<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 5, 1998
REGISTRATION NO.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
(NAME OF SMALL BUSINESS ISSUER AS IN ITS CHARTER)
---------------
FLORIDA 3490 59-1546994
(STATE OR OTHER (PRIMARY STANDARD (IRS EMPLOYER
JURISDICTION OF INDUSTRIAL CLASSIFICATION IDENTIFICATION NUMBER)
INCORPORATION) CODE NUMBER)
436 WEST LANDSTREET ROAD
ORLANDO, FLORIDA 32824
(407) 851-0993
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
---------------
JAMES P. CRAWFORD
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
436 WEST LANDSTREET ROAD
ORLANDO, FLORIDA 32824
(407) 851-0993
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
COPIES TO:
K. MICHAEL SWANN, ESQUIRE LAWRENCE J. SAVALLO, JR. PRESIDENT
SNYDERBURN, RISHOI AND SWANN DISCOVERY CAPITAL GROUP, INC.
280 WEST CANTON AVENUE, SUITE 240 7200 ALOMA AVENUE, SUITE E.
WINTER PARK, FLORIDA 32789 WINTER PARK, FLORIDA 32792
TELEPHONE: (407) 647-2005 TELEPHONE: (407) 672-0200
FACSIMILE: (407) 647-1522 FACSIMILE: (407) 672-1639
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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 under 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. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PRICE(1) OFFERING PRICE(1) FEE
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<S> <C> <C> <C> <C>
Common Stock, $.0002 par
value...................... 1,000,000 $7.25 $7,250,000 $2,138.75
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of registration
fee pursuant to Rule 457.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JUNE 5, 1998
PROSPECTUS
UP TO 1,000,000 SHARES
[LOGO]
CRAWFORD EQUIPMENT & ENGINEERING COMPANY
COMMON STOCK
CRAWFORD EQUIPMENT & ENGINEERING COMPANY (the "Company") is offering (the
"Offering") 1,000,000 shares of common stock ("Common Stock") at an initial
public offering price of $7.25 per share. Prior to this Offering there has been
no market for the shares, and no assurance can be given that any such market
will exist or develop upon completion of this Offering or, if developed, will
be maintained. See "Plan of Distribution" for information relating to the
factors considered in determining the price to public.
-----------
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK AND SUBSTANTIAL DILUTION. SEE
"RISK FACTORS" COMMENCING ON PAGE 4 AND "DILUTION" ON PAGE 16. THESE ARE
SPECULATIVE SECURITIES.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE UNDERWRITING DISCOUNTS PROCEEDS TO ISSUER OR
TO PUBLIC AND COMMISSIONS(1) OTHER PERSONS(2)
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<S> <C> <C> <C>
Per Share................ 7.25 .5075 6.7425
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Total Minimum............ 2,537,500 177,625 2,359,875
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Total Maximum............ 7,250,000 507,500 6,742,500
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</TABLE>
(1) The Company has agreed to pay to Discovery Capital Group, Inc. (the
"Underwriter"), a non-accountable expense allowance equal to 3% of the
gross proceeds of the offering and has agreed to sell to the Underwriter
five (5) year warrants to purchase up to 14,000 shares of Common Stock with
the minimum and 40,000 shares of Common Stock with the maximum at 120% of
the price to the public per share. The Company has also agreed to indemnify
the Underwriter against certain liabilities including liabilities under the
Securities Act of 1933, as amended. See "Plan of Distribution".
(2) Before deducting expenses of the Offering estimated at $184,080 with either
the minimum or the maximum, which does not include the 3% non-accountable
expense allowance described in Note 1 above.
NO SHARES WILL BE ISSUED BY THE COMPANY UNTIL A MINIMUM OF 350,000 SHARES
HAVE BEEN SOLD.
ALL FUNDS FROM SUBSCRIPTIONS SHALL BE HELD IN AN ESCROW ACCOUNT AT CITRUS
BANK, 100 SOUTH ORANGE AVENUE, ORLANDO, FLORIDA 32801. See "Plan of
Distribution".
-----------
THE SECURITIES ARE BEING OFFERED BY THE UNDERWRITER ON A BEST EFFORTS BASIS.
THE UNDERWRITER RESERVES THE RIGHT TO WITHDRAW, CANCEL OR MODIFY THIS
OFFERING AND TO REJECT ANY ORDER IN WHOLE OR IN PART. IT IS EXPECTED THAT
DELIVERY OF THE SECURITIES WILL BE MADE FOLLOWING THE CONCLUSION OF THE
OFFERING IN WINTER PARK, FLORIDA.
DISCOVERY CAPITAL GROUP, INC.
The date of this Prospectus , 1998.
<PAGE>
[ART WORK TO COME]
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus. Unless otherwise indicated, all share and per
share data have been adjusted to give effect to a 30,000 for one (1) stock
split on January 20, 1998. See "Shares Eligible for Future Sale".
THE COMPANY
Crawford Equipment & Engineering Company (the "Company") manufactures a
variety of packaged combustion systems that are utilized to incinerate or
oxidize various types of waste, odors and air pollutants. These systems are
designed for a wide range of industrial and commercial uses, which include:
animal, pathological and human cremation/incineration, medical/bio-
hazardous/infectious waste ("Medical Waste"), incineration, general solid waste
incineration, and the control of volatile organic compounds and hazardous air
pollutants (VOC/HAPS) emitted from industrial processes. In addition, the
Company provides services and replacement parts for existing packaged
combustion systems. The Company was founded in July 1974 by James P. Crawford,
the Chairman of the Board of Directors and Chief Executive Officer and to date
has manufactured and installed approximately 700 installations to customers
located throughout the world. The Company maintains its corporate and
manufacturing and testing facilities in Orlando, Florida.
Through the efforts of Mr. Crawford, the Company has developed unique
features which are integrated into the packaged combustion systems it
manufacturers. See "Business--Products Services and Markets". Mr. Crawford has
also developed patented devices which are primarily used by the Company in the
crematory and incinerator systems it manufactures. These patented devices
provide operational and environmental advantages. See "Business--Intellectual
Property and Proprietary Rights". Following the successful conclusion of the
offering, the Company intends to acquire those patents from Mr. Crawford for a
purchase price of $875,000. See "Certain Relationships and Related
Transactions".
The Company's customers have included, among others, Bristol Meyers-Squibb,
Zoltek Corp., Robert Bosch Corp., Ciba-Giegy, ABB, Royal Caribbean, Alcoa
Aluminum, Whirlpool and Colgate Palmolive. In addition, the Company is a
supplier of waste disposal systems for several federal agencies, municipal and
political subdivisions, foreign governments and academic research facilities.
The Company has recently entered into a strategic alliance agreement with
Monsanto Enviro-Chem Systems, Inc. ("MEC"), an affiliate of Monsanto
Corporation. This agreement establishes a relationship through which specific
custom systems manufactured by the Company for use in the abatement and control
of VOC/HAPS, shall be marketed through MEC, the Company and other sales
representatives. See "Risk Factors and Business--Sales and Marketing".
The Company believes that the packaged combustion equipment industry has
growth potential due to environmental concerns that exist with respect to waste
disposal in general and stringent federal regulations promulgated under the
Clean Air Act (the "Act") and specifically Title V of the Act which imposes
guidelines concerning the emission of VOC/HAPS and international environmental
infrastructure clean-up. See "Business".
1
<PAGE>
THE OFFERING
Securities Offered................................ 1,000,000 Shares of Common
Stock
Securities Outstanding Prior to the Offering(1)... 3,200,000 Shares of Common
Securities Outstanding After the Minimum Stock
Offering(1)....................................... 3,550,000 Shares of Common
Stock
Securities Outstanding After the Maximum
Offering(1)....................................... 4,200,000 Shares of Common
Stock
Proposed OTC Bulletin Board Symbol(2)............. "CRAW"
- --------
(1) Does not include (a) 14,000 shares of Common Stock with the minimum and
40,000 shares of Common Stock with the maximum issuable upon the exercise
of the Underwriter's Warrants at 120% of the Price to Public and (b)
approximately 172,835 shares of Common Stock that certain noteholders may
exchange their notes for, as of March 31, 1998, in connection with a
private placement of such securities. See "Certain Relationships and
Related Transactions" and Note 7 to the financial statements included
elsewhere in the Prospectus.
(2) The Company intends to file an application with the National Association of
Securities Dealers ("NASD") to list its Common Stock with NASDAQ provided,
that at least 830,000 shares are sold through this Offering. See "Risk
Factors--Over-The-Counter Market, Penny Stock Trading Rules and Possible
Delisting of Common Stock from NASDAQ SmallCap Market".
2
<PAGE>
SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE THREE MONTHS ENDED
DECEMBER 31 MARCH 31
---------------------------------- ----------------------------
1995 1996 1997 1997 1998
---------- ---------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA
Sales................... $2,546,895 $2,417,939 $4,375,494 $ 1,116,295 $ 263,736
Costs of sales.......... 1,767,054 1,516,070 2,717,640 679,421 178,181
Operating expenses...... 765,448 902,648 1,224,217 233,151 272,896
Operating income (loss). 14,393 (779) 433,637 203,723 (187,341)
Other income (expense).. 825 (2,426) 920 621 (6,611)
Net income (loss)....... 15,218 (3,205) 434,557 204,344 (193,952)
Net income (loss) per
common share........... 152.18 (32.05) 4,345.57 2,043.44 (0.06)
Shares used in computing
net income (loss)
per share.............. 100 100 100 100 3,200,000
BALANCE SHEET DATA
Current assets.......... $ 644,943 $ 701,182 $ 605,826 $ 1,339,441 $ 730,821
Current liabilities..... 599,228 741,992 404,859 1,153,267 151,808
Working capital......... 45,715 (40,810) 200,967 186,174 579,013
Total assets............ 734,422 783,338 722,884 1,421,658 974,768
Long-term debt, less
current portion........ 7,143 -- 17,123 26,000 715,970
Retained earnings
(accumulated deficit).. (150,453) (237,158) 22,398 (36,113) (171,554)
Stockholder's equity.... 128,051 41,346 300,902 242,391 106,990
</TABLE>
3
<PAGE>
RISK FACTORS
An investment in the shares offered hereby is highly speculative and
involves a high degree of risk and should only be made by investors who can
afford to lose their entire investment. Prospective investors should carefully
consider the following risk factors, along with the other information set
forth in this prospectus in evaluating the Company, its business and prospects
before purchasing the shares.
LIMITED OPERATING HISTORY
The Company's operating history has consisted primarily of custom design,
manufacturing and installation of packaged combustion equipment for use in a
variety of waste disposal applications. Initially, its equipment was utilized
for animal, pathological and human cremation/incineration and later for
Medical Waste disposal. Additional equipment was developed to dispose of
general solid waste, including but not limited to shipboard waste,
international flight waste, and liquid/chemical waste. Volatile Organic
Compounds ("VOC") and Hazard Air Pollutants ("HAP") waste oxidation systems
(hereafter collectively referred "VOC/HAP Waste Disposal Market Systems") were
also developed as a result of current Federal legislation and the Company's
belief that its equipment was compatible to this market. This broad customer
base is often referred to collectively as the "Waste Disposal" or "Waste
Disposal Industry". By creating networks and alliances, the Company intends to
develop additional markets for its products, which may include but are not
limited to nuclear waste disposal, soil remediation and municipal solid waste
disposal markets. This will expand its manufacturing role by adding additional
market sectors in the Waste Disposal Industry in a broader and more
diversified environmental arena. The Company also intends to set up additional
sales and distribution networks both domestically and internationally. As a
result, the Company will be subject to many business risks, including, but not
limited to, the risks of unforeseen capital requirements, governmental
regulations, the possible failure to achieve market acceptance, and establish
business relationships. Competitive disadvantages may arise when larger and
more established companies start to compete. See "Business Competition".
NO ASSURANCE OF ADDITIONAL COLLABORATIVE AND JOINT VENTURE AGREEMENTS,
LICENSES OR PROJECT CONTRACTS
The Company's business strategy is based upon entering into collaborative
working relationships which include sales and marketing agreements with
established developers, purchasers, engineering and environmental companies in
waste incineration equipment systems and technologies, as well as formal joint
venture agreements involving VOC/HAP Waste Disposal, solid and general waste
disposal and air pollution control systems. The Company currently has a
Strategic Alliance Agreement with the Monsanto Enviro-Chem Systems, Inc., a
subsidiary of Monsanto ("Monsanto Agreement"). The Monsanto Agreement provides
sales and support personnel to market certain equipment under the Monsanto
name which is manufactured and designed by the Company.
Under the terms of the Monsanto Agreement either party may terminate for
"cause of convenience" with sixty days advance written notice. Termination of
the Monsanto Agreement may have an adverse effect on the Company's ability to
continue to expand its marketing operations in the VOC/HAP industry. The
Company is currently negotiating other similar relationships. There is no
assurance, however, that the Company will enter into any other definitive
arrangements or joint venture relationships, or that such agreements, if
entered into, will be on terms and conditions that are sufficiently favorable
to the Company to enable it to generate profits.
In addition, any other joint venture contracts or project contracts which
may be awarded to the Company, including the Monsanto Agreement, may be
curtailed, delayed, redirected or eliminated at any time. Problems experienced
on any specific venture, or delays arising in the implementation and funding
of any venture, could have an adverse affect on the Company's business and
financial condition. See "Business--Sales and Marketing".
4
<PAGE>
UNCERTAINTY OF MARKET ACCEPTANCE
Many prospective users in the Waste Disposal Industry have already committed
substantial resources to certain forms of environmental waste disposal
technologies, such as microwave, chemical treatment, steam sterilization,
landfill, and burial. The Company's growth and future financial performance
may depend on demonstrating to prospective collaborative partners and users
the advantages of its Waste Disposal Equipment over alternative systems. There
can be no assurance that the Company and its prospective collaborative
partners will be successful in this effort. It is possible that demand for
environmental waste disposal systems may decline in the future. Private and
public sectors may limit further pollution as a result of governmental
regulations and through recycling. See "Business--Competition".
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company's quarterly revenues and operating results have varied in the
past and may fluctuate in the future as a result of a variety of factors, many
of which are outside the Company's control. Such factors include general
economic and industry conditions, the size and timing of the individual
orders, and the introduction of new products or services by the Company or its
competitors. Additionally, the introduction of the Company's products to new
markets, changes in the levels of operating expenses, including development
costs, and the amount and timing or other costs relating to the expansion of
the Company's operations could affect quarterly revenues and operating
results.
Furthermore, the purchase of the Company's systems, and in particular the
larger systems, may involve a commitment of capital by the Company. Attendant
delays frequently associated with large capital expenditures and authorization
procedures within customers' organizations could also result. For these and
other reasons, the sales cycle for the Company's products can be lengthy (up
to 18 months) and subject to a number of significant risks over which the
Company has little or no control, including customer budgetary constraints.
The Company historically has operated at times with various amounts of works
in progress. Most customer orders are placed with relatively short lead times,
usually from four to twenty-four weeks. Variations in the timing of the
recognition of revenues due to changes in project scope and timing may
adversely and disproportionately affect the Company's operating results for a
quarter because the Company establishes its expenditure levels on the basis of
expected future revenues, and a significant portion of the Company's expenses
do not vary with current revenues. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations".
MANAGEMENT GROWTH
The Company's revenues increased from $2,417,939 in the year ended December
31, 1996 to $4,375,494 in the year ended December 31, 1997. Additional growth
could place a significant strain on its managerial, operational and financial
resources. Although it relies on the customers and/or subcontractors to
assemble, install, maintain and service certain completed systems, the Company
uses its own employees to engineer, design, manufacture, test and commission
its systems. The Company seeks to maintain engineering and design staffing
levels adequate for current and near term demand. During periods of rapid
growth that may be experienced by the Company, the Company's engineering and
design personnel would be operating at full capacity. As a result, future
growth, if any, is limited by the Company's ability to recruit and train
additional engineering, design and project management personnel, and by the
ability of individual employees to manage more and larger projects.
Furthermore, any failure to maintain quality or to meet customer installation
schedules could damage relationships with important customers, damage the
Company's reputation generally and result in contractual liabilities. The
pressures of meeting increased demand may lead to errors in manufacturing or
assembly, which in turn could increase manufacturing costs and decrease gross
margins due to the costs of rework. The Company seeks to adhere to strict
internal operating procedures and controls, including testing of components.
However, the failure of the Company to prevent such errors could have an
adverse effect on the Company's ability to increase its operating margins
which could have a material adverse effect on the Company's business, results
of operations and financial condition. There can be no assurance that the
Company will be able to effectively manage an expansion of its operations or
that the Company's systems or controls will be adequate to support the
5
<PAGE>
Company's operation if expansion occurs. In such event, any failure to manage
growth effectively could have a material adverse effect on the Company's
business, and financial condition. See "Business--Engineering and
Manufacturing and Facilities".
RISKS ASSOCIATED WITH COMMERCIALIZATION OF TECHNOLOGY
The Company's first commercial VOC/HAP unit was installed in 1995, and
therefore, the Company has limited operating history regarding VOC/HAP
installed equipment. Furthermore, as the Company's technology has become more
accepted, the Company has been selling increasingly larger systems. Larger
systems are generally distinguished by the size and weight of the system and
the characteristics of the waste stream flow. The Company's manufacturing
history of larger equipment is also limited, and the larger systems are
generally more complex than the initial systems that were installed by the
Company. There can be no assurance that the performance of the Company's
equipment will not deteriorate as the equipment ages or that unanticipated
problems will not be encountered with the larger, more complex systems. Any
deterioration of the Company's equipment or unanticipated problems with its
systems could have a material adverse effect on the Company's business, and
financial condition.
RISK OF INCREASED COSTS
If the public offering is successful, the Company intends to use the net
proceeds for development of new facilities, salaries, equipment purchases,
payment for patents and a loan to shareholders. The balance will be used for
working capital purposes, including general and administrative expenses,
possible research and development related to the Company's present and new
products, and sales and marketing. The Company believes that the net proceeds
of this Offering, together with the availability of its borrowing capacity,
will be sufficient to finance its working capital and other capital
requirements through the year 2000, however, the increased expenses may have
an adverse effect on the cost of sales and result in a decrease in net profit.
See "Management Discussion and Analysis of Financial Condition and Results of
Operations".
COMPETITION
The market for the Company's products is highly competitive and has been
dominated by manufacturers such as: Thermatrix, Inc., Surface Combustion,
Inc., Seco/Warwick, Lindberg Corporation, and Ebner Furnaces, Inc. There are
many companies known to produce or market products, or provide services
similar to those of Crawford Equipment & Engineering Company worldwide.
According to The McIlvaine Company, a market analyst firm serving the air
pollution control industry, it is estimated that Volatile Organic Compound
abatement systems, as part of the environmental Waste Disposal Industry, will
have sales in excess of two (2) billion dollars by the year 2001. See
"Business--Company Waste Management Equipment Products". The Company believes
that a greater portion of the market share can be attained from competition
and market expansion. However, the present competition is well established and
well capitalized and, currently competes in markets with the Company. The
Company has 24 years of experience marketing waste disposal equipment and five
(5) years of experience in marketing its VOC/HAP Waste Disposal Equipment. Any
one or more of the Company's competitors or other enterprises, not presently
known to the Company, may develop technologies and marketing efforts which are
superior to those utilized by the Company. To the extent that the Company's
competitors are able to offer more cost-effective process waste disposal
alternatives, the Company's ability to compete could be materially and
adversely affected. See "Business--Competition".
The Company's VOC/HAP manufactured systems currently compete primarily with
suppliers of flame-based and flameless thermal oxidation systems, carbon
adsorption systems and scrubbing systems. The Company believes the major
considerations in selecting industrial VOC control systems are: safety,
capital cost, operating and maintenance costs, ease of permitting, process
stream characteristics, unit location and on-line reliability. Many of the
Company's competitors have substantially greater financial resources,
operating experience and market presence than the Company. As a result, these
competitors may be able to respond more
6
<PAGE>
quickly to changes in customer requirements or devote greater resources to the
development, promotion and sale of their products than the Company.
Competitors could potentially reduce prices or adopt other strategies to
compete with the Company. There is no assurance that the Company's existing
competitors or new market entrants will not develop new technologies or
modifications to existing technologies that are superior to or more cost-
effective than the Company's technology. Increased competition could result in
price reductions and reduced gross margins, and could limit the Company's
market share. There can be no assurance that the Company will compete
successfully with new competitors or that competitive pressures faced by the
Company would not materially, adversely affect its business, results of
operations and financial condition. See "Business--Competition".
PROPRIETARY TECHNOLOGY AND UNPREDICTABILITY OF PATENT PROTECTION
The Company's future success may depend, in part, on its ability to obtain
additional patents, protect the patents which it owns and which it may
acquire, maintain trade secrecy protection and operate without infringing on
the proprietary rights of third parties. James P. Crawford currently owns four
patents that are licensed by the Company and which shall be acquired following
the successful conclusion of the Offering. See "Certain Relationships and
Related Transactions". There can be no assurance that the Company will develop
additional proprietary technology that is patentable, that any patents issued
and used by the Company will provide the Company with competitive advantages
or that any patents developed will not be challenged by third parties.
Furthermore, there can be no assurance that others will not independently
develop similar or superior technologies, duplicate any of the Company's waste
disposal processes, or design around its patented processes. It is possible
that the Company may need to acquire licenses to or contest the validity of,
issued or pending patents of third parties relating to the components of its
incineration equipment. There can be no assurance that any license acquired
under such patents would be made available to the Company on acceptable terms,
if at all, or that the Company would prevail in any such contest. In addition,
the Company could incur substantial costs in defending itself in suits brought
against the Company on the patents it utilizes and intends to acquire, or in
prosecuting patent suits against other parties.
In addition to patent protection, the Company also relies on trade secrets,
proprietary know-how and technology which in certain instances it seeks to
protect, in part, by confidentiality agreements with its prospective working
partners and collaborators, employees and consultants. There can be no
assurance that these agreements will not be breached, that the Company would
have adequate remedies for any breach, or that the Company's trade secrets and
proprietary know-how will not otherwise become known or be independently
discovered by others. See "Business--Competition".
ENVIRONMENTAL REGULATIONS; REGULATORY COMPLIANCE
The Waste Disposal Industry has experienced severe regulatory pressures
which has had a direct effect upon the ability of potential customers to
forecast costs.
The Company's customers are subject to various federal, state and local
environmental laws and regulations which limit the discharge, storage and
disposal of VOC/HAP pollutants and other chemicals in applications such as:
chemical plants, electronics, printing and publishing, automotive, petroleum
refining, plastics and solvents manufacturing, and organic chemical
production. Other waste disposal customers of the Company include funeral
homes, cemeteries, research facilities, animal control agencies, veterinary
clinics, humane societies, solid waste disposal facilities, universities and
others. These customers are also subject to a wide variety of regulations.
Accordingly, some of these regulations benefit the Company due to the fact
that they mandate the utilization of combustion systems similar to those
manufactured by the Company.
In order to develop and operate facilities, it is often necessary for the
Company's customers to obtain and maintain, in effect, one or more licenses or
permits as well as zoning, environmental and/or other land use approvals.
These licenses or permits and approvals are often difficult and time consuming
to obtain and are frequently subject to opposition by various elected
officials, environmental advocates and citizen groups. The
7
<PAGE>
failure by the Company's customers to obtain or maintain, in effect, a permit
or approvals significant to its business could have an adverse effect on the
Company's operations and financial conditions.
The EPA has published regulations designed to enforce The Clean Air Act and
to protect the environment. The Company believes, based on required testing,
that its technologies meet current regulatory and statutory emission, disposal
and discharge standards. In addition, the Company believes that it is
currently in compliance with all applicable environmental regulations. There
may be further efforts to impose more stringent environmental regulations
relating to disposition of wastes. Operations of the Company are also governed
by laws and regulations relating to workplace safety and worker health, which
include the Occupational Safety and Health Administration Act, its applicable
state acts and the regulations under these acts. The company recognizes that
it must comply with all such regulations, but the laws and regulations may be
changed and there can be no assurance of compliance with future laws and
regulations.
In addition, the level of enforcement activities by environmental agencies
may also affect demand for the Company's systems. To the extent that certain
VOCs are banned or lower cost substitutes that are not subject to regulation
are developed for some or all of the VOCs currently generated in the Company's
markets, such bans or developments could materially adversely affect the
demand for the Company's systems. To the extent that the burdens of complying
with such environmental laws and regulations may be eased, the demand for the
Company's systems could be materially adversely affected. In addition, the
existence of environmental regulations and the level of enforcement vary by
country and may affect the Company's ability to sell its systems outside the
United States. See "Business--Environmental Matters and Existing Treatment
Methods For Control of VOCs".
DEPENDENCE ON KEY PERSONNEL
The Company's performance is substantially dependent on the efforts and
performance of its Executive Officers and key employees, most of whom have
worked together since the early stages of development of Crawford Equipment &
Engineering Company. The Company is dependent on its ability to retain and
motivate high quality personnel, especially its management and highly skilled
sales representatives, mechanical and electrical engineers, marketing team,
administration team, and to a limited extent, consultants. The loss of the
services of any of its key employees, particularly Mr. James P. Crawford, Mrs.
Kathleen B. Crawford and Mr. Steven L. Atkinson, could have a material adverse
effect on the Company's business, financial condition or operating results and
therefore a "Key Persons" insurance policy on each will be underwritten. The
Company's future success may also depend on its continuing ability to
identify, hire, train and retain other highly qualified managerial and sales
personnel. Since there is competition for such personnel, there can be no
assurance that the Company will be able to attract, or retain qualified
technical and managerial personnel in the future, and the failure of the
Company to do so may have a material adverse effect on the Company's business,
financial condition and operating results. See "Business of the Company,
Management, and Employees".
OPERATIONAL RISKS
Potential investors should be aware of the delays, expenses and difficulties
encountered by any Company when looking at future development, including, but
not limited to, the lack of sufficient capital and unforeseeable problems that
may be beyond the control of the Company. Because of the high cost of
developing and implementing the Company's future marketing sales efforts, if
it does not prove to have a satisfactory market appeal, the Company may not
have sufficient revenues to explore or undertake alternative strategies that
could prove more viable and the Company may be forced to alter its direction
or cease operations. See "Business and Financial Statements".
POSSIBLE PRODUCT LIABILITY
As of this date, the Company has never had a product liability claim for any
of its waste disposal systems. The Company's newer systems are designed to
destroy VOC/HAPS, which can be highly toxic and flammable.
8
<PAGE>
If any of the Company's systems are improperly designed or operated outside of
design parameters and operating instructions provided by the Company, there is
a risk of system failure, which could require the Company to defend itself
against a products liability or personal injury claim. Although the Company
has product liability and commercial general liability insurance which it
believes to be sufficient for the conduct of its business, there can be no
assurance that such insurance coverage will be adequate to cover such claims.
In addition, the Company's general liability insurance is subject to coverage
limitations and excludes coverage for losses or liabilities relating to
environmental damage or pollution. Accordingly, the Company's efforts to
protect itself against such claims could have a material adverse effect on the
Company's business, results of operations and financial condition.
DEPENDENCE ON CUSTOMER INFORMATION
The Company is highly dependent upon information provided by its potential
customers concerning the type, volume and flow rate of waste to be treated by
the Company's systems. If the customer's information is inaccurate, a
malfunction in the Company's system could occur, resulting in damage to the
customer's facilities or personal injury. In addition, incorrect information
could cause delays in the design, manufacture and installation of the
customer's system. Through no fault of its own, the Company could then be held
liable for damages resulting from such malfunction or delay. Any of these
factors could have a material adverse effect on the Company's business,
results of operations and financial condition.
POTENTIAL ENVIRONMENTAL LIABILITY
Although the Company does not believe that its activities would directly
expose it to liabilities under local, state or federal environmental laws and
regulations, if the Company were to improperly design, manufacture or test its
systems or fail to properly train its customer's employees in the operation of
the systems, it could be exposed to possible liability for investigation and
clean-up costs under such environmental laws. Although the Company does not
currently lease its systems to customers or operate the systems on behalf of
its customers, if it were to do so in the future, the Company could be liable
under environmental laws for any releases of toxic substances.
The Company generally conducts performance tests on its systems at its
customers' facilities. However, in the future the Company may perform
prototype testing in its own facilities. If such testing were to involve toxic
substances, it could subject the Company to liability under environmental laws
and regulations.
The Company could also be exposed to possible liability under environmental
laws for violations of requirements involving the generation, storage,
treatment and disposal of toxic waste. Under some environmental laws and
various theories of tort and contract law, it is also possible that the
Company could be liable for damages to its customers and third parties
resulting from the actions of its customers or arising from the failure or
malfunction, or the design, construction or operation of, the Company's
systems or products, even if the Company were not at fault. The Company's
general liability insurance is subject to coverage limits and generally
excludes coverage for losses or liabilities relating to or arising out of
environmental damage or pollution. The Company's business, results of
operations and financial condition could be materially adversely affected by
an uninsured or partially insured claim. See "Business--Environmental
Matters."
RISKS ASSOCIATED WITH FIXED PRICE CONTRACTS
A majority of the Company's contracts are performed using "fixed-price"
rather than "cost-plus" terms. Under fixed-price terms, the Company quotes
firm prices to its customers and bears the full risk of cost overruns caused
by estimates that differ from actual costs incurred or manufacturing delays
during the course of the contract. Some costs, including component costs, are
beyond the Company's control and may be difficult to predict. If manufacturing
or installation costs for a particular project exceed anticipated levels,
gross margins would be materially adversely affected, and the Company could
experience losses. In addition, the manufacturing process may be subject to
change orders. The failure of the Company to recover the full cost of these
change
9
<PAGE>
orders could materially adversely affect gross margins and also cause the
Company to experience losses. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations".
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS AND SALES
The Company plans to increase its revenues, in part, through an expansion of
its overseas operations. International sales and operations may be limited or
disrupted by the imposition of government controls, export license
requirements, trade restrictions, changes in tariffs, difficulties in
staffing, the transport of machinery, managing international operations and
other factors. Regulatory compliance requirements differ among foreign
countries and are also different from those established in the United States.
If the Company's customers are unable to obtain necessary foreign regulatory
approvals on a timely basis, the Company's international sales, and thereby
its business, results of operations and financial condition, could be
materially adversely affected. Additionally, the Company's business, results
of operations and financial condition may be materially adversely affected by
fluctuations in currency exchange rates as well as increases in duty rates,
difficulties in obtaining export licenses, ability to maintain or increase
prices and foreign competition. The Company denominates international sales in
either United States dollars or local currencies. Sales in Europe have been
primarily denominated in British pounds sterling. Since the bulk of expenses
in connection with international contracts are often incurred in United States
dollars, there could be exchange risks. If the Company has significant
international sales in the future denominated in foreign currencies, the
Company may purchase hedging instruments to minimize the exchange rate risk on
such contracts. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations and Business--Sales and Marketing".
LACK OF PUBLIC MARKET; DETERMINATION OF OFFERING PRICE
There has been no public market for the Common Stock prior to the offering,
and there can be no assurance that an active trading market will develop or be
sustained after completion of the Offering or that the market price of the
Common Stock will remain at or above the public offering price. In the event
that the Company's operating results are below the expectations of public
market analysts and investors in one or more future periods, it is likely that
the price of the Common Stock will be materially adversely affected. In
addition, the stock market has experienced significant price and volume
fluctuations that have affected the market prices of equity securities of many
companies and that often have been unrelated to the operating performance of
such companies. General market fluctuations may also adversely affect the
market price of the Common Stock. See "Plan of Distribution".
Prior to this Offering, there has been no public market for the Company's
securities. Although the Company anticipates possible listing of the Common
Stock on the NASDAQ SmallCap Market, there can be no assurance that an active
public market for the Company's securities will develop or be sustained. The
offering price of the Shares has been arbitrarily determined by negotiation
between the Company and the Underwriter and bears no relationship to the
Company's current operating results, book value, net worth or financial
statement criteria of value. The factors considered in determining the
offering price included an evaluation by management of the history of and
prospects for the industry in which the Company competes and prospects for
earnings of the Company. Such factors are largely subjective, and the Company
makes no representation as to any objectively determinable value of the
securities offered hereby.
In addition, if the Company fails to be listed on or maintain a
qualification for its Common Stock to trade on the NASDAQ SmallCap Market, the
Shares could be subject to certain rules of the Securities and Exchange
Commission relating to "penny stocks." Such rules require broker-dealers to
make a suitability determination for purchasers and to receive the purchaser's
prior written consent for a purchase transaction, thus restricting the ability
of purchasers and broker-dealers to sell the stock in the open market. See
"Plan of Distribution".
NO COMMITMENT TO PURCHASE COMMON STOCK; DEPOSITS OF SUBSCRIPTIONS
The Underwriter, in selling the Common Stock, is acting as agent for the
Company on a "best efforts" basis. The Underwriter is only obligated to use
its best efforts to sell the Common Stock, and the Company will
10
<PAGE>
not receive any proceeds of the Offering unless the Underwriter sells shares
equal to the Minimum Offering amount. If the Minimum Offering is not sold,
potential investors will lose the use of their funds for the Offering period,
and any extension thereof, although the funds invested by them will be
returned without interest. See "Plan of Distribution".
POSSIBLE DELISTING OF COMMON STOCK FROM NASDAQ SMALLCAP MARKET
NASDAQ has implemented changes to the standards for companies to remain
listed on the SmallCap Market, including, without limitation, new corporate
governance standards, a new requirement that a listed company have net
tangible assets of $2,000,000, market capitalization of $35,000,000, or net
income of $500,000, and other qualitative requirements. The Company will apply
for listing of its Common Stock on the NASDAQ SmallCap Market, subject to
selling 830,000 shares in this Offering, and believes that if such amount is
sold, it will meet all criteria to become listed and to continue its listing
after completion of this Offering. There can be no assurance, however, that an
active trading market will develop or that if such a market is developed that
it will be sustained. In addition, to obtain a NASDAQ Small Cap Market listing
the Company is required to maintain at least three (3) market makers in the
Company's Common Stock. The Company believes it will have at least three (3)
market makers by the closing of the Offering, but as of the date hereof has
not entered into any agreement with any firm to act as a market maker. If the
Company is unable in the future to satisfy the requirements for continued
quotation on the NASDAQ SmallCap Market, trading in the Common Stock offered
hereby would be conducted only in the over-the-counter market in what are
commonly referred to as the "pink sheets" or on the NASD Electronic Bulletin
Board. As a result, an investor may find it more difficult to dispose of his
or her shares or obtain accurate quotations as to the price of the Common
Stock offered hereby. See "Plan of Distribution".
NO STABILIZATION TRANSACTIONS
The Underwriter has informed the Company that no persons have been engaged
to stabilize, maintain or otherwise affect the price of Common Stock including
entering stabilizing bids. In general, purchases of a security for the
purposes of stabilization or to reduce a short position could cause the price
of the security to be higher than it might be in the absence of such
purchases. In the absence of transactions that stabilize, maintain or
otherwise affect the price of the Common Stock, the price of the Common Stock
offered to the public by the Company could be materially and adversely
affected by market conditions. In addition, the Underwriter does not make
representations that the Underwriter will engage in such transactions or that
such stabilizing transactions, once commenced, will not be discontinued
without notice. See "Plan of Distribution".
EXERCISE OF UNDERWRITER'S WARRANTS
In connection with this Offering, the Company will sell to the Underwriter,
for nominal consideration of one hundred dollars ($100), warrants (the
"Warrants") to purchase an aggregate of four percent (4%) of the shares of
Common Stock sold to the public. The Warrants will be exercisable for five
years (commencing after the first anniversary of the date of this Prospectus)
at an exercise price of 120% of the initial price to the public as set forth
on the cover page of this Prospectus. The Underwriter will have the
opportunity to profit from a rise in the market price of the Common Stock, if
any, without assuming the risk of ownership. To the extent that any of the
Warrants are exercised, the ownership interest of the Company's shareholders
may be diluted. The Company also has granted registration rights to the
Underwriter with respect to the shares of Common Stock issuable upon exercise
of the Warrants. See "Plan of Distribution".
OVER-THE-COUNTER MARKET; PENNY STOCK TRADING RULES
If the Common Stock is traded in the over-the-counter market, it may be
subject to the "penny stock" trading rules. The over-the-counter market is
characterized as volatile in that securities traded in such market are subject
to substantial and sudden price increases and decreases and at times price
(bid and ask) information for such securities may not be available. In
addition, when there is a limited number of market makers (a dealer
11
<PAGE>
holding itself out as ready to buy and sell the securities on a regular
basis), there is a risk that the dealer or group of dealers may control the
market in the security and set prices that are not based on competitive forces
and the available offered price may be substantially below the quoted bid
price.
Generally, at any time the bid price of the Common Stock in the over-the-
counter market is less than $5.00, the Company's equity securities will be
subject to the "penny stock" trading rules, unless the Company meets certain
exemptions. The "penny stock" trading rules impose additional duties and
responsibilities upon broker-dealers and salespersons effecting purchase and
sale transactions in such equity securities of the Company, including
determination of the purchaser's investment suitability, delivery of certain
information and disclosures to the purchaser, and receipt of a specific
purchase agreement from the purchaser prior to effecting the purchase
transaction. Compliance with the "penny stock" trading rules affect or will
affect the ability to resell the Common Stock by a holder principally because
of the additional duties and responsibilities imposed upon the broker-dealers
and salespersons recommending and effecting sale and purchase transactions in
such securities. In addition, many broker-dealers will not effect transactions
in penny stocks, except on an unsolicited basis, in order to avoid compliance
with the "penny stock" trading rules. Consequently, the "penny stock" trading
rules may materially limit or restrict the number of potential purchasers of
the Common Stock and the ability of a holder to resell the Company's Common
Stock. See "Plan of Distribution".
CONTROL BY OFFICERS, DIRECTORS AND EXISTING SHAREHOLDERS
Based upon the number of shares that will be outstanding at the time of
closing and assuming that holders of certain convertible notes have not
elected to convert their notes for shares of the Company's Common Stock, see
"Description of Securities", the present officers, directors and existing
shareholders of the Company will beneficially own approximately 90% of the
outstanding shares of the Company with the minimum proceeds raised and
approximately 76% with the maximum proceeds raised. As a result the current
shareholders will be in a position to elect all of the Company's Directors and
otherwise control the Company. After the closing of this Offering, the
executive officers of the Company will beneficially own shares of Common Stock
(directly or through entities they control), representing approximately 75% of
the outstanding voting securities of the Company with the minimum proceeds
raised and approximately 63% with the maximum proceeds raised. Consequently,
since the Common Stock has no cumulative voting rights, the executive officers
will continue to have the power to elect all of the members of the Board of
Directors of the Company and to generally control the Company's operations,
including acquisitions or mergers involving the Company. See "Dilution,
Management and Principal Shareholders".
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the Public market following
the Offering could adversely effect the market price for the Common Stock.
Upon completion of this Offering, approximately 1,230,000 restricted shares of
Common Stock held by the Company's existing stockholders will be eligible for
sale, subject to the volume limitations and other requirements of Rule 144
under the Act. Notwithstanding however, all of the existing stockholders have
agreed that they will not, without the consent of the Underwriter, publicly
sell or otherwise dispose of any of their presently owned shares of Common
Stock until 24 months from the date this registration statement is effective.
The sale in the future of a substantial number of shares of Common Stock by
existing stockholders could have an adverse effect on the price of the Common
Stock. See "Description of Securities--Shares Eligible For Future Sale".
DIVIDEND POLICY
The Company has not paid any cash dividends on its Common Stock since its
formation. The Company does not currently intend to declare or pay cash
dividends on the Common Stock in the foreseeable future and anticipates that
earnings, if any, will be used to finance the development, working capital and
expansion of its business. Payment of future dividends, if any, and the
amounts thereof will be dependent upon the Company's earnings, financial
requirements, and other factors deemed relevant by the Company's Board of
Directors.
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<PAGE>
Accordingly, investors should not purchase the Shares with a view toward
receipt of cash dividends from any Shares.
RELATED PARTY TRANSACTIONS
The Company and the current shareholders and a director have entered into
certain transactions that may present a conflict of interest. See "Certain
Relationships and Related Transactions".
DILUTION TO NEW INVESTORS
Purchasers of the securities offered hereby will experience immediate
substantial dilution of approximately $6.49 per share with the minimum
proceeds raised and approximately $5.64 per share with the maximum proceeds
raised in the pro forma net tangible book value per share of Common Stock. See
"Dilution". Additional dilution to future book value per share after March 31,
1998 may occur upon the exercise of the Underwriters' Warrants. See "Dilution
and Plan of Distribution".
BROAD DISCRETION IN APPLICATION OF PROCEEDS
Approximately 58% of the net proceeds, if the maximum amount is sold, of
this Offering, has been allocated for working capital and general corporate
purposes. This working capital includes an allocation for proposed
collaborative ventures, research and development for which the Company has no
binding agreements as of the date of this Prospectus. Accordingly, the Company
will have broad discretion as to the application of a significant portion of
the net proceeds of this Offering raised with the maximum. See "Use of
Proceeds".
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<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from this offering after
deducting estimated costs and expenses of the offering are estimated to be
approximately $2,099,750 with the minimum proceeds raised and approximately
$6,316,000 with the maximum proceeds raised. The Company intends to utilize
the net proceeds as follows:
MINIMUM PROCEEDS
<TABLE>
<S> <C>
Collateralized Loan to James P. and Kathleen B. Crawford For New
Manufacturing Facility.......................................... $ 750,000
Purchase of Equipment For New Manufacturing Facility............. $ 500,000
Additional Labor and Personnel................................... $ 200,000
Marketing and Advertising........................................ $ 75,000
Acquisition of Patents(1)........................................ $ 500,000
Working Capital(2)............................................... $ 74,750
MAXIMUM PROCEEDS
Collateralized Loan to James P. and Kathleen B. Crawford For New
Manufacturing Facility.......................................... $ 750,000
Purchase of Equipment For New Manufacturing Facility............. $ 650,000
Additional Labor and Personnel................................... $ 250,000
Marketing and Advertising........................................ $ 200,000
Acquisition of Patents(1)........................................ $ 875,000
Working Capital(2)(3)(4)......................................... $3,591,000
</TABLE>
- --------
(1) The Company intends to acquire four (4) patents presently owned by James
P. Crawford for a total purchase price of $875,000. With the minimum
proceeds raised, the Company intends to pay Mr. Crawford $500,000 in cash
with the balance owed to be evidenced by a promissory note payable
quarterly over a five-year term. With the maximum proceeds raised, the
Company intends to pay the entire acquisition fee to Mr. Crawford in
cash. See "Certain Relationships and Related Transactions".
(2) The Company may utilize a portion of the proceeds allocated to working
capital for leasehold improvements and build-out expenses associated with
the development of a new manufacturing facility.
(3) The Company may utilize a portion of the proceeds allocated to working
capital for research and development of new processes that would enhance
the efficiency of its packaged combustion systems.
(4) The Company may also utilize a portion of the proceeds allocated to
working capital for the acquisition of waste disposal and environmental
related businesses.
Collateralized Loan to James P. and Kathleen B. Crawford. The Company
intends to utilize a maximum of approximately $750,000 of the net proceeds of
the Offering with either the minimum or the maximum proceeds raised as a loan
to James P. and Kathleen B. Crawford. The loan proceeds shall be utilized by
the Crawfords to construct and develop a new manufacturing facility that shall
be leased by the Company. The loan made to the Crawfords by the Company shall
be secured by a mortgage on real property they own. See "Business--Facilities
and Certain Relationships and Related Transactions".
Purchase of Equipment for New Manufacturing Facility. The Company intends to
utilize approximately $500,000 of the net proceeds raised at the minimum
Offering and approximately $650,000 at the maximum Offering to purchase
additional equipment for the Company's new manufacturing facility. See
"Business--Facilities".
Additional Labor and Personnel. The Company intends to utilize approximately
$200,000 of the net proceeds raised at the minimum Offering and approximately
$250,000 of the net proceeds raised at the maximum Offering to hire between
seven (7) and ten (10) employees. See "Risk Factors--Dependence on Key
Personnel and Business--Employees".
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<PAGE>
Marketing and Advertising. The Company intends to utilize approximately
$75,000 of the net proceeds raised at the minimum Offering and approximately
$200,000 of the net proceeds raised at the maximum Offering for marketing,
advertising and promotion of the products and services offered by the Company.
See "Business--Sales and Marketing and Marketing Strategy".
Acquisition of Patents. The Company intends to utilize approximately
$500,000 of the net proceeds raised at the minimum Offering and approximately
$875,000 of the net proceeds raised at the maximum Offering to acquire four
(4) patents from James P. Crawford, one of the Company's founders. With the
minimum proceeds raised, the Company shall issue a promissory note in the
principal amount of $375,000 which represents the balance owed to Mr. Crawford
on the total patent acquisition price of $875,000. See "Business--Intellectual
Property and Proprietary Rights and Certain Relationships and Related
Transactions".
Working Capital. The balance of the net proceeds raised at the minimum and
maximum offerings will be used for general working capital purposes.
Notwithstanding, however, the Company may utilize a portion of the net
proceeds raised at either the minimum or maximum Offering that have been
allocated to working capital for leasehold improvements and tenant build-out
expenses associated with the development of a new manufacturing facility. The
Company may also utilize a portion of the proceeds raised at the maximum
Offering that have been allocated to working capital for research and
development of new systems, to enhance the efficiency of its packaged
combustion systems and the possible acquisition of waste disposal and
environmental related businesses.
The foregoing represents the Company's best estimate of the net proceeds at
both the minimum and maximum offering based upon the current state of its
business operations, its current plans and current economic and industry
conditions. These estimates are subject to change based on unanticipated
levels and types of competition, adverse market trends and new business
opportunities. Any material revisions in the allocation of proceeds will be
made at the discretion of management. The Company believes that net proceeds
from this Offering together with cash generated from operations will be
sufficient to meet the Company's capital needs until the year 2000. Pending
the use of the proceeds of this offering, the Company intends to invest the
proceeds in short term, interest bearing instruments.
15
<PAGE>
DILUTION
Purchasers of the Shares offered hereby will experience an immediate
substantial dilution in net tangible book value of the Shares. As of March 31,
1998, the Company's net tangible book value was $106,990 or approximately $.03
per share of Common Stock. "Net tangible book value" per share of Common Stock
represents the amount of total tangible assets of the Company less the amount
of all liabilities (excluding contingent liabilities) divided by the number of
shares of Common Stock outstanding. After giving effect to the issuance of
approximately 172,835 shares upon exercise of certain outstanding Convertible
Notes ("Notes") which exercise may take place at any time within twelve months
from the respective dates of issuance (the "Pro Forma Adjustments"), the Pro
Forma net tangible book value was approximately $711,914 or $.21 per share.
Without giving effect to any other changes in the Pro Forma net tangible book
value after March 31, 1998 and assuming the sale of 350,000 shares of Common
Stock offered at the minimum and the receipt of the net proceeds of the
minimum Offering estimated to be approximately $2,099,750, the Pro Forma net
tangible book value as of March 31, 1998 would have been $2,811,664 or
approximately $.76 per share. This represents an immediate increase to
existing shareholders in the Pro Forma net tangible book value of
approximately $.55 per share and an immediate dilution to new shareholders of
approximately $6.49 per share. Without giving effect to any changes in the Pro
Forma net tangible book value after March 31, 1998 and assuming the sale of
1,000,000 shares of Common Stock offered at the maximum and the receipt of net
proceeds of the maximum Offering estimated to be approximately $6,316,000, the
Pro Forma net tangible book value as of March 31, 1998 would have been
$7,027,914 or approximately $1.61 per share. This represents an immediate
increase to existing shareholders in the Pro Forma net tangible book value of
approximately $1.40 per share and an immediate dilution to new shareholders of
approximately $5.64 per share. "Dilution" represents the difference between
the amount per share paid by purchasers in this Offering and the Pro Forma net
tangible book value per share of the Common Stock after this Offering. See
"Risk Factors".
The following tables illustrate the per share Dilution at the minimum and
the maximum Offering levels:
(THIS SPACE LEFT BLANK INTENTIONALLY)
16
<PAGE>
MINIMUM OFFERING
<TABLE>
<S> <C> <C>
Assumed initial public Offering price per Share.................... $7.25
Net tangible book value at March 31, 1998.......................... $ .03
Increase in net tangible book value attributable to Pro Forma
Adjustments....................................................... .18
Pro Forma net tangible book value at March 31, 1998................ .21
Increase in net tangible book value attributable to new investors
assuming the Minimum Offering..................................... $ .55
Pro Forma net tangible book value after the Minimum Offering....... .76
Dilution in net tangible book value to new investors assuming the
Minimum Offering.................................................. $6.49
MAXIMUM OFFERING
Assumed initial public Offering price per Share.................... $7.25
Net tangible book value at March 31, 1998.......................... $ .03
Increase in net tangible book value attributable to Pro Forma
Adjustments....................................................... .18
Pro Forma net tangible book value at March 31, 1998................ .21
Increase in net tangible book value attributable to new investors
assuming the Maximum Offering..................................... $1.40
Pro Forma net tangible book value after the Maximum Offering....... 1.61
Dilution in net tangible book value to new investors assuming the
Maximum Offering.................................................. $5.64
</TABLE>
The following tables summarize the differences between the Company's
officers, directors and affiliated parties, existing shareholders and the new
investors with respect to the number of shares of Common Stock purchased from
the Company, the total cash consideration paid by each group, and the average
cash consideration per share of Common Stock paid by each group.
MINIMUM OFFERING
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
Officers, Directors and
Affiliated Parties........... 3,200,000 85.96% $ 540 .02% $.0002
Other Existing
Shareholders(1).............. 172,835 4.64% $ 600,000 19.10% $ 3.50
New Investors................. 350,000 9.40% $ 2,537,500 80.88% $ 7.25
Total......................... 3,722,835 100.00% $ 3,140,000 100.00%
</TABLE>
MAXIMUM OFFERING
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
----------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
Officers, Directors and
Affiliated Parties........... 3,200,000 73.20% $ 540 .01% $.0001
Other Existing
Shareholders(1).............. 172,835 3.92% $ 600,000 7.64% $ 3.50
New Investors................. 1,000,000 22.88% $ 7,250,000 92.35% $ 7.25
Total......................... 4,372,835 100.00% $ 7,852,500 100.00%
</TABLE>
- --------
(1) Calculated as though Noteholders converted their notes for shares of
Common Stock in the Company as of March 31, 1998 and includes accrued
interest due under the notes. See "Description of Securities".
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<PAGE>
S CORPORATION STATUS
Since August 1, 1993 and through December 31, 1997 (the "Termination Date")
the Company elected to be taxed as an S corporation under the provisions of
Subchapter S of the Internal Revenue Code of 1986, as amended. As a result,
the Company's results of operations through the date of termination of the
Company's S corporation status for federal and state income tax purposes were
included in the personal tax returns of the Company's shareholders. Effective
January 1, 1998, the Company terminated its S election and accordingly, it
will become responsible for payment of state and federal income tax on
earnings, if any, subsequent to the Termination Date.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of the Company's historical financial
condition and results of operations should be read in conjunction with the
Company's Financial Statements (including the Notes thereto), and the other
financial information included elsewhere in this Prospectus. The Company's
fiscal year runs from January 1 to and including December 31.
GENERAL
The Company is engaged in the development, manufacture and sale of packaged
combustion equipment and related environmental waste disposal systems. The
Company's activities for fiscal years ending December 31, 1995, December 31,
1996, and December 31, 1997, include domestic and international sales of
medical waste incineration equipment; animal cremation/incineration equipment;
human cremation/incineration equipment; Volatile Organic Compounds ("VOC") and
Hazardous Air Pollutants ("HAP") abatement systems, general waste incineration
systems, ancillary equipment for systems integration and research and
development for other new products and businesses.
From the Company's inception in 1974 to approximately 1986, the Company's
revenues were derived primarily from sales of human cremation/incineration
equipment and animal cremation/incineration equipment. As a result of the
versatility and flexibility of the Company's equipment, coupled with the
enactment of state and local environmental waste disposal regulations, the
Company in 1986 expanded its product lines to include systems for the
incineration of medical/bio-hazardous and infectious Waste ("Medical Waste")
generated by hospitals, doctor's offices, research facilities and laboratories
of federal government agencies among others. This line of Medical Waste
incineration equipment produced additional sales with high gross profit, from
1986 to 1993. See "Risk Factors--Risks Associated with Fixed Priced
Contracts".
In 1993, due to the impending enactment of federal legislation governing the
disposal of medical waste, industry sales of medical waste incineration
equipment decreased significantly as producers of medical waste chose to await
the outcome of the legislation before upgrading or replacing their existing
incineration equipment. Sales of Medical Waste disposal systems made by the
Company were similarly affected by the uncertainty of this federal
legislation. In 1993, sales of Medical Waste disposal systems accounted for
approximately 55% of its total sales as compared to approximately 10% of the
Company's total sales made during 1997. New federal Medical Waste disposal
legislation however became effective in January of 1998 and will continue to
be phased in through the year 2000. The Company will further attempt to
capitalize in the Medical Waste incineration market due to its technological
capability, reputation in the industry and perceived lack of any significant
competition. See "Business--Sales and Marketing".
Commencing in 1995 the Company developed a new line of equipment to control
Volatile Organic Compounds ("VOCs") and Hazardous Air Pollutants ("HAPs"). The
Company's VOC/HAP abatement systems were developed in accordance with
compliance mandated by the Clean Air Act and specifically Title V of that Act.
The Company installed its first VOC system in the second quarter of 1995. The
Company plans to continue to aggressively pursue this market. Sales of VOC/HAP
systems made by the Company have steadily increased since their introduction
in 1995. VOC/HAP sales accounted for approximately 30% of total sales made by
the Company in 1996 and approximately 45% of total sales made by the Company
in 1997. It is anticipated that VOC/HAP product lines will continue to account
for a substantial portion of the Company's sales in the future based upon the
market demand for these products and the high efficiency levels at which the
Company's VOC/HAP systems perform.
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Traditionally, sales made by the Company in the first quarter of the fiscal
year are the lowest due to the fact that the Company's customer purchasing
cycles are completed by the end of the third quarter of the Company's fiscal
year. This results in fewer orders being placed during the fourth quarter, and
therefore fewer shipments of systems are made during the first quarter of the
following year. The Company recognizes revenue when systems are shipped.
Deposits received with purchase orders are reflected as Deferred Revenue on
the Company's Balance Sheet. The Company from January 1, 1998, to May 31,
1998, has received orders for its products of approximately $2,100,000 and has
a substantial number of proposals outstanding pending customer approval. Of
these proposals approximately 88% represent potential sales of VOC/HAP systems
and general and medical waste systems both domestically and internationally.
See "Financial Statements".
In anticipation of the outstanding proposals, the Company, during the fourth
quarter of 1997, and the first quarter of 1998, began increasing its sales,
engineering and management personnel. In addition, the development of a new
manufacturing facility will commence in the third quarter of 1998. It is
anticipated that up to $1,650,000 from this Offering shall be allocated to
construct and build-out this facility, and to add equipment and personnel. In
addition, the Company may, depending on orders received from customers, lease
both its existing manufacturing facility as well as the new manufacturing
facility to satisfy production requirements. Such new facility is expected to
be completed by January 1999. See "Business-Facility". While additional
purchase orders for the Company's products would increase sales, additional
costs including higher lease expenses would be incurred that could adversely
affect operations. See "Risk Factors--Risks of Increased Costs"; "Use of
Proceeds" and "Business". By the end of 1998, the Company plans on adding
sales offices in California, the United Kingdom and Hungary. See "Business--
Sales and Marketing".
RESULTS OF OPERATIONS
Fiscal Year Ended December 31, 1997 Compared to Fiscal Year ended December
31, 1996
Total sales were $4,375,494 for the year ended December 31, 1997, as
compared to $2,417,939 for the year ended December 31, 1996. The significant
increase of $1,957,555, or 81%, is primarily attributable to sales of the
Company's latest product line; the Volatile Organic Compound and Hazardous Air
Pollutants ("VOC/HAP") abatement system. The Company's first VOC/HAP system
was sold and installed in the second quarter of 1995.
Total cost of sales were $2,717,640 for the year ended December 31, 1997, as
compared to $1,516,070 for the year ended December 31, 1996. Cost of sales
decreased as a percentage of sales to 62% in 1997 as compared to 63% in 1996.
The decrease in cost of sales as a percentage of sales was a result of
increased volume of VOC/HAP equipment sales at higher than previous retail
prices. The VOC/HAP product line produces gross profit of approximately 40%
compared to 32%-35% from the Company's other product lines. See "Risk
Factors--Risks Associated with Fixed Price Contracts".
Selling, general and administrative expenses were $1,198,351 for the year
ended December 31, 1997, as compared to $878,254 for the year ended December
31, 1996. The increase in these expenses is a direct result of the increased
sales. Selling, general and administrative expenses decreased as a percentage
of net revenues to 27% in 1997 as compared to 36% in 1996. The decrease in
selling, general and administrative expenses as a percentage of sales was a
result of increased equipment sales without expansion of the manufacturing
facility or increasing administrative staff.
The Company has developed a sales force on a national and international
level. Although the Company anticipates increased sales due to a fully
operational facility, and expanded marketing efforts, there can be no
assurance that increased sales will be realized. Further, in 1998 a new
manufacturing facility, equipment and additional staff may result in an
increase in expenses as a percentage of sales. See "Risk Factors--Risks of
Increased Costs".
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Three Months Ended March 31, 1998, Compared to Three Months Ended March 31,
1997
Total sales were $263,736 for the three months ended March 31, 1998, as
compared to $1,116,295 for the three months ended March 31, 1997. This
significant decrease of $852,559 or 76%, is primarily attributable to the fact
that several systems completed in the fourth quarter of 1996 were not shipped
until the first quarter of 1997, due to customer delays with site completion
and permitting. Since sales are recognized when systems are shipped, the
delayed shipments from the fourth quarter of 1996 distorted sales for the
first quarter of 1997, causing higher than usual results. Further, as
customers tend not to place orders with the Company in the fourth quarter,
sales for the Company's fiscal first quarter are historically lower as
compared to other quarters.
Total cost of sales were $178,181 for the three months ended March 31, 1998
as compared to $679,421 for three months ended March 31, 1997. This
significant decrease is a direct result of the decreased sales. The gross
profit for the three months ended March 31, 1998 of approximately 32% is down
from the gross profit for the comparable period in 1997 of approximately 39%
because there were no VOC/HAP systems shipped in the three month period ending
March 31, 1998 and therefore there was no income recognition for this quarter.
Selling, general and administrative expenses were $269,855 for the three
months ended March 31, 1998, as compared to $231,321 for the three months
ended March 31, 1997. As a percentage of sales, selling, general and
administrative expenses increased from 21% for the three months ended March
31, 1997 to 102% for the comparable period in 1998. The significant increase
in selling, general and administrative expenses as a percentage of sales is a
result of increased marketing and selling activities, hiring of production and
sales personnel, and administrative costs related to planning for the
expansion of the manufacturing facility and preparation for the planned public
offering. See "Use of Proceeds".
The Company's quarterly sales and operating results have varied
significantly in the past and may fluctuate significantly in the future as a
result of a variety of factors, many of which are outside the Company's
control. Such factors include general economic and industry conditions, the
size and timing of individual orders, research and development expenses, the
introduction of new products or services by the Company or its competitors or
the introduction of the Company's products to new markets, changes in the
levels of operating expenses, including development costs, and the amount or
timing of other costs relating to the expansion of the Company's operations.
Furthermore, the purchase of the Company's products, particularly for major
projects, may involve a significant commitment of customer capital, with the
attendant delays frequently associated with large capital expenditures and
authorization procedures within its customers' organization. For these and
other reasons, the sales cycles for the Company's products are typically
lengthy and subject to a number of significant risks over which the Company
has little or no control, including customer budgetary constraints. The
Company historically has operated with little backlog because most customer
orders are placed with relatively short lead times, usually from four to
twenty-four weeks. Variations in the timing of recognition of specific
revenues may adversely and disproportionately affect the Company's operating
results for a quarter because the Company establishes its expenditure levels
on the basis of expected future sales, and a significant portion of the
Company's expenses do not vary with current sales. Accordingly, the Company
believes that period-to-period comparisons of results of operations are not
necessarily meaningful and should not be relied upon as indicative of future
performance. See "Risk Factors".
LIQUIDITY AND CAPITAL RESOURCES
The Company provided cash from operating activities of $251,496 for the year
ended December 31, 1997, as compared to $64,259 for the year ended December
31, 1996. The increase in cash provided for the year ended December 31, 1997,
is a result of increased sales. The Company used the cash provided to acquire
$60,768 of equipment, repay principal on long-term debt of $7,143 and
distribute $175,000 to a shareholder. The Company used cash in operating
activities of $274,331 for the three months ended March 31, 1998 compared to
cash provided by operating activities of $334,717 for the three months ended
March 31, 1997. The increase in cash
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used in the three months ended March 31, 1998 is a direct result of the
increase in operating expenses and the resulting operating loss for that
period. The Company used cash in investing activities of $16,080 for the three
months ended March 31, 1998 compared to $1,769 for the three months ended
March 31, 1997. These operating and investing cash outflows were financed
primarily from the cash provided from the reduction in accounts receivable and
proceeds from the issuance of the Company's convertible notes. During 1996 and
1997 the Company met its liquidity needs primarily from sales and from a loan
from an officer. See Note 7 of Notes to Audited Financial Statement.
From January 1998 to March 1998, the Company generated a total of $600,000
from a private placement of convertible notes. The net proceeds of the
offering were $542,500 after deducting selling commissions and other expenses.
These net proceeds were used for working capital purposes, including general
and administrative expenses and expenses related to the planned public
offering. See "Description of Securities--Convertible Notes".
If the public Offering is successful, the Company intends to use the net
proceeds for salaries, equipment purchases, payment for patents and a loan to
certain shareholders for the development of a new facility. The balance will
be used for working capital purposes, including general and administrative
expenses, and may include research and development related to the Company's
present and new products and sales and marketing. The Company believes that
the net proceeds of this Offering, together with the availability of its
borrowing capacity, will be sufficient to finance its working capital and
other capital requirements until the year 2000. See "Risk Factors--Risks of
Increased Costs".
EFFECT OF INFLATION AND FOREIGN CURRENCY EXCHANGE
The Company has not realized a reduction in the selling price of any of its
product lines as a result of domestic inflation nor has the Company
experienced unfavorable profit reductions due to currency exchange
fluctuations or inflation with its foreign customers. Once the Company opens
its foreign offices, currency exchange fluctuations and or inflation with its
foreign customers may occur. See "Risk Factors--International Operations and
Sales".
EFFECT OF THE YEAR 2000
The Company believes that the costs associated with completing the
awareness, assessment, renovation, validation, and implementation of Year 2000
remediation is unlikely to have a significant effect on its operations. The
Company expects the primary impact of Year 2000 remediation to revolve around
acquiring upgrades to the Company's internal accounting software. As of the
present time, it is impossible for the Company to quantify the cost of these
remediation efforts or any future remediation costs.
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BUSINESS
GENERAL
Crawford Equipment & Engineering Co., Inc., (the "Company") is primarily
engaged in the business of design, engineering and manufacturing of combustion
equipment and technology for use in the disposal of waste. The Company
provides design, engineering, manufacturing, sales and service to customers
worldwide. The Company originally manufactured and serviced cremation systems
for professionals in the death care industry. In addition to human and animal
cremation/incineration equipment the Company also developed equipment to
dispose of solid waste, medical, infectious and bio-hazardous waste. In more
recent years additional equipment was engineered and developed to dispose of
Volatile Organic Compounds ("VOC") and Hazardous Air Pollutants ("HAP") waste
(collectively the "VOC/HAP Waste Disposal Market"). Liquid waste, RAD waste
and municipal solid waste disposal can also be processed by the Company's
equipment. After market parts, service and repairs are also components of the
Company's business. The Company was formed in 1974 and operates from leased
facilities located in Orlando, Florida. See "Business--Facilities and Certain
Relationships and Related Transactions".
PRODUCTS, SERVICES AND MARKETS
The increasing demand for effective disposal of generated waste and the
regulation of pollution and environmental controls has contributed to the
Company's success in filling the needs of the waste disposal market. The Clean
Air Act, and the roles that Environmental Protection Agency (EPA) and the
Occupational Safety and Health Administration (OSHA) play have impacted the
waste management industry. The control and disposal of Medical Waste,
hazardous waste and VOC/HAP waste is becoming more and more regulated with
specific emphasis placed on effective disposal and protection of the
environment.
The Company has many custom designed and manufactured products, systems and
services to meet this growing need. It has expanded in a very competitive
market, maintaining high quality while achieving maximum economy for
customers. Technology and ingenuity in the design and manufacturing operations
are of paramount importance to management. The Company believes a true test of
any product is performance. The Company's goal is for its equipment to perform
with minimal required service and to continually live up to efficiency
specifications. The Company has 24 years experience and approximately 700
installations worldwide. The Company's dynamic approach to combustion
engineering and design incorporates features which effectively dispose of
waste. The Company provides combustion and air pollution control systems to a
variety of facilities and industries including but not limited to chemical,
pharmaceutical, medical, printing and plastics, textile, converting,
finishing, solid waste, recycling, utility, industrial, composites,
wood/furniture, packaging, food, automotive, painting, animal pathological
disposal and human cremation among others.
Patented Refractory Lined Draft Control System, Multi-Material Construction,
Controlled Air Turbulence/Mixing, Integrated PLC Control System and Total
System Modulation Control are some of the features constructed into the
Combustion Systems manufactured by the Company. These features are intended to
provide safe, durable, and reliable equipment. This, together with greater
operational efficiency and worldwide environmental compliance, should continue
to make the Company a leader in its industry.
The Company has an ongoing commitment to research and development activity,
both in process engineering and equipment design.
ENVIRONMENTAL MATTERS
The United States Clean Air Act Amendments of 1990 (the "CAAA")
significantly expanded the scope of air pollution regulations established in
the 1970s, and required the reduction and control of a wide range of air
pollutants, including 188 hazardous air pollutants ("HAPS"), most of which are
VOCs. The CAAA also addressed for the first time the reduction of Nitrogen
Oxides ("NOx") that, in combination with VOCs, produced ground level ozone or
urban smog. The CAAA introduced new regulatory requirements and timetables for
the abatement of VOCs and NOx for various geographic areas that become
progressively more stringent through the year 2010.
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The CAAA originally envisaged that standards for regulatory compliance would
be technology-specific. Current regulatory trends in the United States allow
for performance based mechanisms that provide economic incentives to surpass
compliance standards. One such mechanism currently in effect involves the
accumulation and banking of VOC emission credits obtained by achieving
performance beyond compliance standards. In addition, several states are
currently developing VOC emission credit trading programs. The Company
believes that these programs create additional economic incentives to select
the Company's technology over other treatment methods.
Title I of the CAAA establishes requirements for attaining and maintaining
national ambient air quality standards ("NAAQS"). Key provisions of Title I
are aimed at bringing cities and other geographic areas which are not in
attainment with NAAQS by the year 2010. In addition, measures for all regions
require the application of technological controls to reduce emissions of ozone
precursors, such as VOCs, from a broad range of industrial activities,
including consumer solvents and coatings, hazardous waste treatment storage
and disposal facilities, solid waste landfills and marine terminal loading and
unloading facilities.
Title III of the CAAA establishes a new program for the regulation of toxic
air pollutants. The combined federal and state programs create a comprehensive
and coordinated nationwide effort to deal with these pollutants. Title III
specifically lists 188 substances as hazardous air pollutants, of which most
are VOCs. Title III defines three significant programs that will require
substantial pollution control expenditures by industry across the nation: (i)
control of routine releases of air toxics from major industrial and commercial
sources; (ii) control of air toxic releases from area sources, primarily in
urban areas; and (iii) control of accidental releases of air toxics from
industrial and commercial sources. To reduce emissions of the 188 listed toxic
hazardous air pollutants, the application of the maximum achievable control
technology at major air emitting sources may be required.
The Pollution Prevention Act of 1990 establishes pollution prevention as a
national objective, naming it a primary goal wherever feasible. According to
this Act, where pollution cannot be prevented, materials should be recycled,
reduced or minimized in an environmentally sound manner.
International demand for VOC/HAP control equipment is also rapidly growing.
While many European nations have comprehensive health, safety and
environmental regulations in force, certain Asian and Latin American nations
have only recently begun to recognize the need to more stringently control VOC
emissions. In addition, many multinational companies have recognized the
benefits of global health, safety and environmental standards and are
collaborating in the development of comprehensive future performance
standards. See "Risk Factors--Environmental Regulations; Regulatory
Compliance".
COMPANY WASTE MANAGEMENT EQUIPMENT PRODUCTS
1. Human Cremation/Incineration Equipment Division.
The Company offers a range of Human Cremation Incineration Equipment with
models to accommodate a varied selection of applications.
The range starts with the C1000HB. This is a cremation chamber designed and
constructed to meet the demand of the cremation market to operate continuously
(around the clock if necessary). The high production capability of the
Company's crematory (average processing time 1 hour 15 minutes) is a valued
asset to customers. The Human Cremation/Incineration line is offered in three
"feature package" variations to meet a variety of requirements. The C1000HB
base model includes a manually operated counter-balance chamber access door.
This model serves to accommodate facilities with minimal cremation
requirements. The standard model C1000HS is equipped with such additional
convenience and performance enhancements as a hydraulically operated chamber
access door, easy load casket roller, integral remains collection hopper, and
primary chamber view port. The Company's model C1000 series crematories have
been extensively tested and approved by Underwriters Laboratories (UL) for
safety. The Company also manufactures a high-speed cremation remains
processor. The CP200 model is quiet, fast, compact, efficient and has dust
free operation.
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2. Animal Cremation/Incineration Equipment Division.
The Company offers a range of animal cremation/incineration equipment with
models to accommodate a variety of applications.
The standard models range from the C500PA which operates at 75 pounds per
hour to the C-5000 PA which operates at 500 pounds per hour. These multiple
chamber pathological cremation/incineration systems are designed to process
pathological as well as small quantities of high BTU content plastics found in
"red bag" veterinary/medical waste streams, while complying with the higher
temperatures and residence times required by environmental agencies. Utilizing
a negative pressured, controlled air, hot hearth design, the units are suited
for private cremations with capability of extended continuous operation to
meet greater mass disposal demands. Additional models CB150-1800 have also
been developed for batch loads of between 150 and 1800 pounds. These systems
require minimal operator interface and are suitable for demanding operations.
Finally, custom built systems for diseased or contaminated animal/pathological
waste are available for critical environmental applications and range in size
up to 2,000 pounds per hour.
3. Medical, Infectious and Bio-Hazardous Waste Incineration Equipment
Division.
The Company offers a full range of medical, infectious and bio-hazardous
waste incineration equipment with models to accommodate the needs of a variety
of customers. The standard models range from the C500PM which operates at 25
pounds per hour to the C-2000 SHP which can operate at approximately 2000
pounds per hour. The small systems are multiple chamber, controlled air, hot
hearth incinerators designed to accommodate mixed waste streams ranging from
general medical waste to "red bag" waste. These systems comply with the New
Source Performance Standards ("NSPS") and new rules required by federal
environmental agencies. The larger systems are stepped hearth, hot-loading,
continuous feed incineration systems designed to accommodate mixed waste
streams ranging from general medical waste to "red bag" waste. These systems
also comply with the NSPS and new rules required by federal environmental
agencies by utilizing a negative pressured, controlled air stepped hearth
design, with a sealed, hydraulic ram feed charging system, internal refractory
ash rams and wet/dry ash handling systems. These units are designed for high
production facilities.
4. VOC (Volatile Organic Compound) Abatement Systems
VOCs are an unavoidable by-product of numerous manufacturing and process
industries worldwide which must be controlled due to the serious health,
safety and environmental risks associated with them. The current global market
for control equipment exceeds two billion dollars and is estimated to grow at
ten percent (10%) per annum according to The McIlvaine Company, a market
analyst firm serving the air pollution control industry. Conventional
technologies for the treatment of industrial VOCs are primarily flame-based
destruction systems (such as oxidizers), activated carbon adsorption systems
and scrubbing systems, most of which have been in use for over thirty years.
The Company either manufactures or markets these technologies.
The health, safety and environmental risks presented by VOCs have led to
significant federal regulations, which are enforced by the Occupational Safety
Health Administration ("OSHA"), the United States Environmental Protection
Agency ("EPA") and various state and local agencies. Non-compliance with these
regulations carries substantial civil and criminal penalties. See "Risk
Factors--Environmental Regulations; Regulatory Compliance and "Business--
Environmental Matters".
EXISTING TREATMENT METHODS FOR CONTROL OF VOCS
Established methods to control VOC emissions can be broadly classified as
destruction processes or removal processes. These are generally mature
technologies with multiple suppliers and commodity pricing. These technologies
generally achieve destruction removal efficiencies ("DRE") and heat recovery
ranging from 90 to 99%. The major considerations in selecting industrial VOC
control systems are: safety; capital cost; operating and maintenance costs;
ease of permitting; process stream characteristics; unit location; low energy
consuming oxidation; and on-line reliability.
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DESTRUCTION PROCESSES
Destruction processes typically employ various flame-based technologies
which are designed to convert VOCs into carbon dioxide, water, vapor and, in
some cases, acid gases that can be neutralized. Flame-based technologies
include flares, fume incinerators, catalytic oxidation systems, regenerative
thermal oxidizers and thermal/recuperative oxidizers. The choice of the
destruction process is based upon the composition and concentration of VOCs in
the fume stream, the required DRE, and other factors. Although most VOCs can
be oxidized, the process must be highly controlled to achieve high DRE and
minimize the formation of products of incomplete combustion and carbon
monoxide ("CO"). The inherent higher temperatures of flame-based devices also
result in the formation of thermal NOx.
Scrubbing systems typically utilize water spray to remove VOCs from a fume
stream for collection in liquid form. The liquid effluent from the scrubbing
process is subsequently treated in another process. Scrubbing systems will
only remove VOCs that are soluble in the scrubbing medium and therefore are
not suitable for all VOC streams.
The Company's advanced technology controls VOC/HAPS for odors and toxic air
pollutants for a multitude of industries and processes. All VOC units are
guaranteed to meet or exceed all current regulatory emission/destruction
efficiency standards. All systems are designed to be expandable from 100 SCFM
through 100,000 SCFM and to accommodate a broad spectrum of VOC/HAP gas
streams. The Company can also design custom systems engineered and
manufactured to meet specific requirements. Certain features of this equipment
include up to a 99.99% DRE, minimum one-plus (1+) second residence time,
minimum 1400(degrees)F operating temperature, and low NOx and CO emissions.
SALES AND MARKETING
The Company has established a network of Company employed and independently
commissioned sales representatives. The Company currently has agreements with
three (3) organizations with over 75 sales agents selling the Company's Waste
Management equipment throughout the United States and abroad. The sales
representative network was established to introduce the Company's technology
by utilizing long standing relationships and to utilize the selling experience
of the representatives within the Company's target customer base.
All independent representatives are paid solely on commission, which is
calculated on a sliding scale as a percentage of sales revenues. Sales to
government agencies are handled directly by the Company.
The Non-exclusive Strategic Alliance Agreement between Monsanto Enviro-Chem
Systems, Inc. ("MEC"), a subsidiary of Monsanto, covers the private labeling
of certain VOC control equipment. MEC is an additional sales channel for the
Company's Recuperative Thermal Oxidizers and Thermal Oxidizers domestically
except for sales in Texas. Existing Company sales and marketing staff and
outside representatives market these products in Texas and internationally. In
addition, certain pre-existing customers are excluded from the MEC Agreement
and this contract may be terminated for "cause of convenience."
In order to manage the growing global interest in the technology, and to
handle sales and technical support directly for the Western United States and
European markets, the Company intends to establish sales/marketing offices in
California, the United Kingdom and Hungary in the third quarter of 1998. In
1998, the Company entered into a representative/manufacturing agreement for
the United Kingdom and Europe. The Company also entered into an agreement for
sales representation in Vietnam, Southeast Asia and the Pacific Rim. The
Company is the authorized representative for the continuous emissions
monitoring analyzer and system sales in the United Kingdom and Eastern and
Western Europe for Spectrum Systems, Inc. It has a letter of intent to be the
European sales agent for Des Champs Laboratories' line of heat exchangers and
air movement handling systems. There is also a non-exclusive sales agreement
for eighteen (18) months starting May 1, 1998 with Emcotek Emission Control
Technology Corporation for the sale of medical and related waste air pollution
control systems. See "Risk Factors--No Assurances of Additional Collaborative
and Joint Venture Agreements, Licenses or Project Contracts".
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The Company has submitted a substantial number of proposals to potential
customers both nationally and internationally. There can be no assurance that
such proposals will result in purchase orders or contracts, or that sales will
be finalized. See "Management Discussion and Analysis and Results of
Operations and Risk Factors--Operational Risks".
MARKETING STRATEGY
The Company intends to market its products and services through an expanding
network of customers and affiliations with similar companies. Currently, MEC,
a world leader in air quality management, sells VOC/HAP systems manufactured
by the Company through a strategic alliance agreement. Pursuant to the terms
of this agreement the equipment built for Monsanto will bear the Monsanto
name. The Company may also manufacture Monsanto designed systems that bear the
Company's name. This arrangement allows the Company access to additional
representatives in the field which sell its products without the usual
overhead, management or control systems needed to normally maintain such a
sales force. The Company is continuing to expand into more national and
international markets.
The new manufacturing and assembly plant should foster increased production
and greater sales of the Company's waste incineration equipment. See "Use of
Proceeds and Business--Facilities". The Company is also entering into an
advertising and marketing campaign, to promote the Company's core products and
bring awareness of these products to a larger audience of customers by
utilizing between $100,000 and $200,000 of net proceeds raised from this
Offering. See "Use of Proceeds".
ENGINEERING AND MANUFACTURING
The Company's engineering and manufacturing operations are based in Orlando,
Florida and organized under a comprehensive project management system,
including project costing, process design and engineering, procurement, system
assembly, pre-testing, installation and commissioning. The engineering and
manufacturing group is staffed by experienced engineers and project managers
and is directly managed by James P. Crawford, the Company's founder.
The Company has focused on modularizing and standardizing components of its
technology and utilizes sophisticated software to integrate these components
into comprehensive waste management and air pollution control systems. This
integration allows the Company to provide comprehensive systems centered
around the Company's waste disposal technologies. The engineers utilize state-
of-the-art, PC-based, computer-aided-engineering and database management
tools, including three-dimensional design tools. The Company believes this
approach of automating the design process is effective in that it: (i)
optimizes the engineering work effort and allows ready access to a growing
inventory of standardized design data; (ii) contributes significantly to
accuracy; (iii) shortens the Company's product delivery cycle; and (iv)
facilitates the handling of design data between the Company and its clients.
The systems are typically pre-assembled, pre-wired and tested prior to
delivery and installation. The Company manufactures its systems to order.
Component fabrication is carried out using pre-qualified Company employees who
specialize in the manufacture of each particular component. These specialized
employees adhere to and carry formal certifications with national and
international codes and standards such as those of the American Society of
Mechanical Engineers (ASME). The Company's subcontractors have been selected
to allow the Company to expand its capacity to manufacture additional systems
while minimizing the Company's investment fixed costs. The Company also uses
pre-qualified subcontractors throughout the United States and overseas but is
not dependent on any particular subcontractor.
In the fabrication process, no one subcontractor is exposed to the entire
technology package and final assembly of each system is coordinated by the
Company or by a totally separate subcontractor.
During the period that the technology was developed, an extensive empirical
database for waste flows of different volumes and compositions was compiled.
The Company has used this database to develop a proprietary,
27
<PAGE>
software-based design tool. In the design process, the software tools analyze
the characteristics of the customer's fume flow and determine the optimal
system configuration and size. Not only does this process specify the correct
system characteristics, but it also automates the task of generating budget
proposals. The Company is continuing to expand this database as new systems
are installed.
CONSULTING SERVICES
The Company has retained Grove Scientific & Engineering Company for a period
of 12 months to perform certain environmental permitting, analysis and
consulting services. The President of Grove Scientific Company is Bruno A.
Ferraro, who is also a member of the Company's Board of Directors. See
"Management and Certain Relationships and Related Transactions".
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
The Company currently licenses from James P. Crawford four United States
patents. The patent numbers together with the patent abstracts are set forth
below. Due to the technical nature of these abstracts, investors are
encouraged to review the patent documents on file with the United States
Patent Office. Copies of this information will also be produced by the Company
upon request.
Patent number 4,512,264 issued: April 23, 1985
An apparatus to induce drafts in combustion chamber stacks can operate at
temperatures from 1400(degrees) to 2600(degrees) while being fabricated from
mild steel with refractory lining. The induced draft apparatus includes an
exhaust stack connected to a combustion chamber and has an annular plenum
formed around the base of the stack with narrowed annular outlet from the
plenum into the stack. An air blower is connected to the annular plenum for
directing air under pressure thereunto and into the stack at a predetermined
position. An annular refractory surface is formed on the outside of the plenum
wall in stack and the stack is similarly lined with a refractory material.
Patent number 4,685,403 issued: August 11, 1987
An auxiliary incinerator apparatus for the crematory includes a main
incinerator having primary and secondary chambers formed with a plurality of
refractory walls and main door into the primary chamber. The main incinerator
has an outer framework with wall attached thereto and spaced from the
refractory walls. The refractory passageway extends from the primary chamber
refractory wall to the outer wall. An auxiliary incinerator is attached to the
side of the main incinerator outer wall and framework, adjacent to the opening
from the refractory passageway through the wall. The auxiliary incinerator has
an incineration chamber formed therein with a top opening thereunto. An
auxiliary door simultaneously opens and closes over the opening from the
refractory passageway through the outer wall and over the opening into the
auxiliary incinerator, so that partially incinerated materials can be moved
from the main incinerator to the auxiliary incinerator for further combustion.
A second door into the auxiliary incinerator allows for the removal of ashes
and the main door into the primary chamber. This patent was also issued in
Canada.
Patent number 4,890,367 issued: January 2, 1990
A crematory loader apparatus is provided for loading objects to be
incinerated into a preheated crematory. The loader has a frame with a slidable
support surface attached to the frame for supporting an object thereon which
slides in a track supporting the slidable top surface during of the top
surface between a first position for loading the object onto the slidable
support surface and a second position cantilevering the slidable support into
the crematory. A plurality of legs are attached to the frame and has a first
position out of the path of an object on the slidable support surface and a
second position blocking the path of the object on a slidable support surface
to block the movement of the object when the slidable top surface is moved
from the second position to the first position to thereby force the object
into the crematory as the sliding support surface is withdrawn from
28
<PAGE>
its second cantilevered position. The slidable support surface has rollers
thereon with a ramp at one end with a roller thereon to slide an object off
the slidable support surface. The support surface is moved by an electric
motor driven chain drive.
Patent number 5,152,232 issued: October 6, 1992
An incinerator apparatus has a primary incinerator chamber which has a
secondary incinerator coupled thereto by a passageway. The primary incinerator
chamber has a primary air input into the incinerator chamber and the secondary
air chamber has a secondary air input thereinto having a plurality of air
input lines with each line having an electric motor control valve, such as a
damper motor controlling a damper valve controlling the flow through one of
the input lines. A plurality of ultraviolet flame detector ports open into the
side of the secondary incinerator chamber, each being spaced a predetermined
distance from each other and each having an ultraviolet flame detector
positioned therein for sensing the ultraviolet radiation and the flame
adjacent the detector in the secondary incinerator chamber. Each ultraviolet
flame detector is operatively coupled through electronic controls which
includes relays to actuate each of the plurality of electric damper motors to
open and close the damper valve responsive to the ultraviolet flame detector
signal thereby the secondary air flow is controlled by a flame detector or
reading the flame position at a plurality of points in the secondary
incinerator chamber. One air blower can direct the air to the primary chamber
and to the secondary chamber through a plurality of ports into each chamber
with the secondary air being increased or decreased responsive to the length
of the flame in the secondary chamber to thereby maintain the temperature
within a predetermined range within the secondary chamber to ensure complete
combustion of the incinerated product.
The Company may apply for further patents as further R&D produces
innovations in its products. As a condition of employment, the Company intends
to routinely enter into agreements with its employees, to protect any future
rights relating to intellectual property and proprietary rights. See "Certain
Relationships and Related Transactions, and Risk Factors".
DESCRIPTION OF LICENSE
On January 2, 1998, the Company entered into a License Agreement with James
P. Crawford to utilize the four (4) patents that he has developed and holds
title to. The License Agreement requires the Company to pay a fee to Mr.
Crawford of $350 for each packaged combustion equipment system manufactured by
the Company that implements one or more of these patents. Following the
successful completion of the offering the Company intends to acquire the
patents from Mr. Crawford for a purchase price of $875,000. In conjunction
with the acquisition of the patents, the Company shall also be obligated to
pay a royalty fee to Mr. Crawford equal to the license fee it currently pays
to him. The royalty fee shall be paid to Mr. Crawford until the current
patents expire. See "Certain Relationships and Related Transactions".
COMPETITION
The industrial waste disposal equipment market is mature and highly
fragmented among a large number of competitors, none of whom have a
significant industry-wide market share. The following sets forth the Company's
main competition by category:
THE HUMAN CREMATION MARKET COMPETITION includes: Industrial Equipment &
Engineering Co., Inc., CMS, Inc., and American Cremation Systems, Inc.
THE ANIMAL CREMATION/INCINERATION MARKET COMPETITION includes: Industrial
Equipment & Engineering Co., Inc., Shenandoah Manufacturing, Inc., Consumat
Systems, Inc., International Incinerator, Inc., and Therm-Tech, Inc.
THE MEDICAL WASTE MARKET COMPETITION includes: International Waste
Industries, Inc., Simmonds Manufacturing Co., Inc., Consumat Systems, Inc.,
Advanced Combustion Systems, Inc., and Therm-Tech, Inc.
29
<PAGE>
The Company currently competes with suppliers of flame-based thermal
oxidation systems, carbon adsorption systems and scrubbing VOC equipment
control systems. These companies include Reeco, Inc., Durr Industries,
Thermatrix, Inc., Smith Environmental Co., Inc., Anguil Environmental Systems
Co., Inc., Ad-West and ABB Inc., among others. Since many of these
technologies have been in use for over 30 years, they have certain advantages.
These technologies are familiar and predictable to companies requiring VOC
controls and to regulators, and are available from and promoted by a large
number of suppliers. Many of the Company's competitors have substantially
greater financial resources, operating experience and market presence than the
Company. There can be no assurance that the Company's existing competitors or
new market entrants will not develop new technologies or modifications to
existing technologies that are superior to or more cost-effective than the
Company's waste disposal technologies. In addition, increased competition
could result in price reductions and reduced gross margins and could limit the
Company's market share. See "Risk Factors--Competition".
EMPLOYEES
As of March 31, 1998, the Company had 40 full-time employees, ten (10) of
whom hold advanced degrees. The Company believes that it has been successful
in attracting experienced and capable engineering and management personnel.
None of the Company's employees is covered by collective bargaining. The
Company intends to hire additional employees after the closing of the
Offering. See "Risk Factors--Dependence on Key Personnel and Use of Proceeds.
The Company has employment agreements with James P. Crawford, Kathleen B.
Crawford and Steven L. Atkinson. See "Certain Relationships and Related
Transactions".
FACILITIES
The Company's manufacturing facility and offices are located at: 436 W
Landstreet Road, Orlando, Florida, 32824. The Company intends to use a portion
of the proceeds from this Offering to fund the building of a new plant and
manufacturing facility on a site near its existing facility. Such new
facilities are expected to be completed by January 1999. The majority of the
funding for this is being provided by the Company through a loan to Mr. and
Mrs. Crawford personally. It will be repaid to the Company over a twenty year
period and shall be secured by real property they presently own. The plans for
the new facility are available for inspection. The new manufacturing plant
will be built on land adjacent to the current location. The Company leases the
current facility and offices from Mr. and Mrs. Crawford at rates the Company
believes to be commensurate with industrial rental rates charged in the
Central Florida area. See "Certain Relationships and Related Transactions". A
copy of the lease agreement is available for inspection upon request. See
"Management's Discussion and Analysis and Results of Operations and Risk
Factors".
LEGAL PROCEEDINGS
There are no pending material legal proceedings to which the Company or its
Properties are subject.
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<PAGE>
MANAGEMENT
The executive officers, directors and key employees of the Company upon
completion of the Offering and their representative ages and positions are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD
---- --- ----------------
<S> <C> <C>
James P. Crawford..... 58 Chief Executive Officer and Chairman of the Board
Vice President, Corporate Treasurer, Secretary,
Kathleen B. Crawford.. 50 and Director
Steven L. Atkinson.... 40 President, Director
C. David Cooper....... 50 Director
Bruno A. Ferraro...... 40 Director
William M. Dillard.... 50 Director
</TABLE>
James P. Crawford is a founder and has been the Chief Executive Officer of
the Company since its formation in 1974. Prior to that he worked in the
mechanical and combustion field. Mr. Crawford is or has been a member of the
American Society of Hospital Engineers, the Air and Waste Management
Association, American Animal Hospital Association, American Veterinary Medical
Association, American Association of Crematory Animal Science, Cremation
Association of North America and The National Funeral Directors Association.
He holds a State of Florida Mechanical Contractor Certification and Welder
Unlimited Certification. After attending Orlando Junior College in 1958, Mr.
Crawford served in the United States Army, U.S. Corp of Engineers.
Mr. Crawford has taken extensive courses and seminars in pipe fitting, boiler
making, electrical, and fire brick and high temperature castable. He has
designed numerous products and holds patents previously discussed.
Mr. Crawford is married to Kathleen B. Crawford. Together they are partners in
Horse Shoe Cove Land Development, a Tennessee Corporation. Together they also
own West Landstreet Properties, Inc.; Florida Bio-Compliance, Inc.; land in
Airport Industrial Park, Sebring, Florida; and an 80 acre development project
in Geneva, Florida.
Kathleen B. Crawford, is a founder, Vice President, Corporate Secretary and
Treasurer of the Company. Prior to founding the Company with her husband,
James P. Crawford, she was employed with Bordens Dairy from 1967 to 1970 in
their accounting department. Mrs. Crawford is or has been a member of The
American Veterinary Medical Association, The American Association of
Laboratory Animal Science, The National Funeral Directors Association and The
American Funeral Directors Association. Mrs. Crawford is also a member of the
Daughters of the American Revolution.
Steven L. Atkinson is the President and a Director for the Company. He is
also a shareholder and a Director of Florida Bio-Compliance, Inc. He has been
with the Company since 1983. Prior to that he was a communications consultant
from 1979 through 1983. In addition to holding a degree from Brevard Community
College, Mr. Atkinson has been or is a member of The American Society of
Hospital Engineers, Air and Waste Management Association, American Animal
Hospital Association, American Veterinary Medical Association, American
Association of Laboratory Animal Science, National Funeral Directors
Association, American Cemetery Association, and the Cremation Association of
North America.
William Mason Dillard is a Director of the Company. He has been President
and Chief Executive Officer of Mechanical Services, Inc., since 1974. Prior to
that he was a Field Superintendent with Munson & Associates and has served in
a technical capacity with other engineering firms in Orlando, Florida and
Georgia. He holds an Associate Degree in Heating and Ventilation and Air
Conditioning Technologies from Dekalb College in Atlanta, Georgia. He is an
active member of the American Society of Heating, Refrigeration and Air
Conditioning Engineers (ASHRAE) and recently received the ASHRAE's
distinguished service award.
Bruno A. Ferraro, CEP, QEP, is a Director of the Company. He is founder and
President of Grove Scientific & Engineering Company, a multi-disciplined
environmental consulting firm, which provides engineering design, air
pollution consulting, permitting and testing of pathological, solid waste and
VOC incinerators for a wide variety of industries including the Company. See
"Business--Consulting Services and Certain Relationships and
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<PAGE>
Related Transactions". Mr. Ferraro has extensive experience in environmental
consulting including indoor air quality, industrial hygiene, water quality,
hazardous waste, laboratory analysis and as an expert witness. Mr. Ferraro has
had numerous articles published, has been appointed to local, state and
federal technical advisory boards, has made technical presentations and was a
columnist for the Florida Environment New Journal for over 11 years. He is a
member of several environmental organizations including the Florida Society of
Environmental Analysts where he served as president. He holds several
certifications in environmental science related fields.
C. David Cooper, Ph.D., PE, QEP, has his B.S., MS and Ph.D. degrees in
Chemical Engineering, with a specialization in Environmental Engineering.
After working approximately six (6) years for a major oil company in Texas, he
joined the faculty of the Civil and Environmental Engineering Department at
the University of Central Florida ("UCF") in 1980. Dr. Cooper currently holds
the title of Professor of Engineering, and teaches courses at the graduate and
undergraduate levels. His areas of teaching and research include Hazardous
Waste Incineration, Atmospheric Dispersion Modeling and Air Pollution Control.
He is the principal author of Air Pollution Control--Design Approach, the
leading textbook in the field. This book is in use at more than 120
universities in the United States and Canada; it has been translated into
Korean. The book is also being translated into Chinese. Dr. Cooper is an
active researcher at UCF, and has published numerous peer-reviewed journal
articles on the subjects of hazardous waste incineration and mobile source air
pollution modeling. Sponsors of his research over the years include the EPA,
NASA, the Gulf Coast Hazardous Substance Research Center, Florida DOT, Florida
DEP, and others. Throughout his career, Dr. Cooper has been the principal
investigator on more than 30 research contracts worth more than $3.2 million
in funding for UCF. Dr. Cooper is a registered professional engineer in the
state of Florida, and has served as a consultant to industry and government
agencies on many projects related to combustion and air pollution. He is an
active member of the International Air and Waste Management Association.
COMMITTEES OF DIRECTORS
Following the completion of the Offering, the Board of Directors will have
the following committees:
<TABLE>
<CAPTION>
COMMITTEE CHAIRPERSON(S)
--------- --------------
<S> <C>
Executive........................... James P. Crawford and Steven L. Atkinson
Audit............................... Kathleen B. Crawford
Compensation........................ Kathleen B. Crawford
</TABLE>
The Executive Committee will conduct the normal business operations of the
Company except for certain matters reserved to the Board of Directors. The
Audit Committee will recommend an independent auditor for the Company,
consults with such independent auditor and reviews the Company's financial
statements. The Compensation Committee will recommend to the Board of
Directors the compensation of officers and key employees for the Company and
the granting of stock options. Messrs. C. David Cooper, Bruno A. Ferraro and
William M. Dillard are considered to be independent directors for these and
other purposes.
COMPENSATION OF DIRECTORS
The Company does not pay non-employee directors a fee or a meeting fee for
Board meetings attended, and does not automatically grant to each director any
non-qualified stock options.
32
<PAGE>
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the total annual
compensation paid or accrued by the Company to or for the account of the Chief
Executive Officer and each other executive officer of the Company whose total
cash compensation for the fiscal year ended December 31, 1997 exceeded
$100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
NAME AND PRINCIPAL POSITION SALARY BONUS OTHER COMPENSATION SECURITIES
UNDERLYING ($) ($) ($) AWARDS OPTIONS(#)
--------------------------- ------ ------ ----- ------------ ----------
<S> <C> <C> <C> <C> <C>
James P. Crawford, Chief
Executive Officer and Chairman
of the Board................... 20,000 52,249 -0- -0- -0-
Steve Atkinson, President(1).... 50,000 76,079 -0- -0- -0-
</TABLE>
- --------
(1) On February 1,1998, Mr. Atkinson purchased 200,000 shares of Common Stock
from the Company for a total consideration of $40. See "Certain
Relationships and Related Transactions".
The Company intends to hire a Chief Financial Officer beginning in January
1, 1999, and will grant him or her options to acquire an unspecified number of
shares of Common Stock at the initial public offering price. It is anticipated
the options will vest in installments over five (5) years.
PROFIT SHARING/401K PLAN
The Company has a profit-sharing and a 401(k) plan (the Plan) which cover
substantially all employees who have met certain age and length of service
requirements. Plan contributions are made at the discretion of the Company's
Board of Directors. The Company did not elect to make a contribution to the
Plan for the years ended December 31, 1995 and 1996. However, the Company made
a $9,015 employer matching contribution to the 401(k) plan for the year ended
December 31, 1997.
BOARD OF DIRECTORS
Each of the Company's directors has been elected to serve until the next
annual meeting of shareholders. Each of the Company's directors continues to
serve until his or her successor is designated and qualified.
LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY AND INDEMNIFICATION
The Company's Restated Articles of Incorporation provide that the Company
shall indemnify its officers and directors and former officers and directors
to the fullest extent permitted by law. The Amended By-laws provide that the
Corporation shall have the power to indemnify any director, officer, employer
or agent of the Corporation as provided in Section 607.0850 of the Florida
Business Corporation Act. Such Act generally provides that a corporation shall
have the power to indemnify such persons to the extent they acted in good
faith in a manner reasonably believed to be in, or not opposed to, the best
interest of the Company and, with respect to any criminal action or
proceeding, to the extent they had no reasonable cause to believe the conduct
was unlawful. In the event any such person shall be judged liable for
negligence or misconduct, such indemnification shall apply only if approved by
the Court in which the action was pending. Any other indemnification shall be
made only after a determination by the Board of Directors (excluding any
directors who were party to such action), by independent legal counsel in a
written opinion, or by a majority vote of shareholders (excluding any
shareholders who were parties to such action).
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be provided to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, it may be deemed
against public policy as expressed in the Securities Act of 1933, as amended,
and may therefore, be unenforceable.
33
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 1, 1998, the Company entered into respective employment
agreements with James P. Crawford, Kathleen B. Crawford, and Steven L.
Atkinson, each having a term of five (5) years. These agreements increased the
base salaries of Mr. Crawford from approximately $72,000 that he received for
1997 to $125,000 per annum that he will receive during 1998 and in subsequent
years thereafter over the term of his agreement. Mrs. Crawford's salary was
increased from approximately $20,000 that she received for 1997 to $125,000
that she will receive during 1998 and in subsequent years thereafter over the
term of her agreement. Mr. Atkinson's base salary was increased from $50,000
per annum that he received in 1997 to $75,000 per annum that he shall receive
during 1998 and in subsequent years thereafter over the term of his agreement.
In addition to his base salary, Mr. Atkinson shall also receive a commission
equal to one percent (1%) of all annual gross sales made by the Company and
three percent (3%) of the annual net pre-tax profits earned by the Company as
reflected by the Company's annual audited financial statements. These
agreements also provide the Crawfords and Mr. Atkinson with additional
benefits such as major health, life and disability insurance coverage; the use
of an automobile; and three (3) weeks of annual paid vacation. Each of the
agreements may be terminated either on a justified or unjustified basis. In
the event that the Company unjustly terminates any of these agreements, then
the terminated employee is entitled to receive an amount equal to two and one-
half years of his or her base salary. In the event that the Company elects not
to renew any of these agreements, then the affected employee is entitled to
receive an amount equal to one (1) year of his or her base salary.
On January 1, 1998, the Company entered into a Lease Agreement ("Lease")
with James and Kathleen Crawford to lease the existing 26,000 square foot
manufacturing facility that the Company presently operates from. The terms of
the Lease require the Company to pay rent to the Crawfords over a three (3)
year term equal to seven dollars ($7) per square foot during the first year;
eight dollars ($8) per square foot during the second year; and nine dollars
($9) per square foot during the third year. The Lease also requires the
Company to reimburse the Crawfords for all real estate taxes, assessments and
other governmental charges assessed, levied or imposed against the leased
premises. The Company is required to bear the costs and expenses to maintain
the leased premises in good working order. In addition, the Company is
required to maintain during the term of the Lease, general liability insurance
in an amount at least equal to $3,000,000. The Company is further obligated to
pay all utility charges that may be assessed, used in or about the leased
premises. Between January 1, 1986, and December 31, 1997, the Company had
leased this facility from the Crawfords for rental rates ranging from
approximately $1.85 per square foot to approximately $2.54 per square foot.
On January 1, 1998, the Company entered into a License Agreement with James
P. Crawford to utilize the four (4) patents that he has developed and holds
title to. The License Agreement is in effect until the expiration of the last
patent issued to Mr. Crawford which takes place on October 6, 2009 and
requires the Company to pay him a fee of $350 for each packaged combustion
equipment system manufactured by the Company that implements one or more of
these patents.
On January 20, 1998, a majority of the Company's shareholders affirmatively
voted to adopt a Plan of Re-capitalization (the "Plan"), that increased the
number of shares of common stock that the Company was authorized to issue from
500 shares to 15,000,000 shares ("Common Stock"). The Plan further reduced the
par value of each share of Common Stock from $5.00 to $.0002 per share. Each
shareholder of record as of the date the Plan was adopted received 30,000
shares for each share owned. Following the adoption of the Plan, the Company
caused its Articles of Incorporation to be restated and amended to reflect the
increased capitalization.
On January 20, 1998, a majority of the Company's shareholders affirmatively
voted to grant Steven L. Atkinson, upon the filing by the Company of its
Restated and Amended Articles of Incorporation, the right to subscribe for a
total of 200,000 shares of common stock at a purchase price of $.0002 per
share. On February 1, 1998, Mr. Atkinson acquired 200,000 shares of Common
Stock from the Company for a total consideration of $40. The shares owned by
Mr. Atkinson are subject to certain risks of forfeiture should he terminate
his employment with the Company during the initial term of his employment
agreement.
34
<PAGE>
On February 1, 1998, Kathleen Meehan and Mary Jennifer Crawford (the
"Stockholders") entered into a Voting Trust Agreement with James P. Crawford
and Kathleen B. Crawford (the "Trustees") whereby the Stockholders each
assigned and delivered 90,000 shares of the Company's Common Stock for a total
of 180,000 shares to the Trustees. For a period of ten (10) years from the
date of the Voting Trust Agreement, the Trustees shall have the exclusive
right to vote these shares.
On April 7, 1998, the Company entered into an agreement with Grove
Scientific & Engineering Company ("Grove"), a Florida corporation that is co-
owned by Bruno A. Ferraro, a director of the Company. Under the terms of the
agreement, Grove has agreed to provide the Company with support services for
proposals; assist with incinerator and thermal oxidizer sizing and
specifications; counsel on regulatory issues; perform engineering design; and
assist with other related services. For these services the Company is
obligated to pay Grove a monthly retainer of $2,000. In addition, the Company
shall reimburse Grove for any additional costs that exceed the monthly
retainer as contracts are awarded.
In December 1997, the Company commenced a private offering of convertible
notes ("Notes") pursuant to exemptions from the registration requirements of
federal and applicable state securities laws. Through this private offering,
the Company raised a total of $600,000 from ten (10) purchasers
("Noteholders"). The Notes permit either the Company or the Noteholders to
exchange their Notes for shares of the Company's Common Stock at any time
within twelve (12) months from the date of issuance at a conversion price of
$3.50 per share. See "Description of Securities". As of the date of this
Prospectus, neither the Noteholders nor the Company has elected to convert any
Notes for Common Stock.
On January 7, 1998, James P. Crawford loaned the Company $100,000 for
working capital. The loan was evidenced by a demand promissory note bearing
interest at the rate of eight percent (8%) per annum. On April 27, 1998,
principal and accrued interest were paid to Mr. Crawford in full.
After the Offering, the Company intends to loan approximately $750,000 of
the net proceeds raised with either the minimum or the maximum to James P.
Crawford and Kathleen B. Crawford. These loan proceeds shall be utilized by
the Crawfords to develop and construct a new 40,000 square foot manufacturing
facility for the Company, located on property owned by the Crawfords that is
adjacent to the Company's existing facility. See "Business--Facilities". The
loan shall be evidenced by a promissory note having a term of 20 years and
bearing interest at the rate of eight percent (8%) per annum. The note may be
prepaid either in whole or in part by the Crawfords without penalty and shall
be secured by real property owned by the Crawfords.
After the offering, the Company intends to purchase four (4) patents from
James P. Crawford for a total purchase price of $875,000. With the minimum
proceeds raised, the Company intends to utilize approximately $500,000 as an
initial payment to Mr. Crawford with the balance of the total purchase price
to be evidenced by a promissory note having a principal balance of $375,000.
The note to Mr. Crawford shall be payable quarterly over a five (5) year term
and shall bear interest at the rate of eight percent (8%). With the maximum
proceeds raised, the Company does not intend to finance any portion of the
patent purchase price and shall pay the entire sum of $875,000 to Mr. Crawford
in cash. In addition to the purchase price to be paid for the patents, the
Company shall also pay Mr. Crawford a royalty fee equal to $350 for each
packaged combustion equipment system manufactured by the Company that
implements one or more of the patents to be acquired. The royalty fee shall be
paid to Mr. Crawford until the last issued patent expires which takes place on
October 6, 2009. While the Company reasonably believes that the patent
acquisition fee payable to Mr. Crawford is fair, there has been no independent
valuation performed of the subject patents.
Following the offering and upon its completion the Company shall lease a new
manufacturing facility from the Crawfords. The terms of the proposed lease
shall be similar to those presently in effect between the Company and the
Crawfords for the existing manufacturing facility except that the term of the
proposed lease is for a period of ten (10) years. Base Rent due under the
proposed lease shall be seven dollars ($7) per square foot during the first
year; eight dollars ($8) per square foot during the second year; and nine
dollars ($9) per square foot during the third year. Thereafter, in years
seven, eight and nine of the proposed lease, Base Rent shall increase by five
percent (5%) per annum.
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<PAGE>
All future transactions and loans with officers, directors or shareholders
holding more than 5% of the Company's outstanding Common Stock or affiliates
of any such persons will be made for bona fide business purposes, will be on
terms no less favorable than could be obtained from an unaffiliated third
party, and will be approved by a majority of the independent outside directors
who do not have an interest in the transactions.
[THIS SPACE LEFT BLANK INTENTIONALLY]
36
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of March 31, 1998 and as adjusted
to reflect the sale of Common Stock offered at the minimum and the maximum
hereby for (i) each of the Executive Officers, (ii) each of the Company's
Directors, (iii) all Directors and Executive Officers as a group, and (iv)
each person who is known by the Company to beneficially own more than 5% of
the Common Stock.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES OUTSTANDING
------------------------------------
NAMED EXECUTIVE OFFICERS,
DIRECTORS,
ALL DIRECTORS, EXECUTIVE NUMBER OF
OFFICERS AS A GROUP SHARES AFTER AFTER
AND FIVE PERCENT BENEFICIALLY BEFORE MINIMUM(2) MAXIMUM(3)
STOCKHOLDERS OWNED(1) OFFERING OFFERING OFFERING
------------------------- ------------ ---------- ----------- -----------
<S> <C> <C> <C> <C>
James P. Crawford(4)........ 1,230,000 38.43% 34.64% 29.28%
Kathleen B. Crawford(5)..... 1,230,000 38.43% 34.64% 29.28%
Steven L. Atkinson.......... 200,000 6.25% 5.63% 4.76%
All executive officers and
directors as a group (3
persons)................... 2,660,000 83.12% 74.93% 63.33%
5% STOCKHOLDERS:
Mary Jennifer
Crawford(6)(8).............. 180,000 5.62% 5.07% 4.28%
Irrevocable Trust dated
December 31, 1997
Kathleen Meehan(7)(8)....... 180,000 5.62% 5.07% 4.28%
Irrevocable Trust dated
December 31, 1997
</TABLE>
- --------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock are deemed outstanding. Except as indicated
in the footnotes to this table and as provided pursuant to applicable
community property laws, the stockholders named in the table have sole
voting and investment power with respect to the shares set forth opposite
each stockholder's name.
(2) After giving effect to the issuance of 350,000 shares of Common Stock
offered at the minimum.
(3) After giving effect to the issuance of 1,000,000 shares of Common Stock
offered at the maximum.
(4) James P. Crawford beneficially owns 1,230,000 shares in his capacity as
the Trustee for the James P. Crawford Revocable Trust dated March 24,
1992.
(5) Kathleen B. Crawford beneficially owns 1,230,000 shares in her capacity as
the Trustee for the Kathleen B. Crawford Revocable Trust dated March 24,
1992.
(6) Mary Jennifer Crawford is the daughter of James P. and Kathleen B.
Crawford and sole beneficiary to the Mary Jennifer Crawford Irrevocable
Trust dated December 31, 1997. William Edward Crawford, the brother of
James P. Crawford is the acting Trustee.
(7) Kathleen Meehan is the daughter of James P. and Kathleen B. Crawford and
sole beneficiary to the Kathleen Meehan Irrevocable Trust dated December
31, 1997. William Edward Crawford, the brother of James P. Crawford is the
acting Trustee.
(8) Both Mary Jennifer Crawford and Kathleen Meehan also own 90,000 shares of
Common Stock each which shares are subject to a Voting Trust Agreement
("Agreement") dated February 1, 1998. James P. and Kathleen B. Crawford
are the Trustees under the Agreement and therefore have the right to vote
these shares for a period of ten (10) years. See "Certain Relationships
and Related Transactions".
37
<PAGE>
DESCRIPTION OF SECURITIES
The Company's authorized capital stock consists of 15,000,000 shares of
common stock $.0002 par value per share ("Common Stock"). There are presently
3,200,000 shares issued and outstanding. In the event that the minimum
offering has been completed, there shall be 3,550,000 shares issued and
outstanding. In the event that the maximum offering has been completed, there
shall be 4,200,000 shares issued and outstanding.
COMMON STOCK
There are no preemptive, subscription, conversion or redemption rights
pertaining to the Common Stock. The absence of preemptive rights could result
in a dilution of the interest of existing shareholders should additional
shares of Common Stock be issued. Holders of the Common Stock are entitled to
receive such dividends as may be declared by the Board of Directors out of
assets legally available therefore and to share ratably in the assets of the
Company available upon liquidation. The Company's Board of Directors does not
intend to declare dividends and presently intends to return all earnings, if
any, for use in the Company's business for the foreseeable future. See "Risk
Factors--Dividend Policy".
Each share of Common Stock is entitled to one vote for all purposes and
cumulative voting is not permitted in the election of directors. Accordingly,
the holders of more than 50% of all of the outstanding shares of Common Stock
can elect all of the directors. Significant corporate transactions such as
amendments to the articles of incorporation, mergers, sales of assets and
dissolution or liquidation require approval by the affirmative vote of the
majority in interest of the outstanding shares of Common Stock. Other matters
to be voted upon by the holders of Common Stock normally require the
affirmative vote of a majority in interest of the shares present at the
particular shareholders' meeting. The Company's directors and officers as a
group beneficially own approximately 83% of the outstanding Common Stock of
the Company. Upon completion of this Offering, such persons will beneficially
own approximately 75% of the outstanding Common Stock of the Company with the
minimum proceeds raised and approximately 63% with the maximum proceeds
raised. See "Principal Shareholders". Accordingly, such persons will continue
to be able to substantially control the Company's affairs, including, without
limitation, the sale of equity or debt securities of the Company, the
appointment of officers, the determination of officers' compensation and the
determination whether to cause a registration statement to be filed. There are
seven (7) holders of record of the Company's Common Stock as of the date of
this Prospectus.
CONVERTIBLE NOTES
Between January 27, 1998, and March 12, 1998, the Company issued Notes
having an aggregate principal amount of $600,000 to ten (10) Noteholders in
connection with a private offering made pursuant to certain exemptions from
the registration requirements of federal and state securities laws. See
"Certain Relationships and Related Transactions". The Notes may be converted
into shares of the Company's Common Stock at a conversion price of $3.50 per
share by either the Noteholders or the Company at any time within twelve (12)
months after the date the Note was issued. If neither party elects to convert
the Notes within such time, the entire principal together with accrued
interest at the rate of seven percent (7%) per annum shall be due and payable
to the Noteholders. Both accrued interest and principal due under the Notes
will be subject to conversion. Certificates representing shares of Common
Stock issued to Noteholders upon conversion shall be rounded to the nearest
whole number. No fractional shares shall be issued. As of March 31, 1998, all
Noteholders as a group would be entitled to receive approximately 172,835
shares of Common Stock in exchange for their Notes. Of the ten (10) Notes
issued by the Company, two (2) Notes, collectively having a principal amount
owed of $100,000 shall mature on January 27, 1999; one (1) Note, having a
principal amount owed of $200,000, shall mature on February 9, 1999; and seven
(7) Notes, collectively having a principal amount owed of $300,000, shall
mature on March 12, 1999.
TRANSFER AGENT AND REGISTRAR
It is anticipated that the Transfer Agent and Registrar for the Company's
Common Stock is Liberty Transfer Company, 191 New York Ave, Huntington, New
York 11743-2711.
38
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market following
the Offering could adversely affect the market price for the Common Stock.
Upon completion of this Offering, approximately 1,230,000 restricted shares of
Common Stock held by the Company's existing stockholders will be eligible for
sale, subject to the volume limitations and other requirements of Rule 144
under the Act. However, all existing shareholders have agreed that they will
not, without the consent of the Underwriter, publicly sell or otherwise
dispose of any of their presently owned shares of Common Stock until 24 months
from the date that the Registration Statement is effective. The sale in the
future of a substantial number of shares of Common Stock by existing
stockholders could have an adverse effect on the price of the Common Stock.
39
<PAGE>
PLAN OF DISTRIBUTION
The Company has entered into an Underwriting Agreement with Discovery
Capital Group, Inc., Winter Park, Florida, to act as the Underwriter of this
Offering ("Underwriter"). Pursuant to the Underwriting Agreement, the
Underwriter will act as an agent for the Company to offer to sell on a "best
efforts" basis a minimum of 350,000 shares of Common Stock and a maximum of
1,000,000 shares of Common Stock. The Common Stock will be offered to the
public through the Underwriter and dealers as may be selected by the
Underwriter at the public offering price stated on the front cover of the
Prospectus. The Underwriter has made no commitment to purchase any or all of
the Common Stock. It has agreed to use its best efforts to find purchasers for
the Common Stock within a period of 90 days from the date of this Prospectus,
subject to an extension in the discretion of the Underwriter for an additional
period not to exceed 30 days. On behalf of the Company, the Underwriter
proposes to offer the Common Stock directly to retail purchasers at the
initial public offering price set forth on the cover page of this Prospectus
and may offer, in part, to possible participating dealers who are members of
the National Association of Securities Dealers, Inc. at such price, less a
concession not in excess of $.406 per share. The Underwriter does not intend
to confirm sales to any accounts over which it exercises discretionary
authority. Contingent upon the minimum sale of 350,000 shares of the Company's
Common Stock, the Company will pay the Underwriter a commission of seven
percent (7%) of the public offering price.
It is anticipated that all proceeds from subscriptions with respect to the
shares will be deposited promptly with Citrus Bank, 100 S. Orange Avenue,
Suite 100, Orlando, Florida, 32801 as Escrow Agent pursuant to an Escrow
Agreement between the Company, the Underwriter and such Escrow Agent. Funds
will be deposited in such escrow no later than noon of the business day
following receipt. In the event 350,000 shares of Common Stock are not sold
within the initial 90-day period (subject to the 30-day extension period
described above), funds will be refunded promptly to subscribers in full
without deduction therefrom or interest thereon. During the offering period or
any extension thereof, no subscriber will be entitled to any refund of any
subscription.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Act"). Upon the successful completion of this Offering, the
Company has agreed to pay the Underwriter a non-accountable expense allowance
of 3% of the total proceeds of this offering, of which approximately $52,000
has been paid as of the date of this Prospectus. The Company has also agreed
to pay all expenses in connection with qualifying the Common Stock for sale
under the laws of such jurisdictions as the Underwriter may designate. In
addition, the Underwriter will be sold a Warrant (Underwriter's Warrants) to
purchase shares of Common Stock representing four percent (4%) of the total
shares sold to the public equal to a minimum of 14,000 shares and a maximum of
40,000 shares of Common Stock of the Company. See "Underwriter's Warrants".
Pursuant to the terms of the Underwriting Agreement, all of the Company's
existing shareholders have agreed not to sell the securities of the Company
acquired by them prior to the date of this Prospectus until 24 months
following the effective date of this registration statement.
The Underwriting Agreement also provides that the Underwriter has a right of
first refusal for a period of three (3) years with respect to offerings by the
Company or its principal shareholders of any securities of the Company to be
sold through registration under the Securities Act of 1933 or otherwise.
As part of the Underwriting Agreement, the Company has entered into an
investment banking agreement with the Underwriter. Such agreement shall remain
in effect for a period of two (2) years. The investment banking agreement
provided that the Underwriter shall serve as a nonexclusive agent of the
Company for a period of two years in connection with mergers, consolidations,
joint ventures, exchange offers, and purchase or sale of securities or assets
of the Company. The investment banking agreement provides that the Underwriter
shall receive transaction fees ranging from two (2%) to five (5%) of the
aggregate consideration paid or received by the Company in any of the
designated transactions for which the Underwriter acts as introducing agent.
40
<PAGE>
The Company anticipates providing the Underwriter with a confidential list
of persons whom it believes may be interested or who have contacted the
Company with interest in purchasing shares of Common Stock offered hereby. The
Underwriter may sell the Common Stock to such persons if they reside in a
state in which the Common Stock may be sold and in which the Underwriter is
permitted to sell the shares. The Underwriter is not obligated to sell any
shares to any such person, and will do so only to the extent not inconsistent
with a public distribution of common shares of the Company. Additionally,
officers, directors and present shareholders of the Company and persons
associated with them may be sold some of the 1,000,000 shares. However, it is
not intended that the proceeds from this offering will be utilized, directly
or indirectly, to enable anyone, including officers, directors, present
shareholders or persons associated with them, to purchase the shares offered.
Neither the Company nor the Underwriter will directly or indirectly arrange
for financing of purchases of shares by officers, directors, present
shareholders or persons associated with them. Any such purchases must be made
for investment purposes only.
To the extent such persons purchase up to 1,000,000 shares in the offering,
the number of shares required to be purchased by the general public such that
the minimum amount for closing is reached will be reduced by a like amount.
Moreover, these purchases may be used in order to reach the minimum amount for
closing in the event the minimum is not reached with purchases made by the
general public. Consequently, this offering could close with a substantially
greater percentage of shares being held by present shareholders and with
lesser participation by the public than would otherwise be the case.
UNDERWRITER'S WARRANTS
The Company has agreed to issue to the Underwriter or its designees on the
completion of the offering, for nominal consideration of $100, Underwriter's
Warrants to acquire a minimum of 14,000 and a maximum of 40,000 Common Shares.
The Underwriter's Warrants will be exercisable at a price of $8.70 per share
or 120% of the initial price to the public set forth on the cover page of this
Prospectus during the four-year period commencing 12 months after the date of
this Prospectus. The Underwriter's Warrants may not be assigned, transferred,
sold or delivered by the Underwriters until 12 months after the date of the
Prospectus, except to officers or shareholders of the Underwriter and selected
dealers in this Offering. Any transfer or assignment of the Underwriter's
Warrants to any person must be made in accordance with the provisions of the
Act. No public offering of the shares issued or issuable upon the exercise of
the Underwriter's Warrants will be made until a registration statement has
been filed by the Company and declared effective by the Securities and
Exchange Commission. Any profits realized by the Underwriter upon sale of the
Underwriter's Warrants or the underlying shares may be deemed to be additional
underwriting compensation.
Under the Underwriting Agreement, the Company is obligated, upon written
request of the then holders of the Underwriter's Warrants and any issued
shares underlying the Underwriter's Warrants, if made at any time within the
period commencing one (1) year and ending five (5) years after the date of
this Prospectus, to file with the Securities and Exchange Commission, at its
sole expense but only on one (1) occasion, a post-effective amendment to the
registration statement of which this Prospectus forms a part or a new
registration statement qualifying the Underwriter's Warrants and underlying
shares for sale to the public. The Company is also obligated to file on one
(1) additional occasion with the Securities and Exchange Commission, on
request of the holders of the Underwriter's Warrants or underlying shares, a
post effective amendment or new registration statement covering such
securities. The latter request shall be at the expense of the holders of the
Underwriter's Warrants and underlying shares and must be made within five (5)
years commencing one year from the date of this Prospectus.
Holders of the Underwriter's Warrants are protected against dilution of the
equity interest represented by the underlying shares upon the occurrence of
certain events, including, but not limited to, stock dividends. If the Company
liquidates, merges or reorganizes in such a way as to terminate the
Underwriter's Warrants, the Underwriter's Warrants may be exercised
immediately prior to such action. In the event of liquidation, dissolution and
winding up of the Company, holders of the Underwriter's unexercised Warrants
are not entitled to participate in the distribution of the Company's assets.
41
<PAGE>
The foregoing is a summary of the material provisions of the Underwriting
Agreement and the Underwriter's Warrants. Copies of such documents have been
filed as exhibits to the Registration Statement of which this Prospectus is a
part. See "Risk Factors--No Commitment to Purchase Common Stock; Deposits of
Subscriptions and Exercise of Underwriters Warrants."
DETERMINATION OF OFFERING PRICE
Prior to this offering, there has been no public market for the Company's
Common Stock. The initial public offering price has been determined through
negotiations between the Company and the Underwriter. There is no direct
relation between the offering price and the assets, book value, or net worth
of the Company. However, the Company and the Underwriter considered these
factors, and the condition and prospects of the Company, the experience of the
Company's management, the amount of ownership desired to be retained by
present shareholders and the waste disposal and incineration industry in
general in their negotiations concerning the offering price. There can be no
assurance that the price at which the Shares will be selling after this
offering will not be lower than the initial price to the public. See "Risk
Factors--Lack of Public Market; Determination of Offering Price."
COUNSEL
The legality of the securities of the Company offered will be passed on for
the Company by Snyderburn, Rishoi & Swann, a partnership of professional
associations.
EXPERTS
The financial statements for the years ended December 31, 1995, 1996 and
1997 included herein have been audited by J. Rick Maloy, CPA, independent
auditors, as stated in their report with respect thereto, and is included
herein in reliance upon the authority of said firm as experts in giving said
report.
ADDITIONAL INFORMATION
The Company is not a reporting company under the Securities Exchange Act of
1934, as amended. The Company has filed with the Washington, D.C. Office of
the Securities and Exchange Commission (the "Commission") a Registration
Statement on Form SB-2 under the Act with respect to the Common Stock offered
hereby. This Prospectus filed as a part of the Registration Statement does not
contain all of the information contained in the Registration Statement and the
exhibits thereto, certain portions of which have been omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and the securities offered hereby, reference is made to
such Registration Statement including the exhibits and schedules thereto.
Statements contained in this Prospectus as to the contents of any contract,
agreement or other documents are not necessarily complete, and in each
instance, reference is made to such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. The Registration Statement and exhibits may be
inspected without charge and copied at the Washington office of the
Commission, 450 Fifth Street, N.W., Washington, DC 20549, and copies of such
material may be obtained at prescribed rates from the Commission's Public
Reference Section at the same address. In addition, the Commission maintains a
Web site that contains reports, proxy and information regarding registrants,
such as the Company, that file electronically, with the Commission. The
address of this Web site is: http://www.sec.gov. The Company intends to
furnish to its shareholders annual reports containing audited financial
statements.
42
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants................................. F-2
Balance Sheets as of December 31, 1995, 1996 and 1997............. F-3
Statements of Operations for the years ended December 31, 1995,
1996 and 1997.................................................... F-4
Statements of Changes in Stockholder's Equity for the years ended
December 31, 1995, 1996 and 1997................................. F-5
Statements of Cash Flows for the years ended December 31, 1995,
1996 and 1997.................................................... F-6
Notes to Financial Statements--December 31, 1997.................. F-7 to F-11
Balance Sheets as of March 31, 1997 and 1998 (Unaudited).......... F-12
Statements of Operations for the three months ended March 31, 1997
and 1998 (Unaudited)............................................. F-13
Statements of Cash Flows for the three months ended March 31, 1997
and 1998 (Unaudited)............................................. F-14
Statements of Stockholder's Equity for the three months ended
March 31, 1998 (Unaudited)....................................... F-15
Notes to Financial Statements--March 31, 1998 (Unaudited)......... F-16 to F-18
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Crawford Equipment and Engineering Company
Orlando, Florida
We have audited the accompanying balance sheets of Crawford Equipment and
Engineering Company as of December 31, 1995, 1996, and 1997 and the related
statements of operations, changes in stockholder's equity and cash flows for
the years ended December 31, 1995, 1996 and 1997. 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Crawford Equipment and
Engineering Company at December 31, 1995, 1996 and 1997 and the results of its
operations and its cash flows for the years ended December 31, 1995, 1996 and
1997 in conformity with generally accepted accounting principles.
J. RICK MALOY, CPA
Orlando, Florida
May 22, 1998
F-2
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1996 1997
--------- --------- --------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents..................... $ 23,391 $ (25,343) $ 8,926
Accounts receivable........................... 359,088 529,522 465,320
Inventories
Work in process.............................. 217,540 146,044 88,884
Parts and supplies........................... 36,167 39,961 37,959
Other current assets.......................... 6,757 10,998 4,737
--------- --------- --------
TOTAL CURRENT ASSETS........................ 644,943 701,182 605,826
Property and equipment, net................... 89,479 82,166 117,058
--------- --------- --------
TOTAL ASSETS................................ $ 734,422 $ 783,338 $722,844
========= ========= ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable.............................. 278,846 234,529 $178,522
Accrued expenses.............................. 54,139 46,436 176,717
Deferred revenue.............................. 253,821 453,884 41,058
Current portion of long-term debt............. 12,422 7,143 8,562
--------- --------- --------
TOTAL CURRENT LIABILITIES................... 599,228 741,992 404,859
LONG TERM DEBT.................................. 7,143 0 17,123
--------- --------- --------
TOTAL LIABILITIES........................... 606,371 741,992 421,982
STOCKHOLDER'S EQUITY
Common stock--Authorized: 500 shares; Issued
and outstanding: 100 $5.00 par value shares.. 500 500 500
Additional paid-in capital.................... 278,004 278,004 278,004
Retained earnings--(accumulated deficit)...... (150,453) (237,158) 22,398
--------- --------- --------
TOTAL STOCKHOLDER'S EQUITY.................. 128,051 41,346 300,902
--------- --------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY.. $ 734,422 $ 783,338 $722,884
========= ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31 DECEMBER 31 DECEMBER 31
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
SALES...................................... $2,546,895 $2,417,939 $4,375,494
COST OF SALES.............................. 1,767,054 1,516,070 2,717,640
---------- ---------- ----------
GROSS PROFIT............................. 779,841 901,869 1,657,854
OPERATING EXPENSES......................... 754,658 878,254 1,198,351
Selling, General and Administrative
Depreciation and Amortization........... 10,790 24,394 25,866
---------- ---------- ----------
TOTAL OPERATING EXPENSES............... 765,448 902,648 1,224,217
---------- ---------- ----------
OPERATING INCOME (LOSS).................... 14,393 (779) 433,637
INTEREST EXPENSE........................... 2,031 1,431 0
OTHER INCOME (LOSS), NET................... 2,856 (995) 920
---------- ---------- ----------
NET INCOME (LOSS).......................... $ 15,218 $ (3,205) $ 434,557
========== ========== ==========
NET INCOME (LOSS) PER COMMON SHARE......... $ 152.18 $ (32.05) $ 4,345.57
SHARES USED IN COMPUTING NET INCOME (LOSS)
PER COMMON SHARE.......................... 100 100 100
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
------------- ACCUMULATED TOTAL
NO. OF ADDITIONAL EARNINGS STOCKHOLDER'S
SHARES AMOUNT PAID-IN-CAPITAL (DEFICIT) EQUITY
------ ------ --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31,
1994................... 100 $500 $276,217 $ (64,884) $ 211,833
Contribution to capital. 1,787 1,787
Distribution to share-
holder's............... (100,787) (100,787)
Net income.............. 15,218 15,218
--- ---- -------- --------- ---------
BALANCE AT DECEMBER 31,
1995................... 100 500 278,004 (150,453) $ 128,051
Distribution to share-
holder's............... (83,500) (83,500)
Net loss................ (3,205) (3,205)
--- ---- -------- --------- ---------
BALANCE AT DECEMBER 31,
1996................... 100 500 278,004 (237,158) 41,346
Distribution to share-
holder's............... (175,000) (175,000)
Net income.............. 434,557 434,557
--- ---- -------- --------- ---------
BALANCE AT DECEMBER 31,
1997................... 100 $500 $278,004 $ 22,398 $ 300,902
--- ---- -------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-----------------------------
1995 1996 1997
-------- --------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (Loss).................. $ 15,218 $(3,205) $434,557
Adjustments to reconcile net income
(loss) to net cash used in
operating activities:
Depreciation and amortization..... 10,790 24,394 25,866
Increase (decrease) from changes
in:
Accounts receivable.............. 43,190 (170,434) 64,202
Inventories...................... (72,478) 69,702 59,162
Other assets..................... (4,545) (4,241) 6,261
Accounts payable and accrued
expenses........................ (38,105) (52,020) 74,274
Deferred revenue................. 149,929 200,063 (412,826)
-------- --------- --------
NET CASH PROVIDED BY OPERATING
ACTIVITIES..................... 103,999 64,259 251,496
-------- --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment. (2,000) (17,072) (60,768)
-------- --------- --------
NET CASH USED IN INVESTING
ACTIVITIES..................... (2,000) (17,072) (60,768)
-------- --------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt....... -- -- 25,684
Principal payments on long-term
debt.............................. -- (12,422) (7,143)
Distributions to shareholder's..... (100,787) (83,499) (175,000)
-------- --------- --------
NET CASH USED IN FINANCING
ACTIVITIES ..................... (100,787) (95,921) (156,459)
-------- --------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS................... 1,212 (48,734) 34,269
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD................ 22,179 23,391 (25,343)
-------- --------- --------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD............................. $ 23,391 $ (25,343) $ 8,926
-------- --------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Business
Crawford Equipment and Engineering Company (the Company) was incorporated on
August 1, 1974 in the State of Florida. The Company is engaged in the
development, manufacture and sale of packaged combustion equipment and related
environmental waste disposal systems. These systems are designed for a wide
range of industrial and commercial uses, which include animal and human
cremation, medical waste incineration, general solid waste incineration, and
the control of volatile organic compounds (VOC) and hazardous air pollutants
(HAP) emitted from manufacturing processes. In addition, the Company provides
services and replacement parts for existing packaged combustion systems. The
Company to date has manufactured and installed approximately 700 packaged
combustion systems to customers located throughout the world. The Company
maintains its manufacturing and testing facilities in Orlando, Florida.
Use of Estimates
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. The principal areas of judgment relate to provisions for
returns and sales allowances, doubtful accounts, and the realizability of
inventories, tools and equipment. Actual results could differ from those
estimates.
Cash Equivalents
For financial statement presentation purposes, the Company considers all
highly liquid investments with an original maturity of three months or less to
be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. Cost is determined by
the first-in, first-out method and includes direct costs of manufacturing and
applicable overhead. Inventories consist primarily of work in process and
components for the packaged combustion equipment and environmental waste
disposal system.
Property and Equipment
Property and equipment are stated at cost. Replacement and major
improvements are capitalized and maintenance and repairs are charged to
expense as incurred. Depreciation of property and equipment is computed
primarily using accelerated methods over the estimated useful lives of the
related assets, which range from five to seven years.
As required by SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of, the Company regularly
evaluates the remaining life and recoverability of property and equipment.
Because the Company has only a minimal investment in long-lived assets, the
adoption of SFAS No. 121 did not have significant effect on the Company's
financial position and results of operations.
Revenue Recognition
The Company records sales upon completion and shipment of equipment and
systems and a provision for future returns and other sales allowances is
established based upon historical experience and management estimates.
F-7
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
Deferred Revenue
Deferred revenue represents customer deposits and amounts received from
customers prior to shipment of equipment and systems. The deposits and advance
payments are made pursuant to the terms of the Company's standard purchase
orders.
Effect of Inflation and Foreign Currency Exchange
The Company has not realized a reduction in the selling price of any of its
products or services as a result of domestic inflation. In addition, the
Company has not experienced unfavorable profit reductions due to currency
exchange fluctuations or inflation with its foreign customers.
Income Taxes
The Company has elected to be taxed under the provisions of Subchapter S of
the Internal Revenue Code. Accordingly, the Company does not pay federal or
state income tax on its income. As a result, there is no provision, or
benefit, for income taxes included in the accompanying financial statements.
Research and Development
Costs incurred in connection with research and development activities are
expensed as incurred. These costs consist of direct and indirect costs
associated with specific projects as well as fees paid to various entities
that perform certain research on behalf of the Company.
Concentration of Credit Risk
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of accounts receivable.
Credit risk related to the Company's accounts receivable is somewhat mitigated
by substantial deposits which are generally required from customers. Credit
losses historically have not been significant.
Net Income (Loss) Per Share
Net income (loss) per share is calculated by dividing net income (loss) by
the weighted average shares of common stock outstanding.
2. RELATED PARTY TRANSACTIONS
The Company leases office and plant facilities from its stockholder pursuant
to a long-term lease agreement. Rent expense was $66,000 for the years ended
December 31, 1995, 1996 and 1997. Included in accounts payable and accrued
expenses at December 31, 1995, 1996 and 1997 is $5,500 of accrued rent payable
to the stockholder.
F-8
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
3. PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Automobiles and Trucks................... $ 159,747 $ 159,747 $ 189,924
Office Furniture and Equipment........... 62,807 67,159 88,033
Machinery and Equipment.................. 68,046 80,766 90,321
Leasehold Improvements................... 13,130 13,130 13,130
--------- --------- ---------
303,730 320,802 381,408
Accumulated Depreciation................. (214,251) (238,646) (264,350)
--------- --------- ---------
$ 89,479 $ 82,156 $ 117,058
========= ========= =========
</TABLE>
4. ACCRUED EXPENSES
Accrued Expenses consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Commissions Payable...................... $ $ $101,682
Accrued Salaries......................... 29,993 42,703 15,088
Payroll Taxes Payable.................... 18,942 3,667 56,939
Other.................................... 5,204 66 3,008
------- ------- --------
54,139 46,436 176,717
======= ======= ========
</TABLE>
5. PROFIT-SHARING AND 401(K) PLANS
The Company has a profit-sharing and a 401(k) plan (the Plan) which cover
substantially all employees who have met certain age and length of service
requirements. Plan contributions are made at the discretion of the Company's
Board of Directors. The Company did not elect to make a contribution to the
Plan for the years ended December 31, 1995 and 1996. However, the Company made
a $9,015 employer matching contribution to the 401(k) plan for the year ended
December 31, 1997.
6. PROPOSED PUBLIC OFFERING
On November 6, 1997, the Board of Directors of the Company approved a NASD
member-broker-dealer to act as underwriter in connection with a proposed
public offering. The underwriter is to be retained by the Company to provide
investment banking services concerning a best efforts public offering of the
Company's securities.
7. SUBSEQUENT EVENTS
Income Taxes
The Company has elected to revoke, effective January 1, 1998, the election
to be taxed under the provisions of Subchapter S of the Internal Revenue Code.
Accordingly, effective January 1, 1998, the Company will adopt the liability
method of accounting for income taxes under Statement of Financial Accounting
Standards (SFAS)
F-9
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
No. 109. Under the liability method specified by SFAS No. 109, deferred tax
assets and liabilities are determined based on the difference between the
financial statement and tax bases of assets and liabilities as measured by the
currently enacted tax rates in effect for the years in which these differences
reverse.
Private Placement
In December 1997, the Company began a private placement of up to $600,000 of
securities. Each security consists of a convertible promissory note with a
stated rate of interest of 7% and convertible into the Company's common stock
at a price of $3.50 per share. The notes are convertible at any time within
twelve (12) months from the date of issuance by exercise of the conversion
right by either the Company or the noteholders. As of March 31, 1998, the
Company had issued 10 notes for cash proceeds of $600,000.
Common Stock
On January 20, 1998, the Board of Directors approved a Plan of
Recapitalization (Plan), in contemplation of the planned public offering. The
Plan provides as follows: (1) To increase the number of common shares
authorized from 500 shares to 15,000,000 shares; (2) To change the authorized
shares with a par value of $5.00 per share to shares with a par value of
$.0002 per share; (3) To change each share having a par value of $5.00 per
share which the Company had authority to issue immediately prior to the
effective date of the Plan into 30,000 shares having a par value of $.0002 per
share; and (4) That each certificate representing one or more shares having a
par value of $.0002 per share which shall be issued and outstanding
immediately prior to the effective date of the Plan shall be submitted by the
existing shareholders to the Company. Upon receipt of the outstanding
certificates by the holders thereof, the Company upon the effective date of
the Plan shall issue to such shareholders additional certificates representing
30,000 shares having a par value of $.0002 per share for each share having a
par value of $5.00 per share.
Restricted Common Stock
On February 1, 1998, subsequent to the effective date of the Plan of
Recapitalization, the Company issued and granted an officer of the Company the
right to purchase a total of 200,000 shares of common stock of the Company at
a purchase price of $.0002 per share in exchange for valuable services
rendered to the Company. The officer exercised this right, on February 1,
1998, and purchased the 200,000 shares for $.0002 per share. These shares are
subject to a substantial risk of forfeiture pursuant to the terms of the
officer's employment agreement.
Pursuant to the issuance of the restricted stock, the value assigned by the
Company's investment banker of $2.19 per share will be capitalized as contra-
stockholder's equity and will be amortized ratably as compensation expense
during the years ending December 31, 2001, 2002 and 2003, in accordance with
the terms of the officer's employment agreement.
Effective January 1, 1998, the Company will adopt the disclosure approach
provided for in Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock Based Compensation, with respect to restricted stock
granted to employees. The Company does not expect the pronouncement to have an
impact on its results of operations since the intrinsic value-based method
prescribed by APB Opinion No. 25 and also allowed by SFAS No. 123 will be used
for any restricted stock. The resulting unearned compensation will be
amortized in accordance with the terms of the respective employment agreement.
F-10
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1997
Employment Agreements
Effective January 1, 1998, the Company entered into employment agreements
with three officers, which expire on January 1, 2003. The agreements provide
for aggregate annual compensation of $325,000 effective upon completion of the
planned public offering.
Related Party Transactions
On January 7, 1998, an officer loaned the Company $100,000. This unsecured
demand note will bear interest at 8%.
The Company currently utilizes patents in the design and manufacture of
certain equipment, which are owned by its stockholder. On January 1, 1998, the
Company entered into a licensing agreement with respect to these patents. The
licensing agreement provides for the payment of $350 to the stockholder for
every unit sold. These payments are due on the fifth day of the month
following the month in which they are sold. The Company intends to purchase
the patents upon completion of the planned public offering for $875,000.
F-11
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31,
------------------------
1997 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............................ $ 326,833 $303,552
Accounts receivable.................................. 477,829 169,692
Inventories..........................................
Work in process..................................... 486,896 191,985
Parts and supplies.................................. 36,731 59,539
Other Current Assets................................. 11,152 6,053
---------- --------
TOTAL CURRENT ASSETS............................... 1,339,441 730,821
Property and equipment, net.......................... 82,217 130,097
Subscription receivable.............................. 40
Debt offering costs.................................. 57,872
Deferred public offering costs....................... 55,938
---------- --------
TOTAL ASSETS....................................... $1,421,658 $974,768
========== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable..................................... 423,981 $77,957
Accrued expenses..................................... 29,814 30,941
Deferred revenue..................................... 695,680 34,348
Current portion of long-term debt.................... 3,792 8,562
---------- --------
TOTAL CURRENT LIABILITIES.......................... 1,153,267 151,808
LONG TERM DEBT
Notes payable........................................ 1,000 15,970
Convertible notes payable............................ 600,000
Note payable to stockholder.......................... 25,000 100,000
---------- --------
TOTAL LIABILITIES.................................. 1,179,267 867,778
STOCKHOLDER'S EQUITY
Common Stock--Authorized: 500 shares; issued and
outstanding: 100 $5.00 par value shares at March 31,
1997 Authorized: 15,000,000 shares; issues and
outstanding: 3,200,00 $.0002 par value shares at
March 31, 1998...................................... 500 640
Additional paid-in capital........................... 278,004 715,364
Unearned compensation................................ (437,460)
Accumulated deficit.................................. (36,113) (171,554)
---------- --------
TOTAL STOCKHOLDER'S EQUITY......................... 242,391 106,990
---------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY......... $1,421,658 $974,768
========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-12
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
-----------------------
1997 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
SALES.................................................. $1,116,295 $ 263,736
COST OF SALES.......................................... 679,421 178,181
---------- ---------
GROSS PROFIT......................................... 436,874 85,555
OPERATING EXPENSES
Selling, General and Administrative.................. 231,321 269,855
Depreciation and Amortization........................ 1,830 3,041
---------- ---------
TOTAL OPERATING EXPENSES........................... 233,151 272,896
---------- ---------
OPERATING INCOME (LOSS)................................ 203,723 (187,341)
INTEREST EXPENSE....................................... 152 6,653
OTHER INCOME (LOSS), NET............................... 773 42
---------- ---------
NET INCOME (LOSS)...................................... $ 204,344 $(193,952)
========== =========
NET INCOME (LOSS) PER COMMON SHARE..................... $ 2,043.44 $ (0.06)
SHARES USED IN COMPUTING NET INCOME LOSS PER COMMON
SHARE................................................. 100 3,200,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-13
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
-----------------------
1997 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (Loss)..................................... $204,344 $(193,952)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization........................ 1,830 3,041
Increase (decrease) from changes in:
Accounts receivable................................. 51,693 295,628
Inventories......................................... (337,622) (124,681)
Other assets........................................ (154) (1,316)
Accounts payable and accrued expenses............... 172,830 (246,341)
Deferred revenue.................................... 241,796 (6,710)
-------- ---------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES... 334,717 (274,331)
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment.................... (1,769) (16,080)
-------- ---------
NET CASH USED IN INVESTING ACTIVITIES.............. (1,769) (16,080)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt.................. (2,351) (1,153)
Distributions to stockholder.......................... (3,421) --
Proceeds from issuance of convertible notes payable... -- 600,000
Issuance costs--convertible notes payable............. -- (57,872)
Issuance costs--planned public offering............... -- (55,938)
Proceeds from note payable to stockholder............. 25,000 100,000
-------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES.......... 19,228 585,037
-------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS.............. 352,176 294,626
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD....... (25,343) 8,926
-------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD............. $326,833 $ 303,552
-------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-14
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
COMMON STOCK
---------------- ADDITIONAL ACCUMULATED TOTAL
NO. OF PAID-IN- UNEARNED EARNINGS STOCKHOLDER'S
SHARES AMOUNT CAPITAL COMPENSATION (DEFICIT) EQUITY
--------- ------ ---------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31,
1994................... 100 $500 $276,217 $ (64,884) $211,833
Contribution to capital. 1,787 1,787
Distribution to
shareholder's.......... (100,787) (100,787)
Net income.............. 15,218 15,218
--------- ---- -------- --------- --------- --------
BALANCE AT DECEMBER 31,
1995................... 100 500 278,004 (150,453) 128,051
Distribution to
shareholder's.......... (83,500) (83,500)
Net loss................ (3,205) (3,205)
--------- ---- -------- --------- --------- --------
BALANCE AT DECEMBER 31,
1996................... 100 500 278,004 (237,158) 41,346
Distribution to
shareholder's.......... (175,000) (175,000)
Net income.............. 434,557 434,557
--------- ---- -------- --------- --------- --------
BALANCE AT DECEMBER 31,
1997................... 100 500 278,004 22,398 300,902
Thirty-thousand-for-one
stock split
(unaudited)............ 2,999,900 100 (100)
Issuance of restricted
stock (unaudited)...... 200,000 40 437,460 (437,460) 40
Net loss (unaudited).... (193,952) (193,952)
--------- ---- -------- --------- --------- --------
BALANCE AT MARCH 31,
1998 (unaudited)....... 3,200,000 $640 $715,364 $(437,460) $(171,554) $106,990
--------- ---- -------- --------- --------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-15
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
UNAUDITED
1. FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting only of normal recurring items)
necessary to present fairly the financial position of the Company as of March
31, 1997 and 1998 and the results of operations and its cash flows for the
three months ended March 31, 1997 and 1998 and the statements of changes in
stockholder's equity for the three months ended March 31, 1998. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to the SEC's rules and regulations. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the full year.
2. DEBT OFFERING COSTS
Debt offering costs related to the private placement of convertible
promissory notes ( see Note 5) are being amortized on a straight-line basis
(which approximates the interest method) over the one year term of the notes.
3. DEFERRED PUBLIC OFFERING COSTS
Costs associated with the Company's proposed public offering have been
deferred. Such costs will be netted against the offering proceeds unless the
offering is terminated, at which time they will be charged to expense.
4. INCOME TAXES
The Company has elected to revoke, effective January 1, 1998, the election
to be taxed under the provisions of Subchapter S of the Internal Revenue Code.
Accordingly, effective January 1, 1998, the Company adopted the liability
method of accounting for income taxes under Statement of Financial Accounting
Standards (SFAS) No. 109. Under the liability method specified by SFAS No.
109, deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of assets and
liabilities as measured by the currently enacted tax rates in effect for the
years in which these differences reverse. The Company recognized no income tax
benefit from the loss generated for the three months ended March 31, 1998.
5. PRIVATE PLACEMENT
In January 1998, the Company began a private placement of up to $600,000 of
securities. Each security consists of a convertible promissory note with a
stated rate of interest of 7% and convertible into the Company's common stock
at a price of $3.50 per share. The notes are convertible at any time within
twelve (12) months from the date of issuance by exercise of the conversion
right by either the Company or the noteholders. Through March 31, 1998, the
Company had issued 10 notes for cash proceeds of $600,000.
6. NOTE PAYABLE TO STOCKHOLDER
As of March 31, 1998, a note payable to stockholder aggregating $100,000 was
outstanding. The unsecured demand note bears interest at 8%.
7. COMMON STOCK
On January 20, 1998, the Board of Directors approved a Plan of
Recapitalization (Plan), in contemplation of the planned public offering. The
Plan provides as follows: (1) To increase the number of common shares
F-16
<PAGE>
authorized from 500 shares to 15,000,000 shares; (2) To change the authorized
shares with a par value of $5.00 per share to shares with a par value of
$.0002 per share; (3) To change each share having a par value of $5.00 per
share which the Company had authority to issue immediately prior to the
effective date of the Plan into 30,000 shares having a par value of $.0002 per
share; and (4) That each certificate representing one or more shares having a
par value of $.0002 per share which shall be issued and outstanding
immediately prior to the effective date of the Plan shall be submitted by the
existing shareholders to the Company. Upon receipt of the outstanding
certificates by the holders thereof, the Company upon the effective date of
the Plan shall issue to such shareholders additional certificates representing
30,000 shares having a par value of $.0002 per share for each share having a
par value of $5.00 per share.
8. RESTRICTED COMMON STOCK AND UNEARNED COMPENSATION
On February 1, 1998, subsequent to the effective date of the Plan of
Recapitalization, the Company issued and granted an officer of the Company the
right to purchase a total of 200,000 shares of common stock of the Company at
a purchase price of $.0002 per share in exchange for valuable services
rendered to the Company. The officer exercised this right, on February 1,
1998, and purchased the 200,000 shares for $.0002 per share. These shares are
subject to a substantial risk of forfeiture pursuant to the terms of the
officer's employment agreement.
Pursuant to the issuance of the restricted stock, the value assigned by the
Company's investment banker of $2.19 per share has been capitalized as contra-
stockholder's equity and will be amortized ratably as compensation expense
during the years ending December 31, 2001, 2002 and 2003, in accordance with
the terms of the officer's employment agreement.
Effective January 1, 1998, the Company adopted the disclosure approach
provided for in Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock Based Compensation, with respect to restricted stock
granted to employees. The Company does not expect the pronouncement to have an
impact on its results of operations since the intrinsic value-based method
prescribed by APB Opinion No. 25 and also allowed by SFAS No. 123 will be used
for any restricted stock. The unearned compensation will be amortized in
accordance with the terms of the respective employment agreement.
9. RELATED PARTY TRANSACTION
The Company currently utilizes patents in the design and manufacture of
certain systems, which are owned by its stockholder. On January 1, 1998, the
Company entered into a licensing agreement with respect to these patents. The
licensing agreement provides for the payment of $350 to the stockholder for
every system sold. These payments are due on the fifth day of the month
following the month in which they are sold. The Company intends to purchase
the patents upon completion of the planned public offering.
10. NET INCOME (LOSS) PER SHARE
Net income (loss) per share is calculated by dividing net income (loss) by
the weighted average shares of common stock and common stock equivalents
outstanding.
11. SUBSEQUENT EVENT
On April 27, 1998, the Company repaid a note payable to stockholder in full
with accrued interest (see Note 6).
F-17
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PRO-
SPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECU-
RITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE
SHARES OF COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAW-
FUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPEC-
TUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IM-
PLICATION THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSE-
QUENT TO THE DATE HEREOF.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 1
Selected Financial Information............................................ 3
Risk Factors.............................................................. 4
Use of Proceeds........................................................... 14
Dilution.................................................................. 16
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 19
Business.................................................................. 23
Management................................................................ 31
Certain Relationships and Related Transactions............................ 34
Principal Shareholders.................................................... 37
Description of Securities................................................. 38
Shares Eligible for Future Sale........................................... 39
Plan of Distribution...................................................... 40
Counsel................................................................... 42
Experts................................................................... 42
Additional Information.................................................... 42
Index to Financial Statements............................................. F-1
</TABLE>
---------------
UNTIL , 1998, 90 DAYS AFTER THE DATE OF THIS PROSPECTUS, ALL DEALERS AF-
FECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPAT-
ING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1,000,000 SHARES
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY
COMMON STOCK
---------------
PROSPECTUS
---------------
DISCOVERY CAPITAL GROUP, INC.
JULY , 1998
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS:
The Company's Restated Articles of Incorporation provide that the Company
shall indemnify its officers and directors and former officers and directors
to the fullest extent permitted by law. The Amended By-laws provide that the
Corporation shall have the power to indemnify any director, officer, employer
or agent of the Corporation as provided in Section 607.0850 of the Florida
Business Corporation Act. Such Act generally provides that a corporation shall
have the power to indemnify such persons to the extent they acted in good
faith in a manner reasonably believed to be in, or not opposed to, the best
interest of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the conduct was unlawful. In
the event any such person shall be judged liable for negligence or misconduct,
such indemnification shall apply only if approved by the Court in which the
action was pending. Any other indemnification shall be made only after
determination by the Board of Directors (excluding any directors who were
party to such action), by independent legal counsel in a written opinion, or
by a majority vote of shareholders (excluding any shareholders who were
parties to such action).
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be provided to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, may be against
public policy as expressed in the Securities Act of 1933, as amended, and may
be therefore, unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*:
<TABLE>
<S> <C>
Securities and Exchange Commission NASD Filing Fees................ $ 4,000
NASDAQ Listing Fee................................................. $ 10,000
Accountants' Fees and Expenses..................................... $ 30,000
Legal Fees and Expenses............................................ $ 95,000
Blue Sky Fees and Expenses......................................... $ 10,000
Printing and Engraving Expenses.................................... $ 30,000
Transfer Agent's and Registrar's Fees and Expenses................. $ 5,000
--------
Total............................................................ $184,000
========
</TABLE>
- --------
* All fees and expenses are estimated. All such fees and expenses shall be
borne by the Company.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES:
On March 12, 1998, the Company closed a private offering of its Convertible
Promissory Notes to obtain working capital for this public Offering by issuing
Promissory Notes with a 7% Coupon and are convertible into Common Stock at a
strike price of $3.50. A total amount of $600,000 worth of such securities
were sold. This transaction was exempt from registration under the Securities
Act of 1933, as amended by virtue of Section 4(2) of the Act and Regulation D.
On February 1, 1998, 200,000 shares of Common Stock were issued to Steven
Atkinson, President of the Company for $.0002 per share as part of his
compensation arrangement. See "Certain Relationships and Related
Transactions".
II-1
<PAGE>
ITEM 27. EXHIBITS:
(a) Exhibits.
Number assigned in Regulation SB, Item 601.
<TABLE>
<C> <S>
1.1* Underwriting Agreement
3.1 Restated and Amended Articles of Incorporation of the Company
3.2 Amended Bylaws of the Company
4.1* Form of Stock Certificate
4.2* Form of Underwriter Warrant
5.1* Form of the Opinion of Snyderburn Rishoi & Swann
9.1 Voting Trust Agreement Between Kathleen Meehan, Mary Jennifer Crawford,
James P. Crawford and Kathleen B. Crawford
10.1 Grove Scientific Company Agreement
10.2 Strategic Alliance Agreement Between Monsanto Enviro-Chem Systems,
Inc., and Crawford Equipment & Engineering Co., Inc.
10.3 License Agreement between James Crawford and the Company for the
patents dated January 1, 1998
10.4 Lease dated January 1, 1998 between James and Kathleen Crawford and the
Company
10.5 Form of Mortgage and Note between James and Kathleen Crawford and the
Company
10.6 Employment Agreement dated January 1, 1998 between James Crawford and
the Company
10.7 Employment Agreement dated January 1, 1998 between Kathleen Crawford
and the Company
10.8 Employment Agreement dated January 1, 1998, between Steven Atkinson and
the Company
10.9 Non-exclusive Sales Agreement between Emcotek Corporation and Crawford
Equipment and Engineering Company
10.10 Form of Lease Between James and Kathleen Crawford and the Company
10.11 Form of Sale Agreement and Assignment of Patents Between James P.
Crawford and the Company
10.12* Escrow Agreement
11.1* Statement of Computation of Pro forma Common Shares and Equivalents
15.1 Letter on Unaudited interim financial information.
24.1* Consent of Counsel (included in Exhibit 5.1)
24.2 Consent of J. Rick Maloy, CPA
25.1 Power of Attorney
27.* Financial Data Schedule
</TABLE>
- --------
* To be supplied by amendment
ITEM 28. UNDERTAKINGS:
(a) The undersigned registrant hereby undertakes to:
(1) file, during any period in which offers or sales are being made, a
post effective amendment to this registration statement:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Act");
(ii) reflect in the prospectus any facts or events which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
II-2
<PAGE>
(iii) include any additional or changed material information with
respect to the plan of distribution.
(2) for determining any liability under the Act, treat each such post-
effective amendment shall be deemed to be a new registration relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) file a post-effective amendment to remove from registration any of
the securities being registered which remain unsold at the termination of
the offering.
(4) provide to the Underwriter at the Closing specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriter to permit prompt delivery to each
purchaser.
(b) Insofar as indemnification for liabilities arising under the 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 such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the small business issuer 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 such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
In accordance with the requirements of the Securities Act of 1933, as
amended, the registrant has duly caused this Registration Statement on Form
SB-2 to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Orlando, State of Florida, on June 5, 1998.
II-3
<PAGE>
CRAWFORD EQUIPMENT AND ENGINEERING
COMPANY
/s/ James P. Crawford
By:_________________________________
JAMES P. CRAWFORD
In accordance with the requirements of the Securities Act of 1933, as
amended, this registration statement was signed by the following person in the
capacities and on the dates stated.
SIGNATURE TITLE DATE
/s/ James P. Crawford Chairman, Chief June 5, 1998
- ------------------------------------- Executive Officer,
JAMES P. CRAWFORD and Director
/s/ Kathleen B. Crawford Vice-President, June 5, 1998
- ------------------------------------- Treasurer,
KATHLEEN CRAWFORD Secretary, and
Director
/s/ Steven L. Atkinson President, Director June 5, 1998
- -------------------------------------
STEVE ATKINSON
/s/ C. David Cooper Director June 5, 1998
- -------------------------------------
C. DAVID COOPER
/s/ Bruno A. Ferraro Director June 5, 1998
- -------------------------------------
BRUNO A. FERRARO
/s/ William M. Dillard Director June 5, 1998
- -------------------------------------
WILLIAM M. DILLARD
*By: /s/ James P. Crawford
- -------------------------------------
ATTORNEY-IN-FACT
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT EXHIBIT DESCRIPTIONS NUMBERED PAGE
------- -------------------- -------------
<C> <S> <C>
1.1* Underwriting Agreement
3.1 Restated and Amended Articles of Incorporation of the
Company
3.2 Amended Bylaws of the Company
4.1* Form of Stock Certificate
4.2* Form of Underwriter Warrant
5.1* Form of the Opinion of Snyderburn Rishoi & Swann
9.1 Voting Trust Agreement Between Kathleen Meehan, Mary
Jennifer Crawford,
James P. Crawford and Kathleen B. Crawford
10.1 Grove Scientific Company Agreement
10.2 Strategic Alliance Agreement Between Monsanto Enviro-
Chem Systems, Inc., and Crawford Equipment &
Engineering Co., Inc.
10.3 License Agreement between James Crawford and the
Company for the patents dated January 1, 1998
10.4 Lease dated January 1, 1998 between James and Kathleen
Crawford and the Company
10.5 Form of Mortgage and Note between James and Kathleen
Crawford and the Company
10.6 Employment Agreement dated January 1, 1998 between
James P. Crawford and the Company
10.7 Employment Agreement dated January 1, 1998 between
Kathleen Crawford and the Company
10.8 Employment Agreement dated January 1, 1998, between
Steve Atkinson and the Company
10.9 Non-exclusive Sales Agreement between Emcotek
Corporation and Crawford Equipment and Engineering
Company
10.10 Form of Lease Between James and Kathleen Crawford and
the Company
10.11 Form of Sale Agreement and Assignment of Patents
Between James P. Crawford and the Company
10.12* Escrow Agreement
11.1* Statement of Computation of Pro forma Common Shares
and Equivalents
15.1 Letter on Unaudited interim financial information
24.1* Consent of Counsel (included in Exhibit 5.1)
24.2 Consent of J. Rick Maloy, CPA
25.1 Power of Attorney
27* Financial Data Schedule
</TABLE>
- --------
* To be supplied by amendment
<PAGE>
EXHIBIT 3.1
RESTATED AND AMENDED ARTICLES OF INCORPORATION
OF
CRAWFORD EQUIPMENT & ENGINEERING COMPANY
----------------------------------------------------------------------
Pursuant to the provisions of Section 607.1007 of the Florida
Business Corporation Act, the undersigned corporation, pursuant to a unanimous
vote of its shareholders, hereby adopts the following Restated and Amended
Articles of Incorporation:
ARTICLE I
---------
The name of the Corporation shall be CRAWFORD EQUIPMENT &
ENGINEERING COMPANY.
ARTICLE II
----------
The street address of the initial principal office of the
corporation shall be:
436 West Landstreet
Orlando, Florida 32859
ARTICLE III
-----------
The purpose for which this Corporation is organized is to
engage in every aspect and phase of the business of contract boiler work;
designing manufacturing and selling packaged crematories, volatile organic
compound abatement systems, and medical incineration equipment and to transact
any and all other lawful business for which corporations may be incorporated
under the laws of the United States of America and of this State.
ARTICLE IV
----------
The maximum number of shares of common stock which may be
issued by this Corporation is Fifteen Million (15,000,000) shares of common
stock, $.0002 par value per share. Each holder of common stock shall be entitled
to cast one (1) vote for each share of common stock
<PAGE>
owned on all matters submitted to shareholders for a vote. On all matters
submitted to the shareholders for a vote including the election of directors, a
plurality of the votes cast by the shares entitled to vote in an election at a
meeting for which a quorum is present shall be required for approval of such
matters. A quorum shall be established in the By-Laws by the Board of Directors.
ARTICLE V
---------
The Corporation shall have perpetual existence, unless sooner
dissolved according to law.
ARTICLE VI
----------
The initial registered agent of this Corporation shall be
James P. Crawford
The registered office of this Corporation shall be located at:
436 West Landstreet
Orlando, Florida 32824
ARTICLE VII
-----------
The business of the Corporation shall be conducted and managed
by a Board of Directors consisting of not less than one (1) member. The Board of
Directors shall be elected by the shareholders.
ARTICLE VIII
------------
The Corporation shall indemnify any officer or director, or
any former officer or director, to the fullest extent permitted by law.
ARTICLE IX
----------
No contract or other transaction between the Corporation and any other
firm or corporation shall be affected or invalidated by reason of
2
<PAGE>
the fact that any one or more of the directors or officers of this Corporation
is or are interested in, or is a member, stockholder, director or officer, or
are members, stockholders, directors or officers of such other firm or
corporation; and any director or officer, individually or jointly, may be a
party or parties to, or may be interested in, any contract or transaction of
this Corporation or in which this Corporation is interested, and no contract,
act or transaction of this Corporation with any other person or persons, firm,
association or corporation, shall be affected or invalidated by reason of the
fact that any director or officer of the Corporation is a party or are parties
to, or are interested in such contract, act or association or corporation.
ARTICLE X
---------
The name and street address of the Incorporator is:
James P. Crawford
436 West Landstreet
Orlando, Florida 32824
The foregoing restated articles of incorporation restate and
integrate and amend in accordance with Section 607.1006, Fla. Stat., the
provisions of the corporation's articles of incorporation as theretofore
amended. The amendments contained herein were approved by a unanimous vote of
the shareholders at a special meeting held for such purposes on January 20,
1998.
Dated this 20 of January, 1998.
----
CRAWFORD EQUIPMENT &
ENGINEERING COMPANY
By /s/ James P. Crawford
------------------------
James P. Crawford
Incorporator
3
<PAGE>
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE FOR THE SERVICE OF PROCESS
WITHIN THIS STATE, NAMING AGENT UPON WHOM PROCESS MAY BE SERVED.
In compliance with the laws of the State of Florida, the
following is submitted:
First, that:
CRAWFORD EQUIPMENT & ENGINEERING COMPANY
desiring to organize under the laws of the State of Florida has named:
James P. Crawford
of 436 West Landstreet, Orlando, Orange County, State of Florida, 32824, as its
statutory registered agent.
Having been named the statutory agent of the above corporation
at the place designated in this certificate, I hereby accept the same and agree
to act in this capacity, and agree to comply with the provisions of Florida law
relative to keeping the registered office open.
Dated this 20 day of January, 1998.
----
/s/ James P. Crawford
----------------------------------------
James P. Crawford
Registered Agent
4
<PAGE>
EXHIBIT 3.2
AMENDED BYLAWS
OF
CRAWFORD EQUIPMENT & ENGINEERING COMPANY
ARTICLE I - OFFICES
-------------------
SECTION 1. PRINCIPAL PLACE OF BUSINESS
The initial location of the principal place of business of the
corporation shall be as specified in the articles of incorporation and may be
changed from time to time by resolution of the board of directors. It may be
located at any place within or outside the State of Florida. [BCA Secs.
607.0202(b)]
The principal place of business of the corporation shall also be known
as the principal office of the corporation.
SECTION 2. OTHER OFFICES
The corporation may also have offices at such other places as the
board of directors may from time to time designate, or as the business of the
corporation may require.
ARTICLE II - SHAREHOLDERS
-------------------------
SECTION 1. PLACE OF MEETINGS
All meetings of the shareholders shall be held at the principal place
of business of the corporation or at such other place, within or outside the
State of Florida, as may be determined by the board of directors. [BCA Secs.
607.0701(2) & 607.0702(2)]
SECTION 2. ANNUAL MEETINGS
The annual meeting of the shareholders shall be held on the 1st day of
the month of June in each year, at 10:00 A.M. o'clock, or at such other time as
the board of directors may determine, at which time the shareholders shall elect
a board of directors and transact any other proper business. If this date falls
on a legal holiday, then the meeting shall be held on the following business day
at the same hour. [BCA Sec. 607.0701(1)]
<PAGE>
SECTION 3. SPECIAL MEETINGS
Special meetings of the shareholders may be called by the board of
directors or by the shareholders. In order for a special meeting to be called by
the shareholders, 10 percent or more of all the votes entitled to be cast on any
issue proposed to be considered at the proposed special meeting shall sign, date
and deliver to the secretary one or more written demands for the meeting
describing the purpose or purposes for which it is to be held. [BCA Sec.
607.0702]
The secretary shall issue the call for special meetings unless the
president, the board of directors, or the shareholders designate another person
to make the call.
SECTION 4. NOTICE OF MEETINGS
Notice of all shareholders' meetings, whether annual or special, shall
be given to each shareholder of record entitled to vote at such meeting no fewer
than 10 or more than 60 days before the meeting date. The notice shall include
the date, time and place of the meeting and in the case of a special meeting the
purpose or purposes for which the meeting is called. Only the business within
the purpose or purposes included in the notice of special meeting may be
conducted at a special shareholders' meeting.
Notice of shareholders' meetings may be given orally or in writing, by
or at the direction of the president, the secretary or the officer or persons
calling the meeting. Notice of meetings may be communicated in person; by
telephone, telegraph, teletype, facsimile machine, or other form of electronic
communication; or by mail. If mailed, notice shall be deemed to be delivered
when deposited in the United States mail, addressed to the shareholder at the
shareholder's address as it appears on the stock transfer books of the
corporation, with postage prepaid.
When a meeting is adjourned to a different date, time or place, it
shall not be necessary to give any notice of the adjourned meeting if the new
date, time or place is announced at the meeting at which the adjournment is
taken, and any business may be transacted at the adjourned meeting that might
have been transacted on the original date of the meeting. If, however, after the
adjournment, the board fixes a new record date for the adjourned meeting, notice
of the adjourned meeting in accordance with the preceding paragraphs of this
bylaw shall be given to each person who is a shareholder as of the new record
date and is entitled to vote at such meeting. [BCA Secs. 607.0141 & 607.0705]
2
<PAGE>
SECTION 5. WAIVER OF NOTICE
A shareholder may waive any notice required by the Business
Corporation Act, the articles of incorporation or these bylaws before or after
the date and time stated in the notice. The waiver must be in writing, be signed
by the shareholder entitled to the notice, and be delivered to the corporation,
for inclusion in the minutes or filing with the corporate records. Neither the
business to be transacted at nor the purpose of any annual or special meeting,
of the shareholders need be specified in any written waiver of notice. [BCA Sec.
607.0706(1)]
SECTION 6. ACTION WITHOUT MEETING
Any action which is required by law to be taken at an annual or
special meeting of shareholders, or any action which may be taken at any annual
or special meeting of shareholders, may be taken without a meeting, without
prior notice, and without a vote if one or more written consents, setting forth
the action so taken, shall be dated and signed by the holders of outstanding
shares having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Written consents shall not be effective to
take corporate action unless, within 60 days of the date of the earliest written
consent relating to the action, the signed written consents of the number of
holders required to take the action are delivered to the corporation.
Within 10 days after obtaining any such authorization by written
consent, notice must be given to those shareholders who have not consented in
writing or who are not entitled to vote on the action. The notice shall fairly
summarize the material features of the authorized action. [BCA Sec. 607.0704]
SECTION 7. QUORUM AND SHAREHOLDER ACTION
A majority of the shares entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of shareholders. Unless otherwise
provided under law, the articles of incorporation or these bylaws, if a quorum
is present, action on a matter, other than the election of directors, shall be
approved if the votes cast by the holders of the shares represented at the
meeting and entitled to vote favoring the action exceed the votes cast opposing
the action. Directors shall be elected by a plurality of the votes cast by the
shares entitled to vote in the election at a meeting at which a quorum is
present.
After a quorum has been established at a shareholders' meeting, the
subsequent withdrawal of shareholders, so as to reduce the number of shares
entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment
thereof. [BCA Sec. 607.0725 & 607.0726]
3
<PAGE>
SECTION 8. VOTING OF SHARES
Each outstanding share of Common Stock shall be entitled to one vote
on each matter submitted to a vote at a meeting of shareholders, except as may
be provided under law, the articles of incorporation or the Shareholders'
Agreement. A shareholder may vote either in person or by proxy executed in
writing by the shareholder or the shareholder's duly authorized
attorney-in-fact.
At each election of directors, each shareholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number of
shares owned by the shareholder, for as many Persons as there are directors to
be elected at that time and for whose election the shareholder has a right to
vote. [BCA Sec. 607.0721 & 607.0728]
SECTION 9. PROXIES
A shareholder, or the shareholder's attorney in fact, may appoint a
proxy to vote or otherwise act for the shareholder. An executed telegram or
cablegram appearing to have been transmitted by such person, or a photographic,
photostatic, or equivalent reproduction of an appointment form, shall be a
sufficient appointment form.
An appointment of a proxy is effective when received by the secretary
or other officer or agent authorized to tabulate votes. An appointment is valid
for up to 11 months unless a longer period is specified in the appointment form.
An appointment of a proxy is revocable by the shareholder unless the
appointment form conspicuously states that it is irrevocable and the appointment
is coupled with an interest as provided in Section 607.0722(5) of the Business
Corporation Act. [BCA Sec. 607.0722]
SECTION 10. RECORD DATE FOR DETERMINING SHAREHOLDERS
The board of directors may fix in advance a date as the record date
for the purpose of determining shareholders entitled to notice of a
shareholders' meeting, to demand a special meeting, to vote, or to take any
other action. A record date may not be specified to be more than 70 days before
the meeting or action.
Unless otherwise specified by resolution of the board of directors,
the following, record dates shall be operative:
1. The record date for determining shareholders entitled to demand a
special meeting is the date the first shareholder delivers the shareholder's
demand to the corporation.
4
<PAGE>
2. If no prior action is required by the board of directors pursuant to
the Business Corporation Act, the record date for determining shareholders
entitled to take action without a meeting is the date the first signed written
consent relating to the proposed action is delivered to the corporation.
3. If prior action is required by the board of directors pursuant to the
Business Corporation Act, the record date for determining shareholders entitled
to take action without a meeting is at the close of business on the day on which
the board of directors adopts the resolution taking such prior action.
4. The record date for determining shareholders entitled to notice of and
to vote at a meeting of shareholders is at the close of business on the day
before the first notice is delivered to the shareholders. [BCA Sec. 607.0707]
SECTION 11. SHAREHOLDERS' LIST
After a record date is fixed or determined in accordance with these bylaws,
the secretary shall prepare an alphabetical list of the names of all its
shareholders who are entitled to notice of a shareholders' meeting. The list
shall show the addresses of, and the number and class and series, if any, of
shares held by, each person.
The shareholders list shall be available for inspection by any shareholder
prior to the meeting, and continuing through the meeting, at the corporation's
principal place of business. [BCA Sec. 607.0720]
ARTICLE III - DIRECTORS
-----------------------
SECTION 1. POWERS
Except as may be otherwise provided by law or the articles of
incorporation, all corporate powers shall be exercised by or under the authority
of, and the business and affairs of the corporation shall be managed under the
direction of, the board of directors. [BCA Sec. 607.0801(2)]
A director who is present at a meeting of the board of directors or a
committee of the board of directors when corporate action is taken shall be
deemed to have assented to the action taken unless:
1. The director votes against or abstains from the action taken; or
5
<PAGE>
2. The director objects at the beginning of the meeting, or promptly upon
the director's arrival, to holding the meeting or transacting specified business
at the meeting. [BCA Sec. 607.0824(4)]
The board of directors shall have the authority to fix the compensation of
directors. [BCA Sec. 607.08101]
SECTION 2. QUALIFICATION AND NUMBER
Directors shall be individuals who are 18 years of age or older but need
not be residents of Florida or shareholders of this corporation. [BCA Sec.
607.0802]
The authorized number of directors shall be at least one director. This
number may be increased or decreased from time to time by amendment to these
bylaws, but no decrease shall have the effect of shortening the term of any
incumbent director. [BCA Secs. 607.0803 & 607.0805(3)]
SECTION 3. ELECTION AND TENURE OF OFFICE
The directors shall be elected at each annual meeting of the shareholders
and each director shall hold office until the next annual meeting of
shareholders and until the director's successor has been elected and qualified,
or until the director's earlier resignation or removal from office. [BCA Secs.
607.0803(3) & [BCA Secs. 607.0805]
SECTION 4. VACANCIES
Unless otherwise provided in the articles of incorporation or in the
Stockholders' Agreement, any vacancy occurring in the board of directors,
including any vacancy created by reason of an increase in the number of
directors, may be filled by the affirmative vote of a majority of the remaining
directors, though less than a quorum of the board of directors, or by the
shareholders. [BCA Sec. 607.0809(1)]
A director elected to fill a vacancy shall hold office only until the next
shareholders' meeting at which directors are elected. [BCA Sec. 607.0805(4)]
SECTION 5. REMOVAL
6
<PAGE>
At a meeting of shareholders called expressly for that purpose, one or more
directors may be removed, with or without cause, if the number of votes cast to
remove the director exceeds the number of votes cast not to remove the director.
[BCA Sec. 607.0808]
SECTION 6. PLACE OF MEETINGS
Meetings of the board of directors shall be held at any place, within or
without the State of Florida, which has been designated in the notice of the
meeting or, if not stated in the notice or if there is no notice, at the
principal place of business of the corporation or as may be designated from time
to time by resolution of the board of directors.
The board of directors may permit any or all directors to participate in
meetings by, or conduct the meeting through the use of, any means of
communication by which all directors participating can simultaneously hear each
other during the meeting. [BCA Sec. 607.0820]
SECTION 7. REGULAR MEETINGS
Regular meetings of the board of directors shall be held at such times and
places as may be fixed from time to time by the board of directors but not less
frequently than quarterly. Call and notice of these regular meetings shall not
be required. [BCA Secs. 607.0820(1) & 607.0822(1)]
SECTION 8. SPECIAL MEETINGS AND NOTICE REQUIREMENTS
Special meetings of the board of directors may be called by the chairman of
the board or by the president and shall be preceded by at least 2 days' notice
of the date, time, and place of the meeting. Unless otherwise required by law,
the articles of incorporation or these bylaws, the notice need not specify the
purpose of the special meeting. [BCA Sec. 607.0822(2)]
Notice of directors' meetings may be given orally or in writing, by or at
the direction of the president, the secretary or the officer or persons calling
the meeting. Notice of meetings may be communicated in person; by telephone,
telegraph, teletype, facsimile machine, or other form of electronic
communication; or by mail. If mailed, notice shall be deemed to be delivered
when deposited in the United States mail, addressed to the director at the
director's current address on file with the corporation, with postage prepaid.
[BCA Sec. 607.0141]
If any meeting of directors is adjourned to another time or place, notice
of any such adjourned meeting shall be given to the directors who were not
present at the time of the
7
<PAGE>
adjournment and, unless the time and place of the adjourned meeting are
announced at the time of the adjournment, to the other directors. [BCA Secs.
607.0820(2)]
SECTION 9. QUORUM
A majority of the authorized number of directors shall constitute a quorum
for all meetings of the board of directors. [BCA Sec. 607.0824]
SECTION 10. VOTING
If a quorum is present when a vote is taken, the affirmative vote of a
majority of directors present at the meeting shall be the act of the board of
directors on all matters except as otherwise provided for in the Shareholder's
Agreement..
A director of the corporation who is present at a meeting of the board of
directors when corporate action is taken shall be deemed to have assented to the
action taken unless:
1. The director objects at the beginning of the meeting, or promptly upon
arriving, to holding the meeting or transacting specified business at the
meeting; or
2. The director votes against or abstains from the action taken. [BCA
Sec. 607.0824]
SECTION 11. WAIVER OF NOTICE
Notice of a meeting of the board of directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting and a waiver of any and all objections to the place of the meeting,
or the manner in which it has been called or convened, except when a director
states, at the beginning of the meeting or promptly upon arrival at the meeting,
any objection to the transaction of business because the meeting is not lawfully
called or convened. [BCA Sec. 607.0823]
SECTION 12. ACTION WITHOUT MEETING
Any action required or permitted to be taken at a board of directors'
meeting or committee meeting may be taken without a meeting if the action is
taken by all members of the board of directors or of the committee. The action
must be evidenced by one or more written consents describing the action taken
and signed by each director or committee member. [BCA Sec. 607.0821]
8
<PAGE>
ARTICLE IV - OFFICERS
---------------------
SECTION 1. OFFICERS
The officers of the corporation shall consist of a president, vice
presidents, a secretary, a treasurer, and such other officers as the board of
directors may appoint. A duly appointed officer may appoint one or more officers
or assistant officers if authorized by the board of directors.
The same individual may simultaneously hold more than one office in the
corporation.
Each officer shall have the authority and shall perform the duties set
forth in these bylaws and, to the extent consistent with these bylaws shall have
such other duties and powers as may be determined by the board of directors or
by direction of any officer authorized by the board of directors to prescribe
the duties of other officers. [BCA Secs. 607.08401 & 607.084.]
SECTION 2. ELECTION
All officers of the corporation shall be elected or appointed by, and serve
at the pleasure of, the board of directors.
The election or appointment of an officer shall not itself create contract
rights [BCA Secs. 607.08401 & 607.0843]
SECTION 3. REMOVAL, RESIGNATION AND VACANCIES
An officer may resign at any time by delivering notice to the corporation.
A resignation is effective when the notice is delivered unless the notice
specifies a later effective date. If a resignation is made effective at a later
date and the corporation accepts the future effective date, the board of
directors may fill the pending vacancy before the effective date if the board
provides that the successor does not take office until the effective date.
The board of directors may remove any officer at any time with or without
cause. Any officer or assistant officer, if appointed by another officer, may
likewise be removed by such officer.
An officer's removal shall not affect the officer's contract rights, if
any, with the corporation. An officer's resignation shall not affect the
corporation's contract rights, if any, with the officer. [BCA Secs. 607.0842 &
607.0843]
9
<PAGE>
Any vacancy occurring in any office may be filled by the board of
directors.
SECTION 4. PRESIDENT
The president shall be the chief executive officer and general manager
of the corporation and shall, subject to the direction and control of the board
of directors, have general supervision, direction, and control of the business
and affairs of the corporation. He shall preside at all meetings of the
shareholders if present thereat and be a member of all the standing committees,
including the executive committee, if any, and shall have the general powers and
duties of management usually vested in the office of president of a corporation.
In the absence or disability of the president, the vice president, if
any, shall perform all the duties of the president and, when so acting, shall
have all the powers of, and be subject to all the restrictions imposed upon, the
president.
SECTION 5. VICE PRESIDENTS
The vice presidents shall assist the president and be responsible for
operating various divisions of the corporation reporting to the president.
SECTION 6. SECRETARY
(a) The secretary shall be responsible for preparing, or causing to be
prepared, minutes of all meetings of directors and shareholders and for
authenticating records of the corporation. [BCA Sec. 607.08401(3)]
(b) The secretary shall keep, or cause to be kept, at the principal
place of business of the corporation, minutes of all meetings of the
shareholders or the board of directors; a record of all actions taken by the
shareholders or the board of directors without a meeting for the past three
years; and a record of all actions taken by a committee of the board of
directors in place of the board of directors on behalf of the corporation. [BCA
Sec. 607.1601(1)]
(c) Minutes of meetings shall state the date, time and place of the
meeting; whether regular or special; how called or authorized; the notice
thereof given or the waivers of notice received; the names of those present at
directors' meetings; the number of shares present or represented at
shareholders' meetings; and an account of the proceedings thereof.
(d) The secretary shall maintain, at the principal place of business
of the corporation, a record of its shareholders, showing the names of the
shareholders and their addresses, the number, class, and series, if any, held by
each, the number and date of
10
<PAGE>
certificates issued for shares, and the number and date of cancellation of every
certificate surrendered for cancellation. [BCA See. 607.1601(3)]
(e) The secretary shall make sure that the following papers and
reports are included in the secretary's records kept at the principal place of
business of the corporation:
1. The articles or restated articles of incorporation and all
amendments to them currently in effect;
2. The bylaws or restated bylaws and all amendments to them
currently in effect;
3. Resolutions adopted by the board of directors creating one or
more classes or series of shares and fixing their relative rights, preferences,
and limitations, if shares issued pursuant to those resolutions are outstanding;
4. Minutes of all shareholders' meetings and records of all action
taken by shareholders without a meeting for the past 3 years;
5. Written communications to all shareholders generally or all
shareholders of a class or series within the past 3 years, including the
financial statements furnished for the past 3 years under Article VI, Section 2
of these bylaws and any reports furnished during the last 3 years under Article
VI, Section 3 of these bylaws;
6. A list of the names and business street addresses of current
directors and officers; and
7. The corporation's most recent annual report delivered to the
Department of State under Article VI, Section 4 of these bylaws. [BCA Sec.
607.1601(5)]
The secretary shall give, or cause to be given, notice of all meetings
of shareholders and directors required to be given by law or by the provisions
of these bylaws.
The secretary shall have charge of the seal of the corporation.
In the absence or disability of the secretary, the assistant
secretary, or, if there is none or more than one, the assistant secretary
designated by the board of directors, shall have all the powers of, and be
subject to all the restrictions imposed upon, the secretary.
SECTION 7. TREASURER
11
<PAGE>
The treasurer shall have custody of the funds and securities of the
corporation and shall keep and maintain, or cause to be kept and maintained, at
the principal business office of the corporation, adequate and correct books and
records of accounts of the income, expenses, assets, liabilities, properties and
business transactions of the corporation. [BCA Sec. 607.1601(2)]
The treasurer shall prepare, or cause to be prepared, and shall
furnish to shareholders, the annual financial statements and other reports
required pursuant to Article VI, Sections 2 and 3 of these bylaws.
The treasurer shall deposit monies and other valuables in the name and
to the credit of the corporation with such depositories as may be designated by
the board of directors. The treasurer shall disburse the funds of the
corporation in payment of the just demands against the corporation as authorized
by the board of directors and shall render to the president and directors,
whenever requested, an account of all his or her transactions as treasurer and
of the financial condition of the corporation.
In the absence or disability of the treasurer, the assistant
treasurer, if any, shall perform all the duties of the treasurer and, when so
acting, shall have all the powers of and be subject to all the restrictions
imposed upon the treasurer.
SECTION 8. COMPENSATION
The officers of this corporation shall receive such compensation for
their services as may be fixed by resolution of the board of directors.
ARTICLE V - EXECUTIVE AND OTHER COMMITTEES
------------------------------------------
SECTION 1. EXECUTIVE AND OTHER COMMITTEES OF THE BOARD
The board of directors may, by resolution adopted by a majority of the
authorized of directors, designate from its members an executive committee and
one or more other committees each of which, to the extent provided in such
resolution, the articles of incorporation or these bylaws, shall have and may
exercise the authority of the board of directors, except that no such committee
shall have the authority to:
1. Approve or recommend to shareholders actions or proposals required
by law to be approved by shareholders.
2. Fill vacancies on the board of directors or any committee thereof.
12
<PAGE>
3. Adopt, amend, or repeal the bylaws.
4. Authorize or approve the reacquisition of shares unless pursuant to
a general formula or method specified by the board of directors.
5. Authorize or approve the issuance or sale or contract for the sale
of shares, or determine the designation and relative rights, preferences, and
limitations of a voting group except that the board of directors may authorize a
committee (or a senior executive officer of the corporation) to do so within
limits specifically prescribed by the board of directors.
Unless otherwise provided, each such committee shall have three or
more members who serve at the pleasure of the board of directors. The board, by
resolution adopted by a majority of the authorized number of directors, may
designate one or more directors as alternate members of any such committee who
may act in the place and stead of any absent member or members at any meeting of
such committee. The provisions of law, the articles of incorporation and these
bylaws which govern meetings, notice and waiver of notice, and quorum and voting
requirements of the board of directors shall apply to such committees of the
board and their members as well.
Neither the designation of any such committee, the delegation thereto
of authority, nor action by such committee pursuant to such authority shall
alone constitute compliance by any member of the board of directors not a member
of the committee in question with the director's responsibility to act in good
faith, in a manner the director reasonably believes to be in the best interests
of the corporation, and with such care as an ordinarily prudent person in like
position would use under similar circumstances. [BCA Sec. 607.0825]
ARTICLE VI - CORPORATE BOOKS, RECORDS AND REPORTS
-------------------------------------------------
SECTION 1. BOOKS, RECORDS AND REPORTS
The corporation shall keep correct and complete books and records of
account; minutes of the proceedings of its shareholders, board of directors, and
committees of directors; a record of its shareholders; and such other records
and reports as are further described in Article IV, Sections 5 and 6 of these
bylaws, at the principal place of business of the corporation.
Any books, records, and minutes may be in written form or in another
form capable of being converted into written form within a reasonable time. [BCA
Sec. 607.1601(4)]
SECTION 2. ANNUAL FINANCIAL STATEMENTS FOR SHAREHOLDERS
13
<PAGE>
Unless modified by resolution of the shareholders within 120 days of
the close of each fiscal year, the corporation shall furnish its shareholders
annual financial statements which may be consolidated or combined statements of
the corporation and one or more of its subsidiaries, as appropriate, that
include a balance sheet as of the end of the fiscal year, an income statement
for that year, and a statement of cash flow for that year. The financial
statements of the corporation shall be prepared on the basis of generally
accepted accounting principles. The annual financial statements shall be audited
by an independent certified public accountant. The accountant's report must
accompany the annual financial statements.
The corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the corporation
to prepare its financial statements if, for reasons beyond the corporation's
control, it is unable to prepare its financial statements within the prescribed
period. Thereafter, on written request from a shareholder who was not mailed the
statements, the corporation shall mail the shareholder the latest financial
statements. [BCA Sec. 607.1620]
Copies of the annual financial statements shall be kept at the
principal place of business of the corporation for at least 5 years, and shall
be subject to inspection during business hours by any shareholder or holder of
voting trust certificates, in person or by agent.
SECTION 3. OTHER REPORTS TO SHAREHOLDERS
If the corporation indemnifies or advances expenses to any director,
officer, employee, or agent, other than by court order or action by the
shareholders or by an insurance carrier pursuant to insurance maintained by the
corporation, the corporation shall report the indemnification or advance in
writing to the shareholders with or before the notice of the next shareholders'
meeting, or prior to such meeting if the indemnification or advance occurs after
the giving of such notice but prior to the time that such meeting is held. The
report shall include a statement specifying the persons paid, the amounts paid,
and the nature and status at the time of such payment of the litigation or
threatened litigation. [BCA sec. 607.1621(1)]
SECTION 4. ANNUAL REPORT TO DEPARTMENT OF STATE
The corporation shall prepare and deliver an annual report form to the
Department of State each year within the time limits imposed, and containing the
information required, by Section 607.1622 of the Business Corporation Act.
SECTION 5. INSPECTION BY SHAREHOLDERS
14
<PAGE>
(a) A shareholder of the corporation is entitled to inspect and copy,
during regular business hours at the corporation's principal office, the records
of the corporation described in Article IV, Section 6(e) of these bylaws if the
shareholder gives the secretary written notice of the shareholder's demand at
least 5 business days before the date on which the shareholder wishes to inspect
and copy.
(b) A shareholder of this corporation is entitled to inspect and copy,
during regular business hours at a reasonable location specified by the
corporation, any of the following records of the corporation if the shareholder
meets the requirements of subsection (c) below and gives the corporation written
notice of the shareholder's demand at least 5 business days before the date on
which the shareholder wishes to inspect and copy:
1. Excerpts from minutes of any meeting of the board of directors,
records of any action of a committee of the board of directors while acting in
place of the board of directors on behalf of the corporation, minutes of any
meeting of the shareholders, and records of action taken by the shareholders or
board of directors without a meeting, to the extent not subject to inspection
under subsection (a) above;
2. Accounting records of the corporation;
3. The record of shareholders; and
4. Any other books and records of the corporation.
(c) A shareholder may inspect and copy the records described in
subsection (b) above only if:
1. The shareholder's demand is made in good faith and for a
purpose reasonably related to the shareholder's interest as a shareholder;
2. The demand describes with reasonable particularity the
shareholder's purpose and the records the shareholder desires to inspect; and
3. The records requested are directly connected with the
shareholder's purpose.
(d) This section of the bylaws does not affect:
1. The right of a shareholder to inspect and copy records under
Article H, Section II of these bylaws;
15
<PAGE>
2. The power of a court, independently of the Business Corporation
Act, to compel the production of corporate records for examination.
[BCA Sec. 607.16023]
SECTION 5. INSPECTION BY DIRECTORS
Every director shall have the absolute right at any reasonable time to
inspect and copy all books, records, and documents of every kind of the
corporation and to inspect the physical properties of the corporation. Such
inspection by a director may be made in person or by agent or attorney. The
right of inspection includes the right to copy and make extracts.
ARTICLE VII
-----------
SECTION 1. INDEMNIFICATION UNDER BCA SECTION 607.0850
The corporation shall have the power to indemnify any director,
officer, employee, or agent of the corporation as provided in Section 607.0850
of the Business Corporation Act.
SECTION 2. ADDITIONAL INDEMNIFICATION
The corporation may make any other or further indemnification or
advancement of expenses of any of its directors, officers, employees, or agents,
under any bylaw, agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in the persons official capacity and as to action
in another capacity while holding such office. However, such further
indemnification or advancement of expenses shall not be made in those instances
specified in Section 607.0850(7)(a-d) of the Business Corporation Act.
SECTION 3. COURT ORDERED INDEMNIFICATION
Unless otherwise provided by the articles of incorporation,
notwithstanding the failure of the corporation to provide indemnification, and
despite any contrary determination of the board or of the shareholders in the
specific case, a director, officer, employee, or agent of the corporation who is
or was a party to a proceeding may apply for indemnification or advancement of
expenses, or both, to the court conducting the proceeding, to the circuit court,
or to another court of competent jurisdiction in accordance with Section
607.0850(9) of the Business Corporation Act.
16
<PAGE>
SECTION 4. INSURANCE
The corporation shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee,
or agent of the corporation against any liability asserted against the person
and incurred by the person in any such capacity or arising out of the person's
status as such, whether or not the corporation would have the power to indemnify
the person against such liability under provisions of law. [BCA Sec.
607.0850(12)]
ARTICLE VIII- SHARES
--------------------
SECTION 1. ISSUANCE OF SHARES
The board of directors may authorize shares or options, warrants or
other rights to acquire shares to be issued for consideration consisting of any
tangible or intangible property or benefit to the corporation, including cash,
promissory notes, services performed, promises to perform services evidenced by
a written contract, or other securities of the corporation.
Before the corporation issues shares or options, warrants or other
rights to acquire shares or other securities, the board of directors shall
determine that the consideration received or to be received for shares to be
issued is adequate. That determination by the board of directors is conclusive
insofar as the adequacy of consideration for the issuance of shares relates to
whether the shares are validly issued, fully paid, and nonassessable.
When the corporation receives the consideration for which the board of
directors authorized the issuance of shares, the shares issued therefor are
fully paid and nonassessable. Consideration in the form of a promise to pay
money or a promise to perform services is received by the corporation at the
time of the making of the promise, unless the agreement specifically provides
otherwise.
The corporation may place in escrow shares issued for a contract for
future services or benefits or a promissory note, or make other arrangements to
restrict the transfer of the shares, and may credit distributions in respect of
the shares against their purchase price, until the services are performed, the
note is paid, or the benefits received. If the services are not performed, the
shares escrowed or restricted and the distributions credited may be canceled in
whole or part. [BCA Sec. 607.0621]
17
<PAGE>
SECTION 2. CERTIFICATES
After shares in the corporation have been fully paid, the holder of
the shares shall be given a certificate representing the shares. At a minimum,
each share certificate shall state on its face the following information:
1. the name of the corporation and that the corporation is organized
under the laws of Florida;
2. the name of the person to whom issued;
3. the number and class of shares and the designation of the series,
if any, the certificate represents.
Each certificate shall be signed, either manually or in facsimile, by
the president or a vice president and by the secretary or an assistant secretary
of the corporation and may bear the seal of the corporation. [BCA Sec. 607.0625]
ARTICLE IX - DIVIDENDS
----------------------
SECTION 1. PAYMENT OF DIVIDENDS
The board of directors may authorize, and the corporation may make,
dividends on its shares in cash, property, or its own shares and other
distributions to its shareholders, subject to any restrictions contained in the
articles of incorporation, to the requirements of Sections 607.0623 and
607.06401 of the Business Corporation Act and to all applicable provisions of
law. [BCA Secs. 607.01401(15), 607.0623(2) & 607.06401(3)]
ARTICLE X - AMENDMENT OF ARTICLES AND BYLAWS
--------------------------------------------
SECTION 1. AMENDMENT OF ARTICLES OF INCORPORATION
The board of directors may propose one or more amendments to the
articles of incorporation for submission to the shareholders. For the amendment
to be effective:
1. The board of directors must recommend the amendment to the
shareholders, unless the board of directors determines that because of conflict
of interest or other special circumstances it should make no recommendation and
communicates the basis for its determination to the shareholders with the
amendment; and
18
<PAGE>
2. The shareholders entitled to vote on the amendment must approve the
amendment as provided below.
The board of directors may condition its submission of the proposed
amendment to the shareholders on any basis. The shareholders shall approve
amendments to the articles of incorporation by the vote of a majority of the
votes entitled to be cast on the amendment, except as may otherwise be provided
by the articles of incorporation, Sections 607.1003 and 607.1004 of the Business
Corporation Act and other applicable provisions of law, and these bylaws.
The corporation shall notify each shareholder, whether or not entitled
to vote, of the proposed shareholders' meeting to amend the articles of
incorporation in accordance with Article II, Section 4 of these bylaws. The
notice of meeting must state that the purpose, or one of the purposes, of the
meeting is to consider the proposed amendment and contain or be accompanied by a
copy or summary of the amendment.
SECTION 2. AMENDMENT OF BYLAWS
The board of directors may amend or repeal these bylaws unless:
1. The articles of incorporation or the Business Corporation Act
reserves the power to amend the bylaws generally or a particular bylaw provision
exclusively to the shareholders; or
2. The shareholders, in amending or repealing the bylaws generally or
a particular bylaw provision, provide expressly that the board of directors may
not amend or repeal the bylaws or that bylaw provision.
3. The shareholders may amend or repeal these bylaws even though the
bylaws may also be amended or repealed by the board of directors.
[BCA Sec. 607.1020]
CERTIFICATE
-----------
This is to certify that the foregoing is a true and correct copy of
the Restated and Amended By-Laws of the corporation named in the title thereto
and that such Restated and Amended By-Laws supersede any previously adopted
by-laws of the corporation were duly adopted by the board of directors of the
corporation on the date set forth below.
Dated: January 20, 1998 [SIGNATURE APPEARS HERE]
-----------------------------------
Secretary
19
<PAGE>
EXHIBIT 9.1
VOTING TRUST AGREEMENT
THIS VOTING TRUST AGREEMENT (this "Agreement") is made the 1st day of
February, 1998 by and among KATHLEEN MEEHAN and MARY JENNIFER CRAWFORD (the
"Stockholders"), stockholders holding voting shares of common stock of Crawford
Equipment and Engineering Company (the "Corporation"), a corporation organized
pursuant to the laws of Florida, having its principal office at 436 E.
Landstreet, Orlando, Florida 32859 and JAMES P. CRAWFORD and KATHLEEN B.
CRAWFORD (the "Trustees").
WITNESSETH:
WHEREAS, the Stockholders do not intend to take an active part in the
Corporation's management; and
WHEREAS, the Stockholders desire that their interests in the
Corporation be protected; and
WHEREAS, the parties intend to accomplish this by the provisions of
this Agreement;
IT IS AGREED AS FOLLOWS:
1. Recitals. The recitals set forth above in the "Whereas" clauses are
--------
true and correct and are incorporated herein by reference.
2. Transfer of Stock to Trustees. The Stockholders shall assign and
-----------------------------
deliver their stock certificates (representing voting shares of common stock of
Corporation) to the Trustees who shall cause the stock represented by the
certificates to be transferred to them as voting Trustees on the books of
Corporation.
3. Term of Trust. The voting trust created by this Agreement shall
-------------
continue for ten (10) years from the date of this Agreement.
4. Trustees' Powers. During the term of this Agreement, the Trustees
----------------
shall have the exclusive right to vote the stock transferred pursuant to this
Agreement, or to give written consents in lieu of voting the stock for any
purpose, in person or by proxy at any and all meetings of Stockholders of the
Corporation and in any proceedings at which the vote or written consent of
Stockholders may be required or authorized by law.
5. Trust Certificates. The Trustees will issue and deliver to each of
------------------
the Stockholders (or the Stockholders' nominee) certificates for the number of
shares transferred by him to the Trustees, in form substantially as follows:
<PAGE>
TRUST CERTIFICATE
No. [number] [number] of Shares
The undersigned, Voting Trustees of the stock of Crawford
Equipment & Engineering Company (the "Corporation"), under an agreement
made [date], having received certain shares of the common stock of
Corporation, pursuant to the agreement, and which agreement the holder
of this Certificate by accepting it, ratifies and adopts, certify that
[name] will be entitled to receive a certificate for [number] fully
paid shares of Corporation on the expiration of the voting trust
agreement and, in the meantime, shall be entitled to receive payments
equal to any dividends that may be collected by Trustees upon a like
number of shares held by them under the terms of the trust agreement.
This Certificate is transferable only on the books of
Trustees, by the registered holder in person or by his authorized
attorney. By accepting this Certificate, the holder consents that
Trustees may treat the registered holder as the true owner for all
purposes, except the delivery of stock certificates, which delivery
shall not be made without surrender of this Certificate.
The shares represented by this Certificate are subject to
restrictions on transferability imposed by State and Federal Securities
laws. In addition, the shares represented by this Certificate are
further subject to certain contractual lockup provisions that affect
the transferability of such shares that have been imposed by Discovery
Capital Group, Inc., the financial consultant to the Corporation.
IN WITNESS WHEREOF, Trustees have caused this Certificate to
be executed in their names and have affixed their hands and seals as of
the date and year first above written.
5. Expiration of Term. At the expiration of the term of the trust, the
------------------
Trustees or their survivors will, upon surrender of the trust certificates,
deliver to the holders of the certificates shares of stock of Corporation
equivalent in amount to the shares represented by the trust certificates
surrendered.
6. Limitation of Trustees' Liability. The Trustees will use their best
---------------------------------
judgment in voting the stock held by them, but assume no responsibility for the
consequence of any vote cast, or consent given by them in good faith, and in the
absence of gross negligence.
7. Death, Resignation, Incapacity of Trustees. Upon the death,
------------------------------------------
resignation, or inability to act of any of the Trustees, the survivors or
survivor may act alone with all rights, powers, and privileges; no Trustee shall
be required to give bond or other security for the faithful performance of his
duties. A Trustee may resign by submitting his resignation in writing to the
Secretary of Corporation. The resignation shall become effective upon the date
of receipt.
[SIGNATURE PAGES FOLLOW]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto in manner and form sufficient to bind them as of the day and year first
above written.
"Stockholders"
/s/ Kathleen Meehan
----------------------------------
KATHLEEN MEEHAN
/s/ Mary Jennifer Crawford
----------------------------------
MARY JENNIFER CRAWFORD
"Trustees"
/s/ James P. Crawford
----------------------------------
JAMES P. CRAWFORD
/s/ Kathleen B. Crawford
----------------------------------
KATHLEEN B. CRAWFORD
<PAGE>
TRUST CERTIFICATE
No. 2 90,000 Shares
-----
The undersigned, Voting Trustees of the stock of Crawford
Equipment & Engineering Company (the "Corporation"), under a Voting
Trust Agreement made the 1st day of February, 1998 (the "Agreement"),
having received certain shares of the common stock of Corporation,
pursuant to the Agreement, and which Agreement the holder of this
Certificate by accepting it, ratifies arid adopts, certify that MARY
JENNIFER CRAWFORD will be entitled to receive a certificate for 90,000
fully paid shares of Corporation on the expiration of the Agreement
and, in the meantime, shall be entitled to receive payments equal to
any dividends that may be collected by Trustees upon a like number of
shares held by them under the terms of the Agreement.
This Certificate is transferable only on the books of
Trustees, by the registered holder in person or by his authorized
attorney. By accepting this Certificate, the holder consents that
Trustees may treat the registered holder as the true owner for all
purposes, except the delivery of stock certificates, which delivery
shall not be made without surrender of this Certificate.
The shares represented by this Certificate are subject to
restrictions on transferability imposed by State and Federal Securities
laws. In addition, the shares represented by this Certificate are
further subject to certain contractual lockup provisions that affect
the transferability of such shares that have been imposed by Discovery
Capital Group, Inc., the financial consultant to the Corporation.
[N WITNESS WHEREOF, Trustees have caused this Certificate to
be executed in their names and have affixed their hands and seals as
of the date and year first above written.
/s/ James P. Crawford
-------------------------------
JAMES P. CRAWFORD
/s/ Kathleen B. Ford
-------------------------------
KATHLEEN B. FORD
<PAGE>
TRUST CERTIFICATE
No. 1 90,000 Shares
-----
The undersigned, Voting Trustees of the stock of Crawford
Equipment & Engineering Company (the "Corporation"), under a Voting
Trust Agreement made the 1st day of February, 1998 (the "Agreement"),
having received certain shares of the common stock of Corporation,
pursuant to the Agreement, and which Agreement the holder of this
Certificate by accepting it, ratifies and adopts, certify that KATHLEEN
MEEHAN will be entitled to receive a certificate for 90,000 fully
paid shares of Corporation on the expiration of the Agreement and, in
the meantime, shall be entitled to receive payments equal to any
dividends that may be collected by Trustees upon a like number of
shares held by them under the terms of the Agreement.
This Certificate is transferable only on the books of
Trustees, by the registered holder in person or by his authorized
attorney. By accepting this Certificate, the holder consents that
Trustees may treat the registered holder as the true owner for all
purposes, except the delivery of stock certificates, which delivery
shall not be made without surrender of this Certificate.
The shares represented by this Certificate are subject to
restrictions on transferability imposed by State and Federal Securities
laws. In addition, the shares represented by this Certificate are
further subject to certain contractual lockup provisions that affect
the transferability of such shares that have been imposed by Discovery
Capital Group, Inc., the financial consultant to the Corporation.
IN WITNESS WHEREOF, Trustees have caused this Certificate to
be executed in their names and have affixed their hands and seals as of
the date and year first above written.
/s/ James P. Crawford
--------------------------------
JAMES P. CRAWFORD
/s/ Kathleen B. Crawford
--------------------------------
KATHLEEN B. CRAWFORD
<PAGE>
EXHIBIT 10.1
[LETTERHEAD OF GROVE SCIENTIFIC APPEARS HERE]
April 7, 1998
Mr. Steven L. Atkinson, COO
Crawford Equipment & Engineering Co.
P.O. Box 593243
Orlando, Florida 32859-3243
Re: Agreement for Retained Services
Dear Steve,
Grove Scientific & Engineering Company (GSE) is submitting this contract for
retained consulting services. The Scope of work is as follows:
. Provide support services for proposals; assist with incinerator and thermal
oxidizer sizing and specifications, regulatory issues, engineering design,
and other related services.
GSE will invoice Crawford $2000.00 per month and provide a job cost detail and
account summary. Crawford will reimburse GSC for the additional costs above the
retainer amount as contracts are awarded.
If this proposal is acceptable to Crawford Equipment & Engineering Co., please
sign the attached contract and return one copy for our files.
Sincerely,
Grove Scientific Company
/s/ Bruno A. Ferraro
Bruno A. Ferraro, C.E.P., Q.E.P.
President
BAF:bf
Enclosure
<PAGE>
CONTRACT
================================================================================
This contract between Grove Scientific Company (hereinafter referred to as
"Grove"), and Crawford Equipment & Engineering Co. (hereinafter referred to as
"Client") is written confirmation and acceptance of our agreement hereinafter
referred to as this "Agreement") whereby Client has retained Grove to perform
the scope of services as set forth in the attached letter agreement, dated April
7, 1998 to Steven L. Atkinson (hereinafter referred to as "Addendum").
This Agreement acknowledges that Grove shall charge Client for services
performed by Grove according to the Rate Schedule on the reverse side of this
contract and the terms set forth in the attached Addendum. In addition, Client
is responsible for any direct charges and out-of-pocket costs incurred by Grove
in the course of the work performed for Client. These costs include, but are not
limited to, long distance telephone charges, photocopying, postage, shipping
charges, travel expenses and analytical laboratory expenses.
Grove will prepare and send an invoice to Client monthly. Client shall pay
for the work performed by Grove upon receipt of an invoice from Grove. All
unpaid invoices outstanding for more than thirty (30) days are subject to
interest at a rate of 1.5% per month or 18% annual percentage rate (APR). If
client disagrees with the amount of an invoice, Client shall notify Grove
within ten (10) working days or Client waives any complaint regarding the
invoice.
In the unlikely event that Grove must pursue collection efforts of an
outstanding amount due Grove, Client agrees to pay the total cost incurred by
Grove for collecting said debt, including attorneys' fees incurred prior to and
as a result of filing suit. Venue for any action under this Agreement shall be
Orange County, Florida.
The payment and collection terms of this Agreement shall remain in full
force and effect for any services additional to those set forth in the scope of
services in the attached Addendum, which Grove may perform for Client in the
future, unless otherwise agreed to in writing.
Client understands that this Agreement is for consulting services to be
performed by Grove in accordance with the scope of services set forth in the
attached Addendum. Client further understands that the report or information
generated by Grove arising from this Agreement is intended only for use by
Client unless otherwise agreed to in writing by Grove.
In performing the scope of services set forth in the attached Addendum,
Grove does not assume any of the legal responsibilities as between any
architect, engineers, contractor, or owner. Any opinion rendered by Grove is not
intended to be legal opinion or conclusion. Furthermore, Grove does not warrant
any representation or opinions, either expressed or implied, rendered by Grove
arising from this Agreement.
Client shall protect and indemnify Grove against any loss or damages
suffered by anyone arising through the negligence or misrepresentations of
Client, or those employed by Client or agents of Client, and Client shall bear
any expenses including attorney's fees which Grove may have or incur by reason
of Client's negligence or misrepresentation.
If the terms set forth herein accurately reflect the agreement between
Grove and client and are acceptable to Client, please sign this Agreement where
indicated and return the original Agreement in the enclosed self-addressed
stamped envelope. A copy of this Agreement is enclosed for your records. Upon
receipt of this Agreement, Grove shall proceed immediately as stated in the
attached Addendum.
Grove appreciates the opportunity to be of service and looks forward to
working with you.
================================================================================
The terms of this Agreement are acknowledged and accepted.
Client Grove Scientific Company
Steven L. Atkinson, President /s/ Bruce A. Ferraro
By: --------------------------- By: ---------------------------
Print Name and Title Bruce A. Ferraro, C.E.O.,
G.E.P., President
/s/ Steven L. Atkinson April 7, 1998
--------------------------- ---------------------------
Signature Date
[COMPANY NAME APPEARS HERE]
of ---------------------------
Company Name
4-13-98
---------------------------
Date
<PAGE>
EXHIBIT 10.2
STRATEGIC ALLIANCE AGREEMENT
BETWEEN
MONSANTO ENVIRO-CHEM SYSTEM, INC.
AND
CRAWFORD EQUIPMENT & ENGINEERING CO., INC.
The following is a list of general terms, conditions, and understandings
pursuant to which Monsanto Enviro-Chem Systems, Inc. (MEC) and Crawford
Equipment & Engineering Co, Inc. (CEE) will work together to sell, design,
build, and install VOC control equipment where it is mutually beneficial and
advantageous to do so.
1. The intent of this agreement is to build and maintain a strong relationship
between MEC and CEE.
It is MEC's goal to:
A. Minimize engineering and fabrication costs through the utilization of
CEE's optimized engineering and/or fabrication techniques, where
appropriate.
B. Offer CEE products and technologies to its customers under the MEC name.
It is CEE's goal to:
A. Be the supplier of CEE VOC systems to MEC customers and utilize
MEC's sales network to increase sales of these systems.
B. Become the fabricator of MEC DynaCycle Skidded Systems and other
equipment and systems as deemed appropriate by both parties.
In general terms, MEC and CEE agree to cooperate and promote:
A. New and expanded market penetration.
B. Competitive pricing
C. Better engineering designs, and
<PAGE>
D. Technology improvements
The spirit of this alliance is to be an open, communicating, professional
partnership designed to promote mutual growth, success, and profitability.
2. Products covered by this agreement shall include the following:
A. CEE Recuperative Thermal Oxidation Systems
B. CEE Thermal Oxidation Systems
C. CEE Fabricated Products (ducting, valves stacks, miscellaneous steel)
D. MEC Regenerative Catalytic Oxidation Systems (DynaCycle)
3. This Agreement is in place for both the domestic (U.S.) markets and Ex-U.S.
markets.
4. This Agreement will be considered a non-exclusive agreement by both
parties, however, it is further agreed that only CEE Thermal and Recuperative
Thermal Oxidizers will be marketed by MEC, in conjunction with MEC's other
products.
5. Under this Agreement:
A. MEC will be the sales channel for all CEE Recuperative Thermal
Oxidizers and Thermal Oxidizers in the United States and Ex-United States
Markets, with the following exception:
1. Sales to Zoltek
2. Sales in the state of Texas, which will be handled by CEE's
existing independent Sales Representative.
As such, MEC will use its best efforts to market and sell these CEE systems.
B. To support Section A, above, CEE will:
1. Provide proposal preparation support and calculations.
2. Supply equipment to meet conditions supplied by MEC. CEE will
provide these systems at original equipment manufacturer (OEM)
pricing
<PAGE>
levels. OEM pricing level is defined as manufacturer's normal list
price less 15%.
C. MEC and CEE will jointly develop DynaCycle skid-mounted systems
utilizing process (catalyst) technology, engineering design and direction
from MEC, and manufacturing technology from CEE. Furthermore CEE will
fabricate systems as deemed appropriate by MEC. Finally, CEE will act in a
capacity of Project Managers to include system start-up for all CEE
designed and fabricated Thermal and Reouperative Oxidizers.
6. CEE agrees MEC is not responsible to pay any Sales Representative
commissions or other fees normally paid by CEE. MEC agrees CEE is not
responsible to pay any Sales Representative commissions or other fees normally
paid by MEC.
7. MEC and CEE agree that all technical and commercial information shared
between MEC and CEE will be considered confidential. MEC's/CEE standard
confidentiality agreement (copy attached) is hereby referenced and made an
integral part of this agreement.
8. MEC's standard- and job-specific terms and conditions, Form (EC-187 and
exhibit EC 187-1) are hereby referenced and made an integral part of all MEC/CEE
purchases and sales under this agreement.
9. The following payment terms will apply to any MEC or CEE purchase orders
under this agreement
A. Terms of payment:
For purchase orders under $75,000, payment shall be
25% with purchase order
25% upon Approval of Submittals
45% upon Shipping Notification
<PAGE>
5% upon Start-up or thirty (30) Days from shipment whichever comes
first.
Purchase orders and subcontracts greater than $76,000 in value shall
contain a negotiated, mutually agreeable payment schedule on a
progress/milestone basis.
B. Domestic Shipping terms:
Purchase orders shall be written ex-works with optional quotation for
freight to designated job site.
C. International Shipping terms:
Purchase order shall be written ex-works with optional quotation for
FAS for designated US Port.
10. This agreement shall be in effect for a period of three (3) years beginning
with the date of the agreement and shall be renewed, unless canceled in writing
by a duly authorized representative of either company. Either party may cancel
this agreement for cause of convenience with sixty (60) day advance written
notice. However, any and all outstanding obligations that exist between MEC and
CEE at the time termination shall continue until satisfied or fulfilled.
CRAWFORD EQUIPMENT AND MONSANTO ENVIRO-CHEM
ENGINEERING CO., INC. SYSTEMS, INC.
/s/ illegible signature /s/ illegible signature
- ------------------------- ------------------------
TITLE C.O.O. TITLE BUSINESS MANAGER
-------------------- -------------------
DATE 2/13/98 DATE 2/13/98
--------------------- -------------------
<PAGE>
EXHIBIT 10.3
LICENSE AGREEMENT
-----------------
This AGREEMENT AND LICENSE is made this 1st day of January, 1998, between
JAMES P. CRAWFORD ("Licensor"), residing at 436 West Landstreet Road, Orlando,
Florida 32824 and Crawford Equipment & Engineering Company ("Licensee"), a
corporation of the state of Florida, having its principal place of business at
436 Landstreet Road, Orlando, Florida 32824.
WITNESSETH:
WHEREAS, Licensee has been granted Letters of Patent(s) of the United
States, No(s) 4,512,264 issued on April 23, 1985; 4,685,403 issued on August 11,
1987; 4,890,367 issued on January 2, 1990; and 5,152,232 issued on October 6,
1992 (hereafter collectively the "Patents"), for inventions relating to the
manufacture of packaged combustion equipment systems (the "Licensed Products");
WHEREAS, Licensee desires to acquire the rights to utilize the Patents in
the manufacture and sale of crematories, incinerators, and other systems; and
WHEREAS, Licensor has certain specialized know-how (hereafter "Licensed
Know-How") relating to the Licensed Products; and
WHEREAS, Licensee desires to acquire the Licensed Know-How of Licensor as
it relates to the Licensed Products; and
WHEREAS, Licensor desires to grant Licensee the aforementioned rights
subject to the terms and conditions hereof.
NOW THEREFORE, in consideration of the foregoing premises and the covenants
and agreements contained herein, the parties hereto intending to be legally
bound, covenant and agree as follows:
1. Definitions.
-----------
The following terms whenever used in this Agreement, shall have the
respective meanings set forth below:
(a) "Licensed Products" shall mean and be deemed to include all processes
and procedures relating to the Patents developed by Licensor.
(b) "Licensed Know-How" shall mean Licensor's present and future
specialized, novel, and unique techniques, inventions, practices, knowledge,
skill, experience, and other proprietary information relating solely to the
specific Licensed Products included in this Agreement, and
<PAGE>
the Licensee's specific licensed use of the Licensed Products.
(c) "Affiliate" shall mean any firm, corporation, assignee, contracting
party, or other organization, person or persons:(i) in which Licensee has, or
which has in Licensee, at the time, directly or indirectly, a substantial stock
interest or a substantial interest, or (ii) with which Licensee has, or which
has with Licensee, at the time, directly or indirectly, management relations
sufficient to enable it to influence the other's business policies and
activities, or (ii) with which Licensee has, or which has with Licensee, at the
time, directly or indirectly, a contractual interest or obligation as it relates
to the Licensed Products.
(d) "Licensed Territory" shall be totally unrestricted.
2. Grant of License.
----------------
(a) Licensor hereby grants to Licensee and Licensee hereby accepts from
Licensor, upon the terms and conditions herein specified: (i) the exclusive
rights to manufacture, market, sell, use and distribute the Licensed Products as
defined above; and (ii) all rights to sub-license, assign and contract any
portion of this Agreement to Sub-Licensees and Affiliates who agree to be bound
by the terms and conditions of this Agreement. Except as expressly provided
herein, no right or license is granted pursuant to the terms of this Agreement,
by implication or otherwise, under any other patent, patent application, or
claim.
3. Licensing Fees.
--------------
(a) In consideration of the license herein granted, Licensee shall pay to
Licensor, to the end of the term of this Agreement or until this Agreement is
sooner terminated a fee equal to $350 for each system manufactured by the
Company that implements one or more of the Patents in its design.
(b) Licensee shall collect sub-licensing fees directly from all Sub-
Licensees and Affiliates on a monthly basis. All fees including any sub-
licensee fees shall be due and payable in immediately available U.S. Funds, by
the fifth day following the end of each month, for products sold during that
month.
(c) Upon Licensee's, failure to timely deliver any payment due hereunder, a
late penalty of Five Percent (5%) of the total amount of the license fees due
and payable shall be immediately assessed, provided, however, that in the event
Licensee shall remain in arrears for more than
2
<PAGE>
three (3) months for license fees due and payable with respect to any calendar
month ("Arrears"), a late penalty of Eighteen Percent (18%) per annum, or One
and One-half Percent (1 1/2%) per month, shall be assessed against such Arrears,
which assessment shall be deemed to have commenced as of the date upon which
such Arrears was due and payable hereunder, provided further, that in such case
the initial Five Percent (5%) late penalty shall be credited towards the
assessed Eighteen Percent (18%) late penalty. This provision shall survive the
termination of this Agreement.
4. Reports and Records.
-------------------
(a) Within thirty (30) days after the end of each calendar quarter, Licensor
shall deliver to Licensee a report reflecting the gross sales for all Licensed
Products sold by Licensee, and/or its Sub-Licensees or Affiliates, in the
immediately preceding calendar quarter, (ii) the quantities and amount of all
Licensed Products sold by Licensee, and/or its Sub-Licensees or Affiliates, in
the immediately preceding calendar quarter, and (iii) the computation of license
fees payable to Licensor with respect thereto.
(b) Licensee agrees to maintain complete accurate books and records in
sufficient detail to enable the fees payable hereunder to be determined, and
further agrees that Licensor shall have the rights, at its own expense, upon
twenty-four (24) hours notice, to examine Licensee's books and records to the
extent necessary to verify Licensee's reports rendered pursuant to Article 4(a)
hereof, the amounts of fees due and payable to Licensor under this Agreement,
and/or Licensee's compliance in other respects with this Agreement. Such
examination shall be conducted by Licensor or a personal representative
designated by Licensor and acceptable to Licensee, provided, however, that
Licensee's acceptance of Licensor's designated personal representative shall not
be unreasonably withheld.
5. Term of Agreement.
-----------------
The term of this Agreement shall remain in existence until the expiration
of the last Patent licensed hereby which takes place on October 6, 2009, unless
sooner terminated pursuant to the terms of this Agreement.
6. Quality of Licensed Products Inspection.
---------------------------------------
(a) The Licensed Products provided and sold by Licensee, and/or its Sub-
Licensees and Affiliates, shall adhere to all general and specific procedures,
specifications, and policies for manufacture, marketing, distribution, and use
as directed and defined by the Licensor, or its duly authorized representatives
or agents, from time to time, if any. Any changes in policies
3
<PAGE>
affecting production and the use of materials shall be made in writing by
Licensor.
(b) Licensee shall permit Licensor, or duly authorized representatives of
Licensor, upon twenty-four (24) hours notice, to inspect the premises of
Licensee which produce or provide the Licensed Products at all reasonable times,
for the purpose of determining Licensee's Sub-Licensees' and Affiliates
compliance with subparagraph (a) above.
7. Marking.
-------
Licensee shall submit appropriate patent notices and trademark designations
to Licensor for its approval prior to making or permitting any sales or
advertisements of the Licensed Products. Licensee shall place, or have placed,
in a conspicuous location on the packaging and product literature for each of
the Licensed Products with the patent numbers of all granted patents covering
the Licensed Products.
8. Indemnity and Insurance.
-----------------------
(a) Licensor agrees to defend and indemnify licensee against allegations of
infringement regarding United States Patents, provided however that such
obligation shall not: (i) arise unless the allegation of infringement relate
directly to the specific teachings of Patents, or (ii) exceed the amount of fees
paid hereunder as of the date of commencement of the infringement actions(s).
(b) Licensee agrees to obtain and maintain, or have maintained and
obtained, adequate liability insurance in accordance with industry standards for
products and services of the type of the Licensed Products.
9. Assignment and Sub-License.
--------------------------
As previously recited in Article 2(a)(ii) above, Licensee shall have the
right to sub-license, assign and contract any portion of this Agreement to Sub-
Licensees and Affiliates who agree to be bound by the terms and conditions of
this Agreement. Licensor shall be entitled to assign its rights to receive
license fees payable hereunder, without Licensee's consent.
10. Patent Fees.
-----------
During the terms of this Agreement, Licensor shall pay all patent
prosecution fees, patent issue fees, and patent maintenance fees relating to all
patents covering the Licensed Products, including attorneys' fees in connection
therewith.
4
<PAGE>
11. Improvements.
------------
(a) Licensee agrees to notify Licensor of any changes, modifications or
improvements to the Licensed Products and/or the manufacturing process therefore
that are accomplished by Licensee or its Sub-Licensees or Affiliates during the
term of this Agreement, within fourteen (14) days from the Licensee's
accomplishment of such change, modification or improvement. All such changes,
modifications or improvements to the Licensed Products and/or the manufacturing
process therefore shall become the property of Licensor within thirty (30) days
after Licensee's accomplishment of such change, modification or improvement, and
Licensee shall so provide in any agreements entered into with the inventor
thereof. Any such changed, modified or improved Licensed Products shall be
deemed to be included within the scope of the license granted hereunder to
Licensee and subject to the terms of this Agreement. Within thirty (30) days
after the accomplishment of any such change, modification or improvement to the
Licensed Products, Licensee agrees to cause the inventor thereof to assign to
Licensor all of such inventor's right, title and interest in and to such change,
modification or improvement, as well as in any patent application, granted
patent, and reissue thereof with respect to such change, modification or
improvement.
(b) If, during the term of this Agreement, Licensor makes any further
improvements in the Licensed Products or the mode of its use or becomes the
owner of any new improvements in the Licensed Products through patent or
otherwise, Licensor shall advise Licensee of such improvements(s), which shall
be deemed to be included within the scope of the license granted hereunder to
Licensee and subject to the terms of this Agreement. All changes, modifications
and improvements to the Licensed Products that are accomplished by Licensor
shall remain the property of Licensor during and after the term of this
Agreement.
12. Disclosure of Licensed Know-How.
-------------------------------
(a) All licensed Know-How shall be and remain the sole and exclusive
property of Licensor.
(b) Licensor shall disclose to Licensee, and its Sub-Licensees and
Affiliates, all pertinent Licensed Know-How as it becomes available.
(c) Licensor shall be required to disclose said Licensed Know-How under the
following conditions:
(i) Regarding aspects of the Licensed Products that are still in
research or development;
5
<PAGE>
(ii) Regarding matters with respect to which patent applications
are to be filed;
(iii) Regarding matters which Licensor shall be prevented from
disclosing to Licensee by reason of any regulation, law, order direction, or act
of any governmental authority.
(d) Said Licensed Know-How shall be disclosed by Licensee only in
connection with this Agreement and shall be disclosed by Licensee, and/or its
Sub-Licensees and Affiliates, only to those employees to whom such disclosure
shall be absolutely necessary in order to carry out Licensee's, and/or its Sub-
Licensee's and Affiliate's operations and obligations under this Agreement.
13. Arbitration.
-----------
Any dispute or controversy arising out of or relating to this Agreement or
its actual or alleged breach shall be finally settled by arbitration, to be
conducted in Orange County, Florida, in accordance with the rules then in effect
of the American Arbitration Association in accordance with those rules, and
judgement upon the award rendered therein may be entered in any court having
jurisdiction thereof.
14. Governing Law.
-------------
This Agreement shall be construed and interpreted in accordance with the
laws of the State of Florida. In any action to interpret this Agreement, or to
resolve any dispute between the parties arising hereunder, the prevailing party
shall be entitled to its attorney fees, costs, and expenses.
15. Termination.
------------
(a) In the event:
(i) Licensee shall become bankrupt or insolvent and/or if the
business of the Licensee shall be placed in the hands of a Receiver, or Trustee,
whether by the voluntary act of the Licensee or otherwise; or
(ii) Licensee's stock or assets are to be sold to a third party
sufficient to transfer control of Licensee's business to such party; or
(iii) Licensee shall discontinue its business operations; or
(iv) Licensee shall be in arrears for more than one hundred and
twenty (120) days for the fees due and payable with respect to any calendar
month;
6
<PAGE>
then Licensor may terminate this Agreement and the license granted
hereunder by notice to Licensee, whereupon this Agreement shall terminate thirty
(30) days after such notice of termination.
(b) If Licensee shall breach or be in default of any of its obligation
under this Agreement, other than an Arrears for less than one hundred and twenty
(120) days in the payment of fees with respect to any calendar month, Licensor
may terminate this Agreement and the license granted hereunder by giving thirty
(30) days notice of termination, stating the grounds therefore, to Licensee.
This termination shall become effective at the end of said thirty day period
after the giving of notice, unless during said thirty (30) day period Licensee
shall cure such breach or default, in which case such notice shall cease to be
operative and this Agreement shall continue in full force and effect.
(c) The termination of this Agreement for any reason set forth herein shall
be without prejudice to:
(i) Licensor's right to receive, and shall not release Licensee
from its obligation to pay, all licensing payments accrued and unpaid at the
effective date of such termination, together with the late penalty provided for
in Article 3(c).
(ii) Licensor's rights under Article 5 hereof as to periods prior
to termination, shall not affect Licensor's remedy with respect to any previous
breach of any of the terms and covenants herein contained.
(d) Upon termination of this Agreement as provided for herein, Licensee
releases ad discharges Licensor from any and all claims for damages or
compensation with respect to lost profits, and for any other losses or expenses
incurred by reason of such termination.
16. Consent to Contracts or Sub-License.
-----------------------------------
Licensee shall not be entitled to enter into any transactions with any
Affiliate or entity or Sub-Licensee regarding the Licensed Products without
Licensor's prior written consent. Said consent shall not be unreasonably
withheld by Licensor.
7
<PAGE>
17. Notices.
-------
Any notices required or permitted under this Agreement shall be sent by
U.S. certified mail, return receipt requested, and addressed as follows:
To Licensee: Crawford Equipment & Engineering Co.
436 West Landstreet
Orlando, Florida 32824
To Licensor: Mr. James P. Crawford
436 West Landstreet
Orlando, Florida 32824
Such notice shall be deemed received three (3) days after the mailing thereof.
18. Complete Agreement.
------------------
This Agreement shall constitute the entire understanding between the
parties with respect to the subject matter hereof and shall supersede all
previous or contemporaneous negotiations, commitments or writings with respect
to such subject matter. Licensor and Licensee each acknowledge that it has not
executed this Agreement in reliance upon any promise, representation or warranty
not expressly set forth herein. This Agreement may not be released, discharged,
changed, modified or amended except by any instrument in writing duly executed
by both of the parties hereof.
19. Binding Effect.
--------------
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, legal representatives and
permitted assigns.
20. No Waiver of Enforcement.
------------------------
The failure of any party to require performance of any term of this
Agreement or the waiver of any party of any breach under this Agreement shall
not prevent a subsequent enforcement of such term, nor be deemed a waiver by
that party of any subsequent breach.
21. Invalidity.
----------
The invalidity of any one or more of the words, phrases, sentences,
clauses, or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part hereof,
all of which are inserted conditionally on their being valid under the law. In
the event that any one or more of the words, phrases, sentences, clauses, or
sections contained in
8
<PAGE>
this Agreement shall be invalidated, this Agreement shall be construed as if
such invalid word or words, phrase or phrases, sentence or sentences, clause or
clauses, or section or sections had not been inserted.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
LICENSOR:
[SIGNATURE ILLEGIBLE /s/ James P. Crawford
- --------------------------- ----------------------------
Witness James P. Crawford
- ---------------------------
Witness
LICENSEE:
CRAWFORD EQUIPMENT &
ENGINEERING COMPANY
By /s/ Steven Atkinson
- --------------------------- --------------------------
Witness Steven Atkinson, President
- ---------------------------
Witness
9
<PAGE>
EXHIBIT 10.4
LEASE AGREEMENT
THIS LEASE AGREEMENT, dated this 1st day of January, 1998, is made and
entered into by and between JAMES P. CRAWFORD AND KATHLEEN B. CRAWFORD
(hereinafter called "Landlord"), and CRAWFORD EQUIPMENT AND ENGINEERING CO., a
Florida corporation (hereinafter called "Tenant").
WITNESSETH:
WHEREAS, Landlord owns commercial property consisting of approximately
26,000 square feet located at 436 West Landstreet, Orlando, Florida 32859,
(hereinafter referred to as "Leased Premises"); and
WHEREAS, Tenant desires to lease from Landlord such property upon the
terms and conditions herein contained.
NOW, THEREFORE, for and in consideration of the mutual benefits to be
gained by the performance hereof, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Landlord and
Tenant do hereby agree as follows:
1. Description of Premises Being Leased. Landlord, in consideration of
------------------------------------
the covenants and agreements herein undertaken to be kept and performed by
Tenant, does hereby grant, demise and lease unto Tenant certain land and
building improvements thereon in Orange County, Florida, at 436 West Landstreet,
Orlando, Florida 32859, such land being more particularly described on Exhibit
"A" attached hereto and made a part hereof. Such building and improvements,
including the site improvements and fixtures contained in the building and land
and provided by Landlord therein on Exhibit "A", are hereinafter referred to as
the "Leased Premises."
TO HAVE AND TO HOLD, all and singular, the Leased Premises,
together with all rights, privileges and appurtenances thereunto belonging unto
the Tenant, right of ingress and egress thereto and therefrom at all times, for
a term of years as hereinafter provided, unless such term shall be sooner ended
and terminated under the terms and provisions hereof.
2. Term of Lease. The term of this Lease (sometimes hereinafter called
-------------
the "Term") shall be for a period of three (3) years commencing on the
"Commencement Date" as hereinafter defined, and ending at midnight on the last
day of the month which shall be three (3) years from the Commencement Date,
unless sooner terminated as provided in this Lease.
3. Commencement Date. The Commencement Date shall be January 1, 1998,
-----------------
for a term of three (3) years, ending on December 31, 2000. Tenant's obligation
to pay rent shall commence as of the Commencement Date.
<PAGE>
4. Rent. Tenant shall pay Landlord, during the Term hereof; Base Rent
----
in the annual amount of seven dollars ($7) per square foot for a total One
Hundred Eighty Two Thousand Dollars ($182,000) during the first year of this
Lease. Base Rent shall increase to eight dollars ($8) per square foot for a
total of Two Hundred Eight Thousand Dollars ($208,000) during the second year of
this Lease and shall further increase to nine dollars ($9) per square foot for a
total of Two Hundred Thirty-Four Thousand Dollars ($234,000) during the third
year of this Lease. The Base Rent shall be paid in monthly installments, each in
an amount equal to one-twelfth (1/12) of the annual Base Rent, plus applicable
sales tax, payable in advance on the first day of each month without demand. If
any payment of rent is not received by the tenth (10th) day of the month, Tenant
shall pay to Landlord a late charge of five percent (5%) of the amount of such
past due amount. If the Term of this Lease should commence on a date other than
the first day of a calendar month, the monthly installment of the Base Rent for
such calendar month shall be prorated on a per diem basis. Any other payments
due under this Lease shall be paid within ten (10) days of receipt of the
invoice.
5. Taxes.
-----
a. Tenant shall reimburse Landlord for all real estate taxes,
assessments and other governmental charges assessed, levied or imposed against
the Leased Premises, including real estate taxes, assessments and other
governmental charges which are special, extraordinary and unforeseen. Statements
received by Landlord shall be paid and forwarded promptly to the Tenant.
Reimbursement of all said charges shall be made without interest or penalty by
Tenant on or before the next rent payment date after the receipt of said
reimbursement statement. Upon written request, Landlord shall submit to Tenant
receipted bills showing the payment of such assessments. The Tenant shall be
responsible for the payment of all applicable sales taxes and other such taxes
as are now or hereafter enacted with respect to the tenancy created hereunder.
b. Nothing in this Lease shall require or be construed to
obligate Tenant to pay any corporate, estate, inheritance or succession tax of
Landlord or any income tax upon the income of Landlord.
c. Tenant may contest in good faith, by appropriate
proceeding, at Tenant's expense, in Landlord's or Tenant's name, whenever
necessary, any assessment, and may defer payment thereof, provided that Tenant
shall, if required by law, deposit with the appropriate taxing authority the
amount of the item so contested, and, further provided that such contest shall
not result in the placing upon or enforcement of any lien against the Leased
Premises. Tenant, in each such case, shall notify Landlord of its intent to
contest the assessment and shall further keep the Landlord fully advised as to
any such proceedings and the outcome thereof.
2
<PAGE>
d. Tenant may, if it shall so desire, and in its own name or
in the name of Landlord, as appropriate, endeavor at any time to contest in good
faith the validity of any assessment, or to obtain a lowering of the assessed
valuation upon the Leased Premises for the purpose of reducing any assessment,
provided that Tenant shall, if required by law, deposit with the appropriate
governmental authority the amount of the assessment so contested, and further
provided that such contest shall not result in the placing upon or enforcement
of any lien against the Leased Premises. In such event, Landlord will cooperate
with Tenant at the request of Tenant but without expense to Landlord. If
requested by Tenant, and provided it will not in the reasonable judgment of
Landlord incur any expense or liability thereby, Landlord will execute any
document, which may be necessary and proper for any such proceeding. Tenant, in
each such case, shall notify Landlord of its intent to contest the assessment or
valuation and shall further keep the Landlord fully advised as to any such
proceedings and the outcome thereof.
6. Possession and Use of Leased Premises. Tenant warrants that no
-------------------------------------
business shall be conducted on the Leased Premises, which will violate any law
or ordinance now or hereafter in force. Tenant shall keep and maintain at all
times during the Term of this Lease all licenses now or hereafter needed or
required for the lawful operation of its business on the Leased Premises.
Possession of the Leased Premises when delivered to Tenant shall be delivered
free and clear of all liens except mortgages now or hereafter placed on the
Leased Premises by Landlord, and Landlord shall have the right from time to time
to finance and refinance the Leased Premises subject to the provisions of this
Agreement. Tenant intends to use and occupy the Leased Premises primarily for
the manufacture, design and sale of crematories, incinerators and other
combustion equipment.
7. Relation of Parties. The receipt by Landlord of rents hereunder
-------------------
shall not be deemed to create a partnership or joint venture between Landlord
and Tenant, nor shall Landlord be liable for any debts incurred by Tenant in the
conduct of its business; it being understood that the relationship between such
persons is, and at all times shall remain, that of Landlord and Tenant. Landlord
shall have no management or operational responsibility whatsoever of Tenant's
business.
8. Maintenance and Repairs. Throughout the Term of this Lease, Tenant
-----------------------
shall bear all (100%) of the cost and expense of maintaining the Leased Premises
in good repair and in a clean, sightly and healthful condition, which
maintenance shall include the furnishing of janitorial services, all maintenance
and repairs and replacements, and landscape and grounds maintenance. Landlord
shall deliver the Leased Premises to Tenant with all electrical, heating,
cooling, plumbing and other systems in good working order. If Tenant fails to
repair or maintain the Leased Premises as herein required after thirty (30) days
prior written notice by Landlord, Landlord may pay for such normal repairs or
maintenance and all such amounts paid by Landlord shall automatically be added
to the following month's rental payment provided Landlord submits to Tenant
written confirmation of such normal repairs or maintenance.
9. Construction Liens. Landlord's interest shall not be subject to
------------------
liens for repairs or improvements made by Tenant upon the Leased Premises.
Tenant shall not permit any construction lien to be filed against the Leased
Premises or against Tenant's leasehold interest in the Leased Premises by reason
of work, labor, services or materials supplied to Tenant or anyone holding the
Leased Premises through or under Tenant. If any such construction lien shall at
any time be filed against the Leased Premises, Tenant shall, within sixty (60)
days after notice of the filing thereof,
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cause such lien to be discharged of record by payment, deposit, bond, order of a
court of competent jurisdiction, or otherwise. If Tenant shall fail to cause
such lien to be discharged within such sixty (60) day period, then, after ten
(10) days' written notice by Landlord, in addition to any other right or remedy
of Landlord, Landlord may, but shall not be obligated to, discharge such lien,
either by payment of the amount claimed to be due or by procuring the discharge
of such lien by deposit or by bonding proceedings, and in any such event
Landlord shall be entitled, if Landlord so elects, to compel the prosecution of
an action for the foreclosure of such construction lien by the lienor and to pay
the amount of the judgment for and in favor of the lienor, with interest, costs
and other allowances. Any amount reasonably paid by Landlord for any of such
purposes shall be repaid by Tenant to Landlord on demand, and if unpaid, shall
be treated as additional rent at Landlord's option. At the request of either
party, Landlord and Tenant shall execute an affidavit in recordable form for the
purpose of notifying third parties that the Landlord's interest in the Leased
Premises is not subject to any such construction liens for work performed by
Tenant. Said affidavit shall be recorded in the Public Records of Orange County,
Florida.
10. Insurance. Tenant shall pay for one hundred percent (100%) of the
---------
cost and expense of any insurance carried by Landlord with respect to Landlord's
Property. Tenant shall also maintain throughout the term commercial general
liability insurance in an amount at least equal to $3,000,000 (combined single
limit) or such higher amount as Landlord shall reasonably require. The insurance
shall cover the entire Leased Premises, shall name both Landlord and Tenant as
insureds, shall be issued by insurance companies and in form reasonably
satisfactory to Landlord, shall provide for at least ten (10) days prior written
notice to Landlord in the event of cancellation or material change. Copies of
such policy or policies shall be furnished to Landlord upon written request.
Tenant shall secure and bear the cost and expense of, and
maintain throughout the Term, fire and extended coverage insurance in such
amounts as will cover the full replacement cost of the improvements included as
a part of the Leased Premises, which insurance shall show the interest of the
Landlord and Tenant, shall be issued by insurance companies and in a form
reasonably satisfactory to Landlord, and shall provide for at least ten (10)
days prior written notice to Landlord in the event of such cancellation or any
material change. Each mortgagee of the Leased Premises shall be named as an
additional loss payee, as their interests shall appear. Copies of all such
policies shall be furnished to Landlord upon written request.
Any insurance provided for in this Paragraph may be effected
by a blanket policy or policies of insurance, or under so-called "all risk" or
"multi-peril" insurance policies provided it is available to Landlord. An
increased coverage or "umbrella policy" may be provided and utilized by Tenant
to increase the coverage provided by individual or blanket policies in lower
amounts, and the aggregate liabilities provided by all such policies covering
the Leased Premises and Landlord's liability hereunder shall be satisfactory
provided they otherwise comply with the provisions of this Paragraph. Landlord
shall be named as a loss payees.
11. Damage or Destruction of Leased Premises. If the Leased Premises
----------------------------------------
shall be damaged by fire, the elements, unavoidable accident, vandalism, or
other like casualty to the extent of less than fifty percent (5 0%) of the cost
of replacement of the Leased Premises, the damage (except damage to Tenant's
equipment, trade fixtures and other property) shall be promptly repaired by
Landlord at Landlord's expense, but only if insurance proceeds are available,
and the rent and other
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charges hereunder shall be abated to the extent, if any, that any portion of the
Leased Premises is rendered untenantable for Tenant's purposes (in the
reasonable opinion of Tenant), with such abatement to be computed on the basis
of the relation to which the gross square foot area of the space rendered
untenantable bears to the entire floor area of the Leased Premises, and with
such abatement to run from the date of occurrence of such damage. Provided,
however, that Landlord shall not be obligated to commence such repair,
restoration or rebuilding until insurance proceeds are received by Landlord, and
Landlord's obligation hereunder shall be limited to the proceeds actually
received by Landlord under any insurance policy or policies hereunder. If the
Leased Premises shall be so damaged to the extent of fifty percent (50%) or
more of the costs of replacement of the Leased Premises, Landlord may, at its
option, upon thirty (30) days prior written notice to Tenant, terminate this
Lease, or may elect to repair the Leased Premises (excluding the Tenant's
equipment, trade fixtures or other property), and in either event the rent
chargeable hereunder shall be abated in the manner aforesaid. If the Leased
Premises is so damaged to the extent that the Leased Premises is wholly
untenantable for the Tenant's purposes (in the reasonable opinion of Tenant),
then the Tenant may lease other premises for a period of up to one (1) year,
during which time the running of the Lease Term shall be tolled and all of
Tenant's obligations under this Lease shall abate. If Landlord has not rebuilt
or repaired the Leased Premises to a condition, which is equal to or better than
the condition thereof existing immediately prior to such casualty within nine
(9) months after such casualty, then Tenant may terminate this Lease.
12. Gas, Water and Electricity. Tenant agrees to pay all public
--------------------------
utility charges that may be assessed, including without limitation charges for
gas, electric light or power, water and sewerage (hereinafter "Utility
Expenses") used in or about the Leased Premises, which shall accrue during the
term of this Lease. Tenant shall be solely responsible for any and all required
installation, deposits and other charges incurred in connection with Tenant's
use of the utilities. In the event of failure of Tenant to pay any Utility
Expense within fifteen (15) days after written notice from Landlord that the
same are due and payable, Landlord shall have the right and privilege to pay
such charges, which amounts shall be deemed as additional rent, and shall be due
and payable with the next installment of rent due thereafter.
13. Tenant to Comply with all Laws. Tenant covenants and agrees that
------------------------------
it will comply with all valid laws, ordinances, rules and regulations of the
state and county in which the Leased Premises are located, and of the United
States, and any governmental authority having jurisdiction over the Leased
Premises, applicable to the occupancy or use of the Leased Premises, excluding
any law, ordinance, rule or regulation requiring structural improvements to the
Leased Premises and any improvements to the Leased Premises during the last year
of the Term.
14. Right of Inspection by Landlord. Landlord, its agents or
-------------------------------
representatives, shall have the right upon at least three (3) business days'
prior notice to Tenant (except in the case of an emergency), to enter upon the
Leased Premises at all reasonable hours for the purpose of inspection of same.
Tenant, at its option, may provide an employee to accompany Landlord's
representative, but the unavailability of such employee shall not delay the
inspection.
15. Eminent Domain. If, during the Term hereof, all or so much of the
--------------
Leased Premises shall be taken in any proceeding by public authorities by
condemnation or otherwise, or be acquired for public or quasi-public purposes,
such that the continued operation of the Tenant's business on the
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Leased Premises becomes operationally or economically unfeasible (in the
reasonable opinion of Tenant), this Lease shall be terminated, in which case any
unearned rent paid or credited in advance shall be refunded to Tenant. In the
event of a partial taking which would not cause the continued operation of the
business to become operationally or economically unfeasible (in the reasonable
opinion of Tenant), Landlord shall, with all reasonable dispatch, repair the
remaining portion of the building structure and/or parking areas complete in
themselves and as a complete architectural and/or physical unit so as to put the
building structure and parking areas in a condition to be used by Tenant, and
the rent payable hereunder shall be reduced in proportion to the portion of the
building structure and parking areas taken; provided, however, if Landlord is
able to provide additional parking in amount, reasonable proximity to the Leased
Premises and quality (i.e., surfaced and striped) which is equal to or better
than that which is condemned, then there shall be no rent reduction for parking
loss. Except for payments made pursuant to Tenant's rental protection insurance,
if any, claim for which shall be made, the rent shall be abated during any
period of time that the Leased Premises is untenantable. In the event Landlord
does not commence such work within thirty (30) days after such taking and does
not complete the work within one hundred twenty (120) working days after
commencement of such work, then this Lease, at the option of Tenant, shall cease
and terminate. It is expressly agreed and understood that all sums awarded or
allowed for such taking of the Leased Premises or any part thereof or for
damages for such taking shall belong to Landlord with the exception of any
separate amount specifically awarded to Tenant for moving expenses.
16. Alterations and Improvements.
----------------------------
a. Alterations. Tenant shall be permitted to make any
-----------
structural or non-structural alterations, additions or improvements to or on the
Leased Premises provided such alterations, additions or improvements do not
adversely affect the Leased Premises, including, without limitation, the
plumbing, HVAC systems or electrical system of the Leased Premises. Such
alterations, additions and improvements as are made by Tenant shall be at
Tenant's sole expense. All alterations, additions or improvements to the Leased
Premises which may be made by either party hereto shall be the property of
Landlord, and shall remain upon and be surrendered with the Leased Premises as a
part thereof at the termination of this Lease.
Tenant shall furnish Landlord a copy of the plans and
specifications for any structural alterations, which shall be prepared by a
licensed architect. Landlord shall be entitled to approve such plans and
specifications, which approval shall not be unreasonably withheld. Any approval
or disapproval by Landlord shall be given in writing within fifteen (15) days of
Landlord's receipt of the plans and specifications, and, if disapproved, shall
state the reasons for the disapproval. Failure of the Landlord to provide a
written response within the fifteen (15) day period shall automatically be
deemed as approval. Construction of structural alterations shall be under a
contract with a general contractor licensed in the State of Florida.
b. All alterations, additions and improvements shall be
performed in a first-class workmanlike manner, and shall not weaken or impair
the structural strength or lessen the value of the existing buildings as such
shall be on the Leased Premises at the time of the construction or increase
Landlord's liability to Leased Premises. If required, before the commencement of
such work, such plans and specifications shall be filed with and approved by all
governmental departments or authorities having jurisdiction, and any public
utility company having an interest therein, and all such
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work shall be done subject to and in accordance with the requirements of law and
local regulations of all governmental departments or authorities having
jurisdiction and of each public utility company. Landlord agrees, at Tenant's
expense, to execute such documents and take such action as may be necessary or
desirable to assist Tenant in obtaining such governmental approvals.
17. Tenant's Fixtures and Equipment. All machinery or equipment owned
-------------------------------
or installed by the Tenant in the Leased Premises shall be and remain the
property of the Tenant and may be removed by it at any time during or at the
expiration of the term of this Lease. In the event any removal of machinery or
equipment shall injure or damage the Leased Premises, the Tenant agrees to
repair such damage at its own expense.
18. Tenant's Right to Install Signs. Tenant shall have the privilege
-------------------------------
of placing signs on the Leased Premises for the conduct of its business,
provided Tenant pays all permit and license fees which may be required to be
paid for the erection and maintenance of any and all such signs, and provided
such signs are legally permitted to be installed. Landlord must approve the
size, location and method of installation of any sign placed by Tenant,
provided, however, that such approval shall not be unreasonably withheld.
19. Right of Landlord to Subordinate. Landlord reserves the right to
--------------------------------
subordinate and subject this Lease at all times to the lien of any bona fide
mortgage or mortgages now or hereafter placed upon the Landlord's interest in
the Leased Premises and on the land and building of which the Leased Premises
are a part, or upon any building hereafter placed upon the land of which the
Leased Premises form a part. The parties hereto expressly acknowledge and agree
that (a) this Lease is conditioned upon Landlord delivering to Tenant a
nondisturbance agreement from any existing mortgagee in a form reasonably
satisfactory to Tenant, and (b) Landlord's right to subordinate this Lease is
conditioned upon Landlord first delivering to Tenant a nondisturbance agreement
from any proposed mortgagee in a form reasonably satisfactory to Tenant. Subject
to the foregoing, Tenant covenants and agrees to execute and deliver upon demand
such further instrument or instruments subordinating this Lease to the lien of
any such mortgage or mortgages and attain to any such mortgagee, as shall be
desired by Landlord or any mortgagees or proposed mortgagee; provided, however,
that such subordination and attornment agreement shall not subject Tenant to any
obligations other than those expressly contained in this Lease. Such
subordination and attornment shall be delivered by Tenant to Landlord within ten
(10) days after written demand.
20. Assignment or Subletting. Tenant shall be entitled to assign its
------------------------
leasehold estate under this Lease or sublet all or any part of the Leased
Premises to any parent, subsidiary or affiliate of Tenant, upon notifying
Landlord in writing of such assignment or sublease and provided the assignee or
sublessee intends to maintain the same or similar use of the property. Any other
assignment or subletting must be approved by Landlord in writing, which approval
shall not be unreasonably withheld. In the event of an assignment or subletting,
Tenant shall remain liable to Landlord for its obligations under the Lease
unless released therefrom in writing by Landlord.
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21. Default.
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a. Default by Tenant. If Tenant shall fail or refuse to pay
-----------------
the rent reserved herein or any other sums due by Tenant hereunder and such
default continues for a period often (10) days after the date due; or if Tenant
shall fail to observe or comply with any of the terms, provisions or conditions
of this Lease to be observed and performed by Tenant and such default continues
for a period of thirty (30) days after receipt of written notice by Landlord to
Tenant; or upon the making by Tenant of any general assignment for the benefit
of creditors, the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed with prejudice within sixty (60) days), the
appointment of a trustee or receiver to take possession that is not restored to
Tenant within thirty (30) days, or the attachment, execution or other judicial
seizure that is not discharged within thirty (30) days, then in any such case or
event, Landlord, at Landlord's option and in addition to any other remedies
Landlord may have, shall have the following rights, which may be exercised
independently or concurrently:
(1) The right to declare the entire remaining unpaid rental for
the term of this Lease immediately due and payable forthwith at the then-current
rate of monthly rental and take any legal action to recover and collect the
same;
(2) The right, without further notice or demand, to terminate
this Lease, to re-enter the Leased Premises, or any part thereof, and expel and
remove all persons or property occupying the Leased Premises, and to take
possession of any and all furniture, fixtures and chattels in or on the Leased
Premises and sell same, in whole or in part, at any place, or cause the same to
be sold at public or private sale, with notice to Tenant, without obtaining any
execution order or decrees, to the highest bidder for cash, with or without such
property being present at the sale, and apply the proceeds thereof to the
payment of costs and expenses of taking and removing the property and holding
the sale and of rents and amounts owing Landlord; any excess going to Tenant,
and Tenant agrees to make good any deficiency; and/or
(3) The right, but the Landlord shall not be under any
obligation to do so, to enter the Leased Premises, or any part thereof, and
expel and remove all persons, property and signs therefrom, and relet the same,
for the account of the Tenant, for such rent and such terms as shall be
satisfactory to Landlord without such re-entry working on a forfeiture of the
rents to be paid and the covenants to be performed by the Tenant during the full
term of this Lease. If a sufficient sum shall not be realized monthly from such
re-letting after paying all the costs and expenses of such repairs, changes,
alterations or additions, the expenses of such re-letting and the collection of
the rent accruing therefrom to satisfy the monthly rent provided herein to be
paid by the Tenant, then the Tenant shall and will, and does hereby covenant to
pay such deficiency each month upon demand therefor.
If a non-monetary default by Tenant requires more than thirty
(30) days to cure, Tenant shall not be deemed to be in default, if, in good
faith, it has commenced to cure such default within said thirty (30) day period
and diligently pursues the same. Notwithstanding anything to the contrary
contained in this Lease, if Tenant pays the rent provided in this Lease then
Tenant shall be deemed not to have abandoned the Leased Premises, subject to the
provisions of Section 6.
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b. Default by Landlord. In the event of default by Landlord
-------------------
which is not corrected within thirty (30) days after receipt of written notice
by Tenant to Landlord (or such shorter period after notice as may be required in
the event of an emergency), or if such default requires more than thirty (30)
days to correct, if Landlord has not commenced correction of such default and
does not diligently pursue the same, then, except as otherwise therein provided,
Tenant shall have the option to institute an action to require performance by
the Landlord.
c. The rights and remedies of Landlord and Tenant under this
Paragraph are cumulative to those elsewhere provided herein.
22. Indemnity. Tenant, during the Term and any extension or renewal
---------
thereof, shall indemnify and save Landlord harmless from and against any and all
claims and demands whether for injuries to persons or loss of life, or damage to
property, related to or arising in any manner whatsoever out of the use and
occupancy of the Leased Premises by Tenant or occasioned wholly or in part by
any act or omission of Tenant, its agents, contractors, employees acting within
the scope of their employment by Tenant, invitees, licensees or customers
(except when such claims for injuries or damages are occasioned by or result
from the negligence or willful action of the Landlord, its agents, contractors
or employees).
23. Hazardous Materials. Tenant shall have no responsibility for
-------------------
the discovery, presence, handling, removal, encapsulation or disposal of any
hazardous materials, including but not limited to asbestos products,
polychlorinated biphenyl (PCB), or other toxic substances which became located
on the Leased Premises prior to the delivery of the Leased Premises to Tenant or
which are not due to Tenant's use or occupancy thereof. Landlord agrees to
indemnify and hold Tenant harmless from and against all claims and costs arising
out of the discovery or removal of said hazardous materials which became located
on the Leased Premises prior to Tenant taking possession of the Leased Premises
under this Lease. Tenant agrees to indemnify and hold Landlord harmless from and
against all claims and costs arising out of the discovery or removal of said
hazardous materials which become located on the Leased Premises subsequent to
Tenant taking possession of the Leased Premises under this Lease and which are
due to Tenant's use or occupancy thereof.
24. Holding Over. Any holding over by Tenant after expiration or
------------
termination of this Lease, in whatever manner its termination shall occur, shall
not operate as a renewal of this Lease, but during the period of such holding
over, Tenant shall be a tenant on a month-to-month basis and shall pay Base Rent
in an amount equal to one and one-half (11/2) times the Base Rent due during the
last month of the Term.
25. Attorneys' Fees and Costs Upon Default. In case either party
--------------------------------------
hereto places the enforcement of this Lease, or any part of same or the
collection of any rent or other sums due or to become due hereunder, or the
recovery of possession of the Leased Premises, in the hands of an attorney, or
files suit upon the same, the non-prevailing party in any such action agrees to
pay to the prevailing party all reasonable attorneys' fees and all expenses and
costs incurred by the prevailing party pertaining thereto (including costs and
fees relating to any appeal) and in enforcement of any remedy, and the payment
of same shall be secured in like manner as is herein provided for as security
for rent.
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26. Quiet Possession. Landlord covenants and agrees with Tenant
----------------
that upon Tenant paying the Base Rent, and performing all the covenants and
conditions aforesaid on Tenant's part to be observed and performed, Tenant shall
and may peaceably and quietly have, hold and enjoy the Leased Premises, for the
Term provided herein, subject, however, to the terms of this Lease.
27. Brokerage. Landlord and Tenant hereby acknowledge, represent
---------
and warrant to each other that no broker or finder has been employed by either
Landlord or Tenant in connection with the Lease transaction contemplated in this
Lease. Landlord and Tenant each warrant to the other that no commissions are
payable by Landlord or Tenant to any other broker or finder in connection with
this Lease or the transaction contemplated herein, and Landlord and Tenant each
agrees to indemnify, defend, save and hold the other harmless from and against
the payment of any further commissions or fees or claims for commissions or fees
by virtue of any acts or actions undertaken by them, respectively, including
reasonable attorneys' fees and costs in defending against the same.
28. Notices. Whenever, in the provisions of this Lease, notice is
-------
required to be given by either party herein, it shall not be construed to
require personal notice, but notice may be given in writing by depositing the
same with the U.S. Postal Service, with postage prepaid, in a sealed envelope,
and addressed to such other party and sent by registered or certified mail,
return receipt requested, or it may be delivered personally or by Federal
Express, Express Mail or any other nationally recognized courier service.
Notice to Landlord James P. Crawford and Kathleen B. Crawford
shall be sent to: 13025 Kirby Smith Road
Orlando, Florida 32832
Notice to Tenant Crawford Equipment and Engineering Company
shall be sent to: Post Office Box 593243
Orlando, Florida 32859-3243
Attention: Steven L. Atkinson, C.E.O.
or at such other place as Landlord or Tenant may in writing require.
29. Estoppel. Landlord and Tenant agree that when requested in
--------
connection with any matter relating to the Leased Premises that they will
deliver an estoppel certificate to the other party, addressed as such party
directs, within twenty (20) days after such request. An estoppel certificate
shall set forth the following statements to the best knowledge of the persons
certifying:
a. Whether or not the Lease has been supplemented or amended
and, if so, the specifics of such supplement or amendment.
b. Whether or not the Lease is in full force and effect and if
not, the reasons therefor.
c. The date to which rent and other charges have been paid.
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d. Whether or not there has occurred an event of default,
which continues to exist, or an event exists that may cause a future default,
and, if so, the nature and extent of such event of default.
The estoppel certificate may be relied upon by the party
requesting it or by any other party to whom it is addressed. The contents of the
estoppel certificate shall be binding on the party, which has executed it.
30. Modification or Alteration of Lease. No modification of the
-----------------------------------
provisions, covenants, conditions and terms of this Lease shall become effective
or take precedence unless such modifications are especially covered by written
agreement, signed by both the Landlord and Tenant, and made a supplement of this
Lease.
31. Severability. No provision of this Lease in violation of any
------------
law or ordinance shall invalidate this Lease, and any such provision shall be
deemed stricken from this Lease and all remaining portions of this Lease shall
remain in full force and effect.
32. Rights of Successors in Interest. This Lease, including all
--------------------------------
terms, conditions and covenants, shall be binding upon and shall inure to the
benefit of each of the parties hereto, their successors, assigns and legal
representatives, the same as if such words had been inserted following the names
of Landlord and Tenant, respectively.
33. Governing Laws. This Lease shall be governed, construed and
--------------
enforced in accordance with the laws of the state of Florida.
34. Counterparts. This Lease may be executed in multiple
------------
counterparts, each of which shall be deemed an original.
35. Performance Under Protest. If a dispute shall arise with
-------------------------
respect to the performance of any obligation including an obligation to pay
money, the party against which the obligation is asserted shall have the right
to perform the obligation under protest. Performance of an obligation under
protest shall not be regarded as voluntary performance. A party that shall have
performed under protest shall also have the right to institute a lawsuit to
recover any amount paid or the reasonable costs of otherwise complying with any
such obligation.
36. Warranties and Representations. Landlord warrants and
------------------------------
represents to the Tenant that as of the date of this Lease:
a. Landlord is the owner in fee simple of the Leased
Premises described in Exhibit "A" attached hereto;
b. There are no restrictions in any contract or agreement to
which Landlord is a party which would interfere with Landlord's performance of
its obligations under this Lease;
c. There are no zoning or other governmental regulations which
would prohibit the use of the Leased Premises for its intended uses by the
Tenant; and
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d. There are no assessments imposed against the Leased
Premises, which remain due and unpaid as of the date hereof
37. Memorandum. At the request of either party, both Landlord and
----------
Tenant shall execute a memorandum of this Lease in recordable form. Such
memorandum shall be recorded in the Public Records of Orange County, Florida.
38. Time. For all purposes of this Lease, it shall be understood
----
that time is of the essence.
39. Venue. Landlord and Tenant agree that the exclusive venue for
-----
any actions or litigation related to this Lease shall be in the appropriate
court in Orange County, Florida.
40. Radon Gas. Radon is a naturally occurring radioactive gas that,
---------
when it has accumulated in a building in sufficient quantities, may present
health risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
your county public health unit.
41. Net Lease. This Lease is intended to be a net lease. The Tenant
---------
shall pay the rent hereunder and all expenses related to the Leased Premises and
allocable expense related to the Leased Premises (i.e., insurance, taxes,
utilities, etc.), except the costs associated with the mortgage.
IN WITNESS WHEREOF, the parties have executed this Lease as of the
date first written above.
"Landlord"
/s/ James P. Crawford
-----------------------------------
JAMES P. CRAWFORD
/s/ Kathleen B. Crawford
-----------------------------------
KATHLEEN B. CRAWFORD
"Tenant"
CRAWFORD EQUIPMENT AND
ENGINEERING COMPANY
By: /s/ Steve Atkinson
--------------------------------
STEVE ATKINSON,
President
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EXHIBIT "A"
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Lot 9 in Spahaler's addition to Prosper Colony recorded in Plat Book F, Page 94,
Public Records of Orange County, Florida, less W'ly 1.00 ft. and N'ly 10.00 ft.
for road right of way containing 4.52 acres; Section 2 Townsaid 24 Range 29.
- -- --
<PAGE>
Exhibit 10.5
THIS INSTRUMENT PREPARED BY
AND SHOULD BE RETURNED TO:
Robert P. Saltsman, Esq.
ROBERT P. SALTSMAN, P.A.
222 W. Comstock Avenue, Suite 210
Post Office Box 2146
Winter Park, FL 32790
(407) 647-2899
Property Appraiser Parcel (Folio) Identification No.(s):
For Recording Purposes Only
MORTGAGE
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THIS MORTGAGE (hereinafter referred to as the "Mortgage") executed as of
the ____ day of ________, 1998, by JAMES P. CRAWFORD AND KATHLEEN B. CRAWFORD,
husband and wife, whose post office address is 436 West Landstreet Road,
Orlando, Florida 32824 (hereinafter together to as "Mortgagor"), to CRAWFORD
EQUIPMENT & ENGINEERING COMPANY, a Florida corporation, whose post office
address is 436 West Landstreet Road, Orlando, Florida 32824 (hereinafter
collectively referred to as the "Mortgagee").
WITNESSETH:
-----------
THAT for good and valuable consideration and in consideration of the
aggregate sum named in the Mortgage Note of even date hereinafter described, the
Mortgagor hereby grants, bargains, sells, aliens, remises, conveys and confirms
unto the Mortgagee all the certain land (the "Property") of which the Mortgagor
is now seized and in possession situate in Orange County, Florida, as more
particularly described as follows:
Lots 41 and 42, West of the Drainage Canal, Sphalers Addition to Prosper
Colony, as recorded in Plat Book "F", Page 94, of the Public Records of
Orange County, Florida.
TO HAVE AND TO HOLD the same, together with the tenements, hereditaments
and appurtenances thereto belonging, and the rents, issues and profits thereof,
unto the Mortgagee, in fee simple.
AND the Mortgagor covenants with the Mortgagee that the Mortgagor is
indefeasibly seized of the Property in fee simple; that the Mortgagor has good
right and lawful authority to convey the Property as aforesaid; that the
Mortgagor will make such further assurances to perfect the fee simple title to
the Property in the Mortgagee as may reasonably be required; that the Mortgagor
hereby fully warrants the title to the Property and will defend the same against
the lawful claims of all persons
<PAGE>
whomsoever, and that the Property is free and clear of all encumbrances except
taxes subsequent to December 31, 1997, and easements and restrictions imposed
of record, if any.
PROVIDED ALWAYS, that if said Mortgagor shall pay unto said Mortgagee that
certain Mortgage Note (hereinafter referred to as the "Note"), a copy of which
is attached hereto as Exhibit "A" and shall perform, comply with and abide by
each and every the agreements, stipulations, conditions and covenants thereof,
and of this Mortgage, then this Mortgage, and the estate hereby created, shall
cease, terminate and be null and void.
AND the Mortgagor hereby further covenants and agrees to pay promptly when
due the principal and interest and other sums of money provided for in the Note
and this Mortgage, or either, to pay all and singular the taxes, assessments,
levies, liabilities, obligations, and encumbrances of every nature on said
property; to permit, commit or suffer no waste, impairment or deterioration of
the Property or the improvements thereon at any time; to pay all costs, charges,
and expenses, including attorneys' fees and title searches, reasonably incurred
or paid by the Mortgagee because of the failure of the Mortgagor to promptly and
fully comply with the agreements, stipulations, conditions and covenants of the
Note and this Mortgage, or either; to perform, comply with and abide by each and
every the agreements, stipulations, conditions and covenants set forth in the
Note and this Mortgage, or either. In the event the Mortgagor fails to pay when
due any tax, assessment, or other sum of money payable by virtue of the Note and
Mortgage, or either, the Mortgagee may pay the same, without waiving or
affecting the option to foreclose or any other right hereunder, and all such
payments shall bear interest from the date thereof at the highest lawful rate
then allowed by the laws of the State of Florida.
AND the Mortgagor hereby further covenants to keep the buildings now or
hereafter erected on the Property insured as may be required by the Mortgagee
against loss by fire and other hazards, casualties, and contingencies, in
amounts and in companies and for periods as Mortgagee shall require. Upon
failure to so insure, Mortgagee may have insurance written and pay the premium.
If this occurs, the principal sum secured by this Mortgage together with the
amount paid by the Mortgagee for insurance shall at Mortgagee's option
immediately become due and payable. Mortgagor will give Mortgagee immediate
notice by mail of any fire, damage, or other casualty to the Property or of any
conveyance, transfer, or change of ownership of the Property. If the Property or
any part thereof is damaged by fire or other hazard, the amounts paid by any
insurance company pursuant to the contract of insurance shall, to the extent of
the indebtedness then remaining unpaid, be paid to Mortgagee and, at Mortgagee's
option, may be applied to the debt or released for the repair or rebuilding of
the Property.
If any sum of money herein referred to be not promptly paid within ten (10)
days next after the same becomes due, or if each and every the agreements,
stipulations, conditions and covenants of the Note and this Mortgage, or either,
are not fully performed, complied with and abided by or any prior mortgage on
the Property, then the entire sum mentioned in the Note, and this Mortgage or
the entire balance unpaid thereon, shall forthwith or thereafter, at the option
of the Mortgagee, become and be due and payable anything in the Note or herein
to the contrary notwithstanding. Failure by the Mortgagee to exercise any of the
rights or options herein provided shall nor constitute a waiver of any rights
or options under the Note or this Mortgage accrued or thereafter accruing.
2
<PAGE>
Mortgagor shall have the right to prepay all or any portion of the
unpaid balance of the indebtedness hereunder at any time without penalty as more
particularly described in the Note.
IN WITNESS WHEREOF, the Mortgagor has caused these presents to be
executed in manner and form sufficient to bind it as of the day and year first
above written.
Signed, sealed and delivered
in the presence of:
Sign:
-------------------------- ---------------------------
Print: JAMES P. CRAWFORD
-------------------------
436 West Landstreet Road
Sign: Orlando, FL 32824
--------------------------
Print:
-------------------------
Sign:
-------------------------- ---------------------------
Print: KATHLEEN B. CRAWFORD
-------------------------
436 West Landstreet Road
Sign: Orlando, FL 32824
--------------------------
Print:
-------------------------
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this _______ day of
_________, 1998, by James P. Crawford.
[_] Personally known to me.
[_] Produced identification: ---------------------------
Type: Notary Public
------------------------
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this ______ day of
_________, 1998, by Kathleen B. Crawford.
[_] Personally known to me.
[_] Produced identification: ---------------------------
Type: Notary Public
------------------------
3
<PAGE>
PROMISSORY NOTE
$750,000.00 Orlando, Florida
____________, 1998
FOR VALUE RECEIVED, the undersigned promise to pay to the order of
CRAWFORD EQUIPMENT & ENGINEERING COMPANY, a Florida corporation, at 436 West
Landstreet Road, Orlando, Florida 32824, or at such other place and to such
other person or persons as the holder of this Promissory Note may designate in
writing from time to time, the principal sum of SEVEN HUNDRED FIFTY THOUSAND AND
00/100 DOLLARS ($750,000.00), with interest thereon at the rate of Eight Percent
(8%) interest per annum on the unpaid principal for the term of Twenty (20)
years from the date hereof as follows:
A. Principal and interest shall be due and payable in equal monthly
payments of SIX THOUSAND TWO HUNDRED SEVENTY THREE AND 30/100 DOLLARS
($6,273.30) commencing on __________, 1998, and each consecutive month
thereafter for the term of Twenty (20) years, until paid in full.
Privilege is reserved by the Makers hereof to prepay all or any portion
of the outstanding principal balance of this Note at any time without premium,
penalty or fee.
This Note is secured by that certain Mortgage on real estate, of even
date herewith, made by the Makers hereof in favor of the said Payee, the terms
and conditions of which are incorporated herein by this reference, and this Note
shall be construed and enforced according to the laws of the State of Florida
and in accordance with the terms of said Mortgage.
In the event of a default by Makers in the payment of the installments
hereunder for fifteen (15) days continuing after the due date of an installment,
the Payee shall have the option to accelerate the balance due and payable and to
declare the entire remaining balance due and payable at that time. If Makers
shall default under this Note and if this Note is placed in the hands of an
attorney at law for collection, the undersigned agree to pay all costs of
collection, including reasonable attorney's fees, whether suit be brought or
not, and if suit be brought, then to further pay all costs and expenses,
including attorney's fees, in any appellate proceeding.
<PAGE>
Except as otherwise provided herein, all payments shall be applied first
to principal then to accrued interest.
The undersigned waives presentment, protest and notice of dishonor.
This Promissory Note sets forth the entire understanding and agreement
between the parties hereto in regard to the matters herein, and it may not be
amended, changed or modified except by an instrument in writing executed by the
party to be charged by said amendment, change or modification.
-------------------------------
JAMES P. CRAWFORD
-------------------------------
KATHLEEN B. CRAWFORD
Makers' Address:
436 West Landstreet Road
Orlando, Florida 32824
2
<PAGE>
Mortgagor shall have the right to prepay all or any portion of the
unpaid balance of the indebtedness hereunder at any time without penalty as more
particularly described in the Note.
IN WITNESS WHEREOF, the Mortgagor has caused these presents to be
executed in manner and form sufficient to bind it as of the day and year first
above written.
Signed, sealed and delivered
in the presence of:
Sign: /s/ James P. Crawford
-------------------------- ---------------------------
Print: JAMES P. CRAWFORD
-------------------------
436 West Landstreet Road
Sign: Orlando, FL 32824
--------------------------
Print:
-------------------------
Sign: /s/ Kathleen B. Crawford
-------------------------- ---------------------------
Print: KATHLEEN B. CRAWFORD
-------------------------
436 West Landstreet Road
Sign: Orlando, FL 32824
--------------------------
Print:
-------------------------
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this _______ day of
_________, 1998, by James P. Crawford.
[_] Personally known to me.
[_] Produced identification: ---------------------------
Type: Notary Public
------------------------
STATE OF FLORIDA
COUNTY OF ORANGE
The foregoing instrument was acknowledged before me this ______ day of
_________, 1998, by Kathleen B. Crawford.
[_] Personally known to me.
[_] Produced identification: ---------------------------
Type: Notary Public
------------------------
3
<PAGE>
Exhibit 10.6
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated as of January 1, 1998, between
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY, a Florida corporation (hereinafter
referred to as the "Company"), and JAMES P. CRAWFORD (the "Executive").
The Executive is presently the Chairman of the Board of Directors and Chief
Executive Officer for the Company and shall continue to serve in those
capacities during the term of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and of other good and valuable consideration, the receipt of sufficiency of
which are hereby acknowledged, the Company and the Executive agree as follows:
Section 1. Definitions. For purposes of this Agreement, the following
--------- -----------
terms have the meanings set forth below:
"Base Salary" has the meaning set forth in Section 4.1.
-----------
"Cause" means (a) theft or embezzlement by the Executive with respect to
-----
the Company; (b) wilful malfeasance or nonfeasance of a duty intended to injure
or having the effect of injuring the reputation, business or business
relationships of the Company; (c) the commission of the Executive of any felony
resulting in direct material injury to the business or property of the Company;
(d) willful or prolonged absence from work by the Executive (other than by
reason of disability due to physical or mental illness) or failure, neglect or
refusal by the Executive to perform his duties and responsibilities without the
same being corrected within ten days after being given written notice thereof;
or (e) the material breach by the Executive of any of the covenants contained in
this Agreement.
<PAGE>
"Confidential Information" means information that is not generally
------------------------
known to the public and that was or is used, developed or obtained by the
Company in connection with its business. It shall not include information (i)
required to be disclosed by court or administrative order; (ii) lawfully
obtainable from other sources or which is in the public domain through no fault
of Executive, or (iii) the disclosure of which is consented to in writing by the
Company.
"Employment Period" has the meaning set forth in section 2 of this
-----------------
Agreement.
"Intellectual Property" has the meaning set forth in Section 7 of this
---------------------
Agreement.
"Material Change by Company" means (a) without the Executive's express
--------------------------
written consent, the assignment to him of any duties materially inconsistent
with his positions, duties, and responsibilities with the Company during the
twelve (12) months prior to the date of this Agreement; (b) a material reduction
in the Executive's Base Salary; (c) the failure by the Company to continue in
effect any benefit or compensation plan, pension plan, life insurance plan,
health and accident plan or disability plan in which he is presently
participating or enter into new plans substantially similar to those previously
mentioned which, when considered in the aggregate, provide him with a
substantially similar level of benefits in the aggregate; or (d) any purported
termination of his employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 5.8 below. For purposes of
this paragraph, a material reduction in the Executive's Base Salary is defined
as 10% of the current Base Salary at the time of reduction.
2
<PAGE>
"Noncompetition Period" has the meaning set forth in Section 9.1
---------------------
hereof.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Permanent Disability" means those circumstances where the Executive
--------------------
is unable to continue to perform the usual customary duties of his assigned job
or as otherwise assigned in accordance with the provisions of this Agreement for
a period of four (4) consecutive months.
"Reimbursable Expenses" has the meaning set forth in Section 4.4 of
---------------------
this Agreement.
"Trade Secrets" shall have the meaning as defined within Section
-------------
688.002(4), Fla. Stat., as amended.
Section 2. Employment. The Company hereby employs the Executive, and
--------- ----------
the Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the date of
this Agreement and ending as provided in Section 5 (the "Employment Period").
-----------------
Section 3. Position and Duties.
--------- -------------------
3.1 Position and Duties. The Executive shall serve as Chief Executive
-------------------
Officer and Chairman of the Board of Directors of the Company and shall have
such responsibilities, powers and duties as may from time to time be prescribed
by the Board of Directors of the Company, provided, that such duties and
--------
responsibilities are substantially
3
<PAGE>
consistent with his duties with the Company within the twelve (12) month period
prior to this Agreement and with those of a senior executive officer. The
Executive shall devote substantially all of his working time and efforts to the
business and affairs of the Company. The Executive shall not directly or
indirectly render any services for payment of a business, commercial or
professional nature to any other person or for profit organization not related
to the business of the Company, whether for compensation or otherwise, without
prior written consent of the Company.
3.2 Reporting. The Executive will report to the Board of Directors of
---------
the Company, or any executive committee(s) hereafter established by such Board
of Directors.
Section 4. Base Salary and Benefits.
--------- ------------------------
4.1 Base Salary. During the Employment Period, the Executive's base
-----------
salary will be $125,000 per annum (the "Base Salary"), which Base Salary will be
payable in regular installments in accordance with the general payroll practices
of the Company. The Base Salary shall be subject to review on an annual basis or
at the Company's discretion such earlier date as the Board of Directors may
designate.
4.2 Bonuses. In addition to the Base Salary, the Executive shall be
-------
eligible to receive annual bonuses as determined by the Board of Directors of
the Company.
4.3 Benefits. In addition to the Base Salary, and any bonuses payable
--------
to the Executive pursuant to this Agreement, the Executive shall be entitled to
the following benefits during the Employment Period:
4
<PAGE>
(a) such major medical, life insurance and disability insurance
coverage as is, or may during the Employment Period, be provided for other
senior executive officers of the Company;
(b) a maximum of three (3) weeks of paid vacation annually during
the term of the Employment Period;
(c) an automobile on terms and conditions existing at the date of
the Agreement; and
(d) during the Employment Period, the Executive shall also
participate in or receive benefits under any other plan or arrangement for the
senior executives of the Company in the future, subject to and on a basis
consistent with terms and conditions and overall administration of such plans.
4.4 Expenses. The Company shall reimburse the Executive for all
--------
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent with the Company's policies in effect from
time to time with respect to travel, entertainment and other business expenses
("Reimbursable Expenses"), subject to the Company's requirements with respect to
---------------------
reporting and documentation of expenses.
Section 5. Term and Termination.
--------- --------------------
5.1 Term. The initial Employment Period will terminate on the fifth
----
anniversary of the date of this Agreement; provided, that (a) the Employment
--------
Period shall terminate prior to such date upon the Executive's resignation,
death or Permanent Disability, (b) the Employment Period may be terminated by
the Company at any time prior to such date, if such termination shall be for
Cause, and (c) the Executive may terminate for a Material Change by the Company
during the
5
<PAGE>
Employment Period. At the end of the initial Employment Period, this Agreement
shall be automatically renewed for a renewal Employment Period of one (1) year
and each year thereafter unless either party with sixty (60) days notice prior
to the end of the initial Employment Period or any renewal Employment Period
notifies the other of its intention not to renew.
5.2 Unjustified Termination. Except as otherwise provided in Section
-----------------------
5.3 below, if the Employment Period shall be terminated by the Company prior to
the fifth anniversary of the date of this Agreement or prior to the end of the
year in any renewed Employment Period for any reason, other than (a) for Cause,
(b) as a result of the Executive's resignation or leaving his employment, other
than for a Material Change by Company and non-renewal referred to in Section
5.4, or (c) as a result of the death or Permanent Disability of the Executive
(collectively, an "Unjustified Termination"), the Executive shall be paid the
amount of two and one-half (2 1/2) years of his Base Salary so long as the
Executive receiving payments hereunder has not breached and does not breach the
provisions of Sections 6, 7, 8 or 9 of this Agreement. The Executive shall also
be reimbursed all Reimbursable Expenses incurred by the Executive prior to the
termination of the Employment Period. The amounts payable pursuant to this
Section 5.2 may be payable, at the Company's discretion, in one lump sum
payment, within 30 days following termination of the Employment Period or in
equal monthly installments for the number of months for the length of the period
of compensation described herein. Furthermore, an Unjustified Termination shall
also include termination by the Executive for a Material Change by the Company.
6
<PAGE>
5.3 Justified Termination. If the Employment Period shall be
---------------------
terminated by the Company prior to the fifth anniversary of the date of this
Agreement (a) for Cause, (b) as a result of the Executive's resignation or
leaving of his employment other than for a Material Change by the Company, or
(c) as a result of the death or Permanent Disability of the Executive
(collectively, a "Justified Termination"), the Executive shall be entitled to
receive his Base Salary and Expense Allowance through the date of termination
and reimbursement of all Reimbursable Expenses incurred by the Executive prior
to the termination of the Executive's employment. A termination for Cause shall
become effective on the date designated by the Company.
5.4 Renewal. If the Company does not renew the Employment Period sixty
-------
(60) days prior to the end of the Employment Period or renewal thereof, the
Executive shall be paid an amount equal to his Base Salary and the prior fiscal
period bonus, if any, in twelve (12) equal monthly installments commencing on
the first month following the end of the Employment Period.
5.5 Benefits. Except as otherwise required by law, all of the
--------
Executive's rights to fringe benefits under this Agreement, if any, accruing
after the termination of the Employment Period as a result of a Justified
Termination will cease upon such Justified Termination; provided, that if such
--------
Justified Termination is as a result of a Permanent Disability or retirement of
the Executive, the Executive shall continue to receive his full major medical,
life insurance and disability insurance coverage benefits from the Company plan
at the time for twelve (12) months after termination, and the Company shall
allow Executive to continue on the said coverage existing at the time
7
<PAGE>
of termination for an additional five (5) years if fully paid by the Executive.
5.6 Notice of Termination. Any termination by the Company for
---------------------
Permanent Disability or Cause or by the Executive for a Material Change by
Company shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of employment under the
provisions indicated.
5.7 Date of Termination. "Date of Termination" shall mean (A) if this
-------------------
Agreement is terminated for Permanent Disability, five (5) days after Notice of
Termination is given, (B) if Executive's employment is terminated for a Material
Change by Company, the date specified in the Notice of Termination, and (C) if
Executive's employment is terminated for any other reason, the date on which a
Notice of Termination is given by the Company.
5.8 Mitigation. Executive shall not be required to mitigate the amount
----------
of any payment provided for in this Section 5 by seeking other employment or
otherwise.
Section 6. Nondisclosure and Nonuse of Confidential Information and
--------- --------------------------------------------------------
Trade Secrets. The Executive will not disclose or use at any time during the
- -------------
Employment Period or for a period of ten (10) years following the termination of
this Agreement for any reason whatsoever (the "Nondisclosure Period") any
Confidential Information or Trade Secrets of which the Executive is or becomes
aware, whether or not such information is developed by him, except to the extent
that
8
<PAGE>
such disclosure or use is directly related to and required by the Executive's
performance of duties assigned to the Executive pursuant to this Agreement.
Under all circumstances and at all times, the Executive will take all
appropriate steps to safeguard Confidential Information and Trade Secrets in his
possession and to protect it against disclosure, misuse, espionage, loss and
theft.
Section 7. Ownership of Intellectual Property. Throughout the
--------- ----------------------------------
Nondisclosure Period, in the event that the Executive as part of his activities
on behalf of the Company generate, author or contribute to any invention,
design, new development, device, product, method of process (whether or not
patentable or reduced to practice or comprising Confidential Information), any
copyrightable work (whether or not comprising Confidential Information) or any
other form of Confidential Information relating directly or indirectly to the
business of the Company as now or hereinafter conducted (collectively,
"Intellectual Property"), the Executive acknowledges that such Intellectual
Property is the sole and exclusive property of, the Company and hereby assigns
all right, title and interest in and to such Intellectual Property to the
Company. Any copyrightable work prepared in whole or in part by the Executive
during the Nondisclosure Period will be deemed "a work made for hire" under
Section 201(b) of the Copyright Act of 1976, as amended, and the Company will
own all of the rights comprised in the copyright herein. The Executive will
promptly and fully disclose all Intellectual Property and will cooperate with
the Company to protect the Company's interests in and rights to such
Intellectual Property (including providing reasonable assistance in securing
patent protection and copyright registrations and executing all documents as
9
<PAGE>
reasonably requested by the Company, whether such requests occur prior to or
after termination of executive's employment hereunder).
Section 8. Delivery of Materials Upon Termination of Employment. As
--------- ----------------------------------------------------
requested by the Company, from time to time and upon the termination of the
Executive's employment with the Company for any reason, the Executive will
promptly deliver to the Company all copies and embodiments, in whatever form or
medium, of all Confidential Information or Intellectual Property in the
Executive's possession or within his control (including written records, notes,
photographs, manuals, notebooks, documentation, program listings, flow charts,
magnetic media, disks, diskettes, tapes and all other materials containing any
Confidential Information or Intellectual Property) irrespective of the location
or form of such material and, if requested by the Company will provide the
Company with written confirmation that all such materials have been delivered to
the Company.
Section 9. Noncompetition and Nonsolicitation.
--------- ----------------------------------
9.1 Noncompetition. The Executive acknowledges that in the course of
--------------
his employment with the Company, he has become familiar with, and during his
employment with the Company, he will become familiar with, Trade Secrets and
other Confidential Information concerning the Company and its respective
predecessors, and that his services have been and will be of special, unique and
extraordinary value to the Company. Accordingly, the Executive hereby agrees
that at any time during the Employment Agreement and for a period of two (2)
years following the termination of this Agreement for any reason whatsoever (the
"Noncompetition Period"), he will not directly or indirectly own, manage,
control, participate in, consult with, render services for, or
10
<PAGE>
in any manner engage in any business competing with the businesses of the
Company as such businesses exist or are in process on the date of the
termination of the Executive's employment, within any geographical area in which
the Company engages or plans to engage in such businesses. Nothing herein will
prohibit the Executive from being a passive owner of not more than 2% of the
outstanding stock of any class of a corporation which is publicly traded, so
long as the Executive has no active participation in the business of such
corporation.
9.2 Nonsolicitation. The Executive hereby agrees that: (a) during the
---------------
Nondisclosure Period, the Executive will not, directly or indirectly through
another entity, induce or attempt to induce any employee of the Company to leave
the employ of the Company, or in any way interfere with the relationship between
the Company and any employee thereof, and (b) during the Noncompetition Period,
---
the Executive will not, directly or indirectly through another entity (i)
violate any of the provisions of clause (a) of this Section 9.2, or otherwise
hire any individual who was an employee of the Company at any time during the
Noncompetition Period, or (ii) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Company to cease doing
business with the Company or in any way interfere with the relationship between
any such customer, supplier, licensee or business relation and the Company.
9.3 Enforcement. If, at the time of enforcement of Section 9, a court
-----------
holds that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances will be
substituted for the stated duration, scope or
11
<PAGE>
area and that the court will be permitted to revise the restrictions contained
in this Section 9 to cover the maximum period, scope and area permitted by law.
Section 10. Equitable Relief. The Executive acknowledges that a
---------- ----------------
breach or threatened breach by him of any of his covenants and agreements with
the Company contained in Sections 6, 7, 8 or 9 of this Agreement could cause
irreparable harm to the Company for which it or they would have no adequate
remedy at law. Accordingly, and subject to the provisions of Section 12.14 of
this Agreement, in the event of an actual or threatened breach by the Executive
of his covenants and agreements contained in Sections 6, 7, 8 or 9 of this
Agreement, the Company shall have the absolute right to apply to any court of
competent jurisdiction for such injunctive or other equitable relief as such
court may deem necessary or appropriate in the circumstances.
Section 11. Executive Representations. The Executive hereby
---------- -------------------------
represents and warrants to the Company that (a) the execution, delivery and
performance of this Agreement by the Executive does not and will not conflict
with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgement or decree to which the Executive is a party of by
which he is bound, (b) the Executive is not a party to or bound by any
employment agreement, noncompetition agreement or confidentiality agreement with
any other Person, and (c) upon the execution and delivery of this Agreement by
the Company, this Agreement will be the valid and binding obligation of the
Executive, enforceable in accordance with its terms.
12
<PAGE>
Section 12. Miscellaneous.
---------- -------------
12.1 Remedies. The Company will have all rights and remedies set forth
--------
in this Agreement, all rights and remedies which the Company has been granted at
any time under any other agreement or contract and all of the rights which the
Company has under any law. The Company will be entitled to enforce such rights
specifically, without posting a bond or other security, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
12.2 Consent to Amendments. The provisions of this Agreement may be
---------------------
amended or waived only by a written agreement executed and delivered by the
Company and the Executive. No other course of dealing between the parties to
this Agreement or any delay in exercising any rights hereunder will operate as a
waiver of any rights of any such parties.
12.3 Successors and Assigns. All covenants and agreements contained in
----------------------
this Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not; provided that the Executive may not assign his
rights or delegate his obligations under this Agreement without the written
consent of the Company.
12.4 Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
13
<PAGE>
12.5 Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, any on of which need not contain the signatures of
more than one party, but all of which counterparts taken together will
constitute one and the same agreement.
12.6 Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
12.7 Notices. All notices, demands or other communications to be given
-------
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally to the
recipient, two business days after the date when sent to the recipient: by
reputable express courier service (charges prepaid) or four business days after
the date when mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications will be sent to the Executive and to the Company at the addresses
set forth below.
If to the Executive: James P. Crawford
13025 Kirby Smith Road
Orlando, Florida 32832
If to the Company: Crawford Equipment and
Engineering Company
436 West Landstreet Road
Orlando, Florida 32824
Telephone: (407) 851-0993
Facsimile: (407) 851-2406
14
<PAGE>
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
12.8 No Third Party Beneficiary. This Agreement will not confer any
--------------------------
rights or remedies upon any person other than the Company, the Executive and
their respective heirs, executors, successors and assigns.
12.9 Entire Agreement. This Agreement (including the documents
----------------
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, that may have related in any way to the subject
matter hereof.
12.10 Construction. The language used in this Agreement will be
------------
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any party. Any
reference to any federal, state, local or foreign statute or law will be deemed
also to, refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise. The use of the word "including" in this Agreement
means "including without limitation" and is intended by the parties to be by way
of example rather than limitation.
12.11 Survival. Sections 6, 7, 8, 9 and 12 of this Agreement will
--------
survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period or other Employment
Termination.
12.12 GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
-------------
VALIDITY AND INTERPRETATION OF THIS AGREEMENT WILL BE
15
<PAGE>
GOVERNED BY THE INTERNAL LAW AND NOT THE LAW OF CONFLICTS, OF THE STATE OF
FLORIDA.
12.13 Prevailing Party. In connection with any action arising out of
----------------
this Agreement or the transactions contemplated hereby, the substantially
prevailing party in any such action shall be entitled to receive from the other
party all costs and expenses (including reasonable attorneys' fees) incurred by
the substantially prevailing party in connection therewith, in addition to any
other award made by the court or arbitration tribunal in which such action is
brought.
12.14 Arbitration. Any controversy arising between the parties or
-----------
any person claiming under either of them relating to this Agreement or the
performance or breach thereof with the sole exception of an action for
injunctive relief brought by the Company against the Executive pursuant to
Section 10 of this Agreement, shall be resolved through arbitration in the State
of Florida, City of Orlando, in accordance with the then governing Commercial
Rules of the American Arbitration Association and judgment or decree may be
entered upon the award made by any court of competent jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
CRAWFORD EQUIPMENT AND
ENGINEERING COMPANY
By: /s/ Steven Atkinson
--------------------------------------
Printed Name: Steven Atkinson
----------------------------
Title: President
-----------------------------------
/s/ James P. Crawford
-------------------------------------
JAMES P. CRAWFORD
16
<PAGE>
Exhibit 10.7
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated as of January 1, 1998, between
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY, a Florida corporation (hereinafter
referred to as the "Company"), and KATHLEEN CRAWFORD (the "Executive").
The Executive is presently the Vice-President, Treasurer and Secretary for
the Company and shall continue to serve in those capacities during the term of
this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and of other good and valuable consideration, the receipt of sufficiency of
which are hereby acknowledged, the Company and the Executive agree as follows:
Section 1. Definitions. For purposes of this Agreement, the following
--------- -----------
terms have the meanings set forth below:
"Base Salary" has the meaning set forth in Section 4.1.
-----------
"Cause" means (a) theft or embezzlement by the Executive with respect to
-----
the Company; (b) wilful malfeasance or nonfeasance of a duty intended to injure
or having the effect of injuring the reputation, business or business
relationships of the Company; (c) the commission of the Executive of any felony
resulting in direct material injury to the business or property of the Company;
(d) willful or prolonged absence from work by the Executive (other than by
reason of disability due to physical or mental illness) or failure, neglect or
refusal by the Executive to perform her duties and responsibilities without the
same being corrected within ten days after being given written notice thereof;
or (e) the material breach by the Executive of any of the covenants contained in
this Agreement.
<PAGE>
"Confidential Information" means information that is not generally
------------------------
known to the public and that was or is used, developed or obtained by the
Company in connection with its business. It shall not include information (i)
required to be disclosed by court or administrative order; (ii) lawfully
obtainable from other sources or which is in the public domain through no fault
of Executive, or (iii) the disclosure of which is consented to in writing by the
Company.
"Employment Period" has the meaning set forth in section 2 of this
-----------------
Agreement.
"Intellectual Property" has the meaning set forth in Section 7 of this
---------------------
Agreement.
"Material Change by Company" means (a) without the Executive's express
--------------------------
written consent, the assignment to her of any duties materially inconsistent
with her positions, duties, and responsibilities with the Company during the
twelve (12) months prior to the date of this Agreement; (b) a material reduction
in the Executive's Base Salary; (c) the failure by the Company to continue in
effect any benefit or compensation plan, pension plan, life insurance plan,
health and accident plan or disability plan in which she is presently
participating or enter into new plans substantially similar to those previously
mentioned which, when considered in the aggregate, provide her with a
substantially similar level of benefits in the aggregate; or (d) any purported
termination of her employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 5.8 below. For purposes of
this paragraph, a material reduction in the Executive's Base Salary is defined
as 10% of the current Base Salary at the time of reduction.
2
<PAGE>
"Noncompetition Period" has the meaning set forth in Section 9.1
---------------------
hereof.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Permanent Disability" means those circumstances where the Executive
--------------------
is unable to continue to perform the usual customary duties of her assigned job
or as otherwise assigned in accordance with the provisions of this Agreement for
a period of four (4) consecutive months.
"Reimbursable Expenses" has the meaning set forth in Section 4.4 of
---------------------
this Agreement.
"Trade Secrets" shall have the meaning as defined within Section
-------------
688.002(4), Fla. Stat., as amended.
Section 2. Employment. The Company hereby employs the Executive, and
--------- ----------
the Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the date of
this Agreement and ending as provided in Section 5 (the "Employment Period").
-----------------
Section 3. Position and Duties.
--------- -------------------
3.1 Position and Duties. The Executive shall serve as Vice-
-------------------
President, Treasurer and Secretary for the Company and shall have such
responsibilities, powers and duties as may from time to time be prescribed by
the Board of Directors of the Company, provided, that such duties and
--------
responsibilities are substantially consistent with her
3
<PAGE>
duties with the Company within the twelve (12) month period prior to this
Agreement and with those of a senior executive officer. The Executive shall
devote substantially all of her working time and efforts to the business and
affairs of the Company. The Executive shall not directly or indirectly render
any services for payment of a business, commercial or professional nature to any
other person or for profit organization not related to the business of the
Company, whether for compensation or otherwise, without prior written consent of
the Company.
3.2 Reporting. The Executive will report to the Board of Directors of
---------
the Company, or any executive committee(s) hereafter established by such Board
of Directors.
Section 4. Base Salary and Benefits.
--------- ------------------------
4.1 Base Salary. During the Employment Period, the Executive's base
-----------
salary will be $125,000 per annum (the "Base Salary), which Base Salary will be
payable in regular installments in accordance with the general payroll practices
of the Company. The Base Salary shall be subject to review on an annual basis or
at the Company's discretion such earlier date as the Board of Directors may
designate.
4.2 Bonuses. In addition to the Base Salary, the Executive shall be
-------
eligible to receive annual bonuses as determined by the Board of Directors of
the Company.
4.3 Benefits. In addition to the Base Salary, and any bonuses payable
--------
to the Executive pursuant to this Agreement, the Executive shall be entitled to
the following benefits during the Employment Period:
4
<PAGE>
(a) such major medical, life insurance and disability insurance
coverage as is, or may during the Employment Period, be provided for other
senior executive officers of the Company;
(b) a maximum of three (3) weeks of paid vacation annually during
the term of the Employment Period;
(c) an automobile on terms and conditions existing at the date of
the Agreement; and
(d) during the Employment Period, the Executive shall also
participate in or receive benefits under any other plan or arrangement for the
senior executives of the Company in the future, subject to and on a basis
consistent with terms and conditions and overall administration of such plans.
4.4 Expenses. The Company shall reimburse the Executive for all
--------
reasonable expenses incurred by her in the course of performing her duties under
this Agreement which are consistent with the Company's policies in effect from
time to time with respect to travel, entertainment and other business expenses
("Reimbursable Expenses"), subject to the Company's requirements with respect to
---------------------
reporting and documentation of expenses.
Section 5. Term and Termination.
--------- --------------------
5.1 Term. The initial Employment Period will terminate on the fifth
----
anniversary of the date of this Agreement; provided, that (a) the Employment
--------
Period shall terminate prior to such date upon the Executive's resignation,
death or Permanent Disability, (b) the Employment Period may be terminated by
the Company at any time prior to such date, if such termination shall be for
Cause, and (c) the Executive may terminate for a Material Change by the Company
during the
5
<PAGE>
Employment Period. At the end of the initial Employment Period, this Agreement
shall be automatically renewed for a renewal Employment Period of one (1) year
and each year thereafter unless either party with sixty (60) days notice prior
to the end of the initial Employment Period or any renewal Employment Period
notifies the other of its intention not to renew.
5.2 Unjustified Termination. Except as otherwise provided in Section
-----------------------
5.3 below, if the Employment Period shall be terminated by the Company prior to
the fifth anniversary of the date of this Agreement or prior to the end of the
year in any renewed Employment Period for any reason, other than (a) for Cause,
(b) as a result of the Executive's resignation or leaving her employment, other
than for a Material Change by Company and non-renewal referred to in Section
5.4, or (c) as a result of the death or Permanent Disability of the Executive
(collectively, an "Unjustified Termination"), the Executive shall be paid the
amount of two and one-half (2 1/2) years of her Base Salary so long as the
Executive receiving payments hereunder has not breached and does not breach the
provisions of Sections 6, 7, 8 or 9 of this Agreement. The Executive shall also
be reimbursed all Reimbursable Expenses incurred by the Executive prior to the
termination of the Employment Period. The amounts payable pursuant to this
Section 5.2 may be payable, at the Company's discretion, in one lump sum
payment, within 30 days following termination of the Employment Period or in
equal monthly installments for the number of months for the length of the period
of compensation described herein. Furthermore, an Unjustified Termination shall
also include termination by the Executive for a Material Change by the Company.
6
<PAGE>
5.3 Justified Termination. If the Employment Period shall be
---------------------
terminated by the Company prior to the fifth anniversary of the date of this
Agreement (a) for Cause, (b) as a result of the Executive's resignation or
leaving of her employment other than for a Material Change by the Company, or
(c) as a result of the death or Permanent Disability of the Executive
(collectively, a "Justified Termination"), the Executive shall be entitled to
receive her Base Salary and Expense Allowance through the date of termination
and reimbursement of all Reimbursable Expenses incurred by the Executive prior
to the termination of the Executive's employment. A termination for Cause shall
become effective on the date designated by the Company.
5.4 Renewal. If the Company does not renew the Employment Period sixty
-------
(60) days prior to the end of the Employment Period or renewal thereof, the
Executive shall be paid an amount equal to her Base Salary and the prior fiscal
period bonus, if any, in twelve (12) equal monthly installments commencing on
the first month following the end of the Employment Period.
5.5 Benefits. Except as otherwise required by law, all of the
--------
Executive's rights to fringe benefits under this Agreement, if any, accruing
after the termination of the Employment Period as a result of a Justified
Termination will cease upon such Justified Termination; provided, that if such
--------
Justified Termination is as a result of a Permanent Disability or retirement of
the Executive, the Executive shall continue to receive her full major medical,
life insurance and disability insurance coverage benefits from the Company plan
at the time for twelve (12) months after termination, and the Company shall
allow Executive to continue on the said coverage existing at the time
7
<PAGE>
of termination for an additional five (5) years if fully paid by the Executive.
5.6 Notice of Termination. Any termination by the Company for
---------------------
Permanent Disability or Cause or by the Executive for a Material Change by
Company shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of employment under the
provisions indicated.
5.7 Date of Termination. "Date of Termination" shall mean (A) if this
-------------------
Agreement is terminated for Permanent Disability, five (5) days after Notice of
Termination is given, (B) if Executive's employment is terminated for a Material
Change by Company, the date specified in the Notice of Termination, and (C) if
Executive's employment is terminated for any other reason, the date on which a
Notice of Termination is given by the Company.
5.8 Mitigation. Executive shall not be required to mitigate the amount
----------
of any payment provided for in this Section 5 by seeking other employment or
otherwise.
Section 6. Nondisclosure and Nonuse of Confidential Information and
--------- --------------------------------------------------------
Trade Secrets. The Executive will not disclose or use at any time during the
- -------------
Employment Period or for a period of ten (10) years following the termination of
this Agreement for any reason whatsoever (the "Nondisclosure Period") any
Confidential Information or Trade Secrets of which the Executive is or becomes
aware, whether or not such information is developed by her, except to the extent
that
8
<PAGE>
such disclosure or use is directly related to and required by the Executive's
performance of duties assigned to the Executive pursuant to this Agreement.
Under all circumstances and at all times, the Executive will take all
appropriate steps to safeguard Confidential Information and Trade Secrets in her
possession and to protect it against disclosure, misuse, espionage, loss and
theft.
Section 7. Ownership of Intellectual Property. Throughout the
--------- ----------------------------------
Nondisclosure Period, in the event that the Executive as part of her activities
on behalf of the Company generate, author or contribute to any invention,
design, new development, device, product, method of process (whether or not
patentable or reduced to practice or comprising Confidential Information), any
copyrightable work (whether or not comprising Confidential Information) or any
other form of Confidential Information relating directly or indirectly to the
business of the Company as now or hereinafter conducted (collectively,
"Intellectual Property"), the Executive acknowledges that such Intellectual
Property is the sole and exclusive property of, the Company and hereby assigns
all right, title and interest in and to such Intellectual Property to the
Company. Any copyrightable work prepared in whole or in part by the Executive
during the Nondisclosure Period will be deemed "a work made for hire" under
Section 201(b) of the Copyright Act of 1976, as amended, and the Company will
own all of the rights comprised in the copyright herein. The Executive will
promptly and fully disclose all Intellectual Property and will cooperate with
the Company to protect the Company's interests in and rights to such
Intellectual Property (including providing reasonable assistance in securing
patent protection and copyright registrations and executing all documents as
9
<PAGE>
reasonably requested by the Company, whether such requests occur prior to or
after termination of executive's employment hereunder).
Section 8. Delivery of Materials Upon Termination of Employment. As
--------- ----------------------------------------------------
requested by the Company, from time to time and upon the termination of the
Executive's employment with the Company for any reason, the Executive will
promptly deliver to the Company all copies and embodiments, in whatever form or
medium, of all Confidential Information or Intellectual Property in the
Executive's possession or within her control (including written records, notes,
photographs, manuals, notebooks, documentation, program listings, flow charts,
magnetic media, disks, diskettes, tapes and all other materials containing any
Confidential Information or Intellectual Property) irrespective of the location
or form of such material and, if requested by the Company will provide the
Company with written confirmation that all such materials have been delivered to
the Company.
Section 9. Noncompetition and Nonsolicitation.
--------- ----------------------------------
9.1 Noncompetition. The Executive acknowledges that in the course of
--------------
her employment with the Company, she has become familiar with, and during her
employment with the Company, she will become familiar with, Trade Secrets and
other Confidential Information concerning the Company and its respective
predecessors, and that her services have been and will be of special, unique and
extraordinary value to the Company. Accordingly, the Executive hereby agrees
that at any time during the Employment Agreement and for a period of two (2)
years following the termination of this Agreement for any reason whatsoever (the
"Noncompetition Period"), she will not directly or indirectly own, manage,
control, participate in, consult with, render
10
<PAGE>
services for, or in any manner engage in any business competing with the
businesses of the Company as such businesses exist or are in process on the date
of the termination of the Executive's employment, within any geographical area
in which the Company engages or plans to engage in such businesses. Nothing
herein will prohibit the Executive from being a passive owner of not more than
2% of the outstanding stock of any class of a corporation which is publicly
traded, so long as the Executive has no active participation in the business of
such corporation.
9.2 Nonsolicitation. The Executive hereby agrees that: (a) during the
---------------
Nondisclosure Period, the Executive will not, directly or indirectly through
another entity, induce or attempt to induce any employee of the Company to leave
the employ of the Company, or in any way interfere with the relationship between
the Company and any employee thereof, and (b) during the Noncompetition Period,
the Executive will not, directly or indirectly through another entity (i)
violate any of the provisions of clause (a) of this Section 9.2, or otherwise
hire any individual who was an employee of the Company at any time during the
Noncompetition Period, or (ii) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Company to cease doing
business with the Company or in any way interfere with the relationship between
any such customer, supplier, licensee or business relation and the Company.
9.3 Enforcement. If, at the time of enforcement of Section 9, a court
-----------
holds that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such
11
<PAGE>
circumstances will be substituted for the stated duration, scope or area and
that the court will be permitted to revise the restrictions contained in this
Section 9 to cover the maximum period, scope and area permitted by law.
Section 10. Equitable Relief. The Executive acknowledges that a breach
---------- ----------------
or threatened breach by her of any of his covenants and agreements with the
Company contained in Sections 6, 7, 8 or 9 of this Agreement could cause
irreparable harm to the Company for which it or they would have no adequate
remedy at law. Accordingly, and subject to the provisions of Section 12.14 of
this Agreement, in the event of an actual or threatened breach by the Executive
of her covenants and agreements contained in Sections 6, 7, 8 or 9 of this
Agreement, the Company shall have the absolute right to apply to any court of
competent jurisdiction for such injunctive or other equitable relief as such
court may deem necessary or appropriate in the circumstances.
Section 11. Executive Representations. The Executive hereby represents
---------- -------------------------
and warrants to the Company that (a) the execution, delivery and performance of
this Agreement by the Executive does not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order,
judgement or decree to which the Executive is a party of by which she is bound,
(b) the Executive is not a party to or bound by any employment agreement,
noncompetition agreement or confidentiality agreement with any other Person, and
(c) upon the execution and delivery of this Agreement by the Company, this
Agreement will be the valid and binding obligation of the Executive, enforceable
in accordance with its terms.
12
<PAGE>
Section 12. Miscellaneous.
---------- -------------
12.1 Remedies. The Company will have all rights and remedies set forth
--------
in this Agreement, all rights and remedies which the Company has been granted at
any time under any other agreement or contract and all of the rights which the
Company has under any law. The Company will be entitled to enforce such rights
specifically, without posting a bond or other security, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
12.2 Consent to Amendments. The provisions of this Agreement may be
---------------------
amended or waived only by a written agreement executed and delivered by the
Company and the Executive. No other course of dealing between the parties to
this Agreement or any delay in exercising any rights hereunder will operate as a
waiver of any rights of any such parties.
12.3 Successors and Assigns. All covenants and agreements contained in
----------------------
this Agreement by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not; provided that the Executive may not assign her
rights or delegate her obligations under this Agreement without the written
consent of the Company.
12.4 Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
13
<PAGE>
12.5 Counterparts. This Agreement may be executed simultaneously in
------------
two or more counterparts, any on of which need not contain the signatures of
more than one party, but all of which counterparts taken together will
constitute one and the same agreement.
12.6 Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
12.7 Notices. All notices, demands or other communications to be given
-------
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally to the
recipient, two business days after the date when sent to the recipient: by
reputable express courier service (charges prepaid) or four business days after
the date when mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications will be sent to the Executive and to the Company at the addresses
set forth below.
If to the Executive: Kathleen Crawford
13025 Kirby Smith Road
Orlando, Florida 32832
If to the Company: Crawford Equipment and
Engineering Company
436 West Landstreet Road
Orlando, Florida 32824
Telephone: (407) 851-0993
Facsimile: (407) 851-2406
14
<PAGE>
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
12.8 No Third Party Beneficiary. This Agreement will not confer any
--------------------------
rights or remedies upon any person other than the Company, the Executive and
their respective heirs, executors, successors and assigns.
12.9 Entire Agreement. This Agreement (including the documents
----------------
referred to herein) constitutes the entire agreement among the parties and
supersedes any prior understandings, agreements or representations by or among
the parties, written or oral, that may have related in any way to the subject
matter hereof.
12.10 Construction. The language used in this Agreement will be deemed
------------
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party. Any reference to
any federal, state, local or foreign statute or law will be deemed also to,
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. The use of the word "including" in this Agreement means
"including without limitation" and is intended by the parties to be by way of
example rather than limitation.
12.11 Survival. Sections 6, 7, 8, 9 and 12 of this Agreement will
--------
survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period or other Employment
Termination.
12.12 GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
-------------
VALIDITY AND INTERPRETATION OF THIS AGREEMENT WILL BE
15
<PAGE>
GOVERNED BY THE INTERNAL LAW AND NOT THE LAW OF CONFLICTS, OF THE STATE OF
FLORIDA.
12.13 Prevailing Party. In connection with any action arising out of
----------------
this Agreement or the transactions contemplated hereby, the substantially
prevailing party in any such action shall be entitled to receive from the other
party all costs and expenses (including reasonable attorneys' fees) incurred by
the substantially prevailing party in connection therewith, in addition to any
other award made by the court or arbitration tribunal in which such action is
brought.
12.14 Arbitration. Any controversy arising between the parties or any
-----------
person claiming under either of them relating to this Agreement or the
performance or breach thereof with the sole exception of an action for
injunctive relief brought by the Company against the Executive pursuant to
Section 10 of this Agreement, shall be resolved through arbitration in the State
of Florida, City of Orlando, in accordance with the then governing Commercial
Rules of the American Arbitration Association and judgment or decree may be
entered upon the award made by any court of competent jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
CRAWFORD EQUIPMENT AND
ENGINEERING COMPANY
By: /s/ Steven Atkinson
------------------------------
Printed Name: Steven Atkinson
--------------------
Title: President
---------------------------
/s/ Kathleen Crawford
------------------------------
KATHLEEN CRAWFORD
16
<PAGE>
EXHIBIT 10.8
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement"), dated as of January 1, 1998, between
CRAWFORD EQUIPMENT AND ENGINEERING COMPANY, a Florida corporation (hereinafter
referred to as the "Company"), and STEVE ATKINSON (the "Executive").
The Executive is presently the President for the Company and shall continue
to serve in that capacity during the term of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and of other good and valuable consideration, the receipt of sufficiency of
which are hereby acknowledged, the Company and the Executive agree as follows:
SECTION 1. DEFINITIONS. For purposes of this Agreement, the following
--------- -----------
terms have the meanings set forth below:
"Base Salary" has the meaning set forth in Section 4.1.
-----------
"Cause" means (a) theft or embezzlement by the Executive with respect to
-----
the Company; (b) willful malfeasance or nonfeasance of a duty intended to injure
or having the effect of injuring the reputation, business or business
relationships of the Company; (c) the commission of the Executive of any felony
resulting in direct material injury to the business or property of the Company;
(d) willful or prolonged absence from work by the Executive (other than by
reason of disability due to physical or mental illness) or failure, neglect or
refusal by the Executive to perform his duties and responsibilities without the
same being corrected within ten days after being given written notice thereof;
or (e) the material breach by the Executive of any of the covenants contained
in this Agreement.
<PAGE>
"Confidential Information" means information that is not generally known to
------------------------
the public and that was or is used, developed or obtained by the Company in
connection with its business. It shall not include information (i) required to
be disclosed by court or administrative order; (ii) lawfully obtainable from
other sources or which is in the public domain through no fault of Executive, or
(iii) the disclosure of which is consented to in writing by the Company.
"Employment Period" has the meaning set forth in section 2 of this
-----------------
Agreement.
"Intellectual Property" has the meaning set forth in Section 7 of this
---------------------
Agreement.
"Material Change by Company" means (a) without the Executive's express
--------------------------
written consent, the assignment to him of any duties materially inconsistent
with his positions, duties, and responsibilities with the Company during the
twelve (12) months prior to the date of this Agreement; (b) a material
reduction in the Executive's Base Salary; (c) the failure by the Company to
continue in effect any benefit or compensation plan, pension plan, life
insurance plan, health and accident plan or disability plan in which he is
presently participating or enter into new plans substantially similar to those
previously mentioned which, when considered in the aggregate, provide him with a
substantially similar level of benefits in the aggregate; or (d) any purported
termination of his employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 5.8 below. For purposes of
this paragraph, a material reduction in the Executive's Base Salary is defined
as 10% of the current Base Salary at the time of reduction.
2
<PAGE>
"Noncompetition Period" has the meaning set forth in Section 9.1 hereof.
---------------------
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Permanent Disability" means those circumstances where the Executive is
--------------------
unable to continue to perform the usual customary duties of his assigned job or
as otherwise assigned in accordance with the provisions of this Agreement for a
period of four (4) consecutive months.
"Reimbursable Expenses" has the meaning set forth in Section 4.4 of this
---------------------
Agreement.
"Trade Secrets" shall have the meaning as defined within Section
-------------
688.002(4), Fla. Stat., as amended.
SECTION 2. EMPLOYMENT. The Company hereby employs the Executive, and the
--------- ----------
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on the date of
this Agreement and ending as provided in Section 5 (the "Employment Period").
-----------------
SECTION 3. POSITION AND DUTIES.
--------- -------------------
3.1 Position and Duties. The Executive shall serve as President of the
-------------------
Company and shall have such responsibilities, powers and duties as may from time
to time be prescribed by the Board of Directors of the Company, provided, that
--------
such duties and responsibilities are substantially consistent with his duties
with the Company within the
3
<PAGE>
twelve (12) month period prior to this Agreement and with those of a senior
executive officer. The Executive shall devote substantially all of his working
time and efforts to the business and affairs of the Company. The Executive shall
not directly or indirectly render any services for payment of a business,
commercial or professional nature to any other person or for profit organization
not related to the business of the Company, whether for compensation or
otherwise, without prior written consent of the Company.
3.2 Reporting. The Executive will report to the Board of Directors of the
---------
Company, or any executive committee(s) hereafter established by such Board of
Directors.
SECTION 4. BASE SALARY, ADDITIONAL COMPENSATION AND BENEFITS.
--------- -------------------------------------------------
4.1 Base Salary. During the Employment Period, the Executive's base
-----------
salary will be $75,000 per annum (the "Base Salary"), which Base Salary will be
payable in regular installments in accordance with the general payroll practices
of the Company. The Base Salary shall be subject to review on an annual basis
or at the Company's discretion at such earlier date as the Board of Directors
may designate.
4.2 Additional Compensation. In addition to the Base Salary, the
-----------------------
Executive shall receive additional compensation in the form of a Commission
equal to one percent (1%) of all gross sales made by the Company and a Bonus
equal to three percent (3%) of the net pre-tax profits earned by the Company as
reflected by the audited financial statements prepared in accordance with
generally accepted accounting principles. Commissions shall be paid to the
Executive upon completion of each item sold for which payment has been received
by the Company. Bonuses, if any, shall be paid annually by the Company within
60 days
4
<PAGE>
following completion of the annual audited financial statements. Commissions and
Bonuses payable hereunder shall be subject to review on an annual basis or at
the Company's discretion at such earlier date as the Board of Directors may
designate.
4.3 Benefits. In addition to the Base Salary, and any Commissions and
--------
Bonuses payable to the Executive pursuant to this Agreement, the Executive shall
be entitled to the following benefits during the Employment Period:
(a) such major medical, life insurance and disability insurance
coverage as is, or may during the Employment Period, be provided for other
senior executive officers of the Company;
(b) a maximum of three (3) weeks of paid vacation annually during the
term of the Employment Period;
(c) an automobile on terms and conditions existing at the date of the
Agreement; and
(d) during the Employment Period, the Executive shall also participate
in or receive benefits under any other plan or arrangement for the senior
executives of the Company in the future, subject to and on a basis consistent
with terms and conditions and overall administration of such plans.
4.4 Expenses. The Company shall reimburse the Executive for all
--------
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent with the Company's policies in effect from
time to time with respect to travel, entertainment and other business expenses
("Reimbursable Expenses"), subject to the Company's requirements with respect to
---------------------
reporting and documentation of expenses.
5
<PAGE>
SECTION 5. TERM AND TERMINATION.
--------- --------------------
5.1 Term. The initial Employment Period will terminate on the fifth
----
anniversary of the date of this Agreement; provided, that (a) the Employment
--------
Period shall terminate prior to such date upon the Executive's resignation,
death or Permanent Disability, (b) the Employment Period may be terminated by
the Company at any time prior to such date, if such termination shall be for
Cause, and (c) the Executive may terminate for a Material Change by the
Company during the Employment Period. At the end of the initial Employment
Period, this Agreement shall be automatically renewed for a renewal Employment
Period of one (1) year and each year thereafter unless either party with sixty
(60) days notice prior to the end of the initial Employment Period or any
renewal Employment Period notifies the other of its intention not to renew.
5.2 Unjustified Termination. Except as otherwise provided in Section 5.3
-----------------------
below, if the Employment Period shall be terminated by the Company prior to the
fifth anniversary of the date of this Agreement or prior to the end of the year
in any renewed Employment Period for any reason, other than (a) for Cause,
(b) as a result of the Executive's resignation or leaving his employment, other
than for a Material Change by Company and non-renewal referred to in Section
5.4, or (c) as a result of the death or Permanent Disability of the Executive
(collectively, an "Unjustified Termination"), the Executive shall be paid the
amount of two and one-half (2 1/2) years of his Base Salary so long as the
Executive receiving payments hereunder has not breached and does not breach the
provisions of Sections 6, 7, 8 or 9 of this Agreement. The Executive shall also
be reimbursed all
6
<PAGE>
Reimbursable Expenses incurred by the Executive prior to the termination of the
Employment Period. The amounts payable pursuant to this Section 5.2 may be
payable, at the Company's discretion, in one lump sum payment, within 30 days
following termination of the Employment Period or in equal monthly installments
for the number of months for the length of the period of compensation described
herein. Furthermore, an Unjustified Termination shall also include termination
by the Executive for a Material Change by the Company.
5.3 Justified Termination. If the Employment Period shall be terminated
---------------------
by the Company prior to the fifth anniversary of the date of this Agreement (a)
for Cause, (b) as a result of the Executive's resignation or leaving of his
employment other than for a Material Change by the Company, or (c) as a result
of the death or Permanent Disability of the Executive (collectively, a
"Justified Termination"), the Executive shall be entitled to receive his Base
Salary and Expense Allowance through the date of termination and reimbursement
of all Reimbursable Expenses incurred by the Executive prior to the termination
of the Executive's employment. A termination for Cause shall become effective on
the date designated by the Company.
5.4 Renewal. If the Company does not renew the Employment Period sixty
-------
(60) days prior to the end of the Employment Period or renewal thereof, the
Executive shall be paid an amount equal to his Base Salary and the prior fiscal
period bonus in twelve equal monthly installments commencing on the first month
following the end of the Employment Period.
5.5 Benefits. Except as otherwise required by law, all of the Executive's
--------
rights to fringe benefits under this Agreement, if any,
7
<PAGE>
accruing after the termination of the Employment Period as a result of a
Justified Termination will cease upon such Justified Termination; provided, that
--------
if such Justified Termination is as a result of a Permanent Disability or
retirement of the Executive, the Executive shall continue to receive his full
major medical, life insurance and disability insurance coverage benefits from
the Company plan at the time for twelve (12) months after termination, and the
Company shall allow Executive to continue on the said coverage existing at the
time of termination for an additional five (5) years if fully paid by the
Executive.
5.6 Notice of Termination. Any termination by the Company for Permanent
---------------------
Disability or Cause or by the Executive for a Material Change by Company shall
be communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of employment under the provisions indicated.
5.7 Date of Termination. "Date of Termination" shall mean (A) if this
-------------------
Agreement is terminated for Permanent Disability, five (5) days after Notice of
Termination is given, (B) if Executive's employment is terminated for a
Material Change by Company, the date specified in the Notice of Termination, and
(C) if Executive's employment is terminated for any other reason, the date on
which a Notice of Termination is given by the Company.
8
<PAGE>
5.8 Mitigation. Executive shall not be required to mitigate the amount of
----------
any payment provided for in this Section 5 by seeking other employment or
otherwise.
SECTION 6. NONDISCLOSURE AND NONUSE OF CONFIDENTIAL INFORMATION AND TRADE
--------- --------------------------------------------------------------
SECRETS. The Executive will not disclose or use at any time during the
- -------
Employment Period or for a period of ten (10) years following the termination of
this Agreement for any reason whatsoever (the "Nondisclosure Period") any
Confidential Information or Trade Secrets of which the Executive is or becomes
aware, whether or not such information is developed by him, except to the extent
that such disclosure or use is directly related to and required by the
Executive's performance of duties assigned to the Executive pursuant to this
Agreement. Under all circumstances and at all times, the Executive will take all
appropriate steps to safeguard Confidential Information and Trade Secrets in his
possession and to protect it against disclosure, misuse, espionage, loss and
theft.
SECTION 7. OWNERSHIP OF INTELLECTUAL PROPERTY. Throughout the
--------- ----------------------------------
Nondisclosure Period, in the event that the Executive as part of his activities
on behalf of the Company generate, author or contribute to any invention,
design, new development, device, product, method of process (whether or not
patentable or reduced to practice or comprising Confidential Information), any
copyrightable work (whether or not comprising Confidential Information) or any
other form of Confidential Information relating directly or indirectly to the
business of the Company as now or hereinafter conducted (collectively,
"Intellectual Property"), the Executive acknowledges that such Intellectual
Property is the sole and exclusive property of, the Company and hereby assigns
9
<PAGE>
all right, title and interest in and to such Intellectual Property to the
Company. Any copyrightable work prepared in whole or in part by the Executive
during the Nondisclosure Period will be deemed "a work made for hire" under
Section 201(b) of the Copyright Act of 1976, as amended, and the Company will
own all of the rights comprised in the copyright herein. The Executive will
promptly and fully disclose all Intellectual Property and will cooperate with
the Company to protect the Company's interests in and rights to such
Intellectual Property (including providing reasonable assistance in securing
patent protection and copyright registrations and executing all documents as
reasonably requested by the Company, whether such requests occur prior to or
after termination of executive's employment hereunder).
SECTION 8. DELIVERY OF MATERIALS UPON TERMINATION OF EMPLOYMENT. As
--------- ----------------------------------------------------
requested by the Company, from time to time and upon the termination of the
Executive's employment with the Company for any reason, the Executive will
promptly deliver to the Company all copies and embodiments, in whatever form or
medium, of all Confidential Information or Intellectual Property in the
Executive's possession or within his control (including written records, notes,
photographs, manuals, notebooks, documentation, program listings, flow charts,
magnetic media, disks, diskettes, tapes and all other materials containing any
Confidential Information or Intellectual Property) irrespective of the location
or form of such material and, if requested by the Company will provide the
Company with written confirmation that all such materials have been delivered to
the Company.
10
<PAGE>
SECTION 9. NONCOMPETITION AND NONSOLICITATION.
--------- ----------------------------------
9.1 Noncompetition. The Executive acknowledges that in the course of his
--------------
employment with the Company, he has become familiar with, and during his
employment with the Company, he will become familiar with, Trade Secrets and
other Confidential Information concerning the Company and its respective
predecessors, and that his services have been and will be of special, unique and
extraordinary value to the Company. Accordingly, the Executive hereby agrees
that at any time during the Employment Agreement and for a period of two (2)
years following the termination of this Agreement for any reason whatsoever (the
"Noncompetition Period"), he will not directly or indirectly own, manage,
control, participate in, consult with, render services for, or in any manner
engage in any business competing with the businesses of the Company as such
businesses exist or are in process on the date of the termination of the
Executive's employment, within any geographical area in which the Company
engages or plans to engage in such businesses. Nothing herein will prohibit the
Executive from being a passive owner of not more than 2% of the outstanding
stock of any class of a corporation which is publicly traded, so long as the
Executive has no active participation in the business of such corporation.
9.2 Nonsolicitation. The Executive hereby agrees that: (a) during the
---------------
Nondisclosure Period, the Executive will not, directly or indirectly through
another entity, induce or attempt to induce any employee of the Company to leave
the employ of the Company, or in any way interfere with the relationship between
the Company and any employee thereof, and (b) during the Noncompetition Period,
---
the Executive will not, directly or indirectly through another entity (i)
11
<PAGE>
violate any of the provisions of clause (a) of this Section 9.2, or otherwise
hire any individual who was an employee of the Company at any time during the
Noncompetition Period, or (ii) induce or attempt to induce any customer,
supplier, licensee or other business relation of the Company to cease doing
business with the Company or in any way interfere with the relationship between
any such customer, supplier, licensee or business relation and the Company.
9.3 Enforcement. If, at the time of enforcement of Section 9, a court
-----------
holds that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances will be
substituted for the stated duration, scope or area and that the court will be
permitted to revise the restrictions contained in this Section 9 to cover the
maximum period, scope and area permitted by law.
SECTION 10. EQUITABLE RELIEF. The Executive acknowledges that a breach or
---------- ----------------
threatened breach by him of any of his covenants and agreements with the Company
contained in Sections 6, 7, 8 or 9 of this Agreement could cause irreparable
harm to the Company for which it or they would have no adequate remedy at law.
Accordingly, and subject to the provisions of Section 12.14 of this Agreement,
in the event of an actual or threatened breach by the Executive of his covenants
and agreements contained in Sections 6, 7, 8 or 9 of this Agreement, the Company
shall have the absolute right to apply to any court of competent jurisdiction
for such injunctive or other equitable relief as such court may deem necessary
or appropriate in the circumstances.
12
<PAGE>
SECTION 11. EXECUTIVE REPRESENTATIONS. The Executive hereby represents
---------- -------------------------
and warrants to the Company that (a) the execution, delivery and performance of
this Agreement by the Executive does not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order,
judgement or decree to which the Executive is a party of by which he is bound,
(b) the Executive is not a party to or bound by any employment agreement,
noncompetition agreement or confidentiality agreement with any other Person, and
(c) upon the execution and delivery of this Agreement by the Company, this
Agreement will be the valid and binding obligation of the Executive, enforceable
in accordance with its terms.
SECTION 12. MISCELLANEOUS.
---------- -------------
12.1 Remedies. The Company will have all rights and remedies set forth in
--------
this Agreement, all rights and remedies which the Company has been granted at
any time under any other agreement or contract and all of the rights which the
Company has under any law. The Company will be entitled to enforce such rights
specifically, without posting a bond or other security, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
12.2 Consent to Amendments. The provisions of this Agreement may be
---------------------
amended or waived only by a written agreement executed and delivered by the
Company and the Executive. No other course of dealing between the parties to
this Agreement or any delay in exercising any rights hereunder will operate as a
waiver of any rights of any such parties.
12.3 Successors and Assigns. All covenants and agreements contained in
----------------------
this Agreement by or on behalf of any of the parties
13
<PAGE>
hereto will bind and inure to the benefit of the respective successors and
assigns of the parties hereto whether so expressed or not; provided that the
Executive may not assign his rights or delegate his obligations under this
Agreement without the written consent of the Company.
12.4 Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
12.5 Counterparts. This Agreement may be executed simultaneously in two or
------------
more counterparts, any on of which need not contain the signatures of more than
one party, but all of which counterparts taken together will constitute one and
the same agreement.
12.6 Descriptive Headings. The descriptive headings of this Agreement are
--------------------
inserted for convenience only and do not constitute a part of this Agreement.
12.7 Notices. All notices, demands or other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally to the
recipient, two business days after the date when sent to the recipient: by
reputable express courier service (charges prepaid) or four business days after
the date when mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications will be sent to the Executive and to the Company at the addresses
set forth below.
14
<PAGE>
If to the Executive: STEVE ATKINSON
459 North Pinemeadow Road
Debary, Florida 32713
If to the Company: CRAWFORD EQUIPMENT AND
ENGINEERING COMPANY
436 West Landstreet Road
Orlando, Florida 32824
Telephone: (407) 851-0993
Facsimile: (407) 851-2406
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
12.8 No Third Party Beneficiary. This Agreement will not confer any
--------------------------
rights or remedies upon any person other than the Company, the Executive and
their respective heirs, executors, successors and assigns.
12.9 Entire Agreement. This Agreement (including the documents referred
----------------
to herein) constitutes the entire agreement among the parties and supersedes any
prior understandings, agreements or representations by or among the parties,
written or oral, that may have related in any way to the subject matter hereof.
12.10 Construction. The language used in this Agreement will be deemed to
------------
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party. Any reference to
any federal, state, local or foreign statute or law will be deemed also to,
refer to all rules and regulations promulgated thereunder, unless the context
requires otherwise. The use of the word "including" in this Agreement means
"including without limitation" and is intended by the parties to be by way of
example rather than limitation.
15
<PAGE>
12.11 Survival. Sections 6, 7, 8, 9 and 12 of this Agreement will survive
--------
and continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period or other Employment Termination.
12.12 GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
-------------
AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW AND
NOT THE LAW OF CONFLICTS, OF THE STATE OF FLORIDA.
12.13 Prevailing Party. In connection with any action arising out of this
----------------
Agreement or the transactions contemplated hereby, the substantially prevailing
party in any such action shall be entitled to receive from the other party all
costs and expenses (including reasonable attorneys' fees) incurred by the
substantially prevailing party in connection therewith, in addition to any other
award made by the court or arbitration tribunal in which such action is brought.
12.14 Arbitration. Any controversy arising between the parties or any
-----------
person claiming under either of them relating to this Agreement or the
performance or breach thereof with the sole exception of an action for
injunctive relief brought by the Company against the Executive pursuant to
Section 10 of this Agreement, shall be resolved through arbitration in the State
of Florida, City of Orlando, in accordance with the then governing Commercial
Rules of the American Arbitration Association and judgment or decree may be
entered upon the award made by any court of competent jurisdiction.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
CRAWFORD EQUIPMENT AND
ENGINEERING COMPANY
By: /s/ James P. Crawford
------------------------------------
Printed Name: James P. Crawford
--------------------------
Title: Chief Executive Officer
--------------------------------
/s/ Steven Atkinson
---------------------------
Steven Atkinson
17
<PAGE>
SALE OF RESTRICTED STOCK TO STEVEN L. ATKINSON
In conjunction with the Employment Agreement between Crawford Equipment and
Engineering Company (the "Company") and Steven L. Atkinson (the "Recipient")
dated January 1, 1998; the Company's Board of Directors hereby authorizes the
sale of 200,000 shares (the "Restricted Shares") of Common Stock of the Company
to the Recipient on February 1, 1998 at a purchase price of $.0002 per share.
The purpose of this transfer of restricted stock to the Recipient at the current
par value of the Company's stock is for the Recipient's contributions to the
growth and profits of the Company since his employment in 1983 and to induce him
to continue to make such contributions in the future.
RESTRICTIONS
- ------------
(1) TRANSFER/ISSUANCE. The Restricted Shares after the making of the payment
will be promptly issued or transferred and a certificate or certificates
for such shares shall be issued in the Recipient's name. The Recipient
shall thereupon be a shareholder of all the shares represented by the
certificate or certificates. As such, the Recipient will have all the
rights of a shareholder with respect to such shares, including the right to
vote them and to receive all dividends and other distributions (subject to
Section 2) paid with respect to them, provided, however, that the shares
shall be subject to the restrictions in Section 4. Stock certificates
representing the Restricted Shares will be imprinted with a legend stating
that the shares represented thereby may not be sold, exchanged,
transferred, pledged, hypothecated, or otherwise disposed of except in
accordance with the terms of this agreement and each transfer agent for the
Common Stock shall be instructed to like effect in respect of such shares.
In aid of such restrictions, the Recipient shall, immediately upon receipt
of the certificate(s) therefor, deposit such certificate(s) together with a
stock power or other instrument of transfer, appropriately endorsed in
blank, with an escrow agent to be designated by the Company, under a
deposit agreement containing such terms and conditions as the Company shall
approve, the expenses of such escrow to be borne by the Company.
(2) STOCK SPLITS, DIVIDENDS, ETC. If, due to a stock split, stock dividend,
combination of shares, or any other change or exchange for other securities
by reclassification, reorganization, merger, consolidation,
recapitalization or otherwise, the Recipient, as the owner of the
Restricted Shares subject to the restrictions hereunder, shall be entitled
to new, additional, or different shares of stock or securities, the
certificate or certificates for, or other evidences of, such new,
additional, or different shares or securities, together with a stock power
or other instrument of transfer appropriately endorsed, also shall be
imprinted with a legend as provided in Section 1 and deposited by the
Recipient under the above-mentioned deposit agreement. When the event(s)
described in the preceding sentence occur, all provisions relating to
restrictions and lapse of restrictions will apply to such new, additional,
or different shares or securities to the extent applicable to the shares
with respect to which they were distributed, provided,however, that if the
Recipient shall receive rights, warrants, or fractional interests in
respect of any of such Restricted Shares, such rights or warrants may be
held, exercised, sold or otherwise disposed of, and such fractional
interests may be settled, by the Recipient free and clear of the
restrictions hereafter set forth.
(3) RESTRICTED PERIOD. The term "Restricted Period" with respect to the
Restricted Shares (after which restrictions
will lapse) means a period starting on February 1, 1998 and ending on such
date not less than five (5) years after February 1, 1998.
(4) RESTRICTIONS ON RESTRICTED SHARES. The restrictions to which the
Restricted Shares shall be subject are:
(a) During the Restricted Period applicable to such shares and except
as otherwise specifically provided, none of such shares shall be
sold, exchanged, transferred, pledged, hypothecated, or
1
<PAGE>
otherwise disposed of unless they first, by written notice, have
been offered to the Company for repurchase for the same amount as
was paid for by the Recipient, with appropriate adjustment for any
change in the Restricted Shares of the nature described in Section
2 the Company shall not within 30 days following such offer have so
repurchased the shares and made payment in fill therefor. Unless
such repurchase is otherwise prohibited by the laws of the State of
Florida currently in effect at the time of an offer of the
Restricted Shares to the Company for repurchase, the Company shall
repurchase said shares and make payment in full therefor within
thirty (30) days following such offer.
(b) If the Recipient's employment is terminated for any reason,
including such Recipient's death or disability, at any time before
the Restricted Period ends, the Company shall so notify the escrow
agent appointed under Section 1 above. Such termination shall be
deemed an offer to the Company as described in Section (a) above as
to:
(i) All such shares issued to recipient, if such
termination occurs within three years from February 1,
1998;
(ii) 66.67 % of the total number of such shares originally
issued (including any other or additional securities
issued in respect thereof, as contemplated in Section 2
above) to such Recipient, if such termination occurs
more than three years after February 1, 1998 but prior
to four years after that date;
(iii) 33.33% of the total number of such shares originally
issued (including any other or additional securities
issued in respect thereof, as contemplated Section 2
above) to such Recipient, if such termination occurs on
or after four years after February 1, 1998 but prior to
the end of the Restricted Period.
(5) LAPSE OF RESTRICTED PERIOD. The restrictions set forth in Section 4
hereof, with respect to the Restricted Shares to which such Restricted
Period was applicable, will lapse:
(a) as to such shares in accordance with the time(s) and number(s) of
shares as to which the Restricted Period expires, as described in
Section 4(b), or
(b) as to any shares which the Company will fail to purchase when they
are offered to the Company, as described in Section 4(a), upon the
Company's failure to so repurchase.
(6) TRANSFERS UPON DEATH OF RECIPIENT. Nothing in this agreement will preclude
the transfer of the Restricted Shares, on the Recipient's death, to the
Recipient's legal representatives or estate, nor preclude such
representatives from transferring any of such shares to the person(s)
entitled thereto by will or the laws of descent and distribution, provided,
however, that any shares so transferred as to which such restrictions have
not lapsed will remain subject to all restrictions and obligations imposed
on them.
(7) DELIVERY OF WRITTEN NOTICE. All notices in writing required pursuant to
this Section will be sufficient only if actually delivered or if sent via
registered or certified mail, postage prepaid, to the Company, attention
Treasurer, and/or escrow agent at its principal office within the City of
Orlando, and will be conclusively deemed given on the date of delivery, if
delivered or on the first business day following the date of such mailing,
if mailed.
It is the intention of both, Crawford Equipment and Engineering Company and
Steven Lane Atkinson, that the restrictions referred to above constitute a
substantial risk of forfeiture, as defined in Internal Revenue Code Section
83(c)(1) and the Regulations thereunder, of the Restricted Shares during the
applicable restricted period. This substantial risk of forfeiture precludes
transferability of the Restricted Shares during
2
<PAGE>
the Restricted Period, as defined in Internal Revenue Code Section 83(c )(2) and
the Regulations thereunder. It is also understood by both, Crawford Equipment
and Engineering Company and Steven Lane Atkinson, that a Section 839b) Election
WILL NOT be made. Consequently, any income attributable to the Restricted Shares
will be recognized by the Recipient in the year(s) coinciding with the schedule
provided in Sections 4 and 5 above. The Company will recognize a corresponding
amount of compensation expense over the same time period.
Signed: /s/ James P. Crawford Signed: /s/ Steven Lane Atkinson
------------------------------ ------------------------------
James P. Crawford, CEO Steven Lane Atkinson
For Crawford Equipment and
Engineering Company
Dated: February 1, 1998 Dated: February 1, 1998
-------------------------------- -------------------------------
3
<PAGE>
EXHIBIT 10.9
[LETTERHEAD OF EMISSION CONTROL TECHNOLOGY APPEARS HERE]
April 30, 1998
Mr. Steven Atkinson Phone: 407-851-0993
Crawford Equipment & Engineering Co. Fax: 407-851-2406
436 W. Landstreet Road
Orlando, FL 32824
Subject: Agreement Regarding EMCOTEK Pollution Control Technology
Dear Mr. Atkinson:
This letter shall serve to confirm our Non-Exclusive Agreement regarding the
potential sale of medical and related waste incineration system(s) through your
contacts.
EMCOTEK and its assignees or successors agree to pay an agreed finders fee to
Crawford Equipment and Engineering Co. ("Crawford") for orders received as the
direct result of your introduction to identified customers in the United Kingdom
and Europe, subject to the following conditions:
1. Crawford shall provide all necessary contact information and known
history of the customers prior to the EMCOTEK proposals being prepared.
Any travel deemed necessary by EMCOTEK prior to the receipt of a valid
order and approval of payment for the projects will be paid by the
customer(s). Crawford further warrants that all fees and commissions for
agents, etc. are legally paid by Crawford from its fee. All parties
further agree that the proposals will be prepared by EMCOTEK and will be
submitted to the customer(s). The "Finder's Fee" provided for in this
Agreement will be included in the pricing shown in the proposals. The
specific amount of this "Finder's Fee" shall be determined on a case by
case basis prior to each proposal being prepared. In the event equipment
purchased by EMCOTEK from third parties is also required, the pricing
will be as agreed.
2. The "Finder's Fee" will be based on the value of goods sold, exclusive
of costs relating to export packaging, freight, taxes, duties or other
necessary non-value added charges.
3. Payment of the agreed upon Fee will be due and payable, on a pro rata
basis, upon receipt by EMCOTEK of monies due under the terms of any
purchase agreement made between EMCOTEK and the customers introduced by
Crawford.
4. This Agreement is subject to our confirmation that no previous contact
has been made between EMCOTEK and the potential customers. Confirmation
will be forwarded upon your disclosure of the contact information.
5. This Agreement is valid for a period of eighteen months and can be
renewed upon the agreement of both parties.
I trust that this agreement meets with your approval. Please sign a copy and
return it by telefax and mail Thank you for your interest in working on these
projects. EMCOTEK provides the highest level of operating equipment and customer
support that is available and your customers will enjoy successfully operating
integrated systems when working with us.
Sincerely, Approved by,
/s/ Joseph Cotter
Title /s/ [ILLEGIBLE SIGNATURE]
Joseph Cotter ---------------------------------
President Crawford Equipment and Engineering Co.
<PAGE>
EXHIBIT 10.10
LEASE AGREEMENT
THIS LEASE AGREEMENT, dated this _____ day of ___________, 1998, is made
and entered into by and between JAMES P. CRAWFORD AND KATHLEEN B. CRAWFORD
(hereinafter called "Landlord"), and CRAWFORD EQUIPMENT AND ENGINEERING CO., a
Florida corporation (hereinafter called "Tenant").
W I T N E S S E T H:
WHEREAS, Landlord owns commercial property consisting of approximately
_________ square feet located at ______________, Orlando, Florida 32859,
(hereinafter referred to as "Leased Premises"); and
WHEREAS, Tenant desires to lease from Landlord such property upon the terms
and conditions herein contained.
NOW, THEREFORE, for and in consideration of the mutual benefits to be
gained by the performance hereof, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Landlord and
Tenant do hereby agree as follows:
1. DESCRIPTION OF PREMISES BEING LEASED. Landlord, in consideration of
------------------------------------
the covenants and agreements herein undertaken to be kept and performed by
Tenant, does hereby grant, demise and lease unto Tenant certain land and
building improvements thereon in Orange County, Florida, at ______________,
Orlando, Florida 32859, such land being more particularly described on Exhibit
"A" attached hereto and made a part hereof. Such building and improvements,
including the site improvements and fixtures contained in the building and land
and provided by Landlord therein on Exhibit "A", are hereinafter referred to as
the "Leased Premises."
TO HAVE AND TO HOLD, all and singular, the Leased Premises, together
with all rights, privileges and appurtenances thereunto belonging unto the
Tenant, right of ingress and egress thereto and therefrom at all times, for a
term of years as hereinafter provided, unless such term shall be sooner ended
and terminated under the terms and provisions hereof.
2. TERM OF LEASE. The term of this Lease (sometimes hereinafter called
-------------
the "Term") shall be for a period of ten (10) years commencing on the
"Commencement Date" as hereinafter defined, and ending at midnight on the last
day of the month which shall be ten (10) years from the Commencement Date,
unless sooner terminated as provided in this Lease.
3. COMMENCEMENT DATE. The Commencement Date shall be ______________, for
-----------------
a term of ten (10) years, ending on __________________. Tenant's obligation to
pay rent shall commence as of the Commencement Date.
<PAGE>
4. RENT. Tenant shall pay Landlord, during the Term hereof; Base Rent in
----
the annual amount of seven dollars ($7) per square foot for a total One Hundred
Eighty Two Thousand Dollars ($182,000) during the first year of this Lease.
Base Rent shall increase to eight dollars ($8) per square foot for a total of
Two Hundred Eight Thousand Dollars ($208,000) during the second year of this
Lease and shall further increase to nine dollars ($9) per square foot for a
total of Two Hundred Thirty-Four Thousand Dollars ($234,000) during the third
year of this Lease. In each subsequent year of this Lease, Base Rent shall
increase by an amount equal to ten percent (10%) over the Base Rent for the
preceding year. The Base Rent shall be paid in monthly installments, each in an
amount equal to one-twelfth (1/12) of the annual Base Rent, plus applicable
sales tax, payable in advance on the first day of each month without demand. If
any payment of rent is not received by the tenth (10th) day of the month, Tenant
shall pay to Landlord a late charge of five percent (5%) of the amount of such
past due amount. If the Term of this Lease should commence on a date other than
the first day of a calendar month, the monthly installment of the Base Rent for
such calendar month shall be prorated on a per diem basis. Any other payments
due under this Lease shall be paid within ten (10) days of receipt of the
invoice.
5. TAXES.
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a. Tenant shall reimburse Landlord for all real estate taxes,
assessments and other governmental charges assessed, levied or
imposed against the Leased Premises, include
b. real estate taxes, assessments and other governmental charges which
are special, extraordinary and unforeseen. Statements received by
Landlord shall be paid and forwarded promptly to the Tenant.
Reimbursement of all said charges shall be made without interest or
penalty by Tenant on or before the next rent payment date after the
receipt of said reimbursement statement. Upon written request,
Landlord shall submit to Tenant receipted bills showing the payment
of such assessments. The Tenant shall be responsible for the payment
of all applicable sales taxes and other such taxes as are now or
hereafter enacted with respect to the tenancy created hereunder.
b. Nothing in this Lease shall require or be construed to obligate
Tenant to pay any corporate, estate, inheritance or succession tax of Landlord
or any income tax upon the income of Landlord.
c. Tenant may contest in good faith, by appropriate proceeding, at
Tenant's expense, in Landlord's or Tenant's name, whenever necessary, any
assessment, and may defer payment thereof, provided that Tenant shall, if
required by law, deposit with the appropriate taxing authority the amount of the
item so contested, and, further provided that such contest shall not result in
the placing upon or enforcement of any lien against the Leased Premises.
Tenant, in each such case, shall notify Landlord of its intent to contest the
assessment and shall further keep the Landlord fully advised as to any such
proceedings and the outcome thereof.
<PAGE>
d. Tenant may, if it shall so desire, and in its own name or in the
name of Landlord, as appropriate, endeavor at any time to contest in good faith
the validity of any assessment, or to obtain a lowering of the assessed
valuation upon the Leased Premises for the purpose of reducing any assessment,
provided that Tenant shall, if required by law, deposit with the appropriate
governmental authority the amount of the assessment so contested, and further
provided that such contest shall not result in the placing upon or enforcement
of any lien against the Leased Premises. In such event, Landlord will cooperate
with Tenant at the request of Tenant but without expense to Landlord. If
requested by Tenant, and provided it will not in the reasonable judgment of
Landlord incur any expense or liability thereby, Landlord will execute any
document, which may be necessary and proper for any such proceeding. Tenant, in
each such case, shall notify Landlord of its intent to contest the assessment or
valuation and shall further keep the Landlord fully advised as to any such
proceedings and the outcome thereof.
6. POSSESSION AND USE OF LEASED PREMISES. Tenant warrants that no
-------------------------------------
business shall be conducted on the Leased Premises, which will violate any law
or ordinance now or hereafter in force. Tenant shall keep and maintain at all
times during the Term of this Lease all licenses now or hereafter needed or
required for the lawful operation of its business on the Leased Premises.
Possession of the Leased Premises when delivered to Tenant shall be delivered
free and clear of all liens except mortgages now or hereafter placed on the
Leased Premises by Landlord, and Landlord shall have the right from time to time
to finance and refinance the Leased Premises subject to the provisions of this
Agreement. Tenant intends to use and occupy the Leased Premises primarily for
the manufacture, design and sale of crematories, incinerators and other
combustion equipment.
7. RELATION OF PARTIES. The receipt by Landlord of rents hereunder shall
-------------------
not be deemed to create a partnership or joint venture between Landlord and
Tenant, nor shall Landlord be liable for any debts incurred by Tenant in the
conduct of its business; it being understood that the relationship between such
persons is, and at all times shall remain, that of Landlord and Tenant.
Landlord shall have no management or operational responsibility whatsoever of
Tenant's business.
8. MAINTENANCE AND REPAIRS. Throughout the Term of this Lease, Tenant
-----------------------
shall bear all (100%) of the cost and expense of maintaining the Leased
Premises in good repair and in a clean, sightly and healthful condition, which
maintenance shall include the furnishing of janitorial services, all maintenance
and repairs and replacements, and landscape and grounds maintenance. Landlord
shall deliver the Leased Premises to Tenant with all electrical, heating,
cooling, plumbing and other systems in good working order. If Tenant fails to
repair or maintain the Leased Premises as herein required after thirty (30) days
prior written notice by Landlord, Landlord may pay for such normal repairs or
maintenance and all such amounts paid by Landlord shall automatically be added
to the following month's rental payment provided Landlord submits to Tenant
written confirmation of such normal repairs or maintenance.
9. CONSTRUCTION LIENS. Landlord's interest shall not be subject to liens
------------------
for repairs or improvements made by Tenant upon the Leased Premises. Tenant
shall not permit any construction lien to be filed against the Leased Premises
or against Tenant's leasehold interest in the Leased Premises by reason of work,
labor, services or materials supplied to Tenant or anyone holding the Leased
Premises through or under Tenant. If any such construction lien shall at any
time be filed against the Leased Premises, Tenant shall, within sixty (60) days
after notice of the filing thereof,
3
<PAGE>
cause such lien to be discharged of record by payment, deposit, bond, order of a
court of competent jurisdiction, or otherwise. If Tenant shall fail to cause
such lien to be discharged within such sixty (60) day period, then, after ten
(10) days' written notice by Landlord, in addition to any other right or remedy
of Landlord, Landlord may, but shall not be obligated to, discharge such lien,
either by payment of the amount claimed to be due or by procuring the discharge
of such lien by deposit or by bonding proceedings, and in any such event
Landlord shall be entitled, if Landlord so elects, to compel the prosecution of
an action for the foreclosure of such construction lien by the lienor and to pay
the amount of the judgment for and in favor of the lienor, with interest, costs
and other allowances. Any amount reasonably paid by Landlord for any of such
purposes shall be repaid by Tenant to Landlord on demand, and if unpaid, shall
be treated as additional rent at Landlord's option. At the request of either
party, Landlord and Tenant shall execute an affidavit in recordable form for the
purpose of notifying third parties that the Landlord's interest in the Leased
Premises is not subject to any such construction liens for work performed by
Tenant. Said affidavit shall be recorded in the Public Records of Orange County,
Florida.
10. INSURANCE. Tenant shall pay for one hundred percent (100%) of the
---------
cost and expense of any insurance carried by Landlord with respect to Landlord's
Property. Tenant shall also maintain throughout the term commercial general
liability insurance in an amount at least equal to $3,000,000 (combined single
limit) or such higher amount as Landlord shall reasonably require. The
insurance shall cover the entire Leased Premises, shall name both Landlord and
Tenant as insureds, shall be issued by insurance companies and in form
reasonably satisfactory to Landlord, shall provide for at least ten (10) days
prior written notice to Landlord in the event of cancellation or material
change. Copies of such policy or policies shall be furnished to Landlord upon
written request.
Tenant shall secure and bear the cost and expense of, and maintain
throughout the Term, fire and extended coverage insurance in such amounts as
will cover the full replacement cost of the improvements included as a part of
the Leased Premises, which insurance shall show the interest of the Landlord and
Tenant, shall be issued by insurance companies and in a form reasonably
satisfactory to Landlord, and shall provide for at least ten (10) days prior
written notice to Landlord in the event of such cancellation or any material
change. Each mortgagee of the Leased Premises shall be named as an additional
loss payee, as their interests shall appear. Copies of all such policies shall
be furnished to Landlord upon written request.
Any insurance provided for in this Paragraph may be effected by a
blanket policy or policies of insurance, or under so-called "all risk" or
"multi-peril" insurance policies provided it is available to Landlord. An
increased coverage or "umbrella policy" may be provided and utilized by Tenant
to increase the coverage provided by individual or blanket policies in lower
amounts, and the aggregate liabilities provided by all such policies covering
the Leased Premises and Landlord's liability hereunder shall be satisfactory
provided they otherwise comply with the provisions of this Paragraph. Landlord
shall be named as a loss payees.
11. DAMAGE OR DESTRUCTION OF LEASED PREMISES. If the Leased Premises
----------------------------------------
shall be damaged by fire, the elements, unavoidable accident, vandalism, or
other like casualty to the extent of less than fifty percent (50%) of the cost
of replacement of the Leased Premises, the damage (except damage to Tenant's
equipment, trade fixtures and other property) shall be promptly repaired by
Landlord at Landlord's expense, but only if insurance proceeds are available,
and the rent and other
4
<PAGE>
charges hereunder shall be abated to the extent, if any, that any portion of the
Leased Premises is rendered untenantable for Tenant's purposes (in the
reasonable opinion of Tenant), with such abatement to be computed on the basis
of the relation to which the gross square foot area of the space rendered
untenantable bears to the entire floor area of the Leased Premises, and with
such abatement to run from the date of occurrence of such damage. Provided,
however, that Landlord shall not be obligated to commence such repair,
restoration or rebuilding until insurance proceeds are received by Landlord, and
Landlord's obligation hereunder shall be limited to the proceeds actually
received by Landlord under any insurance policy or policies hereunder. If the
Leased Premises shall be so damaged to the extent of fifty percent (50%) or more
of the costs of replacement of the Leased Premises, Landlord may, at its option,
upon thirty (30) days prior written notice to Tenant, terminate this Lease, or
may elect to repair the Leased Premises (excluding the Tenant's equipment, trade
fixtures or other property), and in either event the rent chargeable hereunder
shall be abated in the manner aforesaid. If the Leased Premises is so damaged to
the extent that the Leased Premises is wholly untenantable for the Tenant's
purposes (in the reasonable opinion of Tenant), then the Tenant may lease other
premises for a period of up to one (1) year, during which time the running of
the Lease Term shall be tolled and all of Tenant's obligations under this Lease
shall abate. If Landlord has not rebuilt or repaired the Leased Premises to a
condition, which is equal to or better than the condition thereof existing
immediately prior to such casualty within nine (9) months after such casualty,
then Tenant may terminate this Lease.
12. GAS, WATER AND ELECTRICITY. Tenant agrees to pay all public utility
--------------------------
charges that may be assessed, including without limitation charges for gas,
electric light or power, water and sewerage (hereinafter "Utility Expenses")
used in or about the Leased Premises, which shall accrue during the term of this
Lease. Tenant shall be solely responsible for any and all required
installation, deposits and other charges incurred in connection with Tenant's
use of the utilities. In the event of failure of Tenant to pay any Utility
Expense within fifteen (15) days after written notice from Landlord that the
same are due and payable, Landlord shall have the right and privilege to pay
such charges, which amounts shall be deemed as additional rent, and shall be due
and payable with the next installment of rent due thereafter.
13. TENANT TO COMPLY WITH ALL LAWS. Tenant covenants and agrees that it
------------------------------
will comply with all valid laws, ordinances, rules and regulations of the state
and county in which the Leased Premises are located, and of the United States,
and any governmental authority having jurisdiction over the Leased Premises,
applicable to the occupancy or use of the Leased Premises, excluding any law,
ordinance, rule or regulation requiring structural improvements to the Leased
Premises and any improvements to the Leased Premises during the last year of the
Term.
14. RIGHT OF INSPECTION BY LANDLORD. Landlord, its agents or
-------------------------------
representatives, shall have the right upon at least three (3) business days'
prior notice to Tenant (except in the case of an emergency), to enter upon the
Leased Premises at all reasonable hours for the purpose of inspection of same.
Tenant, at its option, may provide an employee to accompany Landlord's
representative, but the unavailability of such employee shall not delay the
inspection.
15. EMINENT DOMAIN. If, during the Term hereof, all or so much of the
--------------
Leased Premises shall be taken in any proceeding by public authorities by
condemnation or otherwise, or be acquired for public or quasi-public purposes,
such that the continued operation of the Tenant's business on the
5
<PAGE>
Leased Premises becomes operationally or economically unfeasible (in the
reasonable opinion of Tenant), this Lease shall be terminated, in which case any
unearned rent paid or credited in advance shall be refunded to Tenant. In the
event of a partial taking which would not cause the continued operation of the
business to become operationally or economically unfeasible (in the reasonable
opinion of Tenant), Landlord shall, with all reasonable dispatch, repair the
remaining portion of the building structure and/or parking areas complete in
themselves and as a complete architectural and/or physical unit so as to put the
building structure and parking areas in a condition to be used by Tenant, and
the rent payable hereunder shall be reduced in proportion to the portion of the
building structure and parking areas taken; provided, however, if Landlord is
able to provide additional parking in amount, reasonable proximity to the Leased
Premises and quality (i.e., surfaced and striped) which is equal to or better
than that which is condemned, then there shall be no rent reduction for parking
loss. Except for payments made pursuant to Tenant's rental protection insurance,
if any, claim for which shall be made, the rent shall be abated during any
period of time that the Leased Premises is untenantable. In the event Landlord
does not commence such work within thirty (30) days after such taking and does
not complete the work within one hundred twenty (120) working days after
commencement of such work, then this Lease, at the option of Tenant, shall cease
and terminate. It is expressly agreed and understood that all sums awarded or
allowed for such taking of the Leased Premises or any part thereof or for
damages for such taking shall belong to Landlord with the exception of any
separate amount specifically awarded to Tenant for moving expenses.
16. ALTERATIONS AND IMPROVEMENTS.
----------------------------
a. Alterations. Tenant shall be permitted to make any structural or
-----------
non-structural alterations, additions or improvements to or on the Leased
Premises provided such alterations, additions or improvements do not adversely
affect the Leased Premises, including, without limitation, the plumbing, HVAC
systems or electrical system of the Leased Premises. Such alterations,
additions and improvements as are made by Tenant shall be at Tenant's sole
expense. All alterations, additions or improvements to the Leased Premises
which may be made by either party hereto shall be the property of Landlord, and
shall remain upon and be surrendered with the Leased Premises as a part thereof
at the termination of this Lease.
Tenant shall furnish Landlord a copy of the plans and specifications
for any structural alterations, which shall be prepared by a licensed architect.
Landlord shall be entitled to approve such plans and specifications, which
approval shall not be unreasonably withheld. Any approval or disapproval by
Landlord shall be given in writing within fifteen (15) days of Landlord's
receipt of the plans and specifications, and, if disapproved, shall state the
reasons for the disapproval. Failure of the Landlord to provide a written
response within the fifteen (15) day period shall automatically be deemed as
approval. Construction of structural alterations shall be under a contract with
a general contractor licensed in the State of Florida.
b. All alterations, additions and improvements shall be performed in
a first-class workmanlike manner, and shall not weaken or impair the structural
strength or lessen the value of the existing buildings as such shall be on the
Leased Premises at the time of the construction or increase Landlord's liability
to Leased Premises. If required, before the commencement of such work, such
plans and specifications shall be filed with and approved by all governmental
departments or authorities having jurisdiction, and any public utility company
having an interest therein, and all such
6
<PAGE>
work shall be done subject to and in accordance with the requirements of law and
local regulations of all governmental departments or authorities having
jurisdiction and of each public utility company. Landlord agrees, at Tenant's
expense, to execute such documents and take such action as may be necessary or
desirable to assist Tenant in obtaining such governmental approvals.
17. TENANT'S FIXTURES AND EQUIPMENT. All machinery or equipment owned or
-------------------------------
installed by the Tenant in the Leased Premises shall be and remain the property
of the Tenant and may be removed by it at any time during or at the expiration
of the term of this Lease. In the event any removal of machinery or equipment
shall injure or damage the Leased Premises, the Tenant agrees to repair such
damage at its own expense.
18. TENANT'S RIGHT TO INSTALL SIGNS. Tenant shall have the privilege of
-------------------------------
placing signs on the Leased Premises for the conduct of its business, provided
Tenant pays all permit and license fees which may be required to be paid for the
erection and maintenance of any and all such signs, and provided such signs are
legally permitted to be installed. Landlord must approve the size, location and
method of installation of any sign placed by Tenant, provided, however, that
such approval shall not be unreasonably withheld.
19. RIGHT OF LANDLORD TO SUBORDINATE. Landlord reserves the right to
--------------------------------
subordinate and subject this Lease at all times to the lien of any bona fide
mortgage or mortgages now or hereafter placed upon the Landlord's interest in
the Leased Premises and on the land and building of which the Leased Premises
are a part, or upon any building hereafter placed upon the land of which the
Leased Premises form a part. The parties hereto expressly acknowledge and agree
that (a) this Lease is conditioned upon Landlord delivering to Tenant a
nondisturbance agreement from any existing mortgagee in a form reasonably
satisfactory to Tenant, and (b) Landlord's right to subordinate this Lease is
conditioned upon Landlord first delivering to Tenant a nondisturbance agreement
from any proposed mortgagee in a form reasonably satisfactory to Tenant.
Subject to the foregoing, Tenant covenants and agrees to execute and deliver
upon demand such further instrument or instruments subordinating this Lease to
the lien of any such mortgage or mortgages and attain to any such mortgagee, as
shall be desired by Landlord or any mortgagees or proposed mortgagee; provided,
however, that such subordination and attornment agreement shall not subject
Tenant to any obligations other than those expressly contained in this Lease.
Such subordination and attornment shall be delivered by Tenant to Landlord
within ten (10) days after written demand.
20. ASSIGNMENT OR SUBLETTING. Tenant shall be entitled to assign its
------------------------
leasehold estate under this Lease or sublet all or any part of the Leased
Premises to any parent, subsidiary or affiliate of Tenant, upon notifying
Landlord in writing of such assignment or sublease and provided the assignee or
sublessee intends to maintain the same or similar use of the property. Any
other assignment or subletting must be approved by Landlord in writing, which
approval shall not be unreasonably withheld. In the event of an assignment or
subletting, Tenant shall remain liable to Landlord for its obligations under the
Lease unless released therefrom in writing by Landlord.
7
<PAGE>
21. DEFAULT.
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a. Default by Tenant. If Tenant shall fail or refuse to pay the rent
-----------------
reserved herein or any other sums due by Tenant hereunder and such default
continues for a period of ten (10) days after the date due; or if Tenant shall
fail to observe or comply with any of the terms, provisions or conditions of
this Lease to be observed and performed by Tenant and such default continues for
a period of thirty (30) days after receipt of written notice by Landlord to
Tenant; or upon the making by Tenant of any general assignment for the benefit
of creditors, the filing by or against Tenant of a petition to have Tenant
adjudged a bankrupt or a petition for reorganization or arrangement under any
law relating to bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed with prejudice within sixty (60) days), the
appointment of a trustee or receiver to take possession that is not restored to
Tenant within thirty (30) days, or the attachment, execution or other judicial
seizure that is not discharged within thirty (30) days, then in any such case or
event, Landlord, at Landlord's option and in addition to any other remedies
Landlord may have, shall have the following rights, which may be exercised
independently or concurrently:
(1) The right to declare the entire remaining unpaid rental for the
term of this Lease immediately due and payable forthwith at the then-current
rate of monthly rental and take any legal action to recover and collect the
same;
(2) The right, without further notice or demand, to terminate this
Lease, to re-enter the Leased Premises, or any part thereof, and expel and
remove all persons or property occupying the Leased Premises, and to take
possession of any and all furniture, fixtures and chattels in or on the Leased
Premises and sell same, in whole or in part, at any place, or cause the same to
be sold at public or private sale, with notice to Tenant, without obtaining any
execution order or decrees, to the highest bidder for cash, with or without such
property being present at the sale, and apply the proceeds thereof to the
payment of costs and expenses of taking and removing the property and holding
the sale and of rents and amounts owing Landlord; any excess going to Tenant,
and Tenant agrees to make good any deficiency; and/or
(3) The right, but the Landlord shall not be under any obligation to
do so, to enter the Leased Premises, or any part thereof, and expel and remove
all persons, property and signs therefrom, and relet the same, for the account
of the Tenant, for such rent and such terms as shall be satisfactory to Landlord
without such re-entry working on a forfeiture of the rents to be paid and the
covenants to be performed by the Tenant during the full term of this Lease. If
a sufficient sum shall not be realized monthly from such re-letting after paying
all the costs and expenses of such repairs, changes, alterations or additions,
the expenses of such re-letting and the collection of the rent accruing
therefrom to satisfy the monthly rent provided herein to be paid by the Tenant,
then the Tenant shall and will, and does hereby covenant to pay such deficiency
each month upon demand therefor.
If a non-monetary default by Tenant requires more than thirty (30)
days to cure, Tenant shall not be deemed to be in default, if, in good faith, it
has commenced to cure such default within said thirty (30) day period and
diligently pursues the same. Notwithstanding anything to the contrary contained
in this Lease, if Tenant pays the rent provided in this Lease then Tenant shall
be deemed not to have abandoned the Leased Premises, subject to the provisions
of Section 6.
8
<PAGE>
b. Default by Landlord. In the event of default by Landlord which is
-------------------
not corrected within thirty (30) days after receipt of written notice by Tenant
to Landlord (or such shorter period after notice as may be required in the event
of an emergency), or if such default requires more than thirty (30) days to
correct, if Landlord has not commenced correction of such default and does not
diligently pursue the same, then, except as otherwise therein provided, Tenant
shall have the option to institute an action to require performance by the
Landlord.
c. The rights and remedies of Landlord and Tenant under this
Paragraph are cumulative to those elsewhere provided herein.
22. INDEMNITY. Tenant, during the Term and any extension or renewal
---------
thereof, shall indemnify and save Landlord harmless from and against any and all
claims and demands whether for injuries to persons or loss of life, or damage to
property, related to or arising in any manner whatsoever out of the use and
occupancy of the Leased Premises by Tenant or occasioned wholly or in part by
any act or omission of Tenant, its agents, contractors, employees acting within
the scope of their employment by Tenant, invitees, licensees or customers
(except when such claims for injuries or damages are occasioned by or result
from the negligence or willful action of the Landlord, its agents, contractors
or employees).
23. HAZARDOUS MATERIALS. Tenant shall have no responsibility for the
-------------------
discovery, presence, handling, removal, encapsulation or disposal of any
hazardous materials, including but not limited to asbestos products,
polychlorinated biphenyl (PCB), or other toxic substances which became located
on the Leased Premises prior to the delivery of the Leased Premises to Tenant or
which are not due to Tenant's use or occupancy thereof. Landlord agrees to
indemnify and hold Tenant harmless from and against all claims and costs arising
out of the discovery or removal of said hazardous materials which became located
on the Leased Premises prior to Tenant taking possession of the Leased Premises
under this Lease. Tenant agrees to indemnify and hold Landlord harmless from
and against all claims and costs arising out of the discovery or removal of said
hazardous materials which become located on the Leased Premises subsequent to
Tenant taking possession of the Leased Premises under this Lease and which are
due to Tenant's use or occupancy thereof.
24. HOLDING OVER. Any holding over by Tenant after expiration or
------------
termination of this Lease, in whatever manner its termination shall occur, shall
not operate as a renewal of this Lease, but during the period of such holding
over, Tenant shall be a tenant on a month-to-month basis and shall pay Base Rent
in an amount equal to one and one-half (1 1/2) times the Base Rent due during
the last month of the Term.
25. ATTORNEYS' FEES AND COSTS UPON DEFAULT. In case either party hereto
--------------------------------------
places the enforcement of this Lease, or any part of same or the collection of
any rent or other sums due or to become due hereunder, or the recovery of
possession of the Leased Premises, in the hands of an attorney, or files suit
upon the same, the non-prevailing party in any such action agrees to pay to the
prevailing party all reasonable attorneys' fees and all expenses and costs
incurred by the prevailing party pertaining thereto (including costs and fees
relating to any appeal) and in enforcement of any remedy, and the payment of
same shall be secured in like manner as is herein provided for as security for
rent.
9
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26. QUIET POSSESSION. Landlord covenants and agrees with Tenant that
----------------
upon Tenant paying the Base Rent, and performing all the covenants and
conditions aforesaid on Tenant's part to be observed and performed, Tenant shall
and may peaceably and quietly have, hold and enjoy the Leased Premises, for the
Term provided herein, subject, however, to the terms of this Lease.
27. BROKERAGE. Landlord and Tenant hereby acknowledge, represent and
---------
warrant to each other that no broker or finder has been employed by either
Landlord or Tenant in connection with the Lease transaction contemplated in this
Lease. Landlord and Tenant each warrant to the other that no commissions are
payable by Landlord or Tenant to any other broker or finder in connection with
this Lease or the transaction contemplated herein, and Landlord and Tenant each
agrees to indemnify, defend, save and hold the other harmless from and against
the payment of any further commissions or fees or claims for commissions or fees
by virtue of any acts or actions undertaken by them, respectively, including
reasonable attorneys' fees and costs in defending against the same.
28. NOTICES. Whenever, in the provisions of this Lease, notice is
-------
required to be given by either party herein, it shall not be construed to
require personal notice, but notice may be given in writing by depositing the
same with the U.S. Postal Service, with postage prepaid, in a sealed envelope,
and addressed to such other party and sent by registered or certified mail,
return receipt requested, or it may be delivered personally or by Federal
Express, Express Mail or any other nationally recognized courier service.
NOTICE TO LANDLORD James P. Crawford and Kathleen B. Crawford
SHALL BE SENT TO: 13025 Kirby Smith Road
Orlando, Florida 32832
NOTICE TO TENANT Crawford Equipment and Engineering Company
SHALL BE SENT TO: Post Office Box 593243
Orlando, Florida 32859-3243
Attention: Steven L. Atkinson, C.E.O.
or at such other place as Landlord or Tenant may in writing require.
29. ESTOPPEL. Landlord and Tenant agree that when requested in connection
--------
with any matter relating to the Leased Premises that they will deliver an
estoppel certificate to the other party, addressed as such party directs, within
twenty (20) days after such request. An estoppel certificate shall set forth
the following statements to the best knowledge of the persons certifying:
a. Whether or not the Lease has been supplemented or amended and, if
so, the specifics of such supplement or amendment.
b. Whether or not the Lease is in full force and effect and if not,
the reasons therefor.
c. The date to which rent and other charges have been paid.
10
<PAGE>
d. Whether or not there has occurred an event of default, which
continues to exist, or an event exists that may cause a future default, and, if
so, the nature and extent of such event of default.
The estoppel certificate may be relied upon by the party requesting it
or by any other party to whom it is addressed. The contents of the estoppel
certificate shall be binding on the party, which has executed it.
30. MODIFICATION OR ALTERATION OF LEASE. No modification of the
-----------------------------------
provisions, covenants, conditions and terms of this Lease shall become effective
or take precedence unless such modifications are especially covered by written
agreement, signed by both the Landlord and Tenant, and made a supplement of this
Lease.
31. SEVERABILITY. No provision of this Lease in violation of any law or
------------
ordinance shall invalidate this Lease, and any such provision shall be deemed
stricken from this Lease and all remaining portions of this Lease shall remain
in full force and effect.
32. RIGHTS OF SUCCESSORS IN INTEREST. This Lease, including all terms,
--------------------------------
conditions and covenants, shall be binding upon and shall inure to the benefit
of each of the parties hereto, their successors, assigns and legal
representatives, the same as if such words had been inserted following the names
of Landlord and Tenant, respectively.
33. GOVERNING LAWS. This Lease shall be governed, construed and enforced
--------------
in accordance with the laws of the state of Florida.
34. COUNTERPARTS. This Lease may be executed in multiple counterparts,
------------
each of which shall be deemed an original.
35. PERFORMANCE UNDER PROTEST. If a dispute shall arise with respect to
-------------------------
the performance of any obligation including an obligation to pay money, the
party against which the obligation is asserted shall have the right to perform
the obligation under protest. Performance of an obligation under protest shall
not be regarded as voluntary performance. A party that shall have performed
under protest shall also have the right to institute a lawsuit to recover any
amount paid or the reasonable costs of otherwise complying with any such
obligation.
36. WARRANTIES AND REPRESENTATIONS. Landlord warrants and represents to
------------------------------
the Tenant that as of the date of this Lease:
a. Landlord is the owner in fee simple of the Leased Premises
described in Exhibit "A" attached hereto;
b. There are no restrictions in any contract or agreement to which
Landlord is a party which would interfere with Landlord's performance of its
obligations under this Lease;
c. There are no zoning or other governmental regulations which would
prohibit the use of the Leased Premises for its intended uses by the Tenant;
and
11
<PAGE>
d. There are no assessments imposed against the Leased Premises,
which remain due and unpaid as of the date hereof.
37. MEMORANDUM. At the request of either party, both Landlord and Tenant
----------
shall execute a memorandum of this Lease in recordable form. Such memorandum
shall be recorded in the Public Records of Orange County, Florida.
38. TIME. For all purposes of this Lease, it shall be understood that
----
time is of the essence.
39. VENUE. Landlord and Tenant agree that the exclusive venue for any
-----
actions or litigation related to this Lease shall be in the appropriate court in
Orange County, Florida.
40. RADON GAS. Radon is a naturally occurring radioactive gas that, when
---------
it has accumulated in a building in sufficient quantities, may present health
risks to persons who are exposed to it over time. Levels of radon that exceed
federal and state guidelines have been found in buildings in Florida.
Additional information regarding radon and radon testing may be obtained from
your county public health unit.
41. NET LEASE. This Lease is intended to be a net lease. The Tenant
---------
shall pay the rent hereunder and all expenses related to the Leased Premises and
allocable expense related to the Leased Premises (i.e., insurance, taxes,
utilities, etc.), except the costs associated with the mortgage.
IN WITNESS WHEREOF, the parties have executed this Lease as of the date
first written above.
"Landlord"
-----------------------------------
JAMES P. CRAWFORD
-----------------------------------
KATHLEEN B. CRAWFORD
"Tenant"
CRAWFORD EQUIPMENT AND
ENGINEERING COMPANY
By:________________________________
STEVE ATKINSON,
President
717/lease
12
<PAGE>
EXHIBIT "A"
-----------
Lots 41 and 42, West of the Drainage Canal, Sphalers Addition to Prosper Colony,
as recorded in Plat Book "F", Page 94, of the Public Records of Orange County,
Florida.
13
<PAGE>
EXHIBIT 10.11
SALE AGREEMENT AND ASSIGNMENT OF PATENTS
----------------------------------------
Agreement made this ______ day of _______ 1998 between James P.
Crawford ("Seller") whose address is 436 West Landstreet, Orlando, Florida 32824
and Crawford Equipment & Engineering Company, a Florida corporation ("Buyer")
whose address is 436 West Landstreet, Orlando, Florida 32824.
RECITALS
--------
WHEREAS, Seller is the owner of certain U.S. Letters Patent Nos.
4,512,264 issued April 23, 1985; 4,685,403 issued August 11, 1987; 4,890,367
issued January 2, 1990; and 5,152,232 issued October 6, 1992 the ("Patents")
that are designed for use in the manufacture of packaged combustion equipment
systems; and
WHEREAS, the Buyer is desirous of acquiring the Patents in accordance
with the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants and agreements contained herein, the parties hereto intending to be
legally bound, covenant and agree as follows :
1. Purchase Price.
--------------
Buyer agrees to pay to Seller as consideration for the purchase of the
Patents the sum of $875,000 together with certain royalty payments as
hereinafter described. Buyer at its sole discretion may elect to finance up to
$375,000 of the purchase price over a five (5) year term. At such election,
Buyer shall execute a promissory note in a form substantially similar to that
promissory note attached hereto as Exhibit A in the principal sum not to exceed
$375,000, which shall bear interest at the rate of eight percent (8%) per annum.
Payments of principal and interest due under the note, if applicable, shall be
paid quarterly in equal installments.
2. Royalty Fee.
-----------
(a) As additional consideration for the sale of the Patents
described herein Buyer shall pay to Seller until the expiration of the last
Patent transferred hereunder, which takes place on October 6, 2009, or until
this Agreement is sooner terminated a royalty fee equal to $350 for each system
manufactured by the Company that implements one or more of the Patents.
(b) Seller shall collect royalty fees directly from the Buyer on a
monthly basis. Said payments shall be due and payable in immediately available
U.S. funds, by the fifth day following the end of each month, for products sold
during that month.
(c) Upon Buyer's failure to timely deliver any payment due
hereunder, a late penalty of five percent (5%) of the total amount of the
royalty fees due and payable shall be immediately
<PAGE>
assessed, provided, however, that in the event Buyer shall remain in arrears for
more than three (3) months for royalty fees due and payable with respect to any
calendar month ("Arrears"), a late penalty of Eighteen Percent (18%) per annum,
or One and One-half Percent (1 1/2%) per month, shall be assessed against such
Arrears, which assessment shall be deemed to have commenced as of the date upon
which such Arrears was due and payable hereunder, provided further, that in such
case the initial five Percent (5%) late penalty shall be credited towards the
assessed Eighteen Percent (18%) late penalty. This provision shall survive the
termination of this Agreement.
3. Reports and Records.
-------------------
(a) Within thirty (30) days after the end of each calendar quarter, Buyer
shall deliver to Seller a report reflecting the gross sales for all products
sold by the Buyer, in the immediately preceding calendar quarter for which
royalties are due hereunder, (ii) the quantities and amount of all products sold
by the Buyer for which royalties are due hereunder, in the immediately preceding
calendar quarter, and (iii) the computation of royalty fees payable to the
Seller with respect thereto.
(b) Buyer agrees to maintain complete accurate books and records in
sufficient detail to enable the royalty fees payable hereunder to be determined,
and further agrees that the Seller shall have the right, at its own expense,
upon twenty-four (24) hours notice, to examine Buyer's books and records to the
extent necessary to verify Seller's reports rendered pursuant to Article 4(a)
hereof, the amounts of fees due and payable to Seller under this Agreement,
and/or Buyer's compliance in other respects with this Agreement. Such
examination shall be conducted by Seller or a personal representative designated
by Seller and acceptable to Buyer, provided, however, that Buyer's acceptance of
Seller's designated personal representative shall not be unreasonably withheld.
4. Seller's Representations & Warranties.
-------------------------------------
Seller represents and warrants as follows:
(a) Seller is the party named in the Patents and is the party who made or
caused to be made the application for the U.S. Letters Patent;
(b) The Patents are valid, and in full force and effect as of the date of
this Agreement;
(c) The Patents to be sold, transferred and assigned hereunder are free
and clear of any and all liens, claims, security interests, pledges,
hypothecations or other encumbrances of any nature or kind and no interest in
any of the Patents has been previously or simultaneously granted, transferred,
assigned or otherwise conveyed.
2
<PAGE>
5. Assignment and Transfer of Patents.
----------------------------------
In consideration of the sum of $875,000 evidenced in cash or in cash
together with an executed promissory note, the principal amount of which may not
exceed the sum of $375,000, the receipt of which consideration is hereby
acknowledged, Seller hereby sells, transfers and assigns to the Buyer all of
Seller's rights, title and interest in the improvements made to and the U.S.
Letters Patent issued for such Patents with such rights, title and interest
to the Patents to be held to the full end of the term for each of the respective
Patents for which the Letters Patent or any reissues, renewals or extensions
thereof are or may be granted.
6. Arbitration.
-----------
Any dispute or controversy arising out of or relating to this Agreement or
its actual or alleged breach shall be finally settled by arbitration, to be
conducted in Orange County, Florida, in accordance with the rules then in effect
of the American Arbitration Association in accordance with those rules, and
judgement upon the award rendered therein may be entered in any court having
jurisdiction thereof.
7. Governing Law.
-------------
This Agreement shall be construed and interpreted in accordance with the
law of the State of Florida. In any action to interpret this Agreement, or to
resolve any dispute between the parties arising hereunder, the prevailing party
shall be entitled to its attorney fees, costs and expenses.
8. Notices.
-------
Any notices required or permitted under this Agreement shall be sent by
U.S. certified mail, return receipt requested, and addressed follows:
To Licensee: Crawford Equipment & Engineering Co.
436 West Landstreet
Orlando, Florida 32824
To Licensor: Mr. James P. Crawford
436 West Landstreet
Orlando, Florida 32824
Such notice shall be deemed received three (3) days after the mailing thereof.
9. Complete Agreement.
------------------
This Agreement shall constitute the entire understanding between the
parties with respect to the subject matter hereof and shall supersede all
previous or contemporaneous negotiations, commitments or writings with respect
to such subject matter. Licensor and Licensee each acknowledge that it has not
executed
3
<PAGE>
this Agreement in reliance upon any promise, representation or warranty not
expressly set forth herein. This Agreement may not be released, discharged,
changed, modified or amended except by any instrument in writing duly executed
by both of the parties hereof.
10. Binding Effect.
--------------
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, legal representatives and
permitted assigns.
11. No Waiver of Enforcement.
------------------------
The failure of any party to require performance of any term of this
Agreement or the waiver of any party of any breach under this Agreement shall
not prevent a subsequent enforcement of such term, nor be deemed a waiver by
that party of any subsequent breach.
12. Invalidity.
----------
The invalidity of any one or more of the words, phrases, sentences,
clauses, or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part hereof,
all of which are inserted conditionally on their being valid under the law. In
the event that any one or more of the words, phrases, sentences, clauses, or
sections contained in this Agreement shall be invalidated, this Agreement shall
be construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, or section or sections had not been inserted.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
BUYER:
- --------------------------- CRAWFORD EQUIPMENT & ENGINEERING
Witness COMPANY
- --------------------------- By
Witness -------------------------------
Steven Atkinson, President
- --------------------------- Seller:
Witness
- --------------------------- -------------------------------
Witness James P. Crawford
4
<PAGE>
EXHIBIT 15.1
Board of Directors
Crawford Equipment and Engineering Company
Orlando, Florida
We have compiled the accompanying balance sheets of Crawford Equipment and
Engineering Company as of March 31, 1997 and 1998 and the related statements of
operations and cash flows for the three months ended March 31, 1997 and 1998 and
the statements of changes in stockholder's equity for the three months ended
March 31, 1998, in accordance with Statements on Standards for Accounting and
Review Services issued by the American Institute of Certified Public
Accountants. The financial statements have been prepared on the accounting
basis used by the Company for income tax purposes, which is a comprehensive
basis of accounting other than generally accepted accounting principles.
A compilation is limited to presenting in the form of financial statements,
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to condense or omit certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's assets, liabilities, revenues, expenses, and
retained earnings. The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full year.
Accordingly, these financial statements are not designed for those who are not
informed about such matters.
/s/ J. Rick Maloy
J. Rick Maloy, CPA
Orlando, Florida
June 3, 1998
<PAGE>
EXHIBIT 24.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made part of this
Registration Statement.
/s/ J. Rick Maloy
J. RICK MALOY, C.P.A.
Orlando, Florida
June 03, 1998
<PAGE>
EXHIBIT 25.1
POWER OF ATTORNEY
- -----------------
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and officers of Crawford Equipment and Engineering Company, a Florida
corporation, hereby constitute and appoint James P. Crawford, as his true and
said attorney-in-fact, for him and in his name, place and stead in any and all
capacities to sign each Registration Statement, and to file this Registration
Statement and each Amendment so signed with all exhibits thereto and any and all
documents in connection therewith with the Securities and Exchange Commission,
hereby granting unto said attorneys-in-fact full power and authority to do and
perform any and all acts and things requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might do in
person, hereby ratifying and confirming all that said attorneys-in-fact may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on
June 5, 1998.
Signature Title Date
James P. Crawford Chairman, Chief Executive
Officer June 5, 1998
Steven Atkinson President and Director June 5, 1998
Kathleen Crawford Vice President, Secretary,
Treasurer, and Director June 5, 1998
C. David Cooper Director June 5, 1998
Bruno A. Ferraro Director June 5, 1998
William Dillard Director June 5, 1998
