be numbered and registered in the order issued. They shall bear the holder's name and the number of shares, and shall be signed by (i) the Chairman of the Board or the President or a Vice President, and (ii) the Secretary or Treasurer, or any Assistant Secretary or Assistant Treasurer, and shall bear the corporate seal.
(b) No certificate representing shares shall be issued until the full amount of consideration therefor has been paid, except as otherwise permitted by law.
(c) To the extent permitted by law, the Board of Directors may authorize the issuance of certificates for fractions of a share which shall entitle the holder to exercise voting rights, receive dividends and participate in liquidating distributions, in proportion to the fractional holdings; or it may authorize the payment in cash of the fair value of fractions of a share as of the time when those entitled to receive such fractions are determined; or it may authorize the issuance, subject to such conditions as may be permitted by law, of scrip in registered or bearer form over the signature of an officer or agent of the Corporation, exchangeable as therein provided for full shares, but such scrip shall not entitle the holder to any rights of a shareholder, except as therein provided.
The holder of any certificate representing shares of the Corporation shall immediately notify the Corporation of any loss or destruction of the certificate representing the same. The Corporation may issue a new certificate in the place of any certificate theretofore issued by it, alleged to have been lost or destroyed. On production of such evidence of loss or destruction as the Board of Directors in its discretion may require, the Board of Directors may, in its discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the Corporation a bond in such sum as the Board may direct, and with such surety or sureties as may be satisfactory to the Board, to indemnify the Corporation against any claims, loss, liability or damage it may suffer on account of the issuance of the new certificate. A new certificate may be issued without requiring any such evidence or bond when, in the judgment of the Board of Directors, it is proper so to do.
(a) Transfers of shares of the Corporation shall be made on the share records of the Corporation only by the holder of record thereof, in person or by his duly authorized attorney, upon surrender for cancellation of the certificate or certificates representing such shares, with an assignment or power of transfer endorsed thereon or delivered therewith, duly executed, with such proof of the authenticity of the signature and of authority to transfer and of payment of transfer taxes as the Corporation or its agents may require.
(b) The Corporation shall be entitled to treat the holder of record of any share or shares 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 share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law.
In lieu of closing the share records of the Corporation, the Board of Directors may fix, in advance, a date not exceeding fifty days, nor less than ten days, as the record date for the determination of shareholders entitled to receive notice of, or to vote at, any meeting of shareholders, or to consent to any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividends, or allotment of any rights, or for the purpose of any other action. If no record date is fixed, the record date for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the day next preceding the day on which notice is given, or, if no notice is given, the day on which the meeting is held; the record date for determining shareholders for any other purpose shall be at the close of business on the day on which the resolution of the directors relating thereto is adopted. When a determination of shareholders of record entitled to notice of or to vote at any meeting of shareholders has been made as provided for herein, such determination shall apply to any adjournment thereof, unless the directors fix a new record date for the adjourned meeting.
Subject to applicable law, dividends may be declared and paid out of any funds available therefor, as often, in such amounts, and at such time or times as the Board of Directors may determine.
The fiscal year of the Corporation shall be fixed by the Board of Directors from time to time, subject to applicable law,
The corporate seal, if any, shall be in such form as shall be approved from time to time by the Board of Directors.
All by-laws of the Corporation shall be subject to alteration or repeal, and new by-laws may be made, by the affirmative vote of shareholders holdings of record in the aggregate at least a majority of the outstanding shares entitled to vote in the election of directors at any annual or special meeting of shareholders, provided that the notice or waiver of notice of such meeting shall have summarized or set forth in full therein, the proposed amendment.
The Board of Directors shall have power to make, adopt, alter, amend and repeal, from time to time, by-laws of the Corporation; provided, however, that the shareholders entitled to vote with respect thereto as in this Article IX above-provided may alter, amend or repeal by-laws made by the Board of Directors, except that the Board of Directors shall have no power to change the quorum for meetings of shareholders or of the Board of Directors, or to change any provisions of the by-laws with respect to the removal of directors or the filling of vacancies in the Board resulting from the removal by the shareholders. If any by-law regulating an impending election of directors is adopted, 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 by-law so adopted, amended or repealed, together with a concise statement of the changes made.
(a) Any person made a party to any action, suit or proceeding, by reason of the fact that he, his testator or intestate representative is or was a director, officer or employee of the Corporation, or of any Corporation in which he served as such at the request of the Corporation, shall be indemnified by the Corporation against the reasonable expenses, including attorney's fees, actually and necessarily incurred by him in connection with the defense of such action, suit or proceedings, or in connection with any appeal therein that such officer, director or employee is liable for negligence or misconduct in the performance of his duties.
(b) The foregoing right of indemnification shall not be deemed exclusive of any other rights to which any officer or director or employee may be entitled apart from the provisions of this section.
(c) The amount of indemnity to which any officer or any director may be entitled shall be fixed by the Board of Directors, except that in any case where there is no disinterested majority of the Board available, the amount shall be fixed by arbitration pursuant to then existing rules of the American Arbitration Association.
The undersigned Incorporator certifies that he has adopted the foregoing bylaws as the first by-laws of the Corporation.
Dated: January 5, 2000
/s/ Wayne Andre
----------------------------------
Incorporator
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Exhibit 4
Form of Common Stock Certificate of Humitech International, Inc.
FORM OF STOCK CERTIFICATE
NUMBER
SHARES
--------------------- ------------------
1554
--------------------- ------------------
HUMITECH
HUMITECH, INC.
|
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
PAR VALUE $0.001
A COMMON STOCK
THIS CERTIFIES THAT
VOID
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK PAR VALUE OF $0.001
EACH OF
HUMITECH, INC.
transferable on the books of the Corporation in person or by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar. Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
DATED:
/s/ C. J. Comu Countersigned and Registered:
--------------------------------
CHAIRMAN & CEO
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SIGNATURE STOCK TRANSFER, INC.
(Addison, Texas) Transfer Agent
BY
Authorized Signature
HUMITECH, INC.
CORPORATE
SEAL
NEVADA
Exhibit 5
Opinion of Weed & Co. L.L.P. re: Legality
WEED & CO. LLP
4695 MacArthur Court, Suite 1430
Newport Beach, California 92660
Telephone (949) 475-9086
Facsimile (949) 475-9087
May 15, 2002
Board of Directors
Humitech International Group, Inc.
15851 Dallas Parkway, Suite 410
Addison, TX 75001
RE: Opinion of Counsel
Greetings:
We have acted as counsel to Humitech International Group, Inc. (the "Company") in connection with the registration under the Securities Act of 1933, as amended (the "Act"), of an aggregate of 9,644,108 shares (the "Shares") of the Company's common stock, par value $.001 per share (the "Common Stock"). 4,644,108 shares will be sold by the selling stockholders and 5,000,000 shares will sold by the Company upon the terms and subject to the conditions set forth in the Company's registration statement on Form SB-2 (the "Registration Statement").
In connection therewith, we have examined copies of the Company's Articles of Incorporation, Bylaws, the corporate proceedings with respect to the shares, and such other documents and instruments as we have deemed necessary or appropriate for the expression of the opinions contained herein. In such examination, we have assumed the genuineness of all signatures, the authenticity and completeness of all documents submitted to us as originals, the conformity to the original documents of all documents submitted to us as copies and the correctness of all statements of fact contained in such documents.
Based on the foregoing, and having regard for such legal considerations as we have deemed relevant, we are of the opinion that the Shares to be sold by the selling stockholders and the Company by means of the Registration Statement, when sold in accordance with the terms and conditions set forth in the Registration Statement, will be duly and validly issued, fully paid and non-assessable.
Very truly yours,
/s/ Weed & Co. LLP ------------------- Weed & Co. LLP |
Exhibit 10.1
Humitech, Inc. Distributor Agreement dated October 1, 2001 with HUMICO, Inc.
HUMITECH, INC.
DISTRIBUTOR AGREEMENT
This Agreement ("Agreement") made on this date of October 1, 2001 by and between Humitech, Inc., having its principal place of business at 15851 Dallas Parkway, Suite 410, Addison, Texas, 75001, ("Distributor") herein, and HUMICO, Inc., having its principal place of business at 256 South Robertson Rd., Beverly Hills, CA 90211 ("Company") herein, collectively the "Parties" and individually a "Party", herein, mutually agree as follows:
1. RELATIONSHIP
Company grants and the Distributor accepts:
1.1. The right to purchase all Company Refrigeration Products, current or future brand name labeled as "Humitech Panels" directly from Company, at the price and terms outlined in the most current published Company distributor price pages attached as Exhibit "A".
1.2. The right to stock, display, promote and aggressively sell the Products to customers who are within the Distributor's marketing area.
2. DISTRIBUTOR DUTIES AND OBLIGATIONS
The Distributor shall:
2.1. Arrange for Company training for Distributor owners, sales managers, sales staff, sales associates and technical staff to occur within 45 days of signing this Agreement at Distributor cost.
2.2. Develop and implement a proactive business plan, which Distributor and Company will agree upon.
2.3. Actively promote the Products to potential customers through periodic mailings, promotions or other accepted marketing practices.
2.4. Assign the responsibility for the success of the Products to at least one sales person who will be the specialist and champion for these products.
2.5. Maintain a reasonable inventory of the Products, to facilitate customer satisfaction.
2.6. Comply with all federal, state, and local laws, regulations, statues, etc., affecting the performance of business and this Agreement.
3. COMPANY DUTIES AND RESPONSIBILITIES
The Company shall:
3.1. Support the Distributor efforts through various marketing initiatives, Product brochures, Product trend and technology correspondence, in-house training and other efforts deemed beneficial to the growth of the distributor business.
3.2. Furnish other support and marketing materials at cost to Distributor.
3.3. Maintain reasonable levels of standard Product stock to facilitate prompt deliveries.
3.4. Keep abreast of market and Product trends and inform the Distributor of new opportunities.
3.5. Notify Distributor of policy, pricing and other changes or practices that may affect business, markets and the customer, etc., thirty (30) days prior to the change.
3.6. Comply with all applicable federal, state and local laws, regulations, statute, etc., affecting the performance of business and this Agreement.
4. COST AND EXPENSES
Each party shall be solely responsible for all costs and expenses incurred by it in performing its duties under this Agreement, including, but not limited to, salaries, employee commissions, advertisements, promotions, travel, delays, etc., unless otherwise stated and agreed to by all parties involved.
5. PATENTS AND TRADEMARKS
Distributor agrees not to contest the validity of any licenses, patents, trademarks and/or rights thereto now or hereafter used or claimed by the Company and to notify the Company promptly of any infringement thereof by others whenever such acts come to the attention of the Distributor.
6. INDEMNIFICATION
Distributor shall defend, indemnify and hold harmless the Company, its representatives, agents and employees from and against all claims, damages, losses and expenses arising out of the Distributor's sale or use of the Products, except for consequential damages or gross negligence on the part of the Company.
7. SALES TERRITORY
7.1. The Distributor may market the Products and be the exclusive Distributor within the geographical area considered to be the Distributor's marketing area, ("Sales Territory") including branch operations, unless otherwise indicated as an appendix or note to this agreement.
7.2. The Distributor understands and accepts that other wholesalers, distributors, retail merchandiser have been clients of the Company ("Clients"). These clients are to remain the sole clients of the Company and are exempt from the exclusivity granted Distributor. These clients are reflected in Exhibit "B" attached hereto.
7.3. Humitech, Inc. may expand Distributor's Sales Territory based on area potentials, previous agreements, marketing policy, and the effectiveness of current distributors. .
8. TERM AND TERMINATION
8.1. This Agreement shall be binding for a period of five (5) years from the date of execution and shall automatically renew and extend for consecutive three year terms if notification to the contrary is not given thirty (30) days before the anniversary date.
8.2. This Agreement may be terminated or modified as follows:
a) Immediately by a Party upon written notice to other Party in the event the Party is adjudicated as bankrupt, becomes insolvent or makes an assignment for the benefit of creditors.
b) By either Party upon ninety (90) days written notice if the other Party is in material breach of any of the terms of this Agreement, Or by not purchasing 20,000 commercial panels as required annually.
c) Upon termination, Distributor shall return all books and records of Company to headquarters via prepaid freight.
9. ADDITIONAL PROVISIONS
9.1. CHANGES IN DESIGN. The Company may make reasonable changes of any kind without notice and deliver revised designs or models of the Products against any order accepted by Company. will not be responsible to the Distributor in any way for any inventory in the Distributor's possession of prior models of the Product or manufactured under prior design or specifications.
9.2. FORCE MAJEURE. The Parties shall not be liable for any delay in the delivery or sale of any Products if such delay is due to any cause beyond the reasonable control of the Party In the event of any such delay, the dates for performance by the Party shall be extended for a period equal to the time lost by reason of such delay.
9.3. DISTRIBUTOR NOT AGENT. Distributor is an independent contractor and shall not be considered in any respect an agent or representative of the Company and the Distributor shall not represent or hold out itself or its agents or representatives as the agents or representatives of the Company.
9.4. ASSIGNABILITY. This Agreement may not be assigned or otherwise transferred by the Distributor without prior written consent by the Company. Any purported attempt to assign or transfer this Agreement without Company prior written consent shall be null and void.
9.5. WARRANTY. The warranty for the Products is set forth in the Product Literature and Installation, Operation and Maintenance manuals.
9.6. NOTICES. Any notice required or permitted hereunder shall be sufficient if sent by first-class mail, postage prepaid to the other party at the address specified herein, except that any notice of termination or other pertinent responsibilities, may be by certified mail, return receipt requested. Either party may designate a new address for the purposes of notice by certified mail, return receipt requested.
9.7. GOVERNING LAW. This Agreement shall be construed and the relations between the parties determined in accordance with the laws of the State of Texas.
9.8. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the parties and supersedes all prior agreements, representations, promises and understandings, whether written or oral, which have been made in connection with the subject matter hereof. Any terms and conditions on any purchase order or other document issued by the Distributor shall be inapplicable to any sale of Products pursuant to this Agreement.
9.9. BINDING EFFECT. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by and against the parties hereto and their respective heirs, successors, personal representatives, legal representatives and assigns.
9.10. CAPTIONS. The headings used in this Agreement are for illustrative purposes only, the wording in the paragraphs will control.
9.11. ARBITRATION. The Parties agree to submit any disputes arising from this Agreement to binding Arbitration in lieu of other legal means of resolutions. The Parties agree that the Arbitration will be held in Dallas Texas under the control of the American Arbitration Association or equivalent, if not available.
ACCEPTED BY: (DISTRIBUTOR)
C.J. Comu CEO Alan Perlman Owner
------------------------------------ ------------------------------------
Print or Type Name Title Print or Type Name Title
/s/C.J. Comu 12.12.01 /s/ Alan Perlman 12/19/01
------------------------------------ ------------------------------------
Signature Date Witness Date
/s/ Rick TJ 12-20-01
------------------------------------
Executive Vice President
Additional notice to:
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APPROVED BY: COMPANY
Alan Mitchell Perlman, Chairman Address for notice:
256 South Robertson Rd
Beverly Hills, CA 90211
/s/ Alan Mitchell Perlman 12/19/01
------------------------------------------------
Signature Date
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APPENDIX "A"
RESIDENTIAL PANELS $6.00/EA.
COMMERCIAL PANELS $17.00/EA.
VOLUME DISCOUNTS
----------------
MINIMUM ORDER OF 2000 UNITS:
RESIDENTIAL PANELS $6.00/EA.
COMMERCIAL PANELS $15.00/EA.
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ALL PRICES, F.O.B. LOS ANGELES, CA
EXHIBIT "B"
FOLLOWING CLIENTS - PROPERTY OF THE COMPANY.
1. 100 MILE RADIUS AROUND THE CITY OF LOS ANGELES AND LA COUNTY.
2. State of Hawaii
EXHIBIT "C"
SALES TERRITORY
DISTRIBUTOR SHALL BE GRANTED EXCLUSIVE DEALER DISTRIBUITOR FOR THE HUMITECH PANELS FOR ALL THE CONTIGIOUS STATES IN THE UNITED STATES OF AMERICA AND CANADA.
DISTRIBUTOR SHALL ALSO HAVE FIRST RIGHT OF REFUSAL TO ENTER INTO AGREEMENT TO BE GRANTED EXCLUSIVE LICENSE RIGHTS TO FOREIGN MARKETS ON AN AS DEEMED AND NECESSARY BASIS.
EXCLUSIVE RIGHTS IN THE NOTED TERRITORY SHALL BE DEEMED THAT ALL SALES IN THIS MARKET SHALL BE GRANTED TO DISTRIBUTOR AND COMPANY SHALL BE RESTRICTED FROM SIGNING ANY NEW DISTRIBUTORS PROVIDED THE DISTRIBUTOR HAS ACHIEVED THE ANNUAL SALES COMMITMENTS.
EXHIBIT "D"
MINIMUM ANNUAL PURCHASE COMMITMENT
DISTRIBUTOR HEREBY AGREES TO PURCHASE A MINIMUM OF 20,000 COMMERCIAL PANELS FOR FISCAL YEAR ENDING DECEMBER 31, 2002.
EXHIBIT "E"
MINERAL RIGHTS
DISTRIBUTOR AND COMPANY AGREE TO AN EXCHANGE OF STOCK FOR MINERAL RIGHTS OF THE FOLLOWING. IN EXCHANGE FOR 1% OF THE MINERAL RIGHTS, DISTRIBUTOR HEREBY AGREES TO PAY 200,000 SHARES OF HUMITECH COMMON STOCK, REPRESENTING $200,000 IN EXCHANGE FOR THESE MINERAL RIGHTS. THESE RIGHTS WILL ROLL OVER EACH YEAR UP TO FIVE YEARS OR FIVE PERCENT, FOR A TOTAL OF 5% FOR 1,000,000 SHARES OF COMMON STOCK.
DISTRIBUTOR ACKNOWLEDGES THAT THE COMPANY SHALL RETAIN EXCLUSIVE RIGHTS TO OPERATE AND REMOVE MATERIAL (MINERAL ORE) FROM MINE.
STOCK ISSUED IN CONJUNCTION WITH THE ABOVE MINERAL RIGHTS SHALL BE "REGISTERED" WHEN THE COMPANY GOES PUBLIC. ALL RESTRICTIVE COVENANTS TO BE REMOVED, AND THE STOCK TO BE FREELY TRADED.
IN THE EVENT THAT DISTRIBUTOR DOES NOT GO PUBLIC WITHIN ONE YEAR OF THIS AGREEMENT, ALL MINERAL RIGHTS SHALL REVERT BACK TO THE COMPANY AND THE ISSUED STOCK RETURNED TO DISTRIBUTOR.
DISTRIBUTOR AND EACH OF ITS SHAREHOLDERS AGREE NOT TO HOLD ANY DIRECT INTEREST IN ANY CAPACITY WITH ANY ENTITY THAT MARKETS MINERAL BASED PRODUCTS TO CONTROL HUMIDITY OTHER THAN COMPANY. FURTHER, IN THE EVENT THAT THE AGREEMENT IS TERMINATED BY COMPANY FOR CAUSE OR BY DISTRIBUTOR WITHOUT CAUSE, DISTRIBUTOR AND EACH OF ITS SHAREHOLDERS AGREE NOT TO COMPETE IN OR HOLD ANY DIRECT OR INDIRECT INTEREST IN ANY NEW ENTITY COMPETING IN THE SAME OR SIMILAR BUSINESS AS COMPANY WITHIN THE UNITED STATES FOR A PERIOD OF (5) FIVE YEARS FOLLOWING THE TERMINATION OF THE AGREEMENT.
Exhibit 10.2
Humitech, Inc. International Distributor Agreement dated October 1, 2001 with Brown & Lampe
HUMITECH, INC.
INTERNATIONAL DISTRIBUTOR AGREEMENT
This Agreement made on this date of October 1, 2001, by and between HUMITECH, Inc., having its principal place of business at 15851 Dallas Parkway, Suite 410, Addison, TX, 75001 ("HUMITECH") herein, and Brown & Lampe, having its principal place of business at A-1010 Wien, Borsegebaude Wipplingerstrasse 34, Vienna, Austria ("Distributor") herein, individually a "Party" and collectively the "Parties" herein, mutually agree as follows:
1. RELATIONSHIP
HUMITECH INC. grants and the Distributor accepts:
1.1. The right to purchase HUMITECH Inc.'s Commercial Products brand name labeled as "HUMITECH" to include Model HT-100, Model HT-200 at the price and terms outlined in the most current published HUMITECH INC. Distributor price pages a current copy attached as Exhibit "A".
1.2 The right to stock, display, promote and aggressively sell the Products to customers who are within the distributor's normal marketing area. Subject to existing agreements as shown in attachment "Exhibit B".
2. DISTRIBUTOR DUTIES AND OBLIGATIONS
The Distributor shall:
2.1. Arrange for HUMITECH training for Distributor owners, sales managers, sales staff, sales associates and technical staff to occur within 90 days of signing this Agreement.
2.2. Develop and implement a proactive business plan, which Distributor and HUMITECH Inc. will agree upon. This plan will involve exposing the opportunity to the extensive client base of Distributor.
2.3. Sign up sub-distributors and manufacturers representatives to sell Products, using HUMITECH approved agreements.
2.4. Actively promote the Products to potential customers through periodic mailings, promotions or other accepted marketing practices.
2.5. Represent and sell Airsopure air-filtration and purification products in your territory.
2.6. Assign the responsibility for the success of the Products to at least one sales person who will be the specialist and champion for these products.
2.7. Maintain a reasonable inventory of the Products including replacement filters, to facilitate customer satisfaction.
2.8. Not sell products for shipment INTO the United States or designated territory without prior approval of HUMITECH.
2.9. Comply with all federal, state, and local laws, regulations, statues, etc., affecting the performance of business and this Agreement.
2.10. Follow up all leads to the disposition phase. This includes any and all leads referred by HUMITECH International Group, Inc.
2.11. Keep copies of lead dispositions for review by HUMITECH Inc.
3. HUMITECH, INC. DUTIES AND RESPONSIBILITIES
HUMITECH, INC. shall:
3.1. Support the distributor efforts through various marketing initiatives, Product brochures, Product trend and technology correspondence, in-house training and other efforts deemed beneficial to the growth of the distributor business.
3.2. Furnish reasonable quantities of brochures and other support and marketing materials at cost.
3.3. Provide technical and sales training and field sales support as required.
3.4. Maintain reasonable levels of standard Product stock to facilitate prompt deliveries.
3.5. Keep abreast of market and Product trends and inform the distributor of new opportunities.
3.6. Notify Distributor of policy, pricing and other changes or practices that may affect business, markets and the customer, etc., sixty (60) days prior to the change, whenever practical.
3.7. Comply with all applicable federal, state and local laws, regulations, statute, etc., affecting the performance of business and this Agreement.
4. COST AND EXPENSES
Each party shall be solely responsible for all costs and expenses incurred by it in performing its duties under this Agreement, including, but not limited to, salaries, employee commissions, advertisements, promotions, travel, delays, etc., unless otherwise stated and agreed to by all parties involved.
5. PATENTS AND TRADEMARKS
Distributor agrees not to contest the validity of any licenses, patents, trademarks and/or rights thereto now or hereafter used or claimed by HUMITECH, INC. and to notify HUMITECH INC. promptly of any infringement thereof by others whenever such acts come to the attention of the Distributor. Distributor agrees that all information concerning the products and marketing tools of HUMITECH are the Confidential Information of HUMITECH and they agree to treat them as Confidential Information and used only for sales/marketing purposes. Distributor also agrees to disclose Confidential Information only to those employees, agents and sales contacts reasonably requiring same and only for the above described purpose. The Distributor will apprise such persons of their duty to protect such Confidential Information to the same extent the Distributor is bound hereunder.
6. INDEMNIFICATION
Distributor shall defend, indemnify and hold harmless HUMITECH, INC., its representatives, agents and employees from and against all claims, damages, losses and expenses arising out of the Distributor's sale or use of the Products.
7. SALES TERRITORY
7.1. The Distributor may market the Products within the geographical area considered to be the Distributor's normal marketing area, ("Sales Territory") including branch operations, unless otherwise indicated as an appendix or note to this Agreement.
7.2. The exclusive Sales Territory is AUSTRIA.
7.3 The Distributor understands and accepts that other channels of distribution including the Internet or catalogues may be utilized by HUMITECH International Group, Inc. for the sale of Products within the same Sales Territory, The sales territory will be the exclusive territories of the Distributor, HUMITECH may engage additional distributors for this Territory only as sub-distributors under the direction of Distributor.
7.4 HUMITECH, Inc. may expand Distributor's Sales Territory based on area potentials, previous agreements, marketing policy, and the effectiveness of current distributors. The Distributor will not participate in the sales efforts of other channels of distribution, or receive commission or payments of any kind from sales to or by other channels of distribution.
7.5 The Distributor may NOT sell HUMITECH Products through the Internet, and may not use catalogues or direct sales efforts outside of the Sales Territory. The sub-distributors set up by Distributor may not sell HUMITECH Products through Internet web sites, within sub distributor territory, nor use catalogues or direct sales, outside their sub-territory.
8. PERFORMANCE EXPECTATIONS
8.1. A three year goal for net purchases of these Products, expected of and agreed to by the Distributor, is as follows, the Parties agree that the goals are for the sales territory, the Parties further agree that these goals are subject to adjustment if surrounding or similar territories are selling more than the goals herein (on a per-capita basis) and/or other distribution channels have exceeded the goals. The Parties agree that any increase in goals is due to the territory granted to the Distributor. If the Parties do not agree on adjusted goals, then the Parties agree to an average of the three (3) goals decided by (1) a HUMITECH distributor chosen by mutual agreement and (2) one each of HUMITECH distributors chosen by each Party. Further, these revised goals may be different for each separate sub-sales territory, and/or each product group (consumer or commercial) and/or by individual product.
SEE EXHIBIT A
12 months ended
--------------------------------------------------------------
Purchases of $300,000 October 31, 2002
Purchases of $400,000 October 31, 2003
Purchases of $500,000 October 31, 2004
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8.2 The Distributor understands and accepts that if these agreed upon goals or revised goals and/or sub goals by sub-sales territory are not achieved, and it is determined by HUMITECH at its sole discretion that the Distributor has not implemented the actions required to achieve these goals, the following actions may be taken:
a) This Agreement as to the non-performing Sales Territory may be terminated by HUMITECH International Group, Inc. (see 9.2, c.).
b) This Agreement will continue and additional distributors or distribution channels may be established within the Sales Territory.
c) Taking any action or failure to take any action allowed under this Agreement does not restrict HUMITECH from taking or not taking any action in the future. It is not required for the three years to conclude in order to invoke this paragraph.
9. TERM AND TERMINATION
9.1. This Agreement shall be binding for a period of three years from the date of execution and shall automatically renew and extend for consecutive one year terms if notification to the contrary is not given thirty (30) days before the anniversary date.
9.2. This Agreement may be terminated or modified as follows:
a) Prior to the end of the three-year period by either party without cause, and without time to cure, upon ninety (90) days written notice to the other party.
b) Immediately by HUMITECH, INC. upon written notice to Distributor in the event Distributor is adjudicated as bankrupt, becomes insolvent or makes an assignment for the benefit of creditors or if a principal owner is convicted of a felony that would adversely reflect on HUMITECH.
c) By either party upon sixty (60) days written notice if the other party is in material breach of any of the terms of this Agreement or any joint business plans or Distributor's failure to reach agreed upon market penetration goals measured by annual purchases of HUMITECH, INC. products.
d) In the event of termination of this Agreement by either party, HUMITECH, INC. shall have the option to repurchase all Products purchased hereunder of current design, unused and in saleable condition, which are in Distributor's inventory at the time of termination. If the termination is by HUMITECH, INC., HUMITECH, INC. shall pay the original purchase price as substantiated by the invoice or, if an invoice is unavailable, the published price prevailing at the time of manufacture. If the termination is by the Distributor, a handling charge of fifteen percent (15%) shall be deducted from the purchase price.
e) Upon termination, Distributor shall return all books and records of HUMITECH, Inc. to Dallas, TX headquarters via prepaid freight.
10. ADDITIONAL PROVISIONS
10.1. CHANGES IN DESIGN. HUMITECH INC. may make reasonable changes of any kind without notice and deliver revised designs or models of the Products against any order accepted by HUMITECH, INC. HUMITECH INC. will not be responsible to the Distributor in any way for any inventory in the Distributor's possession of prior models of the Product or manufactured under prior design or specifications.
10.2. FORCE MAJEURE. HUMITECH, INC., and Distributor shall not be liable for any delay in the delivery or sale of any Products if such delay is due to any cause beyond the reasonable control of HUMITECH, INC. or Distributor. In the event of any such delay, the dates for performance by HUMITECH, INC. or Distributor shall be extended for a period equal to the time lost by reason of such delay.
10.3. DISTRIBUTOR NOT AGENT. Distributor is an independent contractor and shall not be considered in any respect an agent or representative of HUMITECH, INC. and the Distributor shall not represent or hold out itself or its agents or representatives as the agents or representatives of HUMITECH, INC., nor shall it allow others to do so.
10.4. ASSIGNABILITY. This Agreement may not be assigned or otherwise transferred by the Distributor without prior written consent by HUMITECH, INC. Any purported attempt to assign or transfer this Agreement without HUMITECH, Inc.'s prior written consent shall be null and void and shall, at HUMITECH, Inc.'s option immediately terminate this Agreement.
10.5. CONFIDENTIALITY. The Parties agree to concurrently enter into a binding Confidentiality Agreement.
10.6. CHANCRE IN CONTROL. Transfer of a controlling interest in Distributor to a party not in control at the time of execution of this Agreement shall be deemed an assignment without HUMITECH International Group, Inc.'s consent.
10.7. USE OF TRADE NAME. The Distributor shall not use in it's corporate, firm or individual name, or allow to be used by others in their corporate, firm or individual names, insofar as the Distributor has any power to prevent such use, the words HUMITECH, Inc., Airsopure, and/or any other name, logo or trademark adopted by HUMITECH, INC. for products or service or any words or names or combinations of words or names closely resembling any of them, without HUMITECH permission, which is hereby given. HUMITECH reserves the right to request that the words HUMITECH be removed from the Distributor's trade name at its sole discretion.
10.8. WARRANTY. The warranty for the Products is set forth in the Product Literature and Installation, Operation and Maintenance manuals.
THE WARRANTY SET FORTH IN THE PRODUCT LITERATURE AND INSTALLATION, OPERATION AND MAINTENANCE MANUALS CONSTITUTES THE ENTIRE WARRANTY OF HUMITECH INTERNATIONAL GROUP, INC. WITH RESPECT TO THE PRODUCTS SOLD HEREUNDER AND IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR ANY WARRANTY AGAINST INFRINGEMENT, ALL OF WHICH ARE HEREBY EXPRESSLY DISCLAIMED. DISTRIBUTOR SHALL NOT CHARGE HUMITECH INTERNATIONAL GROUP, INC. FOR ANY WARRANTY LABOR.
10.9. DISCLAIMERS. IN NO EVENT SHALL HUMITECH INTERNATIONAL GROUP, INC. BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM ANY PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT, OR ANY PURCHASE ORDER ISSUED HEREUNDER, OR THE USE OR PERFORMANCE OF THE PRODUCTS SOLD HEREUNDER, WHETHER DUE TO BREACH OF CONTRACT, BREACH OF WARRANTY, NEGLIGENCE OR OTHERWISE.
10.10. NOTICES. Any notice required or permitted hereunder shall be sufficient if sent by first-class mail, postage prepaid to the other party at the address specified herein, except that any notice of termination or other pertinent responsibilities, may be by certified mail, return receipt requested. Either party may designate a new address for the purposes of notice by certified mail, return receipt requested.
10.11. GOVERNING LAW. This Agreement shall be construed and the relations between the parties determined in accordance with the laws of the State of Texas in the County of Dallas.
10.12. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the parties and supersedes all prior agreements, representations, promises and understandings, whether written or oral, which have been made in connection with the subject matter hereof. Any terms and conditions on any purchase order or other document issued by the Distributor shall be inapplicable to any sale of Products pursuant to this Agreement.
10.13. BINDING EFFECT. This Agreement shall be binding upon, inure to the benefit of, and be enforceable by and against the parties hereto and their respective heirs, successors, personal representatives, legal representatives and assigns.
10.14. CAPTIONS. The headings used in this Agreement are for illustrative purposes only, the wording in the paragraphs will control.
10.15. ARBITRATION. The Parties agree to submit any disputes arising from this Agreement to binding Arbitration in lieu of other legal means of resolutions. The Parties agree that the Arbitration will be held in Dallas, Texas under the control of the American Arbitration Association or equivalent, if not available.
10.16. ACCEPTED BY: (DISTRIBUTOR) ON DATE FIRST WRITTEN ABOVE.
BROWN & LAMPE AG
Bernard Brown, CEO Address for notice:
A-1010 Wien, Borsegesellschaff Wippliningerstrasse 34, Vienna, AUSTRIA
Bernard Brown Chairman --------------------------------------------- Print or Type Name Title /s/ Bernard Brown October 10, '02 --------------------------------------------- Signature Date |
Additional notice to:
APPROVED BY: HUMITECH, INC. ON DATE FIRST WRITTEN ABOVE.
HUMITECH INC.
C.J. Comu, Chairman
Address for notice: 15851 Dallas Pkwy, Suite 410, Addison, TX, 75001 USA
C.J. Comu CEO --------------------------------------------- Print or Type Name Title /s/ C. J. Comu 10/1/01 --------------------------------------------- Signature Date |
Exhibit 10.3
Lease Agreement between Utah State Retirement Investment Fund and Humitech, Inc.
LEASE AGREEMENT BETWEEN
UTAH STATE RETIREMENT INVESTMENT FUND, AS LANDLORD, AND
SUITE 410
DATED APRIL 30, 2002
TABLE OF CONTENTS
Page
----
l. DEFINITION...........................................................4
2. PREMISES.............................................................4
3 TERM.................................................................4
4. USE..................................................................4
5. RENT.................................................................4
5.1 Base Rent...................................................4
5.2 Base Rent Adjustment........................................4
5.3 Additional Rent.............................................4
5.4 Parking Charge..............................................5
5.5 Payment of Rent.............................................5
5.6 Delinquent Payments and Handling Charge.....................5
5.7 Prepaid Rent and Security Deposit...........................5
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6. CONSTRUCTION OF IMPROVEMENTS.........................................5
6.1 General.....................................................5
6.2 Access by Tenant Prior to Commencement of Term..............5
6.3 Commencement Date; Adjustments to Commencement Date.........5
7. SERVICES TO BE FURNISHED BY LANDLORD.................................6
7.1 General.....................................................6
7.2 Keys........................................................6
7.3 Tenant Identity.............................................6
7.4 Charges.....................................................6
7.5 Operating Hours.............................................7
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8. REPAIR AND MAINTENANCE...............................................7
8.1 By Landlord.................................................7
8.2 By Tenant...................................................7
9. TAXES ON TENANT'S PROPERTY...........................................7
10. TRANSFER BY TENANT...................................................7
10.1 General.....................................................7 10.2 Conditions .................................................7 10.3 Liens.......................................................8 |
11. ALTERATIONS..........................................................8
12. SPECIFICALLY PROHIBITED USES.........................................8
13. ACCESS BY LANDLORD...................................................8
14. CONDEMNATION.........................................................8
15. CASUALTY ............................................................9
15.1 General.....................................................9
15.2 Acts of Tenant..............................................9
16. SUBORDINATION AND ATTORNMENT.........................................9
16.1 General.....................................................9
16.2 Attornment..................................................9
22. RIGHT TO RELOCATE...................................................10
23. QUIET ENJOYMENT.....................................................10
24. DEFAULT BY TENANT...................................................10
24.1 Events of Default..........................................10 24.2 Remedies of Landlord.......................................11 24.3 Payment by Tenant..........................................11 24.4 Reletting..................................................11 24.5 Landlord's Right to Pay or Perform.........................11 24.6 No Waiver; No Implied Surrender............................11 |
25. DEFAULTS BY LANDLORD................................................12
26. RIGHT OF REENTRY....................................................12
27. MISCELLANEOUS ......................................................12
27.1 Independent Obligations; No Offset.........................12 27.2 Time of Essence............................................12 27.3 Applicable Law.............................................12 27.4 Assignment by Landlord.....................................12 27.5 Commencement Date and Estoppel Certificates ...............12 27.6 Signs, Building Name and Building Address..................12 27.7 Notices....................................................12 27.8 Entire Agreement, Amendment and Binding Effect.............13 27.9 Severability...............................................13 27.10 Number and Gender, Captions and References.................13 27.11 Attorneys' Fees ...........................................13 27.12 Brokers ...................................................13 27.13 Interest on Tenant's Obligations...........................13 27.14 Authority .................................................13 27.15 Recording .................................................13 27.16 Exhibits...................................................13 27.17 Multiple Counterparts .....................................14 |
Signature Page......................................................14
THIS LEASE AGREEMENT (this "LEASE") is entered as of April 30, 2002, between UTAH STATE RETIREMENT INVESTMENT FUND ("LANDLORD") and HUMITECH, INC., A NEVADA CORPORATION ("TENANT").
1. DEFINITIONS. The definitions of certain of the capitalized terms used in this Lease are set forth in the Glossary of Defined Terms attached as Exhibit A.
2. PREMISES. Subject to the provisions of this Lease, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, approximately 2,994 rentable square feet of space in the Building known as THE MADISON, which space is outlined on the floor plan attached hereto as Exhibit B (the "PREMISES"). In connection with such demise, Landlord hereby grants to Tenant the non-exclusive right to use during the Term all Common Areas designed for the use of all tenants in the Building, in common with all tenants in the Building and their invitees, for the purposes for which designed and in accordance with all Legal Requirements. By occupying the Premises, Tenant accepts the Premises as being suitable for Tenant's intended use of the Premises.
3. TERM. The Term of this Lease shall commence on the Commencement Date (which is scheduled to be May 1, 2002) and shall expire at 5:00 p.m. October 31, 2005 unless earlier terminated as provided herein (the "TERM").
4. USE. Tenant shall occupy and use the Premises solely for lawful, general business office purposes in strict compliance with the Building Rules and Regulations from time to time in effect and all other Legal Requirements.
5. RENT.
5.1 BASE RENT. In consideration of Landlord's leasing the Premises to Tenant, Tenant shall pay to Landlord as follows:
Monthly
Term Amount
---- ------
May 1, 2002 - June 30, 2002 Waived
July 1, 2002 - October 31, 2002 $3,742.50 / month
November 1, 2002 - October 31, 2003 $4,740.50 / month
November 1, 2003 - October 31, 2004 $5,114.75 / month
November 1, 2004 - October 31, 2005 $5,364.25 / month
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The Base Rent set forth in this Section 5.1 is a negotiated figure and shall govern whether or not the actual gross rentable square footage of the Premises is the same as set forth in Section 2 hereof or changes pursuant to the standards set in the definition of Net Rentable Area. Tenant shall have no right to withhold, deduct or offset any amount of the monthly Base Rent or any other sum due hereunder even if the actual gross rentable square footage of the Premises is less than that set forth in Section 2 hereof or changes pursuant to the standards set forth in the definition of Net Rentable Area.
[5.2 Deleted]
5.3 ADDITIONAL RENT. For purposes of this Lease, Tenant's "ADDITIONAL
RENT" for any Fiscal Year (or portion thereof) shall mean the sum of (a)
Tenant's Prorata Share of Operating Expenses plus (b) Tenant's Prorata Share of
Impositions. For purposes of this Lease, Tenant's Prorata Share of Operating
Expenses shall mean and be equal to the product of (x) Net Rentable Area of the
Premises multiplied by (y) the difference, if positive, between (i) the amount
of Operating Expenses divided by the Net Rentable Area of the Building minus
(ii) the Expense Stop, all as applicable for the period in question. For
purposes of this Lease, Tenant's Prorata Share of Impositions shall mean and be
equal to the product of (x) Net Rentable Area of the Premises multiplied by (y)
the difference, if positive, between (i) the amount of Impositions divided by
the Net Rentable Area of the Building minus (ii) the Impositions Stop, all as
applicable for the period in question. By the Commencement Date, Landlord shall
estimate the Additional Rent to be due by Tenant for the balance of the Fiscal
Year in which the Commencement Date occurs. Thereafter, unless Landlord delivers
to Tenant a revision of the estimated Additional Rent, Tenant shall pay to
Landlord, coincident with Tenant's payment of Base Rent, an amount equal to the
estimated Additional Rent for the remainder of such year divided by the number
of months remaining in such year. From time to time during any Fiscal Year,
Landlord may estimate and re-estimate the Additional Rent to be due by Tenant
for that Fiscal Year and deliver a copy of the estimate or re-estimate to
Tenant. Thereafter, the monthly installments of Additional Rent payable by
Tenant shall be appropriately adjusted in accordance with the estimation so
that, by the end of the Fiscal Year, Tenant shall have paid all of the
Additional Rent as estimated by Landlord. After the conclusion of each Fiscal
Year during the Term, and after the termination or expiration of the Term,
Landlord shall deliver to Tenant a statement of actual Additional Rent due by
Tenant for the Fiscal Year (or, with respect to termination or expiration, the
portion of the Fiscal Year) just ended. Within 30 days thereafter, Tenant shall
pay to Landlord or Landlord shall credit against the next installment of
Additional Rent due by Tenant (or Landlord shall refund to Tenant, if the Term
has expired and all payments due by Tenant to Landlord have been paid in full)
the difference between the actual Additional Rent due for such year and the
estimated Additional Rent paid by Tenant during such year. Tenant may review, at
Tenant's expense and after giving 20-days' prior written notice to Landlord,
Landlord's records relating to Operating Expenses and Impositions for any
periods within two Fiscal Years prior to the review; provided, however, no
review shall extend to periods of time preceding the Commencement Date. In lieu
of allowing Tenant to review Landlord's records under this Section 5.3, Landlord
may deliver to Tenant a report of the Operating Expenses and Impositions
prepared by a certified public accountant, which report shall be conclusive for
purposes of this Lease.
5.4 PARKING CHARGE. Tenant shall at all times during the Tern lease from Landlord twelve (12) unassigned automobile parking spaces in the Parking Facility at no extra charge. TENANT MAY ALSO LEASE FOUR (4) RESERVED PARKING SPACES FOR A MONTHLY FEE OF $25.00 PER SPACE FOR MONTHS 1 - 12, $50.00 PER SPACE FOR MONTHS 13 - 24 AND $75.00 PER SPACE FOR MONTHS 25 - 42.
5.5 PAYMENT OF RENT. Except as otherwise expressly provided in this Lease, all Rent shall be due in advance monthly installments on the first day of each calendar month during the Tenn. Rent shall be paid to Landlord at its address recited in Section 27.7 or to such other person or at such other address as Landlord may from time to time designate in writing. Rent shall be paid without notice, demand, abatement, deduction or offset in legal tender of the United States of America. If the Term commences or ends on other than the first or the last day of a calendar month, the Rent for the partial month shall be prorated on the basis of the number of days during the month for which the Term was in effect. If the Term commences or ends on other than the first or the last day of a Fiscal Year, the Additional Rent for the partial Fiscal Year shall be prorated on the basis of the number of days during the Fiscal Year for which the Term was in effect.
5.6 DELINQUENT PAYMENTS AND HANDLING CHARGE. All Rent and other payments required of Tenant hereunder shall bear interest from the date due until the date paid at the rate of interest specified in Section 27.13. Alternatively, Landlord may charge Tenant, as additional Rent hereunder, a fee equal to five percent of the delinquent payment to reimburse Landlord for its cost and inconvenience incurred as a consequence of Tenant's delinquency. In no event, however, shall the charges permitted under this Section 5.6 or elsewhere in this Lease, to the extent the same are considered to be interest under applicable law, exceed the maximum rate of interest allowable under applicable law.
5.7 PREPAID RENT AND SECURITY DEPOSIT. Landlord hereby acknowledges receipt of $5,114.75 representing (a) the Security Deposit as security for the full and timely payment and performance by Tenant of its obligations under this Lease. Landlord may apply any or all of the Security Deposit toward the payment of any sum or the performance of any obligation which Tenant was obligated, but failed, to pay or perform hereunder. The Security Deposit shall not be considered an advance payment of Rent by Tenant or a measure of or a limit to Landlord's damages upon an Event of Default. TENANT SHALL PAY TO LANDLORD A DEPOSIT OF $20.00 FOR EACH ACCESS CARD REQUESTED TO GAIN ACCESS TO THE BUILDING.
6. CONSTRUCTION OF IMPROVEMENTS.
6.1 GENERAL. Subject to events of Force Majeure, Landlord shall install, furnish, perform and apply, at its expense, the Landlord's Work as specified in the Work Letter. Performance of the Landlord's Work shall constitute Landlord's sole construction obligation to Tenant under this Lease.
6.2 ACCESS BY TENANT PRIOR TO COMMENCEMENT OF TERM. Provided that Tenant obtains and delivers to Landlord the certificates or policies of insurance called for in Section 17.1, Landlord, in its sole discretion, may permit Tenant and its employees, agents, contractors and suppliers to enter the Premises before the Commencement Date (and such entry, alone, shall not constitute Tenant's taking possession of the Premises for the purpose of Section 6.3(c)) to prepare the Premises for Tenant's occupancy. Tenant and each other person or firm who or which enters the Premises before the Commencement Date shall conduct itself so as to not interfere with Landlord or other occupants of the Building. Landlord may withdraw any permission granted under this Section 6.2 upon 24-hours' notice to Tenant if Landlord, in its sole discretion, determines that any such interference has been or may be caused. Any prior entry shall be under all of the terms of this Lease (other than the obligation to pay Base Rent and Additional Rent) and at Tenant's sole risk. Landlord shall not be liable in any way for personal injury, death or property damage (including damage to any personal property which Tenant may bring into, or any work which Tenant may perform in, the Premises) which may occur in or about the Complex by Tenant or such other person or firm as a result of any prior entry.
6.3 COMMENCEMENT DATE: ADJUSTMENTS TO COMMENCEMENT DATE. For purposes of this Lease, the "COMMENCEMENT Date" shall mean the earliest of: (a) the date on which Landlord substantially completes the Landlord's Work and tenders possession of the Premises to Tenant; or (b) the date on which Landlord would have substantially completed the Landlord's Work and tendered possession of the Premises to Tenant but for (i) the delay or failure of Tenant to furnish information or other matters required in the Work Letter, (ii) Tenant's request for changes in the Plans or non-Building Standard Items or (iii) any other action or inaction of Tenant, or any person or firm employed or retained by Tenant or the date on which Tenant takes possession of the Premises. If by the scheduled Commencement Date specified in Section 3 the Landlord's Work has not been substantially completed, and such failure to substantially complete renders the Premises untenable for their intended purpose, all as reasonably determined by Landlord, or Landlord is unable to tender possession of the Premises to Tenant, then the Commencement Date (and the commencement of payment of Base Rent and Additional Rent) shall be postponed until the Landlord's Work is substantially completed as reasonably determined by Landlord or until possession of the Premises is tendered to Tenant, as the case may be. Such postponement shall extend the scheduled expiration of the Term for a number of days equal to the postponement. The postponement of the payment of Base Rent and Additional Rent under this Section 6.3 shall be Tenant's exclusive remedy for Landlord's delay in completing the Landlord's Work or tendering possession of the Premises to Tenant.
7. SERVICES TO BE FURNISHED BY LANDLORD.
7.1 GENERAL. Subject to applicable Legal Requirements and Tenant's performance of its obligations hereunder, Landlord shall use all reasonable efforts to furnish the following services:
(a) Air-conditioning and heating to the Premises during Building Operating Hours, at such temperatures and in such amounts as are considered by Landlord to be suitable and standard (thus excluding air-conditioning or heating for electronic data processing or other specialized equipment);
(b) Hot and cold water at those points of supply common to all floors for lavatory and drinking purposes only;
(c) Janitor service and periodic window washing in and about the Building and the Premises;
(d) Elevator service, if necessary, to provide access to and egress from the Premises;
(e) Electric current during Building Operating Hours for normal office machines and other machines of low electrical consumption (which shall exclude electric current for electronic data processing equipment, lighting in excess of Building Standard or any other item of electrical equipment which singly consumes more than 0.5 kilowatts per hour at rated capacity or requires a voltage other than 120 volts single phase); and
(f) Replacement of fluorescent lamps in Building Standard light fixtures installed by Landlord and of incandescent bulbs or fluorescent lamps in all public restrooms, stairwells and other common areas in the Building.
If any of the services described above or elsewhere in this Lease are interrupted, Landlord shall use reasonable diligence to promptly restore same. However, neither the interruption or cessation of such services nor the failure of Landlord to restore same shall render Landlord liable for damages to person or property, or be construed as an eviction of Tenant, or work an abatement of Rent or relieve Tenant from fulfilling any of its other obligations hereunder.
7.2 KEYS. Landlord shall furnish Tenant, at Landlord's expense, with (four 4) keys, and at Tenant's expense with such additional keys as Tenant may request, to unlock each corridor door entering the Premises. Tenant shall not install, or permit to be installed, any additional lock on any door into or in the Premises or make, or permit to be made, any duplicates of keys to the Premises. Landlord shall be entitled at all times to possession of a duplicate of all keys to all doors to or inside of the Premises. All keys referred to in this Section 7.2 shall remain the property of Landlord. Upon the expiration or termination of the Term, Tenant shall surrender all such keys to Landlord and shall deliver to Landlord the combination to all locks on all safes, cabinets and vaults which will remain in the Premises. Landlord shall be entitled to install, operate and maintain security systems in or about the Premises and the Complex which monitor, by closed circuit television or otherwise, all persons leaving or entering the Complex, the Building and the Premises.
7.3 TENANT IDENTITY. Landlord shall provide and install, in Building
Standard graphics, letters or numerals identifying Tenant's name and suite
number on entrance doors to the Premises. Without Landlord's prior written
consent, no other signs, numerals, letters, graphics, symbols or marks
identifying Tenant shall be placed on the exterior, or on the interior if they
are visible from the exterior, of the Premises. Landlord shall install up to one
(1) directory strip(s) for each 2,994 net rentable square feet in the Premises,
listing the names and suite numbers of Tenant on the Building directory board to
be placed in the main lobby of the Building.
7.4 CHARGES. Tenant shall pay to Landlord, monthly as billed, as additional Rent, such charges as may be separately metered or as Landlord may compute for the following:
(a) any utility services utilized by Tenant for computers, data processing equipment or other electrical equipment in excess of that agreed to be furnished by Landlord pursuant to Section 7.1(e),
(b) lighting installed in the Premises in excess of Building Standard lighting, or provided at times other than Building Standard Hours;
(c) air-conditioning, heating and other services in excess of that stated in Section 7.1 (a) or provided at times other than Building Operating Hours; and
(d) janitorial services required with respect to Non-Building Standard Items within the Premises.
HVAC and lighting utilized at times other than Building Standard Hours will be furnished only upon the request of Tenant, provided that Tenant shall pay to the Landlord for the actual costs of such additional services monthly, upon receipt of a bill therefor, the sum equal to the amount charged to Landlord by the applicable utilities authority plus a $10.00 monthly service charge for such metering recording device. Tenant acknowledges that such service and temperature may be subject to change by local, county, state or federal regulation. Whenever machines or equipment that generate abnormal heat are used in the Leased Premises which affect the temperature otherwise maintained by the air conditioning system, Landlord shall have the right to install supplemental air conditioning in the Leased Premises, and the cost thereof, including the cost of installation, operating, use and maintenance, shall be paid by Tenant to Landlord as additional rental upon demand.
With respect to any other Non-Building Standard services provided to Tenants Landlord may elect to estimate the charges to be paid by Tenant under this Section 7.4 and bill such charges to Tenant monthly in advance, in which event Tenant shall promptly pay the estimated charges. When the actual charges are determined by Landlord an appropriate cash adjustment shall be made between Landlord and Tenant to account for any underpayment or overpayment by Tenant.
7.5 OPERATING HOURS. Subject to Building Rules and Regulations and such security standards as Landlord may from time to time adopt, the Building shall be open to the public during the Building Operating Hours and the Premises shall be open to Tenant during hours other than Building Operating Hours.
8. REPAIR AND MAINTENANCE.
8.1 By Landlord. Landlord shall maintain the Building (excluding leasehold improvements which become fixtures thereto) in a good and operable condition, and shall make such repairs and replacements as may be required to maintain the Building in such condition. This Section 8.1 shall not apply to damage resulting from a Taking (as to which Section 14 shall apply), or damage resulting from a casualty (as to which Section 15.1 shall apply) or to damage for which Tenant is otherwise responsible under this Lease.
8.2 By Tenant. Tenant shall maintain the Premises in a clean, safe, operable, attractive condition, and will not commit or allow to remain any waste or damage to any portion of the Premises. Tenant shall repair or replace, subject to Landlord's direction and supervision, any damage to the Complex caused by Tenant or Tenant's agents, contractors or invitees. If Tenant fails to make such repairs or replacements, Landlord may make same at Tenant's cost. Such cost shall be payable to Landlord by Tenant on demand as additional Rent. All contractors, workmen, artisans and other persons which or who Tenant proposes to retain to perform work in the Premises (or the Complex, pursuant to the second sentence of this Section 8.2) pursuant to this Section 8.2 or Section 11 shall be approved by Landlord prior to the commencement of any such work.
9. TAXES ON TENANT'S PROPERTY. Tenant shall be liable for and shall pay, before their becoming delinquent, all taxes and assessments levied against any personal property placed by Tenant in the Premises (even if same becomes a fixture by operation of law or the property of Landlord by operation of this Lease), including any additional Impositions which may be assessed, levied, charged or imposed against Landlord or the Building by reason of Non-Building Standard Items in the Premises. Tenant may withhold payments of any taxes and assessments described in this Section 9 so long as Tenant contests its obligation to pay in accordance with applicable law and the non-payment thereof does not pose a threat of loss or seizure of the Building or any interest of Landlord therein.
10. TRANSFER BY TENANT.
10.1 GENERAL. Without the prior written consent of Landlord, Tenant shall not effect or suffer any Transfer. Any attempted Transfer without such consent shall be void. If Tenant desires to effect a Transfer, it shall deliver to Landlord written notice thereof in advance of the date on which Tenant proposes to make the Transfer, together with all of the terms of the proposed Transfer and the identity of the proposed Transferee. Landlord shall have 30 days following receipt of the notice and information within which to notify Tenant in writing whether Landlord elects (a) to refuse to consent to the Transfer and to terminate this Lease as to the space proposed to be Transferred as of the date so specified by Tenant, in which event Tenant will be relieved of all further obligations hereunder as to such space, (b) to refuse to consent to the Transfer and to continue this Lease in full force as to the entire Premises or (c) to permit Tenant to effect the proposed Transfer. If Landlord fails to notify Tenant of its election within said 30 day period, Landlord shall be deemed to have elected option (b). The consent by Landlord to a particular Transfer shall not be deemed a consent to any other Transfer. If a Transfer occurs without the prior written consent of Landlord as provided herein, Landlord may nevertheless collect rent from the Transferee and apply the net amount collected to the Rent payable hereunder, but such collection and application shall not constitute a waiver of the provisions hereof or a release of Tenant from the further performance of its obligations hereunder.
10.2 CONDITIONS. The following conditions shall automatically apply to each Transfer, without the necessity of same being stated in or referred to in Landlord's written consent:
(a) Tenant shall execute, have acknowledged and deliver to Landlord, and cause the Transferee to execute, have acknowledged and deliver to Landlord, an instrument in form and substance acceptable to Landlord in which (i) the Transferee adopts this Lease and agrees to perform, jointly and severally with Tenant, all of the obligations of Tenant hereunder, as to the space transferred to it, (ii) the Transferee grants Landlord an express first and prior security interest in its personal property brought into the transferred space to secure its obligations to Landlord hereunder, (iii) Tenant subordinates to
Landlord's statutory lien and security interest any liens, security interests or other rights which Tenant may claim with respect to any property of the Transferee, (iv) Tenant agrees with Landlord that, if the rent or other consideration due by the Transferee exceeds the Rent for the transferred space, then Tenant shall pay Landlord as additional Rent hereunder all such excess rent and other consideration immediately upon Tenant's receipt thereof, (v) Tenant and the Transferee agree to provide to Landlord, at their expense, direct access from a public corridor in the Building to the transferred space, (vi) the Transferee agrees to use and occupy the transferred space solely for the purpose specified in Section 4 and otherwise in strict accordance with this Lease and (vii) Tenant acknowledges that, notwithstanding the Transfer, Tenant remains directly and primarily liable for the performance of all the obligations of Tenant hereunder (including, without limitation, the obligation to pay all Rent), and Landlord shall be permitted to enforce this Lease against Tenant or the Transferee, or both, without prior demand upon or proceeding in any way against any other persons, and
(b) Tenant shall deliver to Landlord a counterpart of all instruments relative to the Transfer executed by all parties to such transaction (except Landlord).
10.3 LIENS. Without in any way limiting the generality of the foregoing, Tenant shall not grant, place or suffer, or permit to be granted, placed or suffered, against the Complex or any portion thereof, any lien, security interest, pledge, conditional sale contract, claim, charge or encumbrance (whether constitutional, contractual or otherwise) and if any of the aforesaid does arise or is asserted, Tenant will, promptly upon demand by Landlord and at Tenant's expense, cause same to be released.
11. ALTERATIONS. Tenant shall not make, or permit to be made, any alteration, improvement or addition to, or install, or permit to be installed, any fixture or equipment (other than desk top electrical equipment) in, the Premises without the prior written consent of Landlord. All such alterations, improvements and additions (including all articles attached to the floor, wall or ceiling of the Premises) shall become the property of Landlord and shall, at Landlord's election, be (a) surrendered with the Premises as part thereof at the termination or expiration of the Term, without any payment, reimbursement or compensation therefor, or (b) removed by Tenant, at Tenant's expense, with all damage caused by such removal repaired by Tenant. Tenant may remove Tenant's trade fixtures, office supplies, movable office furniture and equipment not attached to the Building provided such removal is made within five days after the expiration of the Term, no uncured Event of Default has occurred and Tenant promptly repairs all damage caused by such removal.
12. SPECIFICALLY PROHIBITED USES. Tenant will not (a) use, occupy or permit the use or occupancy of the Premises for any purpose or in any manner which is or may be, directly or indirectly, violative of any Legal Requirement, or dangerous to life or property, or a public or private nuisance or disruptive or obstructive of any other tenant of the Building, (b) keep, or permit to be kept, any substance in or conduct, or permit to be conducted, any operation from the Premises which might emit offensive odors or conditions into other portions of the Building, or make undue noise or create undue vibrations, (c) commit or permit to remain any waste to the Premises, (d) install or permit to remain any improvements to the Premises (other than window coverings which have first been approved by Landlord) which are visible from the outside of the Premises, or exceed the structural loads of floors or walls of the Building, or adversely affect the mechanical, plumbing or electrical systems of the Building or affect the structural integrity of the Building in any way, (e) install any food, soft drink or other vending machine (other than those for the exclusive, non-commercial use of Tenant and its business invitees) in the Premises or (f) commit, or permit to be committed, any action or circumstance in or about the Building which, directly or indirectly, would or might justify any insurance carrier in canceling or increasing the premium on the fire and extended coverage insurance policy maintained by Landlord on the Building or contents, and if any increase results from any act of Tenant, then Tenant shall pay such increase promptly upon demand therefor by Landlord.
13. ACCESS BY LANDLORD. Landlord, its employees, contractors, agents and
representatives, shall have the right (and Landlord, for itself and such persons
and firms, hereby reserves the right) to enter the Premises at all hours (a) to
inspect, clean, maintain, repair, replace or alter the Premises or the Building,
(b) to show the Premises to prospective purchasers (or, during the last 12
months of the Term, to prospective tenants), (c) to determine whether Tenant is
performing its obligations hereunder and, if it is not, to perform same at
Landlord's option and Tenant's expense or (d) for any other purpose deemed
reasonable by Landlord. In an emergency, Landlord (and such persons and firms)
may use any means to open any door into or in the Premises without any liability
therefor. Entry into the Premises by Landlord or any other person or firm named
in the first sentence of this Section 13 for any purpose permitted herein shall
not constitute a trespass or an eviction (constructive or otherwise), or entitle
Tenant to any abatement or reduction of Rent, or constitute grounds for any
claim (and Tenant hereby waives any claim) for damages for any injury to or
interference with Tenant's business, for loss of occupancy or quiet enjoyment or
for consequential damages.
14. CONDEMNATION. If all of the Complex is Taken, or if so much of the Complex is Taken that, in Landlord's opinion, the remainder cannot be restored to an economically viable, quality office building, or if the awards payable to Landlord as a result of any Taking are, in Landlord's opinion, inadequate to restore the remainder to an economically viable, quality office building, Landlord may, at its election, exercisable by the giving of written notice to Tenant within 60 days after the date of the Taking, terminate this Lease as of the date of the Taking or the date Tenant is deprived of possession of the Premises (whichever is later). If this Lease is not terminated as a result of a Taking, Landlord shall restore the Premises remaining after the Taking to a Building Standard condition. During the period of restoration, Base Rent shall be abated to the extent the Premises are rendered untenantable and, after the period of restoration, Base Rent and Tenant's Share shall be reduced in the proportion that the area of the Premises Taken or otherwise rendered untenantable bears to the area of the Premises just prior to the Taking. If any portion of Base Rent is abated under this Section 14, Landlord may elect to extend the expiration date of the Term for the period of the abatement. All awards, proceeds, compensation or other payments from or with respect to any Taking of the Complex or any portion thereof shall belong to Landlord, Tenant hereby assigning to Landlord all of its right, title, interest and claim to same. Tenant may assert a claim for and recover from the condemning authority, but not from Landlord, such compensation as may be awarded on account of Tenant's moving and relocation expenses, and depreciation to and loss of Tenant's moveable personal property.
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15. CASUALTY.
15.1 GENERAL. Tenant shall give prompt written notice to Landlord of any casualty to the Complex of which Tenant is aware and any casualty to the Premises. If the Complex or the Premises are totally destroyed, or if the Complex or the Premises are partially destroyed but in Landlord's opinion, they cannot be restored to an economically viable, quality office building, or if the insurance proceeds payable to Landlord as a result of any casualty are, in Landlord's opinion, inadequate to restore the portion remaining to an economically viable and quality office building, Landlord may, at its election exercisable by the giving of written notice to Tenant within 60 days after the casualty, terminate this Lease as of the date of the casualty or the date Tenant is deprived of possession of the Premises (whichever is later). If this Lease is not terminated as a result of a casualty, Landlord shall (subject to Section 15.2) restore the Premises to a Building Standard condition. During the period of restoration, Base Rent shall be abated to the extent the Premises are rendered untenantable and, after the period of restoration, Base Rent and Tenant's Share shall be reduced in the proportion that the area of the Premises remaining tenantable after the casualty bears to the area of the Premises just prior to the casualty. If any portion of Base Rent is abated under this Section 15.1, Landlord may elect to extend the expiration date of the Term for the period of the abatement.
15.2 ACTS OF TENANT. Notwithstanding any provisions of this Lease to the contrary, if the Premises or the Complex are damaged or destroyed as a result of a casualty arising from the acts or omissions of Tenant, or any of Tenant's officers, directors, shareholders, partners, employees, contractors, agents, invitees or representatives, (a) Tenant's obligation to pay Rent and to perform its other obligations under this Lease shall not be abated, reduced or altered in any manner, (b) Landlord shall not be obligated to repair or restore the Premises or the Complex and (c) subject to Section 17.2, Tenant shall be obligated, at Tenant's cost, to repair and restore the Premises or the Complex to the condition they were in just prior to the damage or destruction under the direction and supervision of, and to the satisfaction of, Landlord and any Landlord Mortgagee.
16. SUBORDINATION AND ATTORNMENT.
16.1 GENERAL. This Lease, Tenant's leasehold estate created hereby and all of Tenant's rights, titles and interests hereunder and in and to the Premises are subject and subordinate to any Mortgage presently existing or hereafter placed upon all or any portion of the Complex. However, Landlord and Landlord's Mortgagee may, at any time upon the giving of written notice to Tenant and without any compensation or consideration being payable to Tenant, make this Lease, and the aforesaid leasehold estate and rights, titles and interests, superior to any Mortgage. Upon the written request by Landlord or by Landlord's Mortgagee to Tenant, and within five (5) days of the date of such request, and without any compensation or consideration being payable to Tenant, Tenant shall execute, have acknowledged and deliver a recordable instrument confirming that this Lease, Tenant's leasehold estate in the Premises and all of Tenant's rights, titles and interests hereunder are subject and subordinate (or, at the election of Landlord or Landlord's Mortgagee, superior) to the Mortgage benefiting Landlord's Mortgagee.
16.2 ATTORNMENT. Upon the written request of any person or party succeeding to the interest of Landlord under this Lease, Tenant shall automatically become the tenant of and attorn to such successor in interest without any change in any of the terms of this Lease. No successor in interest shall be (a) bound by any payment of Rent for more than one month in advance, except payments of security for the performance by Tenant of Tenant's obligations under this Lease, (b) subject to any offset, defense or damages arising out of a default or any obligations of any preceding Landlord or (c) bound by any amendment of this Lease entered into after Tenant has been given written notice of the name and address of Landlord's Mortgagee and without the
written consent of Landlord's Mortgagee or such successor in interest. The subordination, attornment and mortgage protection clauses of this Section 16 shall be self-operative and no further instruments of subordination, attornment or mortgagee protection need be required by any Mortgagee or successor in interest thereto. Nevertheless, upon the written request therefor and without any compensation or consideration being payable to Tenant, Tenant agrees to execute, have acknowledged and deliver such instruments as maybe requested to confirm the same.
17. INSURANCE.
17.1 GENERAL. Tenant shall obtain and maintain throughout the Term the following policies of insurance:
(a) fire and all risk insurance, with vandalism, malicious mischief and sprinkler leakage endorsements, on all of Tenant's personal property located in, and on all Non-Building Standard Items to, the Premises in an amount not less than eighty percent of the replacement cost thereof;
(b) comprehensive general and contractual liability insurance against claims for personal injury, bodily injury, death and property damage occurring in or about the Premises, such insurance to afford protection to the limits of not less than $1,000,000 per occurrence;
(c) insurance required hereunder shall be written by companies licensed to do business in the State of Texas and shall have a minimum rating of A:X by Best's Key Rating Guide.
(d) such other policy or policies of insurance as Landlord may reasonably require or as Landlord is then requiring from one or more other tenants in the Building.
Tenant shall deliver to Landlord, prior to the Commencement Date, certificates of such insurance and shall, at all times during the Term, deliver to Landlord upon request true copies of such insurance policies. The policy described in clause (b) shall (i) name Landlord as an additional insured, (ii) provide that it will not be canceled, reduced or non-renewed without 30-days' prior written notice to Landlord, (iii) insure performance of the indemnities of Tenant contained in Section 18 and elsewhere in this Lease and (iv) be primary coverage, so that any insurance coverage obtained by Landlord shall be in excess thereto. Tenant shall deliver to Landlord certificates of renewal at least 30 days before the expiration date of each such policy and copies of new policies at least 30 days before terminating any such policies. All policies of insurance required to be obtained and maintained by Tenant shall be subject to the approval of Landlord as to terms, coverage, deductibles and issuer.
17.2 WAIVER OF SUBROGATION. Landlord and Tenant hereby waive all claims, rights of recovery and causes of action that either party or any party claiming by, through or under such party may now or hereafter have by subrogation or otherwise against the other party or against any of the other party's officers, directors, shareholders, partners or employees for any loss or damage that may occur to the Complex, the Premises, Tenant's improvements or any of the contents of any of the foregoing by reason of fire or other casualty, or by reason of any other cause except gross negligence or willful misconduct (THUS INCLUDING SIMPLE NEGLIGENCE OF THE PARTIES HERETO OR THEIR OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS OR EMPLOYEES), that could have been insured against under the terms of (a) in the case of Landlord, the standard fire and extended coverage insurance policies available in the state where the Complex is located at the time of the casualty and (b) in the case of Tenant, the fire and extended coverage insurance policy required to be obtained and maintained under Section 17.1; provided, however, that the waiver set forth in this Section 17.2 shall not apply to any deductibles on insurance policies carried by Landlord or to any coinsurance penalty which Landlord might sustain. Landlord and Tenant shall cause an endorsement to be issued to their respective insurance policies recognizing this waiver of subrogation.
18. TENANT'S INDEMNITY. Subject to Section 17.2, Tenant shall defend, indemnify and hold harmless Landlord and Landlord's officers, directors, shareholders, partners and employees from and against, all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including court costs and reasonable attorneys' fees) resulting from any injuries to or death of any person or damage to any property occurring during the Term in or about the Premises.
19. THIRD PARTIES; ACTS OF FORCE MAJEURE. Landlord shall have no liability to Tenant, or to Tenant's officers, directors, shareholders, partners, employees, agents, contractors or invitees, for bodily injury, death, property damage, business interruption, loss of profits, loss of trade secrets or other direct or consequential damages occasioned by (a) the acts or omissions of any other tenant or such other tenant's officers, directors, shareholders, partners, employees, agents, contractors or other invitees within the Complex, (b) Force Majeure, (c) vandalism, theft, burglary and other criminal acts (other than those committed by Landlord and its employees), (d) water leakage or (e) the repair, replacement, maintenance, damage, destruction or relocation of the Premises.
20. SECURITY INTEREST. As security for Tenant's payment of Rent and performance of all of its other obligations under this Lease, Tenant hereby grants to Landlord a security interest in all property of Tenant now or hereafter placed in the Premises. Landlord, as secured party, shall be entitled to all of the rights, remedies and recourses afforded to a secured party under the Texas Uniform Commercial Code, which rights, remedies and recourses shall be cumulative of all other rights, remedies, recourses, liens and security interests afforded Landlord by law, equity or this Lease. Contemporaneously with the execution of this Lease, Tenant shall execute and deliver, as debtor, promptly upon request and without any compensation or consideration being payable to Tenant, such additional financing statement or statements as Landlord may request. However, Landlord may at any time file a copy of this Lease as a financing statement.
21. CONTROL OF COMMON AREAS. Landlord shall have the exclusive control over the Common Areas. Landlord may, from time to time, create different Common Areas, close or otherwise modify the Common Areas, and modify and the Building Rules and Regulations with respect thereto.
22. RIGHT TO RELOCATE. Landlord retains the right and power, to be exercised reasonably and at Landlord's expense, to relocate Tenant within the Building in space which is comparable in size to the Premises and is suited to Tenant's use. Instances when the exercise of Landlord's right and power to relocate Tenant shall be deemed reasonable include, but shall not be limited to, instances where Landlord desires to consolidate the rentable area in the Building to provide Landlord's services more efficiently, or to provide contiguous vacant space for a prospective tenant. Landlord shall not be liable to Tenant for any claims arising in connection with a relocation permitted under this Section 22.
23. QUIET ENJOYMENT. Provided Tenant has performed all its obligations under this Lease, Tenant shall and may peaceably and quietly have, hold, occupy, use and enjoy the Premises during the Term subject to the provisions of this Lease. Landlord shall warrant and forever defend Tenant's right to occupancy of the Premises against the claims of any and all persons whomsoever lawfully claiming the same or any part thereof, by, through or under Landlord, but not otherwise, subject to the provisions of this Lease.
24. DEFAULT BY TENANT.
24.1 EVENTS OF DEFAULT. Each of the following occurrences shall constitute an Event of Default (herein so called):
(a) The failure of Tenant to pay Rent as and when due hereunder and the continuance of such failure for a period of three days after written notice from Landlord to Tenant specifying the failure; provided, however, after Landlord has given Tenant written notice pursuant to this clause (a) on two separate occasions Landlord shall not be required to give Tenant any further notice under this clause (a);
(b) The failure of Tenant to perform, comply with or observe any other agreement, obligation or undertaking of Tenant, or any other term, condition or provision, in this Lease, and the continuance of such failure for a period of ten days after written notice from Landlord to Tenant specifying the failure;
(c) The abandonment of the Premises by Tenant or the failure of Tenant to occupy the Premises or any significant portion thereof,
(d) The filing of a petition by or against Tenant (the term "Tenant" also meaning, for the purpose of this clause (d), any guarantor of the named Tenant's obligations hereunder) (i) in any bankruptcy or other insolvency proceeding, (ii) seeking any relief under the Bankruptcy Code or any similar debtor relief law, (iii) for the appointment of a liquidator or receiver for all or substantially all of Tenant's property or for Tenant's interest in this Lease or (iv) to reorganize or modify Tenant's capital structure; and
(e) The admission by Tenant in writing that it cannot meet its obligations as they become due or the making by Tenant of an assignment for the benefit of its creditors.
24.2 REMEDIES OF LANDLORD. Upon any Event of Default, Landlord may, at Landlord's option and in addition to all other rights, remedies and recourses afforded Landlord hereunder or by law or equity, do any one or more of the following:
(a) Terminate this Lease by the giving of written notice to
Tenant, in which event Tenant shall pay to Landlord the sum of (i) all
Rent and other amounts accrued hereunder to the date of termination,
(ii) all amounts due under Section 24.3 and (iii) liquidated damages in
an amount equal to (A) the total Rent that Tenant would have been
required to pay for the remainder of the Term discounted to present
value at the prime lending rate (or equivalent rate, however
denominated) in effect on the date of termination at the largest
national bank in the state where the Complex is located minus (B) the
then present fair rental value of the Premises for such period,
similarly discounted.
(b) Terminate Tenant's right to possession of the Premises
without terminating this Lease by the giving of written notice to
Tenant, in which event Tenant shall pay to Landlord (i) all Rent and
other amounts accrued hereunder to the date of termination of
possession, (ii) all amounts due from time to time under Section 24.3
and (iii) all Rent and other sums required hereunder to be paid by
Tenant during the remainder of the Term, diminished by any net sums
thereafter received by Landlord through reletting the Premises during
said period. Reentry by Landlord in the Premises will not affect the
obligations of Tenant hereunder for the unexpired Term. Landlord may
bring action against Tenant to collect amounts due by Tenant on one or
more occasions, without the necessity of Landlord's waiting until
expiration of the Term. If Landlord elects to proceed under this
Section 24.2(b), it may at any time elect to terminate this Lease
pursuant to Section 24.2(a).
(c) Without notice, alter any and all locks and other security devices at the Premises without being obligated to deliver new keys to the Premises, unless Tenant has cured all Events of Default before Landlord has terminated this Lease under Section 24.2(a) or has entered into a lease to relet all or a portion of the Premises.
(d) If an Event of Default specified in Section 24.1 (c) occurs, Landlord may remove and store any property that remains on the Premises, and, if Tenant does not claim such property within ten days after Landlord has delivered to Tenant notice of such storage, Landlord may appropriate, sell, destroy, or otherwise dispose of the property in question without notice to Tenant or any other person and without any obligation to account for such property.
24.3 PAYMENT BY TENANT. Upon any Event of Default, Tenant shall also pay to Landlord all costs and expenses incurred by Landlord, including court costs and reasonable attorneys' fees, in (a) retaking or otherwise obtaining possession of the Premises, (b) removing and storing Tenant's or any other occupant's property, (c) repairing, restating, altering, remodeling or otherwise putting the Premises into condition acceptable to a new tenant or tenants, (d) reletting all or any part of the Premises, (e) paying or performing the underlying obligation which Tenant failed to pay or perform and (f) enforcing any of Landlord's rights, remedies or recourses arising as a consequence of the Event of Default.
24.4 RELETTING. Upon termination of this Lease or upon termination of Tenant's right to possession of the Premises, Landlord shall use reasonable efforts to relet the Premises on such terms and conditions as Landlord in its sole discretion may determine (including a term different than the Term, rental concessions, and alterations to, and improvements of, the Premises); however, Landlord shall not be obligated to relet the Premises before leasing other portions of the Building. Landlord shall not be liable, nor shall Tenant's obligations hereunder be diminished because of, Landlord's failure to relet the Premises or collect rent due in respect of such reletting. Tenant shall not be entitled to the excess of any rent obtained by reletting over the Rent herein reserved.
24.5 LANDLORD'S RIGHT TO PAY OR PERFORM. Upon an Event of Default, Landlord may, but without obligation to do so and without thereby waiving or curing such Event of Default, pay or perform the underlying obligation for the account of Tenant, and enter the Premises and expend the Security Deposit for such purpose.
24.6 NO WAIVER; NO IMPLIED SURRENDER. Provisions of this Lease may only be waived by the party entitled to the benefit of the provision evidencing the waiver in writing. Thus, neither the acceptance of Rent by Landlord following an Event of Default (whether known to Landlord or not), nor any other custom or practice followed in connection with this Lease, shall constitute a waiver by Landlord of such Event of Default or any other Event of Default. Further, the failure by Landlord to complain of any action or inaction by Tenant, or to assert that any action or inaction by Tenant constitutes (or would constitute, with the giving of notice and the passage of time) an Event of Default, regardless of how long such failure continues, shall not extinguish, waive or in any way diminish the rights, remedies and recourses of Landlord with respect to such action or inaction. No waiver by Landlord of any provision of this Lease or of any breach by Tenant of any obligation of Tenant hereunder shall be deemed to be a waiver of any other provision hereof, or of any subsequent breach by Tenant of the same or any other provision hereof. Landlord's consent to any act by Tenant requiring Landlord's consent shall not be deemed to render unnecessary the obtaining of Landlord's consent to any subsequent act of Tenant. No act or omission by Landlord (other than Landlord's execution of a document acknowledging such surrender) or Landlord's agents, including the delivery of the keys to the Premises, shall constitute an acceptance of a surrender of the Premises.
25. DEFAULTS BY LANDLORD. Landlord shall not be in default under this Lease, and Tenant shall not be entitled to exercise any right, remedy or recourse against Landlord or otherwise as a consequence of any alleged default by Landlord under this Lease, unless Landlord fails to perform any of its obligations hereunder and said failure continues for a period of 30 days after Tenant gives Landlord and (provided that Tenant shall have been given the name and address of Landlord's Mortgagee) Landlord's Mortgagee written notice thereof specifying, with reasonable particularity, the nature of Landlord's failure. If, however, the failure cannot reasonably be cured within the 30-day period, Landlord shall not be in default hereunder if Landlord or Landlord's Mortgagee commences to cure the failure within the 30 days and thereafter pursues the curing of same diligently to completion. If Tenant recovers a money judgment against Landlord for Landlord's default of its obligations hereunder or otherwise, the judgment shall be limited to Tenant's actual direct, but not consequential, damages therefor and shall be satisfied only out of the interest of Landlord in the Complex as the same may then be encumbered, and Landlord shall not otherwise be liable for any deficiency. In no event shall Tenant have the right to levy execution against any property of Landlord other than its interest in the Complex. The foregoing shall not limit any right that Tenant might have to obtain specific performance of Landlord's obligations hereunder.
26. RIGHT OF REENTRY. Upon the expiration or termination of the Term for whatever cause, or upon the exercise by Landlord of its right to re-enter the Premises without terminating this Lease, Tenant shall immediately, quietly and peaceably surrender to Landlord possession of the Premises in "broom clean" and good order, condition and repair, except only for ordinary wear and tear, damage by casualty not covered by Section 15.2 and repairs to be made by Landlord pursuant to Section 15.1. If Tenant fails to surrender possession as herein required, Landlord may, without giving Tenant prior notice to vacate the Premises or any other notice, initiate any and all legal action as Landlord may elect to dispossess Tenant and all of its property, and all persons or firms claiming by, through or under Tenant and all of their property, from the Premises, and may remove from the Premises and store (without any liability for loss, theft, damage or destruction thereto) any such property at Tenant's cost. While Tenant remains in possession of the Premises after such expiration, termination or exercise by Landlord of its re-entry right, Tenant shall be deemed to be occupying the Premises as a tenant-at-sufferance, subject to all of the obligations of Tenant under this Lease, except that the daily Rent shall be twice the per day Rent in effect immediately before such expiration, termination or exercise by Landlord. No such holding over shall extend the Term. If Tenant fails to surrender possession of the Premises in the condition herein required, Landlord may, at Tenant's expense, restore the Premises to such condition.
27. MISCELLANEOUS.
27.1 INDEPENDENT OBLIGATIONS; NO OFFSET. The obligations of Tenant to pay Rent and to perform the other undertakings of Tenant hereunder constitute independent unconditional obligations to be performed at the times specified hereunder, regardless of any breach or default by Landlord hereunder. Tenant shall have no right, and Tenant hereby waives and relinquishes all rights which Tenant might otherwise have, to claim any nature of lien against the Complex or to withhold, deduct from or offset against any Rent or other sums to be paid to Landlord by Tenant.
27.2 TIME OF ESSENCE. Time is of the essence with respect to each date or time specified in this Lease by which an event is to occur.
27.3 APPLICABLE LAW. This Lease shall be governed by, and construed in accordance with, the laws of the State of Texas. All monetary and other obligations of Landlord and Tenant are performable in the county where the Complex is located.
27.4 ASSIGNMENT BY LANDLORD. Landlord shall have the right to assign, in whole or in part, any or all of its rights, titles or interests in and to the Complex or this Lease and, upon any such assignment, Landlord shall be relieved of all unaccrued liabilities and obligations hereunder to the extent of the interest so assigned.
27.5 COMMENCEMENT DATE AND ESTOPPEL CERTIFICATES. From time to time at the request of Landlord or Landlord's Mortgagee, Tenant will promptly and without compensation or consideration execute, have acknowledged and deliver a certificate stating (a) the Commencement Date and the date of expiration of the Term, (b) the rights (if any) of Tenant to extend the Term or to expand the Premises, (c) the Rent (or any components of the Rent) currently payable hereunder, (d) whether this Lease has been amended in any respect and, if so, submitting copies of or otherwise identifying the amendments, (e) whether, within the knowledge of Tenant, there are any existing breaches or defaults by Landlord hereunder and, if so, stating the defaults with reasonable particularity and (f) such other information pertaining to this Lease as Landlord or Landlord's Mortgagee may reasonably request.
27.6 SIGNS, BUILDING NAME AND BUILDING ADDRESS. Landlord may, from time to time at its discretion, maintain any and all signs anywhere in the Complex, and to change the name and street address of the Complex. Tenant shall not use the name of the Building for any purpose other than as the address of the business to be conducted by Tenant from the Premises.
27.7 NOTICES. All notices and other communications given pursuant to this Lease shall be in writing and shall either be mailed by first class United States mail, postage prepaid, registered or certified with return receipt requested, and addressed as set forth in this Section 27.7, or delivered in person to the intended addressee, or sent by prepaid telegram, cable or telex followed by a confirmatory letter. Notice mailed in the aforesaid manner shall become effective three business days after deposit; notice given in any other manner, and any notice given to Landlord, shall be effective only upon receipt by the intended addressee. Each party shall have the continuing right to change its address for notice hereunder by the giving of 15 days' prior written notice to the other party in accordance with this Section 27.7. ALL PAYMENTS SHOULD BE MADE PAYABLE TO "THE MADISON OFFICE BUILDING" AND DELIVERED TO THE PROPERTY MANNER'S OFFICE.
Landlord: Tenant: -------- ------ State of Utah Retirement Investment Fund Humitech, Inc. c/o Cottonwood Partners 15851 Dallas Parkway, Suite 410 5956 Sherry Lane, Suite 850 Addison, Texas 75001 Dallas, Texas 75225 cc: Attn: Property Manager Cottonwood Management Services 15851 Dallas Parkway, Suite 725 Addison, Texas 75001 |
27.8 ENTIRE AGREEMENT, AMENDMENT AND BINDING EFFECT. This Lease constitutes the entire agreement between Landlord and Tenant relating to the subject matter hereof and all prior agreements relative hereto which are not contained herein are terminated. This Lease may be amended only by a written document duly executed by Landlord and Tenant (and, if a Mortgage is then in effect, by the Landlord's Mortgagee entitled to the benefits thereof), and any alleged amendment which is not so documented shall not be effective as to either party. The provisions of this Lease shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors and assigns; provided, however, that this Section 27.8 shall not negate, diminish or alter the restrictions on Transfers applicable to Tenant set forth elsewhere in this Lease.
27.9 SEVERABILITY. This Lease is intended to be performed in accordance with and only to the extent permitted by all Legal Requirements. If any provision of this Lease or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, but the extent of the invalidity or unenforceability does not destroy the basis of the bargain between the parties as contained herein, the remainder of this Lease and the application of such provision to other persons or circumstances shall not be affected thereby, but rather shall be enforced to the greatest extent permitted by law.
27.10 NUMBER AND GENDER, CAPTIONS AND REFERENCES. As the context of
this Lease may require, pronouns shall include natural persons and legal
entities of every kind and character, the singular number shall include the
plural and the neuter shall include the masculine and the feminine gender.
Section headings in this Lease are for convenience of reference only and are not
intended, to any extent and for any purpose, to limit or define any section
hereof. Whenever the terms "hereof," "hereby," "herein", "hereunder" or words of
similar import are used in this Lease, they shall be construed as referring to
this Lease in its entirety rather than to a particular section or provision,
unless the context specifically indicates to the contrary. Any reference to a
particular "Section" shall be construed as referring to the indicated section of
this Lease.
27.11 ATTORNEYS' FEES. If either party hereto initiates any litigation against the other party relating to this Lease, the prevailing party shall be entitled to recover, in addition to all damages allowed by law and other relief, all court costs and reasonable attorneys' fees incurred in connection with such litigation.
27.12 BROKERS. Tenant and Landlord hereby warrant and represent unto the other that it has not incurred or authorized any brokerage commission, finder's fees or similar payments in connection with this Lease, other than that which is due to Cottonwood Partners, which payment shall be paid by Landlord. Each party shall defend, indemnify and hold the other harmless from and against any claim for brokerage commission, finder's fees or similar payment arising by virtue of authorization of such party, or any Affiliate of such party, in connection with this Lease.
27.13 INTEREST ON TENANT'S OBLIGATIONS. Any amount due from Tenant to Landlord which is not paid when due shall bear interest at the maximum rate allowed by law from the date such payment is due until paid, but the payment of such interest shall not excuse or cure the default in payment.
27.14 AUTHORITY. The person executing this Lease on behalf of Tenant
personally warrants and represents to Landlord that (a) Tenant is a duly
organized and existing legal entity, in good standing in the State of Texas; (b)
Tenant has full right and authority to execute, deliver and perform this Lease;
(c) the person executing this Lease on behalf of Tenant was authorized to do so;
and (d) upon request of Landlord, such person will deliver to Landlord
satisfactory evidence of his or her authority to execute this Lease on behalf of
Tenant.
27.15 RECORDING. Neither this Lease (including any Exhibit hereto) nor any memorandum hereof shall be recorded without the prior written consent of Landlord.
27.16 EXHIBITS. All Exhibits and written addenda hereto are incorporated herein for any and all purposes.
27.17 MULTIPLE COUNTERPARTS. This Lease may be executed in two or more counterparts, each of which shall be an original, but all of which shall constitute but one instrument.
EXECUTED as of the date and year above first written.
TENANT ACKNOWLEDGES THAT LANDLORD HAS MADE NO WARRANTIES TO TENANT AS TO THE CONDITION OF THE PREMISES, EITHER EXPRESS OR IMPLIED, AND LANDLORD AND TENANT EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY THAT THE PREMISES ARE SUITABLE FOR TENANT'S INTENDED COMMERCIAL PURPOSE, AND TENANT'S OBLIGATION TO PAY RENT HEREUNDER IS NOT DEPENDENT UPON THE CONDITION OF THE PREMISES OR THE PERFORMANCE BY LANDLORD OF ITS OBLIGATIONS HEREUNDER, AND TENANT SHALL CONTINUE TO PAY THE RENT, WITHOUT ABATEMENT (EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN), SET OFF, DEDUCTION, NOTWITHSTANDING ANY BREACH BY LANDLORD OF ITS DUTIES OR OBLIGATIONS HEREUNDER, WHETHER EXPRESS OR IMPLIED.
TENANT: HUMITECH, INC.,
A NEVADA CORPORATION
By: /s/ Michael R. Davis
-------------------------------------------------
Name: Michael R. Davis
-----------------------------------------------
Title: Chief Financial Officer
----------------------------------------------
|
LANDLORD: UTAH STATE RETIREMENT INVESTMENT FUND,
AN INDEPENDENT AGENCY OF THE STATE OF UTAH
BY: Wallace Realty Advisors, Ltd.,
A Texas limited partnership
BY: Wallace Realty Advisors 1, Inc.,
A Texas corporation, its general partner
By: /s/ Robert J. Axley
-----------------------------------
Name: Robert J. Axley
---------------------------------
Title: Chairman
--------------------------------
|
By: /s/ John L. West
-----------------------------------
Name: John L. West
---------------------------------
Title: President
--------------------------------
|
Exhibit A: Glossary Exhibit B: Description of Premises Exhibit C: Rules and Regulations Exhibit D: Work Letter Exhibit E: Property Legal Description Exhibit F: Renewal Option |
EXHIBIT A
1. "ADDENDUM" shall mean the Addendum, if any, attached to this Lease.
2. "AFFILIATE" shall mean a person or party who or which controls, is controlled by or is under common control with another person or party.
3. "BUILDING" shall mean that certain 12 floor office building and garage structure constructed on the Land, the street address of which is 15851 Dallas Parkway, Addison, Texas, and is more particularly described in the deed recorded in Volume 85021, Page 1686 of the Deed Records of Dallas County, Texas. The term "Building" shall include all fixtures and appurtenances in and to the aforesaid structure, including specifically but without limitation all above grade walkways and all electrical, mechanical, plumbing, security, elevator, boiler, HVAC, telephone, water, gas, storm sewer, sanitary sewer and all other utility systems and connections, all life support systems, sprinklers, smoke detection and other fire protection systems, and all equipment, machinery, shafts, flues, piping, wiring, ducts, duct work, panels, instrumentation and other appurtenances relating thereto.
4. "BUILDING OPERATING HOURS" shall mean 7:00 a.m. to 7:00 p.m. Monday through Friday and Saturday 7:00 a.m. to 1:00 p.m., exclusive of Sundays and Holidays.
5. "BUILDING RULES AND REGULATIONS" shall mean the rules and regulations governing the Complex promulgated by Landlord from time to time. The current Building Rules and Regulations maintained by Landlord are attached as Exhibit C hereto.
6. "BUILDING STANDARD", when applied to an item, shall mean such item as has been designated by Landlord (orally or in writing) as generally applicable throughout the leased portions of the Building.
7. "COMMENCEMENT DATE" shall mean the date of the commencement of the Term as determined pursuant to Section 6.3.
8. "COMMON AREAS" shall mean all areas and facilities within the Complex which have been constructed and are being maintained by Landlord for the common, general, non-exclusive use of all tenants in the Building, and shall include restrooms, lobbies, corridors, service areas, elevators, stairs and stairwells, the Parking Facility, driveways, loading areas, ramps, walkways and landscaped areas.
9. "COMPLEX" shall mean the Land and all improvements thereon, including the Building and the Parking Facility.
10. "EXPENSE STOP" shall mean that portion of the Operating Expenses, expressed in terms of dollars per square foot of Net Rentable Area per Fiscal Year, which will be excluded from the computation of Additional Rent. Unless changed by mutual agreement of the parties, the "Expense Stop" shall equal the actual operating expenses for calendar year 2002.
11. "FISCAL YEAR" shall mean the fiscal year (or portion thereof) of Landlord as elapses during the Term. The Fiscal Year currently commences on January 1; however, Landlord may change the Fiscal Year at any time or times.
12. "FORCE MAJEURE" shall mean the occurrence of any event which hinders, prevents or delays the performance by Landlord of any of its obligations hereunder and which is beyond the reasonable control of Landlord.
13. "HOLIDAYS" shall mean (a) New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day, (b) other days on which national or state banks located in the state where the Complex is located must or may close for ordinary operations and (c) other days which are commonly observed as holidays by the majority of tenants of the Building. If the Holiday occurs on a Saturday or Sunday, the Friday preceding or the Monday following may, at Landlord's discretion, be observed as a Holiday.
14. "HVAC" shall mean the heating, ventilation and air conditioning systems in the Building.
15. "IMPOSITIONS" shall mean (a) all real estate, personal property, rental,
water, sewer, transit, use, occupancy and other taxes, assessments, charges,
excises and levies (including any interest, costs or penalties with respect
thereto), general and special, ordinary and extraordinary, foreseen and
unforeseen of any kind and nature whatsoever which are assessed, levied, charged
or imposed upon or with respect to the Complex, or any portion thereof, or the
sidewalks, streets or alley ways adjacent thereto, or the ownership, use,
occupancy or enjoyment thereof (including but not limited to mortgage taxes and
other taxes and assessments passed on to Landlord by Landlord's Mortgagee) and
(b) all charges for any easement, license, permit or agreement maintained for
the benefit of the Complex. "Impositions" shall not include income taxes, estate
and inheritance taxes, excess profit taxes, franchise taxes, taxes imposed on or
measured by the income of Landlord from the operation of the Complex, and taxes
imposed on account of the transfer of ownership of the Complex or the Land. If
any or all of the Impositions be discontinued and, in substitution therefor,
taxes, assessments, charges, excises or impositions be assessed, levied, charged
or imposed wholly or partially on the Rents received or payable hereunder (a
"SUBSTITUTE IMPOSITION"), then the Substitute Imposition shall be deemed to be
included within the term "Impositions".
16. "Impositions Stop" shall mean that portion of the amount of Impositions, expressed in terms of dollars per square foot of Net Rentable Area per Fiscal Year, which will be excluded from the computation of Additional Rent.
Unless changed by mutual agreement of the parties, the "Impositions Stop" shall equal the actual real estate taxes for calendar year 2002.
17. [deleted]
18. "LAND" shall mean the real property on which the Building is constructed and which is further described in Exhibit E hereto.
19. "LANDLORD'S MORTGAGEE" shall mean the mortgagee of any mortgage, the beneficiary of any deed of trust, the pledgee of any pledge, the secured party of any security interest, the assignee of any assignment and the transferee of any other instrument of transfer (including the ground lessor of any ground lease on the Land) now or hereafter in existence on all or any portion of the Complex, and their successors, assigns and purchasers. "Mortgage" shall mean any such mortgage, deed of trust, pledge, security agreement, assignment or transfer instrument, including all renewals, extensions and rearrangements thereof and of all debts secured thereby.
20. "LANDLORD'S WORK" shall mean all improvements, components, assemblies, installations, finish, labor, materials and services that Landlord is required to furnish, install, perform, provide or apply to the Premises as specified in the Work Letter.
21. "LEGAL REQUIREMENTS" shall mean any and all (a) judicial decisions, orders, injunctions, writs, statutes, rulings, rules, regulations, promulgations, directives, permits, certificates or ordinances of any governmental authority in any way applicable to Tenant or the Complex, including but not limited to the Building Rules and Regulations, zoning, environmental and utility conservation matters, (b) requirements imposed on Landlord by any Landlord's Mortgagee, (c) insurance requirements and (d) other documents, instruments or agreements (written or oral) relating to the Complex or to which the Complex may be bound or encumbered.
22. "NET RENTABLE AREA" whether of the Premises or the Complex shall mean the area determined pursuant to the American National Standard Method for measuring floor space in office buildings, as set forth in American National Standard's Institute publication Z65.1-1980 and as, from time to time, revised. Landlord and Tenant hereby stipulate that, unless and until revised by virtue of the application of the standards set forth in said publication or in a revised publication, the Net Rentable Area of the Premises shall be 2,994 square feet and the Net Rentable Area of the Building shall be 288,920 square feet.
23. "OPERATING EXPENSES" shall mean all costs and expenses which Landlord pays or accrues by virtue of the ownership, use, management, leasing, maintenance, service, operation, insurance or condition of the Complex during a particular Fiscal Year or portion thereof as determined by Landlord or its certified public accountants in accordance with generally accepted accounting principles plus (in instances where the Building was not fully occupied for the entire period in question) all additional costs and expenses which Landlord or such accountant reasonably determines Landlord would have paid or accrued during such period if the Building has been fully occupied (defined as 95% occupied). "Operating Expenses" shall include, but shall not be limited to, the following to the extent they relate to the Complex:
(a) all insurance premiums charged for policies obtained by Landlord, which may include without limitation, at Landlord's election, (i) fire and extended coverage insurance including earthquake, windstorm, hail, explosion, riot, strike, civil commotion, aircraft, vehicle and smoke insurance, (ii) public liability and property damage insurance, (iii) elevator insurance, (iv) workmen's compensation insurance for the employees covered by clause (g), (v) boiler, machinery, sprinkler, water damage, legal liability, burglary, hold-up, fidelity and pilferage insurance, (vi) rental loss insurance and (vii) such other insurance as Landlord may elect to obtain;
(b) all deductible amounts incurred in any Fiscal Year relating to an insurable loss;
(c) all maintenance, repair, replacement and painting costs;
(d) all janitorial, custodial, cleaning, washing, landscaping, landscape maintenance, trash removal and pest control costs;
(e) all security costs;
(f) all electrical, energy monitoring, water, water treatment, gas, sewer, telephone and other utility and utility related charges;
(g) all wages, salaries, salary burdens, employee benefits, payroll taxes, social security and insurance for all persons engaged by Landlord or an Affiliate of Landlord or the property management company engaged by Landlord or affiliates of the Property management company engaged by Landlord;
(h) all costs of leasing or purchasing supplies, tools, equipment and materials;
(i) all management fees and other charges for management services (including, without limitation, travel and related expenses), whether provided by an independent management company, by Landlord or by an Affiliate of Landlord;
(j) all fees and other charges paid under all maintenance and service agreements, including but not limited to window cleaning, elevator and HVAC maintenance;
(k) all legal, accounting and auditing fees and expenses; and
(l) amortization of the cost of acquiring, financing and installing capital items which are intended to reduce (or avoid increases in) operating expenses or which are required by a governmental authority. Such costs shall be amortized over the reasonable life of the items in accordance with generally accepted accounting principles, but not beyond the reasonable life the Building.
"Operating Expenses" shall not include (i) expenditures classified as capital
expenditures for federal income tax purposes except as set forth in clause (1),
(ii) costs for which Landlord is entitled to specific reimbursement by Tenant,
by any other tenant of the Building or by any other third party, (iii)
allowances specified in the Work Letter for expenses incurred by Landlord for
improvements to the Premises, (iv) leasing commissions, and all non-cash
expenses (including depreciation), except for the amortized costs specified in
clause (I), (v) land or ground rent, if applicable, and (vi) debt service on any
indebtedness secured by the Complex (except debt service on indebtedness to
purchase or pay for items specified as permissible "Operating Expenses" under
clause (a) through (l)).
24. "PARKING FACILITY" shall mean (a) any parking garage and any other parking lot or facility adjacent to or in the Complex servicing the Building and (b) any parking area, open or covered, leased by Landlord to service the Building.
25. "PREMISES" shall mean the area leased by Tenant pursuant to this Lease as outlined on the floor plan drawing attached as Exhibit B hereto and all other space added to the Premises pursuant to the terms of this Lease. The Premises includes the space between the top surface of the floor slab of the outlined area and the finished surface of the ceiling immediately above.
26. "RENT" shall mean Base Rent, Additional Rent, the parking charge called for
in Section 5.4 and all other amounts provided for under this Lease to be paid by
Tenant, whether as additional rent or otherwise. "BASE RENT" shall mean the base
rent specified in Section 5.1 as adjusted in accordance with Section 5.2. "BASE
RENT ADJUSTMENT" shall mean the increase in the annual Base Rent as set forth in
Section 5.2. "ADDITIONAL RENT" shall mean the additional rent specified in
Section 5.3.
27. "SECURITY DEPOSIT" shall mean $5,114.75 paid by Tenant as security for the full and faithful performance of the obligations of Tenant under this Lease.
28. "TAKING" or "TAKEN" shall mean the actual or constructive condemnation, or the actual or constructive acquisition by or under threat of condemnation, eminent domain or similar proceeding, by or at the direction of any governmental authority or agency.
29. "TENANT'S SHARE" shall mean the proportion by which the Net Rentable Area of the Premises bears to the Net Rentable Area of the Building. "Tenant's Share" shall be adjusted by Landlord from time to time to reflect adjustments to the then current Net Rentable Area of the Building or the Premises. "Tenant's Share" shall initially mean 2,994 rentable square feet divided by 288,920 rentable square feet x 100 = 1.0363%.
30. "TRANSFER" shall mean (a) an assignment (direct or indirect, absolute or conditional, by operation of law or otherwise) by Tenant of all or any portion of Tenant's interest in this Lease or the leasehold estate created hereby, (b) a sublease of all or any portion of the Premises or (c) the grant or conveyance by Tenant of any concession or license within the Premises. If Tenant is a corporation then any transfer of this Lease by merger, consolidation or dissolution, or by any change in ownership or power to vote a majority of the voting stock (being the shares of stock regularly entitled to vote for the election of directors) in Tenant outstanding at the time of execution of this Lease shall constitute a Transfer. If Tenant is a partnership having one or more corporations as general partners, the preceding sentence shall apply to each corporation as if the corporation alone had been the Tenant hereunder. If Tenant is a general or limited partnership, joint venture or other form of association, the transfer of a majority of the ownership interests therein shall constitute a Transfer. "TRANSFEREE" shall mean the assignee, sublessee, pledgee, concessionee, licensee or other transferee of all or any portion of Tenant's interest in this Lease, the leasehold estate created hereby or the Premises.
31. "WORK LETTER" shall mean the agreement, if any, attached as Exhibit D hereto between Landlord and Tenant for the construction of improvements in the Premises.
EXHIBIT B
Suite 410
(Approximately 2,994 Rentable Square Feet)
1. Landlord may from time to time adopt appropriate systems and procedures for the security or safety of the Building, any persons occupying, using, or entering the Building, or any equipment, finishings, or contents of the Building, and each tenant shall comply with such systems and procedures.
2. Tenant's employees, visitors, and licensees shall not loiter in or interfere with the use of the Parking Facility or the Complex's driveway or parking areas nor consume alcohol in the common areas of the Complex or the Parking Facility. The sidewalks, halls, passages, exits, entrances, elevators, escalators, and stairways of the Building will not be obstructed by any tenants or used by any of them for any purpose other than for ingress to and egress from their respective premises. The halls, passages, exits, entrances, elevators, escalators, and stairways are not for the general public, and Landlord may control and prevent access to them by all persons whose presence, in the reasonable judgment of Landlord, would be prejudicial to the safety, character, reputation and interests of the Building and its tenants; in determining whether access will be denied, Landlord may consider attire worn by a person and its appropriateness for an office building, whether shoes are being worn, use of profanity, either verbally or on clothing, actions of a person (including, without limitation, spitting, verbal abusiveness, and the like), and such other matters as Landlord may reasonably consider appropriate.
3. No sign, placard, picture, name, advertisement, or notice visible from the exterior of any tenant's premises shall be inscribed, painted, affixed, or otherwise displayed by any tenant on any part of the Building without the prior written consent of Landlord. All approved signs or lettering on doors will be printed, painted, affixed, or inscribed at the expense of the tenant desiring such by a person approved by Landlord. Material visible from outside the Building will not be permitted. Landlord may remove such material without any liability, and may charge the expense incurred by such removal to the tenant in question.
4. No curtains, draperies, blinds, shutters, shades, screens, or other coverings, hangings, or decorations will be attached to, hung, or placed in, or used in connection with any window of the Building or the Premises.
5. The sashes, sash doors, skylights, windows, heating, ventilating, and air conditioning vents and doors that reflect or admit light and air into the halls, passageways, or other public places in the Building shall not be covered or obstructed by any tenant, nor will any bottles, parcels, or other articles be placed on any window sills.
G. No showcases or other articles will be put in front of or affixed to any part of the exterior of the Building, nor placed in the public halls, corridors, or vestibules without the prior written consent of Landlord.
7. No tenant will permit its Premises to be used for lodging or sleeping. No cooking will be done or permitted by any tenant on its premises, except in areas of the premises which are specially constructed for cooking, so long as such use is in accordance with all applicable federal, state, and city laws, codes, ordinances, rules, and regulations.
8. No tenant will employ any person or persons other than the cleaning service of Landlord for the purpose of cleaning the premises, unless otherwise agreed by Landlord in writing. If any tenant's actions result in any increased expense for any required cleaning, Landlord may assess such tenant for such expenses. Janitorial service will not be furnished on nights to offices which are occupied after business hours on those nights unless, by prior written agreement of Landlord, service is extended to a later hour for specifically designated offices.
9. The toilets, urinals, wash bowls, and other plumbing fixtures will not be used for any purposes other than those for which they were constructed, and no sweepings, rubbish, rags, or other foreign substances will be thrown in them. All 3amages resulting from any misuse of the fixtures will be borne by the tenant who, or whose servants, employees, agents, visitors, or licensees, have caused the damage.
10. No tenant will deface any part of the premises or the Building. Without the prior written consent of Landlord, no tenant will lay linoleum, or other similar floor covering, so that it comes in direct contact with the floor of such tenant's premises. If linoleum or other similar floor covering is to be used, an interlining of builder's deadening felt will be first affixed to the floor, by a paste or other material, soluble in water. The use of cement or other similar adhesive material is expressly prohibited.
11. No tenant will alter, change, replace, or rekey any lock or install a new lock or a knocker on any door of the premises. Landlord, its agent or employee, will retain a master key to all door locks on the premises. Any new door locks required by a tenant or any change in keying of existing locks will be installed or changed by Landlord following such tenant's written request to Landlord and will be at such tenant's expense. All new locks and rekeyed locks will remain operable by Landlord's master key. Landlord will furnish to each tenant, free of charge, two (2) keys to each door lock on its premises. Landlord will have the right to collect a reasonable charge for additional keys and cards requested by any tenant. Each tenant, upon termination of its tenancy, will deliver to Landlord all keys and access cards for the premises and Building which have been furnished to such tenant.
12. The elevator designated for freight by Landlord will be available for use by all tenants in the Building during the hours and pursuant to such procedures as Landlord may determine from time to time. The persons employed to move tenant's equipment, material, furniture, or other property in or out of the Building must be acceptable to Landlord; such persons must be a locally recognized professional mover, whose primary business is the performing of relocation services, and must be bonded and fully insured. A certificate or other verification of such insurance must be received and approved by Landlord prior to the start of any moving operations. Insurance must be sufficient, in Landlord's sole opinion, to cover all personal liability, theft, or damage to the Building, including without limitation floor coverings, doors, walls, elevators, stairs, foliage, and landscaping. All moving operations will be conducted at such times and in such a manner as Landlord may direct, and all moving will take place during nonbusiness hours unless Landlord otherwise agrees in writing. The moving tenant shall be responsible for the provision of Building security during all moving operations, and shall be liable for all losses and damages sustained by any party as a result of the failure to supply adequate security. Landlord may prescribe the weight, size, and position of all equipment, materials, furniture, or other property brought into the Buildings. Heavy objects will, if considered necessary by Landlord, stand on wood strips of such thickness as is necessary to distribute the weight properly. Landlord will not be responsible for loss of or damage to any such property from any cause, and all damage done to the Building by moving or maintaining such property will be repaired at the expense of the moving tenant. Landlord may inspect all such property to be brought into the Building and to exclude from the Building all such property which violates any of these rules and regulations or the lease of which these rules and regulations are a part. Supplies, goods, materials, packages, furniture, and all other items of every kind delivered to or taken from the premises will be delivered or removed through the entrance and route designated by Landlord.
13. No tenant will use or keep in the premises or the Building any kerosene, gasoline, or inflammable or combustible or explosive fluid or material or chemical substance other than limited quantities of them reasonably necessary for the operation or maintenance of office equipment or limited quantities of cleaning fluids and solvents required in normal operation of the premises.
Without Landlord's prior written approval, no tenant will use any method of heating or air conditioning other than that supplied by Landlord. No tenant will keep any firearms within the Premises. No tenant will use or keep or permit to be used or kept any foul or noxious gas or substance in the premises, or permit of suffer the premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Building by reason of noise, odors, or vibrations, or interfere in any way with other tenants or those having business in the Building.
14. Landlord may without notice and without liability to any tenant, change the name and street address of the Building.
15. Landlord will have the right to prohibit any advertising by tenant, mentioning the Building, which, in Landlord's reasonable opinion, tends to impair the reputation of the Building or its desirability as a Building for offices, and upon written notice from Landlord, tenant will discontinue such advertising.
16. Tenant will not bring any animals or birds into the Building, and will not permit bicycles or other vehicles inside or on the sidewalks outside the Building except in areas designated from time to time by Landlord for such purposes.
17. All persons entering or leaving the Building at any time other than the Building's business hours shall comply with such off-hour regulations as Landlord may establish and modify from time to time. Landlord may limit or restrict access to the Building during such periods.
18. Each tenant will store all its trash and garbage within its premise. No material will be placed in the trash boxes or receptacles if such material is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of trash and garbage without being in violation of any law or ordinance governing such disposal. All garbage and refuse disposal will be made only through entryways and elevators provided for such purposes and at such times as Landlord may designate. No furniture, appliances, equipment, or flammable products of any type may be disposed of in the Building trash receptacles.
19. Canvassing, peddling, soliciting, and distribution of handbills or any other written materials in the Building are prohibited, and each tenant will cooperate to prevent same.
20. Each tenant shall keep the doors of the premises closed and locked and shall shut off all water faucets, water apparatus, and utilities before tenant or tenant's employees leave the premises, so as to prevent waste or damage, and for any default or carelessness in this regard tenant shall be liable for all injuries sustained by other tenants or occupants of the Building or Landlord. On multiple-tenancy floors, all tenants will keep the doors to the Building corridors closed at all times except for ingress and egress.
21. Smoking is not permitted in hallway corridors, stairwells, elevators, restrooms, lobby areas, or any interior common areas within the Building. Additionally, outdoor smoking is not permitted within twenty (20) fee of any entrance to the Building. Tenants may smoke in their leased suites, provided ventilation systems servicing their respective suites can be sufficiently modified to prevent smoke and/or smoking odors from escaping into common areas, hallway corridors, and plenum areas in which air distribution ducts are located. Tenants must additionally install self-circulating air purifiers in each room within their suites in which they desire to smoke. The costs of all such air-quality equipment and ventilation improvements shall be borne entirely by the Tenants desiring to smoke in their suites.
If smoke or smoking odors are intrusive or objectionable to any other Tenant on a floor in which a smoking Tenant is located, the smoking Tenant shall bear full responsibility for curing the objectionable condition within twenty (20) days after receiving written notice that such a condition exists. If the smoking Tenant is thereafter unable to rectify the intrusive or objectionable condition, then it shall be required to immediately cease smoking in its suite for the duration of its tenancy in the Building. Smoking Tenants are not entitled to reimbursement or offset of any kind for the cost of air-quality equipment or ventilation improvements.
EXHIBIT D
WORK LETTER
In all respects, Tenant accepts the Premises in their present condition, as is, with all faults, as being suitable for use and occupancy by Tenant in accordance with this Lease. Landlord does not make any representation or warranty, express or implied, as to the condition of the Premises or suitability of the Premises for the uses to which Tenant intends to put the Premises.
EXHIBIT E
LEGAL DESCRIPTION OF PROPERTY
BEING a tract or parcel of land out of the D.W. FISHER SURVEY, Abstract No. 482, Dallas County, Texas, said tract being all of that tract recorded as the 15851 DALLAS NORTH PARKWAY ADDITION, an Addition to the City of Addison, as recorded in Volume 85021, Page 1686, Map Records, Dallas County, Texas, except that portion thereof conveyed by The Young Companies IV to the Texas Turnpike Authority for right of way for the Dallas North Tollway as recorded in Volume 86134, Page 435, Deed Records, Dallas County, Texas, said 4.022 acre tract of land being more particularly described as follows:
BEGINNING at a 1/2 inch iron rod with cap set in the south right of way line of Airport Parkway (55 feet wide) said point being at the intersection of said line of Airport Parkway with the west right of way line of the Dallas North Tollway as defined by said conveyance by The Young Companies IV to the Texas Turnpike Authority, said point being North 89 degrees 37 minutes 15 seconds West, a distance of 92.70 feet along said line of Airport Parkway from the northeast corner of said 15851 Dallas North Parkway Addition;
THENCE South 40 degrees 26 minutes 12 seconds East, with said west right of way line of the Dallas North Tollway (a Variable width right of way), a distance of 23.50 feet to a 1/2 inch iron rod with cap set at an angle point;
THENCE South 08 degrees 41 minutes 31 seconds West, continuing with said line of the Dallas North Tollway, a distance of 53.20 feet to a 1/2 inch iron rod with cap set at the beginning of a curve to the left, the center of which bears South 81 degrees 18 minutes 29 seconds East, a distance of 1283.24 feet from said point;
THENCE in a southerly direction continuing with said line of said Dallas North Tollway, through a central angle of 07 degrees 42 minutes 30 seconds, an arc distance of 172.64 feet to a 1/2 inch iron rod with cap set at the end of said curve;
THENCE South 00 degrees 59 minutes 01 seconds West, continuing with said line of the Dallas North Tollway a distance of 117.56 feet to a 1/2 inch iron rod with cap set in the south line of said 15851 Dallas North Parkway Addition;
THENCE North 89 degrees 37 minutes 15 seconds West, with the south line of said 15851 Dallas North Parkway Addition and with the north line of a tract of land conveyed to Opubco Resources, Inc. by deed recorded in Volume 78070, Page 3638, Deed Records, Dallas County, Texas, a distance of 477.99 feet to a 1/2 inch iron rod with cap found for corner, said point being the southeast corner of a tract of land conveyed to Chaney and Hope, Inc., by deed recorded in Volume 78194, Page 1741, Deed Records, Dallas County, Texas;
THENCE North 00 degrees 19 minutes 15 seconds West, with the west line of said 15851 Dallas North Parkway Addition, and with the east line of said Chaney and Hope, Inc. tract, a distance of 360.00 feet to a 1/2 inch iron rod with cap found for corner in the south line of Airport Parkway;
THENCE South 89 degrees 37 minutes 15 seconds East, with said line of Airport Parkway a distance of 489.38 feet to the POINT OF BEGINNING and CONTAINING 175,196 square feet or 4.022 acres of land, more or less.
EXHIBIT F
RENEWAL OPTION
Provided that no event has ever occurred under any term or provision
contained in this Lease and no condition exists which with the passage of time
or the giving of notice or both would constitute an event of default pursuant to
this Lease and provided that Tenant has continuously occupied the Premises for
the Permitted Use during the Lease Term, Tenant (but not any assignee or
subtenant) shall have the right and option (the "Renewal Option") to renew this
Lease, by written notice delivered to Landlord no later than six (6) months
prior to the expiration of the initial Lease Term, for a period of thirty six
(36) months (Renewal Term), at the then Prevailing Market rates and under the
same terms, conditions, and covenants contained in the Lease, except that (a) no
abatements or other concessions, if any, applicable to the initial Lease Term
shall apply to the Renewal Term; (b) Tenant shall have no option to renew this
Lease beyond the expiration of the Renewal Term; and (c) all leasehold
improvements within the Premises shall be provided in their then existing
condition (on an "as is" basis) at the time the Renewal Term commences. Failure
by Tenant to notify Landlord in writing of Tenant's election to exercise the
Renewal Option herein granted within the time limits set forth for such exercise
shall constitute a waiver of such Renewal Option. In the event Tenant elects to
exercise the Renewal Option as set forth above, Landlord shall, within twenty
(20) days thereafter, notify Tenant in writing of the proposed rental for the
Renewal Term (the "Proposed Renewal Rental"). Tenant shall within twenty (20)
days following delivery of the Proposed Renewal Rental by Landlord notify
Landlord in writing of the acceptance or rejection of the Proposed Renewal
Rental. If Tenant accepts Landlord's proposal, then the Proposed Renewal Rental
shall be the rental rate in effect during the Renewal Term. Failure of Tenant to
respond in writing during the aforementioned twenty (20) day period shall be
deemed an acceptance by Tenant of the Proposed Renewal Rental. Should Tenant
reject Landlord's Proposed Renewal Rental during such twenty (20) day period,
then Landlord and Tenant shall negotiate during the thirty (30) day period
commencing upon Tenant's rejection of Landlord's Proposed Renewal Rental to
determine the rental for the Renewal Term. In the event Landlord and Tenant are
unable to agree to a rental for the Renewal Term during said thirty (30) day
period, then the Renewal Option shall terminate and be null and void and the
Lease shall, pursuant to its terms and provisions, terminate at the end of the
original Lease Term.
Upon exercise of the Renewal Option by Tenant and subject to the conditions set forth hereinabove, the Lease shall be extended for the period of such Renewal Term without the necessity of the execution of any further instrument or document, although if requested by either party, Landlord and Tenant shall enter into a written agreement modifying and supplementing the Lease in accordance with the provisions hereof. Any termination of the Lease during the initial lease Term shall terminate all renewal rights hereunder. The renewal rights of Tenant hereunder shall not be severable from the Lease, nor may such rights be assigned or otherwise conveyed in connection with any permitted assignment of the Lease. Landlord's consent to any assignment of the Lease shall not be construed as allowing an assignment of such rights to any assignee.
Exhibit 10.4 Employment Agreement with C.J. Comu
This Agreement is made by and between HUMITECH INC, a Nevada Corporation (the "Corporation") and C.J. Comu (the "Executive") effective the 1st day of October 2001.
WHEREAS, The Corporation is the holding company that's business of manufacturing and marketing of Humidity control technology, WHEREAS, The Executive has considerable experience in the management of a successful businesses, WHEREAS, The Corporation desires to hire Executive as Chief Executive Officer of the Company. NOW, THEREFORE, in consideration of the promises and of the mutual covenants and agreements contained in this Agreement, the parties hereby agree as follows:
1. EMPLOYMENT SCOPE AND AUTHORITY. The Corporation hereby employs the
Executive and Executive accepts employment as Chief Executive Officer
of the Corporation, The Executive shall report and be responsible to
the Corporation's Board of Directors. The management powers shall be
superior to all other officers or employees of the Corporation.
Executive shall become and remain a Director of the Corporation during
the term of this agreement.
2. TERM. The initial term of the Agreement shall be for ten (10) years
from the date the Agreement is signed by all of the parties.
3. CONTINUED TERM. The Executive Committee of the Board of Directors,
after the initial term of the Agreement has expired, may extend and
renew this Agreement for additional ten (10) year terms.
4. DUTIES. The Executive shall serve as Chief Executive Officer of the
Corporation and shall have such duties, responsibilities and authority
as is customary to such position and such other duties,
responsibilities as may from time to time be assigned by the Board of
Directors of the Corporation.
5. TIME, ABILITY AND ATTENTION. The Executive shall devote substantially
all of his working time, ability and attention to the business of the
Corporation. Corporation recognizes that the Executive any have other
business interest, to which he may devote a reasonable amount of time,
provided such do not conflict with the conduct of the business affairs
of the Corporation.
6. PLACE OF PERFORMANCE. The Executive shall maintain his office at the
principal Executive offices of the Corporation, subject to required
travel on behalf of the Corporation.
7. COMPENSATION. The Corporation shall pay the Executive the salary,
reimbursement of expenses and provide the benefits as specified below.
(a) SALARY. The Corporation shall pay the Executive a salary at an
annual rate of $250,000 commencing on the effective date
hereof, payable bimonthly or otherwise in accordance with the
Corporation payroll practices for all employees;
(b) INCENTIVE BONUS. As a further inducement to accept the
position with the Corporation, during the term of this
Agreement and extensions thereof, Corporation shall pay to
Executive an annual bonus to be determined in good faith by
the Board of Directors. The Board of Directors if the
Corporation shall, within six (6) months of the date of this
Agreement, structure, institute and establish an incentive
bonus program specifying how and when bonuses are to paid
pursuant to this paragraph.
(c) BENEFITS. Executive shall be entitled to participate in the
Corporation's employee benefit programs in effect from time to
time for employees at comparable levels of responsibility.
Participation will be in accordance with any applicable
policies adopted by the Board of Directors. Executive shall be
entitled to vacations, absences for illness. And to similar
benefits of employment to the extent such benefits are
generally offered to employees of the Corporation at a
comparable level of responsibility, subject to the policies
and procedures adopted by the Board of Directors.
(d) EXPENSES. Subject to the policies and procedures as may be
adopted by the Corporation's Board of Directors, Executive
shall be entitled to reimbursement for auto, insurance,
travel, entertainment and other expenses actually incurred on
behalf of Corporation (upon presentation of reasonable
evidence thereof) to the extent such expenses are incurred in
connection with direct activities of the Corporation, and to
the extent similar reimbursements are generally available to
employees of the Corporation at a comparable level of
responsibility.
(e) SERVICES. The Corporation shall furnish Executive office
space, personnel and such other facilities and services as
reasonably required for Executive to perform the duties of
Chief Executive Officer of the Corporation.
8. TERMINATION BY CORPORATION. This Agreement, and the employment of
Executive, hereunder, shall terminate immediately upon the occurrence
of any one of the following events:
(a) DEATH. Upon the death of Executive.
(b) DISABILITY. The Executive becomes incapacitated due to
physical or mental illness and Executive shall have been
absent from employment on a full-time basis for one hundred
fifty (150) consecutive days, and fails to return to perform
the duties assigned by the Corporation on a full-time basis
within thirty (30) days after delivery of written notice of
termination of the Agreement.
(c) AGREEMENT. The mutual written agreement of the Corporation and
the Executive.
(d) TERM. The expiration of the term, as extended, of this
Agreement
(e) FOR CAUSE. (i) Willful, intentional and continued failure to
perform the duties of Chief Executive Officer of the
Corporation, except disability, for more than thirty (30) days
after delivery of written demand by the Corporation for
performance which shall specify the manner and means which the
Corporation believes that the Executive is not performing the
duties of Chief Executive Officer, (ii) the conviction of the
Executive of a criminal act of moral turpitude, have or liable
to have an adverse affect on the Corporation, its business,
reputation or good will. For purposes of this paragraph, no
act, or failure to act, on the Executive's part shall be
considered "willful" or "intentional" unless done, omitted to
be done, knowingly, in bad faith, and without reasonable
belief that such action or omission was in the best interest
of the Corporation. The Executive shall not be terminated for
cause by the Corporation without first having received the
opportunity, together with legal counsel, to be heard before
the Board of Directors and delivery of written notice
specifying the provisions of this Agreement and the facts and
circumstances relied upon as basis for termination and a
written finding of facts and good faith opinion of the Board
of Directors that the Executive violated clause (i) and/or
(ii) of this paragraph.
9. TERMINATION BY EXECUTIVE. This Agreement may be terminated by the
Executive upon the occurrence of any one of the following events:
(a) DISABILITY. In the event the Executive's health impairs the
performance of the duties of President and such is hazardous
to Executive's physical or mental health or life, provided a
written statement form a qualified physician is delivered to
the Board of Directors reasonably describing such impairment.
(b) GOOD CAUSE. (i) the Board of Directors fails to reelect
Executive as President and Director of the Company or removes
Executive from such position or position, (ii) the Board of
Directors shall fail to vest the powers and authority of Chief
Executive Officer, (iii) the Board of Directors shall fail to
comply with any material provision of the Agreement which is
not cured within ten (10) days of delivery of written notice
to the Board of Directors; or, (iv) any purported termination
by Corporation not in compliance with the requirements of
paragraph 8 (e).
10. EXECUTIVE COMPENSATION UPON TERMINATION. The Corporation shall pay the
Executive upon the event of termination the compensation set forth
below:
(a) DEATH. The corporation shall continue the salary for a period
of twelve (12) months from and including the month of death
and pay such in accordance with the payroll policies of the
Corporation to the representative of the deceased Executive's
estate.
(b) DISABILITY. The Corporation shall continue the salary for a
period of six (6) months after this agreement is terminated
pursuant to paragraph 8 (b), provided the salary payments may
be reduced by the amount of payment received by the Executive
under disability benefits plans of the Company, if any.
(c) BREACH OF AGREEMENT. In the event this Agreement is terminated
pursuant to paragraph 9 (b) the Corporation shall pay
Executive (i) full salary through Date of Termination at the
annual rate then in effect at the time Notice of Termination,
the Corporation shall pay as severance pay to Executive, the
greater of one million dollars ($1,000,000) or an amount equal
to two times the salary remaining unpaid under the term of
this agreement or two times the amount equal to the annual
salary in effect at the Date of Termination, payable in one
lump sum on or before five (5) business days after the Date of
Termination; and (iii) if the termination arises out of a
breach by the Company of this agreement, the Corporation shall
pay all other damages for loss of benefits, legal expenses
incurred and costs of court. In the event this Agreement is
terminated pursuant to paragraph 8(e) the Corporation shall be
obligated to pay Executive any salary due to the Date of
Termination.
(d) OPTIONAL SEVERANCE PAYMENT. Executive upon the event of the
Corporation's obligation to pay severance, may in Executive's
sole discretion and option elect to accept a number of shares
of registered stock of the Corporation determined by dividing
the severance amount due by $1.00 which number of shares when
delivered shall be in full payment and satisfaction of the
Corporation's obligation to Executive.
(e) CONTINUATION OF BENEFITS. Except for termination for Cause,
the Corporation shall maintain in full force and effect, for
the benefit of the Executive for twelve (12) months, all
employee benefits, plans and programs in which Executive was
entitled to participate and did participate immediately prior
to the Corporation shall terminate all employee benefits,
plans and programs in which Executive was entitled to
participate and did participate immediately prior to the Date
of Termination.
(f) MITIGATION. The Executive shall not be required to mitigate
the amount of any payment provided under this paragraph 10 by
seeking other employment or otherwise.
11. NON-COMPETITION. Executive expressly agrees that while this agreement
is in effect, and, except for termination for Good Cause, for a period
of one (1) years following the termination of this Agreement, Executive
will not directly or indirectly, as an employee, agent, proprietor,
partner, broker, stockholder, officer, director, or otherwise, render
any services to, on Executive's own behalf or on behalf of any other
person or entity, engage in as an employee or owner of any competitive
business or organization located within a 100 mile radius of the
Counties of Dallas, Tarrant, Denton, Collin, Rockwell, Texas or any
other county in any state in which the Corporation then maintains an
office that would compete directly or indirectly with Corporation's
Business, without prior written consent of Corporation. The term
"competitive business" shall include but shall not be limited to any
business that manufactures and markets commercial air purification
technology. Executive further expressly agrees that Executive will not
use for Executives' own benefit or disclose to any person any
information, including confidential information, which is obtained or
learned while acting as Executive, without prior written consent of the
Corporation. The agreements contained in this paragraph on the part of
Executive shall be construed as an integral part of an enforceable
agreement and the agreements contained herein were made at the time
this agreement was consummated by the parties. The Executive
acknowledges and agrees that the non-competition restrictions contained
herein are fair and reasonable as to geographical area, length of time
and scope of activity restrained. The existence of any claim or cause
of action against Executive by the Corporation, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Corporation of the agreements contained in this
paragraph.
12. ADMINISTRATIVE PROVISIONS. The terms of this Agreement shall be
administered pursuant to the following provisions:
(a) DEFINITION. "Date of Termination" shall mean (i) the date of
death of Executive, (ii) thirty (30) days after notice of
termination is given for disability, (iii) the date specified
in the notice of termination for cause or good cause;
provided, if within thirty (30) days after delivery of a
notice of termination the person receiving such notice
notifies the other in writing that a dispute exists, the Date
of Termination shall be the date he dispute is finally
determined by mutual agreement or otherwise.
(b) PARTIES BOUND. This Agreement shall be binding on and inure to
the benefit of the parties and their respective heirs,
executors, administrators. Legal representatives, successors
and assigns.
(c) ASSIGNMENT. Executive shall have no right to transfer or
assign any interest in this Agreement without the prior
written consent of the Corporation.
(d) TIME LIMITS. Time is of the essence in this Agreement; and all
time limits shall be strictly construed and rigidly enforce.
(e) NO WAIVER. A failure or delay in the enforcement of the rights
detailed in this Agreement by Corporation shall not constitute
a waiver of those rights or be considered a basis for
estoppel. Corporation may exercise its rights under this
Agreement despite any delay or failure to enforce those
rights.
(f) DISPUTE OR CONTEST. In the unlikely event that a dispute
occurs or an action in law or equity arises out of the
operation, construction, or interpretation of this Agreement,
the prevailing party shall be entitled, in addition to any
other relief granted to reasonable expenses for attorneys'
fees and costs incurred by such party in the action.
(g) PARAGRAPH HEADINGS. The paragraph headings used in this
Agreement are descriptive only and shall have no legal force
or effect whatever.
(h) TEXAS LAW. This Agreement shall be subject to and governed by
the laws of the State of Texas. Any and all obligations or
payments are due and payable in Dallas County, Texas.
(i) SEVERABILITY. If any provision of this Agreement shall, for
any reason, be hold violative of any applicable law, and so
much of the Agreement is held to be unenforceable, then the
invalidity of such a specific provision of this Agreement
shall not be deemed to invalidate any other provisions of this
Agreement, which other provisions shall remain in full force
and effect unless removal of the invalid provisions destroy
the legitimate purposes of this Agreement, in which event this
Agreement shall be canceled.
(j) MODIFICATION OF AGREEMENT. This Agreement represents the
entire Agreement by and between the parties, except as
otherwise provided in this Agreement, and it may not be
changed except by written amendment duly executed by all
parties.
(k) NOTICES. All notices and communications pursuant to this
Agreement shall be in writing and delivered when sent by
United States certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to Executive: C.J. Comu
15851 Dallas Parkway, Suite 410
Addison, TX, 75001
If to Corporation: Humitech Inc.
15851 Dallas Parkway, Suite 410
Addison, TX, 75001
|
Or such other address any party may have furnished to the other in writing upon receipt by such party.
SIGNED, accepted and agreed to the first date stated above, by the undersigned parties.
CORPORATION:
HUMITECH INC:
/s/ David Marlett ------------------------------------ David Marlett, CFO & General Counsel |
EXECUTIVE:
/s/ C.J. Comu ------------------------------------ C.J. Comu, Chief Executive Officer |
Exhibit 10.5 Employment Agreement with Michael Davis
EMPLOYMENT AGREEMENT
This Agreement is made by and between HUMITECH INTERNATIONAL GROUP, INC, a Nevada Corporation (the "Corporation") and Michael R Davis (the "Executive") effective the 28th day of January 2002.
WHEREAS, The Corporation is the holding company that's business of manufacturing
and marketing of Humidity control technology,
WHEREAS, The Executive has considerable experience in the management of a
successful businesses,
WHEREAS, The Corporation desires to hire Executive as Chief Financial Officer
for the Company.
NOW, THEREFORE, in consideration of the promises and of the mutual covenants and
agreements contained in this Agreement, the parties hereby agree as follows:
1. EMPLOYMENT SCOPE AND AUTHORITY. The Corporation hereby employs the
Executive and Executive accepts employment as Chief Financial Officer
of the Corporation, The Executive shall report and be responsible to
the Corporation's CEO and Board of Directors. The management powers
shall be superior to all other officers or employees of the
Corporation. Executive shall become and remain a Employee of the
Corporation during the term of this agreement.
2. TERM. The initial term of the Agreement shall be for five (5) years
from the date the Agreement is signed by all of the parties.
3. CONTINUED TERM. The Executive Committee of the Board of Directors,
after the initial term of the Agreement has expired, may extend and
renew this Agreement for additional five (5) year terms.
4. DUTIES. The Executive shall serve as Chief Financial Officer of the
Corporation and shall have such duties, responsibilities and authority
as is customary to such position and such other duties,
responsibilities as may from time to time be assigned by the Board of
Directors of the Corporation.
5. TIME, ABILITY AND ATTENTION. The Executive shall devote substantially
all of his working time, ability and attention to the business of the
Corporation. Corporation recognizes that the Executive any have other
business interest, to which he may devote a reasonable amount of time,
provided such do not conflict with the conduct of the business affairs
of the Corporation.
6. PLACE OF PERFORMANCE. The Executive shall maintain his office at the
principal Executive offices of the Corporation, subject to required
travel on behalf of the Corporation.
7. COMPENSATION. The Corporation shall pay the Executive the salary,
reimbursement of expenses and provide the benefits as specified below.
(a) SALARY. The Corporation shall pay the Executive a salary (See
Exhibit A) commencing on the effective date hereof, payable
bimonthly or otherwise in accordance with the Corporation
payroll practices for all employees;
(b) INCENTIVE BONUS. As a further inducement to accept the
position with the Corporation, during the term of this
Agreement and extensions thereof, Corporation shall pay to
Executive an annual bonus to be determined in good faith by
the Board of Directors. The Board of Directors if the
Corporation shall, within six (6) months of the date of this
Agreement, structure, institute and establish an incentive
bonus program specifying how and when bonuses are to paid
pursuant to this paragraph.
(c) BENEFITS. Executive shall be entitled to participate in the
Corporation's employee benefit programs in effect from time to
time for employees at comparable levels of responsibility.
Participation will be in accordance with any applicable
policies adopted by the Board of Directors. Executive shall be
entitled to vacations, absences for illness. And to similar
benefits of employment to the extent such benefits are
generally offered to employees of the Corporation at a
comparable level of responsibility, subject to the policies
and procedures adopted by the Board of Directors.
(d) EXPENSES. Subject to the policies and procedures as may be
adopted by the Corporation's Board of Directors, Executive
shall be entitled to reimbursement for auto, insurance,
travel, entertainment and other expenses actually incurred on
behalf of Corporation (upon presentation of reasonable
evidence thereof) to the extent such expenses are incurred in
connection with direct activities of the Corporation, and to
the extent similar reimbursements are generally available to
employees of the Corporation at a comparable level of
responsibility.
(e) SERVICES. The Corporation shall furnish Executive office
space, personnel and such other facilities and services as
reasonably required for Executive to perform the duties of
Chief Financial Officer of the Corporation.
8. TERMINATION BY CORPORATION. This Agreement, and the employment of
Executive, hereunder, shall terminate immediately upon the occurrence
of any one of the following events:
(a) DEATH. Upon the death of Executive.
(b) DISABILITY. The Executive becomes incapacitated due to
physical or mental illness and Executive shall have been
absent from employment on a full-time basis for thirty (30)
consecutive days, and fails to return to perform the duties
assigned by the Corporation on a full-time basis within thirty
(30) days after delivery of written notice of termination of
the Agreement.
(c) AGREEMENT. The mutual written agreement of the Corporation and
the Executive.
(d) TERM. The expiration of the term, as extended, of this
Agreement
(e) FOR CAUSE. (i) Willful, intentional and continued failure to
perform the duties of Chief Financial Officer of the
Corporation, except disability, for more than thirty (30) days
after delivery of written demand by the Corporation for
performance which shall specify the manner and means which the
Corporation believes that the Executive is not performing the
duties of Chief Financial Officer, (ii) the conviction of the
Executive of a criminal act of moral turpitude, have or liable
to have an adverse affect on the Corporation, its business,
reputation or good will. For purposes of this paragraph, no
act, or failure to act, on the Executive's part shall be
considered "willful" or "intentional" unless done, omitted to
be done, knowingly, in bad faith, and without reasonable
belief that such action or omission was in the best interest
of the Corporation. The Executive shall not be terminated for
cause by the Corporation without first having received the
opportunity, together with legal counsel, to be heard before
the Board of Directors and delivery of written notice
specifying the provisions of this Agreement and the facts and
circumstances relied upon as basis for termination and a
written finding of facts and good faith opinion of the Board
of Directors that the Executive violated clause (i) and/or
(ii) of this paragraph.
9. TERMINATION BY EXECUTIVE. This Agreement may be terminated by the
Executive upon the occurrence of any one of the following events:
(a) DISABILITY. In the event the Executive's health impairs the
performance of the duties of the Executive and such is
hazardous to Executive's physical or mental health or life,
provided a written statement form a qualified physician is
delivered to the Board of Directors reasonably describing such
impairment.
(b) GOOD CAUSE. (i) the Board of Directors fails to reelect
Executive as Chief Financial Officer of the Company or removes
Executive from such position or position, (ii) the Board of
Directors shall fail to vest the powers and authority of Chief
Financial Officer, (iii) the Board of Directors shall fail to
comply with any material provision of the Agreement which is
not cured within ten (10) days of delivery of written notice
to the Board of Directors; or, (iv) any purported termination
by Corporation not in compliance with the requirements of
paragraph 8 (e).
10. EXECUTIVE COMPENSATION UPON TERMINATION. The Corporation shall pay the
Executive upon the event of termination the compensation set forth
below:
(a) DEATH. The corporation shall continue the salary for a period
of six (6) months from and including the month of death and
pay such in accordance with the payroll policies of the
Corporation to the representative of the deceased Executive's
estate.
(b) DISABILITY. The Corporation shall continue the salary for a
period of six (6) months after this agreement is terminated
pursuant to paragraph 8 (b), provided the salary payments may
be reduced by the amount of payment received by the Executive
under disability benefits plans of the Company, if any.
(c) BREACH OF AGREEMENT. In the event this Agreement is terminated
pursuant to paragraph 9 (b) the Corporation shall pay
Executive (i) full salary through Date of Termination at the
annual rate then in effect at the time Notice of Termination,
the Corporation shall pay as severance pay to Executive, the
greater of one years payroll or an amount equal to two times
the salary remaining unpaid under the term of this agreement
or two times the amount equal to the annual salary in effect
at the Date of Termination, payable in one lump sum on or
before five (5) business days after the Date of Termination;
and (iii) if the termination arises out of a breach by the
Company of this agreement, the Corporation shall pay all other
damages for loss of benefits, legal expenses incurred and
costs of court. In the event this Agreement is terminated
pursuant to paragraph 8(e) the Corporation shall be obligated
to pay Executive any salary due to the Date of Termination.
(d) OPTIONAL SEVERANCE PAYMENT. Executive upon the event of the
Corporation's obligation to pay severance, may in Executive's
sole discretion and option elect to accept a number of shares
of registered stock of the Corporation determined by dividing
the severance amount due by $1.00 which number of shares when
delivered shall be in full payment and satisfaction of the
Corporation's obligation to Executive.
(e) CONTINUATION OF BENEFITS. Except for termination for Cause,
the Corporation shall maintain in full force and effect, for
the benefit of the Executive for six (6) months, all employee
benefits, plans and programs in which Executive was entitled
to participate and did participate immediately prior to the
Corporation shall terminate all employee benefits, plans and
programs in which Executive was entitled to participate and
did participate immediately prior to the Date of Termination.
(f) MITIGATION. The Executive shall not be required to mitigate
the amount of any payment provided under this paragraph 10 by
seeking other employment or otherwise.
11. NON-COMPETITION. Executive expressly agrees that while this agreement
is in effect, and, except for termination for Cause, for a period of
one (1) years following the termination of this Agreement, Executive
will not directly or indirectly, as an employee, agent, proprietor,
partner, broker, stockholder, officer, director, or otherwise, render
any services to, on Executive's own behalf or on behalf of any other
person or entity, engage in as an employee or owner of any competitive
business or organization located within a 500 mile radius of the
Counties of Dallas, Tarrant, Denton, Collin, Rockwell, Texas or any
other county in any state in which the Corporation then maintains an
office that would compete directly or indirectly with Corporation's
Business, without prior written consent of Corporation. The term
"competitive business" shall include but shall not be limited to any
business that manufactures and markets commercial air purification
technology. Executive further expressly agrees that Executive will not
use for Executives' own benefit or disclose to any person any
information, including confidential information, which is obtained or
learned while acting as Executive, without prior written consent of the
Corporation. The agreements contained in this paragraph on the part of
Executive shall be construed as an integral part of an enforceable
agreement and the agreements contained herein were made at the time
this agreement was consummated by the parties. The Executive
acknowledges and agrees that the non-competition restrictions contained
herein are fair and reasonable as to geographical area, length of time
and scope of activity restrained. The existence of any claim or cause
of action against Executive by the Corporation, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Corporation of the agreements contained in this
paragraph.
12. ADMINISTRATIVE PROVISIONS. The terms of this Agreement shall be
administered pursuant to the following provisions:
(a) DEFINITION. "Date of Termination" shall mean (i) the date of
death of Executive, (ii) thirty (30) days after notice of
termination is given for disability, (iii) the date specified
in the notice of termination for cause or good cause;
provided, if within thirty (30) days after delivery of a
notice of termination the person receiving such notice
notifies the other in writing that a dispute exists, the Date
of Termination shall be the date he dispute is finally
determined by mutual agreement or otherwise.
(b) PARTIES BOUND. This Agreement shall be binding on and inure to
the benefit of the parties and their respective heirs,
executors, administrators. Legal representatives, successors
and assigns.
(c) ASSIGNMENT. Executive shall have no right to transfer or
assign any interest in this Agreement without the prior
written consent of the Corporation.
(d) TIME LIMITS. Time is of the essence in this Agreement; and all
time limits shall be strictly construed and rigidly enforce.
(e) NO WAIVER. A failure or delay in the enforcement of the rights
detailed in this Agreement by Corporation shall not constitute
a waiver of those rights or be considered a basis for
estoppel. Corporation may exercise its rights under this
Agreement despite any delay or failure to enforce those
rights.
(f) DISPUTE OR CONTEST. In the unlikely event that a dispute
occurs or an action in law or equity arises out of the
operation, construction, or interpretation of this Agreement,
the prevailing party shall be entitled, in addition to any
other relief granted to reasonable expenses for attorneys'
fees and costs incurred by such party in the action.
(g) PARAGRAPH HEADINGS. The paragraph headings used in this
Agreement are descriptive only and shall have no legal force
or effect whatever.
(h) TEXAS LAW. This Agreement shall be subject to and governed by
the laws of the State of Texas. Any and all obligations or
payments are due and payable in Dallas County, Texas.
(i) SEVERABILITY. If any provision of this Agreement shall, for
any reason, be hold violative of any applicable law, and so
much of the Agreement is held to be unenforceable, then the
invalidity of such a specific provision of this Agreement
shall not be deemed to invalidate any other provisions of this
Agreement, which other provisions shall remain in full force
and effect unless removal of the invalid provisions destroy
the legitimate purposes of this Agreement, in which event this
Agreement shall be canceled.
(j) MODIFICATION OF AGREEMENT. This Agreement represents the
entire Agreement by and between the parties, except as
otherwise provided in this Agreement, and it may not be
changed except by written amendment duly executed by all
parties.
(k) NOTICES. All notices and communications pursuant to this
Agreement shall be in writing and delivered when sent by
United States certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to Executive: Michael R Davis
9730 Burleson Drive
Dallas, TX, 75243
If to Corporation: Humitech Inc.
15851 Dallas Parkway, Suite 410
Addison, TX, 75001
|
Or such other address any party may have furnished to the other in writing upon receipt by such party.
SIGNED, accepted and agreed to the first date stated above, by the undersigned parties.
CORPORATION:
HUMITECH INTERNATIONAL GROUP, INC:
/s/ C.J. Comu -------------------------------------------- C.J. Comu, Chief Executive Officer |
EXECUTIVE:
/s/ Michael R. Davis -------------------------------------------- Michael R Davis |
EXHIBIT "A"
Exhibit 10.6 Employment Agreement with Mike Ryan
This Agreement is made by and between HUMITECH INC, a Nevada Corporation (the "Corporation") and Mike Ryan (the "Executive") effective the 1st day of October 2001.
WHEREAS, The Corporation is the holding company that's business of manufacturing
and marketing of Humidity control technology,
WHEREAS, The Executive has considerable experience in the management of a
successful businesses,
WHEREAS, The Corporation desires to hire Executive as Executive Vice President
of Marketing and Sales for the Company.
NOW, THEREFORE, in consideration of the promises and of the mutual covenants and
agreements contained in this Agreement, the parties hereby agree as follows:
1. EMPLOYMENT SCOPE AND AUTHORITY. The Corporation hereby employs the
Executive and Executive accepts employment as Executive Vice President
of Marketing and Sales of the Corporation, The Executive shall report
and be responsible to the Corporation's CEO and Board of Directors. The
management powers shall be superior to all other officers or employees
of the Corporation. Executive shall become and remain a Employee of the
Corporation during the term of this agreement.
2. TERM. The initial term of the Agreement shall be for three (3) years
from the date the Agreement is signed by all of the parties.
3. CONTINUED TERM. The Executive Committee of the Board of Directors,
after the initial term of the Agreement has expired, may extend and
renew this Agreement for additional three (3) year terms.
4. DUTIES. The Executive shall serve as Executive Vice President of
Marketing and Sales of the Corporation and shall have such duties,
responsibilities and authority as is customary to such position and
such other duties, responsibilities as may from time to time be
assigned by the Board of Directors of the Corporation.
5. TIME, ABILITY AND ATTENTION. The Executive shall devote substantially
all of his working time, ability and attention to the business of the
Corporation. Corporation recognizes that the Executive any have other
business interest, to which he may devote a reasonable amount of time,
provided such do not conflict with the conduct of the business affairs
of the Corporation.
6. PLACE OF PERFORMANCE. The Executive shall maintain his office at the
principal Executive offices of the Corporation, subject to required
travel on behalf of the Corporation.
7. COMPENSATION. The Corporation shall pay the Executive the salary,
reimbursement of expenses and provide the benefits as specified below.
(a) SALARY. The Corporation shall pay the Executive a salary (See
Exhibit A) commencing on the effective date hereof, payable
bimonthly or otherwise in accordance with the Corporation
payroll practices for all employees;
(b) INCENTIVE BONUS. As a further inducement to accept the
position with the Corporation, during the term of this
Agreement and extensions thereof, Corporation shall pay to
Executive an annual bonus to be determined in good faith by
the Board of Directors. The Board of Directors if the
Corporation shall, within six (6) months of the date of this
Agreement, structure, institute and establish an incentive
bonus program specifying how and when bonuses are to paid
pursuant to this paragraph.
(c) BENEFITS. Executive shall be entitled to participate in the
Corporation's employee benefit programs in effect from time to
time for employees at comparable levels of responsibility.
Participation will be in accordance with any applicable
policies adopted by the Board of Directors. Executive shall be
entitled to vacations, absences for illness. And to similar
benefits of employment to the extent such benefits are
generally offered to employees of the Corporation at a
comparable level of responsibility, subject to the policies
and procedures adopted by the Board of Directors.
(d) EXPENSES. Subject to the policies and procedures as may be
adopted by the Corporation's Board of Directors, Executive
shall be entitled to reimbursement for auto, insurance,
travel, entertainment and other expenses actually incurred on
behalf of Corporation (upon presentation of reasonable
evidence thereof) to the extent such expenses are incurred in
connection with direct activities of the Corporation, and to
the extent similar reimbursements are generally available to
employees of the Corporation at a comparable level of
responsibility.
(e) SERVICES. The Corporation shall furnish Executive office
space, personnel and such other facilities and services as
reasonably required for Executive to perform the duties of
Executive Vice President of Marketing and Sales of the
Corporation.
8. TERMINATION BY CORPORATION. This Agreement, and the employment of
Executive, hereunder, shall terminate immediately upon the occurrence
of any one of the following events:
(a) DEATH. Upon the death of Executive.
(b) DISABILITY. The Executive becomes incapacitated due to
physical or mental illness and Executive shall have been
absent from employment on a full-time basis for thirty (30)
consecutive days, and fails to return to perform the duties
assigned by the Corporation on a full-time basis within thirty
(30) days after delivery of written notice of termination of
the Agreement.
(c) AGREEMENT. The mutual written agreement of the Corporation and
the Executive.
(d) TERM. The expiration of the term, as extended, of this
Agreement
(e) FOR CAUSE. (i) Willful, intentional and continued failure to
perform the duties of Executive Vice President of the
Corporation, except disability, for more than thirty (30) days
after delivery of written demand by the Corporation for
performance which shall specify the manner and means which the
Corporation believes that the Executive is not performing the
duties of Chief Executive Officer, (ii) the conviction of the
Executive of a criminal act of moral turpitude, have or liable
to have an adverse affect on the Corporation, its business,
reputation or good will. For purposes of this paragraph, no
act, or failure to act, on the Executive's part shall be
considered "willful" or "intentional" unless done, omitted to
be done, knowingly, in bad faith, and without reasonable
belief that such action or omission was in the best interest
of the Corporation. The Executive shall not be terminated for
cause by the Corporation without first having received the
opportunity, together with legal counsel, to be heard before
the Board of Directors and delivery of written notice
specifying the provisions of this Agreement and the facts and
circumstances relied upon as basis for termination and a
written finding of facts and good faith opinion of the Board
of Directors that the Executive violated clause (i) and/or
(ii) of this paragraph.
9. TERMINATION BY EXECUTIVE. This Agreement may be terminated by the
Executive upon the occurrence of any one of the following events:
(a) DISABILITY. In the event the Executive's health impairs the
performance of the duties of the Executive and such is
hazardous to Executive's physical or mental health or life,
provided a written statement form a qualified physician is
delivered to the Board of Directors reasonably describing such
impairment.
(b) GOOD CAUSE. (i) the Board of Directors fails to reelect
Executive as Executive Vice President of the Company or
removes Executive from such position or position, (ii) the
Board of Directors shall fail to vest the powers and authority
of Executive Vice President, (iii) the Board of Directors
shall fail to comply with any material provision of the
Agreement which is not cured within ten (10) days of delivery
of written notice to the Board of Directors; or, (iv) any
purported termination by Corporation not in compliance with
the requirements of paragraph 8 (e).
10. EXECUTIVE COMPENSATION UPON TERMINATION. The Corporation shall pay the
Executive upon the event of termination the compensation set forth
below:
(a) DEATH. The corporation shall continue the salary for a period
of six (6) months from and including the month of death and
pay such in accordance with the payroll policies of the
Corporation to the representative of the deceased Executive's
estate.
(b) DISABILITY. The Corporation shall continue the salary for a
period of six (6) months after this agreement is terminated
pursuant to paragraph 8 (b), provided the salary payments may
be reduced by the amount of payment received by the Executive
under disability benefits plans of the Company, if any.
(c) BREACH OF AGREEMENT. In the event this Agreement is terminated
pursuant to paragraph 9 (b) the Corporation shall pay
Executive (i) full salary through Date of Termination at the
annual rate then in effect at the time Notice of Termination,
the Corporation shall pay as severance pay to Executive, the
greater of one years payroll or an amount equal to two times
the salary remaining unpaid under the term of this agreement
or two times the amount equal to the annual salary in effect
at the Date of Termination, payable in one lump sum on or
before five (5) business days after the Date of Termination;
and (iii) if the termination arises out of a breach by the
Company of this agreement, the Corporation shall pay all other
damages for loss of benefits, legal expenses incurred and
costs of court. In the event this Agreement is terminated
pursuant to paragraph 8(e) the Corporation shall be obligated
to pay Executive any salary due to the Date of Termination.
(d) OPTIONAL SEVERANCE PAYMENT. Executive upon the event of the
Corporation's obligation to pay severance, may in Executive's
sole discretion and option elect to accept a number of shares
of registered stock of the Corporation determined by dividing
the severance amount due by $1.00 which number of shares when
delivered shall be in full payment and satisfaction of the
Corporation's obligation to Executive.
(e) CONTINUATION OF BENEFITS. Except for termination for Cause,
the Corporation shall maintain in full force and effect, for
the benefit of the Executive for six (6) months, all employee
benefits, plans and programs in which Executive was entitled
to participate and did participate immediately prior to the
Corporation shall terminate all employee benefits, plans and
programs in which Executive was entitled to participate and
did participate immediately prior to the Date of Termination.
(f) MITIGATION. The Executive shall not be required to mitigate
the amount of any payment provided under this paragraph 10 by
seeking other employment or otherwise.
11. NON-COMPETITION. Executive expressly agrees that while this agreement
is in effect, and, except for termination for Cause, for a period of
five (5) years following the termination of this Agreement, Executive
will not directly or indirectly, as an employee, agent, proprietor,
partner, broker, stockholder, officer, director, or otherwise, render
any services to, on Executive's own behalf or on behalf of any other
person or entity, engage in as an employee or owner of any competitive
business or organization located within a 500 mile radius of the
Counties of Dallas, Tarrant, Denton, Collin, Rockwell, Texas or any
other county in any state in which the Corporation then maintains an
office that would compete directly or indirectly with Corporation's
Business, without prior written consent of Corporation. The term
"competitive business" shall include but shall not be limited to any
business that manufactures and markets commercial air purification
technology. Executive further expressly agrees that Executive will not
use for Executives' own benefit or disclose to any person any
information, including confidential information, which is obtained or
learned while acting as Executive, without prior written consent of the
Corporation. The agreements contained in this paragraph on the part of
Executive shall be construed as an integral part of an enforceable
agreement and the agreements contained herein were made at the time
this agreement was consummated by the parties. The Executive
acknowledges and agrees that the non-competition restrictions contained
herein are fair and reasonable as to geographical area, length of time
and scope of activity restrained. The existence of any claim or cause
of action against Executive by the Corporation, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Corporation of the agreements contained in this
paragraph.
12. ADMINISTRATIVE PROVISIONS. The terms of this Agreement shall be
administered pursuant to the following provisions:
(a) DEFINITION. "Date of Termination" shall mean (i) the date of
death of Executive, (ii) thirty (30) days after notice of
termination is given for disability, (iii) the date specified
in the notice of termination for cause or good cause;
provided, if within thirty (30) days after delivery of a
notice of termination the person receiving such notice
notifies the other in writing that a dispute exists, the Date
of Termination shall be the date he dispute is finally
determined by mutual agreement or otherwise.
(b) PARTIES BOUND. This Agreement shall be binding on and inure to
the benefit of the parties and their respective heirs,
executors, administrators. Legal representatives, successors
and assigns.
(c) ASSIGNMENT. Executive shall have no right to transfer or
assign any interest in this Agreement without the prior
written consent of the Corporation.
(d) TIME LIMITS. Time is of the essence in this Agreement; and all
time limits shall be strictly construed and rigidly enforce.
(e) NO WAIVER. A failure or delay in the enforcement of the rights
detailed in this Agreement by Corporation shall not constitute
a waiver of those rights or be considered a basis for
estoppel. Corporation may exercise its rights under this
Agreement despite any delay or failure to enforce those
rights.
(f) DISPUTE OR CONTEST. In the unlikely event that a dispute
occurs or an action in law or equity arises out of the
operation, construction, or interpretation of this Agreement,
the prevailing party shall be entitled, in addition to any
other relief granted to reasonable expenses for attorneys'
fees and costs incurred by such party in the action.
(g) PARAGRAPH HEADINGS. The paragraph headings used in this
Agreement are descriptive only and shall have no legal force
or effect whatever.
(h) TEXAS LAW. This Agreement shall be subject to and governed by
the laws of the State of Texas. Any and all obligations or
payments are due and payable in Dallas County, Texas.
(i) SEVERABILITY. If any provision of this Agreement shall, for
any reason, be hold violative of any applicable law, and so
much of the Agreement is held to be unenforceable, then the
invalidity of such a specific provision of this Agreement
shall not be deemed to invalidate any other provisions of this
Agreement, which other provisions shall remain in full force
and effect unless removal of the invalid provisions destroy
the legitimate purposes of this Agreement, in which event this
Agreement shall be canceled.
(j) MODIFICATION OF AGREEMENT. This Agreement represents the
entire Agreement by and between the parties, except as
otherwise provided in this Agreement, and it may not be
changed except by written amendment duly executed by all
parties.
(k) NOTICES. All notices and communications pursuant to this
Agreement shall be in writing and delivered when sent by
United States certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to Executive: Mike Ryan
15851 Dallas Parkway, Suite 410
Addison, TX, 75001
If to Corporation: Humitech Inc.
15851 Dallas Parkway, Suite 410
Addison, TX, 75001
|
Or such other address any party may have furnished to the other in writing upon receipt by such party.
SIGNED, accepted and agreed to the first date stated above, by the undersigned parties.
CORPORATION:
HUMITECH INC:
/s/ C.J. Comu -------------------------------------------- C.J. Comu, Chief Executive Officer |
EXECUTIVE:
/s/ Mike Ryan -------------------------------------------- Mike Ryan |
EXHIBIT "A"
Exhibit 10.7
Humitech International Group, Inc. 2002 Company-Wide Stock Option Plan
HUMITECH INTERNATIONAL GROUP, INC.
2002 COMPANY-WIDE
STOCK OPTION PLAN
1. Purpose.
The purpose of this Plan is to encourage ownership of the common stock of Humitech International Group, Inc. ("the Company") by all Partners of the Company and its Subsidiaries. This Plan is intended to provide an incentive for Partners to exert their maximum efforts to achieve the successful operation of the Company and is intended to assist the Company in attracting and retaining talented personnel by providing an opportunity to benefit from the increased value of the Company, to which such Partners and new personnel have contributed. The Plan is expected to benefit the shareholders of the Company by linking the interests of the Company's Partners with those of its shareholders. The benefits of this Plan are not a substitute for compensation otherwise payable to Partners pursuant to the terms of their employment.
2. Definitions.
For purposes of the Plan:
"AGREEMENT" means the written document issued by the Company to an Optionee evidencing the grant of Options and setting forth the terms and conditions of such grant.
"BASE WAGES," with respect to an Eligible Partner, means all gross actual base pay (including any applicable shift differentials), whether paid or deferred, but not including overtime, bonuses and commissions, and shall be calculated before deductions for amounts contributed to Company benefits and/or long-term savings plans. "Base Wages" does not include deferred income at payout, any awards payable under any long-term incentive plan to be adopted by the Company, imputed income for life insurance, relocation reimbursement or similar programs. With respect to the entire Company, "Base Wages" means the total amount of Base Wages for all Eligible Partners at a particular time under the Plan.
"BOARD" means the Board of Directors of the Company.
"CHANGE IN CAPITALIZATION" means any increase or reduction in the number of Shares, or any change (including, but not limited to, a change in value) in the Shares or exchange of Shares for a different number or kind of shares or other securities of the Company or another corporation, by reason of a reclassification, recapitalization, merger, consolidation, reorganization, spin-off, split-up, issuance of warrants or rights or debentures, stock dividend, stock split or reverse stock split, cash dividend, property dividend, combination or exchange of shares, repurchase of shares, change in corporate structure or otherwise.
"CHANGE IN CONTROL" has the meaning set forth in Section 5.9 hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means a committee, as described in Section 3.1, that may be appointed by the Board from time to time to administer the Plan and to perform the functions set forth herein.
"COMPANY" means Humitech International Group, Inc.
"DIRECTOR" means a member of the Board.
"DISABILITY" means:
(a) in the case of an Optionee whose employment with the Company or a Subsidiary is subject to the terms of an employment agreement between such Optionee and the Company or Subsidiary, which employment agreement includes a definition of "Disability," the term "Disability" as used in this Plan or any Agreement shall have the meaning set forth in such employment agreement during the period that such employment agreement remains in effect; and
(b) in all other cases, the term "Disability" as used in this Plan or any Agreement shall have the same meaning as set forth under the Company's long- term disability plan as may be amended from time to time and in the event the Company does not maintain such a plan, a physical or mental condition resulting from bodily injury, disease, or mental disorder which renders the Optionee incapable of continuing his or her usual and customary employment with the Company or Subsidiary, as the case may be.
"ELIGIBLE PARTNER" means any regular, full-time or part-time Partner who (i) was a Partner as of April 1 in the fiscal year of the Company prior to the date of the Option grant, (ii) is a Partner on the date of the Option grant, and (iii) who has been paid for at least 500 hours (which equates to approximately twenty hours per week on average) between April 1 and the last day of the prior fiscal year or between the first day of the prior fiscal year and March 31 of the fiscal year prior to the date of the Option grant. Officers and members of the Boards of Directors of the Company or its Subsidiaries shall not be eligible to participate in this Plan. In addition, none of the following individuals shall be an Eligible Partner:
(1) A Partner covered by a collective bargaining agreement, unless the collective bargaining agreement applicable to the Partner specifically provides for participation in this Plan;
(2) A leased employee;
(3) A temporary Partner as defined by the Company's human resources policy; or
(4) Individuals who are not designated as "employees" in the Company's or applicable Subsidiary's employment records. For example, individuals engaged to perform services in a relationship which the Company or Subsidiary characterizes as that of an "independent contractor" with respect to the Company or Subsidiary shall not be Eligible Partners.
Individuals described in this paragraph shall not be Eligible Partners for the period they are not characterized as employees in the Company or applicable Subsidiary's employment records, even if a determination is made by the Internal Revenue Service, the United States Department of Labor, another governmental agency, a court or other tribunal that the individual is an "employee" of the Company or Subsidiary during that period, for purposes of pertinent sections of the Code or for any other purpose. An individual who has not been designated an Eligible Partner on account of this paragraph may, in the sole discretion of the Committee, be designated an Eligible Partner effective as of the date as of which the Company or applicable Subsidiary characterizes the individual as an "employee" in their employment records.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" on any date means the closing sale price of a Share on the principal national securities exchange or stock market on which such Shares are listed or admitted to trading. If there are no quoted prices with respect to Shares for such date, the Fair Market Value shall be the closing sale price per Share on the immediately previous business day on which such quotations are available and, if the Shares are no longer publicly-traded, the Fair Market Value shall be the value established by the Board in good faith.
"OFFICER" means a Partner serving in a position of vice president or higher of the Company or its Subsidiaries.
"OPTION" means an option to purchase a Share under the Plan; no Option granted under the Plan shall be an incentive stock option within the meaning of Section 422 of the Code.
"OPTIONEE" means a person to whom an Option has been granted under the Plan.
"PARTNER" means any individual serving as an employee of the Company or any of its Subsidiaries.
"PERSON" means a natural person, company, government or political subdivision, agency or instrumentality of a government.
"PLAN" means the Humitech International Group, Inc. 2002 Company-Wide Stock Option Plan, including any country-specific rules approved and adopted by the Board or the Committee, as such plan and country-specific rules may be amended and restated from time to time.
"SHARES" means the shares of common stock, no par value per share, of the Company.
"SUBSIDIARY" means any corporation or other Person, of which a majority of its voting equity securities or equity interest is owned directly or indirectly by the Company.
3. Administration.
3.1. The Plan shall be administered by the Board, provided however that the Board may appoint a Committee to administer the Plan, consisting of not less than three members of the Board.
3.2. Authority; Powers. Subject to the express terms and conditions set forth herein, the Board (or the Committee, if so appointed) shall have the power from time to time to:
(a) determine those Eligible Partners to whom Options shall be granted under the Plan, the number of Options to be granted and the terms and conditions of such Option grants, including the exercise price per Option;
(b) construe and interpret the Plan and the Options granted hereunder and to establish, amend and revoke rules and regulations for the administration of the Plan, including, but not limited to, correcting any defect or supplying any omission, or reconciling any inconsistency in the Plan or in any Agreement, in the manner and to the extent it shall deem necessary or advisable so that the Plan complies with applicable law, and otherwise to make the Plan fully effective. All decisions and determinations by the Board or the Committee in the exercise of this power shall be final, binding and conclusive upon the Company, its Subsidiaries, the Optionees, and all other persons having any interest herein;
(c) exercise its discretion with respect to the powers and rights granted to it as set forth in the Plan;
(d) generally exercise such powers and to perform such acts as are deemed necessary or advisable to promote the best interests of the Company with respect to the Plan; and
(e) delegate to an administrator or administrators those clerical and administrative functions which can be legally delegated to such administrator or administrators.
4. Stock Subject to the Plan and Maximum Grants.
4.1. Number. The number of Shares reserved for issuance pursuant to the exercise of Options granted under the Plan is 1,000,000. The maximum number of Options that an Eligible Partner may receive in any fiscal year may not exceed Options to purchase the number of Shares having an aggregate Fair Market Value on the date of grant equal to ten percent (10%) of such Eligible Partner's Base Wages for the previous fiscal year of the Company. No Eligible Partner shall be granted Options under this Plan that would result in such Eligible Partner receiving more than five percent (5%) of the maximum number of Shares available for issuance hereunder. Upon a Change in Capitalization, the number of Shares referred to in the first sentence of this Section 4.1 shall be adjusted pursuant to Section 7.
4.2. Reduction of Number. Upon the granting of Options, the number of Shares available under Section 4.1 for the granting of further Options shall be reduced by the number of Shares for which such Options may be exercised.
4.3. Expired Options. Whenever any outstanding Option is canceled or is otherwise terminated for any reason without having been exercised, the Share allocable to the expired, canceled or otherwise terminated Option shall continue to be reserved for issuance under the Plan and may be the subject of new Options granted hereunder.
5. Terms and Conditions of Options.
5.1. Agreement and Date of Grant. The terms and conditions of the grant of Options to an Eligible Partner shall be set forth in an Agreement. The Board or the Committee shall determine, in its sole discretion, the date during the quarter following the end of the Company's fiscal year upon which Options are granted.
5.2. Exercise Price. The exercise price for each Option shall be 100% of the Fair Market Value of a Share on the date the Option is granted.
5.3. Vesting. Subject to Section 5.9, and unless otherwise approved by action of the Board or the Committee, each grant of Options shall vest and become exercisable in annual twenty-five percent (25%) installments commencing on the first anniversary of the date of grant. To the extent not exercised, installments shall accumulate and be exercisable, in whole or in part, at any time after becoming exercisable, but not later than the date the Options expire. Options shall cease vesting as of the date of the Optionee's death, Disability, or other voluntary or involuntary termination of employment with the Company or any Subsidiary.
5.4. Term. Unless otherwise provided in the applicable Agreement, each Option granted hereunder shall have a term of two (2) years, and renewable for another two (2) years. The Committee may, subsequent to the granting of any Option, extend the term thereof, but in no event shall the term of any Option exceed two (2) years. The options are worthless if not exversied.
5.5. Modification. No modification of an Option shall adversely alter or impair any rights or obligations under the Option without the Optionee's consent.
5.6 Non-Transferability. An Option granted hereunder shall not be transferable by the Optionee except by will or the laws of descent and distribution or pursuant to a domestic relations order (within the meaning of Rule 16a-12 promulgated under the Exchange Act). An Option may be exercised during the lifetime of such Optionee only by the Optionee or his or her guardian or legal representative. The terms of such Option shall be final, binding and conclusive upon the beneficiaries, executors, administrators, heirs and successors of the Optionee.
5.7 Method of Exercise. An Optionee desiring to exercise options granted and exercisable hereunder shall notify the Company or, if required by the Company, the brokerage firm designated by the Company to facilitate exercises and sales under this Plan, specifying the number of Options to be exercised. The notification to the brokerage firm shall be made in accordance with procedures of such brokerage firm approved by the Company. The notification to the Company or the designated brokerage firm shall be accompanied by (i) payment of the aggregate exercise price of the Options in cash or by tender of previously-owned Shares having an aggregate Fair Market Value of at least the aggregate exercise price, or (ii) a request that the Company or the designated brokerage firm conduct a cashless exercise of the Options. Payment of the aggregate exercise price by means of tendering previously-owned Shares of the Company's common stock shall not be permitted when the same may, in the reasonable opinion of the Company, cause the Company to record a loss or expense as a result thereof.
5.8 Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Options unless and until
(i) the Options shall have been exercised pursuant to the terms thereof, and
(ii) the Company shall have issued and delivered Shares to or for the account of
the Optionee. Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such Shares. Nothing in this Plan should be
construed to provide any Partner with any right to receive an Option under this
Plan, irrespective of whether the Partner may or may not be an Eligible Partner.
5.9 Effect of Change in Control. In the event of a Change in Control, all Options outstanding on the date of such Change in Control shall become immediately and fully exercisable and shall remain exercisable in accordance with Section 6.2. A "Change in Control" means the occurrence during the term of the Plan of:
(a) An acquisition (other than directly from the Company) of any voting securities of the Company (the "Voting Securities") by any Person (as the term Person is used for purposes of Section 13(d) or 14(d) of the Exchange Act), immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty-five percent (25%) or more of the then outstanding Shares or the combined voting power of the Company's then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Shares or Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control.
A "Non-Control Acquisition" shall mean an acquisition by
(i) an employee benefit plan (or a trust forming a part thereof) maintained by
the Company or any Subsidiary, (ii) the Company or its Subsidiaries, or (iii)
any Person in connection with a "Non-Control Transaction" (as hereinafter
defined);
(b) Cessation for any reason of the individuals who are members of the Board as of April 1, 2002 (the "Incumbent Board") to constitute at least two-thirds of the members of the Board; provided, however, that if the election, or nomination for election by the Company's common shareholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or
(c) The consummation of:
(i) A merger, consolidation or reorganization with or into the Company or in which securities of the Company are issued, unless such merger, consolidation or reorganization is a "Non-Control Transaction."A "Non-Control Transaction" shall mean a merger, consolidation or reorganization with or into the Company or in which securities of the Company are issued where:
(A) the shareholders of the Company, before such merger, consolidation or reorganization, own directly or indirectly immediately following such merger, consolidation or reorganization, at least fifty percent (50%) of the combined voting power of the outstanding voting securities of the corporation resulting fromsuch merger or consolidation or reorganization (the "Surviving Corporation") in substantially thesame proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, or a corporation directly or indirectly beneficially owning a majority of the Voting Securities of the Surviving Corporation, and
(C) no Person other than (i) the Company,
ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a part
thereof) that, prior to such merger, consolidation or reorganization, was
maintained by the Company or any Subsidiary, or (iv) any Person who, prior to
such merger, consolidation or reorganization had Beneficial Ownership of
twenty-five percent (25%) or more of the then outstanding Voting Securities or
Shares, has Beneficial Ownership of twenty-five percent (25%) or more of the
combined voting power of the Surviving Corporation's then outstanding voting
securities or its common stock.
(ii) A complete liquidation or dissolution of the Company; or
(iii) The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the then outstanding Shares or Voting Securities as a result of the acquisition of Shares or Voting Securities by the Company which, by reducing the number of Shares or Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons, provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Shares or Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Shares or Voting Securities which increases the percentage of the then outstanding Shares or Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur.
Section 5.9 set forth above applies to any Option granted or Change in Control occurring after April 1, 2002; provided, however, that in the event that the adoption of Section 5.9 as set forth above is considered to be an alteration of equity interests in contemplation of a pooling of interests transaction, the adoption of Section 5.9 shall be automatically rescinded. Upon the rescission of the adoption of Section 5.9 set forth above, the effect of a merger, consolidation, tender offer or takeover bid shall be governed by the terms of Section 2.6 of the Plan in effect prior to April 1, 2002.
6. Effect of a Termination of Employment.
6.1. Board or Committee Discretion. The Agreement evidencing the grant of each Option may set forth the terms and conditions applicable to such Option upon a termination or change in the status of the employment of the Optionee by the Company, or a Subsidiary (including a termination or change by reason of the sale of a Subsidiary), which shall be as the Board or Committee may, in its discretion, determine at the time the Option is granted or thereafter.
6.2. Default Provisions. Unless otherwise provided in the applicable Agreement pursuant to the Board or Committee's authority as set forth in Section 6.1, any Option granted pursuant to this Plan shall expire at the earliest of the following:
(i) the date specified in the Option;
(ii) ninety (90) days after the date of voluntary or involuntary
termination of Optionee's employment other than a termination as described in
(iii) or (iv) below;
(iii) on the date of the discharge of the Optionee for misconduct that is willfully or wantonly harmful to the Company; or
(iv) twelve (12) months after the date of the Optionee's death or termination due to Disability.
7. Adjustment Upon Changes in Capitalization.
7.1. Adjustment. In the event of a Change in Capitalization, the Board or the Committee, as appropriate, shall conclusively determine the appropriate adjustments, if any, to (i) the number of Shares reserved for issuance pursuant to the exercise of Options under the Plan, (ii) the maximum number of Shares with respect to which Options may be granted to any Eligible Partner during the term of the Plan, and (iii) the number of Shares which are subject to outstanding Options granted under the Plan and the exercise price therefor (if applicable).
7.2. No Fractional Shares. If any adjustment under Section 7.1 hereof results in an obligation of the Company to issue a fractional Share, the number of Shares to be issued shall be rounded to the nearest whole number. Under no circumstances shall the Company be obligated to issue and fractional Shares pursuant to the exercise of Options under this Plan.
8. Termination and Amendment of the Plan.
The Plan shall terminate on April 1, 2004 and no Option may be granted thereafter. Subject to Section 5.5, the Board or the Committee may terminate the Plan prior to the day set forth above and the Board or the Committee, may at any time and from time to time amend, modify or suspend the Plan and all administrative rules, regulations and practices; provided, however, that:
(a) no such amendment, modification, suspension or termination shall impair or adversely alter any Options theretofore granted under the Plan, except with the consent of the Optionee, nor shall any amendment, modification, suspension or termination deprive any Optionee of any Shares that he or she may have acquired through or as a result of the Plan; and
(b) to the extent necessary under applicable law, no amendment shall be effective unless approved by the shareholders of the Company in accordance with applicable law.
9. Non-Exclusivity of the Plan.
The adoption of the Plan by the Board shall not be construed as amending, modifying or rescinding any previously approved incentive arrangement or as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock options otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases.
10. Limitation of Liability.
As illustrative of the limitations of liability of the Company, but not intended to be exhaustive thereof, nothing in the Plan shall be construed to:
(a) give any person any right to be granted an Option other than at the sole discretion of the Board or the Committee;
(b) give any person any rights whatsoever with respect to Shares except as specifically provided in the Plan and any applicable Agreement;
(c) limit in any way the right of the Company or any Subsidiary to terminate the employment of any person at any time; or
(d) be evidence of any agreement or understanding, expressed or implied, that the Company will employ any person at any particular rate of compensation or for any particular period of time.
11. Regulations and Other Approvals; Governing Law.
11.1. State Law. Except as to matters of federal law, the Plan and the rights of all persons claiming hereunder shall be construed and determined in accordance with the laws of the State of Texas without giving effect to conflicts of laws principles thereof.
11.2. Applicable Laws and Regulations. The obligation of the Company to issue Shares upon the exercise of Options granted under the Plan shall be subject to all applicable laws, rules and regulations, including all applicable federal and state securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Board or the Committee.
11.3. Compliance. The Board or the Committee may make such changes to the Plan as may be necessary or appropriate to comply with the rules and regulations of any government authority.
12. Foreign Eligible Partners.
Without amending the Plan, the Board or the Committee may grant Options to Eligible Partners who are foreign nationals on such terms and conditions different from those specified in this Plan as may in the judgment of the Committee be necessary or advisable to foster and promote achievement of the purposes of the Plan, and, in furtherance of such purposes, the Board or the Committee may make such modifications, amendments, procedures, subplans, and the like as may be necessary or advisable to comply with the provisions of the laws in other countries in which the Company or its Subsidiaries operate or have employees.
13. Miscellaneous.
13.1. Multiple Option Grants. The terms of each Option grant may differ from other Options granted under the Plan at another time. The Committee may also make more than one grant of Options to a given Eligible Partner during the term of the Plan.
13.2. Withholding of Taxes. At such time as an Optionee recognizes taxable income in connection with the receipt of Shares or receives cash in connection with the sale of Shares acquired pursuant to the exercise of Options under the Plan (a "Taxable Event"), the Optionee shall pay to the Company an amount equal to the federal, state and local (including applicable local country) taxes required to be withheld by the Company in connection with the Taxable Event (the "Withholding Taxes") prior to the issuance of such Shares or the payment of such cash. The Company shall have the right to deduct from any payment of cash to an Optionee an amount equal to the Withholding Taxes in satisfaction of the obligation to pay Withholding Taxes. In satisfaction of the obligation to pay Withholding Taxes to the Company, the Optionee may elect to have a portion of the Shares then issuable to him or her having an aggregate Fair Market Value on the date of exercise equal to or greater than the Withholding Taxes withheld by the Company. If Shares are to be withheld to pay required Withholding Taxes, the Optionee, his or her personal representative or permitted transferee must deliver an attestation that he or she has held a number of Shares equal to the number to be withheld to pay such Withholding Taxes for at least six (6) months.
Exhibit 10.8 Letter of Agreement for Franchise Program Assistance
PSA
PAUL STEWART ASSOCIATES, INC.
14455 Preston Road, Suite 128 o Dallas, Texas 75254
Mail: RO. Box 802216 o Dallas, Texas 75380-2216
1.888.716.9931 o 972.716.9931 o Fax 97 2 716.9913
April 13, 2002
Mr. C. J. Comu
Humitech International Group, Inc.
15851 Dallas Parkway, Ste. 410
Addison, TX 75001
Re: LETTER OF AGREEMENT FOR FRANCHISE PROGRAM ASSISTANCE
Dear Mr. Comu:
Here are the terms and conditions under which Paul Stewart Associates, Inc. ("PSA") will agree to augment and assist the franchising and marketing efforts of Humitech International Group, Inc. ("HIGI") with its franchise concept for commercial humidity control systems (the "Franchise Program"):
A. DOCUMENTATION & MARKETING. PSA will undertake the creation, review and revision as needed of the following elements of the proposed Franchise Program, including the:
l. Offering Circular 4. Franchise Advertising 2. Franchise Agreement 5. Marketing Plan 3. Sales Brochure Inserts 6. Franchise Financing Options |
B. COMPLIANCE WITH LAW. PSA will cooperate with and assist HIGI in all matters relative to the continued success of the Franchise Program, in a professional and responsible manner with respect to compliance with all state and federal franchising statues, laws and regulations;
C. HOLD HARMLESS. HIGI will hold Paul J. Stewart and PSA harmless for any misstatement of fact or misrepresentation or legal action arising from or caused by owners, officers, directors, employees or agents of HIGI, and VICE VERSA;
D. BUDGETS. HIGI acknowledges that the estimated financial commitment for the revision of the existing Franchise Program may be from $15,000 to $20,000, including all consulting retainers and marketing fees, over a period of two months-not including printing and advertising costs, which must be approved by HIGI in advance;
E. MODIFICATIONS. PSA acknowledges that the final budgets for the recreation of documents and/or marketing materials shall be based on bid to, and approval by HIGI in advance of any such expenditures. HIGI may cancel, modify, delay or accelerate projects and/or timetables as HIGI deems necessary and appropriate;
O SPECIALISTS IN BUSINESS CONSULTING, PACKAGING & MARKETING O
F. PRIOR APPROVAL. PSA will not incur or authorize any financial expenditure, of any type or kind, without the prior consent of, and approval by HIGI in advance of such expenditure;
G. APPROVED EXPENSES. HIGI will pay for all prior approved and necessary expenses to be incurred in the development, packaging and marketing of the Franchise Program, which may include, but not be limited to printing and production expenses, marketing costs, advertising placements, travel, room and board, clerical and other such expenditures as are directly related to or part of the Franchise Program as per this Agreement;
H. RETAINERS AND FEES. HIGI shall retain Paul Stewart and PSA to perform the above services, in conjunction with and under the supervision of HIGI, for the sum of $12,500 as the total consulting retainer, to be paid monthly, at the rate of $7,500 deposited for the rough drafts of the franchise documents and $5,000 for completion of the final approved documents, to be delivered within thirty days or less. The initial consulting retainer installment of $7,500 is due upon signing this Agreement;
I. COMPLETION/ADDITION OF PROJECTS. At the conclusion of the above projects (OR OTHERS AS MAY BE IDENTIFIED BY HIGI), or at such time as HIGI requests further assistance from Paul Stewart and PSA for projects not listed above, HIGI shall have the option of retaining PSA as needed on a project-to-project basis, at the regular hourly rate of $250 per hour, or as mutually agreed;
J. TERM. This Agreement, which shall incorporate and include the exhibited project timetable and budget indicated above, shall commence from the date of its signing for 90 days, and may be extended and/or amended only by mutual written agreement; and
K. CANCELLATION. This Agreement may be canceled by either party upon ten
(10) days written notice and receipt of all then due earned and payable
retainers, fees and/or approved expenses. Any unearned retainers or
fees that may be due PSA shall be returned to HIGI after cancellation
of this Agreement by HIGI.
THEREFORE, on this the 13th day of April, 2002, the parties named below do hereby agree.
/s/C.J. Comu /s/ Paul J. Stewart ------------------------------------ ------------------------------------ C. J. Comu, Chairman Paul J. Stewart, President Humitech International Group, Inc. Paul Stewart Associates, Inc. |
O SPECIALISTS IN BUSINESS CONSULTING, PACKAGING & MARKETING O
BUYSIDE 1103 Knott Court
P A R T N E R S Dallas, Texas 75013
214.718.9202 Tel.
972.359.9202 Fax
gmatus@buysidepartners.com
www.buysidepartners.com
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DALLAS O SAN FRANCISCO O NEW YORK O BOSTON O LOS ANGELES O LONDON O ZURICH
10.9 SERVICE AGREEMENT WITH BUYSIDE PARTNERS LLC
THIS SERVICE AGREEMENT (Agreement) is entered into as of the 1st the day of March, 2002, between Buyside Partners, Inc. (Buyside Partners) and CLIENT
RECITALS
A. Buyside Partners is engaged in providing investor relations, strategic consulting, public relations and other consulting services for the primary purpose of enhancing the market valuations of publicly traded and privately held corporations.
B. CLIENT requires the services from Buyside Partners that are set forth in Exhibit "A" attached hereto and made a part of this Agreement (hereinafter referred to as "the Services").
C. Buyside Partners desires to provide the Services to CLIENT and CLIENT desires to receive the Services from Buyside Partners.
NOW THEREFORE, in consideration of the mutual covenants, conditions, and promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, Buyside Partners and CLIENT agree as follows:
1. ENGAGEMENT. CLIENT hereby engages Buyside Partners to provide the Services and Buyside Partners accepts said engagement.
2. TERM. This Agreement shall commence as of the date hereof and shall continue until terminated by either party upon Thirty (30) days written notice to the other party.
3. COMPENSATION. CLIENT agrees to pay Buyside Partners a 'fixed' monthly fee of $6,300 dollars within thirty (30) days after date of month-end invoice from Buyside Partners. Options will be offered at client's discretion.
a. BUYSIDE PARTNERS SHALL INVOICE CLIENT, AND CLIENT SHALL PAY BUYSIDE PARTNERS FOR ALL FEES AND EXPENSES THAT BUYSIDE PARTNERS HAS INCURRED IN PERFORMING THE SERVICES DURING SUCH INVOICE PERIOD.
BUYSIDE PARTNERS FEES FOR SERVICES PROVIDED INCLUDE A STANDARD MONTHLY BILLING FEE OF $6,300 DOLLARS. FOLLOWING THE END OF EACH MONTH, A FULLY DOCUMENTED AND DETAILED REPORT WILL BE SUBMITTED. CLIENT'S ONLY "FIXED" COMMITMENT WILL BE $6,300 PER MONTH FOR A 12 MONTH PERIOD INCLUDING A ONE-TIME $5,000 RETAINER.
4. PROGRESS REPORTS. Buyside Partners shall provide CLIENT with monthly progress reports at the same time as invoices for its services are rendered and where appropriate and upon request, samples of work in progress.
5. TRADE SECRETS AND CONFIDENTIALITY. Buyside Partners shall not disclose, use, or sell any trade secret of CLIENT except as specifically authorized in writing by CLIENT. "Trade Secret" is defined as Information owned by CLIENT, its subsidiaries or divisions, that are not generally known to the public, has economic value to CLIENT, its subsidiaries or divisions, and were collected through efforts put forth by CLIENT, its subsidiaries or divisions. The term "trade secret" shall not, however, include (a) anything that is generally known in the relevant trade or industry or to the public generally, or (b) nonproprietary knowledge, skills, or experience that Buyside Partners would have gained in the course of similar employment or work elsewhere.
6. MISCELLANEOUS PAYMENTS. Buyside Partners shall pay all agents, subcontractors, and vendors for all services and products pertaining to this Agreement that are received or purchased by Buyside Partners with the prior written authorization of CLIENT.
7. TERMINATION. Either party may terminate his Agreement with or without cause and at any time by giving the other party 30 day written notice. If this Agreement is terminated, Buyside Partners shall cease all work for CLIENT and shall immediately deliver all CLIENT related material in Buyside Partners procession and a final invoice to CLIENT.
8. INDEPENDENT CONTRACTOR. Buyside Partners is an independent contractor and no training or assistance that Buyside Partners may give or offer to CLIENT shall defeat this status. The relationship between the parties hereunder is not an employment, partnership, joint venture, legal representation, membership or fiduciary relationship. Buyside Partners shall be responsible to pay all its sub-contractors, taxes and similar items.
9. OWNERSHIP OF COPYRIGHT, I.P. AND WORK PRODUCTS. All work performed and all work product credited on behalf of CLIENT by Buyside Partners, shall remain the property of CLIENT. Such work and work product will include, but not be limited to, any inventions or idea arising out of, and related to CLIENT, Analyst Reports, any finished work product, literatures, reports, slicks, advertisement, presentations and data, either in printed, hand written or electronic form and any technology developed for CLIENT, or intended for CLIENT, or paid for by CLIENT in any parts of such development.
10. INDEMNIFICATION. CLIENT shall indemnify, defend and hold harmless Buyside Partners for any liabilities arising out of, or as a result of, negligence by CLIENT. Buyside Partners shall indemnify, defend and hold harmless CLIENT for any liabilities, expenses and legal costs arising out of, or as a result of negligence on the part of Buyside Partners.
11. GENERAL PROVISIONS.
a. INTERPRETATION. The paragraph headings contained herein are for convenience and reference only and shall not expand, limit, or otherwise affect interpretation of any provision of this Agreement. Whenever the text requires, the singular shall include the plural, the plural hall include the singular, the whole shall include any part thereof, and any gender shall include both other genders.
b. ENFORCEABILITY AND SEVERABILITY. CLIENT represents and warrants to Buyside Partners, and Buyside Partners represents and warrants to CLIENT, that this Agreement constitutes a legal, valid, and binding obligation of the respective parties enforceable in accordance with the terms herein contained. The provisions of this Agreement shall be deemed and construed to be independent and severable, and the invalidity or partial invalidity or un-enforceability of any one provision or portion thereof shall not affect the validity or enforceability of any other provision of this Agreement.
c. ENTIRE AGREEMENT. This Agreement constitutes the final agreement between Buyside Partners and CLIENT regarding the subject matter of this agreement and supersedes all prior agreements, understandings, negotiations, and discussions, written or oral, between Buyside Partners and CLIENT with respect thereto. No subsequent modification, amendment, or change of this Agreement shall be binding unless reduced to writing and signed by both Buyside Partners and CLIENT.
d. BINDING EFFECT. All provisions hereof shall be binding upon and shall inure to the benefit of the parties hereto, and their respective successors and assigns.
e. NOTICES. All notices required to be given hereunder shall be in writing and shall be delivered in person or sent by certified mail, return receipt requested, to the address of the other party set forth on the first page hereof or to such other address as such party shall have designated by written notice.
f. ATTORNEYS' FEES. If either party employs an attorney or attorneys to enforce any of the provisions hereof, the non-prevailing party agrees to pay the prevailing party all reasonable costs and expenses, including attorney fees, incurred in connection therewith.
g. NO WAIVER. Acceptance by either party of any performance less than required hereby shall not be deemed to be a waiver of the rights of such party to enforce all of the terms and conditions hereof. No waiver of any right hereunder shall be binding unless reduced to writing and signed by the party to be charged therewith.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
Buyside Partners, Inc.
/s/ George Matus ----------------------------------- George Matus, Director |
CLIENT
/s/ C.J. Comu ----------------------------------- (CLIENT SIGNATURE) |
EXHIBIT "A"
This Addendum is attached to and made a part of the Service Agreement between Buyside Partners and CLIENT dated _____________, 2002.
CLIENT requires the following services from Buyside Partners:
During the term of the Agreement, Buyside Partners shall manage investor relations for CLIENT.
Deliver the following program elements to help increase visibility and attain "full" market valuation correlated to future growth prospects:
1. RESEARCH ORIENTATION. Buyside Partners will provide a thorough analysis of CLIENT'S "investment fundamentals and appeals" to develop a Management Vision Statement, Analyst Reports for fund managers on a quarterly basis and corporate goals, including a long range business plan, market demand projections by segment and CLIENT'S competitive position within CLIENT'S markets and internal factors likely to affect the CLIENT'S operating margins. Buyside Partners will visit CLIENT'S headquarters for a full orientation and interviews with CLIENT'S key executives.
2. COUNSELING, PROGRAM PLANNING AND REPORTING. Buyside Partners will provide consulting, as needed, with top management regarding the effective structuring of CLIENT'S investment story, speech presentations, pitch documents and printed communications; and strategies to enhance the marketability of the common and/or any preferred stock, such as: policy on dividends, stock splits, exchange listings, and annual meeting planning and staging. Also, the issuance of monthly program reports to CLIENT and a conference as often as needed to analyze CLIENT's performance, plan a disclosure tack and review prevailing street feedback and review program progress through monthly written reports.
3. TARGETING. MEETING AND FOLLOW-UP. Buyside Partners will provide both its personal/ professional investment contacts as well as an extensive electronic nation-wide database (BUYSIDE CONNECT(TM)) of approx. (30,000) investment professionals to CLIENT, including analysts, fund managers, brokerage officers, high net-worth individuals and other
professional contacts in the investment community. Buyside Partners will arrange meetings between qualified and strategically important investment professionals, analysts, fund managers, brokerage officers, high net-worth individuals and other contacts in the investment community on a weekly and monthly basis. This process will include:
* Audience selection and personal contact
* Deliver advance CLIENT information to attendees
* Site selection and all logistics including; catering, sound and projection equipment, printed materials handling; etc.
* Preparing the "pitch" presentation.
* Securing audience reactions within 48 hours thereafter.
4. INVESTMENT COMMUNITY OUTREACH. Ongoing identification of investment professionals both nationwide and internationally who should be the top priority candidates for first time introduction to the CLIENT. Buyside Partners pre-qualifies analysts, brokers and fund managers and all other investment professionals for private group meetings with CLIENT officers. A screening process is conducted through on-going personal interviews with identified candidates.
5. PERCEPTION STUDY. Identification and interviews with investment professionals influencing CLIENT's stock float to determine prevailing attitudes, including analysis of the 13F SEC filings of all those institutions holding stock of CLIENT's peer group (public companies in CLIENT's category), as well as an analysis of CLIENT's shareholder roster, street name holdings and other data.
6. PRINTED MATERIALS. Buyside Partners shall assist in the review and preparation of initial draft for the following documents, however, CLIENT shall approve in writing all printed materials, prior to distribution to any outside entity. CLIENT shall have the responsibility to design and print all printed materials and shall rely on Buyside Partners for advice in the development of these collateral materials:
a. Quarterly Shareholder Letters: to accompany earnings releases.
b. Quarterly Analyst Report
c. Annual Report: Theme and format; review and editing.
d. Corporate Press Releases: Prepare and distribute all press releases to PR News Wire and other appropriate media, subject to final sign-off by CLIENT officer prior to distribution of any press release.
e. Investment Profile: Buyside Partners shall prepare a research report designed for top analysts and money managers.
f. Broker Fact Sheet: Buyside Partners shall prepare a two-page distillation of the CLIENT's investment profile aimed at the retail investment community.
g. Investor Kit: Buyside Partners shall prepare a sample Investor Kit.
7. CONFERENCE CALL BRIEFINGS. Buyside Partners will assist with script development and review; invitation dissemination, set-up of all conference call logistics, set-up of conference call web-cast with v-call, street link, etc., including telephonic archives, and immediate follow-up with key participants. Buyside Partners will also arrange for CLIENT to participate in Buyside Partners annual virtual CEO conference call.
8. FINANCIAL PRESENTATIONS. Buyside Partners will assist in producing speech outline and slides to be utilized in effectively presenting the CLIENT's story to assembled groups of brokers, money managers and investment analysts.
9. MEDIA RELATIONS. Buyside Partners will make arrangement for media interviews and preparation therefore; and development of editorial interest in feature profile articles on CLIENT in local, regional, and national financial media. CLIENT's publications will include BusinessWeek, Fortune, Barrons, Forbes, Wall Street Journal and other major media as well as CNBC, BLOOMBERG TV AND CNNFN. Buyside Partners will also arrange for regular progress report conferences with Dow Jones, Reuters or Bloomberg on an exclusive basis just in advance of quarterly results issuance to obtain the fullest possible coverage with the national wires.
10. MATERIALS DISTRIBUTION. Buyside Partners will be responsibility for the creation of, review, cleanup, expansion and maintenance of CLIENT's financial mailing list of brokers and analysts targeted for direct mail. Responsibility also includes; supervising the distribution of investor kits, news bulletins, shareholder reports, profile reports and feature article reprints to existing investors and potential analysts, fund managers, retail brokers and targeted financial media. Buyside Partners also offers the usage of its premises as CLIENT's information base in the investment community, to stock CLIENT's financial materials and facilitate convenient handling of broker/analyst inquiries and requests for literature.
11. INVESTOR RELATIONS WEBSITE CONSULTING. Buyside Partners will review CLIENT's investor relations page section on CLIENT's web site, and make recommendation's on the items for dissemination, such as; investment profile, news, releases, frequently asked questions, key financial highlights, current quotes, and SEC information hyper-linked to the appropriate sites throughout the internet.
Buyside Partners will, within 3 months, establish a WEB presence under its own domain name to promote and disseminate information for the companies it represents, including CLIENT.
12. STOCK ACTIVITY SURVEILLANCE. Buyside Partners will provide CLIENT with information about who is buying, selling or shorting CLIENT's stock and why.
13. PROGRAM MEASUREMENT. Buyside Partners shall provide to CLIENT every six months a report which measures the effectiveness of the Buyside Partners efforts with respect to the following criteria:
DJIA
S&P 500 Index
NASDAQ
CLIENT's stock price
CLIENT's average monthly stock trading volume CLIENT's rank in industry stock group by:
P/E
ROE
12-month sales/earnings growth
The number of analysts following the CLIENT's stock
The number of investment professionals on the CLIENT's mailing
list
The number of sponsoring brokerage houses
The number of shares held by institutions
The number of institutional holders and their names
Changes in investor perception
Media interest
Exhibit 21 Subsidiaries of Humitech International, Inc.
Name Jurisdiction of Names under which
Incorporation Subsidiaries do Business
--------------------------- ------------------------- --------------------------
Health Tech, Inc. Nevada Health Tech, Inc.
--------------------------- ------------------------- --------------------------
FoodSoFresh, Inc. Nevada FoodSoFresh, Inc.
--------------------------- ------------------------- --------------------------
Humitech Franchise Nevada Humitech Franchise
Corporation Corporation
--------------------------- ------------------------- --------------------------
|
Exhibit 23.1
Consent of Independent Auditors, Turner, Stone & Company, L.L.P.
Independent Auditors' Consent
The Board of Directors and Stockholders
Humitech International Group, Inc.
Addison, Texas
We consent to the use and inclusion in this Form SB-2/A Registration Statement and the Prospectus, which is part of this Registration Statement, of our report dated March 4, 2002 on our audit of the financial statements of Humitech International Group, Inc. at December 31, 2001 and for the year then ended.
We also consent to the reference of our Firm under the caption "Experts" in the Registration Statement and Prospectus.
/s/ Turner, Stone & Company L.L.P. Turner, Stone & Company, L.L.P. Certified Public Accountants Dallas, Texas May 13, 2002 |
Exhibit 23.2 Consent of Weed & Co. L.L.P.
WEED & CO. LLP
4695 MACARTHUR COURT, SUITE 1430, NEWPORT BEACH, CALIFORNIA 92660-2164
TELEPHONE (949) 475-9086 FACSIMILE (949) 475-9087
May 15, 2002
Board of Directors
Humitech International Group, Inc.
15851 Dallas Parkway, Suite 410
Addison, TX 75001
RE: Consent
Greetings:
We hereby consent to the use of our opinion in connection with the registration under the Securities Act of 1933, as amended (the "Act"), of 9,644,108 shares (the "Shares") of the Company's common stock, par value $.001 per share (the "Common Stock"), to be sold by the selling stockholders and the Company upon the terms and subject to the conditions set forth in the Company's registration statement on Form SB-2, (the "Registration Statement") and as an exhibit to the Registration Statement.
Very truly yours,
/s/ Weed & Co. LLP ------------------------ Weed & Co. LLP |
Exhibit 99 Section 78.7502 of the Nevada Revised Statutes
SECTION 78.7502. DISCRETIONARY AND MANDATORY INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS: GENERAL PROVISIONS
1. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he 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 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. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act 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 that, with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may 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 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 amounts paid in settlement and attorneys' fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit 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. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
3. To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections 1 and 2, or in defense of any claim, issue or matter therein, the corporation shall indemnify him against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense.