U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________
COMMISSION FILE NUMBER: 000-28775
LUMINART CORP.
(Exact name of registrant as specified in its charter)
Nevada 87-0413934
(State or jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
3245 Grande Vista Drive, Newbury Park, California 91320
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (805) 480-9899
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 Par Value
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) been subject to such filing
requirements for the past 90 days. Yes X No .
As of March 31, 2000, the Registrant had 17,006,167 shares
of common stock issued and outstanding.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS AS OF
MARCH 31, 2000 AND MARCH 31, 1999 3
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH
31, 2000 AND MARCH 31, 1999 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND MARCH 31, 1999 5
NOTES TO FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 10
PART II
ITEM 1. LEGAL PROCEEDINGS 12
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12
ITEM 5. OTHER INFORMATION 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURE 13
PART I.
ITEM 1. FINANCAL STATEMENTS.
LUMINART CORP.
CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, 1999 March 31, 2000
Current Assets:
Cash $ 98,373 $ 47,536
Accounts Receivable (Net of
Allowance for Bad Debts of
$5,732) 57,509 78,230
Inventory+ 941,557 802,099
Other Current Assets 17,887 5,829
Total Current Assets 1,115,326 933,694
Property & Equipment:
Net Property & Equip 489,782 452,112
Organization Costs (Net) 202,247 0
Goodwill (Net) 92,500 0
Capitalized Software Costs 0 205,700
Deferred Taxes 0 82,705
294,749 288,405
Total Assets $1,899,855 $1,674,212
Current Liabilities:
Accounts Payable $ 76,527 $ 63,460
Accrued Payables 14,741 143,919
Taxes Payable 17,343 24,749
Interest Payable 11,987 71,925
120,598 304,054
Notes Payable 99,950 106,000
Shareholders' Equity:
Preferred Stock 685,000 685,000
Common Stock 17,036 17,006
Additional Paid-In 3,057,104 3,054,118
Accumulated Deficit (2,079,833) (2,491,966)
Shareholders' Equity 1,679,307 1,264,157
Total Liab & Equity $1,899,855 $1,674,212
See Accompanying Notes to Unaudited Financial Statement
LUMINART CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 2000
Revenue $370,589 $298,516
Cost of Sales 320,311 45,772
Gross Profit 50,278 252,743
Operating Expenses:
Depreciation & Amortization 0 44,390
Selling, General & Admin. 143,414 93,063
Other Operating Costs 0 70,365
Total Operating Costs 143,414 207,817
Interest Expense 0 11,987
Income Before Income Taxes (93,136) 32,938
Income Tax Expense (Benefit) 0 0
Net Income (93,136) 42,938
Basic Income Per Share: $(0.01) $0.01
Diluted Income Per Share $(0.01) $0.01
Average Shares Used In Basic 17,006,170 17,006,167
Average Shares Used In Diluted 18,006,170 19,156,167
See Accompanying Notes to Unaudited Financial Statement
LUMINART CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 2000
Cash Flows From Operating
Activities
Adjustments:
Net Income from Operations $(93,137) $ 32,938
Depreciation/Amortization 140,360 44,390
Accounts Receivable (23,087) 14,258
Change in Inventories (95,104) (3,148)
Change in Other Assets 2,000 (3,819)
Change in Accounts Payable 1,685 17,377
Increase in Accrued Liab. (9,758) 0
Increase in Other Liabilities (9,268 7,254
Interest Payable 0 11,987
Total Adjustments 6,826 88,299
Net Cash Provided
(Used) by Operations (86,309) 121,238
Cash Flows From Investing
Activities
Increase in Fixed Assets (79,546) 0
Other Assets 0 70,365
Net Cash Used in Investing (79,546) 70,365
Cash Flows From Financing
Activities
Notes Payable Non-Current (25,270) (170,000)
Sales of Common Stock 237,077 0
Net Cash Used in Financing 211,807 (170,000)
Net Increase (Decrease) in Cash 45,951 21,603
Beginning Cash Balance 52,421 25,933
Ending Cash Balance 98,373 47,536
See Accompanying Notes to Unaudited Financial Statement
LUMINART CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Luminart Corp. (the "Company") is a technology company which is
a designer, developer, manufacturer, and marketer of proprietary
sign making products for the worldwide marketplace.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reporting amounts
in the consolidated financial statements and accompanying notes.
Actual results could differ from those estimates.
Basis of Presentation
The accompanying unaudited consolidated financial statements are
presented in accordance with the requirements of Form 10-QSB and
Item 310 of Regulation SB. Accordingly, they do not include all
the disclosures normally required by generally accepted
accounting principles. Reference should be made to the
Company's audited financial statements for the year ended
September 30, 1999 as contained in a Form 10-SB filed with the
U.S. Securities and Exchange Commission for additional
disclosures including a summary of accounting policies, which
have not significantly changed.
Principles of Consolidation
The consolidated financial statements of the Company include the
accounts of the Company and all its wholly-owned subsidiaries.
All significant intercompany transactions and balances are
eliminated.
Revenue Recognition
Revenue is generally recognized when the Company has completed
substantially all manufacturing and/or sign development to
customer specifications, factory testing has been completed and
the product has been shipped. Additionally, for sign systems
where installation requirements are the responsibility of the
Company and payment terms are related to installation
completion, revenue is generally recognized when the system has
been shipped to the customer's final site for installation.
Inventories
Inventories are valued at the lower of average cost or market.
Inventories consisted of the following at March 31, 2000:
Raw Material $ 581,507
Work in Process 67,163
Finished Goods 143,429
$ 802,099
Property and Equipment
Property and equipment are recorded at cost and depreciated on a
straight-line basis over their estimated useful lives as follows:
Leasehold improvements: 15 years
Manufacturing equipment: 7 years
Computer equipment, office
Furniture and other: 5-7 years
Cost in Excess of Net Assets of Business Acquired, Net
Cost in excess of net assets of business acquired is amortized
on a straight-line basis over 15 years. This represents the
excess of the cost of acquiring the Ecosphere Environmental
Systems business over the fair value of net assets received as
of the acquisition date by $100,000, net of the accumulated
amortization of $16,667 at September 30, 1999. The company
adopted SFAS 121 and divested its recycling assets of $187,000
in October 1999 along with the remaining $83,333 in goodwill
associated therewith.
Capitalized Software Development Costs
Certain software development costs are capitalized when
incurred. Capitalization of software development costs begins
upon the establishment of technological feasibility. The
establishment of technological feasibility and the ongoing
assessment of recoverability of capitalized software development
costs require considerable judgment by management with respect
to certain external factors, including, but not limited to,
anticipated future revenues, estimated economic life and changes
in software and hardware technologies. The capitalized software
development costs would be adjusted to fair market value if
significant facts and circumstances altered the Company's
original assumptions and rationale.
Unamortized capitalized software development costs determined to
be in excess of the net realizable value of the product are
expensed immediately.
Amortization of capitalized software costs is provided by the
straight-line method over the remaining estimated economic life
of the product. An original estimated economic life of 15 years
is assigned to capitalized software development of $239,651, net
of accumulated amortization of $33,951 at March 31, 2000.
Organization Costs
Organization costs are capitalized when incurred and are
amortized on a straight-line basis over a sixty (60) month
period. Organization costs are $86,017, net of accumulated
amortization of $15,832 at March 31, 2000.
Income Taxes
The liability method as prescribed by Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes" ("FAS 109"), is used in accounting for income taxes.
At March 31, 2000 income tax expense was zero due to net
operating loss carryforwards available for tax purposes.
Income Per Share
In February 1997, the Financial Accounting Standards Board
issued SFAS 128, "Earnings Per Share" ("FAS 128"), which
replaces the presentation of primary and fully diluted earnings
per share with the presentation of basic and diluted earnings
per share. Basic income per share is computed by dividing net
income available to common shareholders by the weighted average
common shares outstanding for the period. Diluted income per
share is computed giving effect to all potentially dilutive
common shares. Potentially dilutive common shares may consist of
incremental shares issuable upon the exercise of stock options
adjusted for the assumed repurchase of the Company's common
stock at the average market price. The impact of Statement 128
on the calculation of earnings is as follows:
3 Months Ended
March 31
1999 2000
Basic Income Per Share: ($0.0058) $0.0019
Diluted Income Per Share N/A $0.0017
Average Shares Used In Basic 16,071,788 17,006,167
Average Shares Used In Diluted N/A 19,156,167
Average Market Price of Stock $0.15 $0.468
Ending Market Price of Stock $0.21 $0.468
The following securities were excluded from the calculation of
diluted earnings per share at March 31, 2000 because they are
considered anti-dilutive under FAS 128:
1) Unexercised Options granted to company officers during 1999 of
1,000,000 shares of the Company's common stock at $0.25 per share.
2) Unexercised Options granted to company officers during 2000 of
2,150,000 shares of the Company's common stock at $0.25 per share.
NOTE 2 - PROPERTY AND EQUIPMENT
The Company's property and equipment consisted of the following
at March 31, 2000:
Leasehold improvements $ 81,860
Manufacturing equipment 638,885
Computer equipment, office
furniture and other 149,769
906,918
Less: Accumulated depreciation (372.011)
$ 496,503
NOTE 3 - ACCRUED LIABILITIES
The Company's accrued liabilities at March 31, 2000 consisted of
accrued payroll to officers and accrued interest as follows:
Payroll and related $ 116,037
Accrued interest 59,938
$ 175,975
NOTE 4 - COMMON AND PREFERRED STOCK
Description and Dividends
At March 31, 2000 the Company was authorized to issue
100,000,000 shares of common stock, $0.001 par value. The common
stock is a publicly traded Over the Counter Bulletin Board Stock
with the symbol LUMP. As of March 31, 2000, 17,006,167 shares of
common stock were issued and outstanding of which 5,868,863 are
restricted and the remaining 11,137,304 are free trading.
At March 31, 2000 the Company was authorized to issue 10,000,000
shares of preferred stock, $0.001 par value. The preferred stock
issued at March 31, 2000 consists of 1,840,000 preferred shares
outstanding for consideration of $685,000 bearing interest at
the rate of seven percent (7%) per annum.
Since inception, the Company has not declared or paid a cash
dividend.
Stock Options
The Company has stock option plans that provide for the issuance
of up to 2,150,000 shares of common stock to directors and
consultants. As of March 31, 2000, no options had been exercised.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
Operating Lease Commitments
The Company leases certain facilities which require future
rental payments. These rental arrangements do not impose any
financing restrictions on the Company or contain contingent
rental provisions.
Future minimum rental commitments under operating leases with
noncancelable lease terms in excess of one year were as follows
at March 31, 2000:
2000 $ 71,051
2001 89,635
2002 0
2003 0
2004 0
Thereafter 0
$160,686
Operating lease rental expense was $11,120 for the three month
period ended March 31, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Overview
The following management's discussion and analysis of financial
condition and results of operations reviews the financial
performance of the Registrant for the three months ended March
31, 2000 and 1999, and should be read in conjunction with the
Registrant's unaudited consolidated financial statements and
notes thereto set forth in this Form 10-QSB. All of the numbers
set forth in the unaudited financial statements of the
Registrant are denominated in U.S. dollars.
Consolidated Results of Operations
Net sales decreased to $298,516 for the three months ended March
31, 2000 from $370,589 for the three months ended on March 31,
1999, a decrease of $72,073, or 19.45%, primarily due to a
decrease in orders. The Registrant does not have a sales
backlog as, typically, all gel orders are filled within 24 hours
of receipt; work in progress orders are not typically booked as
sales until finished and shipped.
Gross profit increased to $298,516 for the three months ended
March 31, 2000 from $50,278 for the same period in 1999 and cost
of goods sold decreased as a percentage of sales to 15.3% from
86.5%. The increase in gross profit margin in 2000 as compared
to 1999 is primarily due to increased efficiencies realized by
the company operations and the Registrant is no longer suffering
from the costs associated with the subsidiary companies divested
in 1999. The Registrant fully expects the increase in
efficiency to continue.
Selling, general and administrative expenses decreased to
$93,063 in 2000 from $143,415 in 1999, as a direct result of
increased efficiencies in operations. The Registrant fully
expects the increase in efficiency to continue.
Interest expense increased to $11,987 in 2000 from $0 in 1999,
as a result of the accrual of interest on the preferred stock
issued by Registrant.
Net profit was $32,938 for the three months ended March 31,
2000, as compared to a net loss of $93,137 for the three months
ended March 31, 1999.
Liquidity and Capital Resources
During the three months ended March 31, 2000 the Registrant
financed its working capital requirements from cash reserves, as
well as operations of the Registrant. The Registrant currently
has no lines of credit.
Currently, the inventory turnover is 8.06 months, while
receivables turnover is 23.85 days. Inventory turnover is
heavily impacted by dispensing machines on hand, trade show
booth and brochures with a combined value of $420,345. With
these removed, inventory turnover falls to 3.84 months. The
Registrant does have work in progress each day, but does not
account for work in progress as a sale until the work is
completed.
During the three months ended March 31, 2000, the Registrant's
operations provided cash of $121,238 as compared with cash used
during the three months ended March 31, 1999 of $86,311,
investing activities provided cash of $70,365 versus a use of
$79,546, respectively, and financing activities used cash of
$170,000 for the three months ended March 31, 2000, as compared
with cash provided of $211,807 for the three months ended March
31, 1999.
Capital Expenditures
The Registrant did not have any capital expenditure commitments
outstanding at March 31, 2000, although the Registrant
anticipates making capital expenditures in the ordinary course
of business commensurate with an expected increase in the
Registrant's business operations in subsequent periods.
Year 2000 Issue.
The Year 2000 issue arises because many computerized systems
use two digits rather than four to identify a year. Date
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using the year
2000 date is processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to represent
something other than a date. The effects of the Year 2000 issue
may be experienced after January 1, 2000, and if not addressed,
the impact on operations and financial reporting may range from
minor errors to significant system failure which could affect the
Registrant's ability to conduct normal business operations. This
creates potential risk for all companies, even if their own
computer systems are Year 2000 compliant. It is not possible to
be certain that all aspects of the Year 2000 issue affecting the
Registrant, including those related to the efforts of customers,
suppliers, or other third parties, will be fully resolved.
The Registrant currently believes that its systems are Year 2000
compliant in all material respects. Although management is not
aware of any material operational issues or costs associated with
preparing its internal systems for the Year 2000, the Registrant
may experience serious unanticipated negative consequences (such
as significant downtime for one or more of its suppliers) or
material costs caused by undetected errors or defects in the
technology used in its internal systems. Furthermore, the
purchasing patterns of consumers may be affected by Year 2000
issues. The Registrant does not currently have any information
about the Year 2000 status of its potential material suppliers.
The Registrant's Year 2000 plans are based on management's best
estimates.
Forward Looking Statements.
The foregoing Management's Discussion and Analysis contains
"forward looking statements" within the meaning of Rule 175 of
the Securities Act of 1933, as amended, and Rule 3b-6 of the
Securities Act of 1934, as amended, including statements
regarding, among other items, the Registrant's business
strategies, continued growth in the Registrant's markets,
projections, and anticipated trends in the Registrant's business
and the industry in which it operates. The words "believe,"
"expect," "anticipate," "intends," "forecast," "project," and
similar expressions identify forward-looking statements. These
forward-looking statements are based largely on the Registrant's
expectations and are subject to a number of risks and
uncertainties, certain of which are beyond the Registrant's
control. The Registrant cautions that these statements are
further qualified by important factors that could cause actual
results to differ materially from those in the forward looking
statements, including, among others, the following: reduced or
lack of increase in demand for the Registrant's products,
competitive pricing pressures, changes in the market price of
ingredients used in the Registrant's products and the level of
expenses incurred in the Registrant's operations. In light of
these risks and uncertainties, there can be no assurance that the
forward-looking information contained herein will in fact
transpire or prove to be accurate. The Registrant disclaims any
intent or obligation to update "forward looking statements."
PART II.
ITEM 1. LEGAL PROCEEDINGS.
The Registrant is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Registrant has been threatened.
On September 8, 1998 the Registrant was sued by Linda Lampenius
aka Linda Brava in Los Angeles County Superior Court. The
lawsuit claimed breach of contract, breach of implied covenant of
good faith and fair dealing, fraud, breach of fiduciary duty,
claim and delivery, conversion, declaratory relief and
accounting. This action was settled in September 1999 on the
following terms: (a) payment by the Registrant to Ms. Lampenius
of $96,000; and (b) the Registrant is to be paid a royalty on the
next seven albums to be released by Ms. Lampenius through EMI
Records on a sliding scale starting at 10% down to 2.5%.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Reports on Form 8-K. No reports on Form 8-K were filed
during the three month period covered this Form 10-QSB.
(b) Exhibits. Exhibits included or incorporated by
reference herein: See Exhibit Index.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Luminart Corp.
Dated: May 12, 2000 By: /s/ Wm. Michael Reynolds
Wm. Michael Reynolds, President
EXHIBIT INDEX
Number Exhibit Description
2.1 Plan and Agreement of Merger (incorporated by reference to
Exhibit 2.1 of the Form 10-SB filed on January 5, 2000).
2.2 Agreement and Plan of Reorganization (incorporated by
reference to Exhibit 2.2 of the Form 10-SB filed on January 5,
2000).
3.1 Articles of Incorporation(incorporated by reference to
Exhibit 3.1 of the Form 10-SB filed on January 5, 2000).
Articles of Amendment to Articles of Incorporation (incorporated
by reference to Exhibit 3.2 of the Form 10-SB filed on January 5,
2000).
3.3 Certificate of Amendment to Articles of Incorporation
(incorporated by reference to Exhibit 3.3 of the Form 10-SB filed
on January 5, 2000).
3.4 Certificate of Amendment of Amendment to Articles of
Incorporation (incorporated by reference to Exhibit 3.4 of the
Form 10-SB filed on January 5, 2000).
3.5 Certificate of Amendment to Articles of Incorporation
(incorporated by reference to Exhibit 3.5 of the Form 10-SB filed
on January 5, 2000)
3.6 Bylaws (incorporated by reference to Exhibit 3.6 of the Form
10-SB filed on January 5, 2000).
10.1 Toll Processing Agreement between the Registrant and PRC-
DeSoto Canada (see below)
10.2 Consultation Agreement between the Registrant and Don
Docken (see below).
10.3 Management Agreement between the Registrant and Wm. Michael
Reynolds (see below).
10.4 Management Agreement between the Registrant and Ronnie
Case (see below).
21 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 of the Form 10-SB filed on January 5, 2000).
27 Financial Data Schedule (see below).
99 Patent Abstract (incorporated by reference to Exhibit 99 of
the Form 10-SB filed on January 5, 2000)
TOLL PROCESSING AGREEMENT
This Agreement ("Agreement") made this 1st day of December,
1999, by and between PRC-DeSoto Canada, Inc., a corporation with
a principal mailing address of 5676 Timberlea Boulevard,
Mississauga, Ontario L4W 4MS ("PRC") and Luminart International,
Inc., a Nevada corporation, with a principal mailing address of
Post Office Box 4029, Thousand Oaks, California 91359 ("LI").
WITNESSETH:
WHEREAS, LI desires to engage PRC to toll produce the
products listed on the attached Exhibit A (the "Products") for
LI; and
WHEREAS, PRC desires to toll produce the Products for LI;
NOW, THEREFORE, for and in consideration of the foregoing
and the terms and conditions contained in this Agreement, the
parties agree as follows:
1. Condition Precedent
LI shall provide PRC with a current Material Safety
Data Sheet ("MSDS") and a Canadian Domestic Toxic Substances List
("DSL") for each of the Products or ingredients of the Products
listed on Exhibit. LI shall provide PRC with all hazard
communication information for the safe mixing, packaging,
shipping and labeling for the Products.
2. Formulae and Other Information
(A) LI shall provide PRC with the formulae for the
Products and other information necessary to enable PRC to
manufacture the Products with each LI Purchase Order for the
Products. LI has the right to amend its formulae prior to the
products being manufactured by PRC. Any ingredients of the
Products no longer required because LI has amended its formulae
will be shipped to LI or, at the option of LI, disposed at LI
cost.
(B) LI shall provide PRC with reasonable access to
LI's technical personnel on a continuing basis, which personnel
will provide advice regarding the manufacture of the Products as
requested by PRC. LI's personnel will, if requested by PRC,
travel to PRC's plant for initial scale-up or problem solving at
LI's sole expense.
(C) PRC shall manufacture the Products in accordance
with the formulae provided to PRC by LI as of the time of
manufacture. PRC may, however, change LI's manufacturing
procedures to adapt the formulae to PRC's processing equipment so
long as LI has given its prior approval and such change does not
lower the quality of the Products. PRC shall not be responsible
for failure, or costs associated with any batch made with the
amended formulae of the Products. Any new formulae and
information for products not listed on the attached Exhibit A
(the "Products") must be approved by PRC to ensure compatibility
with PRC's manufacturing processes and/or PRC's processing
equipment.
3. Production, Schedules and Shipping
(A) All LI purchase orders for the Products shall be
for full batch quantities. A batch will yield approximately 275
6.5-ounce cartridges filled with Product. All orders will be
considered complete with the actual yield quantity per batch.
(B) PRC shall manufacture up to two (2) full batches
of Product, if both of the same color, per business day.
(C) LI shall give PRC notice of a desired release of
Products at least ten (10) business days prior to the date
Products are requested to be shipped. The period may be extended
if more than two (2) batches are requested.
(D) PRC shall make Products available on the earlier
of the desired release date or ten (10) business days after all
ingredients for the batch(es) are available to PRC.
(E) LI shall take delivery of all Products yielded
from each batch on the release date, FOB PRC Plant, Mississauga,
Ontario, Canada. LI will be responsible for all transportation
charges.
4. Ingredients Study and Control
(A) LI shall be responsible for the purchase and
supply of all ingredients required to process Products other than
plastic components of the cartridge as listed on the attached
Exhibit B (the "Plastics"). LI shall provide PRC with an
Approved Supplier and Material List, as well as WHMIS conforming
MSDS for all ingredients except Plastics.
(B) LI shall be responsible for the purchase and
supply of all packaging necessary to properly ship the Products.
(C) PRC shall purchase and pay for all Plastics
required to package the Products. PRC shall ensure that it has
enough Plastics in its inventory to produce the Products to meet
desired delivery dates as set by this Agreement.
(D) PRC shall maintain inventory records. In all
cases where discrepancies exist between PRC and LI inventory
records, PRC records will be the sole basis of consideration.
PRC inventory records will be made available to LI upon written
request.
(E) Upon receiving purchase orders for Products from
LI, PRC shall perform purchasing functions, including review of
inventories, obtaining quotes and determining minimum ingredients
and quantities required to fill purchase orders. PRC will
forward a Purchase Requisition to LI for approval and payment by
LI.
(F) Upon receiving LI payment for requisitioned
ingredients, PRC shall issue its Purchase Order to the supplier
of ingredients. PRC shall receive ingredients ordered and pay
the supplier for the goods received on a timely basis. PRC
agrees that the ingredients referenced herein once purchased and
paid for by LI become the sole property of LI, and that PRC holds
these ingredients on behalf of LI for production of LI's
Products.
(G) PRC shall store and maintain all ingredients in
suitable conditions. Any aged, obsolete and/or discontinued
ingredients for reasons beyond PRC's control will be returned to
LI, or disposed of at LI's cost, based on the prior decision of
LI.
5. Prices and Payment Terms
(A) The prices for the Products manufactured under
this Agreement are set forth on the attached Exhibit A and shall
be valid for the term of this Agreement.
(B) RC shall determine actual yield quantity from the
batch manufactured and advise LI of the total amount required to
ship Products to LI.
(C) LI will wire transfer required payments to PRC's
bank account. Upon acknowledgment of receipt of said payments,
PRC will ship the Products to LI and issue an invoice clearly
marked as "Paid In Full".
(D) LI shall pay all fees arising out of the
transportation or sale of the Products.
6. Term and Termination
(A) This Agreement shall continue and be in full force
for an initial term of five (5) years, commencing on the 1st day
of December, 1999, and ending on the last day of November, 2004.
Thereafter, this Agreement shall automatically renew for
successive terms of twelve (12) calendar months, however, after
its initial term either party may terminate this Agreement at any
time, with or without cause, by giving the other party ninety
(90) days advance written notice.
(B) In the event one party defaults in the performance
of its duties and obligations under this Agreement, the non-
defaulting party shall give written notice to the defaulting
party specifying the basis of the default. If the defaulting
party does not correct or cure, or commence to correct or cure
the default within thirty (30) days after notice of same, the
non-defaulting party may terminate this Agreement effective as of
the day notice of default was initially given by giving written
notice.
(C) Either party may terminate this Agreement upon
seven (7) days advance written notice to the other in the event
that bankruptcy or receivership proceedings are filed against or
by the other party, or if either party makes a general assignment
for the benefit of its creditors.
(D) Within the thirty (30) day period following the
termination or expiration of this Agreement, or of LI's written
notification that it has ceased sales of one or more Products
under this Agreement, PRC shall ship to LI, FOB California
facility, all ingredients purchased by PRC exclusively for the
production of the Products, as well as all finished Products then
stored at PRC's facility.
7. Quality Control and Other Records
(A) LI shall provide PRC in writing all required
quality control specifications and/or tests for all ingredients
required to make the Products. If no testing is specified, LI
shall assume all responsibilities for the quality of the
ingredients not tested and any batch non-conformance. Test
methods shall be agreed upon beforehand by PRC and LI to ensure
their compatibility with PRC's capabilities.
(B) PRC shall perform required and agreed upon
tests of ingredients and maintain records of its quality test for
a minimum of ten (10) years.
(C) PRC shall return to the supplier all non-
conforming ingredients for credit. LI shall not be responsible
for expenses associated with non-conforming ingredients.
(D) LI shall provide to PRC written quality control
specifications and specify test methods for the Products. The
test method shall be agreed upon beforehand by both parties to
ensure their compatibility with PRC's capabilities.
(E) PRC shall ensure that all the Products meet the
specified quality requirements and keep its quality control
records for a minimum of ten (10) years relating to the
production, testing and shipping of the Products.
8. Confidentiality
PRC agrees to maintain in strictest confidence all
information provided by LI in connection with this Agreement,
including, but not by way of limitation, LI's information
relating to its products, financial condition, business plans,
customer identities, technical information, and similar
information, and to hold in trust and use such information only
as needed to fulfill PRC's obligations for LI's sole benefit.
PRC shall not use such information for its own benefit, publish
or otherwise disclose it to other, or permit its use to the
detriment of LI, and shall carefully restrict access to such
information to those of its employees who clearly require it in
order for PRC to fulfill its obligations under this Agreement,
and who have executed confidentiality agreements consistent with
PRC's obligations under this Agreement. Upon termination of
PRC's obligations under this Agreement, PRC shall return to LI
all copies of all information provided by LI to PRC, including
partial copies and derivative works of such information.
9. Limitation on Use
PRC shall use the proprietary information provided to
it by LI only in connection with the manufacture and production
of the Products under this Agreement. It is expressly understood
and agreed, however, that PRC may manufacture and sell solvent
blends not based upon or derived from proprietary and/or patented
information for itself or for third parties. Except as provided
in this Agreement, PRC shall have no right to disclose or use
proprietary of LI and no license is granted or implied under this
Agreement.
10. Hazard Communication
LI shall supply all label information, MSDS, and
other documentation for the Products necessary for compliance
with all applicable Hazard Communication Standards, the Emergency
Planning and Community Right-to-Know legislation and any other
applicable federal, provincial, state and local laws or
regulations.
11. Warranty and Disclaimer
(A) LI warrants that the Products manufactured
under this Agreement shall meet the specifications and quality
control parameters furnished by LI as of the time of
certification. PRC will retain a sample for each batch of
Product in accordance with LI's instruction for a period of one
(1) year from the date of production and then will forward such
retained samples to and at LI's expense, or at the option of LI
and with a written request from LI, PRC will dispose of the
retained sample and will bill LI for the reasonable and necessary
costs of disposal in compliance with applicable regulations.
(B) LI agrees that it is familiar with the
characteristics, qualities and potentialities of the Products.
LI warrants that the formulae and other information supplied to
PRC under this Agreement do not infringe upon any patents or
other rights of any third party. LI agrees to disclose to PRC,
prior to the commencement of manufacture, information concerning
the hazards and potential hazards of the raw materials, Products,
by-products, and waste and shall disclose any further information
concerning such hazards as it becomes aware during the term of
this Agreement.
12. Limitation of Liability
(A) LI shall inspect and test the Products upon
receipt. LI shall notify PRC of any defects in conformance
within ten (10) business days after receipt and LI and PRC shall
discuss the corrective actions.
(B) With PRC's agreement, LI may return non-
conforming Products to PRC at PRC's expense. PRC shall have a
reasonable time in which to cure the non-conformity, replace the
non-conforming Products, or refund the purchase price of the non-
conforming Products at the sole election of LI. If non-
conforming Products are returned to PRC, then in no event shall
PRC be liable to LI or any third party for indirect, incidental,
or consequential damages arising from LI's use or intended use of
such non-conforming Products.
(C) LI shall be liable for the use of the Products,
either alone or in combination with another substance. Except
for acts or omissions by PRC in the production, testing or
handling of the Products, or the selection and purchase of
materials, PRC shall not be liable, and LI assumes full
liability, for personal injury and property damage resulting from
or connected with LI's or any third party's use, treatment,
storage, possession, transportation, handling, further
manufacture, or resale of any of the Products, either alone or in
combination with any other substance from and after LI's receipt
and acceptance of Products from PRC.
13. Indemnification
(A) Subject to Section 12, PRC shall indemnify,
defend, and hold harmless LI for claims, actions, losses, damages
and expenses, including costs and reasonable attorneys fees,
arising out of PRC's negligence relating to any of the Products
manufactured and produced under this Agreement, for Products
which were not produced in accordance with the specifications
provided by LI, and for breach of this Agreement specifically
including, without limitation, PRC's misuse of LI's formulae or
information under this Agreement and the misuse of LI's labels,
MSDS', or other documentation.
(B) LI shall indemnify, defend, and hold harmless
PRC from and against all claims, actions, losses, damages, and
expenses, to include costs and reasonable attorneys fees, arising
out of LI's negligence or breach of this Agreement, or otherwise
relating to any of the Products received from PRC and accepted by
LI under this Agreement.
14. Insurance
(A) During the term of this Agreement, LI agrees to
maintain in full force and effect, at its own expense, Commercial
General Liability Insurance, including, but not limited to,
coverage for products liability and completed operations,
independent contractors, and broad form contractual liability,
written on an "occurrence" basis, insuring PRC and LI for injury
to persons or damage to property arising out of the manufacture,
storage, handling, shipment or use of the Products or raw
materials. The insurance shall provide combined single limits or
not less than $1,000,000.00 per occurrence and $1,000,000
aggregate. Upon written request of PRC, LI will provide proof of
such insurance.
(B) During the term of this Agreement, PRC agrees to
maintain in full force and effect, at its own expense, Commercial
General Liability Insurance, including, but not limited to,
coverage for products liability and completed operations,
independent contractors, and broad form contractual liability,
written on an "occurrence" basis, insuring PRC and LI for injury
to persons or damage to property arising out of the manufacture,
storage, handling, shipment or use of the Products or raw
materials. The insurance shall provide combined single limits or
not less than $1,000,000.00 per occurrence and $1,000,000.00 in
the aggregate. Upon written request of LI, PRC will provide
proof of such insurance.
(C) If, during the term of this Agreement, PRC
transports the Products and raw materials in its owned, borrowed,
leased or otherwise controlled vehicles, PRC agrees to maintain
in full force and effect, at its own expense, Comprehensive
Automobile Liability Insurance insuring LI and PRC for injury to
persons or damage to property arising out of the use of such
vehicles to transport the Products or raw materials. The
insurance shall comply with all applicable laws.
15. Force Majeure
(A) Either party shall be excused for any inability
to perform, or for a delay in performance, when the inability or
delay is due to any cause beyond its reasonable control,
including, but not limited to, an act of God, storm, flood,
earthquake, labor strike or other labor work stoppage, equipment
failure, rebellion, riot, sabotage, fire, explosion, or
government act or regulation.
(B) The affected party shall promptly notify the
other party of the occurrence of such a cause and specify its
reasonable efforts to remove the cause or its inability to
perform, or delay in performance, provided, however, the affected
party shall not be required to settle a labor dispute against its
own best judgment.
(C) In the event PRC is prevented by force majeure
from supplying the full quantities of the Products ordered by LI
under this Agreement, PRC may allocate its production capacity
among LI, itself, and its other customers as it determined
reasonable. In such event, PRC shall incur no liability for not
supplying the full quantities requested by LI.
16. Notices
Any notices required or permitted under this
Agreement shall be in writing and delivered personally or sent by
prepaid certified mail duly addressed or sent via facsimile
message machine as follows:
To PRC: PRC-DeSoto Canada, Inc.
5676 Timberlea Blvd.
Mississauga, Ontario L4W 4M6
Canada
Fax: (905) 629-7009
To LI: Wm. Michael Reynolds
President/CEO
Luminart International, Inc.
P. O. Box 4029
Thousand Oaks, California 91359
Fax: (805) 480-3919
Or to such other address as either party may hereafter furnish in
writing to the other party.
17. Independent Contractors
PRC is an independent contractor engaged by LI to
perform services under this Agreement. Neither party is hereby
authorized to act as an agent of the other for any purposes
whatsoever.
18. Headings
The headings appearing in this Agreement have been
inserted for the purposes of convenience and ready reference.
They do not purport to and shall not be deemed to define, limit
or extend the scope or intent of the provisions to which they
appertain.
19. Governing Law
This Agreement shall be governed and construed in
accordance with the laws of the State of California.
20. Waiver
The failure of either party at any time to enforce
any provision of this Agreement, to exercise its rights under any
provision, or to require a certain performance of any provision,
shall in no way be construed as a waiver of such provision, nor
in any way affect the validity of this Agreement or the right of
the party thereafter to enforce each and every provision.
21. Severability
If any provision of this Agreement shall be held
unenforceable or invalid, the remaining provisions shall continue
in force.
22. Assignment
Neither party shall assign its rights or obligations
under this Agreement without the prior written consent of the
other.
23. Arbitration
Any controversy or claim arising out of, or relating
to, this Agreement or a breach hereof shall be settled by
arbitration in accordance with the rules then obtained from the
American Arbitration Association.
24. Entire Agreement
This Agreement constitutes the entire understanding
between the parties and supersedes all other agreements between
the parties with respect to the subject matter of this Agreement.
There are no understandings, representations, or warranties of
any kind, express or implied, not expressly set forth in this
Agreement. No modification of this Agreement shall be effective
unless in writing and signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day, month, and year first above written.
PRC-DeSOTO CANADA, INC.
By: /s/ Paul Zibula
Paul Zibula, Business Manager
LUMINART INTERNATIONAL, INC.
By: /s/ Wm. Michael Reynolds
Wm. Michael Reynolds, President
CONSULTATION AGREEMENT
Agreement made this 1st day of January, 1999, between
Luminart Corp. (hereinafter referred to as "Corporation"), and
Don Docken (hereinafter referred to as "Consultant"):
Recitals:
In consideration of the mutual promises contained in this
Agreement, the contracting parties agree as follows:
Don Docken specializes in instore fixtures, marketing and
advertising. Mr. Docken is currently employed by a national
retail sales company. This contract is not designed to conflict
with any employment or consulting agreements any in which Mr.
Docken is currently engaged.
The Corporation desires to engage the services of the
Consultant to perform consulting services in the instore fixtures
marketing, advertising and promotional areas of the Corporation's
business.
The Consultant desires to consult with the Board of
Directors, the Officers of the Corporation, and certain
administrative staff members of the Corporation, and to undertake
for the Corporation consultation as to the Corporation's and its
subsidiaries' marketing, advertising and promotional activities.
1. The initial term of this Agreement shall be for a period of
six (6) months commencing on the date first appearing above. In
addition to the initial term, the term of this Agreement shall be
automatically extended for up to three additional six month
periods, unless either party shall give written notice of its
desire not to extend within twenty (20) days of the end of the
proceeding term.
Services Provided by Consultant
2. Consultant will provide consulting services upon the
reasonable request of the Corporation in connection with the
Corporation's marketing, advertising and promotion areas of all
activities undertaken by the Corporation or its subsidiaries.
Consultant may provide such services, to the extent practicable,
by telephone, correspondence and E-mail. Consultant shall not be
required to devote more than 40 hours in any month to performing
the services.
3. In consideration for the services provided by Consultant to
Corporation, the Corporation shall pay or cause to be delivered
to the Consultant, as promptly as possible following execution of
this Agreement, the following:
a. Within ten (10) business days from this date written above,
the Corporation shall issue to Consultant or its designee 100,000
shares of the Corporation's restricted common stock. Consultant
shall have "piggy back" registration rights pari passu with any
other shareholders having such rights. In addition, to the
extent the Corporation is eligible for such registration,
Consultant may require the Corporation to file an S-8
Registration with respect to Consultant's warrants and the
underlying common stock. In addition, the Corporation shall
issue to Consultant or its designee warrants to purchase 150,000
shares of the Corporation's common stock. The warrants shall be
divided into three 50,000 share lots and shall be exercisable
under the following terms and conditions: (1) a lot of 50,000
shares may be exercised after the end of the initial six month
term of this Agreement at an exercise price which is the lower of
$1.00 per share or one half the average Bid price of the
Corporation's stock for a period of thirty days prior to the
exercise date; (2) a second lot of 50,000 shares may be exercised
after the end of the first six month extension of this Agreement
at an exercise price which is the lower of $1.50 per share or one
half of the average Bid price of the Corporation's stock for a
period of thirty days prior to the exercise date; and (3) the
third lot of 50,000 shares may be exercised after the end of the
second six month extension of this Agreement at an exercise price
which is the lower of $2.00 per share or one half of the average
Bid price of the Corporation's stock for a period of thirty days
prior to the exercise date. The corporation shall deliver the
stock to consultant immediately upon receipt of the consultants
written notice of exercise and payment of the exercise price.
If this Agreement is not renewed for a second six month
period as set forth in paragraph 1 above, the unexercised
warrants shall be forfeited and of no force or effect.
Representation of Corporation
4. (a) The Corporation, upon entering this Agreement, hereby
warrants and represents to the Consultant that all statements,
either written or oral, made by the Corporation to the Consultant
are true and accurate, and contain no misstatements of a material
fact. The Corporation acknowledges that the information it
delivers to the Consultant will be used by the Consultant in
preparing materials regarding the Company's business, including
but not necessarily limited to, its financial condition, for
dissemination to the public. Therefore, in accordance with
Paragraph 5 below, the Corporation shall defend, indemnity hold
harmless the Consultant from any and all losses, costs, expenses,
claims, demands, actions, debts, obligations, suits, judgments or
proceedings arising out of or relating to any actual or alleged
errors, omissions, misstatements, negligent or intentional
misrepresentations, in connection with all information furnished
by Corporation to Consultant, in accordance with and pursuant to
the terms and conditions of this Agreement for whatever purpose
or purposes the Consultant sees fit to use said information. The
Corporation further represents and warrants that as to all
matters set forth within this Agreement, the Corporation has had
independent legal counsel and will continue to maintain
independent legal counsel to advise the Corporation of all
matters.
Limited Liability
5. With regard to the services to be performed by the
Consultant pursuant to the terms of this Agreement, the
Consultant shall not be liable to the Corporation, or to anyone
who may claim any right due to any relationship with the
Corporation, for any acts or omissions in the performance of
services on the part of the Consultant, or on the part of the
agents or employees of the Consultant, except when said acts or
omissions of the Consultant are due to the willful misconduct of
Consultant or Consultant's employees.
Termination
6. This Agreement may be terminated by either party upon the
giving of not less than sixty (60) days written notice except
that only twenty (20) days shall be required for non renewal of
this agreement as provided in paragraph 1 above delivered to the
parties at such address or addresses as set forth in paragraph 7,
below. In the event this Agreement is terminated by the
Corporation, all compensation paid by Corporation to the
Consultant shall be deemed earned. In the event this Agreement
is terminated by Consultant, a portion of the compensation paid
by Corporation to Consultant shall be refunded to the Corporation
as follows:
(a) In the event the Agreement is terminated by the Consultant
in months 1 through 6, Consultant shall return to Corporation a
portion of the shares, determined as follows: (1) 50,000 of the
shares shall be deemed earned upon the signing of this Agreement,
and shall not be subject to being returned; (2) the remaining
50,000 shares shall be deemed to vest on the last day of each of
months one through six, inclusive, at the rate of eight thousand
three hundred thirty-three and one-third (8,333 1/3) shares per
month, and Consultant shall be required to return all unvested
shares as of the date of such termination.
(b) In the event Consultant is required to return any unvested
shares to Corporation pursuant to Paragraph 6(a) above,
Consultant may, at Consultant's option, either pay the
Corporation cash an amount equal to the fair market value of the
unvested shares, or return that number of shares of the
Corporation for cancellation. The fair market value of bid
shares for purposes of repayment of shares, shall be the bid
price of said shares as of the date shares are tendered back to
the Corporation. If there is no bid price, then the price shall
be agreed to by the parties, or, in the event the parties fail to
so agree, the price shall be determined by appraisal by a
mutually agreeable appraiser, or by arbitration in accordance
with Paragraph 8 below.
Notices
7. Notices to be sent pursuant to the terms and conditions of
this Agreement, shall be sent as follows:
Luminart Corp.
c/o Shawn Hackman
1600 East Desert Inn, Suite 102
Las Vegas, NV 89109
Don Docken
844 N. Larrabee
Chicago, IL 60671
Arbitration
8. In connection with any controversy or claim arising out of
or relating to this Agreement, the parties hereto agree that such
controversy shall be submitted to arbitration, which arbitration
shall be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. Any award
rendered as a result of the arbitration of any dispute herein,
shall upon being rendered by the arbitrators be submitted to a
Court of competent jurisdiction within the State of California or
in any state where a party to this action maintains its principal
business or is a corporation incorporated in said state. In the
event any arbitration arises out of or in connection with this
Agreement between parties hereto, the prevailing party in such
litigation shall be entitled to recover from the other parties,
all reasonable attorney's fees, expenses and costs, including
those associated within the appellate or post judgement
collection proceedings.
Governing Law
9. This Agreement shall be construed under and in accordance
with the laws of the State of Nevada
Parties Bound
10. This Agreement shall be binding on and inure to the benefit
of the contracting parties and their respective heirs, executors,
administrators, legal representatives, successors, and assigns
when permitted by this Agreement.
Legal Construction
11. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, the invalidity, illegality, or
unenforceability shall not affect any other provisions, and this
Agreement shall be construed as if the invalid, illegal, or
unenforceable provision had never been contained in it.
Prior Agreements Superseded
12. This Agreement constitutes the sole and only Agreement of
the contracting parties and supersedes any prior understandings
or written or oral agreements between the respective parties
hereto.
Multiple Copies or Counterparts of Agreement
13. The original and one or more counterparts, and all of such
counterparts taken together shall constitute but one fully
executed original. Further, this Agreement may be signed by the
parties and copies hereof delivered to each party by way of
facsimile transmission, and such facsimile copies shall be deemed
original copies for all purposes if original copies of the
parties' signatures are not delivered.
Headings
14. Headings used throughout this Agreement are for reference
and convenience, and in no way define, limit or describe the
scope or intent of this Agreement or effect its provisions.
IN WITNESS WHEREOF, the parties have set their hands and seal as
of the 11th day of December, 1998,
By: /s/ Wm. Michale Reynolds
Wm. Michael Reynolds, CEO
Luminart Corp.
/s/ Don Docken
Don Docken, an individual
MANAGEMENT CONTRACT
This Agreement ("Agreement") is entered into this 15th day
of January, 2000, by and between Wm. Michael Reynolds
(hereinafter, "Reynolds"), whose address is 3245 Grande Vista
Drive, Thousand Oaks, California 91320 and Luminart Corp.
(hereinafter "Luminart"), whose address is 3245 Grande Vista
Drive, Thousand Oaks, California 91320.
WHEREAS, Reynolds desires to provide his expertise and
services in the fields of executive general management to
Luminart; and
WHEREAS, Luminart desires to use the services and expertise
of Reynolds in the management of the company;
NOW, THEREFORE, the parties agree to be bound to the terms
of this Agreement as follows:
1. Duties
A. During the Term of this Agreement, Reynolds will
serve as the President and Chief Executive Officer of Luminart
and will perform such duties to include, but not be limited to,
providing Luminart with his expertise in executive general
management.
B. Reynolds will oversee and direct all operations of
Luminart and its subsidiary, Luminart International, Inc. and
will be directly responsible to the Board of Directors of
Luminart.
C. Reynolds will direct Luminart at all times, and,
in such a way, as to maximize the company's market presence and
its net income.
D. Reynolds will ensure that accurate and current
records of Luminart and its subsidiary are at all times
maintained, and will provide timely reports to the Board of
Directors keeping them informed as to the direction of Luminart.
E. Reynolds will perform all other reasonable tasks
within his expertise as may be periodically assigned to him by
the Board of Directors.
2. Term and Termination
A. This Agreement shall commence on the day, month
and year first above written and shall continue in full force and
effect for a period of thirty six (36) months.
B. This Agreement may be terminated at will, with or
without cause, by either Reynolds or by the Board of Directors of
Luminart after having given a thirty (30) day written notice to
the other party to the address of record personally or by mail,
postage prepaid, or by facsimile machine message.
3. Compensation
A. Reynolds will devote his full time and effort to
the performance of his duties as set forth in this Agreement.
For these services, Luminart will compensate Reynolds in a base
salary in the amount of Ten Thousand Dollars ($10,000.00) per
month. If Luminart realizes a net profit, after having given
effect for tax liability, for a full twelve (12) months ending
coincident with its fiscal year end, to wit September 30, then
for the following twelve months the Board of Directors may
approve that Reynolds will be paid an amount in addition to his
base salary to reward his performance. Maximum payroll to
Reynolds under this Agreement will not exceed Two Hundred Fifty
Thousand Dollars ($250,000.00) in any one year.
B. Reynolds may accrue any portion of his salary and
Luminart will maintain this accrual as a primary short-term
liability on its books of record. In the event of termination of
this Agreement, all accrual still existing on the company books
of record will be paid to Reynolds within five (5) business days
of said termination by either party to this Agreement.
C. Upon execution of this Agreement, Reynolds will be
vested with an option to purchase up to and including 2,000,000
shares of the company's common stock (par value $0.001) for a
value of $0.25 per share. Thereafter, and for each fiscal year
during the term of this Agreement wherein a net profit has been
realized by Luminart, after giving effect for tax liabilities,
Reynolds will be granted options to purchase an additional one
million (1,000,000) shares of said stock at $0.25 per share.
Reynolds may exercise his earned options at any time either by
direct payment to the company or by applying an offset of equal
amount against any accrual on his behalf then existing on the
books of the corporation.
D. Reynolds agrees that neither federal nor state nor
local taxes will be withheld from his payroll, and as such he is
fully and personally liable for their payment.
4. Confidentiality
Reynolds agrees to maintain in strictest confidence
all information provided by Luminart or any subsidiary of
Luminart regarding any and all proprietary information. Reynolds
further agrees to hold in trust and use such information only as
needed to fulfill Reynolds's obligations for Luminart' sole
benefit. Reynolds shall not use such information for his own
benefit, publish or otherwise disclose it to others, or permit
its use to the detriment of Luminart. Upon termination of
Reynolds's obligations under this Agreement, Reynolds shall
return to Luminart all copies of all information provided by
Luminart to Reynolds, including partial copies and derivative
works of such information.
5. Limitation on Use
Reynolds shall use the proprietary information
provided to him by Luminart only in connection with the duties as
set forth in Section 1 of this Agreement. It is expressly
understood and agreed, however, that Reynolds may perform duties
for others which are not based upon or derived from Luminart'
proprietary and/or patented information. Except as provided in
this Agreement, Reynolds shall have no right to disclose or use
proprietary of Luminart and no license is granted or implied
under this Agreement.
6. Indemnification
(A) Reynolds shall indemnify, defend, and hold
harmless Luminart for claims, actions, losses, damages and
expenses, including costs and reasonable attorneys fees, arising
out of Reynolds's negligence relating to any breach of this
Agreement.
(B) Luminart shall indemnify, defend, and hold
harmless Reynolds from and against all claims, actions, losses,
damages, and expenses, to include costs and reasonable attorneys
fees, arising out of Luminart's negligence or breach of this
Agreement, or otherwise relating to any of the services accepted
and approved by Luminart under this Agreement.
7. Force Majeure
(A) Either party shall be excused for any inability
to perform, or for a delay in performance, when the inability or
delay is due to any cause beyond its reasonable control,
including, but not limited to, an act of God, storm, flood,
earthquake, labor strike or other labor work stoppage, equipment
failure, rebellion, riot, sabotage, fire, explosion, or
government act or regulation.
(B) The affected party shall promptly notify the
other party of the occurrence of such a cause and specify its
reasonable efforts to remove the cause or its inability to
perform, or delay in performance, provided, however, the affected
party shall not be required to settle a labor dispute against its
own best judgment.
8. Headings
The headings appearing in this Agreement have been
inserted for the purposes of convenience and ready reference.
They do not purport to and shall not be deemed to define, limit
or extend the scope or intent of the provisions to which they
appertain.
9. Governing Law
This Agreement shall be governed and construed in
accordance with the laws of the State of California.
10. Waiver
The failure of either party at any time to enforce
any provision of this Agreement, to exercise its rights under any
provision, or to require a certain performance of any provision,
shall in no way be construed as a waiver of such provision, nor
in any way affect the validity of this Agreement or the right of
the party thereafter to enforce each and every provision.
11. Severability
If any provision of this Agreement shall be held
unenforceable or invalid, the remaining provisions shall continue
in force.
12. Assignment
Neither party shall assign its rights or obligations
under this Agreement without the prior written consent of the
other.
13. Arbitration
Any controversy or claim arising out of, or relating
to, this Agreement or a breach hereof shall be settled by
arbitration in accordance with the rules then obtained from the
American Arbitration Association.
14. Entire Agreement
This Agreement constitutes the entire understanding
between the parties and supersedes all other agreements between
the parties with respect to the subject matter of this Agreement.
There are no understandings, representations, or warranties of
any kind, express or implied, not expressly set forth in this
Agreement. No modification of this Agreement shall be effective
unless in writing and signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day, month, and year first above written.
WM. MICHAEL REYNOLDS
/s/ Wm Michael Reynolds
Wm. Michael Reynolds
LUMINART CORP.
/s/ Ronnie Case
Ronnie Case, Senior Vice President &
Secretary
WITNESS:
/s/ Thomas W. Maher
Thomas W. Maher, Chief Financial Officer
MANAGEMENT CONTRACT
This Agreement ("Agreement") is entered into this 15th day
of January, 2000, by and between Ronnie Case (hereinafter,
"Case"), whose address is 3245 Grande Vista Drive, Thousand Oaks,
California 91320 and Luminart Corp. (hereinafter "Luminart"),
whose address is 3245 Grande Vista Drive, Thousand Oaks,
California 91320.
WHEREAS, Case desires to provide his expertise and services
in the fields of executive general management to Luminart; and
WHEREAS, Luminart desires to use the services and expertise
of Case in the management of the company;
NOW, THEREFORE, the parties agree to be bound to the terms
of this Agreement as follows:
1. Duties
A. During the Term of this Agreement, Case will serve
as the Senior Vice President of Luminart and will perform such
duties to include, but not be limited to, providing Luminart with
his expertise in operations and general management.
B. Case will oversee and direct all plant and
facility operations of Luminart and its subsidiary, Luminart
International, Inc. and will be directly responsible to the
President of Luminart.
C. Case will direct his attention at all times, and,
in such a way, as to maximize the company's market presence,
operational efficiency and its net income.
D. Case will ensure that accurate and current records
of Luminart International, Inc. are at all times maintained, and
will provide timely reports to the President keeping him informed
as to the direction of the company.
E. Case will perform all other reasonable tasks
within his expertise as may be periodically assigned to him by
the Board of Directors or President.
2. Term and Termination
A. This Agreement shall commence on the day, month
and year first above written and shall continue in full force and
effect for a period of thirty six (36) months.
B. This Agreement may be terminated at will, with or
without cause, by either Case or by the Board of Directors of
Luminart after having given a thirty (30) day written notice to
the other party to the address of record personally or by mail,
postage prepaid, or by facsimile machine message.
3. Compensation
A. Case will devote his full time and effort to the
performance of his duties as set forth in this Agreement. For
these services, Luminart will compensate Case in a base salary in
the amount of Four Thousand Dollars ($4,000.00) per month. If
Luminart realizes a net profit, after having given effect for tax
liability, for a full twelve (12) months ending coincident with
its fiscal year end, to wit September 30, then at the direction
of the Board of Directors, Case's salary may be increased to Five
Thousand Dollars ($5,000.00) per month.
B. Case may accrue any portion of his salary and
Luminart will maintain this accrual as a primary short-term
liability on its books of record. In the event of termination of
this Agreement, all accrual still existing on the company books
of record will be paid to Case within five (5) business days of
said termination by either party to this Agreement.
C. Upon execution of this Agreement, Case will be
vested with an option to purchase up to and including 150,000
shares of the company's common stock (par value $0.001) for a
value of $0.25 per share. Thereafter, and for each fiscal year
during the term of this Agreement wherein a net profit has been
realized by Luminart, after giving effect for tax liabilities,
Case will be granted options to purchase an additional one
hundred thousand (100,000) shares of said stock at $0.25 per
share. Case may exercise his earned options at any time either
by direct payment to the company or by applying an offset of
equal amount against any accrual on his behalf then existing on
the books of the corporation.
D. Case agrees that neither federal nor state nor
local taxes will be withheld from his payroll, and as such he is
fully and personally liable for their payment.
4. Confidentiality
Case agrees to maintain in strictest confidence all
information provided by Luminart or any subsidiary of Luminart
regarding any and all proprietary information. Case further
agrees to hold in trust and use such information only as needed
to fulfill Case's obligations for Luminart' sole benefit. Case
shall not use such information for his own benefit, publish or
otherwise disclose it to others, or permit its use to the
detriment of Luminart. Upon termination of Case's obligations
under this Agreement, Case shall return to Luminart all copies of
all information provided by Luminart to Case, including partial
copies and derivative works of such information.
5. Limitation on Use
Case shall use the proprietary information provided to
him by Luminart only in connection with the duties as set forth
in Section 1 of this Agreement. It is expressly understood and
agreed, however, that Case may perform duties for others which
are not based upon or derived from Luminart' proprietary and/or
patented information. Except as provided in this Agreement, Case
shall have no right to disclose or use proprietary of Luminart
and no license is granted or implied under this Agreement.
6. Indemnification
(A) Case shall indemnify, defend, and hold harmless
Luminart for claims, actions, losses, damages and expenses,
including costs and reasonable attorneys fees, arising out of
Case's negligence relating to any breach of this Agreement.
(B) Luminart shall indemnify, defend, and hold
harmless Case from and against all claims, actions, losses,
damages, and expenses, to include costs and reasonable attorneys
fees, arising out of Luminart's negligence or breach of this
Agreement, or otherwise relating to any of the services accepted
and approved by Luminart under this Agreement.
7. Force Majeure
(A) Either party shall be excused for any inability
to perform, or for a delay in performance, when the inability or
delay is due to any cause beyond its reasonable control,
including, but not limited to, an act of God, storm, flood,
earthquake, labor strike or other labor work stoppage, equipment
failure, rebellion, riot, sabotage, fire, explosion, or
government act or regulation.
(B) The affected party shall promptly notify the
other party of the occurrence of such a cause and specify its
reasonable efforts to remove the cause or its inability to
perform, or delay in performance, provided, however, the affected
party shall not be required to settle a labor dispute against its
own best judgment.
8. Headings
The headings appearing in this Agreement have been
inserted for the purposes of convenience and ready reference.
They do not purport to and shall not be deemed to define, limit
or extend the scope or intent of the provisions to which they
appertain.
9. Governing Law
This Agreement shall be governed and construed in
accordance with the laws of the State of California.
10. Waiver
The failure of either party at any time to enforce
any provision of this Agreement, to exercise its rights under any
provision, or to require a certain performance of any provision,
shall in no way be construed as a waiver of such provision, nor
in any way affect the validity of this Agreement or the right of
the party thereafter to enforce each and every provision.
11. Severability
If any provision of this Agreement shall be held
unenforceable or invalid, the remaining provisions shall continue
in force.
12. Assignment
Neither party shall assign its rights or obligations
under this Agreement without the prior written consent of the
other.
13. Arbitration
Any controversy or claim arising out of, or relating
to, this Agreement or a breach hereof shall be settled by
arbitration in accordance with the rules then obtained from the
American Arbitration Association.
14. Entire Agreement
This Agreement constitutes the entire understanding
between the parties and supersedes all other agreements between
the parties with respect to the subject matter of this Agreement.
There are no understandings, representations, or warranties of
any kind, express or implied, not expressly set forth in this
Agreement. No modification of this Agreement shall be effective
unless in writing and signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day, month, and year first above written.
RONNIE W. CASE
/s/ Ronnie W. Case
Ronnie W. Case
LUMINART CORP.
/s/ Wm. Michael Reynolds
Wm. Michael Reynolds, President & CEO
WITNESS:
/s/ Thomas W. Maher
Thomas W. Maher, Chief
Financial Officer
<TABLE> <S> <C>
<S> <C>
<PAGE>
<ARTICLE>5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE UNAUDITED FINANCIAL STATEMENTS CONTAINED IN THE
REGISTRANT'S FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER>1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 46,101
<SECURITIES> 0
<RECEIVABLES> 78,230
<ALLOWANCES> 0
<INVENTORY> 802,099
<CURRENT-ASSETS> 933,695
<PP&E> 496,502
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,788,967
<CURRENT-LIABILITIES> 304,055
<BONDS> 0
0
685,000
<COMMON> 17,006
<OTHER-SE> 1,378,912
<TOTAL-LIABILITY-AND-EQUITY> 1,788,967
<SALES> 298,516
<TOTAL-REVENUES> 298,516
<CGS> 45,772
<TOTAL-COSTS> 45,772
<OTHER-EXPENSES> 93,063
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,987
<INCOME-PRETAX> 147,694
<INCOME-TAX> 0
<INCOME-CONTINUING> 146,694
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 147,694
<EPS-BASIC> .01
<EPS-DILUTED> .01
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