UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB
General form for registration of securities of small
business issuers Under Section 12(b) or (g) of the
Securities Exchange Act of 1934
TOUPS TECHNOLOGY LICENSING INCORPORATED
---------------------------------------
(Name of Small Business Issuer in its charter)
Florida 59-3462501
----------- -----------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7887 Bryan Dairy Road, Suite 105, Largo, Florida 33777
-----------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (813)-548-0918
Securities to be registered under Section 12(b) of the Act:
None None
----- ------
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Securities to be registered under Section 12(g) of the Act:
Par $.001 Common
----------------
(Title of class)
(1)
<PAGE>
CONTENTS
PART I
ITEM 1 DESCRIPTION OF BUSINESS............................................3
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION..........8
ITEM 3 DESCRIPTION OF PROPERTY...........................................10
ITEM 4 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT....11
ITEM 5 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS......11
ITEM 6 EXECUTIVE COMPENSATION............................................12
ITEM 7 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................13
ITEM 8 DESCRIPTION OF SECURITIES.........................................13
PART II
ITEM 1 MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON..........14
EQUITY AND OTHER SHAREHOLDER MATTERS
ITEM 2 LEGAL PROCEEDINGS.................................................14
ITEM 3 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.....................14
ITEM 4 RECENT SALES OF UNREGISTERED SECURITIES...........................14
ITEM 5 INDEMNIFICATION OF DIRECTORS AND OFFICERS.........................15
PART F/S
AUDITOR'S REPORT AND ACCOMPANYING FINANCIAL STATEMENTS....................15
PART III
ITEM 1 INDEX TO EXHIBITS.................................................23
SIGNATURES................................................................24
(2)
<PAGE>
ITEM 1 - DESCRIPTION OF BUSINESS
Toups Technology Licensing, Incorporated, was incorporated in the state of
Florida on July 28, 1997 ("Toups Technology" or the "Company"). The Company was
formed to facilitate the market applications of late-stage technologies
primarily in the energy, environmental and natural resources market segments.
The Company has not been the subject of any bankruptcy, receivership or
similar proceeding and has not undertaken any material reclassification, merger,
consolidation or sale of assets.
The Company intends to achieve its business purpose by entering into
exclusive licensing agreements which grant the Company the exclusive
manufacturing and marketing rights to technologies with applications in the
energy, environmental and natural resource market segments. The Company does not
intend to acquire rights to technologies which are subject to short-term
obsolescence such as computers or computer software or technologies in need of
further research and development. Instead, the Company selects proprietary
products or devices within its market segments which management perceives are
not subject to rapid change and can be delivered to the marketplace within a
three to six month period. To date, the Company has entered into three
agreements, all of which are more fully described below.
Principal Products or Services
The Company currently has three technologies under license which are in
various stages of market entry:
Balanced Pistons Valve ("BP Valves")
The Company received purchase order for certain BP Valves in January and
specification designs from prospective end users during February. Based on these
orders, the Company anticipates generating revenues commencing the second
quarter, 1997.
On November 1, 1997, the Company entered into a world wide exclusive
license agreement with Robert Jaeger, who was the owner of the Balanced Piston
Fluid Valve. The ownership of the BP Valves is based on United States Patent
5,309,934 Balanced Piston Fluid Valve issued May 10, 1994 and United States
Patent 5,421,358 Fluid Valve Mechanism and Valving Method issued June 6, 1995.
The BP Valve invention relates to regulating the flow of fluids in piping
systems and machinery through a valve closure made by fitting together old and
well known elements to form a new result. The ease of closure achieved through
the BP Valve invention translates into higher speed - smaller automated valve
assembly size - lighter weight - longer life - reduced system costs reduced
system complexity - ease of computer control and monitoring. The Company has
retained Robert Jaeger, two, full-time selling engineers and one full-time
design engineer to assist in the manufacturing and marketing BP Valves. The
Company is currently testing prototype valves and has initiated direct marketing
activities for the sale of the BP Valves. The Company intends to outsource the
manufacture and assembly of valves on a per order basis. The Company intends to
conduct all designed and other technical drawings relating to its BP Valves at
its facilities in the Pinellas Science Technology and Research Center located at
7887 Bryan Dairy Road, Largo, Florida.
AquaFuel.
The Company is engaged in certain scientific documentation and anticipates
marketing products and services derived from the AquaFuel technology commencing
during the third quarter, 1997.
On November 3, 1997, the Company executed a world wide exclusive license
agreement with William Richardson, the owner of AquaFuel. The ownership rights
to AquaFuel is based on United States Patent Number 5,435,274 titled Electric
Power Generation Without Harmful Emissions dated July 25, 1995 and United States
Patent Number 5,692,459 titled Pollution-Free Vehicle Operation dated December
2, 1997. AquaFuel is a water-derived alternative fuel technology, which, in the
opinion of management, affords a number of prospective applications including:
(1) a clean synthetic gas that emits no harmful emissions; (2) feedstock for
chemical extraction that would allow the production of pure hydrogen and/or
carbon dioxide; (3) desalination of salt water (by product of creating gas); (4)
organic or farm-animal waste disposal; (5) industrial waste disposal;
co-generation of electricity and; (6) fuel for internal combustion engines. The
Company has retained inventor and patent owner William Richardson and has
engaged the International Basic Research ("IBR") through its President Dr.
Ruggero Santilli as Theoretician to document the scientific characteristics of
the AquaFuel technology.
(3)
<PAGE>
The Company is currently manufacturing and assembling the AquaFuel
prototype apparatus at its facilities in the Pinellas Science Technology and
Research Center. Thereafter, the Company may either manufacture additional
AquaFuel devices at its headquarters facility in the Pinellas Science Technology
and Research Center or may outsource such manufacturing. The Company anticipates
that the AquaFuel prototype will be completed by March 31, 1997. There is,
however, no assurance that the prototype will be completed by that date and a
delay in the completion date could have a material adverse affect on the Company
relating to the market introduction of the AquaFuel technology.
Balanced Oil Recover System Lift ("BORS Lift").
The Company has thus far received purchase orders for 27 BORS Lifts at the
purchase price of $7,500 each. The Company anticipates deriving revenues from
the sale of pumps beginning the second quarter, 1997. The Company is
manufacturing the BORS Lift at its facilities in Largo, Florida.
On January 15, 1998, the Company executed an exclusive Manufacturing
License Agreement with Gerold Allen for the rights to manufacture the BORS Lift.
Ownership of the BORS Lift is not based on any patent or similar device. The
BORS Lift Pump is designed to replace traditional oil patch pump jacks. The BORS
Lift is a device developed in response to the current high cost/low production
of stripper wells (oil wells that produce 10 barrels or less per day) which
contributed to a flat-lining of the annual domestic oil production. The unit is
comprised of hardware that is both positioned above ground and downhole as well
as a programmable logic controller. The Company has retained inventor Gerold
Allen and is currently manufacturing BORS Lifts at its headquarters facility.
The Company intends to manufacture the hardware portion and assemble the
components of the BORS Lift device at its headquarters facilities in the
Pinellas Science Technology and Research Center.
Product background
As it relates to BP Valves, the initial thrust of standard line prototype
development is targeting three broad spectrum core valve group design concepts.
Each of the three concepts consists of a basic valve structure with a different
application target focus. Initial valve flow capacity of 1/2" nominal porting
has been selected based on the ability to market products across the broadest
industrial valve application range encompassing both fluid power and fluid
process control. Each basic structure is a nucleus whereupon application
specific attachments are added to fulfill a variety of particular customer
needs.
The basic structure will often be modified to accommodate various pipeline
and system installation requirements. Attachments will include actuators for
manual, electric, and fluid powered driving of the core components. These
actuators will range from simple hand operated knobs and levers to highly
engineered electromechanical motors and solenoids as well as pneumatic and
hydraulic prime movers. Other attachments include feedback devices monitoring
valve position for computer and automatic control. The Company's initial BP
Valve product line consists of:
1 2-way unidirectional basic valve structure starting with a simple on/off
mode of flow control. The above mentioned actuator sub-assemblies will be
developed for attachment installation along with feedback options. The
Company has manufactured 24 prototype models which are being used for sales
demonstration and testing.
2 3-way multidirectional flow structure valve will provide various
capabilities such as flow stream diverting, mixing, and directional
control.
3 regulator/pilot type valve will provide automatic control and performance
enhanced actuation drive options.
Each one of these valve groups represent product lines with the capability
of being both scaled up or scaled down to meet standard customer market system
flow capacities and performance needs. Basic models and spare parts can be
pre-manufactured to maintain a stock valve and parts inventory available for
rapid customer order turnaround time delivery.
As it relates to the AquaFuel Technology, the Company has identified two
prospective applications. The first relates to a product in the form of a gas
created through the AquaFuel process and the second application relates to
utilizing the AquaFuel apparatus for certain water reclamation and organic waste
disposal activities.
(4)
<PAGE>
The AquaFuel Technology makes use of a new carbon electrode arc technology
used underwater to produce a new clean-burning, low-cost alternative synthetic
gas or syngas called AquaFuel. To make AquaFuel, an ac or dc electric arc
tunnels through water between the tips of carbon electrodes. The 5,000 to 7,000
degrees Fahrenheit heat from the arc dissociates nearby water molecules into
hydrogen and oxygen atoms. Carbon atoms break loose from the electrodes and form
bonds in this high energy plasma soup. The resulting hydrogen/carbon/oxygen
molecules cool and bubble up to the surface in the surrounding water.
This renewable, inexhaustible, lighter-than-air syngas can be produced and
used in place of costly, non-renewable, pollution generating fossil fuels.
AquaFuel can be produced practically anywhere, in large or small production
facilities. The process works with any type of water including salt, tap, river
or even distilled water and with no electrolyte or any other additives required.
The AquaFuel apparatus can also serve as a means to reclaim polluted waterways
or for use in the disposal of organic (farm-animal) waste.
While the gaseous material (AquaFuel) requires scientific documentation
before any significant comparisons can be made relating to AquaFuel versus
fossil fuels, the currently available evidence has identified the following
characteristics:
1.AquaFuel is lighter than air because it continues to rise in the atmosphere;
2.AquaFuel does not self-combust because of its very low content of oxygen;
3.AquaFuel is largely composed of H2, CO and other hydrocarbons and oxygen;
4.AquaFuel can run existing internal combustion engines with insignificant
modification;
5. AquaFuel has astonishingly low pollutant content as in its exhaust as
compared to other fuels such as gasoline, methane, coal, etc.
6. No pollution control equipment is needed for burning AquaFuel;
7. Engine oil remains much cleaner when burning AquaFuel;
8. The main gas produced in burning AquaFuel is carbon dioxide which can be
dissolved in water and precipitate into useful solid carbonate products;
9 AquaFuel is a stable, permanent gas and is in no way similar to the mixture
of hydrogen and oxygen emitted from ordinary electrolysis;
10. AquaFuel can be stored in ordinary tanks either as a gas or in its liquid
form;
11.AquaFuel is cheaper,simpler, and more practical to produce than other fuels
such as gasoline, methane or pure hydrogen;
12.AquaFuel is safer to use than other fuels because when ignited, it burns
without exploding;
13. The AquaFuel technology can be used for the recycling or organic, industrial
and sewer waste.
The Company is currently engaged in the process of documenting the
scientific attributed and character of the AquaFuel process and gas. See
Management's Discussion and Analysis or Plan of Operation.
As it relates to the BORS Lift Technology The BORS Lift unit uses an oil
recovery tube that is attached to material similar to that used as seat belts in
most cars. The material guides these "cups" down into the well and into the oil
column that is contained within the production casing of the well. As these cups
dip into the oil column, the BORS Lift units stops, then reverses direction to
come back "up-hole." The BORS Lift unit is stationed approximately 20 feet from
the well bore hole. PVC piping is reversibly inclined such that the metal sweep
is higher than the entrance into the BORS Lift unit.
An oil transfer pump located inside the small holding tank then transfers
the oil to a nearby collection tank. After a 2 to 3 minutes drain time, the
machine then reverses direction to send the "cups" down the hole again into the
oil column without going into the water column which is situated below the oil
column. The result is minimal to no water lifted and no saltwater disposal
systems typically used with such wells are required. The BORS Lift operates on a
3/4 horse power electrical motor that drives the unit and programmable logic
controller which combined utilizes less than $15 of electric power per month per
pump.
(5)
<PAGE>
The BORS Lift unit employs a Programmable Logic Controller to self correct
operational problems that the pure mechanical lifting device encounters in
specific field applications. The Programmable Logic Controller is literally the
brains of the BORS Lift unit.
Principal Markets
As it relates to the BP Valves design, the Company envisions that the use
of valves is not limited to a particular market segment. The US demand for
industrial valves will advance 6.8 percent per annum to $11.8 billion in the
year 2000, based on heightened capital spending and rising production levels in
key end-uses (i.e., chemicals and other process industries). Gains will result
from an increasing emphasis on modernization and automation of production
processes, both to remain globally competitive and to reduce product costs
through improved operating efficiencies. The introduction of more advanced,
energy efficient and generally better performing valves will further spur gains,
as utilities and other end-users seek components which streamline operations and
require less maintenance. This drive to modernize will also support dollar
gains, as end- users become increasingly willing to purchase more
capital-intensive valve products, aware that in the long-run these larger
up-front outlays will reduce operating costs.
As it relates to the AquaFuel device, the Company believes its primary
markets will be the energy market as it relates to the gas created through the
AquaFuel device and environmental markets as its relates to utilizing the
apparatus as a remediation device. However, the Company is currently engaged in
a series of scientific documentation relating to the AquaFuel technology which
is designed, among other things, to further identify prospective applications.
Accordingly the Company is unable at this time to provide any meaningful market
information. As it relates to the BORS Lift device, the Company acts as the
exclusive manufacturer for a specific type of oil-well pump. The Company
envisions it will initially market the BORS Lift primarily to small,
privately-owned oil companies. The Company operates on the premise that in 1992,
when the majors produced a per company average of 345,000 barrels per day and
the mid-level publicly-traded oil and gas companies produced an average of
10,000 barrels per day, the remaining oil and gas companies produced an average
of only 300 barrels per day.
These small private producers are quite numerous, accounting for about
7,400 of the nearly 8,000 companies reporting oil and/or natural gas production
in the United States in 1992. In the same year, 427 publicly traded corporations
disclosed that Standard Industrial Code (SIC) 1311 (oil and gas extraction) was
one of the industries in which they operate, of which 327 stated that SIC 1311
was their primary industry.
Distribution methods
As it relates to BP Valves, the Company is currently marketing sub-license
agreements with valve manufacturing entities which sub-license agreements would
allow the licensee to develop the BP Valve technology into a specific
application which, at this time, cannot be known. In addition, the Company
intends to develop a core group of design concepts which can be marketed
directly to valve end-users. The Company has retained two, full time selling
agents that dedicate 100% of their time and expertise in executing TTL's direct
valve marketing program.
As it relates to AquaFuel, the Company intends to enter arrangements such
as sub-license, joint-ventures and/or strategic alliances relating to the
technology on an application/geographic basis and to market the resultant fuel
directly to the consumer. The Company's Vice President, Sales and Marketing
dedicates a portion of his time to investigating various AquaFuel revenue
opportunities. As the Company completes third-party documentation relating to
the AquaFuel process and resultant gas, Toups Technology may increase its
inhouse selling program or may outsource marketing responsibilities to firms
which are currently engaged in the business of developing sub-license,
joint-venture or strategic alliances.
As it relates to the BORS Lift, the Company has been engaged strictly as
the hardware manufacturer relating to the mechanical portions of the pump and to
conduct final assembly and delivery. Marketing of the BORS Lift is the
responsibility of Lift Pump, L.L.C.,, an Oklahoma Limited Liability Company
formed by the pump inventor Gerold Allen. The Company is a 20% owner of Lift
Pump, L.L.C.,.
Competitive business conditions
As it relates to BP Valves, approximately 250 companies participate in the
US valves industry, although aggressive acquisition activity has reduced the
base of producers and suppliers to some extent. The two largest producers --
Watts Industries and Emerson Electric -- together supply about ten percent of
the market. The other top manufacturers, each with less than 2.5 percent of the
market, are Crane, Neles-Jamesbury (UPM-Kymmene), Tyco, Duriron and Keystone
International.
(6)
<PAGE>
The US industrial valve industry is very price competitive and relatively
mature. Although the variety of products spans from fire hydrants (which have
experienced very few innovations in recent decades) to smart valves, which
utilize microchip technology to integrate with other plant systems and provide
diagnostic and maintenance feedback, valves nevertheless remain a commodity-like
product. Thus, to gain market share, competitors must offer favorable pricing,
full service packages and a consistent array of new and better performing valves
(well over a hundred new valve products were introduced in 1995 alone). However,
product differentiation is difficult to achieve in such an environment. Many
producers therefore target individual markets, specialty niches and product
segments, although large producers generally offer a full valve line.
The US industrial valve industry is comprised of a variety of manufacturers
typically engaged in specialize not only in the design and production of valves,
but also entire fluid control systems and automation systems. Contrastingly,
many of the smaller companies involved in the industry produce only a limited
line of valves as their primary business activity. Hansen, for instance,
manufactures valves for refrigeration applications. In addition, some very large
firms engaged in diverse activities target particularly lucrative niches (such
as Honeywell, via its Skinner subsidiary).
At present, the top five manufacturers within the valve industry are
comprised of:(derived from Freedonia Market Research Group, October 1993)
CompanyMarket Share
Emerson Electric 3.8
KSB 2.9
Kitz 2.4
BTR 2.4
Keystone International 1.9
As it relates to AquaFuel Technology, the Company believes it can market
the resultant gas as a product in competition with conventional resources such
as propane and natural gas. Further, the Company envisions it can provide a
reclamation service for the AquaFuel apparatus. However, in both cases, final
application determinations await certain testing and as such, the Company is
unable to provide an industry-specific discussion of potential markets.
However, the Company estimates that the AquaFuel Technology, in both the
gas and reclamation market segments, will be in competition with
long-established providers that have substantially greater marketing and
financial resources and as such, may preclude any significant deployment of the
AquaFuel Technology.
As it relates to the BORS Lift Technology, Management is of the view that the a
significant number of domestic oil wells fit the definition of a "stripper" well
and are prime candidates for the net efficiency increase afforded through an
BORS Lift.
The U. S. Department of Energy in the annual Energy Review reports that
despite the fact there are large numbers of oil wells drilled each year, the
total number of producing wells (oil & gas) does not increase because of the
large number of marginally profitable wells that cease production based on
economic factors.
Three main factors contribute to the number of marginal wells which are
abandoned each year: The production of large amounts of water in conjunction
with production of small amounts of oil; cost to provide power to operate each
well exceeds the revenues produced and/or; the daily flow of oil decreases to
the point that continued operation is no longer economically feasible. The
Company believes the BORS Lift device can enhance marginal wells to the point of
profitability and therefore extend the life of fields which would otherwise
cease operation.
Patents and royalty agreements
The Company has entered two agreements relating to four U. S. patents and a
manufacturing agreement. All three agreements are summarized below and each
requires advance and on-going royalty payments.
Relating to BP Valves, on the 3rd of November, 1997, the Company executed a
exclusive agreement to design, manufacture and sell or otherwise commercialize
technologies based on U. S. Patent 5,309,934 Balanced Piston Fluid Valve and U.
S. Patent 5,421,358 Fluid Valve Mechanism and Valving Method (collectively "BP
Valves"). BP Valves agreement contains customary elements relating to agreements
of this nature and will, at a minimum, provide that (i) the duration of the
agreement is for the life of the patent: (ii) each license agreement will be for
an initial period of one-year whereafter it can be renewed for three-year
periods at the Company's discretion; (iii) the subject of the license will be
all present technologies and all future improvements and developments. The
license agreement obligates the Company to pay an annual 6% royalty fee. The
Company is also required to make a one-time advance payment of $36,000 upon
execution of the license agreement which is to be applied toward 1/2 the first
twelve months royalty fees.
(7)
<PAGE>
The advance royalty fee will be retained by the recipient regardless of the
performance of BP Valves in the marketplace. One of the Company's Directors is
the beneficial owner of approximately 30% of patents relating to BP Valves.
Relating to AquaFuel, on the 3rd of November, 1997, the Company executed an
exclusive agreement to design, manufacture and sell or otherwise commercialize
the water-derived fuel technology based on United States Patent 5,435,274
Electric Power Generation Without Harmful Emissions and United States Patent
5,692,459 Pollution Free Vehicle Operation (collectively, "AquaFuel"). The
AquaFuel Agreement contains customary elements relating to agreements of this
nature and, at a minimum, provides that (i) the duration of the agreement is for
the life of the patent: (ii) each license agreement will be for an initial
period of one-year whereafter it can be renewed for three-year periods at the
Company's discretion; (iii) the subject of the license will be all present
technologies and all future improvements and developments. The license agreement
obligates the Company to pay a royalty fee of 6% of annual revenues related to
the sale of AquaFuel and related products or services. The Company is also
required to make a one-time advance payment of $60,000 in four quarterly
installments of $15,000 each quarter. Advance royalty fees shall be applied
toward 1/2 the first twelve months royalty fees. The advance royalty fee will be
retained by the recipient regardless of the performance of AquaFuel in the
marketplace. The License Agreement allows the principals of the AquaFuel patent
90 days from the date of execution to conclude agreements with the nations of
Australia, Austria, Britain, France, Japan, Mexico and Taiwan. If the principals
of the AquaFuel patent are unable to conclude such negotiations within 90 days,
then the Company is entitled to a 50% portion of any agreements negotiated after
that date. One of the Company's Directors is the beneficial owner of
approximately 30% of patents relating to AquaFuel.
Relating to BORS Lift, the Company executed a five-year Manufacturing
License Agreement effective January 1, 1998, by and between Gerold Allen
("Licensor") and Toups Technology Licensing, Inc., ("Licensee") (the "BORS Lift
Agreement"). The BORS Lift Agreement requires the Licensee to pay a 6% royalty
fee to the Licensor of the net sales price received from the sale of BORS Lifts.
The BORS Lift Agreement requires the Company to remit an advance first year
royalty payment of $80,000 in increments of $20,000 each with the first due upon
execution and the remainder due in equal amounts every three months thereafter.
However, the BORS Lift Agreement acknowledge the Company will not be required to
remit the remaining $60,000 advance royalty payments if the payment of the first
three BORS Lifts is not received. The BORS Lift Agreement further requires the
Company to manufacture a minimum of 100 pumps in the first year and not less
than three hundred pumps each year thereafter. The BORS Lift Agreement remains
in effect until December 31, 2002.
The Company currently has 10 full-time employees and one employ who provide
50% of his time in matters relating to the AquaFuel process. None of the
Company's employees are covered by collective bargaining agreements. Messrs.
Jaeger, Richardson and Allen have agreements relating to their services
regarding BP Valves, AquaFuel and BORS Lift technologies, respectively. The
Company's employees are classified as:
Executive 3
Sales 3
Engineering 4
Other 1
--------------------
Total Employees 11
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company was organized during July, 1997, became operational on
November, 1, 1997 and has no earnings to date. The Company's initial success is
predicated on successfully marketing applications of the AquaFuel, BP Valves and
the BORS Lift technologies. To date the Company has funded its operations
through the private sale of its securities. To date, the Company has received
orders for 27 BORS Lifts at the purchase price of $7,500 and anticipates
delivery during March and April. To date, the Company has received orders and/or
specification sheets for its BP Valves which management estimates will result in
revenues during the second quarter, 1997. The Company does not anticipate
marketing its AquaFuel technologies until commencing with the third quarter,
1997. The Company believes its cash reserves together with net-income from
operations are sufficient to satisfy the Company's cash requirements for at
least the next twelve months.
The technologies licensed by the Company to date have been developed during
the past 3 - 5 years. The Company's strategy envisions acquiring a license for
the technology thereby avoiding the research and application development
expenses. The Company has decide to proceed in this manner because it believes
the expenses of developing new technologies can result in significant losses
which must be recouped prior to achieving a profitable operation. At the point
in time when the Company acquires a particular license, the underlying
technology the Company anticipates that it will be ready for entrance into the
market place and not in the development or start-up state. This strategy is
designed to enable the Company to achieve revenues for its licensed technologies
within approximately six months of obtaining the license.
(8)
<PAGE>
An example of the Company's plan of operation is reflected in the BORS
Lift. With the BORS Lift, the Company executed its manufacturing agreement on
January 15, 1998 and as of February 20, 1998, has received orders totaling more
than $200,000 in gross sales. Another example of the Company's plan of operation
is reflected in the BP Valve. With the BP Valve, the Company executed its
agreement on the 3rd of November, 1997 and received its first purchase order on
the first of January, 1998.
The Company has not relied on anything other than the opinion of management
in developing the business plan for AquaFuel, BORS Lift and BP Valves. The
Company is therefore subject to all the risks inherent in any start-up venture,
many of which are beyond the control of management. Among the factors which
could adversely effect the Company's on-going operations include lack of market
acceptance for the applications developed from the Company's licensed
technologies; inability to manufacture products developed from the Company's
licensed technologies or, if accepted and produced, an inability of the Company
to profitably sell such products or services in light of existing marketplace
competitors most of which have substantially greater financial resources and
historical operating performance.
On March 2, 1998, the Company executed a Letter of Intent with A. M. W.
Metal Fabricators, a Florida Corporation, relating to the Sale of A. M. W. Stock
in exchange for stock of the Company. A. M. W. Metal Fabricators is a metal
fabrication company which specializes in advanced micro welding. The Company
proposed the acquisition of A. M. W. Metal Fabricators because, if acquired, A.
M. W. Metal Fabricators would bring a heighten level of manufacturing
capabilities through its micro-welding division and would represent a
significant reduction in the manufacturing costs associated with the BORS Lift.
Pursuant to the Letter, the Company has proposes to issue 500,000 of its
restricted $.001 par value Common Shares in exchange for 100% of the capital
stock of A. M. W. Metal Fabricators. Under the terms of the Letter, the Company
is to complete an audit by its independent auditors as a condition precedent to
the transaction proposed in the Letter. The Company anticipates the audit will
be complete during April-May, 1998. The Company does not anticipate any expense
for product research and development during the next twelve months. The Company
is engaged in documenting the theoretical aspects of its AquaFuel technology and
in acquiring third-party testing/verification.
On January 15, 1998, the Company engaged the Institute for Basic Research
("IBR") through its President Dr. Ruggero Maria Santilli, to conduct theoretical
evaluations in the form of a series of technical reports relating to the
AquaFuel technology. The Company has caused for the first of four Technical
Papers to be produced.
The IBR is comprised of approximately 100 scholars plus 30 members with
dual affiliations to universities and research institutions throughout the
world. Each IBR member is selected based on an expertise in the fields of
contemporary mathematics, physics, biology and other, related fields. The IBR is
headquartered at the Castle Prince Pignatelli, in Molise, Italy and has
editorial offices in Palm Harbor, Florida. The IBR is the publisher of Algebras,
groups and Geometries (15 years of publication), Hadronic Journal (20 years of
publication) and Hadronic Journal supplement (12 years of regular publication).
Dr. Ruggero Maria Santilli has been engaged by the Company as Theoretician
charged with organizing the Company's scientific documentation of the AquaFuel
technology. Dr. Santilli is the current President and Professor of Theoretical
Physics for the IBR and is the author of over 150 research papers, 12 advanced
monographs and editor of 30 volumes of conference proceedings and collected
works.
Dr. Santilli has held faculty or visiting positions at the University of
Miami, Boston University, M.I.T., Harvard University Departments of Physics and
Mathematics, J.I.N.R., Dubna Russia, Ukraine, Romanian and Estonian Academies of
Sciences. Dr. Santilli received a Ph.D. in Theoretical Physics at the University
of Turin, Italy in 1966 and is the recipient of two Gold Medals for scientific
merits.
Among the factors under review for scientific documentation or third-party
analysis include:
1. Measure the energy content of AquaFuel per unit volume;
2. Measure the individual isotopes in AquaFuel originating from triple
distilled water;
3. Measure the chemical composition of AquaFuel originating from triple
distilled water;
4. Measure the chemical composition of AquaFuel originating from liquids
inclusive of waste to be recycled;
(9)
<PAGE>
5. Identify the chemical structure of the exhaust following combustion;
6. Identification of physical characteristics of AquaFuel such as specific
density;
7. Identification of compressibility to liquid state;
8. Identification of the structure of the electric discharge;
9. Optimization of AquaFuel.
The Company contemplates it will have completed the scientific
documentation of the AquaFuel process and fuel during March, 1998. To date the
AquaFuel gas has been measured against gasoline at Briggs & Stratton with the
following results. AquaFuel demonstrated a substantial reduction in pollutants
with minimal loss in power.
<TABLE>
Briggs & Stratton Test Data
<CAPTION>
Gasoline AquaFuel
-------- --------
<S> <C> <C>
RPM 3060 3060
Torque 3.45 3.20
Horsepower 2.05 1.86
Oil Temperature 227 degrees 165 degrees
Exhaust Temperature 751 degrees 637 degrees
Hydrocarbons 2436 ppm 185 ppm
CO% 4.343 0.039
CO2% 12.086 14.695
Oxygen% 0.544 7.100
Hydrocarbons 13.367 0.001g/hr
Nitrogen Oxides 5.921 0.002 g/hr
CO 421.141 0.002 g/hr
</TABLE>
The Company occupies approximately 5,000 square-feet within the 96-acre
Pinellas Science Technology and Research Center ("STAR Center") in Largo,
Florida. Formerly used by Lockheed Martin Specialty Components, Inc. ("Lockheed
Specialty Components") as a provider of nuclear triggers for the Department of
Energy ("DOE"), the STAR Center has been converted into a technology incubator
for engineering firms and specialty manufacturers.
When the Department of Energy no longer had use for the facility, an
extraordinary amount of high technology manufacturing equipment became available
for STAR Center tenets at the rate of $1.00 per year. Under this program, the
Company has already acquired an estimated $500,000 in various computer,
manufacturing and high-technology equipment at a cost of $1.00 per year. The
Company does not envision therefore a need to make any significant purchase of
equipment in the course of establishing and operating its manufacturing
capabilities.
ITEM 3 - DESCRIPTION OF PROPERTY
The Company's headquarters and manufacturing facility occupies
approximately 5,000 square-feet within the 96-acre Pinellas Science Technology
and Research Center ("STAR Center") located at 7887 Bryan Diary Road, Suite 210,
Largo, Florida, 33777. The Company issued 120,000 of its restricted Common
Shares to InterSource Health Care, Inc. in exchange for the use of 5,000 square
feet for a period of twelve months, which twelve months ends December 31, 1998.
Thereafter, the Company intends to negotiate a lease directly with the STAR
Center.
InterSource Health Care, Inc., is a privately-held medical equipment
brokerage firm which refurbishes and resells used medical equipment. InterSource
is unrelated to Toups Technology except for common ownership. The Company's
Chief Executive Officer and Chief Financial Offer are Directors and shareholders
of InterSource. Neither individual received any of the restricted Common Shares
issued to InterSource in exchange for its use of the facilities.
Formerly used by Lockheed Martin Specialty Components, Inc. as a provider
of nuclear triggers for the Department of Energy ("DOE"), the STAR Center has
been converted into a technology incubator for engineering firms and specialty
manufacturers. The STAR Center is a 739,873 square-foot complex comprised of 17
separate buildings; a 150,000 square foot, 16 foot high bay manufacturing area
and approximately 100 separate areas including laboratories, production space
and offices. The STAR Center contains world class analytical laboratory
facilities for chemical, metallurgical, ceramic, polymer and environmental
analysis. Distributed computer networks throughout the facility and full
manufacturing machine shop capability including several CNC lathes, 4-axis
machine centers, automatic CNC screw machines and wire EDM facilities.
The Company does not invest in real estate or real estate mortgages nor
does the Company invest in the securities of or interests in persons primarily
engaged in real estate activities.
(10)
<PAGE>
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company has 9,100,214 shares of its Common Stock issued and
outstanding. The following table sets forth, as of January 31, 998, the
beneficial ownership of the Company's Common Stock (i) by the only persons who
are known by the Company to own beneficially more than 5% of the Company's
Common Stock; (ii) by each director of the Company; and (iii) by all directors
and officers as a group.
<TABLE> Beneficial ownership of the Company's Common Stock
<CAPTION>
(1) (2)
Name and Amount and
Address of Nature of
Beneficial Beneficial (3)
Title of Class Owner Owner Percent of Class
-------------- ----- ----- ----------------
<S> <C> <C> <C>
Common Leon H. Toups 3,200,000 35.1%
418 Harbor View Lane
Largo, Florida 33770
Common Mark Clancy 1,600,000 17.5%
417 Barrett Court
Tampa, Florida 33617
Common Michael Toups 1,600,000 17.5%
400 Palm Drive
Largo, Florida 33770
Common Jerry Kammerer 1,600,000 17.5%
1421 Water View Drive
Largo, Florida 33771
Common Charles McClure 250,000 2.7%
701 Bayshore Blvd #201
Tampa, Florida 33606
Common Officers and Directors 8,250,000 90.3%
(five persons)
<FN>
- ----------
(1) Mr. L. Toups serves as the Company's President, Chief Executive Officer and
Chairman of the Board of Directors. Mr. Clancy serves as a Director and as
the Corporate Secretary and Vice President, Sales and Marketing. Mr. M.
Toups serves as a Director and as the Company's Chief Financial Officer
and Vice President, Finance. Mr. Kammerer serves as a Director and as
the Company's Vice President, Technology Development. Mr. McClure
serves as a Director and as the Company's Patent Advisor.
(2 All Shares issued to named persons and Officers and Directors as a group
were issued upon incorporation in lieu of salary. None of the named persons
and Officer and Directors as a group are holders of any options, warrants,
right conversion privileges or similar items.
(3) The Company has not granted any options, warrants, rights conversion
privileges or similar items. There are no provisions which allow for a
change in control of the issuer beyond the annual election of Directors. The
Company is unaware of any voting trusts or similar agreements among its
Shareholders.
</FN>
</TABLE>
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers. The following Directors and Executive
Officers have served in their respective capacities since July 28, 1997. The
Directors were re-elected for the current term at a Meeting of Shareholders
conducted January 5, 1998. None of the Directors hold similar positions in any
reporting company.
Chairman of the Board of Directors, President and Chief Executive Officer
Leon H. Toups (58). Mr. Toups' past professional experiences include from 1980
to present as President and Chairman of the Board of Directors, DMV, Inc.,
Clearwater, Florida. DMV is a private business consulting company. Prior
thereto, from 1973 to 1980, Mr. Toups served as President and Chief Operating
Officer, as a Member, of the Board of Directors and as a Member of the Executive
Committee for Chromalloy American Corporation, St. Louis, Missouri and as
President, Chromalloy Natural Resources Company, Houma, Louisiana. Chromalloy
American was an international conglomerate with sales of approximately $1.6
billion which employed 32,000 people worldwide and traded its capital stock on
the New York Stock Exchange. Mr. Toups holds the following degrees: M.S.
Aerospace Engineering, University of Florida; M.S. Mechanical Engineering,
Georgia Tech; B.S. Mechanical Engineering, Georgia Tech. From 1968 - 1969
attended M.I.T. on a NASA Hugh Dryden Fellowship
(11)
<PAGE>
Director and Vice President, Technology Development, Jerry Kammerer (53).
Mr. Kammerer's past professional experiences include from 1980 through the
present, President, Filter and Systems, Inc., Minneapolis, Minnesota; Co-founder
of New Thermal Technologies, Inc., Clearwater, Florida. and as a Director of
Ceramic Rotors, Inc., Clearwater, Florida. Prior thereto, Mr. Kammerer was a
licensed developer involved in the following projects: President, Kam Builders,
Inc.; President, HPI Development and Construction Company; President, The Adonis
Group, Inc.. Mr. Kammerer holds a B.A., Business Administration, Fort Lewis
College, Durango, Colorado and a B.A., Faith Theological College, Scottville,
Michigan.
Director, Vice-President, Finance, Chief Financial Officer, Michael P.
Toups (32). Mr. Toups' past professional experiences include from: 1996 to
present as a Director and Vice President, Finance for InterSource Health Care,
Inc., Clearwater, Florida ; 1992 through Present, Vice President, Finance and
Operations, DMV, Inc., Clearwater, Florida. Mr. Toups holds an MBA, University
of Notre Dame with concentrations in finance and marketing and a BA, Business
Administration, Texas Christian University.
Director, Corporate Secretary and Vice President, Sales and Marketing, Mark
Clancy (42). Mr. Clancy's past business experiences include from: 1993 to
Present, Compliance Officer, DMV, Inc., Largo, Florida; 1996 to Present,
President, Total Kids, Incorporated, Tampa, Florida. Total Kids, Inc., a service
corporation which intends to engage in the operation of child-care centers.
Prior thereto, Mr. Clancy as General Sales Manager, WRCC FM Radio, Cape Coral,
Florida and as Sales Consultant, WIZD FM Radio, West Palm Beach, Florida. Mr.
Clancy holds an AA from Hillsborough Community College, Tampa, Florida.
Director and Patent Advisor, Charles A. McClure (71). Mr. McClure's past
professional experiences are as an active member of District of Columbia,
Florida and Pennsylvania Bar. Registered Patent Attorney (regn. No 17,177) in
United States Patent Office. Originally E.I. duPont de Nemours & Company legal
department, Wilmington, Delaware. Subsequently in private practice in
Philadelphia for two decades and as a full-time practitioner of intellectual
property law in Tampa, Florida since 1983. Mr. McClure holds an A.B. in
Chemistry, Oberlin College; an MS in Physics and J.D. in Law, University of
Illinois; an MBA, Management, Wharton School, University of Pennsylvania, and;
MA, PhD, Communications, Annenberg School, University of Pennsylvania.
The Company's Chief Financial Officer, Vice President, Finance and Director
Michael Toups is the son of the Company's President, Chief Executive Officer and
Chairman of the Board of Directors, Leon H. Toups.
ITEM 6 - EXECUTIVE COMPENSATION
The following table depicts all plan and non-plan compensation awarded to,
earned by or paid to the named executive officer of this corporation for the
period indicated:
<TABLE>
Annual Long Term
Compensation Compensation
------------ ------------
<CAPTION>
(a) (b) (c) (d) (e)
Restricted
Stock Total
Name and Principal Salary Bonus award(s) Compensation
Position Year ($) ($) ($) ($)
-------- ---- --- --- --- ---
<S> <C> <C> <C> <C> <C>
Leon H. Toups 1997 $2,000 $0 $3,200 $5,200
President
Chief Executive Officer
Mark Clancy 1997 $2,000 $0 $1,600 $3,600
Corporate Secretary
Vice President, Sales
& Marketing
Jerry Kammerer(f) 1997 $2,000 $0 $1,600 $3,600
Vice President,
Technology Development
Michael Toups 1997 $2,000 $0 $1,600 $3,600
Vice President, Finance
<FN>
- ----------
(a) All named executive Officers have served in their respective capacities
Since formation of the Company.
(b) The Company was incorporated during July, 1997. As such, the information
provided relates to the short-year then ended December 31, 1997.
(12)
<PAGE>
(c) All named Officers have agreed to serve in their respective capacities at
the rate of $4,000 per month until such time as the Company's Board of
Directors authorizes an increase. Such an increase would be predicated on
prevailing industry standards and the existent financial situation of the
Company. The Board of Directors may authorize an increase in the
compensation of the Company's executive officers without a vote of
Shareholders.
The Company began organizational/business planning activities during
March, 1997. At that time, executive officers elected to accept restricted
Shares of the Company's $.001 par value Common Stock in lieu of salary. The
Company currently pays its Officers an entry rate of $4,000 per month.
During November, the Company began to compensate its Officers at the rate
of $1,000 cash per month. During February, 1998, the Company began
compensating its Officers at the rate of $4,000 cash per month.
(d) The Company did not make any bonus payments to its executive officers
during the short year August - December, 1997. However, the Company may in
the future develop programs which may include bonus payments.
(e) Each Officer received their shares upon incorporation at par value in lieu
of cash compensation.
</FN>
</TABLE>
The Company does not compensate its Directors for their participation.
Charles McClure, the Company's Patent Advisor and a Director was given a
one-time grant of 250,000 of the Company's Restricted $.001 par value Common
Shares. Mr. McClure is not scheduled to receive any further payments from the
Company in either cash or stock except as to which he would be entitled in the
execution of the Technology Licensing Agreements to which he is a party.
The Company does not provide for agreements with any of its executive
officers. However, the company may in the future need to compete for the
services of its executive officers at which time the Board of Directors may
adopt and require its executive officers to execute employment agreements.
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Director and Patent Advisor Mr. Charles McClure is a 30% partner
to the BP Valve Agreement and the AquaFuel Agreement. Accordingly, Mr.
McClure is entitled to 30% of all royalty payments which have been or which are
scheduled to be paid in the performance of these Agreements.
Two of the Company's Officers and Directors are each 15% shareholders in
Lift Pump, L.L.C., an Oklahoma Limited Liability Company formed by Gerold Allen
to conduct the marketing and maintenance of the BORS Lift. The Company is a 20%
shareholder in Lift Pump, L.L.C. As such, when sales of the BORS Lift are made,
the Company and two of its Officers and Directors will receive a pro rata
portion of the net proceeds thereto. The Lift Pump, L.L.C.,, intends to assume
its responsibilities immediately following the initial placement and payment of
the first three BORS Lifts. The Company may incur certain as yet unknown
expenses in the course of operationally activating Lift Pump, L.L.C.,
ITEM 8 - DESCRIPTION OF SECURITIES
The Company is authorized to issue up to 20,000,000 shares of Common Stock,
par value $.001 per share and 10,000,000 shares of Preferred Stock, par value
$1.00 per share. As of the date hereof, none of the Preferred Shares were
outstanding and there were 9,100,214 Common Shares outstanding.
Of the 9,100,214 Common Shares, 8,610,000 Common Shares are "restricted
securities" as that term is defined and, in the future, said Shares may only be
sold upon compliance with Rule 144, adopted under the Securities Act of 1933.
Further, in Securities and Exchange Commission (SEC) Release No. 33-7390
Revision of Holding Period Requirements in Rules 144 and 145 the SEC amended the
holding period contained in Rule 144 to permit the resale of limited amounts of
restricted securities by qualified persons after a one-year, rather than a
two-year, holding period. Also, the amendments permit unlimited resales of
restricted securities held by non-affiliates of the Company after a holding
period of two years, rather than three years.
As of the date of this Form 10-SB, None of the Company's Officers,
Directors, associates, employees or affiliates hold any free-trading Common
Shares. There are no promoters, consultants, underwriters or persons or firms
acting in any similar capacity associated with the Company.
Holders of Common Shares are entitled to one vote per Common Share on all
matters to be voted on by Shareholders. The Common Shares do not have cumulative
voting rights. Therefore, holders of a majority of the Common Shares are also
members of the Board of Directors. A majority vote is also sufficient for most
other actions requiring the vote or concurrence of Shareholders. The Company's
Officers and Directors as a group (five persons) own directly approximately
90.3% of the Issuer's capital stock. As such, these individuals will be in a
position to constitute a majority of the Shareholders at any vote of
shareholders including the election of Directors.
(13)
<PAGE>
All Shares are entitled to share equally in dividends when and if declared
by the Board of Directors out of funds legally available therefore. It is
anticipated that the Company will not pay cash dividends on its Shares in the
foreseeable future. In the event of liquidation or dissolution of the Company,
whether voluntary or involuntary, holders of the Shares are entitled to share
equally in all assets of the Company legally available for distribution to
Shareholders. The holders of Shares have no preemptive or other subscription
rights to acquire authorized but unissued capital stock of the Company, and
there are no conversion rights or redemption or sinking fund provisions with
respect to such Shares. All of the outstanding Shares and those Shares issued in
accordance with this offering will be fully paid and non assessable.
PART II
ITEM 1 - MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
To date there is no public trading market for the Company's securities.
The Company intends to apply for inclusion of the Common Shares on the
NASDAQ OTC (Over the Counter) Bulletin Board. However, there can be no
assurances that an active trading market will develop, even if the securities
are accepted for quotation.
Quotations on the Nasdaq OTC Bulletin Board reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent actual
transactions.
As of 28 February, 1998, Company had 41 Shareholders of Record.
Holders of the Company's Common Stock are entitled to dividends when, as
and if declared by the Board of Directors out of funds legally available
therefore. The Company does not anticipate the declaration or payment of any
dividends in the foreseeable future.
The Company intends to retain earnings, if any, to finance the development
and expansion of its business. Future dividend policy will be subject to the
discretion of the Board of Directors and will be contingent upon future
earnings, if any, the Company's financial condition, capital requirements,
general business conditions and other factors. Therefore, there can be no
assurance that any dividends of any kind will ever be paid.
The Company registrar and transfer agent is Continental Stock Transfer &
Trust Company.
ITEM 2 - LEGAL PROCEEDINGS.
The Company is not subject to any legal proceedings. The Company is unaware
of any governmental authority that is contemplating any procedure to which the
Company is a participant.
ITEM 3 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Toups Technology has never had any disagreements with its accountants.
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES
On incorporation, the Company issued 8,250,000 of its $.001 par value
Common Shares to its Officers and Directors in lieu of salary. The 8,250,000
shares were issued as "restricted shares" which can only be resold if a
registration statement relating to said securities is effective or if qualified
counsel opines that such registration is not required.
On November 1, 1997, in conjunction with the execution of the BP Valve
License Agreement, the Company issued 25,000 of its $.001 par value Common
Shares to the Licensor. The 25,000 shares were issued as "restricted shares"
which can only be resold if a registration statement relating to said securities
is effective or if qualified counsel opines that such registration is not
required.
On November 1, 1997, in conjunction with the execution of the AquaFuel
License Agreement, the Company issued 50,000 of its $.001 par value Common
Shares to the Licensor. On January 29, 1997, in conjunction with AquaFuel, the
Company issued 10,000 of its $.001 par value Common Shares to the Licensor. The
50,000 and 10,000 shares were issued as "restricted shares" which can only be
resold if a registration statement relating to said securities is effective or
if qualified counsel opines that such registration is not required.
Between November 8, 1997 and January 15, 1998, the Company issued 25,000,
10,000, 50,000 and 10,000 of its $.001 par value Common Shares to its employees
Messrs DeCara, Reilly, Santilli and Lindfors, respectively. The 95,000 shares
were issued as "restricted shares" which can only be resold if a registration
statement relating to said securities is effective or if qualified counsel
opines that such registration is not required.
(14)
<PAGE>
On December 1, 1997, the Company entered an agreement with InterSource
HealthCare, Inc. underwhich the Company would occupy 5,000 square-feet of
office/manufacturing space which was under a lease between InterSource and the
STAR Center. The Agreement required the Company to issue 120,000 of its
restricted Common Shares to InterSource in exchange for the use of the
facilities. Two of the Company's Officers and Directors are also Officers and
Directors of InterSource. Upon receipt of the 120,000 restricted Common Shares,
InterSource distributed the Shares to its employees except for the individuals
who are also Officers and Directors of Company.
On January 29, 1998, in conjunction with the BORS Lift License Agreement,
the Company issued 60,000 of its $.001 par value Common Shares to Messrs Greever
and Allen in increments of 30,000 per individual. The 60,000 shares were issued
as "restricted shares" which can only be resold if a registration statement
relating to said securities is effective or if qualified counsel opines that
such registration is not required.
Between November 1, 1997 and February 28, 1998, the Company sold 864,535
Shares of its $.001 par value Common Stock at approximately $0.67 (sixty-seven)
per Common Share to 4 accredited investors and 18 unaccredited investors which
investors purchased such securities pursuant to an exemption from registration
according to Regulation D, Rule 504 (the "Private Offering"). There were no
underwriters involved in the Private Offering and no commissions were paid nor
discounts given to any individual.
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article III of the Company's by-laws provide for the indemnification of
directors in that Directors of this Corporation shall not be personally liable
for monetary damages to the corporation or any other person for any statement,
vote, decision or failure to act, regarding corporate management or policy, by a
director unless the director breached or failed to perform his duties as
director.
Article VI of the Company's by-laws provide for the indemnification of
officers, directors, employee and agents of the Company. Such indemnification is
available to any person who was or is a party to any proceeding (other than an
action by, or in the right of, the corporation), by reason of the fact that he
or she is or was a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation. Further
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been 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.
PART F/S
The following is the Auditor's Report and accompanying audited balance
sheets of Toups Technology Licensing, Inc. (A Development Stage Company) as of
December 31, 1997 and January 31, 1998, and the related statements of
operations, stockholders' equity and cash flows for the period from July 28,
1997 (date of Inception) through December 31, 1997, for the month ended January
31, 1998 and for the period from July 28, 1997(Date of Inception) through
January 31, 1998.
Auditor's Report...........................................16
Balance Sheets.............................................17
Statements of Operations...................................18
Statement of Stockholders' Equity..........................19
Statements of Cash Flows...................................20
Notes to Financial Statements..............................21
(15)
<PAGE>
lNDEPENDENT AUDITORs' REPORT
Board of Directors and Stockholders
Toups Technology Licensing, lncorporated
(A Development Stage Company)
Largo, Florida
We have audited the accompanying balance sheets of Toups Technology
Licensing, lncorporated (A Development Stage Company) as of December 31, 1997
and January 31, 1998, and the related statements of operations, stockholders'
equity, and cash flows for the period from July 28, 1997 (Date of Inception)
through December 31, 1997, for the month ended January 31, 1998, and for the
period from July 28, 1997 (Date of Inception) through January 31, 1998.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supPorting
the amounts and disclosures in the financial statements. An audt also includes
assessing the accounting principles used and significant estimates made by
management, as weII 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 Toups Technology Licensing,
lncorporated (A Development Stage Company) as of December 31, 1 997 and January
31, i998, and the results of its operations and its cash flows for the period
from July 28, l997 (Date of Inception) through December 31, 1997, for the month
ended January 31, 1998, and for the period from July 28, 1997 (Date of
Inception) through January 31, 1998.
February 12, 1998
Harper, Van Scoik & Company, L. L. P.
A WORLDWlDE ORGANIZATION OF ACCOUNTlNG FlRMS AND BUSlNESS ADVlSORS
(16)
<PAGE>
Toups Technology Licensing Incorporated
(A Development Stage Company)
<TABLE>
Balance Sheet (audited)
<CAPTION>
BALANCE SHEETS
December 31, 1997 and January 31, 1998
December 31 January 31
1997 1998
---- ----
<S> <C> <C>
Assets:
Cash $60,421 $185,920
Prepaid royalty expenses 96,000 176,000
Property and equipment - 3,433
Deferred Charges 5,075 8,775
----- -----
Total assets $161,496 $374,128
======== ========
Liabilities:
Accounts payable and $8,559 $1,694
accrued liabilities
Accrued royalty expenses 85,000 145,000
------ -------
Total liabilities 93,559 146,694
Stockholders' equity:
Common stock 8,510 9,049
Additional paid-in capital 99,850 284,036
Deficit accumulated during
development stage (40,423) (65,651)
-------- --------
Total stockholders' equity 67,937 227,434
------ -------
Total liabilities and
stockholders' equity $93,559 $374,128
======= ========
</TABLE>
See Notes to Financial Statements
(17)
<PAGE>
TOUPS TECHNOLOGY LICENSING, INCORPORATED
(A Development Stage Company)
<TABLE>
Statement of Operations (audited)
<CAPTION>
STATEMENT OF OPERATIONS
For the period from July 28, 1997 (Date of
Inception) through December 31, 1997, for the month ended
January 31, 1998, and the period from July 28, 1997
(Date of Inception) through January 31, 1998
July 28, 1997 July 28, 1997
(inception) Month (Inception)
through Ended through
December January 31 January 31,
1997 1998 1998
---- ---- ----
<S> <C> <C> <C>
Interest Income $ 543 $ 327 $ 870
Expenses:
Salaries 17,902 6,227 24,129
Consulting fees 14,209 6,536 20,745
Other operating costs 8,855 12,792 21,647
----- ------ ------
Total expenses 40,966 25,555 66,521
------ ------ ------
Net loss $40,423 $25,228 $65,651
======= ======= =======
Weighted average number
of shares outstanding 8,358,057 8,723,960 8,418,390
Net loss per share $.005 $.003 $.008
</TABLE>
See Notes to Financial Statements
(18)
<PAGE>
TOUPS TECHNOLOGY LICENSING, INCORPORATED
(A Development Stage Company)
<TABLE>
Statement of Stockholders' Equity (audited)
<CAPTION>
STATEMENT OF STOCKHOLDERS' EQUITY
For the period from July 28, 1997 (Date of
Inception) through December 31, 1997, for the month
ended January 31, 1998,
and the period from July 28, 1997
(Date of Inception) through January 31, 1998
Deficit
Accumulated
Common Additional During
Number Stock Paid-in Development
of Shares (At Par) Capital Stage Total
--------- -------- ------- ----- -----
<S> <C> <C> <C> <C> <C>
Issuance of common
stock upon inception 8,250,000 $8,250 $-0- $-0- $8,250
Stock issued for:
Services 110,000 110 - - 110
Cash 150,000 150 99,850 - 100,000
Deficit accumulated
during development
stage through
December 31, 1997 - - - (40,423) (40,423)
- - - -------- --------
Balance
December 31, 1997 8,510,000 8,510 99,850 (40,423) 67,937
Stock issued for:
Cash 278,714 279 184,186 - 184,465
Services 140,000 140 - - 140
Rent 120,000 120 - - 120
Deficit accumulate
during development
stage January 1,
1998 through January
31, 1997 - - - (25,228) (25,228)
- - - -------- --------
Balance
January 31, 1998 9,048,714 $9,049 $284,036 $(65,651) $227,434
========= ====== ======== ======== ========
</TABLE>
See Notes to Financial Statements
(19)
<PAGE>
TOUPS TECHNOLOGY LICENSING, INCORPORATED
(A Development Stage Company)
<TABLE>
Statement of Cash Flows (audited)
<CAPTION>
STATEMENT OF CASH FLOWS
For the period from July 28, 1997 (Date of
Inception) through December 31, 1997, for the month
ended January 31, 1998,
and the period from July 28, 1997
(Date of Inception) through January 31, 1998
July 28, 1997 July 28, 1997
(Inception) Month (Inception)
through Ended through
December January 31, January 31,
1997 1998 1998
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(40,423) $(25,228) $(65,651)
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Capital stock issued
for services and rent 8,360 260 8,620
(increase prepaid expenses (96,000) (80,000) (176,000)
Increase in deferred charges (5,075) (3,700) (8,775)
Increase (decrease) in
accounts payable 8,559 (6,865) 1,694
Increase in accrued
royalty expenses 85,000 60,000 145,000
------ ------ -------
Net cash used by
operating activities (39,579) (55,533) (95,112)
Cash flows from investing activities:
Acquisition of equipment - (3,433) (3,433)
- ------- -------
Net cash used
by investing activities - (3,433) (3,433)
- ------- -------
Cash flows from
financing activities:
Proceeds from sale of
capital stock 100,000 184,465 284,465
------- ------- -------
Net cash provided by
financing activities 100,000 184,465 284,465
Cash, beginning of period - 60,421 -
- ------ -
Cash, end of period $60,421 $185,920 $185,920
====== ======== ========
</TABLE>
See Notes to Financial Statements
(20)
<PAGE>
TOUPS TECHNOLOGY LICENSING, lNCORPORATED
(A Development Stage Company)
NOTES TO FlNANClAL STATEMENT
December 31, 1997 and January 31, 1998
1. Summary of Significant Accounting Policies
Company - Toups Technology Licensing, lncorporated (Company), a Florida
Corporation, was formed on July 28, l997, and activated its startup
operations on November 1, 1997 to facilitate market applications through the
licensing of late-stage technologies primarily in the energy, environmental
and natural resources market segments. The Company selects proprietary
products or devices within market segments which management perceives are not
subject to rapid change and can be delivered to the marketplace within a
three to six month period. The Company is in the development stage of its
operations and has not realized any revenues from its product lines (see
subsequent event note 7). The Company's intended market will be world-wide.
Machinery and Equipment - Machinery and equipment are recorded at cost.
Depreciation is computed on an accelerated method over seven years.
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. Actual results could differ from those
estimates.
Income Taxes - Deferred income taxes are reported using the liability method.
Deferred tax assets are recognized for deductible temporary differences and
deferred tax liabilities are recognized for taxable temporary differences.
Temporary differences are differences between the reported amounts of assets
and liabilities and their tax bases. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
2. Capital Stock
Common
The Company is authorized to issue 20 million shares of common stock with a
par value of $0.001 (one, one-thousandth dollar) per share. As of December
31, ol997 and January 31, 1998, there were 8,510,000 and 9,048,714 shares
issued and outstanding, respectively. Each share of common stock has one vote
on all matters acted upon by the shareholders. Of the 9,048,714 shares issued
and outstanding at January 31, i998, 428,714 shares are unrestricted and
8,620,000 shares are restricted as to the sale to other parties.
Preferred
The Company is also authorized to issue 10 million shares of preferred stock
having a par value of $i per share. There were no preferred shares issued
outstanding at either December 31, 1997 or January 31, 1998,
3. Employment Agreements Stock Commitments
The Company entered into a series of one-year employment contracts. Within
those contracts, 85,000 shares of stock were issued to certain employees.
These shares have been recorded in the accompanying balance sheet.
Additionally, there are incentive clauses in these contracts that allow up to
another 270,000 shares of common stock to be issued to employees if certain
goals are met. None of these shares are scheduled to be issued to officers,
directors, or holders of more than 5% of the outstanding stock. The
additional 270,000 shares have not been recorded in the accompanying
financial statements.
4, Licensing Agreement Commitments
The Company entered into two licensing agreements in November 1997, whereby,
the Company has exclusive rights to make, use, lease, market and sell these
product lines. In January, 1998, the Company executed a five year
manufacturing agreement with a third licensor. In exchange for these rights,
under the three agreements, the Company has committed to pay the Licensor a
6% royalty as computed by those agreements. The Company agreed to pay a
minimum of $176,000 of royalties in1998, of which $31.000 has been paid as of
January 31, 1998. The remaining royalty payments for the initial licensing
term will be paid as follows:
(21)
<PAGE>
Year Ending
-----------
1998 $145,000
1999 96,000
2000 96,000
------
$337,000
========
The Company can offset these advanced payments against the royalties
earned in 1998 through the year 2000. The $l45,000 has been recorded as a
liability in the accompanying balance sheet.
In addition to the above, if the Company exercised its option to renew
the licenses it will have future minimum royalties as follows:
Year Ending
2001 $200,000
2002 $250,000
2003 $300,000
2004 and every year thereafter $400,000
5. Non-Cash Disclosures
The following transactions were excluded from the statement of cash flows
because they were not cash transactions.
At inception the Company issued 8,250,000 shares to its organizers. These
shares of stock were recorded at a total of $8,250.
In addition to the commitments described in the 'licensing agreement
commitment" note, the Company issued 115,000 shares of stock to the licensors of
the Company's three technologies. These shares of stock were recorded at a total
of $115.
The Company issued 135,000 shares of stock to consultants and employees.
These shares were recorded at $135.
The Company issued 120,000 shares of stock for the use of operating
facilities for one year. These shares of stock were recorded at $120.
6. Income Taxes
A deferred tax asset stemming from the Company's net operating loss
carryforward has been reduced by a valuation account to zero due to
uncertainties regarding the utilization of the deferred asset. The deferred
tax asset and the corresponding valuation allowance were approximately $8,085
as of December 31, 1997.
The net operating loss of $40,423 will expire in 2012.
Deferred tax asset:
Net operating loss carryforwards $8,085
Less valuation allowance 8,085
------
Net deferred taxes $ -
======
7. Subsequent Event
Management has agreed in principle to the sale of the first Balanced Oil
Recovery System Lift Pumps. These pumps are expected to be installed in April
and May of .1998 at a total sales price of $180,000.
(22)
<PAGE>
PART III
ITEM 1 - INDEX TO EXHIBITS
#Exhibit
--------
EX-3.(i) Articles of Incorporation
EX-3.(ii) By-laws
EX-5 Opinion re legality
EX-10.(i) BPV License Agreement (BP Valves)
EX-10.(ii) WAFT License Agreement (AquaFuel)
EX-10.(iii) BORS Lift Manufacturing License Agreement
EX-23 Auditor's Consent
(23)
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Toups Technology Licensing, Inc.
(Registrant)
February, 23, 1998
By Leon H. Toups, Chief Executive Officer
S/S LEON H. TOUPS
-----------------
(Signature)*
(24)
STATE OF FLORIDA
Department of State
I certify from the records of this office that TOUPS TECHNOLOGY LICENSING,
lNCORPORATED is a corporation organized under the laws of the State of Florida,
filed on July 28, 1997.
The document number of this corporation is P97000067689.
I further certify that said corporation has paid all fees and penalties due
this office through December 31, 1998, that its most recent annual report was
filed on January 27, 1998, and its status is active.
I further certify that said corporation has not filed Articles of
Dissolution.
Given under my hand and the Great Seal of the State of Florida at
Tallahassee the Capitol, this the Twenty-ninth day of January, 1998
Sandra B. Mortham
Secretary of State
(25)
<PAGE>
ARTICLES OF INCORPORATION
OF
TOUPS TECHNOLOGY LICENSING, INCORPORATED
ARTICLE I - NAME
The name of this Corporation is TOUPS TECHNOLOGY LICENSING INCORPORATED.
ARTICLE II - NATURE OF BUSINESS
This Corporation is organized primarily to acquire license rights for
devices and processes derived from patents and other intellectual materials and
to engage in or transact any or all other lawful business permitted under the
laws of the State of Florida or any other State and of the United States.
ARTICLE III - CAPITAL STOCK
This Corporation is authorized to issue 20,000,000 (twenty-million) shares
of Common Stock having a par value of $0.001 (one, one-thousandth dollar) per
share which shares shall be and hereby are designated as "Common Shares".
Without action by the stockholders, any or all of the authorized shares may be
issued by the Corporation from time to time for such consideration as may be
fixed by the Board of Directors of this Corporation.
This Corporation is authorized to issue 10,000,000 (ten-million) shares of
Preferred Stock having a par value of $1.00 (one dollar) per share which shares
shall be and hereby are designated as "Preferred Shares." Without action by the
shareholders, any or all of the authorized Preferred Shares may be issued by the
Corporation from time to time for such consideration as may be fixed by the
Board of Directors of this Corporation.
Each of the Common Shares shall have one vote on all matters coming before
any meeting of the Shareholders or otherwise to be acted upon by Shareholders.
No holder of any shares or shares of any class of capital stock of the
Corporation shall have any preemptive right to subscribe for any shares of
capital stock of any class of the Corporation now or hereafter authorized or for
any security convertible into or carrying any optional rights to purchase or
subscribe for any shares of capital stock of any class of the Corporation now or
hereafter authorized.
No provision of these Articles of Incorporation shall be deemed to deny to
the Board of Directors the right, in its sole discretion, to grant to the holder
of shares of any class of capital stock or any other securities of the
Corporation now or hereafter authorized, at such prices and upon such other
terms and conditions as the Board of Directors, in its sole discretion, may fix.
Dividends respecting any shares of the Corporation's capital stock shall be
payable only out of earnings or assets of the Corporation legally available for
the payment of such dividends and only as and when declared by the Board of
Directors.
ARTICLE IV- TERM OF EXISTENCE
The term for which this Corporation shall exist shall be perpetual,
commencing on the date of execution of these Articles.
ARTICLE V - PRINCIPAL OFFICE AND REGISTERED AGENT
The principal office of this Corporation in the State of Florida is 801
West Bay Drive, Suite 707, Largo, Florida 34640. The name of the initial
Registered Agent of this Corporation at that address is Mark Clancy. The mailing
address of this Corporation shall be 4706 Barrett Court, Tampa, Florida 33617.
(26)
<PAGE>
ARTICLE VI - BOARD OF DIRECTORS
This Corporation shall initially have two (2) directors. The number of
Directors may be increased or decreased from time to time as permitted according
to the By Laws of this Corporation but in no event shall the number of Directors
be reduced below one (1). The names and addresses of the Directors of this
Corporation are:
Board of Directors Name and Address
Chairman of the Board of Directors Leon H. Toups
Toups Technology Licensing Incorporated
801 West Bay Drive, Suite 707
Largo, Florida 34640
Director Mark C. Clancy
Toups Technology Licensing Incorporated
4706 Barrett Court
Tampa, Florida 33617
ARTICLE VII - INCORPORATORS
The name and addresses of the incorporators of this Corporation are:
Name/Address
Leon H. Toups
Toups Technology Licensing Incorporated
801 West Bay Drive, Suite 707
Largo, Florida 34640
Mark C. Clancy
Toups Technology Licensing Incorporated
4706 Barrett Court
Tampa, Florida 33617
ARTICLE VIII - BY LAWS
The Board of Directors may repeal, amend or adopt By Laws for the
Corporation pursuant to law and these Articles.
ARTICLE IX - AMENDMENTS
These Articles of Incorporation may be amended in the manner provided by
law.
ARTICLE X - SUBSCRIPTION
As of and by the execution of these Articles of Incorporation by the
Incorporators, in consideration of the filing of and the premises and covenants
contained in these Articles of Incorporation, the Incorporators hereby subscribe
to purchase 4,000,000 (four-million) shares of Common Stock at par value for an
aggregate purchase price of $4,000.00, the full payment of which is herein
acknowledged. Said Common Shares shall be issued as specified below:
Incorporator/Number of Shares
Leon H. Toups 3,200,000 (three-million, two-hundred thousand) Common Shares
Mark C. Clancy 1,600,000 (one-million, six-hundred thousand) Common Shares
IN WITNESS WHEREOF, the undersigned Incorporators, being natural persons
competent to contract, have hereunto set their hand and affixed their seal this
29 day of July, 1997
S/S LEON H. TOUPS
- -----------------
Leon H. Toups, Incorporator, Chairman of the Board of Directors (Seal)
S/S MARK C. CLANCY
- ------------------
Mark C. Clancy, Incorporator, Director (Seal)
Filed Secretary of State of Florida
Division of Corporations
August 4, 1997, 3:24PM.
(27)
<PAGE>
CERTlFlCATE OF ACCEPTANCE OF DESlGNATlON OF REGlSTERED AGENT
OF TOUPS TECHNOLOGY LlCENSlNG lNCORPORATED
Pursuant to Sections 48.091 and 607.034, Florida Statutes, the undersigned,
having been designated as the initial Registered Agent for the service of
process within the State of Florida upon Toups Technology Licensing
Incorporated, a Corporation organized under the laws of the State of Florida,
does hereby accept the appointment as such Registered Agent for the above named
corporation. and does hereby agree to comply with the provisions of Section
48.091(e) relative to keeping open the Registered Office of said corporation,
which Registered Office is located at 801 West Bay Drive, Suite 707, Largo,
Florida 34640.
IN WlTNESS WHEREOF, I, such designed Registered Agent, have hereunto set my
hand and seal at Largo, Pinellas County, Florida on this 28th day of July, 1997.
S/S MARK C. CLANCY
- ------------------
Mark C. Clancy
Registered Agent
Filed Secretary of State of Florida
Division of Corporations
August 4, 1997, 3:24PM
(28)
By-Laws of
Toups Technology Licensing Incorporated
as adopted by the Board of Directors on July 28, 1997
ARTICLE I - OFFICES
The principal office of the corporation shall be established and maintained
as designated in the Articles of Incorporation. The corporation may also have
offices at such places within or without the State of Florida as the Board of
Directors (the "Board") may from time to time establish.
ARTICLE II - STOCKHOLDERS
Notices
All notices made to Shareholders of this Corporation must be in writing,
unless oral notice is reasonable under the circumstances. Notice may be
communicated in person; by telephone (where oral notice is permitted),
telegraph, teletype, or other form of electronic communication; or by mail.
Written notice is effective when received; five days after its deposit in the
United States mail, as evidenced by the postmark, if mailed postpaid and
correctly addressed; or on the date shown on the return receipt, if sent by
registered or certified mail, return receipt requested, and the receipt is
signed by or on behalf of the addressee. Oral notice is effective when
communicated if communicated directly to the person to be notified in a
comprehensible manner.
Annual meeting
This Corporation shall hold a meeting of shareholders commencing at 10:00AM
January 10th, for the election of directors and for the transaction of any
proper business. The annual shareholders' meeting may be held in or out of this
state at a location to be determined by the Board of Directors at least 90
calendar days prior to such meeting.
Special meetings
This Corporation shall hold a special meeting of shareholders on call of
its board of directors or the person or persons authorized to do so by the
articles of incorporation or bylaws; or if the holders of not less than 20
percent of all the votes entitled to be cast on any issue proposed to be
considered at the proposed special meeting sign, date, and deliver to the
corporation's secretary one or more written demands for the meeting describing
the purpose or purposes for which it is to be held. Special shareholders'
meetings may be held in or out of the state at a place stated in or fixed in
accordance with these bylaws or in the notice of the special meeting. Unless
otherwise stated, special meetings shall be held at this Corporation's principal
office. Only business within the purpose or purposes described in the special
meeting notice may be conducted at a special shareholders' meeting. This
Corporation shall hold a special meeting of shareholders within 60 days of
notice as provided in these bylaws.
Action by shareholders without a meeting
Action required or permitted and of which may be taken at an annual or
special meeting of shareholders may be taken without a meeting, without prior
notice, and without a vote if the action is taken by the holders of outstanding
stock of each voting group entitled to vote thereon having not less than the
minimum number of votes with respect to each voting group that would be
necessary to authorize or take such action at a meeting at which all voting
groups and shares entitled to vote thereon were present and voted. In order to
be effective the action must be evidenced by one or more written consents
describing the action taken, dated and signed by approving shareholders having
the requisite number of votes of each voting group entitled to vote thereon, and
delivered to the corporation by delivery to its principal office in this state,
its principal place of business, the corporate secretary, or another officer or
agent of the corporation having custody of the book in which proceedings of
meetings of shareholders are recorded. No written consent shall be effective to
take the corporate action referred to therein unless, within 60 days of the date
of the earliest dated consent delivered in the manner required by this section,
written consents signed by the number of holders required to take action are
delivered to the corporation by delivery as set forth herein. Any written
consent may be revoked prior to the date that the corporation receives the
required number of consents to authorize the proposed action. No revocation is
effective unless in writing and until received by the corporation at its
principal office or received by the corporate secretary or other officer or
agent of the corporation having custody of the book in which proceedings of
meetings of shareholders are recorded. Within 10 days after obtaining 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.
(29)
<PAGE>
The notice shall fairly summarize the material features of the authorized
action and, if the action be such for which dissenters' rights are provided, the
notice shall contain a clear statement of the right of shareholders dissenting
therefrom to be paid the fair value of their shares upon compliance with further
conditions regarding the rights of dissenting shareholders. A consent signed
under this section has the effect of a meeting vote and may be described as such
in any document. Whenever action is taken pursuant to this section, the written
consent of the shareholders consenting thereto or the written reports of
inspectors appointed to tabulate such consents shall be filed with the minutes
of proceedings of shareholders.
Notice of meetings
This Corporation shall notify shareholders of the date, time, and place of
each annual and special shareholders' meeting no fewer than 10 or more than 60
days before the meeting date. This Corporation shall provide notice only to
shareholders entitled to vote at the meeting.
Notice shall be given in the manner provided herein, by or at the direction
of the President, the secretary, or the officer or persons calling the meeting.
If the notice is mailed at least 30 days before the date of the meeting, it may
be done by a class of United States mail other than first class. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
addressed to the shareholder at his address as it appears on the stock transfer
books of the corporation, with postage thereon prepaid.
Notice of an annual meeting may not include a description of the purpose or
purposes for which the meeting is called. Notice of a special meeting shall
include a description of the purpose or purposes for which the meeting is
called.
If an annual or special shareholders' meeting is adjourned to a different
date, time, or place, notice need not be given of the new date, time, or place
if the new date, time, or place is announced at the meeting before an
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.
Waiver of notice
A shareholder may waive any notice 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 regular or special meeting of the
shareholders need be specified in any written waiver of notice.
Record date
The record date to determine shareholders entitled to notice of a
shareholders' meeting shall be as of a date no more than 60 days prior to such
meeting. The record date for determining shareholders entitled to notice
regarding any special meeting shall be the date the first shareholder delivers
his demand to the corporation. Unless otherwise required by law, the record date
for determining shareholders entitled to take action without a meeting is the
date the first signed written consent is delivered to the corporation. A
determination of shareholders entitled to notice of or to vote at a
shareholders' meeting is effective for any adjournment of the meeting unless the
board of directors fixes a new record date, which it must do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting.
Shareholders' list for meeting
This Corporation shall prepare an alphabetical list of the names of all its
shareholders who are entitled to notice of a shareholders' meeting, arranged by
voting group with the address of, and the number and class and series, if any,
of shares held by, each.
The shareholders' list shall be available for inspection by any shareholder
for a period of 20 days prior to the meeting or such shorter time as exists
between the record date and the meeting and continuing through the meeting at
the corporation's principal office or at a place identified in the meeting
notice in the city where the meeting will be held or at the office of the
corporation's transfer agent or registrar. The shareholder list shall be
available during regular business hours during the period it is available for
inspection. This Corporation shall also make the shareholders' list available at
the meeting.
Voting entitlement of shares
Each outstanding share, regardless of class, is entitled to one vote on
each matter submitted to a vote at a meeting of shareholders. The shares of this
Corporation are not entitled to vote if they are owned, directly or indirectly,
by a second corporation, domestic or foreign, and the first corporation owns,
directly or indirectly, a majority of the shares entitled to vote for directors
of the second corporation. However this shall not limit the power of this
Corporation to vote any shares, including its own shares, held by it in a
fiduciary capacity.
(30)
<PAGE>
Preferred Shares, when and if issued, are not entitled to vote on any
matter. Redeemable Shares are not entitled to vote on any matter, and shall not
be deemed to be outstanding, after notice of redemption is mailed to the holders
thereof and a sum sufficient to redeem such shares has been deposited with a
bank, trust company, or other financial institution upon an irrevocable
obligation to pay the holders the redemption price upon surrender of the shares.
Shares standing in the name of another corporation, domestic or foreign, may be
voted by such officer, agent, or proxy as the bylaws of the corporate
shareholder may prescribe.
Shares held by an administrator, executor, guardian, personal
representative, or conservator may be voted by him, either in person or by
proxy, without a transfer of such shares into his name. Shares standing in the
name of a trustee may be voted by him, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him without a transfer of such
shares into his name or the name of his nominee. Shares held by or under the
control of a receiver, a trustee in bankruptcy proceedings, or an assignee for
the benefit of creditors may be voted by him without the transfer thereof into
his name. If a share or shares stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety, or otherwise, or if two or more persons have
the same fiduciary relationship respecting the same shares, unless the secretary
of the corporation is given notice to the contrary and is furnished with a copy
of the instrument or order appointing them or creating the relationship wherein
it is so provided, then acts with respect to voting have the following effect:
If only one votes, in person or by proxy, his act binds all; If more than one
vote, in person or by proxy, the act of the majority so voting binds all; If
more than one vote, in person or by proxy, but the vote is evenly split on any
particular matter, each faction is entitled to vote the share or shares in
question proportionally; If the instrument or order so filed shows that any such
tenancy is held in unequal interest, a majority or a vote evenly split for
purposes of this subsection shall be a majority or a vote evenly split in
interest;
Proxies
A shareholder, other person entitled to vote on behalf of a shareholder
pursuant to s. 607.0721, or attorney in fact may vote the shareholder's shares
in person or by proxy. A shareholder may appoint a proxy to vote or otherwise
act for him by signing an appointment form, either personally or by his attorney
in fact. An executed telegram or cablegram appearing to have been transmitted by
such person, or a photographic, photostatic, or equivalent reproduction of an
appointment form, is 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 expressly provided in the appointment form. The death or incapacity of
the shareholder appointing a proxy does not affect the right of the corporation
to accept the proxy's authority unless notice of the death or incapacity is
received by the secretary or other officer or agent authorized to tabulate votes
before the proxy exercises his authority under the appointment.
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. Appointments coupled with an interest include the
appointment of: A pledgee; A person who purchased or agreed to purchase the
shares; A creditor of the corporation who extended credit to the corporation
under terms requiring the appointment; An employee of the corporation whose
employment contract requires the appointment.
Corporation's acceptance of votes
If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the corporation if acting in good
faith is entitled to accept the vote, consent, waiver, or proxy appointment and
give it effect as the act of the shareholder. If the name signed on a vote,
consent, waiver, or proxy appointment does not correspond to the name of its
shareholder, the corporation if acting in good faith is nevertheless entitled to
accept the vote, consent, waiver, or proxy appointment and give it effect as the
act of the shareholder according to law.
The corporation is entitled to reject a vote, consent, waiver, or proxy
appointment if the secretary or other officer or agent authorized to tabulate
votes, acting in good faith, has reasonable basis for doubt about the validity
of the signature on it or about the signatory's authority to sign for the
shareholder. The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance with
the standards of these bylaws is not liable in damages to the shareholder for
the consequences of the acceptance or rejection.
(31)
<PAGE>
Quorum and voting requirements for voting groups
Shares entitled to vote as a separate voting group may take action on a
matter at a meeting only if a quorum of those shares exists with respect to that
matter. A majority of the votes entitled to be cast on the matter by the voting
group constitutes a quorum of that voting group for action on that matter. Once
a share is represented for any purpose at a meeting, it is deemed present for
quorum purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that adjourned meeting.
If a quorum exists, action on a matter (other than the election of directors) by
a voting group is approved if the votes cast within the voting group favoring
the action exceed the votes cast opposing the action. The holders of a majority
of the shares represented, and who would be entitled to vote at a meeting if a
quorum were present, where a quorum is not present, may adjourn such meeting
from time to time.
Voting for directors; cumulative voting
Directors are 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. Each
shareholder who is entitled to vote at an election of directors has the right to
vote the number of shares owned by him for as many persons as there are
directors to be elected and for whose election he has a right to vote.
Shareholders do not have a right to cumulate their votes.
Voting trusts
One or more shareholders may create a voting trust, conferring on a trustee
the right to vote or otherwise act for him or for them, by signing an agreement
setting out the provisions of the trust (which may include anything consistent
with its purpose) and transferring their shares to the trustee. When a voting
trust agreement is signed, the trustee shall prepare a list of the names and
addresses of all owners of beneficial interests in the trust, together with the
number and class of shares each transferred to the trust, and deliver copies of
the list and agreement to the corporation's principal office. A voting trust
becomes effective on the date the first shares subject to the trust are
registered in the trustee's name. A voting trust is valid for not more than 10
years after its effective date unless extended according to law. The validity of
any voting trust otherwise lawful shall not be affected during a period of 10
years from the date when it was created or last extended by the fact that under
its terms it will or may last beyond the 10-year period. All or some of the
parties to a voting trust may extend it for additional terms of not more than 10
years each by signing an extension agreement and obtaining the voting trustee's
written consent to the extension. An extension is valid for the period set forth
therein, up to 10 years, from the date the first shareholder signs the extension
agreement. The voting trustee must deliver copies of the extension agreement and
list of beneficial owners to the corporation's principal office. An extension
agreement binds only those parties signing it.
Shareholders' agreements
Two or more shareholders may provide for the manner in which they will vote
their shares by signing an agreement for that purpose. A shareholders' agreement
created under this section is specifically enforceable.
Shareholders' preemptive rights
The shareholders of the corporation do not have a preemptive right to
acquire proportional amounts of the corporation's unissued shares upon the
decision of the board of directors to issue them. Holders of shares of any class
or series without general voting rights but with preferential rights to
distributions or assets have no preemptive rights with respect to shares of any
class. Holders of shares of any class or series with general voting rights but
without preferential rights to distributions or assets have no preemptive rights
with respect to shares of any class with preferential rights to distributions or
assets unless the shares with preferential rights are convertible into or carry
a right to subscribe for or acquire shares without preferential rights.
Distributions to shareholders
This Corporation's board of directors may authorize and the corporation may
make distributions to its shareholders. If the board of directors does not fix
the record date for determining shareholders entitled to a distribution (other
than one involving a purchase, redemption, or other acquisition of the
corporation's shares), it is the date the board of directors authorizes the
distribution.
No distribution may be made if, after giving it effect, the corporation
would not be able to pay its debts as they become due in the usual course of
business; or the corporation's total assets would be less than the sum of its
total liabilities plus the amount that would be needed, if the corporation were
to be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of shareholders whose preferential rights are superior
to those receiving the distribution.
(32)
<PAGE>
The board of directors may base a determination that a distribution is not
prohibited either on financial statements prepared on the basis of accounting
practices and principles that are reasonable in the circumstances or on a fair
valuation or other method that is reasonable in the circumstances. In the case
of any distribution based upon such a valuation, each such distribution shall be
identified as a distribution based upon a current valuation of assets, and the
amount per share paid on the basis of such valuation shall be disclosed to the
shareholders concurrent with their receipt of the distribution. This
Corporation's indebtedness to a shareholder incurred by reason of a distribution
made in accordance with this section is at parity with the corporation's
indebtedness to its general, unsecured creditors except to the extent
subordinated by agreement.
Inspection of records by shareholders
(1) A shareholder of a corporation is entitled to inspect and copy, during
regular business hours at the corporation's principal office, any of the
records of the corporation described in the preceding Bylaw if he gives the
corporation written notice of his demand at least 5 business days before
the date on which he wishes to inspect and copy.
(2) Bona fide shareholders of this Corporation are 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 provided
such shareholder gives the corporation written notice of his demand at
least 5 business days before the date on which he wishes to inspect and
copy:
(a) 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 (1);
(b) Accounting records of the corporation;
(c) The record of shareholders; and
(d) Any other books and records.
A shareholder may inspect and copy the records of this Corporation only if
his demand is made in good faith and for a proper purpose and he describes with
reasonable particularity his purpose and the records he desires to inspect; and
the records are directly connected with his purpose.
This Corporation may deny any demand for inspection made pursuant to
subsection (2) if the demand was made for an improper purpose, or if the
demanding shareholder has within 2 years preceding his demand sold or offered
for sale any list of shareholders of the corporation or any other corporation,
has aided or abetted any person in procuring any list of shareholders for any
such purpose, or has improperly used any information secured through any prior
examination of the records of the corporation or any other corporation.
Financial statements for shareholders
Unless modified by resolution of the shareholders within 120 days of the
close of each fiscal year, this 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 flows for that year. The financial
statements shall be prepared for this Corporation on the basis of generally
accepted accounting principles.
If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the president or the person responsible for the
corporation's accounting records:
(a) Stating his reasonable belief whether the statements were prepared on the
basis of generally accepted accounting principles and, if not, describing
the basis of preparation; and
(b) Describing any respects in which the statements were not prepared on a
basis of accounting consistent with the statements prepared for the
preceding year.
ARTICLE III - DIRECTORS
Requirement for and duties of board of directors
All corporate powers shall be exercised by or under the authority of, and
the business and affairs of the corporation managed under the direction of, its
board of directors.
(33)
<PAGE>
Qualifications of directors
Directors must be natural persons who are 18 years of age or older but need
not be residents of this state or shareholders of this Corporation.
Terms of directors
The terms of the initial directors of a corporation expire at the first
shareholders' meeting at which directors are elected. The terms of all other
directors expire at the next annual shareholders' meeting following their
election. A decrease in the number of directors does not shorten an incumbent
director's term. The term of a director elected to fill a vacancy expires at the
next shareholders' meeting at which directors are elected. Despite the
expiration of a director's term, he continues to serve until his successor is
elected and qualifies or until there is a decrease in the number of directors.
Resignation of directors
A director may resign at any time by delivering written notice to the board
of directors or its chairman or to this 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, the board of directors may
fill the pending vacancy before the effective date if the board of directors
provides that the successor does not take office until the effective date.
Removal of directors by shareholders
The shareholders may remove one or more directors only for cause. A
director may be removed by the shareholders at a meeting of shareholders,
provided the notice of the meeting states that the purpose, or one of the
purposes, of the meeting is removal of the director.
Vacancy on board
Whenever a vacancy occurs on a board of directors, including a vacancy
resulting from an increase in the number of directors, it 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
Compensation of directors
This Corporation shall not compensate Directors.
Meetings of the Board of Directors
The board of directors shall hold regular or special meetings in or out of
this state. A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the board of directors to another time and place.
Notice of any such adjourned meeting shall be given to the directors who were
not present at the time of the adjournment and, unless the time and place of the
adjourned meeting is announced at the time of the adjournment, to the other
directors. Meetings of the board of directors may be called by the chairman of
the board or by the president. The board of directors may permit any or all
directors to participate in a regular or special meeting by, or conduct the
meeting through the use of, any means of communication by which all directors
participating may simultaneously hear each other during the meeting. A director
participating in a meeting by this means is deemed to be present in person at
the meeting.
Action by directors without a meeting
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 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. Action taken under this section is effective when
the last director signs the consent, unless the consent specifies a different
effective date. A consent signed under this section has the effect of a meeting
vote and may be described as such in any document.
Notice of director meetings
Regular meetings of the board of directors may be held without notice of
the date, time, place, or purpose of the meeting. Special meetings of the board
of directors must be preceded by at least 2 days' notice of the date, time, and
place of the meeting. The notice need not describe the purpose of the special
meeting.
Waiver of notice of directors meetings
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,
the time 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.
(34)
<PAGE>
Quorum and voting
A quorum of a board of directors consists of a majority of the number of
directors prescribed by the articles of incorporation. If a quorum is present
when a vote is taken, the affirmative vote of a majority of directors present is
the act of the board of directors. A director of a corporation who is present at
a meeting of the board of directors or a committee of the board of directors
when corporate action is taken is deemed to have assented to the action taken
unless he objects at the beginning of the meeting (or promptly upon his arrival)
to holding it or transacting specified business at the meeting; or he votes
against or abstains from the action taken.
Committees
The board of directors, by resolution adopted by a majority of the full
board of directors, may designate from among its members an executive committee
and one or more other committees each of which, to the extent provided in such
resolution shall have and may exercise all the authority of the board of
directors, except that no such committee shall have the authority to: Approve or
recommend to shareholders actions or proposals required by this act to be
approved by shareholders, fill vacancies on the board of directors or any
committee thereof, adopt, amend, or repeal the bylaws, authorize or approve the
reacquisition of shares unless pursuant to a general formula or method specified
by the board of directors, 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.
General standards for directors
A director of this Corporation shall discharge his duties as a director,
including his duties as a member of a committee, in good faith, with the care an
ordinarily prudent person in a like position would exercise under similar
circumstances; and in a manner he reasonably believes to be in the best
interests of the corporation.
In discharging his duties, a director is entitled to rely on information,
opinions, reports, or statements, including financial statements and other
financial data, if prepared or presented by one or more officers or employees of
the corporation whom the director reasonably believes to be reliable and
competent in the matters presented, legal counsel, public accountants, or other
persons as to matters the director reasonably believes are within the persons'
professional or expert competence; or a committee of the board of directors of
which he is not a member if the director reasonably believes the committee
merits confidence. In discharging his duties, a director may consider such
factors as the director deems relevant, including the long-term prospects and
interests of the corporation and its shareholders, and the social, economic,
legal, or other effects of any action on the employees, suppliers, customers of
the corporation or its subsidiaries, the communities and society in which the
corporation or its subsidiaries operate, and the economy of the state and the
nation. A director is not liable for any action taken as a director, or any
failure to take any action, if he performed the duties of his office in
compliance with this section.
Liability of directors
Directors of this Corporation shall not be personally liable for monetary
damages to the corporation or any other person for any statement, vote,
decision, or failure to act, regarding corporate management or policy, by a
director, unless the director breached or failed to perform his duties as a
director; and the director's breach of, or failure to perform, those duties
constitutes: 1. A violation of the criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful. A judgment or other final adjudication against
a director in any criminal proceeding for a violation of the criminal law estops
that director from contesting the fact that his breach, or failure to perform,
constitutes a violation of the criminal law; but does not estop the director
from establishing that he had reasonable cause to believe that his conduct was
lawful or had no reasonable cause to believe that his conduct was unlawful; 2. A
transaction from which the director derived an improper personal benefit, either
directly or indirectly; 3. A circumstance under which the liability provisions
pursuant to law are applicable; 4. In a proceeding by or in the right of the
corporation to procure a judgment in its favor or by or in the right of a
shareholder, conscious disregard for the best interest of the corporation, or
willful misconduct; or 5. In a proceeding by or in the right of someone other
than the corporation or a shareholder, recklessness or an act or omission which
was committed in bad faith or with malicious purpose or in a manner exhibiting
wanton and willful disregard of human rights, safety, or property.
(35)
<PAGE>
Director conflicts of interest
Any contract or other transaction between a corporation and one or more of
its directors or any other corporation, firm, association, or entity in which
one or more of its directors are directors or officers or are financially
interested shall be either void or voidable because of such relationship or
interest, because such director or directors are present at the meeting of the
board of directors or a committee thereof which authorizes, approves, or
ratifies such contract or transaction, or because his or their votes are counted
for such purpose. Unless the fact of such relationship or interest is disclosed
or known to the board of directors or committee which authorizes, approves, or
ratifies the contract or transaction by a vote or consent sufficient for the
purpose without counting the votes or consents of such interested directors, or
the fact of such relationship or interest is disclosed or known to the
shareholders entitled to vote and they authorize, approve, or ratify such
contract or transaction by vote or written consent; or the contract or
transaction is fair and reasonable as to the corporation at the time it is
authorized by the board, a committee, or the shareholders.
ARTICLE IV - OFFICERS
Required officers
A duly appointed officer may appoint one or more officers or assistant
officers if authorized by the board of directors. The board of directors shall
delegate to one of the officers responsibility for preparing minutes of the
directors' and shareholders' meetings and for authenticating records of the
corporation. The same individual may simultaneously hold more than one office in
this corporation.
Duties of officers
Each officer has the authority and shall perform the duties set forth
herein or the duties prescribed by the board of directors or by direction of any
officer authorized by the bylaws or the board of directors to prescribe the
duties of other officers. Each Officer of this Corporation shall be provided a
written description of responsibilities for their specific function and shall be
required to acknowledge an understanding of expectations by affixing his/her
signature thereon.
Resignation and removal of officers
An officer may resign at any time by delivering notice to this 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, its board of
directors may fill the pending vacancy before the effective date if the board of
directors 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.
ARTICLE V - SHARES OF THE COMPANY'S STOCK
Fractional shares
This Corporation shall not issue fractional shares but in any such
circumstance shall make arrangements, or provide reasonable opportunity, for any
person entitled to or holding a fractional interest in a share to sell such
fractional interest or to purchase such additional fractional interests as may
be necessary to acquire a full share. The holder of a fractional share is
entitled to exercise the rights of a shareholder, including the right to vote,
to receive dividends, and to participate in the assets of the corporation upon
liquidation. When this Corporation is to pay in money the value of fractions of
a share, the good faith judgment of the board of directors as to the fair value
shall be conclusive.
Subscriptions for shares
A subscription for shares of this Corporation is not enforceable unless in
writing and signed by the subscriber. The board of directors may determine the
payment terms of subscriptions for shares. A call for payment by the board of
directors must be uniform as to all shares of the same class or series. Shares
issued pursuant to subscriptions are fully paid and nonassessable when the
corporation receives the consideration specified in the subscription agreement.
If a subscriber defaults in payment of money or property under a subscription
agreement, the corporation may collect the amount owed as any other debt. The
corporation may rescind the agreement and may sell the shares if the debt
remains unpaid more than 20 days after the corporation sends written demand for
payment to the subscriber. If mailed, such written demand shall be deemed to be
made when deposited in the United States mail in a sealed envelope addressed to
the subscriber at his last post-office address known to the corporation, with
first-class postage thereon prepaid. The defaulting subscriber or his legal
representative shall be entitled to be paid the excess of the sale proceeds over
the sum of the amount due and unpaid on the subscription and the reasonable
expenses incurred in selling the shares, but in no event shall the defaulting
subscriber or his legal representative be entitled to be paid an amount greater
than the amount paid by the subscriber on the subscription.
(36)
<PAGE>
Issuance of shares
The board of directors may authorize 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, the board of directors must
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 it
cannot be determined that outstanding shares are fully paid and nonassessable,
there shall be a conclusive presumption that such shares are fully paid and
nonassessable if the board of directors makes a good faith determination that
there is no substantial evidence that the full consideration for such shares has
not been paid.
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.
Liability for shares issued before payment
A holder of, or subscriber to, shares of this Corporation shall be under no
obligation to the corporation or its creditors with respect to such shares other
than the obligation to pay to the corporation the full consideration for which
such shares were issued or to be issued. Any person becoming an assignee or
transferee of shares, or of a subscription for shares, in good faith and without
knowledge or notice that the full consideration therefor has not been paid shall
not be personally liable to the corporation or its creditors for any unpaid
portion of such consideration, but the assignor or transferor shall continue to
be liable therefor. No pledgee or other holder of shares as collateral security
shall be personally liable as a shareholder, but the pledgor or other person
transferring such shares as collateral shall be considered the holder thereof
for purposes of liability under this section. An executor, administrator,
conservator, guardian, trustee, assignee for the benefit of creditors, receiver,
or other fiduciary shall not be personally liable to the corporation as a holder
of, or subscriber to, shares of a corporation, but the estate and funds in his
hands shall be so liable. No liability under this section may be asserted more
than 5 years after the earlier of the issuance of the stock, or the date of the
subscription upon which the assessment is sought.
Share dividends
Shares may be issued pro rata and without consideration to this
Corporation's shareholders or to the shareholders of one or more classes or
series. An issuance of shares under this subsection is a share dividend. Shares
of one class or series may not be issued as a share dividend in respect of
shares of another class or series unless a majority of the votes entitled to be
cast by the class or series to be issued approves the issue, or there are no
outstanding shares of the class or series to be issued. If the board of
directors does not fix the record date for determining shareholders entitled to
a share dividend, it is the date the board of directors authorizes the share
dividend.
Share options
This Corporation may issue rights, options, or warrants for the purchase of
shares of the corporation. The board of directors shall determine the terms upon
which the rights, options, or warrants are issued, their form and content, and
the consideration for which the shares are to be issued.
The terms and conditions of stock rights and options which are created and
issued by this Corporation or its successor, and which entitle the holders
thereof to purchase from this Corporation shares of any class or classes,
whether authorized but unissued shares, treasury shares, or shares to be
purchased or acquired by the corporation, may include, without limitation,
restrictions, or conditions that preclude or limit the exercise, transfer,
receipt, or holding of such rights or options by any person or persons,
including any person or persons owning or offering to acquire a specified number
or percentage of the outstanding common shares or other securities of the
corporation, or any transferee or transferees of any such person or persons, or
that invalidate or void such rights or options held by any such person or
persons or any such transferee or transferees.
(37)
<PAGE>
Form and content of certificates
Shares may but need not be represented by certificates. The rights and
obligations of shareholders are identical whether or not their shares are
represented by certificates. The board of directors of a corporation may
authorize the issue of some or all of the shares of any or all of its classes or
series without certificates. In such an event, within a reasonable time after
the issue or transfer of shares without certificates, the corporation shall send
the shareholder a written statement of the information required on certificates
as set forth in the bylaws of this Corporation.
At a minimum, each share certificate issued by this Corporation shall state
on its face Toups Technology Licensing Corporation, a Florida Corporation; The
name of the person to whom issued; and The number and class of shares and the
designation of the series, if any, the certificate represents. If the issuing
corporation is authorized to issue different classes of shares or different
series within a class, the designations, relative rights, preferences, and
limitations applicable to each class and the variations in rights, preferences,
and limitations determined for each series (and the authority of the board of
directors to determine variations for future series) must be summarized on the
front or back of each certificate. Alternatively, each certificate may state
conspicuously on its front or back that the corporation will furnish the
shareholder a full statement of this information on request and without charge.
Each share certificate must be signed (either manually or in facsimile) by the
President and Treasurer or as designated by the board of directors, and must
bear the corporate seal or its facsimile. If the person who signed (either
manually or in facsimile) a share certificate no longer holds office when the
certificate is issued, the certificate is nevertheless valid.
Restriction on transfer of shares and other securities
Unless the Company is provided with a qualified Opinion of Counsel that the
following is not required, a legend in substantially the following form will be
placed on any certificate(s) evidencing shares or other securities of this
Corporation:
THESE SECURITIES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF BY
ANY INVESTOR TO ANY OTHER PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER APPLICABLE LAW OF THE STATE OR
Jurisdiction WHERE SOLD, TRANSFERRED OR DISPOSED OF, UNLESS SUCH SALE, TRANSFER
OR Disposition SHALL QUALIFY UNDER AN ALLOWED EXEMPTION TO SUCH REGISTRATION.
ANY REQUEST FOR THE SALE, TRANSFER OR OTHER DISPOSITION OF THESE SHARES SHALL BE
ACCOMPANIED BY AN OPINION OF COUNSEL ACCEPTABLE TO THIS CORPORATION.
Stop transfer instructions will be placed with respect to the securities of
this Corporation so as to restrict resale or other transfer thereof subject to
further items hereof, including the provisions of the legend set forth above.
Expenses of issue
This Corporation shall pay the expenses of selling or underwriting its
shares.
Corporation's acquisition of its own shares
This Corporation may acquire its own shares and shares so acquired shall
constitute authorized but unissued shares of the same class but undesignated as
to series.
ARTICLE VI - GENERAL PROVISIONS
Emergency powers
During any emergency defined in the preamble hereto, the board of directors
of this Corporation may: modify lines of succession to accommodate the
incapacity of any director, officer, employee, or agent; and relocate the
principal office or designate alternative principal offices or regional offices
or authorize the officers to do so. During an emergency defined in the preamble
hereto notice of a meeting of the board of directors need be given only to those
directors whom it is practicable to reach and may be given in any practicable
manner, including by publication and radio; one or more officers of the
corporation present at a meeting of the board of directors may be deemed to be
directors for the meeting, in order of rank and within the same rank in order of
seniority, as necessary to achieve a quorum; and the director or directors in
attendance at a meeting constitute a quorum. Corporate action taken in good
faith during an emergency under this section to further the ordinary business
affairs of the corporation binds the corporation; and may not be used to impose
liability on a corporate director, officer, employee, or agent. No officer,
director, or employee acting in accordance with this section shall be liable
except for willful misconduct. Any emergency of the Corporation shall remain in
effect during such emergency, and upon termination of the emergency, this
section of the Corporation's bylaws will cease to be operative.
(38)
<PAGE>
Loans to officers, directors, and employees; guaranty of obligations
This Corporation may lend money to, guarantee any obligation of, or
otherwise assist any officer, director, or employee of the corporation or of a
subsidiary, whenever, in the judgment of the board of directors, such loan,
guaranty, or assistance may reasonably be expected to benefit the corporation.
The loan, guaranty, or other assistance may be with or without interest and may
be unsecured or secured in such manner as the board of directors shall approve,
including, without limitation, a pledge of shares of stock of the corporation.
Indemnification of officers, directors, employees, and agents
This corporation shall indemnify any person who was or is a party to any
proceeding (other than an action by, or in the right of, the corporation), by
reason of the fact that he is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against liability incurred in connection
with such proceeding, including any appeal thereof, if he acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any proceeding by judgment, order, settlement, or conviction or
upon a plea of nolo contendere or its equivalent shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
This corporation shall indemnify any person, who was or is a party to any
proceeding by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee, or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise, against expenses and amounts paid in
settlement not exceeding, in the judgment of the board of directors, the
estimated expense of litigating the proceeding to conclusion, actually and
reasonably incurred in connection with the defense or settlement of such
proceeding, including any appeal thereof. Such indemnification shall be
authorized if such person acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be made under this subsection in respect of
any claim, issue, or matter as to which such person shall have been adjudged to
be liable unless, and only to the extent that, the court in which such
proceeding was brought, or any other court of competent jurisdiction, shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
To the extent that a director, officer, employee, or agent of a corporation
has been successful on the merits or otherwise in defense of any proceeding
referred to in herein, or in defense of any claim, issue, or matter therein, he
shall be indemnified against expenses actually and reasonably incurred by him in
connection therewith. Expenses incurred by an officer or director in defending a
civil or criminal proceeding may be paid by the corporation in advance of the
final disposition of such proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if he is ultimately
found not to be entitled to indemnification by the corporation pursuant to this
section. Expenses incurred by other employees and agents may be paid in advance
upon such terms or conditions that the board of directors deems appropriate.
This 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 or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
Affiliated transactions
In addition to any affirmative vote required by any other section of these
Bylaws or by the Articles of Incorporation, an affiliated transaction shall be
approved by the affirmative vote of the holders of two-thirds of the voting
shares other than the shares beneficially owned by the interested shareholder.
A majority of the disinterested directors shall have the power to determine
for the purposes of this section: Whether a person is an interested shareholder;
The number of voting shares beneficially owned by any person; Whether a person
is an affiliate or associate of another; and Whether the securities to be issued
or transferred by the corporation or any of its subsidiaries to any interested
shareholder or any affiliate or associate of the interested shareholder have an
aggregate fair market value equal to or greater than 5 percent of the aggregate
fair market value of all of the outstanding voting shares of the corporation or
any of its subsidiaries.
(39)
<PAGE>
The voting requirements set forth in subsection (2) do not apply to a
particular affiliated transaction if the affiliated transaction has been
approved by a majority of the disinterested directors or the corporation has not
had more than 300 shareholders of record at any time during the 3 years
preceding the announcement date.
Notwithstanding anything to the contrary herein, material transactions with
officers, directors, affiliates or shareholders shall be:
(a) On terms no less favorable to the Company or its affiliates that those that
are generally available from unaffiliated third parties; and
(b) Ratified by a majority of independent outside members of the Company's
Board of Directors who do not have an interest in the transaction. However,
if the Company has 100 or fewer Shareholders, such transactions can be
ratified by a majority of the Company's Board of Directors.
Authority to amend the articles of incorporation
This Corporation may amend its articles of incorporation at any time to add
or change a provision that is required or permitted in the articles of
incorporation or to delete a provision not required in the articles of
incorporation. Whether a provision is required or permitted in the articles of
incorporation is determined as of the effective date of the amendment. A
shareholder of this corporation does not have a vested property right resulting
from any provision in the articles of incorporation, including provisions
relating to management, control, capital structure, dividend entitlement, or
purpose or duration of this Corporation. This Corporation's board of directors
may adopt one or more amendments to this Corporation's articles of incorporation
without shareholder action that is expressly permitted by law to be made without
shareholder action.
Corporate records
This Corporation shall keep as permanent records minutes of all meetings of
its shareholders and board of directors, a record of all actions taken by the
shareholders or board of directors without a meeting, 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. This corporation shall maintain accurate
accounting records according to Generally Accepted Accounting Principals (GAAP).
This corporation or its agent shall maintain a record of its shareholders
in a form that permits preparation of a list of the names and addresses of all
shareholders in alphabetical order by class of shares showing the number and
series of shares held by each.
This corporation shall keep a copy of the following records and shall make
such records available for inspection by shareholders of record as set forth
herein:
(a) Its articles or restated articles of incorporation and all amendments to
them currently in effect;
(b) Its bylaws or restated bylaws and all amendments to them currently in
effect;
(c) Resolutions adopted by its 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;
(d) The minutes of all shareholders' meetings and records of all action taken
by shareholders without a meeting for the past 3 years;
(e) 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;
(f) A list of the names and business street addresses of its current directors
and officers; and
(g) Its most recent annual report.
Corporate Seal
The seal of the Corporation shall bear the name of the corporation, the
year of its organization the words "CORPORATE SEAL, FLORIDA" or 'OFFICIAL
CORPORATE SEAL, FLORIDA." The seal may be used by causing it to be impressed
directly on the instrument or writing to be sealed, or upon adhesive substance
affixed thereto. The seal on the certificates for shares or on any corporate
obligation for the payment of money may be facsimile, engraved or printed.
(40)
<PAGE>
Execution of Instruments
All corporate instruments and documents shall be signed or countersigned,
executed, verified or acknowledged by such officer or officers or other person
or persons as the Board may from tie to tie designate. All checks, drafts or
other orders for the payment of money, notes or other evidence of indebtedness
issued in the name of the corporation shall be signed by such officer or
officers agent or agents of the corporation, and in such manner as shall be
determined from time to time by resolution of the Board.
Fiscal Year
The fiscal year shall begin on the first day of each year.
Construction
Whenever a conflict arises between the language of these By-laws and the
Articles of Incorporation, the Articles of Incorporation shall govern.
Adopted by the Board of Directors of
Toups Technology Licensing Incorporated
August, 1997
(41)
Law Offices of
Eric P. Littman, PA
7090 SW 104th Street
Miami, Florida 33110
March 2, 1998
Board of Directors
Toups Technology Licensing, Incorporated
7887 Bryan Diary Road
Suite 210
Largo, Fl 33777
re: Tradeability of the Outstanding Shares of Common Stock of
Toups Technology Licensing, Incorporated
Our File No 1880
Gentlemen:
You have requested an opinion as to whether or not a public trading market
may be established in the issued and outstanding shares of common stock (the
"Shares") of Toups Technology Licensing, Incorporated, a Florida Corporation
(the "Company") and whether the Shares may be traded and/or transferred without
violation of the Securities Act of 1933, as amended (the "Act"). IN providing
this opinion, the following factors have been considered and examined:
1. The present corporate status of the Company and the legal validity and
effect of prior actions of the Company's Board of Directors and
shareholders.
2. The adequacy and timeliness of the Company's current public information
made available and distributed by the Company, and whether such information
has been made "publicly available."
3. The present status and validity of the Company's authorized, issued and
outstanding Shares.
4. The Tradeability of the Company's Shares in interstate commerce under the
Act pursuant to the rules and regulations promulgated thereunder.
FACTS AND HISTORY
In rendering this opinion, we have reviewed certain documents and
information provided to us the Company. Among the documents examined are the
Company's Articles of Incorporation, By-Laws, minutes, Private Placement
Memorandum and Form D filed with the S.E.C.
Based on our review of the documents and information, the following facts are
set forth:
1. The Company was incorporated under the laws of the state of Florida on
August 4, 1997 and is a corporation in good standing in the state of
Florida. The Company currently has authorized capitalization of 20,000,000
shares of common stock, par value $.001 and 10,000,000 shares of preferred
stock, par value $1.00.
2. 8,610,000 Shares are currently held by the Company's officers, directors
and affiliates and are considered restricted Shares.
3. The Company undertook an offering of Shares pursuant to Rule 504 as
promulgated under Regulation D of the Act and issued 864,535 in that
offering. Such Shares were offered investors for cash and services and are
held by 19 unaffiliated shareholders. The offering is now closed.
THE LAW
Section 5 of the Act prohibits the sale of any security unless "a
Registration Statement is in effect." Section 4 of the Act provides several
transactional exemptions to the registration requirements of Section 5, as do
certain rules and regulations promulgated under the Act. Regulation D provides
rules governing the limited offer and sale of securities under the Act. Rule 504
under Regulation D provides for the limited offer and sale by certain issuers
not exceeding $1,000,000. Rule 504(b)(1) provides that certain securities issued
under the Rule 504 exemption are not subject to the limitations on resale
provisions applicable to other securities issued under Regulation D. Section
2(4) of the Act defines the term "issuer" and Section 2(11) of the Act defines
the term "underwriter." Rule 144 under the Act provides guidelines for the sale
of securities by an affiliate or controlling person of the issuer, or the sale
of restricted securities by any person.
As of the date of this opinion, the Company has 9,474,535 Shares
outstanding of which 8,610,000 are restricted from resale by virtue of Rule 144
and 864,535 Shares which are freely tradeable by virtue of the Company's Rule
504 offering.
(42)
<PAGE>
COMPANY'S INFORMATION AND DISCLOSURE STATEMENT
The Information and Disclosure constitutes "adequate and current"
information with respect to the Company within the meaning of those terms as
they are used in and defined by Paragraph (c) of Rule 144 under the Act.
In the opinion of the undersigned, the Company has complied with all public
disclosure requirements of the Act. This opinion is based, without limitation,
upon the following:
1. That by the time this opinion letter is used, the Company will have made
available to its shareholders copies of the Information and Disclosure
Statement with all attached exhibits; and
2. That the Information and Disclosure Statement contains the Company's
representation that copies thereof will be furnished to interested
securities broker/dealers upon request; and
3. That the Company has represented that it will, in the immediate future,
seek to have its common stock quoted on the OTC Bulletin Board and that the
Company will furnish copies of its Information and Disclosure Statement in
support of its proposed market maker's application for such quotation to
the NASD. Assuming that said quotation is included on the OTC Bulletin
Board and assuming the persons who are contemplating the purchase or sale
of the Company's Shares contact a broker-dealer, that broker-dealer would
be in compliance with the provisions of Rule 15c2-11 and hence would have
the information in question and would be obligated to make said information
reasonably available upon request; and
4. That the Company has represented to the undersigned that copies of the
Company's Information and Disclosure Statement have been furnished to its
registered agent in the State of Florida and that they will be delivered
free of charge to interested persons who inquire; and
5. That the Company intends to hereinafter have information concerning itself
available on a continuous and ongoing basis through the issuance of timely
(in light of any subsequent material transactions), periodic reports to not
only the Company's shareholders and broker-dealers who may become market
makers in its Shares, but also to financial and statistical services and
any other person whom the Company becomes aware may be interested.
In light of the foregoing, it is the conclusion of the undersigned that the
Company has done all that is can reasonably do, and which is calculated to
assure that the information concerning the Company is accessible without undue
effort to anyone interested and hence that the information concerning the
Company contained in its Information and Disclosure Statement is "publicly
available."
TRADEABILITY OF COMPANY'S ISSUED AND OUTSTANDING SHARES
Based upon the foregoing, the Company's corporate records, including the
Company's Private Placement Memorandum, Form D as filed with the S.E.C., stock
transfer records, and Minutes, it is the opinion of the undersigned that the
864,535 Shares issued in the Company's Regulation D offering have come to rest
in the hands of the current holders and are freely tradable. The remaining
8,610,000 Shares are restricted and may not be freely traded. In rendering this
opinion, we have relied upon the representations of management set forth herein
as to their truth and accuracy, but for which we do not assume responsibility.
Very truly yours,
ERIC P. LITTMAN
(43)
AMENDMENT A
TO THE
BPV LICENSE AGREEMENT
Made between Robert Alan Jaeger (RAJ), acting for himself individually and
as majority Partner of BPV Partners (PART), holders of his pertinent patent
rights:
and
Toups Technology Licensing incorporation (TTL) by its Chief Executive
Officer, Leon H. Toups;
and
WHEREAS item 13g of the BPV License Agreement requires any amendment to
said Agreement must be in writing and signed by the Party or Parties to be bound
thereby.
Therefore, RAJ, PART and TTL now desire to amend the BPV License Agreement,
item 6a "Royalties", as follows:
6. Royalties
a TTL will pay Advance Royalty to PART in the amount of thirty-six
dollars ($36.000) payable in quarterly payments of nine-thousand
dollars ($9,000) with the first such payment due immediately upon
execution of this Amendment and the remaining payments to be made
during the months of February, May and August. 1998. The $36,000 shall
be recoverable by TTL by being creditable against whatever Running
Royalty may become due for BPV transaction within the Initial Period,
and to be so credited at the rate of one-half (1/2) of the Running
Royalty due for each royalty accounting period thereof TTL shall issue
to PART 25 000 of its Common Shares and said Common Snares shall be
fully earned upon issuance.
All other Provisions of the BPV License Agreement remain without any change
whatsoever.
Further, the Parties hereto agree this modification shall remain in effect
until such time as TTL, receives a minimum of $300,000 through the private sale
of TTL common shares.
IN WITNESS WHEREOF. the Parties have caused this Amendment to be signed,
sealed and attested by persons duly authorized so to do, as of November 3, 1997.
RAJ & PART TTL
S/S ROBERT A. JAEGER S/S LEON H. TOUPS
Robert A. Jaeger Leon H. Toups
Attest: S/S CHARLES A. MCCLURE Attest: S/S MARK CLANCY
Charles A. McClure Mark Clancy, Vice President
(44)
<PAGE>
BPV LICENSE AGREEMENT
THIS AGREEMENT, Effective This 3rd Day of November. 1997, Made Between:
Robert Alan Jaeger, 3822 Cloverhill Court, Brandon, FL 33511, where RAJ],
acting for himself individually and as majority Partner of BPV Partners [here
PART], holders of his pertinent patent rights;
and
Toups Technology Licensing Incorporated, Suite 707, 801 West Bay Drive,
Largo, FL 33640, [here TTL], by its C.E.O., Leon H. Toups;
WITNESSETH THAT
WHEREAS RAJ for some years past has been developing and disclosing, as in
patents and technical papers, what he calls Balanced Pistons Valve (BPV)
Technology; wherein he has received U.S. Patent 5,309,934 for Balanced Piston
Fluid Valve; and Patent 5,421,358 for Fluid Valve Mechanism and Valving Method;
and has a half dozen BPV foreign patent applications pending; AND
WHEREAS TTL is a new development stage company formed to engage in
developing market-ready technological products and services protected by
intellectual property rights, especially patents, by application of a systems
approach to identifying, funding, developing and marketing technological
products and services; AND
WHEREAS RAJ and TTL are jointly interested in undertaking together a joint
effort at designing, manufacturing, selling, or otherwise commercializing BPV
valves, as by a License Agreement that provides for RAJ to introduce TTL to the
technology and to authorize TTL to make and to commercialize BPV valves, at an
agreed royalty, so long as both Parties perform in accordance with this
Agreement;
NOW, THEREFORE, RAJ and TTL, intending to be legally bound, agree to
undertake designing, manufacturing and selling or otherwise commercializing BPV
valves, upon the following terms and conditions:
1.Definitions
a."Licensed Know-how" means unpatented proprietary technical, professional, or
commercial information disclosed to TTL by RAJ, and useful in designing,
making, or using Licensed Products or performing Licensed Services.
b."Licensed Patent" means any patent (or disclosed patent application) licensed
to TTL herein and containing a claim defining the appearance, composition,
design, manufacturing, structure, operation, or use of a valve or
valve-related subject matter, insofar as owned or licensable by RAJ or PART
(BPV Partners), and so licensed to TTL in or for the License Territory.
c."Licensed Product" means any apparatus whose appearance, composition, design,
manufacturing, structure, operation, or use embodies any Licensed Know-how,
is defined by a claim of a Licensed Patent or disclosed patent application
and/or would infringe a Licensed Patent in the absence of this License
Agreement, or displays or is commercialized by a Licensed Trademark.
d."Licensed Service" means any designing, making, specifying, or any
instruction, leasing, or performance of other services relating to any
License Product for, to, or with a customer or other Party, whether for
compensation or not.
e."Licensed Specification" means any requirement or standard identified by RAJ
to TTL relating to composition, design, manufacturing method, structure,
workmanship and/or resulting appearance, form, identity, quality, or
presentation of a Licensed Product or a Licensed Service.
f."Licensed System" means any assembly of a Licensed Product, with or without
other valves or with whatever accessories, articles, materials, etc.
g."Licensed Trademark" means BP, BPV, BASCULE, or other word and/or design--used
with or without any other word and/or design, in or as a brand name for
Licensed Products or Licensed Services or Licensed Systems.
h."Improvement" means any substantial change in any foregoing BPV defined item
(a to g) during this Agreement, whether made by RAJ or by TTL, or both, or
otherwise owned and/or licensable by either of them to the other, as more
fully considered below.
i."License Term" means the duration of this Agreement, as follows: (i) an
Initial Period, beginning on the aforesaid effective date with a Startup
Time ending on 2 November 1998, and continuing, if TTL so elects, to the
end of the year 2000; and (ii) further continuing (at TTL's advance notice
of election to do so) for one or more successive Renewal Periods of three
(3) calendar years, noted further below.
(45)
<PAGE>
j."License Territory" means worldwide.
k."Startup Time" means the time period from the beginning of the Initial Period
of this Agreement on the identified effective date, to end on 2 Nov. 1998.
2.License and Sub licenses
a. RAJ hereby grants to TTL, for the License Term only, an indivisible,
non-assignable right and license to make, use, lease, sell, and otherwise
practice commercially the defined Licensed subject matter. [See next page
for sublicensing.]
b. So long as TTL is in good standing under this Agreement, this grant is to
be exclusive, meaning that neither RAJ nor PART will grant any third Party
a similar license in the License Territory, except to Parties with whom RAJ
has or may have an ongoing obligation, as noted in the Appendix hereto.
c. TTL shall have the right to apply any Licensed Trademark to Licensed
Products and other components approved by RAJ and sold by TTL for
construction of Licensed Systems, but TTL shall use Licensed Trademarks
only in accordance with acceptable trademark practice and subject to the
provisions of this Agreement.
d. TTL customers will have an implied sublicense to assemble Licensed Products
into Licensed Systems, with or without other components.
e. Having elected to continue hereunder until at least the end of the Startup
Time, TTL may grant sublicenses, contingent upon TTL's retention of its
license under this Agreement, whereupon TTL will become and remain
obligated to share equally (50/50) with PART all royalties accruing from
each such sublicensee and to report and pay the same to PART as provided
for TTL's license royalties (sublicense royalties being excluded from the
revenue base for license royalty computation).
f. Each such sublicense granted by TTL shall be upon terms and conditions of
Running Royalty not significantly more favorable to the sublicensee than
the terms and conditions of the present License Agreement are to TTL,
excepting only if TTL shall have disclosed the proposed sublicense to PART
in advance and have received PART's express written approval of such more
favorable terms/conditions.
g. Each sublicense granted by TTL under this Agreement will provide expressly
that it is so granted and that--in the event that TTL should discontinue
its license hereunder or its license otherwise become terminated-the
sublicensee will become a licensee of PART by substitution for TTL, unless
prohibited by law.
h TTL will share equally with PART in the cost of protecting PART's
intellectual property rights, including applying for, obtaining, and
maintaining applicable patents and trademarks therein, including patents
for any Improvements.
3.License Term
a. The Initial Period begins on the effective date of this Agreement and will
extend at least to the end of the Startup Time, when it will terminate if
TTL fails to notify RAJ or PART in writing at least thirty (30) days
theretofore that TTL elects to continue for the rest of the Initial Period;
such election will extend the Initial Period to end on 31 December 2000,
subject to TTL election of a Renewal Period.
b. Unless sooner terminated, the License Term may continue for a succeeding
Renewal Period, from the end of the Initial Period or of any Renewal
Period, at the election of TTL if then in good standing; such election to
be made by TTL giving written notice to RAJ, within the last calendar
quarter of any Period, of intention to continue this Agreement for a
succeeding Renewal Period, beginning on the first day of January of the
next year and continuing for three (3) more years.
c. The License Term shall continue from Period to Period so long as TTL timely
renews, or until RAJ gives TTL notice that TTL is no longer in good
standing because of a specified breach or default of one or more of TTL's
obligations under this Agreement; TTL shall have the right to remedy any
such breach or default within forty-five (45) days thereafter or by the due
date of the next quarterly report by TTL (whichever is later) to return to
good standing as to such breach or default.
d. Obligations of this Agreement that are indicated as surviving beyond the
end of a Period or of the License Term shall continue for such time period
as may be lawful, despite notice by either Party to the other of an
election to discontinue either Party's Participation in or under this
Agreement.
e. The Term of this Agreement, if not sooner ended by the act of a Party or
the operation of law, shall end upon expiration of the last to expire of
the Licensed Patents, except as TTL is using a BPV trademark, or otherwise
as set forth below.
(46)
<PAGE>
4.Confidentiality
a. To the extent that TTL receives Licensed Know-how, or either Party becomes
aware of other proprietary information from the other Party via their
relationship pursuant to this Agreement, each recipient of such information
will hold it in confidence so long as the other Party effectively treats it
as confidential, except as specific information becomes public knowledge
otherwise than by or from TTL.
b. The Parties will ensure that their personnel sign Confidentiality and/or
Non-Competition Agreements in customary form or otherwise as may reasonably
be required by either Party; moreover, if disclosure thereof to suppliers
is desirable to assure satisfactory nature or quality of materials or
methods for BPV valves, specific suppliers must first have like agreements
with their employees.
c. The foregoing obligation to keep proprietary information confidential and
to safeguard it within the organization of a Party will survive any
termination of this Agreement to the extent that such information is not
common trade knowledge.
5. Startup Time
a. TTL will provide facilities, equipment, and resources for BPV design,
development, and marketing purposes during the Startup Time in order to
enable the first valves to be assembled, operated, tested, and (as soon as
feasible) to be demonstrated to prospective customers, investors, and other
interested persons.
b. RAJ will provide BPV Licensed Know-how to TTL from time to time as may be
appropriate and will Participate regularly as a technical consultant upon
BPV design, development, testing, and marketing-as TTL may deem desirable.
6.Royalties
a. TTL will pay Advance Royalty to PART in the amount of Thirty Six Thousand
Dollars ($36,000) at the signing of this Agreement, to be recoverable by
TTL by being creditable against whatever Running Royalty may become due for
BPV transactions within the Initial Period, and to be so credited at the
rate of onehalf (1/2) of the Running Royalty due for each royalty
accounting period thereof.
b. If TTL elects to continue beyond the Startup Time, additional Advance
Royalty will become due and payable by TTL to PART as follows:
(i) Fifty Thousand Dollars ($50,000) in January 1999, and
(ii) Seventy-Five Thousand Dollars ($75,000) in January 2000.
c. After each complete calendar quarter of operations, Running Royalty will
become due and be payable by TTL to PART in the first month of the next
calendar quarter based upon TTL's total BPV revenue during that preceding
calendar quarter, from commercialization of all BPV Licensed
Products/Services/Systems, whether received from lease, sale, service, or
otherwise (sublicensing excluded).
d. The Running Royalty rate is Six Percent (6%) of TTL's total revenue
received from commercialization of BPV Technology by commercialization of
Licensed Products, Services, Systems, whether by lease, sale, service or
otherwise.
e. The total Running Royalty due and paid for the quarters of any given
calendar year of a Renewal Period will be credited in full against targeted
Minimum (not maximum) Annual Royalty for that entire calendar year of that
Renewal Period.
f. MinimumAnnual Royalty becomes due for each entire calendar year of any and
all Renewal Periods of this Agreement, in the amounts stated below:
First Renewal Period: Second and Any Additional Renewal Periods
(2001) First Year: $100,000 (2004) 4th Year and each year thereafter
(2002) 2nd Year: $125,000 $200,000
(2003) 3rd Year: $150,000
g. RunningRoyalty accrues upon invoice, lease, sale, or service by TTL but
shall not be payable until thirty (30) days thereafter or upon TTL's
receipt of payment therefor (whichever occurs first), and shall be without
any deduction from TTL's actual total revenue therefrom, except for
customers' related costs (such as insurance, shipping, or taxes) and then
only if so itemized on the invoices to them.
h. Running Royalty payable for any given month becomes due at the end of the
then current calendar quarter, and shall be paid during the first month of
the next calendar quarter, or will become overdue on the first day of the
next month. i
(47)
<PAGE>
i MinimumAnnual Royalty in excess of Running Royalty accrued and paid for a
given year becomes due and payable during January of the next calendar year
and becomes overdue on the first day of February of that year.
7. Payments and Reports
a. TTL will report to BPV Partners (PART), c/o Charles A. McClure (CAM) Suite
201, 701 Bayshore Boulevard, Tampa, FL 33606, all Running Royalty for each
calendar quarter of the License Term during the first month of the next
ensuing calendar quarter, may include with each such report full payment of
royalty due for (and reported for) the preceding quarter's operations, will
include in the report for the fourth (4th) quarter of each calendar year an
itemization by major customers and a listing of Running Royalty accrued and
payable or paid for each quarter in that year .
b. Quarterly and annual royalty reports will be signed and be certified as
accurate and complete by an authorized officer of TTL; all such reports and
all royalty payments will be sent, together or separately, to BPV Partners,
as above, and at year end will include explicit comparison with the Minimum
Annual Royalty target for that year, and be accompanied by payment of any
deficiency of the year's Running royalty paid relative to the Minimum
Annual Royalty due for that year.
c. TTL will keep accurate and complete records of all business done pursuant
to this Agreement and will make such records available to RAJ and to PART,
no more than two (2) persons at once, for inspection during regular
business hours, upon at least three (3) business days' advance notice, to
determine Royalties accrued and paid or unpaid, and any other information
due hereunder.
d. Refusalby TTL to report or to pay Royalty, or to maintain or make available
records of business done hereunder, will forfeit TTL's good standing under
this Agreement if not remedied within thirty (30) days, unless limited to
non-payment of money, which may be remedied within forty-five (45) days or
by the due date of the next quarterly report, whichever is later.
8.Improvements
a. Any new composition, design, product, or service conducive to third-party
competition with Licensed Product or Licensed Services, invented or
otherwise coming under the control of either Party during the License Term,
is deemed an "improvement"--and such Party will disclose the same to the
other Party promptly and in enough detail to enable the other Party to
elect whether to have such Improvement included hereunder.
b. As to any such Improvement by either Party, either Party may elect to have
such Improvement included hereunder, within three (3) months after first
knowledge thereof, without change in Royalty, by promptly notifying the
other Party of an election to do so; and the Party that made or acquired
such Improvement need do no more if both Parties fail to elect to include
the Improvement.
c. The originating Party of an elected Improvement that appears possibly
patentable--after a competent prior art search-will file and prosecute a
patent application thereon, and may discontinue prosecuting it or
maintaining any resulting patent, but only after giving the other Party
notice of such intention plus ample opportunity to take such (or
equivalent) action at its own sole future discretion and expense.
d. If either Party so elects to have any given Improvement included under this
Agreement, the electing Party by doing so will become obligated to pay
one-half (1/2) the expense of undertaking to patent it within the License
Territory, whereas the other one-half (1/2) of any such patent expense will
be the obligation of the originating Party, whether or not the electing and
originating Parties are the same, except that if TTL elects not to
Participate in the payment of an Improvement made by RAJ to be included,
TTL shall not be obligated to do so.
e. If the Parties have joint inventorship/ownership patent rights in an issued
Improvement patent, the Parties will share equally the related ownership
rights and expenses--including any official patent maintenance fees. The
Parties need not exercise Improvement patent rights, except as this
Agreement may provide, nor need either Party account to the other Party for
any lawful activity regarding such patent rights outside this Agreement.
f. The Parties recognize that well-based differences may arise with regard to
origination of any given Improvement and that as to U.S. patents the
determination of inventorship and of patentability is exclusively within
the jurisdiction of the U.S. Patent and Trademark Office and the Federal
Courts. Unless the Parties are/have joint inventors--or successor(s)
thereto--and hence are joint owners, they specifically agree that for any
Improvement patent application and for any resulting patent for an
Improvement elected by either Party to be included hereunder, regardless of
inventorship, the Improvement originating or otherwise acquiring Party will
grant to the other Party (if that other Party so elects) an unrestricted
paid-up (free) license to practice the Improvement for the License Term, if
such practice of it would not violate any non-elected prior patent of the
grantor-licensor.
(48)
<PAGE>
g. Each Party's foregoing Improvement rights are executory in nature,
including the right to be informed of any Improvement by the other Party,
and to elect an Improvement for inclusion hereunder (or not), and including
rights to ongoing prosecution of patent applications and maintenance of
patents by an originating Party of an elected Improvement, and receipt of
license or ownership rights thereunder.
9.Infringement Rights
a. As of the effective date of this Agreement, TTL acknowledges that the
exclusive ownership of the initially Licensed Know-how, the Licensed
Patents, and the Licensed Trademarks is in RAJ or in BPV Partners, and is
not at all in TTL.
b. In the event that TTL's commercialization of any Licensed Product, Licensed
Service, or Licensed System is accused of infringing a proprietary right of
any third Party, the Parties will cooperate in attempting to avoid such
infringement or to prove lack of infringement, and so long as TTL's license
hereunder is exclusive to the extent set forth above, each Party will have
the right and obligation, to defend or assist in defending against any
infringement action brought by a third Party, and shall have also the
obligation to pay one-half (1/2) of the costs of doing so, except as either
Party may voluntarily pay more thereof incidental to Participation therein.
c. Neither Party will be liable to the other Party if unable or unwilling to
continue this Agreement because of such infringement of third-Party rights,
and in that event TTL will cease commercializing Licensed Products,
Licensed Services, and Licensed Systems, and TTL will relinquish its rights
hereunder in that event, and thereby terminate its Royalty and attendant
obligations to RAJ and BPV.
d. In the event that the activities of any third Party are asserted (or
other-wise appear) to infringe an intellectual property right licensed to
TTL hereunder, the Parties will cooperate in attempting to ascertain and to
abate such infringement. So long as TTL's license hereunder is exclusive to
the extent set forth above, TTL will have a prior right, but not an
obligation, to abate such infringement, whether by litigation or otherwise,
subject to paying all the costs of doing so other than such costs or
expenses as RAJ may voluntarily pay incidental thereto or to Participation
therein. Any moneys recovered from a third-Party infringer will be retained
by the Party(ies), pro-rated to their expenditures, whose action(s) had
such result.
e. If third-Party infringement is not abated, TTL may elect to continue as a
non-exclusive licensee under this Agreement as its sole remedy, or
alternatively TTL may discontinue its license and cease royalty payments as
its sole remedy.
1O.Assurances
a. RAJ assures TTL of RAJ's origination of the inventions in his Licensed
Patents/Patent Applications, but RAJ cannot guarantee TTL of RAJ's
invention priority or patent validity.
b. RAJ warrants ownership (joint with CAM as BPV Partners) of the Licensed
Patents and Licensed Trademarks, in the specific sense that RAJ has no
reason to believe that any third Party has any right to prevent either RAJ
or TTL from practicing any Licensed Invention, or from using any Licensed
Trademark, as provided in this Agreement, but RAJ cannot and does not
warrant such practice or usage as non-infringing of third-Party rights.
c. RAJ will instruct and/or assist TTL personnel in design, manufacturing,
quality standards, testing, distribution, marketing, and sale, as well as
proper marking, of Licensed Product and Licensed Systems, and RAJ will
provide Licensed Know-how in doing so, as may be applicable.
d. RAJ (and BPV Partners) will have no liability whatever to TTL for TTL's
actions or inactions under this Agreement, and TTL will save RAJ (and BPV
Partners) harmless against any liability to third Parties-whether based
upon agency, contract, negligence, product liability, or other basis-for
any claim based on action or inaction of TTL relating to Licensed Products,
Services, or Systems.
11.Product Marking
a. TTL will mark on Licensed Products (or containers) each patent number
applicable thereto upon being advised thereof by RAJ.
b TTL will display a Licensed Trademark (if elected) on ail Licensed Product
and in advertising copy, brochures, and publications by or for TTL about
Licensed Product. TTL will not use any Licensed Trademark in or as a trade
name (i) if not elected, or (ii) if elected, after TTL discontinues (or
other termination of) TTL's license under this Agreement. Product Marking.
c. TTL will provide access for RAJ, at agreed times, to all Licensed Product
to enable RAJ to ascertain that the nature and quality thereof meet
standards required by trademark law of products bearing a Licensed
Trademark.
(49)
<PAGE>
d. TTL will not make any material change in materials, production methods, or
otherwise that might affect the nature or quality of any BPV product or
service, without advance notice to RAJ and ample opportunity for RAJ to
confirm compliance of such product or service with applicable quality
standards-or not.
e. TTL will provide representative specimens of each Licensed Product or
Licensed Service or Licensed System label and advertising copy, and of each
product or service brochure, before publication thereof, to enable RAJ to
assure that they meet accepted trademark usage standards.
f. TTL will not manufacture, sell, or distribute any Licensed Product that
does not meet RAJ's quality standards, nor distribute any product
literature that does not meet accepted trademark usage standards.
g. If TTL elects to use one or more Licensed Trademark(s), TTL will display
one thereof on each container of Licensed Product made by or for it, and in
all Licensed Product advertising copy, product brochures, press releases,
and publications by or for TTL about Licensed Product plus the generic name
of the goods, together with occasional notice that such Trademark is the
property of BPV Partners.
12. Termination
a. During the last calendar quarter of the Initial or any Renewal Period, TTL
may notify RAJ of TTL's election to continue the Agreement for a Renewal
Period, to begin at the end of the then current Period; or, by failing to
do so, TTL will terminate its rights under this Agreement, whereupon TTL
will be obligated to discontinue its Participation in licensed activities
by the end of the existing Period, except as the Parties otherwise agree as
embodied in a signed written agreement.
b. Upon termination, TTL will refrain from exercising thereafter any right it
had by license hereunder, such as practicing the invention of any
previously Licensed Patent, or using a licensed Trademark or confusingly
similar expression.
c. Whenever TTL is not in good standing hereunder, RAJ may render TTL's
license wholly non-exclusive, or if it is already non-exclusive for a prior
breach or default RAJ may terminate TTL's rights hereunder, in the absence
of specific curative provisions for TTL's breach or default, or if TTL has
had specified opportunity to comply with such a curative provision and has
not done so.
d. If either Party becomes, or would become, disabled-as by the other Party's
choosing, or being subjected to, an act or a procedure for relief of
debtors from enforcing compliance with a given executory obligation of the
other Party hereunder (e.g., compliance with standards, action with regard
to infringers, offer of Improvements) the thus disabled Party may deem this
Agreement and the license and other rights of the other Party hereunder
terminated ipsofacto.
e. No inaction or overlooking by RAJ of any condition or provision of this
Agreement or of any breach or default thereof by TTL shall be deemed to
imply or to constitute a future waiver of any similar breach or default of
the same or other condition/provision.
13.Miscellaneous
a. If any one or more provision(s) or effect(s) of this Agreement should prove
to be invalid or unenforceable, and the Agreement be otherwise valid and
enforceable, the invalid or unenforceable provision or portion thereof will
be severed, and the remainder of the Agreement be and remain valid and
enforceable to the fullest extent permitted by applicable law.
b. This License Agreement is made for the benefit of the Parties, their heirs,
successors, and assigns, and any other person or legal entity named in any
provision hereof, and not made to give any named person or legal entity any
right of action whatever.
c. Each statement made in this Agreement is deemed material, and each Party is
entitled to rely, and deemed to have relied, upon the truth and correctness
thereof in entering into this Agreement.
d Each Party acknowledges that he(it) has received advice of independent
counsel of choice as to the inducements, provisions, and terms of this
Agreement, and their effect, whereupon entering into this License Agreement
is each Party's free and independent act.
e. This Agreement is to be governed by Federal law to whatever extent a
proprietary right granted by the United States is involved, and otherwise
by Florida law, except as activities of a Party in any other State render
that other State's law applicable.
f. Notice to be given under this Agreement will be in writing and be addressed
to the other Party at the address of such Party hereinabove, unless such
address has been superseded by like notice, whereupon the latest noticed
address thereof is to be used. Notice will be effective when delivered to
the addressee, or-if not a change of address--when sent by Express or
Registered Mail so addressed.
(50)
<PAGE>
g. This Agreement sets forth the entire intent and understanding of the
Parties with regard to the subject matter hereof, and merges any prior
negotiations or agreements by the Parties as to such subject matter, and no
addition, deletion, or other modification of the wording hereof may be made
except in writing subsequent hereto and signed by the Party or Parties to
be bound thereby.
IN WITNESS WHEREOF the Parties have caused this Agreement to be signed,
sealed, and attested by persons duly authorized so to do, as of the date first
stated hereinabove.
RAJ & PART: TTL
S/S ROBERT A JAEGER (SEAL) S/S LEON H. TOUPS (SEAL)
Robert A. Jaeger Leon H. Toups/President
Attest: S/S CHARLES A. MCCLURE Attest: S/S MARK CLANCY
Charles A. McClure Mark Clancy, Vice President
APPENDIX
Ongoing Negotiation
Prospective Consultant - to Maxon Corporation, Muncie, Indiana
Prior Commitment
Consultant - to Magnatrol Valve Corporation, Hawthorne, New Jersey
(51)
WAFT AGENT AGREEMENT
THIS AGREEMENT, Effective This 8th day of November 1997, Made Between:
Wm. H, Richardson, Jr., 1496 Giles Street, Palm Bay F1, 32907 [here WHR],
acting for himself individually and as majority partner of WAFT Partners [here
PART], holders of his pertinent patent rights;
and
TOUPS TECHNOLOGY LICENSING INCORPORATED, Suite 707, 801 West Bay Drive,
Largo, FL 33640, [here TTL], by its Vice President Jerry Kammerer;
WITNESSENTH THAT
WHEREAS WAFT has appointed TTL as its sole agent to represent WAFT in any
on going Negotiation with parties listed on Appendix of the WAFT LICENSE
AGREEMENT.
WHR & PART: TTL
S/S WILLIAM H. RICHARDSON S/S JERRY L. KAMMERER
William H.. Richardson Jerry L. Kammerer, Vice President
Attest: S/S EILEEN R. RICHARDSON Attest: S/S CONNIE CLOUSE
(52)
<PAGE>
AMENDMENT A
TO THE
WAFT license AGREEMENT
Made between William H. Richardson, Jr. (WHR), acting for himself
individually and as majority partner of WAT Partners (PART), holders of his
pertinent patent rights;
and
Toups Technology Licensing incorporation (TTL) by its Chief Executive
Officer, Leon H. Toups;
and
WHEREAS item 13g of the WAFT License Agreement requires any amendment to
said Agreement must be in writing and signed by the party or parties to be bound
thereby. Therefore, WHR, PART and TTL now desire to amend the WAFT License
Agreement, item 1.i "License-Term", as follows:
i."License Term" means the duration of this Agreement, as follows:
(i)A Holding Period, beginning on the 3rd of November, 1997 and continuing
through January 30, 1998;
(ii) an Initial Period, beginning February, 1998 with a Startup Time ending
on 31 January, 1999 and continuing if TTL so elects, to the end of the year
2000; and
(iii)further continuing (at TTL's advance notice of election to do so) for
one or more successive Renewal Periods of three (3) calendar years, noted
further below.
WHR, PART and TTL desire to further amend the WAFT License Agreement, item
6, "Royalties", as follows:
6. Royalties
Interim. In consideration of the Holding Period, TTL shall pay to PART a
onetime fee of five-thousand ($5,OOO) cash and shall issue to PART 50,000
of its Common Shares. Both cash payment and stock issuance shall be
considered by all parties as payment exclusive for the Holding Period and
shall not impact any other portion of the WAFT Agreement.
The above paragraph "interim" shall be inserted into the WAFT Agreement
immediately preceding paragraph 6a.
All other provisions of the WAFT License Agreement remain without any
change whatsoever.
Further, the parties hereto agree this modification shall remain in effect
until such time as m receives a minimum of $300, 000 through the private sale of
TTL common shares.
IN WITNESS WHEREOF the parties have caused this Amendment to be signed,
sealed and attested by persons duly authorized so to do, as of November 3, 1997.
WHR & PART TTL
S/S WILLIAM R. RICHARDSON, JR S/S LEON H. TOUPS
William R. Richardson, Jr. Leon H. Toups, President
Attest: S/S CHARLES A. MCCLURE Attest: S/S MARK CLANCY
Charles A. McClure Mark Clancy, Vice President
(53)
<PAGE>
WAFT LICENSE AGREEMENT
THIS AGREEMENT, Effective This 3rd Day of November 1997, Made Between:
Wm, H, Richardson, Jr., 1496 Giles Street, Palm Bay, FL 32907, [here WHR],
acting for himself individually and as majority partner of WAFT Partners [here
PART], holders of his pertinent patent rights;
and
Toups Technology Licensing Incorporated, Suite 707, 801 West Bay Drive,
Largo, FL 33640, (here TTL], by its C.E.O., Leon H, Toups;
WITNESSETH THAT
WHEREAS WHR for some years past has been investigating, and now is
improving, Water-Derived Alternative Fuel Technology WAFT), wherein he has
received U.S. Patent 5,435,274 for Electric Power Generation Without Harmful
Emissions, has a half dozen WAFT patent applications pending, and is awaiting
receipt later this year of a U.S. Patent for Pollution-Free Vehicle Operation;
AND
WHEREAS TTL is a new development stage company formed to engage in
developing market-ready technological products and services protected by
intellectual property rights, especially patents, by application of a systems
approach to identifying, funding, developing, and marketing technological
products and services; AND
WHEREAS WHR and TTL are jointly interested in undertaking together a joint
effort at designing, manufacturing, selling, or otherwise commercializing WAFT
fuels, as by a License Agreement that provides for WHR to introduce TTL to the
technology and to authorize TTL to make and to commercialize WAFT fuels
manufacturing, and related equipment at an agreed royalty, so long as both
parties perform in accordance with this Agreement;
NOW, THEREFORE, WHR and TTL, intending to be legally bound, agree to
undertake designing, manufacturing, and selling or otherwise commercializing
WAFT fuels upon the following terms and conditions:
1.Definitions
a "Licensed Know-how" means unpatented proprietary technical, professional,
or commercial information disclosed to TTL by WHR, and useful in designing,
making, or using Licensed Products or performing Licensed Services.
b. "Licensed Patent" means any patent (or disclosed patent application)
licensed to TTL herein and containing a claim defining the composition,
design, manufacturing, structure, operation, or use of a fuel or
fuel-related subject matter, insofar as owned or licensable by WHR or PART
(WAFT Partners), and so licensed to TTL in or for the License Territory.
c. "Licensed Product" means any fuel or related composition whose production,
structure, or use embodies any Licensed Know-how, is defined by a claim of
a Licensed Patent or disclosed patent application and/or would infringe a
Licensed Patent in the absence of this License Agreement, or displays or is
commercialized by a Licensed Trademark.
d. "Licensed Service" means any designing, making, specifying, or any
instruction, leasing, or performance of other services relating to any
License Product for, to, or with a customer or other party, whether for
compensation or not.
e. "Licensed Specification" means any requirement or standard identified by
WHR to TTL relating to composition, design, manufacturing method,
structure, workmanship and/or resulting appearance, form, identity,
quality, or presentation of a Licensed Product or a Licensed System,
f. "Licensed System" means any apparatus, assembly, device, or structure
(e.g., arc assembly, reactor, production plant, turbogenerator) for
producing or using a Licensed Product, with or for use with (or without)
other fuels or accessories.
g. "Licensed Trademark" means AQUAFUEL, AQUAGAS, AQUALENE, AQUALECTRIC,
AQUAMOTIVE, or other word and/or design, used with or without any other
word and/or design, in or as a brand name for Licensed Products or Licensed
Services or Licensed Systems.
h. "Improvement" means any substantial change in any foregoing WAFT defined
item (a to g) during this Agreement, whether made by WHR or by TTL, or
both, or otherwise owned and/or licensable by either of them to the other,
as more fully considered below.
(54)
<PAGE>
i. "License Term" means the duration of this Agreement, as follows: (i) an
Initial Period, beginning on the aforesaid effective date with a Startup
Time ending on 2 November 1998, and continuing, if TTL so elects, to the
end of the year 2000; and (ii) further continuing (at TTL's advance notice
of election to do so) for one or more successive Renewal Periods of three
(3) calendar years, noted further below.
j. "License Territory" means worldwide.
k. "Startup Time" means the time period from the beginning of the Initial
Period of this Agreement on the identified effective date, to end on 2 Nov.
1998.
2. License and Sublicenses
a. WHR hereby grants to TTL, for the License Term only, an indivisible,
non-assignable right and license to make, use, lease, sell, and otherwise
practice commercially the defined Licensed subject matter. [See next page
for sublicensing.]
b. So long as TTL is in good standing under this Agreement, this grant is to
be exclusive, meaning that neither WHR nor PART will grant any third party
a similar license in the License Territory, except to parties with whom WHR
has or may have an ongoing obligation, as noted in the Appendix hereto.
c. TTL shall have the right to apply any Licensed Trademark to Licensed
Products and other components approved by WHR and sold by TTL for
construction of Licensed Systems, but TTL. shall use Licensed Trademarks
only in accordance with acceptable trademark practice and subject to the
provisions of this Agreement.
d. TTL customers will have an implied sublicense to assemble Licensed Products
into Licensed Systems, with or without other components.
e. Having elected to continue hereunder until at least the end of the Startup
Time, TTL may grant sublicenses, contingent upon TTL's retention of its
license under this Agreement, whereupon TTL will become and remain
obligated to share equally (50/50) with PART all royalties accruing from
each such sublicensee and to report and pay the same to PART as provided
for TTL's license royalties (sublicense royalties being excluded from the
revenue base for license royalty computation).
f. Each such sublicense granted by TTL shall be upon terms and conditions of
Running Royalty not significantly more favorable to the sublicensee than
the terms and conditions of the present License Agreement are to TTL,
excepting only if TTL shall have disclosed the proposed sublicense to PART
in advance and to have received PART's express written approval of such
more favorable terms/conditions.
g. Each sublicense granted by TTL under this Agreement will provide expressly
that it is so granted and that--in the event that TTL should discontinue
its license hereunder or its license otherwise become terminated-the
sublicensee will become a licensee of PART by substitution for TTL, unless
prohibited by law. h. TTL will share equally with PART in the cost of
protecting PART's intellectual property rights, including applying for,
obtaining, and maintaining applicable patents and trademarks therein,
including patents for any Improvements.
3. License Term
a. The Initial Period begins on the effective date of this Agreement and will
extend at least to the end of the Startup Time, when it will terminate if
TTL fails to notify WHR or PART in writing at least thirty (30) days
theretofore that TTL elects to continue for the rest of the Initial Period;
such election will extend the Initial Period to end on 31 December 2000,
subject to TTL election of a Renewal Period.
b. Unless sooner terminated, the License Term may continue for a succeeding
Renewal Period, from the end of the Initial Period or of any Renewal
Period, at the election of TTL if then in good standing; such election to
be made by TTL giving written notice to WHR, within the last calendar
quarter of any Period, of intention to continue this Agreement for a
succeeding Renewal Period, beginning on the first day of January of the
next year and continuing for three (3) more years.
c. The License Term shall continue from Period to Period so long as TTL timely
renews, or until WHR gives TTL notice that TTL is no longer in good
standing because of a specified breach or default of one or more of TTL's
obligations under this Agreement; TTL shall have the right to remedy any
such breach or default within forty-five (45) days thereafter or by the due
date of the next quarterly report by TTL (whichever is later) to return to
good standing as to such breach or default.
d. Obligations of this Agreement that are indicated as surviving beyond the
end of a Period or of the License Term shall continue for such time period
as may be lawful, despite notice by either party to the other of an
election to discontinue either party's participation in or under this
Agreement.
(55)
<PAGE>
e. The Term of this Agreement, if not sooner ended by the act of a party or
the operation of law, shall end upon expiration of the last to expire of
the Licensed Patents, except as TTL is using a WAFT trademark, or otherwise
as noted below.
4.Confidentiality
a. To the extent that TTL receives Licensed Know-how, or either party becomes
aware of other proprietary information from the other party via their
relationship pursuant to this Agreement, each recipient of such information
will hold it in confidence so long as the other party effectively treats it
as confidential, except as specific information becomes public knowledge
otherwise than by or from TTL.
b. The parties will ensure that their personnel sign Confidentiality and/or
Non-Competition Agreements in customary form or otherwise as may reasonably
be required by either party; moreover, if disclosure thereof to suppliers
is desirable to assure satisfactory nature or quality of materials or
methods for WAFT fuels, specific suppliers must first have like agreements
with their employees.
c. The foregoing obligation to keep proprietary information confidential and
to safeguard it within the organization of a party will survive any
termination of this Agreement to the extent that such information is not
common trade knowledge.
5. Startup Time
a. TTL will provide facilities, equipment, and resources for WAFT design,
development, and marketing purposes during the Startup Time in order to
enable the first fuels to be produced, analyzed, tested, and (as soon as
feasible) to be demonstrated to prospective customers, investors, and other
interested persons.
b. WHR will provide WAFT Licensed Know-how to TTL from time to time as may be
appropriate and will participate regularly as a technical consultant upon
WAFT design, development, testing, and marketing, as TTL deems desirable.
6. Royalties
a. TTL will pay a first yearly Advance Royalty to PART in the amount of Sixty
Thousand Dollars ($60,000), in quarterly installments of Fifteen Thousand
dollars ($15,000) each, the first such installment to be so paid at the
signing of this Agreement, to be recoverable by TTL by being creditable
against whatever Running Royalty may become due for WAFT transactions
within the Initial Period, and to be so credited at the rate of one-half of
the Running Royalty due for each royalty accounting period thereof.
b. If TTL elects to continue beyond the Startup Time, identical Advance
Royalty yearly amounts will become due and be payable likewise by TTL to
PART as lump sums in January 1999 and January 2000.
c. After each complete calendar quarter of operations, Running Royalty 'will
become due and be payable by TTL to PART in the first month of the next
quarter based upon TTL's total WAFT revenue during that preceding quarter,
from commercialization of all WAFT Licensed Products/Services/Systems ,
whether received from lease, sale, service, or otherwise.
d. The Running Royalty rate for Licensed Product, Licensed Services, and
Licensed Systems is Six Percent (6%) of all that TTL receives in money or
other thing of value for leasing, servicing, selling, or otherwise
commercializing the same.
e. The total Running Royalty due and paid for the quarters of any given
calendar year of a Renewal Period will be credited in full against targeted
Minimum (~~ maximum) Annual Royalty for that entire calendar year of that
Renewal Period.
f. Minimum Annual Royalty becomes due for each entire calendar year of any and
all Renewal Periods of this Agreement, in the amounts stated below:
First Renewal Period: Second and any Additional Renewal Periods
(2001) First Year: $100,000 (2004) 4th Year and each year thereafter
(2002) 2nd Year: $125,000 $200,000
(2003) 3rd Year: $150,000
g. Running Royalty accrues upon invoice, lease, sale, or service by TTL but
shall not be payable until thirty (30) days thereafter or upon TTL's
receipt of payment therefor (whichever occurs first), and shall be without
any deduction from TTL's actual total revenue therefrom, except for
customers' related costs (such as insurance, shipping, or taxes) and then
only if so itemized on TTL's invoices to them.
h. Running Royalty payable for any given month becomes due at the end of the
then current calendar quarter, and shall be paid during the first month of
the next calendar quarter, or will become overdue on the first day of the
next month.
(56)
<PAGE>
i. Minimum Annual Royalty in excess of Running Royalty accrued and paid for a
given year becomes due and payable during January of the next calendar year
and becomes overdue on the first day of February of that year.
7. Payments and Reports
a. TTL will report to WAFT Partners (PART), c/o Charles A. McClure (CAM),
Suite 201, 701 Bayshore Boulevard, Tampa, FL 33606, all Running Royalty for
each calendar quarter of the License Term during the first month of the
next ensuing calendar quarter, may include with each such report full
payment of royalty due for (and reported for) the preceding quarter's
operations, will include in the report for the fourth (4th) quarter of each
calendar year an itemization by major customers and a listing of Running
Royalty accrued and payable or paid for each quarter in that year .
b. Quarterly and annual royalty reports will be signed and be certified as
accurate and complete by an authorized officer of TTL; ail such reports and
all royalty payments will be sent, together or separately, to WAFT
Partners, as above, a and at year end will include explicit comparison with
the Minimum Annual Royalty target for that year, and be accompanied by
payment of any deficiency of the year's Running Royalty paid relative to
the Minimum Annual Royalty due for that year.
c. TTL will keep accurate and complete records of all business done pursuant
to this Agreement and will make such records available to WHR and to PART,
no more than two (2) persons at once-for inspection during regular business
hours, upon at least three (3) business days' advance notice, to determine
Royalties accrued and paid or unpaid, and any other information due
hereunder.
d. Refusal by TTL to report or to pay Royalty, or to maintain or make
available records of business done hereunder, will forfeit TTL's good
standing under this Agreement, if not remedied within thirty (30) days,
unless limited to nonpayment of money, which may be remedied within
forty-five (45) days, or by the due date of the next quarterly report,
whichever is later.
8.Improvements
a. Any new composition, design, product, or service conducive to third party
competition with Licensed Product or Licensed Services or Licensed Systems,
invented or otherwise coming under the control of either party during the
License Term, is deemed an "Improvement"--and such party will disclose the
same to the other party promptly and in enough detail to enable the other
party to elect whether to have such Improvement included hereunder.
b. As to any such Improvement by either party, either party may elect to have
such Improvement included hereunder, within three (3) months after first
knowledge thereof, without change in Royalty, by promptly notifying the
other party of an election to do so; and the party that made or acquired
such Improvement need do no more if both parties fail to elect to include
the Improvement.
c. The originating party of an elected Improvement that appears possibly
patentable--after a competent prior art search-will file and prosecute a
patent application thereon, and may discontinue prosecuting it or
maintaining any resulting patent, but only after giving the other party
notice of such intention plus ample opportunity to take such (or
equivalent) action at its own sole future discretion and expense.
d. If either party so elects to have any given Improvement included under this
Agreement, the electing party in doing so will become obligated to pay
one-half (1/2) the expense of undertaking to patent it within the License
Territory, whereas the other one-half (1/2) of any such patent expense will
be the obligation of the originating party, whether or not the electing and
originating parties are the same, except that if TTL elects not to
participate in the payment of an Improvement made by WHR to be included,
TTL shall not be obligated to do so.
e. If the parties have joint inventorship/ownership patent rights in an issued
Improvement patent, the parties will share equally the related ownership
rights and expenses--including any official patent maintenance fees. The
parties need not exercise improvement patent rights, except as this
Agreement may provide, nor need either party account to the other party for
any lawful activity regarding such patent rights outside this Agreement.
f. The parties recognize that well-based differences may arise with regard to
origination of any given Improvement and that as to U.S. patents the
determination of inventorship and of patentability is exclusively within
the jurisdiction of the U.S. Patent and Trademark Office and the Federal
Courts. Unless the parties are/have joint inventors--or successor(s)
thereto--and hence are joint owners, they specifically agree that for any
Improvement patent application and for any resulting patent for an
Improvement elected by either party to be included hereunder, regardless of
inventorship, the Improvement originating or otherwise acquiring party will
grant to the other party (if that other party so elects) an unrestricted
paid-up (free) license to practice the Improvement for the License Term, if
such practice of it would not violate any non-elected prior patent of the
grantor-licensor.
(57)
<PAGE>
g. Each party's foregoing Improvement rights are executory in nature,
including the right to be informed of any Improvement by the other party,
and to elect an Improvement for inclusion hereunder (or not), and including
rights to ongoing prosecution of patent applications and maintenance of
patents by an originating party of an elected Improvement, and receipt of
license or ownership rights thereunder.
9.Infringement Rights
a. As of the effective date of this Agreement, TTL acknowledges that the
exclusive ownership of the initially Licensed Know-how, the Licensed
Patents, and the Licensed Trademarks is in WHR or in WAFT Partners, and not
at all in TTL.
b. In the event that TTL's commercialization of any Licensed Product, Licensed
Service, or Licensed System is accused of-infringing a proprietary right of
any third party, the parties will cooperate in attempting to avoid such
infringement or to prove lack of infringement, and so long as TTL's license
hereunder is exclusive to the extent set forth above, TTL will have a
right, but not an obligation, to defend or assist in defending against any
infringement action brought by a third party, and shall have also the
obligation to pay one-half (1/2) of the costs of doing so, except as either
party may voluntarily pay more thereof incidental to participation therein.
c. Neither party will be liable to the other party if unable or unwilling to
continue this Agreement because of such infringement of third-party rights,
and in that event TTL will cease commercializing Licensed Products,
Licensed Services, and Licensed Systems, and TTL will relinquish its rights
hereunder in that event, and thereby terminate its Royalty and attendant
obligations to WHR and WAFT.
d. In the event that the activities of any third party are asserted (or other-
wise appear) to infringe an intellectual property right licensed to TTL
hereunder, the parties will cooperate in attempting to ascertain and to
abate such infringement. So long as TTL's license hereunder is exclusive to
the extent set forth above, TTL will have a prior right, but not an
obligation, to abate such infringement, whether by litigation or otherwise,
subject to paying all the costs of doing so other than such costs or
expenses as WHR may voluntarily pay incidental thereto or to participation
therein. Any moneys recovered from a third-party infringer will be retained
by the party(ifs), pro-rated to their expenditures, whose action(s) had
such result.
e. If third-party infringement is not abated, TTL may elect to continue as a
non-exclusive licensee under this Agreement as its sole remedy, or
alternatively TTL may discontinue its license and cease royalty payments as
its sole remedy.
1O.Assurances
a. WHR assures TTL of WHO's origination of the inventions in his Licensed
Patents/Patent Applications, but WHR cannot guarantee TTL of WHR's
invention priority or patent validity.
b. WHR warrants ownership (joint with CAM as WAFT Partners) of the Licensed
Patents and Licensed Trademarks, in the specific sense that WHR has no
reason to believe that any third party has any right to prevent either WHR
or TTL from practicing any Licensed Invention, or from using any Licensed
Trademark, as provided in this Agreement, but WHR cannot and does not
warrant such practice or usage as non-infringing of third-party rights.
c. WHR will instruct and/or assist TTL's personnel in design, manufacturing,
quality standards, testing, distribution, marketing, and sale, as well as
proper marking, of Licensed Product and Licensed Systems, and WHR will
provide Licensed Know-how in doing so, as may be applicable.
d. WHR (and WAFT Partners) will have no liability whatever to TTL for TTL's
actions or inactions under this Agreement, and TTL will save WHR (and WAFT
Partners) harmless against any liability to third parties-whether based
upon agency, contract, negligence, product liability, or other basis-for
any claim based on action or inaction of TTL relating to Licensed Products,
Services, or Systems.
e An Appendix hereto discloses prior contractual relations of WAFT with one
Richard Boskind, and his companies (Boskind Development, Inc., Bell 2,
Inc.); with Richardson Energy, Inc., WHR's one-man corporation formed in
June 1996; and then of the latter with Ricky Lee Johansen and James J.
Wallace, as marketing representatives and exclusive distributors for the
three West Coast States and for Nevada. The Boskind Agreement fell into
non-renewable condition, and activities of both Richardson Energy, Inc. and
the West Coast distributors have fallen dormant. WHR recognizes that any of
these matters may conflict somewhat with this Agreement but will be
personally responsible for abating any such conflict that may arise.
11.Product Marking
a. TTL will mark on Licensed Products (or containers) each patent number
applicable thereto upon being advised thereof by WHR.
(58)
<PAGE>
b. TTL will display a Licensed Trademark (if elected) on all Licensed Product
and in advertising copy, brochures, and publications by or for TTL about
Licensed Product. TTL will not use any Licensed Trademark in or as a trade
name (i) if not elected, or (ii) if elected, after TTL discontinues (or
other termination of) TTL's license under this Agreement.
c. TTL will provide access for WHR, at agreed times, to all Licensed Product
to enable WHR to ascertain that the nature and quality thereof meet
standards required by trademark law of products bearing a Licensed
Trademark.
d. TTL will not make any material change in materials, production methods, or
otherwise that might affect the nature or quality of any WAFT product or
service, without advance notice to WHR and ample opportunity for WHR to
confirm compliance of such product or service with applicable quality
standards-or not.
e. TTL will provide representative specimens of each Licensed Product or
Licensed Service or Licensed System label and advertising copy, and of each
product or service brochure, before publication thereof, to enable WHR to
assure that they meet accepted trademark usage standards.
f. TTL will not manufacture, sell, or distribute any Licensed Product that
does not meet WHR's quality standards, nor distribute any product
literature that does not meet accepted trademark usage standards.
g. If TTL elects to use one or more Licensed Trademark(s), TTL will display
one thereof on each container of Licensed Product made by or for it, and in
all Licensed Product advertising copy, product brochures, press releases,
and publications by or for TTL about Licensed Product plus the generic name
of the goods, together with occasional notice that such Trademark is the
property of WAFT.
12.Termination
a. During the last calendar quarter of the Initial or any Renewal Period, TTL
may notify WHR of TTL's election to continue the Agreement for a Renewal
Period, to begin at the end of the then current Period; or, by failing to
do so, TTL will terminate its rights under this Agreement, whereupon TTL
will be obligated to discontinue its participation in licensed activities
by the end of the existing Period, except as the parties otherwise agree in
a signed written agreement.
b. Upon termination, TTL will refrain from exercising thereafter any right it
had by license hereunder, such as practicing the invention of any
previously Licensed Patent, or using a Licensed Trademark or confusingly
similar expression.
c. Whenever TTL is not in good standing hereunder, WHR may render TTL's
license wholly non-exclusive, or if it is already non-exclusive for a prior
breach or default WHR may terminate TTL's rights hereunder, in the absence
of specific curative provisions for TTL's breach or default, or if TTL has
had an opportunity to comply such a curative provisions and failed or
refused to do so.
d. If either party becomes, or would become, disabled-as by the other party's
choosing, or being subjected to, an act or a procedure for relief of
debtors from enforcing compliance with a given executory obligation of the
other party hereunder (e.g., compliance with standards, action with regard
to infringers, offer of Improvements) the thus disabled party may deem this
Agreement and the license and other rights under this Agreement terminated
ipsofacto.
e. No inaction or overlooking by WHR of any condition or provision of this
Agreement or of any breach or default thereof by TTL shall be deemed to
imply or to constitute a future waiver of any similar breach or default of
the same or other condition/provision.
13.Miscellaneous
a. If any one or more provision(s) or effect(s) of this Agreement should prove
to be invalid or unenforceable, and the Agreement be otherwise valid and
enforceable, the invalid or unenforceable provision or portion thereof will
be severed, and the remainder of the Agreement be and remain valid and
enforceable to the fullest extent permitted by applicable law.
b. This License Agreement is made for the benefit of the parties, their heirs,
successors, and assigns, and any other person or legal entity named in any
provision hereof, and not made to give any unnamed person or legal entity
any right of action whatever.
c. Each statement made in this Agreement is deemed material, and each party is
entitled to rely, and deemed to have relied, upon the truth and correctness
thereof in entering into this Agreement.
d. Each party acknowledges that he(it) has received advice of independent
counsel of choice as to the inducements, provisions, and terms of this
Agreement, and their effect, whereupon entering into this License Agreement
is each party's free and independent act.
(59)
<PAGE>
e. This Agreement is to be governed by Federal law to whatever extent a
proprietary right granted by the United States is involved, and otherwise
by Florida law, except as activities of a party in any other State render
that other State's law applicable.
f. Notice to be given under this Agreement will be in writing and be addressed
to the other party at the address of such party hereinabove, unless such
address has been superseded by like notice, whereupon the latest noticed
address thereof is to be used. Notice will be effective when delivered to
the addressee, or-if not a change of address-when sent by Express or
Registered Mail so addressed.
g. This Agreement sets forth the entire intent and understanding of the
parties with regard to the subject matter hereof, and merges any prior
negotiations or agreements by the parties as to such subject matter, and no
addition, deletion, or other modification of the wording hereof may be made
except in writing subsequent hereto and signed by the party or parties to
be bound thereby.
IN WITNESS WHEREOF the parties have caused this Agreement to be signed,
sealed, and attested by persons duly authorized so to do, as of the date first
stated hereinabove.
WHR & PART TTL
S/S WILLIAM R. RICHARDSON, JR. S/S LEON H. TOUPS
William R. Richardson, Jr. Leon H. Toups, President
Attest: S/S CHARLES A. MCCLURE Attest: S/S MARK CLANCY
Charles A. McClure Mark Clancy, Vice President
(60)
<PAGE>
APPENDIX
Ongoing Negotiations
1. Australia - Frank Bachrach, Universal Associates Pty., Rose Bay.
2. Austria - Kelly Speakes, Jennbacher Energiesysteme, Norwood, Mass.
3o Britain - GIyn Brooke & Andrew Shire, Jewetts Farm, Hemyock, Devon.
4o France - Antoine Giudicelli (ex-min. Nuclear Power) & Dr. Laurent Clerc.
5. Japan - Tom Peters, Ark International, Captain Cook, Hawaii.
6. Mexico - Nestor Hernandez, Col. Granada Blvd., Mexico City.
7. Taiwan - John T. L. Hsu, Far East Trade Services, Inc., San Francisco.
WHR may exclude from this Agreement any binding commitment entered into
with any of these parties within ninety (90) days from the effective date
hereof. In the absence of a commitment during that time, WHR will not enter into
any such commitment, and TTL may deal thereafter with any such party and will
pay over to PART one-half (1/2) of the proceeds therefrom, as in the instance of
a sublicense.
Prior Commitments
1. WAFT Partners - Richard Boskind, Boskind Development, Inc., Bell 2, Inc.;
a. Two-page Preliminary Agreement Sept. 1993 to develop truck-mounted reactor;
b. Ten-page Supplementary Agreement March 96 to build trailer-mounted reactor;
Mr. Boskind lost good standing by the end of 1996, so could not renew, but
has persisted in sending quarterly statements together with requests for
money for parts.
2. Richardson Energy, Inc. (WHR's l-man corporation) June 1996 Agreement with
a. Ricky Lee Johansen and James J. Wallace, exclusive marketing
representatives and distributors for the states of California, Nevada,
Oregon, and Washington; also
b. Partial cross-ownership with their limited liability companies, but stock
purchases in Richardson Energy not completed by them, and its charter being
allowed to lapse.
3. Australia and New Zealand, Option Memorandum - Dr. Peter Nel, Las Vegas;
and Peter Lausevic, American Merchandising Company, Sacramento, California;
signed in February 1997, but Ten Percent advance royalty payments toward
agreed paid-up royalty of $500,000 for Australia and $250,000 for N.Z.
never received.
(61)
MANUFACTURING LICENSE AGREEMENT
This AGREEMENT is made this Ist day of January, 1998, by and between Gerold
Allen, 900 N.E. Edgewater: Cove, Claremore, Oklahoma, 74017 (hereinafter the
"Licensor") and Toups Technology Licensing, Incorporated, a Florida Corporation
located at 801 West Bay Drive, Suite 707, Largo, Florida, 34640 (hereinafter
"TTL" or the "Licensee").
WHEREAS the Licensor has made certain new and useful inventions including
the AllenLift Pump (Allen Lift), a pumping device for oil wells, and desires to
have the invention commercially used through the granting of a license to
manufacture; and
WHEREAS, the Licensee is a Florida corporation organized for the principal
purpose of developing technologies similar to the Allen-Lift and now desires to
acquire a license to manufacture the mechanical components, coordinate assembly
and delivery for the Allen-Lift; and
WHEREAS, the Licensor has previously granted a license to New Lift, Inc.,
an Oklahoma corporation, who has in turn granted one sub-license (hereinafter
the "New Lift License").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto do hereby agree as follows:
1. The Licensor hereby licenses and empowers the Licensee to manufacture a
pumping device for oil wells designed by Licensor in accordance with plans and
specifications for said pump developed by Licensor, subject to the conditions
hereinafter set forth at Licensee's facilities in the Pinellas Science
Technology and Research Center in Tampa, Florida. Licensee shall not have the
right to grant sublicenses of this Agreement. Nothing contained or construed to
be contained in this Agreement shall constitute the grant by Licensor of any
right by way of license or otherwise to Licensee to use any trademark or trade
name of Licensor without the prior written consent of Licensor, which may be
withheld by Licensor in his sole and absolute discretion .
2. The Licensee shall make full and true returns to the Licensor under oath
on the first days of January and July of each year of all Allen Lifts
manufactured by Licensee pursuant to this Agreement during the preceding six
months.
3. Licensee shall pay to Licensor as a license fee (hereunder "License
Fee") for each Allen Lift manufactured for delivery the sum of six percent (6~~)
of the Net Sales Price (as such term is hereinafter defined) received by the
Licensee which sale shall be deemed to occur on the date of invoice, shipment or
delivery of Allen Lifts during the term of this Agreement. For purposes hereof,
the term "Net Sales Price" shall mean the gross sales priced charged to a
purchaser of an Allen Lift less (to the extent included and separately itemized
in the gross sales price): (i) transportation, handling, insurance, taxes and
other similar charges, and (ii) rebates and other allowances actually paid or
allowed; provided, however, no deduction shall be made for commissions, costs of
collection, bad debts, returns or similar items.
4. The Licensee agrees to pay to the Licensor the License Fee according to
the following schedule:
a. An advance first year License Fee payment of Eighty-Thousand and No/100
Dollars ($80,000.00) payable in four equal installments of Twenty Thousand and
No/100 Dollars ($20,000.00) each with the first payment being made upon the
execution of this Agreement. The second payment shall be made upon the latter
of: (i) the payment of the purchase price of the first three Allen Lifts
manufactured pursuant to the agreement or (ii) three months from the date of
this Agreement. In the event that the second payment is made pursuant to this
paragraph 4 a., the third and fourth payments shall be made six months and nine
months from January 1, 1998. Such advance License Fee payment will thereafter be
applied toward any amounts due Licensor under paragraph 3 above.
b. Thereafter, License Fee payments shall be made quarterly as computed for
the periods ending March 31, June 30, September 31 and December 31 of each
annual Period this Agreement remains in force. License Fee payments shall be
computed as set forth in paragraph 3 of this Agreement.
c. Licensee shall keep and maintain complete and accurate records and
documentation concerning all sales or other dispositions of Allen Lifts and
shall retain such records and documentation for not less than seven (7) years
from the date of their creation.
d. Licensor and his representatives and agents shall have the right during
the term of this Agreement and for a period of one (1) year thereafter upon
reasonable notice to Licensee to inspect during regular business hours the
records and documentation required to be retained pursuant to this Agreement.
(62)
<PAGE>
e. The costs of any inspection pursuant to this paragraph 4 shall be borne
by Licensor, unless as a result of such inspection it is determined that the
amounts payable by Licensee to Licensor for any period are in error by greater
than five percent (5R), in which case the costs of such inspection shall be
borne by Licensee. Licensor shall report the results of any such inspection to
Licensee, and Licensee shall promptly thereafter pay to Licensor the amount of
any underpayment, and the amount of any overpayment shall be credited by
Licensor against future amounts payable by Licensee to Licensor. In addition,
Licensee shall pay interest on the amount of such underpayment at ten percent
(10~~) per annum.
5. In the event that the Licensee fails to make returns or to make payment
as hereinafter provided by thirty (30) days after the dates herein specified,
the Licensor may, at his option, terminate this Agreement by giving notice in
writing thereof to the Licensee by certified mail addressed to such Licensee at
its address herein set forth.
6. In the event that the Licensor terminates this Agreement as provided in
this Agreement, Licensor shall thereafter have the right to enter into any
agreement which he deems proper with any other person, firm or corporation for
the licensing or assignment of the Allen Lift to any other person, firm or
corporation for the manufacture of the Allen Lift and the Licensee shall
thereafter have no right to manufacture the Allen Lift. Upon the termination of
this Agreement for any reason, the Licensee shall promptly and without demand
from Licensor, deliver to Licensor all plans, specifications, memorandum and
documents of any kind or nature relating to the manufacture of the Allen Lift.
7. The Licensee shall endeavor in every reasonable and proper way and to
the best of its ability to further the manufacture of the Allen Lift in such
manner as may seem necessary and shall be prepared to manufacture not less than
one hundred (100) Allen Lifts in the first year of this Agreement and not less
than three hundred (300) Allen Lifts in any subsequent year of this Agreement.
8. Licensee shall mark all Allen Lifts which are made, sold or otherwise
disposed of by Licensee under this Agreement in such manner as is required to
protect or preserve Licensor's rights to the Allen Lift under applicable law
and/or as is customary in the market and no Allen Lift shall be sold without
such label or plate.
9. Each party acknowledges that this Agreement may require the disclosure
by one party to the other party of its confidential and proprietary information
("Confidential Information"). Each party shall regard and preserve Confidential
Information as secret and confidential, and during the term of this Agreement
and for a period of ten (10) years thereafter neither party shall publish or
disclose any Confidential Information in any manner without the prior written
consent of the other party. Each party shall use the same level of care to
prevent the disclosure of the Confidential Information of the other party that
it exercises in protecting its own Confidential Information and shall in any
event take all reasonable precautions to prevent the disclosure of Confidential
Information to any third party.
10. Neither party shall without the prior written consent of the other
party, disclose to any third party the existence of this Agreement or any of its
provisions unless such disclosure is required under applicable law or in
connection with legal enforcement of this Agreement.
11. Neither party shall publish or arrange for the publication in any
scientific, trade or other publication information concerning the Allen Lift
without the prior written consent of the other party which consent may not be
unreasonably withheld.
12. Each party acknowledges that in the event of any breach or default or
threatened breach or default by either party of paragraphs 9, 10 and 11 of this
Agreement, the other party may be irreparably damaged and that it would be
extremely difficult and impractical to measure such damage, so that the remedy
of damages at law would be inadequate. Consequently, each party acknowledges and
agrees that the other party, in addition to any other available rights or
remedies, shall, without the necessity of posting any bond or similar security,
be entitled to specific performance, injunctive relief and any other equitable
remedy for the breach or default or threatened breach or default of said
paragraphs 9, 10 and 11 of this Agreement, and each party waives any defense
that a remedy at law or damages is adequate.
13. Each party represents and warrants to the other party that this
Agreement has been duly authorized, executed and delivered by each party and
that this Agreement is a binding obligation of each party, enforceable in
accordance with its terms, subject, as to enforcement of remedies, to applicable
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally, and to general equitable principles.
14. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, LICENSOR MAKES NO
REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR IMPLIED INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR ANY EXPRESS OR IMPLIED WARRANTY THAT THE USE OF THE ALLEN LIFT, OR
THE IMPROVEMENTS OR THE MANUFACTURE, USE OR SALE OF ANY OF THE ALLEN LIFT WILL
NOT INFRINGE ANY PATENT, COPYRIGHT OR OTHER RIGHT OF ANY THIRD PARTY), OF ANY
KIND OR NATURE WHATSOEVER.
(63)
<PAGE>
The Licensor has retained patent counsel to conduct a patent search and has
received an opinion letter from patent counsel stating that the invention, as
broadly described, would be patentable.
15. Licensee shall indemnify, hold harmless and defend Licensor and his
heirs, personal representatives, successors and assigns, from and against any
and all claims, demands, lawsuits, actions, proceedings, liabilities, losses,
damages, fees, costs and expenses (including without limitation attorneys' fees
and costs of investigation and experts) resulting from or arising out of the
manufacture, assembly or delivery of any of the Allen Lifts or the exercise by
Licensee of any right granted hereunder, including without limitation any
liabilities, losses or damages whatsoever with respect to death or injury to any
individual or damage to any property arising from the possession, use or
operation of the Allen Lift by Licensee or any third party in any manner
whatsoever.
16. Licensee shall maintain at all times during and after the term of this
Agreement, comprehensive general liability insurance, including product
liability insurance, with reputable and financially secure insurance carriers
and having commercially reasonable limits giving due consideration to the nature
and extent of such activities and the risks inherent therein to cover the
activities of Licensee contemplated by this Agreement. Any such insurance shall
have Licensor as an additional named insured party and shall provide for no
cancellation or material alteration except upon at least thirty (30) days prior
written notice to Licensor, Licensee shall timely provide Licensor with
certificates of insurance evidencing such coverage.
17. The Licensee agrees to act exclusively to manufacture the mechanical
portions of the Allen Lift and shall not make any efforts to promote or exploit
the sale of the equipment.
18. This Agreement shall become effective on the date first above written
and shall remain in effect until December 31, 2002, unless sooner terminated
pursuant to the terms of this Agreement.
19. This Agreement may be terminated by either party if the other party
breaches any material provision hereof (including without limitation any
provision requiring payment by Licensee to Licensor), provided that termination
may only take place if (i) the claiming party has given the breaching party
written notice specifying the respects in which the claiming party claims this
Agreement has been breached and (ii) the breaching party fails to remedy such
breach within thirty (30) days after receiving such notice.
20. Upon the termination or expiration of the term of this Agreement, the
license granted by Licensor to Licensee pursuant to paragraph 1 hereof shall
terminate. Notwithstanding any termination or expiration of the term of this
Agreement, Licensee shall be permitted for a period of not more than three (3)
months to sell all Allen Lifts then in inventory and shall have the obligation
to pay Licensor all amounts which have accrued or shall accrue by reason of the
sale of such Allen Lifts. Licensee shall not be entitled to any refund of any
amounts by reason of any termination or expiration of the term of this
Agreement. Upon termination of this Agreement for any reason, the Licensee shall
not engage in the manufacture of Allen Lifts or any derivative or copy thereof
nor shall Licensee or any subsidiary of Licensee solicit any customers of
Licensor or directly or indirectly induce any employee of Licensor to leave his
employee for a period of five (5) years after the date of termination of this
Agreement.
21. The rights and obligations of Licensee shall not be assignable without
the prior written consent of Licensor which consent may be granted or withheld
by Licensor in his sole and absolute discretion.
22. Any notice or other communication hereunder must be given in writing
and either (i) delivered in person, (ii) transmitted by telex, facsimile or
telecopy mechanism provided that any notice so given is also mailed as provided
herein, (iii) delivered by Federal Express or similar commercial delivery
service or (iv) mailed by certified mail, postage prepaid, return receipt
requested, to the party which such notice or communication is to be given at the
address set forth on the first page of this Agreement or to such other address
or to such other person as either party shall have last designated by such
notice to the other party. Each such notice or other communication shall be
effective (i) if given by telecommunication, when transmitted, (ii) if given by
mail, seven (7) days after such communication is deposited in the mails and
addressed as aforesaid, (ii) given by Federal Express or similar commercial
delivery service three (3) business days after such communication is deposited
with such service and addressed as aforesaid, and (iv) given by any other means,
when actually delivered at such address.
23. This Agreement and the legal relations between the parties shall be
governed by and construed in accordance with the laws of the State of Oklahoma.
24. In any action between the parties seeking enforcement of any of the
provisions of this Agreement, the prevailing party shall be awarded, in addition
to damages, injunctive or other relief, its reasonable costs and expenses, not
limited to taxable costs, and reasonable attorneys' fees.
(64)
<PAGE>
25. Neither this Agreement nor any provisions hereof shall be waived,
modified, discharged or terminated except by an instrument in writing signed by
both parties.
26. This Agreement contains the entire agreement of the parties with
respect to the subject matter hereof, and there are no representations,
warranties, covenants or other agreements except as stated or referred to
herein.
27. Each provision of this Agreement is intended to be severable from every
other provision and the validity or legality of the remainder hereof shall
remain valid and binding.
28. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, legal representatives,
administrators, executors, and successors, subject, however, to the restrictions
on assignment set forth in this Agreement.
29. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, and such counterparts together shall
constitute one agreement.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the day
and year first above written.
LICENSOR
S/S GEROLD ALLEN
Gerold Allen
LICENSEE
TOUPS TECHNOLOGY LICENSING, INCORPORATED
By: S/S LEON H. TOUPS
President
Attest:
S/S MARK CLANCY
Secretary (SEAL)
(65)
HARPER, VAN SCOIK
& Company, LLP
CPA's and Business Advisors
2111 Drew Street PO Box 4989
Clearwater, Florida 33758
We consent to the use of our audit for Toups Technology Licensing
Incorporated dated February 12, 1998 in the form 10-SB to be filed on or about
February 20, 1998.
S/S HARPER VAN SCOIK AND COMPANY, LLP
(66)
