SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF
THE SECURITIES EXCHANGE ACT OF 1934
INTEGRATED HOMES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COLORADO 84-1448176
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(STATE OR OTHER JURISDICTION OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
BOCA CORPORATE PLAZA, 1801 CLINT MOORE ROAD, SUITE 204,
BOCA RATON, FLORIDA 33487
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (561) 395-7424
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SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
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SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, .001 VALUE
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(TITLE OF CLASS)
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ITEM 1. BUSINESS
Integrated Homes, Inc. (the "Company") is a holding company whose primary
operations are through Integrated Homes of Florida, Inc. ("IHF"), a wholly-owned
subsidiary. IHF was founded in the State of Florida on June 1, 1998, by Philip
Sergeant and David Rich. IHF was formed with the objective of developing
community-wide, broad-band networks in "Master Planned Residential Communities"
for the new community development and construction industry. IHF specializes in
furnishing new homes with infrastructures and the equipment and services
necessary to give homeowners improved access to the ever-increasing scope of
entertainment, educational and communication services being developed "on-line."
The Company's headquarters are located at 1801 Clint Moore Road, Suite 204, Boca
Raton, Florida 33487. Its telephone number is (561) 395-7424 and its fax number
is (561) 338-6401.
HISTORY
The Company was incorporated on November 13, 1997, under the name of Automotive
Technologies, Inc. ("ATI"), under the laws of the State of Colorado, and is in
the early development stage of its business. Pursuant to an Agreement and Plan
of Reorganization dated March 31, 1999 (the "Agreement"), by and among ATI, IHF
and the shareholders of IHF (the "Shareholders"), the Shareholders exchanged all
of the common stock of IHF in return for 3,441,700 shares of common stock of
ATI. IHF became a wholly-owned subsidiary of ATI. The directors of ATI were
replaced by Philip Sergeant, David Rich and Richard D. Wedel. On May 21, 1999,
The Board of Directors authorized and approved changing the corporate name to
Integrated Homes, Inc., and elected John Tomassini to the Board.
OPERATIONS
The primary operations of the Company are through IHF, its wholly-owned
subsidiary. The Company has no significant operating history. Since its
inception, the Company has engaged primarily in the development of its business.
The Company's viability, profitability and growth depend upon successful
establishment of its products and services within the new home construction
industry, which cannot be assured. The prospects for the Company's success must
be considered in light of the risks, expenses and difficulties often encountered
in the establishment of a new startup business.
To date, the Company has not had any significant operating revenues and, while
current orders for its products and services are high, the Company does not
believe that its short term significant growth will come from the amount of
revenues it collects, but rather from an accumulation of such orders. The
Company anticipates that it will continue to incur costs in connection with the
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development of its business; however, there can be no assurance as to when the
Company will be able to achieve sufficient revenues to offset operating costs.
The Company's operations are driven by a "Connected Communities" concept whereby
through the installation of a structured wiring system the Company is able to
effectively link the homes of the community to each other during construction,
connecting each such system to a private central computerized network to create
a link for the purpose of enhanced community services and unity as more fully
described below. Through the establishment of that infrastructure within the
community, the Company believes it will later be able to deliver the full range
of its electronic services and products to homeowners. The Company further
anticipates that these products and services will also serve to enhance and
unite entire residential communities. The Company's system is installed in the
walls of new homes to accommodate the distribution of broadband low voltage
services throughout the home. Currently, IHF has several existing contracts with
developers and homeowners to provide its package of products and services to
approximately 3,000 homes.
Through its structured wiring systems, the Company provides a variety of
products: security systems, home entertainment systems, distributed audio
packages and lighting and home management control. Additionally, it currently
provides certain on-line monthly services such as security monitoring and
satellite television access, and supplies varied residential on-line services
from CATV, telephone, long distance, to ISP and advanced Internet and Intranet
services.
The Company also provides community-wide enhancement systems through a fiber
optic "backbone" within the communities themselves. These systems are integrated
in "planned" communities and act as sophisticated networks which electronically
connect the community through a basic infrastructure of common services which
provide community wide control and information systems. This system allows
homeowners to connect to a community "Intranet," provides for community
visibility, controls access to the community, provides access to concierge
services and many other benefits.
The Company provides services which connect the "Connected Communities" to the
outside world. Through the community "Intranet" homeowners enjoy enhanced access
to the following services: (i) local and long distance telephone services; (ii)
CATV services; (iii) satellite television and DSS services; (iv) provision of
Internet service at various access speeds; (v) community and regional
visibility; and (vi) "Extranet" services.
The Company also targets homeowners during the home construction stage,
involving itself directly with homeowners during the "option selection" process.
The Company offers homeowners systems and equipment which the Company believes
will enhance their lifestyle; these include security system and consumer
electronic upgrades, satellite television dishes, home theater equipment,
telephone systems, lighting control, intercoms, distributed audio packages,
cable modems and simple home management systems. The Company offers homeowners
these products as a package or as individual options/upgrades for the new home.
The Company believes that marketing its products
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to homeowners at the construction stage offers the consumer the unique
opportunity to "future proof" their home with a wide range of hard to buy items.
The sale and installation of these products for homeowners paves the way for the
Company's provision of the recurring services associated with such products. The
Company believes that its products shall create an ongoing stream of revenues
from the communities it has wired and equipped. The Company anticipates that a
significant source of future revenue opportunities will arise from providing
CATV, local telephone and long distance services, DSS and ISP services.
Additionally, the Company currently receives recurring revenue from monitoring
of security and alarm systems. Another stream of revenue is expected from
equipment service and maintenance plans. The Company believes that it is
prepared well and is currently in the position to execute there capabilities,
needing only the essential capital for such implementation.
MARKET
The Company was formed to take advantage of the rapid growth in new home
development and the installation of on-line services in the home. The Company
offers its products and services to various levels of consumers. Currently, the
Company has been successful in targeting new home construction developers and
marketing its "Connected Communities" concept to communities of at least 300
homes in the $180,000 to $500,000 price range.
The Company believes that the demand for its products and services is strong and
continues to grow. This demand is led, in part, by the increasing development
and construction of new home communities and the rising use of on-line and
multi-media services within the home. The Company hopes to fulfill this demand
with its package of services as well as its technologically advanced equipment.
The Company believes that its products and services offer several advantages
over the competition. The Company's package of products and services provides a
single solution for homeowners. Installation at the time of construction give
homeowners assurance that their homes will always be connected to numerous
on-line services both within the community and from the outside world. Finally,
the provision of ongoing quality service and maintenance gives consumers the
confidence in their investments and ensures that their home electronic
infrastructures will always be up to date with technology.
MARKETING
The Company currently markets its products and services through personal contact
with major community developers and the respective homeowner associations. The
Company's target market is community developments consisting of at least 300
homes which have a high potential for a quick rate of build out (production
homes). The Company believes that this market has demonstrated willingness to
establish and develop technologically sound homes and communities with
infrastructures capable of providing all the electronic and on-line services
which homeowners
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demand. Management seeks a diverse customer base insuring that no one customer
will account for a significant portion of the Company's sales. The Company
believes that it is in a position to coordinate and advise developers regarding
all available "Connected Community" products and services. The Company feels
that it can provide consumers with a single point of contact to establish and
maintain the capabilities of their new homes. The Company also believes it is in
a position to offer its products to each community home buyer on an individual
basis by providing tailored service packages. The perfection of on-line services
and the development of the community "Intranet" are currently the Company's
major priorities.
The Company has existing contracts which will result in the completion of over
3,000 homes. Additionally, the Company is currently in negotiations with several
home developers which represent over 20,000 new homes. The Company anticipates a
significant expansion in its contracts with home developers and homeowner
associations in 1999 and well into the early 2000s. The Company believes it is
in a strong position to take advantage of this rapidly expanding market need.
COMPETITION
There are currently several companies which provide similar products and
services for new homes, however, none offers the comprehensive package of
products and services currently provided by the Company. Therefore, the Company
believes it will be unique in both its mission and objectives when fully
operational. The Company anticipates its concept of providing a package of
products and services will be successful and realize broad acceptance. However,
there are very few barriers to entry into this industry and future competition
may have an adverse effect on the Company and its operations.
ECONOMIC FACTORS
The Company's operations are directly dependent on new home construction rates,
interest rates, growth rates in the industry and general economic conditions in
the southeastern United States. The new home development market has been
historically cyclical. Downturns in the economy will likely have adverse effects
on the Company's business and its operations.
REGULATORY ISSUES
The Company believes it currently complies with all existing laws and
regulations. However, the subsequent adoption or modification of state and local
laws and regulations imposing controls and other restrictions on the home
construction industry may materially and adversely affect the marketability of
the Company's products and services, which would likely have a negative effect
on the Company's financial conditions and its operations. The Company has made,
and will continue to make, expenditures to comply with such laws and
regulations. However, changes in laws and regulations may give rise to
additional compliance costs or additional burdens to obtaining applicable
regulatory approvals that could have a material adverse effect on the Company.
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The subsequent adoption or modification of state and local laws and regulations
imposing environmental controls, disclosure rules, zoning and other land use
restrictions may materially and adversely affect the development of new home
communities, which would likely have a negative effect on the Company's
financial conditions and its operations. Additionally, there are various
licensing requirements imposed on the Company. While based on the Company's
experiences to date, the cost of compliance has not had, and is not expected to
have, a material effect on the Company. Changes in laws and regulations may give
rise to additional compliance costs that could have a material adverse effect on
the Company. Further, licenses may be revoked for a variety of reasons,
including the violation of regulations and the failure to maintain certain
financial requirements. Revocation of licenses would also have material and
adverse effect on the Company and its operations.
EMPLOYEES
As of July 1, 1999, the Company has 16 full-time employees. The Company expects
to hire up to 15 additional employees by the end of this year for sales,
intranet development and installation services.
REPORTS TO SECURITY HOLDERS
The Company intends to provide all of its shareholders with an annual report of
the Company's operations, including audited financial statements, for the year
ended December 31, 1998.
The public may read and copy any materials that the Company has on file with the
Securities and Exchange Commission ("SEC") at the SEC's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by calling SEC at
1-800-SEC-0330.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included herein should be read in conjunction with the Consolidated
Financial Statements of Integrated Homes of Florida, Inc. as of December 31,
1998, and the related notes thereto. The Company's Financial Statements have
been prepared in accordance with generally accepted accounting principles in the
United States and have been audited by the Company's independent accountants.
The financial information in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" refers to the continuing operations of the
Company.
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RESULTS OF OPERATIONS
REVENUES. The Company's revenues for the six month period ended December 31,
1998 (fiscal 1998) were approximately $106,000. These revenues are primarily
attributable to new home development activity, which activity is increasing as a
result of the rise in the Company's existing market (South Florida). Revenue is
also attributable the Company's ongoing contracts with home developers to
install wiring and home technology products. In addition, the Company has
derived revenues from recurring sources which include monthly fees for
maintenance and monitoring services for products installed by the Company.
COST OF GOODS SOLD. Cost of goods sold for fiscal 1998 were $74,800. This
primarily attributable to the cost of the equipment needed by the Company to
install and provide its home services. Such equipment typically includes the
wiring as well as audio, video and computer products.
OPERATING EXPENSES. Operating expenses for fiscal 1998 were approximately
$540,100. Operating expenses are principally attributable to research and
development costs, as well as personnel costs (salaries) and marketing costs.
NET LOSS. The Company had a net loss for fiscal 1998 of $508,945. This net loss
resulted principally from costs associated with the start up of the Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company used approximately $470,500 in cash for operating activities for
fiscal 1998. This is primarily due to its net operating loss.
Cash used for investing activities for fiscal 1998 was $33,000. This was
attributable to the purchase of property and equipment, and other capital
expenditures necessary for the start-up of the Company's business.
Cash provided from financing activities was approximately $515,500 for fiscal
1998, which is principally due to the proceeds from borrowings made by the
Company in the form of notes payable.
At December 31, 1998, the Company had outstanding notes payable totaling
$351,166, a $164,298 obligation due to certain shareholders and related parties
and no other material indebtedness except for trade credit.
At December 31, 1998, the Company had a shareholders' deficit of $474,274. For
the year ended December 31, 1998 the Company's negative working capital (current
assets minus current liabilities) was ($538,218), primarily due to current notes
payable.
The Company intends to raise additional capital through a private offering of
its common stock.
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TRENDS
Currently, the Company is providing its structured wiring installations in three
home communities. Three additional communities are expected to begin development
within the next two months. The Company is realizing an average per home profit
of $1,300 to $1,500. Growth is highly dependent on factors such as increasing
construction rates and favorable interest rates.
As of the date hereof, the Company had a backlog of installations of
approximately 3,000 homes. The Company is expected to address this backlog by
raising capital through a private offering, institutional investments and
conventional borrowings.
The Company is expecting capital costs as well as research and development costs
to increase over the next 12 to 18 months. These increases are attributable to
the Company's development of its own proprietary software and to the Company's
desire to actively pursue acquisitions of companies which will enhance and add
to the Company's current "Suite of Products." The Company's proprietary Intranet
software will be used to provide on-line services to all of the Company's
customers. Currently, the management team has budgeted $1 million for research
and development expenditures. In addition, the Company is expected to increase
its corporate staff to support the anticipated growth
SEASONALITY
The Company's operations are principally based on the new home community
development market in South Florida. These markets have historically been
seasonal with generally higher sales in the first and fourth calendar quarters.
Therefore, the results of any interim period is not necessarily indicative of
the results that might be expected during a full fiscal year.
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field and cannot distinguish 21st
century dates from 20th century dates. These date code fields will need to
distinguish 21st century dates from 20th century dates and, as a result, many
companies' software and computer systems may need to be upgraded or replaced in
order to comply with such "Year 2000" requirements. The Company has made certain
adjustments to its equipment and software, including equipment purchases over
the last two years, in order to make its systems Year 2000 compliant. The
Company has not incurred material costs to date in this regard, and currently
does not believe the cost of additional actions will have a material effect on
our results of operations or financial condition. The Company currently believes
that its systems are Year 2000 compliant in all material respects; however, its
current systems may contain undetected errors or defects which with Year 2000
date functions that may result in material costs.
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Failure of the Company's equipment, or software to operate properly with regard
to the year 2000, and thereafter, could require the Company to incur
unanticipated expenses to remedy any problems, which could have a material
adverse effect on its business, results of operations, and financial condition.
The Company has not yet developed a comprehensive contingency plan to address
situations that may result if such systems fail; the cost of developing and
implementing any such plan may itself be material. Finally, the Company is also
subject to external forces that might generally affect industry and commerce.
FORWARD LOOKING STATEMENTS
From time to time, the Company makes statements about its future results in this
Form 10-SB that may constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements are
based on our current expectations and the current economic environment. We
caution you that these statements are not guarantees of future performance. They
involve a number of risks and uncertainties that are difficult to predict. Our
actual results could differ materially from those expressed or implied in the
forward-looking statements. Important assumptions and other important factors
that could cause our actual results to differ materially from those in the
forward-looking statements, include, but are not limited to: (i) the continued
growth in the new home community development market in South Florida; (ii) the
general availability of financing at favorable rates; (iii) continued positive
economic climate in the United States; (iv) competition in our existing lines of
business; and (v) our ability to obtain and maintain working capital, whether
internally generated or from financing sources (on acceptable terms) in order to
finance our growth strategy.
ITEM 3. PROPERTIES
The Company maintains its principal business address at Boca Corporate Plaza,
1801 Clint Moore Road, Suite 204, Boca Raton, Florida 33487, which consists of
4,000 square feet of leased space.
The Company's telephone number is (561) 395-7424.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the Company's Common Stock
beneficially owned as of the date hereof, for (i) each shareholder known by the
Company to be a beneficial owner of five percent or more of the Company's
outstanding Common Stock, (ii) each of the Company's executive officers and
directors, and (iii) all executive officers as a group. As of June 30, 1999,
there are 14,670,300 shares of the Company's Common Stock, par value $.001
outstanding.
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<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENT OF
TITLE OF CLASS BENEFICIAL OWNERS NO. OF SHARES CLASS (%)
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<S> <C> <C> <C>
Common Stock David Rich 2,111,520 14.5
1801 Clint Moore Road, Suite 204
Boca Raton, Florida 33487
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Common Sock Philip Sergeant 1,405,680 9.6
1801 Clint Moore Road, Suite 204
Boca Raton, Florida 33487
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Common Stock Richard D. Wedel 242,250 1.7
3900 Woodcastle Road
Evansville, Indiana 47711
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Common Stock John Tomassini 0 0.0
200 East 71st Street, Apt. 40
New York, New York 10021
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Common Stock Stone Pine Venture Lending, LLC 1,377,660 9.5
410 17th Street
Denver, CO 80202
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Common Stock Officers and directors, as a group 3,759,450 25.8
(4 persons)
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</TABLE>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
The executive officers and directors of the registrant are as
follows:
NAME AGE POSITION
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David Rich 34 Chief Executive Officer/Director
Philip Sergeant 47 President/Director of Marketing/Director
Richard D. Wedel 51 Chairman of the Board of Directors
John Tomassini 54 Director
The Company has a well-rounded management team with individuals that complement
each other to provide significant management capability, leadership and
expertise in varied disciplines. A brief discussion of this management team is
as follows:
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DAVID RICH
Mr. Rich provides overall leadership for the strategic direction, corporate and
field operations, customer services and finance aspects of the Company. Mr. Rich
has served as the president of Integrated Homes of Florida. Mr. Rich has over 15
years of extensive experience in the commercial construction industry. Mr. Rich
served as Vice President for five years of his family's mechanical business;
this business has conducted over $350 million in contracts over the past 20
years. Mr. Rich has worked closely with local utility companies throughout the
Untied States in an effort to provide consumers with bundled services. Mr. Rich
has negotiated and executed major projects, including Bally's Western Theme
Casino (Atlantic City, NJ), Atlantic Thermal Systems (various locations), IBM @
FAA Technical Center (Pomona, NJ), South Woods State Prison (Bridgeton, NJ),
Atlantic Care Ambulatory Hospital (Cardiff, NJ) and Caesar's Hotel and Casino
(Atlantic City, NJ). Over his career Mr. Rich has been responsible for more than
1,000 employees, company insurance plans, employee and company policies,
significant vehicle fleets, strategic business plans and company sales and
marketing plans.
PHILIP SERGEANT
Mr. Sergeant provides a diverse background with significant expertise
particularly in the marketing field. Mr. Sergeant is formally educated in
engineering. Mr. Sergeant has 25 years of extensive training in business
management of large industrial companies. Mr. Sergeant served as a partner with
a multi-national marketing consulting firm for eight years. Mr. Sergeant
undertook significant marketing projects including developing the African market
for a consortium of European manufacturers of hi-tech video and audio equipment,
marketing a chain of health food restaurants from the first store through the
establishment of 75 franchised operations and developing a significant export
market for South Africa automotive product manufacturing. Mr. Sergeant acted as
consultant for the British government with respect to preparation for the advent
of the European Common Market. Prior to joining the Company, Mr. Sergeant spent
11 years consulting start-up operations by creating new marketing programs for
the effective launch of various products and services. Mr. Sergeant's strengths
lie in establishing unique and imaginative marketing programs that differentiate
the Company's activities from that of the competition and create strong
ownership of market share.
David Rich and Philip Sergeant have spent two years extensively researching the
basis and trends in the industry. They possess a unique understanding of this
market niche and the potential of various technologies in this market, the
positioning of various players in the industry (e.g., community developers,
media providers, infrastructure developers), and the opportunities available
today as well as the potential for expansion in existent markets and the
possibilities and requirements for national expansion.
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RICHARD D. WEDEL
Richard D. Wedel has significant experience in providing consulting services.
Mr. Wedel served as President of Horizontal Ventures, Inc., an oil and gas
research and development company, from 1985 to 1998. In this position Mr. Wedel
provided consulting services to various business ventures involved in the oil
and gas industry. From 1998 to the present, Mr. Wedel has served as a consultant
to various businesses with emphasis on providing start up funding and capital
resources.
JOHN TOMASSINI
Mr. Tomassini has had extensive experience in the financial services industry.
From February 1995 through June 1998 Mr. Tomassini served as President and Chief
Operating Officer of Laidlaw Global Securities, Inc. In this position Mr.
Tomassini was responsible for supervising over 200 employees in the areas of
institutional brokerage services, asset management and investment banking. Mr.
Tomassini has also served as National Director and Senior Vice President of
Direct Investments for Shearson Lehman Hutton, Inc. With Shearson, Mr. Tomassini
was responsible for marketing and promotional activities for a division which
produced over $120 million in annual revenues. Mr. Tomassini serves as a
director of Silver Screen Partners, a feature film joint venture with Walt
Disney & Co., and Franchise Finance Corporation of America. Mr. Tomassini
received his bachelor's degree in Economics from American International College,
a Masters degree in Organizational Behavior from Wichita State University and a
Masters degree in Business Administration from Suffolk University.
All directors hold office until the next annual meeting of shareholders of the
Company and until their successors are elected and qualified. Officers hold
office until the first meeting of directors following the annual meeting of
shareholders and until their successors are elected and qualified, subject to
earlier removal by the Board of Directors.
ITEM 6. EXECUTIVE COMPENSATION
COMPENSATION OF OFFICERS
For the period ended December 31, 1998, the Company's executive officers did not
receive compensation from the Company. The Company has entered into employment
agreements with David Rich and Philip Sergeant (see description below).
COMPENSATION OF DIRECTORS
The Company will reimburse members of the Board of Directors for their expenses
incurred in connection with their services as directors.
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COMPENSATION OF OFFICERS - EMPLOYMENT AGREEMENTS
The Company recently entered into employment agreements with Messrs. Rich and
Sergeant. The agreements memorialize the employment relationships that have
existed between the respective individuals and the Company since the Company's
inception. The agreements have an initial five year term through February 2004.
Mr. Rich's agreement provides for his employment as Chief Executive Officer of
the Company at a base salary of $110,000 per year with annual increases up to
35% as determined by the Board of Directors. Mr. Sergeant's agreement provides
for his employment as President and Director of Marketing of the Company at a
base salary of $102,500 per year with annual increases up to 35% as determined
by the Board of Directors. Under the agreements, the Company also provides each
officer with full medical and health insurance coverage, a 401(K) plan and a
monthly automobile allowance.
The Company plans to adopt benefit packages including a stock option plan
designed to provide incentives to its management personnel.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 31, 1999, the principal shareholders of ATI entered into a Voting Trust
Agreement with the Shareholders of IHF governing the management of the Company.
Under this Agreement the Shareholders of IHF act as trustees with the ability to
vote the shares of all the parties to the Agreement on matters requiring
shareholder vote.
ITEM 8. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The Company's Articles of Incorporation authorizes the issuance of up to
50,000,000 shares of Common Stock, $.001 par value. There are 14,670,300 shares
of Common Stock currently issued and outstanding. The holders of the Common
Stock are entitled to one vote per each share held and have the sole right and
power to vote on all matters on which a vote of stockholders is taken. Voting
rights are non-cumulative. The holders of shares of Common Stock are entitled to
receive dividends when, as and if declared by the Board of Directors, out of
funds legally available therefore and to share pro rata in any distribution to
stockholders. Upon liquidation, dissolution, or winding up of the Company, the
holders of the Common Stock are entitled to receive the net assets of the
Company in proportion to the respective number of shares held by them after
payment of liabilities which may be outstanding. The holders of Common Stock do
not have any preemptive right to subscribe for or purchase any shares of any
class of stock. The outstanding shares of Common Stock will not be subject to
further call or redemption and will be fully paid and non-assessable.
The issuance of additional shares of the Company's Common Stock is solely within
the discretion of the Company's Board of Directors. The Company anticipates the
issuance of a substantial number of additional shares of Common Stock in
connection with the further development of its business.
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The Company may also issue additional shares of its Common Stock, through stock
incentive plans, in connection with employment of certain employees and
consultants. All such agreements and/or issuances will have prior approval of
the Board of Directors. No such agreements or issuances have been made as of the
date of this Form 10-SB
Nevada Transfer and Trust serves as the Company's transfer agent for its Common
Stock.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
Presently the shares of Common Stock of the Company are quoted on the OTC
Bulletin Board Service under the stock symbol "HNET." However, there is no
assurance that a trading market for the Common Stock will be sustained.
Accordingly, investors may have to hold their securities indefinitely and may
have difficulty in selling such securities if an active trading market does not
develop.
The Company has not paid any dividends on its Common Stock and intends to retain
all earnings for use in its operations and to finance the development and the
expansion of its business. It does not anticipate paying any dividends on the
Common Stock in the foreseeable future. The payment of dividends is within the
discretion of the Company's Board of Directors. Any future decision with respect
to dividends will depend on future earnings, future capital needs and the
Company's operating and financial condition, among other factors.
ITEM 2. LEGAL PROCEEDINGS
The Company is currently not a party to any material litigation which is not
incidental to the ordinary course of its business and operations.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
The Company recently sold 700,300 shares of Common Stock at $1.00 per share
pursuant to a Confidential Private Offering Memorandum, dated April 1, 1999. The
Company received $700,300 in gross proceeds from this Offering. The Company paid
no cash commissions in connection with this Offering. This Offering was made
pursuant to the exemption from registration provided in Rule 504 of Regulation D
as promulgated under the Securities Act of 1933, as amended.
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<PAGE>
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has authority under Title 7, Article 109 of the Colorado Business
Corporation Act to indemnify its directors and officers to the extent provided
in such statute.
The provisions of the Colorado Business Corporation Act that authorize
indemnification do not eliminate the duty of care of a director, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of nonmonetary relief will remain available under Colorado law. In addition,
each director will be subject to liability for (a) violations of criminal laws,
unless the director had reasonable cause to believe his conduct was lawful or
had no reasonable cause to believe his conduct was unlawful; (b) deriving an
improper personal benefit from a transaction; (c) voting for or assenting to an
unlawful distribution; and (d) willful misconduct or a conscious disregard for
the best interests of the Company in a proceeding by or in the right of the
Company to procure a judgment in its favor or in a proceeding by or in the right
of a shareholder. The statute does not affect a director's responsibilities
under any other law, such as the federal securities laws.
At present, there is no pending litigation or proceeding involving a director or
officer of the Company as to which indemnification is being sought, nor is the
Company aware of any threatened litigation that may result in claim for
indemnification by any officer or director.
PART F/S
The Company's audited consolidated financial statements for the period ended
December 31, 1998, immediately follow the signature page of this Form 10-SB.
PART III
ITEM 1. INDEX TO EXHIBITS
(2) Agreement and Plan of Reorganization dated as of March 31,
1999, by and among the Automotive Technologies Inc.,
Integrated Homes of Florida, Inc. and the shareholders of
Integrated Homes of Florida, Inc.
(3)(i) Articles of Incorporation of the Company (formerly known as
Automotive Technologies Inc.), as amended.
(3)(ii) Bylaws of Automotive Technologies Inc.
(9) Voting Trust Agreement, dated as of March 31, 1999, by and
among the principal shareholders of Automotive Technologies,
Inc., and David Rich and Philip Sergeant as Trustees.
15
<PAGE>
(10.1) Employment Agreement, dated as of March 31, 1999, by and
between Integrated Homes of Florida, Inc. and David Rich.
(10.2) Employment Agreement, dated as of March 31, 1999, by and
between Integrated Homes of Florida, Inc. and Philip Sergeant.
(21) Subsidiaries of the Registrant.
(27.1) Financial Data Schedule.
(27.2) Financial Data Schedule.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
INTEGRATED HOMES, INC.
DATE: JULY 16, 1999 BY: /s/ DAVID RICH
------------------------------
TITLE: CHIEF EXECUTIVE OFFICER
17
<PAGE>
INTEGRATED HOMES, INC. AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report.................................................F-2
Consolidated Balance Sheets..................................................F-3
Consolidated Statements of Operations........................................F-4
Consolidated Statements of Stockholders' Deficit.............................F-5
Consolidated Statements of Cash Flows........................................F-6
Notes to Consolidated Financial Statements............................F-7 - F-11
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Integrated Homes, Inc. and Subsidiaries
Boca Raton, Florida
We have audited the accompanying consolidated balance sheet of
Integrated Homes, Inc. as of December 31, 1998, and the related consolidated
statements of operations, stockholders' deficit, and cash flows for the period
June 1, 1998 (Inception) through December 31, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with 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 amount and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Integrated
Homes, Inc. and Subsidiaries as of December 31, 1998, and the results of its
operations and its cash flows for the period June 1, 1998 (Inception) through
December 31, 1998, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
Integrated Homes, Inc. will continue as a going concern. As discussed in Note 1
to the financial statements, the Company's net working capital deficiency raises
substantial doubt about the entity's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments relating to the
recoverability and classification of reported asset amounts and classification
of liabilities that might result from the outcome of this uncertainty.
Feldman Sherb Horowitz & Co., P.C.
Certified Public Accountants
New York, New York
June 30, 1999
F-2
<PAGE>
INTEGRATED HOMES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 11,986 $ 131,419
Accounts receivable 17,538 47,316
Inventories 47,953 47,953
Other current assets -- 1,915
----------- -----------
TOTAL CURRENT ASSETS 77,477 228,603
FURNITURE AND EQUIPMENT, net 63,944 65,762
----------- -----------
$ 141,421 $ 294,365
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 85,284 $ 113,227
Accrued expenses 29,245 71,295
Notes payable 351,166 398,166
Due to stockholders 150,000 150,000
Common stock to be issued -- 136,282
----------- -----------
TOTAL CURRENT LIABILITIES 615,695 868,970
----------- -----------
STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value, 50,000,000 shares authorized;
1,500,000 and 7,941,700 shares issued and outstanding, respectively 1,500 7,942
Additional paid-in capital 33,171 3,026,729
Accumulated deficit (508,945) (3,609,276)
----------- -----------
TOTAL STOCKHOLDERS' DEFICIT (474,274) (574,605)
----------- -----------
$ 141,421 $ 294,365
=========== ===========
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
INTEGRATED HOMES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
From
June 1, 1998 Three
(Inception) to Months Ended
December 31, 1998 March 31, 1999
----------- -----------
(Unaudited)
REVENUES $ 106,020 $ 152,565
COST OF GOODS SOLD 74,800 74,737
----------- -----------
GROSS PROFIT 31,220 77,828
----------- -----------
EXPENSES:
Research and development 321,266 --
General and administrative 218,899 178,159
----------- -----------
540,165 178,159
----------- -----------
OPERATING LOSS (508,945) (100,331)
NONCASH IMPUTED COMPENSATION EXPENSE -- 3,000,000
----------- -----------
NET LOSS $ (508,945) $(3,100,331)
=========== ===========
LOSS PER SHARE - BASIC $ (0.34) $ (1.75)
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 1,500,000 1,771,574
=========== ===========
See notes to consolidated financial statements.
F-4
<PAGE>
INTEGRATED HOMES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Common Stock
------------------------- Additional Total
Number of Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity (Deficit)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, June 1, 1998 (Inception) 1,500,000 $ 1,500 $ 33,171 $ -- $ 34,671
Net loss -- -- -- (508,945) (508,945)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 1,500,000 1,500 33,171 (508,945) (474,274)
Stock issued for services (unaudited) 3,000,000 3,000 2,997,000 -- 3,000,000
Issuance of common stock pursuant
to share exchange agreement (unaudited) 3,441,700 3,442 (3,442) -- --
Net loss (unaudited) -- -- -- (3,100,331) (3,100,331)
----------- ----------- ----------- ----------- -----------
Balance, March 31, 1999 (Unaudited) 7,941,700 $ 7,942 $ 3,026,729 $(3,609,276) $ (574,605)
=========== =========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
INTEGRATED HOMES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
From
June 1, 1998 Three
(Inception) to Months Ended
December 31, 19 98 March 31, 1999
----------- -----------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (508,945) $(3,100,331)
----------- -----------
Adjustments to reconcile net loss to net cash used in operations:
Depreciation 3,700 3,500
Noncash imputed compensation expense -- 3,000,000
Changes in assets and liabilities:
Increase in accounts receivable (17,538) (29,778)
Increase in other current assets -- (1,915)
Increase in inventories (47,953) --
Increase in accounts payable 85,284 42,241
Increase in accrued expenses 29,245 42,050
----------- -----------
Total adjustments 52,738 3,056,098
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (456,207) (44,233)
----------- -----------
CASH FLOWS INVESTING ACTIVITIES:
Capital expenditures (32,973) (5,318)
----------- -----------
NET CASH FLOWS USED IN INVESTING ACTIVITIES (32,973) (5,318)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 351,166 47,000
Common stock to be issued -- 136,282
Increase (decrease) in due to stockholders 150,000 (14,298)
----------- -----------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 501,166 168,984
----------- -----------
NET INCREASE IN CASH 11,986 119,433
CASH - beginning of period -- 11,986
----------- -----------
CASH - end of period $ 11,986 $ 131,419
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Noncash investing activities:
Contribution of fixed assets $ 34,671 $ --
=========== ===========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
INTEGRATED HOMES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD JUNE 1, 1998 (Inception) THROUGH DECEMBER 31, 1998
Integrated Homes of Florida, Inc. ("IHF") was formed in 1998 with the objective
of developing community-wide, broad-band networks in "Master Planned Residential
Communities" for the new community development and construction industry.
On March 31, 1999, IHF was acquired by Automotive Technologies, Inc. ("ATI"), a
Colorado corporation, for 3,441,700 shares of ATI stock (the "Exchange"). The
Exchange was completed pursuant to the Agreement and Plan of Reorganization
between IHF and ATI. The Exchange has been accounted for as a reverse
acquisition under the purchase method for business combinations. Accordingly,
the combination of the two companies is recorded as a recapitalization of IHF,
pursuant to which IHF is treated as the continuing entity. On May 21, 1999 the
Board of Directors of ATI authorized and approved the changing of ATI's name to
Integrated Homes, Inc. (the "Company").
The consolidated balance sheet at March 31, 1999 and the consolidated statements
of operations and of cash flows for the three months ended March 31, 1999 are
unaudited but include all adjustments which in the opinion of management, are
necessary to the fair presentation of the financial position and results of
operations for the periods then ended. All such adjustments are of a normal
recurring nature. The results of the operations for any interim period are not
necessarily indicative of results for a full fiscal year.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF PRESENTATION - The Company's financial statements
have been presented on a basis that it is a going concern,
which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.
The Company intends to seek additional equity capital through
additional equity offerings to adequately fund operations,
working capital demands, and growth plans.
The Company has a working capital deficiency of $538,218 as of
December 31, 1998. Accordingly, continued existence is
dependent upon the Company' ability to resolve its liquidity
problem, principally by obtaining additional equity capital or
debt financing, neither of which can be assured.
B. PRINCIPLES OF CONSOLIDATION - The financial statements include
the accounts of the Company and its wholly-owned subsidiary.
All material intercompany transactions have been eliminated.
C. REVENUES - Revenues from contracts to install wiring and home
technology products are recognized using the
"percentage-of-completion-method",
F-7
<PAGE>
recognizing revenue relative to the proportionate progress on
such contracts as measured by the ratio which costs incurred
by the Company to date bear to total anticipated costs on each
program.
D. FURNITURE AND EQUIPMENT - Furniture and equipment is carried
at cost. Depreciation is computed using the straight-line
method over the estimated useful lives of the various assets.
E. INVENTORIES - Inventories consist of audio, video and computer
products used in contractor showrooms or in model homes as
marketing tools. These inventories will be sold as the product
lines change or as model homes are sold to close out
residential developments. The Company's management believes it
will not sell inventories below cost.
F. INCOME TAXES - Income taxes are accounted for under Statement
of Financial Accounting Standards No. 109, "Accounting for
Income Taxes," which is an asset and liability approach that
requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events
that have been recognized in the Company's financial
statements or tax returns.
G. FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amounts
reported in the balance sheet for cash, receivables, and
accounts payable approximate their fair market value based on
the short-term maturity of these instruments.
H. ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles
require 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 revenue
and expenses during the reporting period. Actual results could
differ from those estimates.
I. IMPAIRMENT OF LONG-LIVED ASSETS - The Company reviews
long-lived assets for impairment whenever circumstances and
situations change such that there is an indication that the
carrying amounts may not be recovered. At December 31, 1998,
the Company believes that there has been no impairment of its
long-lived assets.
J. CONCENTRATION OF RISK - Credit losses, if any, have been
provided for in the financial statements and are based on
management's expectations. The Company's accounts receivable
are subject to potential concentrations of credit risk. The
Company does not believe that it is subject to any unusual or
significant risks, in the normal course of business.
J. COMPREHENSIVE INCOME - The Company has adopted Statement of
Financial Accounting Standards No. 130 ("SFAS 130) "Reporting
Comprehensive Income". Comprehensive income is comprised of
net loss and all changes to the statements of stockholders'
equity, except those due to investments by stockholders,
changes
F-8
<PAGE>
in paid-in capital and distribution to stockholders. For the
period ended December 31, 1998, the Company had deemed
comprehensive income to be negligible.
K. RESEARCH AND DEVELOPMENT - Research and development costs are
expensed as incurred. These costs primarily consists of fees
paid for the development of the Company's software. Research
and development costs for the seven months ended December 31,
1998 were $321,266.
L. EARNINGS (LOSS) PER SHARE - The Company has adopted the
provisions of Financial Accounting Standards No. 128,
"Earnings Per Share". Basic net loss per share is based on the
weighted average number of shares outstanding. Potential
common shares included in the computation are not presented in
the financial statements as their effect would be
anti-dilutive.
2. FURNITURE AND EQUIPMENT
Furniture and equipment are as follows:
ESTIMATED DECEMBER 31,
LIFE 1998
--------- ------------
Tools and machinery 5 Years $ 9,500
Computer equipment 5 Years 48,547
Office equipment 5 Years 2,433
Office furniture 7 Years 7,164
-----------
67,644
Less: Accumulated depreciation 3,700
-----------
$ 63,944
===========
3. COMMITMENTS
The Company leases certain office and warehouse space, and equipment
under operating leases commencing May 1999. These leases expires up to
and through May 2003.
Minimum rental commitments are as follows:
1999 $ 79,363
2000 $ 101,865
2001 $ 90,764
2002 $ 89,150
2003 $ 90,947
F-9
<PAGE>
The Company has entered into two employment agreements. The agreement
with its President, is for a term through February 2004, it provides
for an annual salary of $110,000 with annual increases determined by
the Board of Directors. The agreement with its Director of Marketing,
is for a term through February 2004 and provides for an annual salary
of $102,500 with annual increases determined by the Board of Directors.
Each agreement has potential bonus payments of up to 35% of the annual
salary based upon certain performance milestones.
4. RELATED PARTY TRANSACTIONS
The Company has notes payable to related parties in the amount of
$158,666. These notes are non-interest bearing and are payable upon
demand.
The Company has loans, payable to a shareholder aggregating $150,000,
with interest at 1.5% above the prime rate. $100,000 has monthly
interest payments with principal due in March 1999.$50,000 is due upon
demand.
The Company currently occupies office space leased by one of its
shareholders on a monthly basis. Rent expense from inception to
December 31, 1998 was $13,849.
Prior to the Company's incorporation the majority stockholder incurred
$321,266 for research and development costs for the Company's benefit.
The research and development was financed from borrowings from third
parties. Upon incorporation, the borrowings were assumed by the
Company, and the related research and development costs have been
expensed by the Company at the stockholders historical cost basis.
5. NOTES PAYABLE
Notes payable consist of the following:
Notes payable to related parties (see Note 4) $ 158,666
Notes payable due on demand with interest rates
ranging from 0% to approximately 20.00%. 192,500
$ 351,166
===========
6. INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No.
109"). SFAS No. 109 requires the recognition of deferred tax assets and
liabilities for both the expected impact of differences between the
financial statements and tax basis of assets and liabilities, and for
the expected future tax benefit to be derived from tax loss and tax
credit carryforwards. SFAS No. 109 additionally requires the
establishment of a valuation allowance to reflect the likelihood of
realization of deferred tax assets.
F-10
<PAGE>
The provision (benefit) for income taxes differs from the amounts
computed by applying the statutory federal income tax rate to income
(loss) before provision for income taxes. The reconciliation is as
follows:
Taxes computed at statutory rate $(173,000)
Research and development 96,000
Income tax benefit not utilized 77,000
---------
Net income tax benefit $ --
=========
The Company has a net operating loss carryforward for tax purposes
totaling approximately $400,000 at December 31, 1998 expiring in the
year 2013.
Listed below are the tax effects of the items related to the Company's
net tax liability:
Tax benefit of net operating loss carryforward $ 173,000
Expenses not currently deductible for income tax purposes (96,000)
---------
Total 77,000
Valuation Allowance (77,000)
---------
Net deferred tax asset recorded $ --
=========
7. SIGNIFICANT CONCENTRATIONS
During the period ended December 31, 1998, the Company derived 100% of
its revenues from one customer.
8. SUBSEQUENT EVENTS
In March 1999 the Company issued 3,000,000 shares of common stock for
services. The Company has recorded a non-cash expense of $3,000,000
representing the fair market value of the common stock.
Subsequent to the Exchange the Company completed the following
transactions: (i) issuance of 1,562,480 shares for a reduction of the
Company's outstanding debt (ii) issuance of 4,465,820 shares for
services provided to secure investment capital for the Company and
(iii) the completion of a private placement of 700,300 shares of common
stock at $1.00 per share.
F-11
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- -------- -----------
(2) Agreement and Plan of Reorganization dated as of March 31,
1999, by and among the Automotive Technologies Inc.,
Integrated Homes of Florida, Inc. and the shareholders of
Integrated Homes of Florida, Inc.
(3)(i) Articles of Incorporation of the Company (formerly known as
Automotive Technologies Inc.), as amended.
(3)(ii) Bylaws of Automotive Technologies Inc.
(9) Voting Trust Agreement, dated as of March 31, 1999, by and
among the principal shareholders of Automotive Technologies,
Inc., and David Rich and Philip Sergeant as Trustees.
(10.1) Employment Agreement, dated as of March 31, 1999, by and
between Integrated Homes of Florida, Inc. and David Rich.
(10.2) Employment Agreement, dated as of March 31, 1999, by and
between Integrated Homes of Florida, Inc. and Philip Sergeant.
(21) Subsidiaries of the Registrant.
(27.1) Financial Data Schedule.
(27.2) Financial Data Schedule.
EXHIBIT 2
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made and
entered into this 31st day of March, 1999 by and among AUTOMOTIVE TECHNOLOGIES
INC., a Colorado corporation (hereinafter referred to as "ATI"), INTEGRATED
HOMES OF FLORIDA, INC., a Florida corporation (hereinafter referred to as the
"Company"), and the shareholders of the Company (hereinafter referred to as the
"Shareholders").
R E C I T A L S:
A. The Shareholders own all of the issued and outstanding shares of the
capital stock of the Company.
B. ATI is willing to acquire all of the issued and outstanding capital
stock of the Company, making the Company a wholly-owned subsidiary of ATI, and
the Shareholders desire to exchange all of their shares of the Company's capital
stock for shares of ATI's authorized but unissued shares of Common Stock as
hereinafter provided.
C. It is the intention of the parties hereto that: (i) ATI shall
acquire all of the issued and outstanding capital stock of the Company in
exchange solely for the number of shares of ATI's authorized but unissued Common
Stock set forth below (the "Exchange"); (ii) the Exchange shall qualify as a
tax-free reorganization under Section 368(a)(B) of the Internal Revenue Code of
1986, as amended, and related sections thereunder; and (iii) the Exchange shall
qualify as a transaction in securities exempt from registration or qualification
under the Securities Act of 1933 as amended, and under the applicable securities
laws of the state of jurisdiction where the Shareholders reside.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the parties hereto
agree as follows:
SECTION 1. EXCHANGE OF SHARES
a. EXCHANGE OF SHARES. ATI and the Shareholders hereby agree that the
Shareholders shall, on the Closing Date (as hereinafter defined), exchange all
of their issued and outstanding shares of the capital stock of the Company (the
"Shares") for the shares of ATI Common Stock, $.001 par value (the "ATI Shares")
set forth in Exhibit A hereto. The number of ATI Shares which the Shareholders
will be entitled to receive in the Exchange is set forth in Exhibit A hereto.
b. DELIVERY OF SHARES. On the Closing Date, the Shareholders will
deliver to ATI the certificates representing the Shares, duly endorsed (or with
executed stock powers) so as to make ATI the sole owner thereof. Simultaneously,
ATI will deliver certificates representing the ATI Shares to the Shareholders.
1
<PAGE>
c. TAX-FREE REORGANIZATION. The Shareholders acknowledge that, in the
event that capital stock of the Company representing at least 80% in interest of
the Company is not exchanged for shares of ATI Voting Capital Stock pursuant
hereto, the Exchange will not qualify as a tax-free reorganization under Section
368(a)(B) of the Internal Revenue Code of 1986, as amended.
d. FAIRNESS OPINION. Consummation of this Agreement is not subject to a
fairness opinion.
e. INVESTMENT INTENT. The ATI Shares have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be resold unless the
ATI Shares are registered under the Act or an exemption from such registration
is available. The Shareholders represent and warrant that they are acquiring the
ATI Shares for their own account, for investment, and not with a view to the
sale or distribution of the ATI Shares. Each certificate representing the ATI
Shares will have a legend thereon incorporating language as follows:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"). The shares have been acquired for investment and may
not be sold or transferred in the absence of an effective
Registration Statement for the shares under the Act unless in
the opinion of counsel satisfactory to the Company,
registration is not required under the Act."
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SHAREHOLDERS
The Company and the Shareholders (to the best of Shareholders'
knowledge and belief as to the Company, except with respect to subsections 2.a.
and 2.n hereafter as to which the representation and warranty shall be
unqualified as to the Shareholders' interest) hereby represent and warrant as
follows:
a. ORGANIZATION AND GOOD STANDING; OWNERSHIP OF SHARES. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of Florida, and is entitled to own or lease its properties and to carry on
its business as and in the places where such properties are now owned, leased or
operated and such business is now conducted. The Company is duly licensed or
qualified and in good standing as a foreign corporation where the character of
the properties owned by it or the nature of the business transacted by it make
such licenses or qualifications necessary. The company does not have any
subsidiaries. There are no outstanding subscriptions, rights, options, warrants
or other agreements obligating either the Company or the Shareholders to issue,
sell or transfer any stock or other securities of the Company.
b. OWNERSHIP OF SHARES. The Shareholders are the owners of record and
beneficially of all of the shares of capital stock of the Company, all of which
Shares are free and clear of all rights,
2
<PAGE>
claims, liens and encumbrances, and have not been sold, pledged, assigned or
otherwise transferred except pursuant to this Agreement.
c. FINANCIAL STATEMENTS; BOOKS AND RECORDS. There has been previously
delivered to ATI the unaudited balance sheet of the Company as at December 31,
1998 (the "Balance Sheet") and the related unaudited statements of operations
for the periods then ended (the "Financial Statements"). The Financial
Statements are true and accurate and fairly represent the financial position of
the Company as at such dates and the results of its operations for the periods
then ended, and have been prepared in accordance with generally accepted
accounting principles consistently applied.
d. NO MATERIAL ADVERSE CHANGES. Since the date of the Balance Sheet
there has not been:
i. any material adverse change in the assets, operations, conditions
(financial or otherwise) or prospective business of the Company;
ii. any damage, destruction or loss materially affecting the assets,
prospective business, operations or condition (financial or otherwise) of the
Company, whether or not covered by insurance;
iii. any declaration, setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of the Company's
capital stock;
iv. any sale of an asset (other than in the ordinary course of
business) or any mortgage or pledge by the Company of any properties or assets;
or
v. adoption of any pension, profit sharing, retirement, stock bonus,
stock option or similar plan or arrangement.
e. TAXES. Except as set forth on Schedule 2.5 the Company has prepared
and filed all appropriate federal, state and local tax returns for all periods
prior to and through the date hereof for which any such returns have been
required to be filed by it and has paid all taxes shown to be due by said
returns or on any assessments received by it or has made adequate provision for
the payment thereof.
f. COMPLIANCE WITH LAWS. The Company has complied with all federal,
state, country and local laws, ordinances, regulations, inspections, orders,
judgments, injunctions, awards or decrees applicable to it or its business
which, if not complied with, would materially and adversely affect the business
of the Company.
g. NO BREACH. The execution, delivery and performance of this Agreement
and the consummation of the transaction contemplated hereby will not:
3
<PAGE>
i. violate any provision of the Articles of Incorporation or By-Laws
of the Company;
ii. violate, conflict with or result in the breach of any of the
terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract or other agreement to
which the Company is a party or by or to which it or any of its assets or
properties may be bound or subject;
iii. violate any order, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory body against, or binding upon,
the Company, or upon the properties or business of the Company; or
iv. violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein which could have a materially
adverse effect on the business or operations of the Company.
h. ACTIONS AND PROCEEDINGS. There is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against or involving the Company. There is no action, suit
or claim or legal, administrative or arbitral proceeding or (whether or not the
defense thereof or liabilities in respect thereof are covered by insurance)
pending or threatened against or involving the Company or any of its properties
or assets. Except as set forth on Schedule 2.8, there is no fact, event or
circumstances that may give rise to any suit, action, claim, investigation or
proceeding.
i. BROKERS OR FINDERS. No broker's or finder's Fee will be payable by
the Company in connection with the transactions contemplated by this Agreement,
nor will any such fee be incurred as a result of any actions by the Company or
the Shareholders.
j. REAL ESTATE. Except as set forth on Schedule 2.10, the Company
neither owns real property nor is a party to any leasehold agreement.
k. TANGIBLE ASSETS. The Company has full title and interest in all
machinery, equipment, furniture, leasehold improvements, fixtures, vehicles,
structures, owned or leased by the Company, any related capitalized items or
other tangible property material to the business of the Company (the "Tangible
Assets"). The Company holds all rights, title and interest in all the tangible
Assets owned by it on the Balance Sheet or acquired by it after the date of the
Balance Sheet, free and clear of all liens, pledges, mortgages, security
interests, conditional sales contracts or any other encumbrances except as set
forth on Schedule 2.11. All of the Tangible Assets are in good operating
condition and repair and are usable in the ordinary course of business of the
Company and conform to all applicable laws, ordinances and governmental orders,
rules and regulations relating to their construction and operation.
4
<PAGE>
l. LIABILITIES. The Company does not have any direct or indirect
indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued or absolute, contingent or otherwise, including,
without limitation any liability on account of taxes, any other governmental
charge or lawsuit (all of the foregoing collectively defined to as
"Liabilities"), which were not fully, fairly and adequately reflected on the
Balance Sheet. As of the Closing Date, the Company will not have any
Liabilities, other than Liabilities fully and adequately reflected on the
Balance Sheet, except for Liabilities incurred in the ordinary course of
business.
m. OPERATIONS OF THE COMPANY. Except as set forth on Schedule 2.13,
from the date of the Balance Sheet and through the Closing Date hereof the
Company has not and will not have:
i. incurred any indebtedness for borrowed money;
ii. declared or paid any dividend or declared or made any
distribution of any kind to any shareholder, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any shares in its
capital stock;
iii. made any loan or advance to any shareholder, officer,
director, employee, consultant, agent or other representative or made any other
loan or advance otherwise than in the ordinary course of business;
iv. except in the ordinary course of business, incurred or assumed
any indebtedness or liability (whether or not currently due and payable);
v. disposed of any assets of the Company except in the ordinary
course of business;
vi. materially increased the annual level of compensation of any
executive employee of the Company;
vii. increased, terminated, amended or otherwise modified any plan for
the benefit of employees of the Company;
viii. issued any equity securities or right to acquire such equity
securities; or
ix. except in the ordinary course of business, entered into or
modified any contract, agreement or transaction.
n. CAPITALIZATION. The authorized capital stock of the Company consists
of 800,000 shares of common stock having a par value of $2.50 per share of which
800,000 shares are presently issued and outstanding. Neither the Company nor the
Shareholders has granted, issued or agreed
5
<PAGE>
to grant, issue or make available any warrants, options, subscription rights or
any other commitments of any character relating to the issued or unissued shares
of capital stock of the Company.
o. FULL DISCLOSURE. No representation or warranty by the Company or the
Shareholders in this Agreement or in any document or schedule to be delivered by
them pursuant hereto, and no written statement, certificate or instrument
furnished or to be furnished to ATI pursuant hereto or in connection with the
negotiation, execution or performance of this Agreement, contains or will
contain any untrue statement of a material fact or omits or will omit to state
any fact necessary to make any statement herein or therein not materially
misleading or necessary to a complete and correct presentation of all material
aspects of the businesses of the Company.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF ATI
ATI hereby represents and warrants to the Company and the Shareholders
as follows:
a. ORGANIZATION AND GOOD STANDING. ATI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado
and is entitled to own or lease its properties and to carry on its business as
and in the places where such properties are now owned, leased, or operated and
such business is now conducted. The authorized capital stock of ATI consists of
50,000,000 shares of Common Stock. Subsequent to the execution hereof, ATI
intends to (a) file an amendment to its Certificate of Incorporation which will
change its corporate name to "Integrated Homes, Inc" pursuant to a License
Agreement (as hereinafter defined) entered into by and between ATI and the
Company; (b) conduct a best-efforts offering for $60,000 under Rule 504
promulgated under Regulation D of the Act (the "Offering"); and (c) conduct a
best-efforts offering for $500,000 under Rule 504. ATI is duly licensed or
qualified and in good standing as a foreign corporation where the character of
the properties owned by ATI or the nature of the business transacted by it make
such license or qualification necessary.
b. THE ATI SHARES. The ATI Shares to be issued to the Shareholders have
been or will have been duly authorized by all necessary corporate and
shareholder actions and, when so issued in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable.
c. FINANCIAL STATEMENTS: BOOKS AND RECORDS. There will be delivered to
the Company, the unaudited balance sheet of ATI as at December 31, 1998 (the
"Balance Sheet") and the related unaudited statements of operations for the
periods then ended (the "Financial Statements"). The Financial Statements are
true and accurate and fairly represent the financial position of the Company as
at such dates and the results of its operations for the periods then ended, and
have been prepared in accordance with generally accepted accounting principles
consistently applied.
d. NO MATERIAL ADVERSE CHANGES. Since the date of the ATI Balance
Sheet, there has not been:
6
<PAGE>
i. any material adverse change in the assets, operations, condition
(financial or otherwise) or prospective business of ATI;
ii. any damage, destruction or loss materially affecting the assets,
prospective business, operations or condition (financial or otherwise) of ATI,
whether or not covered by insurance;
iii. any declaration, setting aside or payment of any dividend or
distribution with respect to any redemption or repurchase of ATI's capital
stock;
iv. any sale of an asset (other than in the ordinary course of
business) or any mortgage or pledge by ATI of any properties or assets; or
v. adoption of any pension, profit sharing, retirement, stock bonus,
stock option or similar plan or arrangement.
e. COMPLIANCE WITH LAWS. ATI has complied with all federal, state,
country and local laws, ordinances, regulations, inspections, orders, judgments,
injunctions, awards or decree applicable to their businesses which, if not
complied with, would materially and adversely affect the business of ATI or the
trading market for the shares of ATI's Common Stock.
f. NO BREACH. The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby will not:
i. violate any provision of the Articles of Incorporation or By-Laws
of ATI;
ii. violate, conflict with or result in the breach of any of the
terms of, result in a material modification of, otherwise give any other
contracting party the right to terminate, or constitute (or with notice or lapse
of time or both constitute) a default under, any contract or other agreement to
which ATI is a party or by or to which it or any of its assets or properties may
be bound or subject;
iii. violate any order, judgment, injunction, award or decree of any
court, arbitrator or governmental or regulatory body against, or binding upon,
ATI or upon the securities properties or business of ATI; or
iv. violate any statute, law or regulation of any jurisdiction
applicable to the transactions contemplated herein.
g. ACTIONS AND PROCEEDINGS. There is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against or involving ATI. There is no action, suit or claim
or legal, administrative or arbitral proceeding or (whether or not the defense
thereof or Liabilities in respect thereof are covered by insurance) pending or
7
<PAGE>
threatened against or involving ATI or any of its properties or assets. Except
as set forth on Schedule 3.7, there is no fact, event or circumstances that may
give rise to any suit, action, claim, investigation or proceeding.
h. BROKERS OR FINDERS. No broker's or finder's fee will be payable by
ATI in connection with the transactions contemplated by this Agreement, nor will
any such fee be incurred as a result of any actions by ATI.
i. LIABILITIES. ATI does not have any direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, known
or unknown, fixed or unfixed, liquidated or unliquidated, secured or unsecured,
accrued or absolute, contingent or otherwise, including without limitation, any
liability on account of taxes, any other governmental charge or lawsuit (all of
the foregoing collectively defined to as "Liabilities"), which were not fully,
fairly and adequately reflected on the ATI Balance Sheet. As of the Closing
Date, ATI will not have any Liabilities, other than Liabilities fully and
adequately reflected on the ATI Balance Sheet, except for Liabilities incurred
in the ordinary course of business.
j. OPERATIONS OF ATI. Except as set forth on Schedule 3.10 since the
date of the ATI Balance Sheet and through the Closing Date hereof, ATI has not
and will not have:
i. incurred any indebtedness or borrowed money;
ii. declared or paid any dividend or declared or made any
distribution of any kind to any shareholder, or made any direct or indirect
redemption, retirement, purchase or other acquisition of any shares in its
capital stock;
iii. made any loan or advance to any shareholder, officer,
director, employee, consultant, agent or other representative or made any loan
or advance otherwise than in the ordinary course of business;
iv. except in the ordinary course of business, incurred or
assumed any indebtedness or liability (whether or not currently due and
payable);
v. disposed of any assets of ATI except in the ordinary course of
business;
vi. materially increased the annual level of compensation of any
executive employee of ATI;
vii. increased, terminated, amended or otherwise modified any plan for
the benefit of employees of ATI; or
viii. except in the ordinary course of business, entered into or
modified any a contract, agreement or transaction.
8
<PAGE>
k. AUTHORITY TO EXECUTE AND PERFORM AGREEMENTS. ATI has the full legal
right and power and all authority and approval required to enter into, execute
and deliver this Agreement and to perform fully its obligations hereunder. This
Agreement has been duly executed and delivered and is the valid and binding
obligation of ATI enforcement in accordance with its terms, except as may be
limited by bankruptcy, moratorium, insolvency or other similar laws generally
affecting the enforcement of creditors' rights. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby and
the performance by ATI of this Agreement, in accordance with its respective
terms and conditions will not:
i. require the approval or consent of any governmental or regulatory
body, the Shareholders of ATI, or the approval or consent of any other person;
ii. conflict with or result in any breach or violation of any of the
terms and conditions of or constitute (or with any notice or lapse of time or
both would constitute) a breach default violation under, of the Articles and
Bylaws of ATI, any order, judgment, or decree applicable to ATI, or any
instrument, contract or other agreement to which ATI is a party or by or to
which ATI is bound or subject; or
iii. result in the creation of any lien or other encumbrance on the
assets or properties of ATI.
l. FULL DISCLOSURE. No representation or warranty by ATI in this
Agreement or in any document or schedule to be delivered by it pursuant hereto,
and no written statement, certificate or instrument furnished or to be furnished
to the Company or the Shareholders pursuant hereto or in connection with the
execution or performance of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary
to make any statement herein or therein not materially misleading or necessary
to a complete and correct presentation of all material aspects of the business
of ATI. The foregoing notwithstanding, all of the aforementioned representations
and warranties are qualified to the extent that any of the companies or
businesses acquired or to be acquired pursuant to the Company's acquisition
program may include events, conditions or circumstances involving matters
contemplated by such representations and warranties the disclosure of which will
not be made pursuant to this Agreement.
m. SHARES CURRENTLY TRADING. The ATI Shares are currently trading and
quoted on the OTC Bulletin Board Service. ATI has satisfied all applicable
requirements of the Securities and Exchange Commission Rule 15c2-11 and the
filing requirements of the National Association of Securities Dealers ("NASD").
ATI is currently in good standing with the NASD and up to date with its 15c2-11
filings. ATI is not aware of any stops, pending stops, de-listings, pending
de-listings or any other situation which may adversely effect the trading of the
ATI Shares on the OTC Bulletin Board Service.
9
<PAGE>
SECTION 4. COVENANTS
a. CORPORATE EXAMINATIONS AND INVESTIGATIONS. Prior to the Closing
Date, the parties acknowledge that they have been entitled, through their
employees and representatives to make such investigation of the assets,
properties, business and operations, books, records and financial condition of
the other as they each may reasonably require. No investigation by a party
hereto shall, however, diminish or waive in any way any of the representations,
warranties, covenants or agreements of the other party under this Agreement.
b. EXPENSES. Each party hereto agrees to pay its own costs and expenses
incurred in negotiating this Agreement and consummating the transactions
described herein.
c. FURTHER ASSURANCES. The parties shall execute such documents and
other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. Each such party shall use its best efforts to fulfill or obtain the
fulfillment of the conditions to the Closing, including, without limitation, the
execution and delivery of any documents or other papers, the execution and
delivery of which are necessary or appropriate to the Closing.
d. CONFIDENTIALITY. In the event the transactions contemplated by this
Agreement are not consummated, each of the parties hereto agree to keep
confidential any information disclosed to each other in connection therewith for
a period of two (2) years from the date hereof; provided, however, such
obligation shall not apply to information which:
i. at the time of disclosure was public knowledge;
ii. after the time of disclosure becomes public knowledge (except due
to the action of the receiving party); or
iii. the receiving party had within its possession at the time of
disclosure.
e. STOCK CERTIFICATES. At the Closing, the Shareholders shall have
delivered the certificates representing the Shares duly endorsed (or with
executed stock powers) so as to make ATI the sole owner thereof. Such
certificates shall contain a restrictive legend advising that the shares are
subject to dilution under Section 4.h. At such Closing, ATI shall issue to
Shareholders the ATI Shares as applicable.
f. INVESTMENT LETTERS. The Shareholders shall have delivered to ATI an
"Investment Letter" agreeing that the Shares are being acquired for investment
purposes only and not with the view to public resale or distribution.
g. AMENDMENT TO CERTIFICATE OF INCORPORATION. Subsequent to the
execution of this Agreement and prior to the Closing hereof, ATI will file an
Amendment to its Certificate of
10
<PAGE>
Incorporation to change its corporate name to "Integrated Homes, Inc." subject
to the terms of the License Agreement (as hereinafter defined) entered into by
and between ATI and the Company.
h. ADDITIONAL TRANSFER OF ATI SHARES. If within one year of the date of
this Agreement ATI fails to successfully complete its private offerings, which
offerings will effectively generate $2 million for the operations of the Company
and not less than $1,600,000 in working capital, then ATI will authorize and
issue for par value such shares as to give the Shareholders at least 51%
ownership of ATI.
i. EMPLOYMENT AGREEMENTS. On the Closing Date, ATI shall enter into an
Employment Agreement with David Rich for a term through February 2004 and with
an annual salary of $110,000 with annual increases as determined by the Board of
Directors of ATI; ATI shall also enter into an Employment Agreement with Philip
Sergeant for a term through February 2004 and with an annual salary of $102,500
with annual increases as determined by the Board of Directors.
j. VOTING TRUST AGREEMENT. On the Closing Date, ATI shall enter into a
Voting Trust Agreement with the Shareholders governing the management of ATI and
the Company.
SECTION 5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF ATI
Notwithstanding any right of the Company and the Shareholders fully to
investigate the affairs of ATI, the former shall have the right to rely fully
upon the representations, warranties, covenants and agreements of ATI contained
in this Agreement or in any document delivered by ATI or any of its
representatives, in connection with the transactions contemplated by this
Agreement. All such representations, warranties, covenants and agreements shall
survive the execution and delivery hereof and the Closing Date hereunder for one
year following the Closing.
SECTION 6. SURVIVAL OF REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SHAREHOLDERS
Notwithstanding any right of ATI fully to investigate the affairs of
the Company, ATI has the right to rely fully upon the representations,
warranties, covenants and agreements of the Company and the Shareholders
contained in this Agreement or in any document delivered to ATI by the latter or
any of their representatives in connection with the transactions contemplated by
this Agreement. All such representations, warranties, covenants and agreements
shall survive the execution and delivery hereof and the Closing Date hereunder
for three (3) months following the Closing.
11
<PAGE>
SECTION 7. INDEMNIFICATION
a. OBLIGATION OF ATI TO INDEMNIFY. Subject to the limitations on the
survival of representations and warranties contained in Section 5, ATI hereby
agrees to indemnify, defend and hold harmless the Company and the Shareholders
from and against any losses, liabilities, damages, deficiencies, costs or
expenses (including interest, penalties and reasonable attorney's fees and
disbursements) (a "Loss") based upon, arising out of or otherwise due to any
inaccuracy in or any beach of any representation, warranty, covenant or
agreement of ATI contained in this Agreement or in any document or other writing
delivered pursuant to this Agreement.
b. OBLIGATION OF THE COMPANY AND THE SHAREHOLDERS TO INDEMNIFY. Subject
to the limitations on the survival of representations and warranties contained
in Section 6, the Company and the Shareholders agree to indemnify, defend and
hold harmless ATI from and against any loss, based upon, arising out of or
otherwise due to any inaccuracy in or any breach of any representation,
warranty, covenant or agreement made by any of them and contained in this
Agreement or in any document or other writing delivered pursuant to this
Agreement.
SECTION 8. THE CLOSING
The Closing shall take place upon initiation of the Offering and
completion of the name change. At the Closing, the parties shall provide each
other with such documents as may be necessary or appropriate in order to
consummate the transactions contemplated hereby including evidence of due
authorization of the Agreement and the transactions contemplated hereby.
ATI shall have complied in all material respects with all of its
agreements and covenants contained herein required to be complied with at or
prior to the Closing, and all of the representations and warranties of ATI
contained herein shall be true in all material respects on and as of the Closing
with the same effect as though made on and as of the Closing. The Shareholders
shall have received a certificate of ATI, dated as of the Closing and signed by
an officer of ATI, certifying as to the fulfillment of the conditions set forth
in this Section 8.
SECTION 9. MISCELLANEOUS
a. WAIVERS. The waiver of a breach of this Agreement or the failure of
any party hereto to exercise any right under this Agreement shall in no event
constitute waiver as to any future breach whether similar or dissimilar in
nature or as to the exercise of any further right under this Agreement.
b. AMENDMENT. This Agreement may be amended or modified only by an
instrument of equal formality signed by the parties or the duly authorized
representatives of the respective parties.
c. ASSIGNMENT. This Agreement is not assignable except by operation of
law.
12
<PAGE>
d. NOTICES. Until otherwise specified in writing, the mailing addresses
of both parties of this Agreement shall be as follows:
The Company: INTEGRATED HOMES OF FLORIDA, INC.
7301-A West Palmetto Park Road, Suite 103C
Boca Raton, Florida 33433
Shareholders: c/o David Rich
7301-A West Palmetto Park Road, Suite 103C
Boca Raton, Florida 33433
with a copy to: Adorno & Zeder, P.A.
2601 South Bayshore Drive, Suite 1600
Miami, Florida 33133
Attention: Dennis J. Olle
with a copy to: Kanouse & Walker, P.A.
Peninsular Executive Center, Suite 270
2385 Executive Center Drive
Boca Raton, Florida 33431
Attention: Keith J. Kanouse, Esq.
ATI: AUTOMOTIVE TECHNOLOGIES INC.
c/o A. Thomas Tenenbaum
Mellon Financial Center
1775 Sherman Street, Suite 1001
Denver, Colorado 80203
Any notice or statement given under this Agreement shall be deemed to have been
given if sent by registered mail addressed to the other party at the address
indicated above or at such other address which shall have been furnished in
writing to the addressor. Any party may send any notice hereunder to the
intended recipient at the address set forth above using any other means
(including personal delivery, expedited courier, messenger service, telecopy,
ordinary mail or electronic mail), but no such notice shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any party may change the address to which notices hereunder are to be
delivered by giving the other party notice in the manner herein set forth.
e. GOVERNING LAW. This Agreement shall be construed, and the legal
relations of the parties determined, in accordance with the laws of the State of
Florida, thereby precluding any choice of law rules which may direct the
applicable of the laws of any other jurisdiction.
13
<PAGE>
f. LITIGATION; PREVAILING PARTY. In the event of any arbitration or
litigation, including appeals, with regard to this Agreement, the prevailing
party shall be entitled to recover from the non-prevailing party all reasonable
fees, costs, and expenses of counsel (at pre-trial, trial and appellate levels).
g. PUBLICITY. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be issued by either
party hereto at any time from the signing hereof without advance approval in
writing of the form and substance thereof by the other Party.
h. ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules hereto) and the collateral agreements executed in connection with the
consummation of the transaction contemplated herein contain the entire agreement
among the parties with respect to the purchase and issuance of the Shares and
the ATI Shares and related transactions, and supersede all prior agreements,
written or oral.
i. HEADINGS. The headings in this Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
j. SEVERABILITY OF PROVISIONS. The invalidity or unenforceability of
any term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision of this Agreement shall in no way affect the validity or enforcement
of any other provision or any part thereof.
k. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed, shall constitute an original copy
hereof, but all of which together shall consider but one and the same document.
14
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
AUTOMOTIVE TECHNOLOGIES INC.
By: /s/ RICHARD WEDEL
------------------------------------
Richard Wedel, Chairman
INTEGRATED HOMES OF FLORIDA, INC.
By: /s/ DAVID RICH
-------------------------------------
David Rich, President & CEO
SHAREHOLDERS
/s/ DAVID RICH
----------------------------------------
DAVID RICH
/s/ PHILIP SERGEANT
----------------------------------------
PHILIP SERGEANT
15
<PAGE>
EXHIBIT A
EXCHANGE WITH INTEGRATED HOMES OF FLORIDA, INC.
Shares of
Name of ATI to be
Shareholder Received
- ----------- ----------
David Rich 2,036,020
Philip Sergeant 1,405,680
A-1
<PAGE>
SCHEDULE 2.5
INTEGRATED HOMES
COMPANY TAXES
- ----------------
MARCH 15, 1999
A. USE AND PAYROLL TAXES
DESCRIPTION PRIOR 12/31/98 AFTER 1/1/99
- ----------- -------------- ------------
Accrued Payroll Taxes $15,159.00 $3,659.00
Sales and Use Taxes $5,108.00 $2,174.00
<PAGE>
SCHEDULE 2.8
INTEGRATED HOMES
ACTIONS AND PROCEEDINGS
MARCH 15, 1999
A. ACTIONS AND PROCEEDINGS
Integrated Homes of Florida, Inc. is not aware of any pending actions,
proceedings or judgements against the company as of this date.
<PAGE>
SCHEDULE 2.10
INTEGRATED HOMES
REAL ESTATE
MARCH 15, 1999
A. OFFICE SUB-LEASE
Integrated Homes of Florida Inc. has a sub-lease agreement within Concept 2
Reality, Inc. which is in effect until November of 2000. The monthly amount is
$2,308.00 plus any common area maintenance fees.
<PAGE>
SCHEDULE 2.11
INTEGRATED HOMES
TANGIBLE ASSETS
MARCH 15, 1999
A. OFFICE EQUIPMENT AND FURNITURE
PHIL'S OFFICE
QUANTITY DESCRIPTION COST EACH EXTENSION
- -------- ----------- --------- ---------
1 Desk Lamps 39.99 39.99
1 Desk Lamps 9.99 9.99
2 Floor Lamps 19.99 39.98
3(a) Casual chairs Below
1(a) Glass/chrome secretarial desk Below
1 Executive chair 189.00 189.00
1 Executive chair 90.00 89.00
1 4 tier cupboard/blk 49.00 49.00
1 6 tier cupboard/blk 69.00 69.00
1 Blk metal file cabinet 239.99 239.99
1 Blk/grey file cabinet 115.00 115.00
2 Compdesk worktop 149.00 149.00
1 Executive desk/green Below
1 Worktable/grey 120.00 120.00
2 Plants 39.95 79.90
2 Wall paintings 190.00 380.00
1 Rollaway filetray 29.00 29.00
1 MacQuadra 650 2500.00 2500.00
1 Supermatch Pressview 21-T 2900.00 2900.00
1 Supermatch Proofpositive 7500.00 7500.00
1 Laptop/Macintosh Powerbook 3400C 4259.00 4259.00
1 Syquest Removable 200 559.00 559.00
1 Databackup 2000 1359.00 1359.00
1 Power PC8180 9025.00 9025.00
1 Cartridges 1500.00 1500.00
1 Kodak Digital Camera 600.00 600.00
Kodak Digital Card 100.00 100.00
Littlemouse 59.00 59.00
Personal Items 350.00 350.00
<PAGE>
Page 2
ACCOUNTING OFFICE
QUANTITY DESCRIPTION COST EACH EXTENSION
- -------- ----------- --------- ---------
2(a) Casual chairs Below
1(b) Executive desk Below
1 Executive chair 89.00 89.00
1 5 Tier file cabinet 69.99 69.99
1 Floor lamp 19.99 19.99
1 Beige file cabinet 30.00 30.00
1 Desk lamp 39.99 39.99
1 MacPerforma 405 550.00 550.00
2 Laptop Comp 5300CS 2900.00 5800.00
2 Global Village K56 370.00 740.00
Global Village 298 M/cards 199.00 199.00
PURCHASING
QUANTITY DESCRIPTION COST EACH EXTENSION
- -------- ----------- --------- ---------
2 2 Tier cabinet blk/grey 69.00 69.00
2 Floor lamps 19.99 39.98
1 6 Tier Cabinet blk 69.99 69.99
2(b) Executive desk/green Below
1 SelectPress GCC Tech 5799.00 5799.00
1 PowerMac 7100/80 4800.00 4800.00
1 Powerbook 3400C 3900.00 3900.00
1 Monitor / Radius 20e 2100.00 2100.00
Speakers 329.00 329.00
1 Viewtek Touchscreen 1700.00 1700.00
1 Flatbed Scanner 2200.00 2200.00
1 Transparancy Scanner 13000.00 13000.00
<PAGE>
RECEPTION
QUANTITY DESCRIPTION COST EACH EXTENSION
- -------- ----------- --------- ---------
2 Visitor High chair 90.00 180.00
1(a) Casual chair Below
1(b) Executive desk/green Below
1 6 Tier cabinet/blk 69.99 69.99
1 4 Tier cabinet/blk 69.00 69.00
3 Plants 39.95 39.95
2 Floor lamps 19.95 39.98
1 Rollaway file bin 35.00 35.00
1 Labelwriter XL Plus 119.00 119.00
1 Macintosh 7100/80 2500.00 2500.00
HENK'S AREA
QUANTITY DESCRIPTION COST EACH EXTENSION
- -------- ----------- --------- ---------
2 Secretarial Chairs 42.00 84.00
1 Toshiba Copier Lease
1 NEC Superscript 1260W 1039.00 1039.00
1 Sony Multiscan 100 E.S. 359.00 359.00
1 Labelwriter XL 119.00 119.00
1 Minolta Fax 1800 350.00 350.00
1 Macintosh Performa 6300CD 2500.00 2500.00
DAVID'S OFFICE
QUANTITY DESCRIPTION COST EACH EXTENSION
- -------- ----------- --------- ---------
2 Side tables/glasstop 100.00 100.00
1 Coffee table/glasstop 100.00 100.00
1 Plant 75.00 75.00
1 Sony TV 400.00 400.00
1 Philips VCR 350.00 350.00
1 Pioneer Sound System 300.00 300.00
1 Desk lamp 129.99 129.99
1 Steel file cabinet/blk 200.00 200.00
1 Media unit/blk 500.00 500.00
6 Wall paintings 300.00 300.00
2 Floor lamps 19.95 39.98
<PAGE>
1 Executive desk w/extension 1400.00 1400.00
glass/top
1 Executive chair/leather 299.99 299.99
1 Sony Multiscan 200SX 639.00 639.00
1 Sharp EL 2192G11Calcu 60.00 60.00
1 Powerbook 3400C 3700.00 3700.00
Personal Items 300.00 300.00
COST OF ITEMS (a) COMBINATION 575.00
COST OF ITEMS (b) COMBINATION 1310.00
GENERAL
QUANTITY DESCRIPTION COST EACH EXTENSION
- -------- ----------- --------- ---------
2 Backup/powersupply 99.00 198.00
Cables/connectors 500.00 500.00
Software 6600.00 6600.00
4 Mesh wastecans 19.99 79.96
5 Mats 19.99 99.75
1 Light Table 500.00 500.00
1 Metal file cabinet 150.00
-------
$100,663.49
B. DISPLAY EQUIPMENT DESCRIPTION COST EACH EXTENSION
- -------------------------------- --------- ---------
WCI Communities Design Center 26700.00 26700.00
Kolter Signature Homes Design Center 18590.00 18590.00
Philips Video Projector w/case 5050.00 5050.00
Gateway Destination - MultiMedia 3000.00 3000.00
Mighty DVD/Web-Browser 500.00 500.00
27" Multi-scan Monitor 2000.00 2000.00
Sony Digital Video Recorder 3500.00 3500.00
Aegis Home Management Systems 1800.00 3600.00
Presentation Equipment 3500.00 3500.00
---------
$66,440.00
C. TOOLS AND EQUIPMENT DESCRIPTION COST EACH EXTENSION
- ---------------------------------- --------- ---------
Hand tools, testing equipment, generators, 9500.00 9500.00
ladders, heavy tools, etc.
---------
$9500.00
<PAGE>
SCHEDULE 2.13
INTEGRATED HOMES
OPERATIONS OF THE COMPANY
MARCH 15, 1999
A. INDEBTEDNESS FOR BORROWED MONEY
DESCRIPTION AFTER 12/31/98
- ----------- --------------
AMOUNT
------
John Egnor $10,000
Larry and Susan Rothman $50,000
David and Ronnie Sommer $10,000
Sheila Simon $25,000
Patty and Jack Touhy $10,000
<PAGE>
SCHEDULE 3.7
AUTOMOTIVE TECHNOLOGIES INC.
ACTIONS AND PROCEEDINGS
None.
<PAGE>
SCHEDULE 3.10
AUTOMOTIVE TECHNOLOGIES INC.
OPERATIONS OF ATI
None.
EXHIBIT 3.(1)
Mail to: Secretary of State For office use
Corporations Section only
1560 Broadway, Suite 200
Denver, CO 80202
(303) 894-2251
Fax (303) 894-2242
Please include a typed
self-addressed envelope
MUST BE TYPED
FILING FEE: $50.00
MUST SUBMIT TWO COPIES
ARTICLES OF INCORPORATION
Corporation Name Automotive Technologies Inc.
----------------------------------------------------------------
Principal Business Address 669 Peoria Street Suite 289, Aurora, CO 80011
------------------------------------------------------
Cumulative voting shares of stock is authorized. Yes / / No /X/
If duration is less than perpetual enter number of years
-----------------------
Preemptive rights are granted to shareholders. Yes / / No /X/
STOCK INFORMATION: (If additional space is needed, continue on a separate
sheet of paper.)
Stock Class Common Authorized Shares % 50,000,000 Par Value .001
------------- ---------------- -----------
Stock Class Auhorized Shares Par Value
------------- ---------------- -----------
The name of the initial registered agent and the address of the registered
office is: (If another corporation, use last name space)
Last Name Kern First & Middle Name James M.
------------------- --------------------------------
Street Address 669 Peoria Street Suite 289 Aurora, CO 80011
------------------------------------------------------------------
(Include City, State, Zip)
THE UNDERSIGNED CONSENTS TO THE APPOINTMENT AS THE INITIAL REGISTERED AGENT.
Signature of Registered Agent /s/ JAMES KERN
---------------------------------------------------
These articles are to have a delayed effective date of:
-------------------------
INCORPORATORS: Names and addresses: (If more than two, continue on a separate
sheet of paper.
NAME ADDRESS
- --------------------------------------- ----------------------------------------
James M. Kern 669 Peoria Street, Aurora CO 80011
- --------------------------------------- ----------------------------------------
Incorporators who are natural persons must be 18 years or more. The undersigned,
acting as incorporator(s) of a corporation under the Colorado Business
Corporation Act, adopt the above Articles of Incorporation.
Signature /s/ JAMES KERN Signature
---------------------------- ---------------------------------
<PAGE>
ARTICLES OF AMENDMENT
TO
THE ARTICLES OF INCORPORATION
OF
AUTOMOTIVE TECHNOLOGIES INC.
Pursuant to the provisions of the Colorado Corporation Code, the
undersigned, President and Secretary of AUTOMOTIVE TECHNOLOGIES INC. (the
"Corporation"), hereby executes the following Articles of Amendment to its
Articles of Incorporation:
1. The name of the Corporation is AUTOMOTIVE TECHNOLOGIES INC.
2. The following amendment to the Articles of Incorporation of the
Corporation was approved at a meeting of the Shareholders of the Corporation
held on May 20, 1999, in the manner prescribed by the Colorado Corporation Code:
Article FIRST of the Articles of Incorporation of the Corporation is
amended in its entirety by substitution of the following Article:
FIRST: The name of the corporation is INTEGRATED HOMES, Inc.
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment
to the Articles of Incorporation to be executed this 20th day of May, 1999.
AUTOMOTIVE TECHNOLOGIES INC.
a Colorado corporation
By: /s/ PHILIP SERGEANT
-------------------------------
Philip Sergeant,
President and Secretary
EXHIBIT 3.(ii)
BYLAWS
OF
AUTOMOTIVE TECHNOLOGIES, INC.
---------
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock
in the corporation shall be signed by, or in the name of, the corporation by the
Chairperson or Vice-Chairperson of the Board of Directors, if any, or by the
President or a Vice-President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were such officer, transfer
agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or
uncertificated shares in place of any certificate theretofore issued by it,
alleged to have been lost, stolen, or destroyed, and the Board of Directors may
require the owner of the lost, stolen, or destroyed certificate, or such owner's
legal representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction or any such certificate or the issuance of
any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the
General Corporation Law, the Board of Directors of the corporation may provide
by resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of any
<PAGE>
uncertificated shares, the corporation shall send to the registered owner
thereof any written notice prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on a stock ledger of the corporation by the registered holder thereof, or
by the registered holder's attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the corporation or with a transfer
agent or a registrar, if any, and, in the case of shares represented by
certificates, on surrender of the certificate or certificates for such shares of
stock properly endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of
such meeting. If no record date is fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting. In order that the corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and
<PAGE>
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Colorado,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record date for
determining stockholders entitled to consent to corporation action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right
to notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares or
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provision of law
may otherwise require.
7. STOCKHOLDER MEETINGS.
-TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors, provided, that the first annual
meeting shall be held on a date
<PAGE>
within thirteen months after the organization of the corporation, and each
successive annual meeting shall be held on a date within thirteen months after
the date of the preceding annual meeting. A special meeting shall be held on
the date and at the time fixed by the directors.
-PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Colorado, as the directors may, from time
to time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Colorado.
-CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
-NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall
be given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information, or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting, unless the lapse of the prescribed period of time shall have been
waived, and directed to each stockholder at such stockholder's record address or
at such other address which such stockholder may have furnished by request in
writing to the Secretary of the corporation. Notice by mail shall be deemed to
be given when deposited, with postage thereon prepaid, in the United States
Mail. If a meeting is adjourned to another time, not more than thirty days
hence, and/or to another place, and if an announcement of the adjourned time
and/or place is made at the meeting, it shall not be necessary to give notice of
the adjourned meeting unless the directors, after adjournment, fix a new record
date for the adjourned meeting. Notice need not be given to any stockholder who
submits a written waiver of notice signed by such stockholder before or after
the time stated therein. Attendance of a stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends the meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders need be specified in any written waiver of notice.
-STOCKHOLDER LIST. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall
<PAGE>
be open to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city or other municipality or
community where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. The stock ledger shall be the only evidence as to
who are the stockholders entitled to examine the stock ledger, the list required
by this section or the books of the corporation, or to vote at any meeting of
stockholders.
-CONDUCT OF MEETING. Meeting of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting - the Chairperson of the Board, if any, the Vice-Chairperson of the
Board, if any, the President, a Vice-President, or, if none of the foregoing is
in office and present and acting, by a chairperson to be chosen by the
stockholders. The Secretary of the corporation, or in such Secretary's absence,
an Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the chairperson of the
meeting shall appoint a secretary of the meeting.
-PROXY REPRESENTATIONS. Every stockholder may authorize another person
or persons to act for such stockholder by proxy in all matters in which a
stockholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the stockholder or by such
stockholder's attorney-in-fact. No proxy shall be voted or acted upon after
three years from its date unless such proxy provides for a longer period. A
duly executed proxy shall be irrevocable if it states that it is irrevocable
and, if, and only as long as, it is coupled with an interest sufficient in law
to support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock itself
or an interest in the corporation generally.
-INSPECTORS. The directors, in advance of any meeting, may, but need
not, appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of duties of inspector, shall take and
sign an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of such inspector's ability. The
inspectors, if any, shall determine the number of shares of stock outstanding
and the voting power of each, the shares of stock represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots, or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots, or consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all stockholders. On request of
the
<PAGE>
person presiding at the meeting, the inspector or inspectors, if any, shall make
a report in writing of any challenge, question, or matter determined by such
inspector o inspectors and execute a certificate of any fact found by such
inspector or inspectors. Except as may otherwise be required by subsection (e)
of Section 231 of the General Corporation Law, the provisions of that Section
shall not apply to the corporation.
-QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
-VOTING. Each share of stock shall entitle the holder thereof to one
vote. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the election of directors. Any other action shall be authorized by a majority of
the votes case except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Except as any provision of
the General Corporation Law may otherwise require, any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. Action taken pursuant to this paragraph shall be
subject to the provisions of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of Directors
of the corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder,
a citizen of the United States, or a resident of the State of Colorado. The
initial Board of Directors shall consist of 2 persons. Thereafter the number of
directors constituting the whole board shall be at least one. Subject to the
foregoing limitation and except for the first Board of
<PAGE>
Directors, such number may be fixed from time to time by action of the
stockholders or of the directors, or, if the number is not fixed, the number
shall be 2. The number of directors may be increased or decreased by action of
the stockholders or of the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the
members thereof shall have been named in the certificate of incorporation, shall
be elected by the incorporator or incorporators and shall hold office until the
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualified or until their earlier resignation or removal. Except
as the General Corporation Law may otherwise require, in the interim between
annual meetings of stockholders or of special meetings of stockholders called
for the election of directors and/or for the removal of one or more directors
and for the filling of any vacancy in that connection, newly created
directorships and any vacancies in the Board of Directors, including unfilled
vacancies resulting from the removal of directors for cause or without cause,
may be filled by the vote of a majority of the remaining directors then in
office, although less than a quorum, or by the sole remaining director.
4. MEETINGS.
-TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
-PLACE. Meetings shall be held at such place within or without the
State of Colorado as shall be fixed by the Board.
-CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairperson of the Board, if any, the Vice-Chairperson of the
Board, if any, of the President, or of a majority of the directors in office.
-NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any member of a
committee of directors who submits a written waiver of notice signed by such
director or member before or after the time stated therein. Attendance of any
such person at a meeting shall constitute a waiver of notice of such meetings,
except when such person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to
<PAGE>
be transacted at, nor the purpose of, any regular or special meeting of the
directors need be specified in any written waiver of notice.
-QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A majority
of the directors present, whether or not a quorum is present, may adjourn a
meeting to another time or place. Except as herein otherwise provided, and
except as otherwise provided by the General Corporation Law, the vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board. The quorum and voting provisions herein stated
shall not be construed as conflicting with any provisions of the General
Corporation Law and these Bylaws which govern a meeting of directors held to
fill vacancies and newly created directorships in the Board or action of
disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
-CHAIRPERSON OF THE MEETING. The Chairperson of the Board, if any and
if present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairperson of the Board, if any and if present and acting, or the
President, if present and acting, or any other director chosen by the Board,
shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
General Corporation Law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The Board may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of any member of
any such committee or committees, the member or members constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board, shall have and
may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the corporation with the exception of
any power or authority the delegation of which is prohibited by Section 141 of
the General Corporation Law, and may authorize the seal of the corporation to be
affixed to all papers which may require it.
<PAGE>
7. WRITTEN ACTION. Any action required or permitted to be taken at
any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a
Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by the
Board of Directors, a Chairperson of the Board, a Vice-Chairperson of the Board,
an Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
with such titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors choosing such officer, no officer other than the Chairperson or
Vice-Chairperson of the Board, if any, need be a director. Any number of offices
may be held by the same person, as the directors may determine.
Unless otherwise provided in the resolution choosing such officer, each
officer shall be chosen for a term which shall continue until the meeting of the
Board of Directors following the next annual meeting of stockholders and until
such officer's successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform
such duties in the management and operation of the corporation as shall be
prescribed in the resolutions of the Board of Directors designating and choosing
such officers and prescribing their authority and duties, and shall have such
additional authority and duties as are incident to their office except to the
extent that such resolutions may be inconsistent therewith. The Secretary or an
Assistant Secretary of the corporation shall record all of the proceedings of
all meetings and actions in writing of stockholders, directors, and committees
of directors, and shall exercise such additional authority and perform such
additional duties as the Board shall assign to such Secretary or Assistant
Secretary. Any officer may be removed, with or without cause, by the Board of
Directors. Any vacancy in any office may be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors
shall prescribe.
ARTICLE V
FISCAL YEAR
<PAGE>
The fiscal year of the corporation shall be fixed, and shall be subject
to change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter, or repeal
these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors
or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy
of the Bylaws of AUTOMOTIVE TECHNOLOGIES, INC., a COLORADO corporation, as in
effect on the date hereof.
Dated: November 13, 1997
/s/ GREG B. RUYBAL
------------------------------------
Secretary of
AUTOMOTIVE TECHNOLOGIES, INC.
(SEAL)
EXHIBIT 9
VOTING TRUST AGREEMENT
This VOTING TRUST AGREEMENT is signed on March 31, 1999, among certain
shareholders of AUTOMOTIVE TECHNOLOGIES, INC., a Colorado corporation (the
"Corporation") whose names and signatures are below (the "Subscribers) and
Philip Sergeant and David Rich (the "Trustees")
BACKGROUND
1. Each of the Subscribers is an owner of shares of the Corporation in
the amounts set opposite their respective signatures.
2. With a view to the safe and competent management of the Corporation
in the interests of all of its shareholders, the Subscribers are
desirous of creating a trust in the following manner.
The parties agree as follows:
1. TRANSFER TO THE TRUSTEES. The Subscribers will indorse in blank and
assign and deliver to the Trustees the stock certificates owned by each of them
and will do all things necessary for the transfer of their shares to the
Trustees on the books of the Corporation.
2. TRUSTEES TO HOLD SUBJECT TO THIS AGREEMENT. The Trustees will hold
the shares transferred to them for the common benefit of the Subscribers subject
to the terms of this Agreement and Section 4 of that certain Agreement and Plan
of Reorganization ("Exchange Agreement").
3. NEW CERTIFICATES TO THE TRUSTEES. The Trustees will surrender to the
Corporation for cancellation all certificates assigned and delivered to them,
and in their place, will procure new certificates to be issued to them as
Trustees under this Agreement.
4. TRUSTEES' CERTIFICATES. The Trustees will issue to each Subscriber
a trust certificate for the same number of shares represented by the share
certificates transferred to the Trustees. Each trust certificate will: (i) state
that it is issued under this Agreement; (ii) set forth the nature and
proportional amount of the beneficial interest of the person to whom it is
issued; and (iii) be assignable, subject to the terms of Section 9. The Trustees
will keep a list of the shares transferred to them, and will also keep a record
of all trust certificates issued or transferred on their books. The record will
contain the names and addresses of the trust certificate holders and the number
of shares represented by each certificate. The list and record will be open at
all reasonable times to the inspection of the trust certificate holders. Upon
the transfer of any trust certificate on the books of Corporation, the
transferee will succeed to all the rights of the transferor, subject to the
terms of Section 9.
Page 1 of 4
<PAGE>
5. TRUSTEES TO VOTE SHARES. It is the duty of the Trustees, and they
have full power and authority, and are fully empowered and authorized, to
represent the holders of the trust certificates and the shares transferred to
the Trustees, and to vote the shares, as in the judgment of both of the
Trustees, may be for the best interest of the Corporation, at all meetings of
the shareholders of the Corporation, in the election of directors and upon all
matters and questions which may be brought before these meetings, as fully as
any shareholder might do if personally present. The Trustees agree to take the
following action:
(1) The Board of Directors will be composed of 5 persons including
each of the Trustees, and Richard D. Wedel (or his designee).
Each director will be elected for a term of not less than 1 year
and may serve a staggered term for a period greater than 1 year.
(2) If the Corporation fails to successfully complete the following:
1. Within 60 days from the date of this Agreement, the
Corporation must raise an equity contribution of at least
$450,000 for working capital;
2. Within 8 months from the date of this Agreement, the
Corporation must raise an additional equity contribution of at
least $550,000 for working capital; and
3. Within 12 months from the date of the Agreement, the
Corporation must raise an additional equity contribution of at
least $1,000,000 for working capital.
If any of these conditions are not timely and fully met, then the
Trustees will vote to authorize the creation of additional common
shares which they will issue to Philip Sergeant and David Rich, in
their individual capacities and not as Trustees, for par value in
an amount which than allows Messrs. Sergeant and Rich to own 51%
of the total authorized, issued and outstanding shares of the
Corporation. All other shareholders will be diluted upon this
additional share issuance.
If the Articles of Incorporation and/or Bylaws of the Corporation
need to be amended to accomplish the purposes of this Agreement,
the Trustees have the power to so vote to amend.
6. DIVIDENDS. The Trustees will collect and receive any dividends that
may accrue upon the shares subject to this Agreement and, subject to deduction
as provided in Section 7, will divide any dividends among the trust certificate
holders in proportion to the number of shares respectively represented by their
trust certificates.
7. TRUSTEES' INDEMNITY. The Trustees are to be fully indemnified out of
the dividends coming to their hands against all costs, charges, expenses, and
other liabilities properly incurred by them in the exercise of any power
conferred upon them under this Agreement or by law. The
Page 2 of 4
<PAGE>
Subscribers covenant with the Trustees that, if the moneys and securities in
their hands are insufficient for that purpose, the Subscribers will, in
proportion to the amounts of their respective shares and interests and save
harmless and keep indemnified the Trustees of and from all loss or damage which
they may sustain or be put to by reason of anything they may lawfully do in the
signing of this Agreement.
8. SALE OF TRUST CERTIFICATES; TRUSTEES' OPTION. If the holder of any
trust certificate desires to sell or pledge his or her beneficial interest in
the shares represented by a trust certificate, he or she will first give written
notice to the Trustees. The Trustees have the right at their option any time
within 30 days after the receipt of the notice to purchase the beneficial
interest at the book value of the shares represented by the trust certificate at
the time of purchase. If the Trustees exercise their option to purchase, they
will hold the beneficial interest for the benefit of all the remaining trust
certificate holders, including the Trustees, who will, upon 30 days' written
notice given by the Trustees before exercising the option, contribute their
respective proportionate share of the purchase price in cash paid by the
Trustees. If the Trustees do not exercise their option, the holder of the trust
certificate has the right to sell the trust certificate to any person and for
any price he or she determines.
9. NEW TRUSTEES. If any Trustee dies, resigns, refuses or becomes
unable to act, the other Trustee will appoint another Trustee to fill the
vacancy. The person appointed will become vested with all the duties, powers,
and authority of the Trustees as if originally named in this Agreement.
10. CONTINUANCE AND TERMINATION OF TRUST. The trust created continues
for 1 year from the date of this Agreement, unless sooner terminated by the vote
of 100% of the shares subject of this Agreement by specific resolution adopted
at a meeting of the trust certificate holders called by a majority of the
certificate holders for that purpose by at least 30 days' written notice mailed
to the trust certificate holders at their respective addresses appearing in the
records of the Trustees. Upon the termination of the trust, the Trustees will,
upon the surrender of the trust certificates by the respective holders, assign
and transfer to them the number of shares represented.
IN WITNESS WHEREOF, the parties have signed this Voting Trust Agreement
on the date first set forth.
Shareholders:
/s/ Lance Friedman
----------------------------------------
International Consolidated Capital
Company, by its President
----------------------------------------
Page 3 of 4
<PAGE>
/s/ Richard D. Wedel
----------------------------------------
Wedel Group by its President
/s/ David Rich
----------------------------------------
David Rich
/s/ Philip Sergeant
----------------------------------------
Philip Sergeant
Trustees:
/s/ Philip Sergeant
----------------------------------------
Philip Sergeant
/s/ David Rich
----------------------------------------
David Rich
Page 4 of 4
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
BETWEEN
AUTOMOTIVE TECHNOLOGIES, INC.,
A COLORADO CORPORATION
("CORPORATION")
AND
DAVID RICH
("EMPLOYEE")
DATED: MARCH 31, 1999
<PAGE>
TABLE OF CONTENTS
SECTI0N
BACKGROUND:...............................................................1
1. Employment............................................................ 1
2. Term.................................................................. 1
3. Duties................................................................ 1
4. Compensation ......................................................... 2
5. Business Expenses and Reimbursements.................................. 3
6. Employee's Representations and Indemnification........................ 4
7. Confidential Information.............................................. 4
8. Reservation of Business Opportunities................................. 4
9. Covenant Not to Compete............................................... 4
10. Termination by the Employee or By the Corporation..................... 5
11. Return of Materials .................................................. 6
12. Disability or Death................................................... 6
13. Ownership of Inventions and Ideas..................................... 7
14. Entire Agreement...................................................... 7
15. Amendments............................................................ 7
16. Assignments........................................................... 8
17. Binding Effect........................................................ 8
18. Severability.......................................................... 8
20. Waivers............................................................... 8
21. Notices............................................................... 8
22. Jurisdiction and Venue................................................ 9
23. Enforcement Costs..................................................... 9
24. Remedies Cumulative................................................... 9
25. Governing Law......................................................... 9
26. Further Assurances.................................................... 9
27. Definitions...........................................................11
EXHIBIT A- MILESTONES....................................................11
i
<PAGE>
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is signed on March 31,
1999 between AUTOMOTIVE TECHNOLOGIES, INC., a Colorado corporation having its
principal place of business at 7301-A Palmetto Park Road, Suite 105-C, Boca
Raton, Florida 33433 (the "Corporation") and DAVID RICH (the "Employee").
BACKGROUND:
A. The Corporation is engaged in the business of establishing residential
networks within communities, installing low voltage wiring systems and equipment
in homes and selling electronic upgrades and options to home buyers; and
B. The Corporation desires to employ the Employee as Chief Executive Officer of
the Corporation in connection with the conduct of the business of the
Corporation, and the Employee desires to accept such employment on the terms set
forth in this Agreement.
The parties agree as follows:
1. EMPLOYMENT. The Corporation employs the Employee as Chief Executive
Officer to perform the duties set forth in Section 3 and the Employee accepts
the employment, all upon the terms in this Agreement.
2. TERM. Unless sooner terminated pursuant to the terms of this
Agreement, the initial term of employment begins on the date of this Agreement
and continues for 5 years. The Employment Period shall be extended automatically
for additional one-year terms unless either the Corporation or the Employee
gives at least 30 days' written notice to the other pursuant to Section 21.
3. DUTIES.
(a) The Employee will serve as Chief Executive Officer of the
Corporation. Subject to any restrictions set forth in the Shareholders'
Agreement or in the Bylaws of the Corporation, the Employee will perform all
duties as are customary for a CEO of a leading edge technology company in the
US, and such other duties as may from time to time be assigned to him by the
Board.
(b) The Employee will use his best efforts to carry out his duties
and responsibilities and devote his entire working time to the business and
affairs of the Corporation and will not, in any advisory or other capacity,
work for any other individual, firm or corporation without first having
obtained the written consent of the Board.
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<PAGE>
(c) The principal place of employment of the Employee will be the
Corporation's headquarters in Boca Raton, Florida or such other locations as
may be selected for the Corporation's facilities by the Board, although it is
understood that in connection with his duties under this Agreement, the Employee
will be required to travel to and perform services at other locations.
4. COMPENSATION. As compensation for the services to be rendered by
the Employee, the Corporation agrees to pay or provide to the Employee:
(a) SALARY. The Corporation will pay to the Employee a base annual
salary of $110,000 per year payable in accordance win the normal payroll
policies of the Corporation less withholding of all applicable FICA taxes,
federal unemployment taxes (FUTA), income tax withholding and other payments the
Corporation is obligated to withhold. The annual salary is subject to annual
review and upward adjustment in the Board's sole discretion. An adjustment to
the amount of salary, if any, is not deemed a modification, amendment or waiver
of this Agreement and all other terms of his Agreement will remain in full force
and effect.
(b) BONUSES. The Employee shall be entitled to a bonus paid annually
during the Employment Period up to a maximum of 35% of the base annual salary,
payable at such times and upon the achievement of such milestones as are set
forth on Exhibit A or as shall be mutually agreed upon by the Employee and the
Board.
(c) VACATION/SICK DAYS. The Employee is entitled to an annual paid
vacation of 3 calendar weeks per fiscal year (taken consecutively or in
segments) adjusted pro rata for any partia1 fiscal year. For purposes of
vacation eligibility, the Employee's start date is June 1, 1998. The Employee is
also entitled to annual paid sick days of at least 5 days per year during the
Employment Period. Vacation may be taken at such times as is reasonably
consistent with proper performance by the Employee of his duties and
responsibilities. Vacation days and sick days are forfeited and not accumulated
from year to year.
(d) INSURANCE. The Corporation agrees to provide to the Employee,
throughout the Employment Period, insurance and all benefits including workers'
compensation insurance, life insurance, health insurance and profit sharing
benefits, that are, or may in the future be, provided generally by the
Corporation to its other employees including:
(i) The Corporation may, so long as this Agreement remains in
effect, maintain in force, a life insurance policy on the life of the
Employee in an amount determined by the Corporation. The proceeds of the
insurance policy is payable directly to the Corporation, which is the
direct beneficiary. The Corporation will pay all premiums for all policies
as the same become due; and
(ii) The Corporation will provide health insurance providing full
hospital, medical and dental coverage pursuant to the Corporation plans in
effect from time
2
<PAGE>
to time for the Employee and each of the Employee's dependents at no
expense to the Employee or his or her dependents other than deductible
amounts under these plans not to exceed S200 per person per year.
(e) AUTOMOBILE. During the Employment Period, the Employee is
entitled to a $650 per month car allowance in accordance with the
Corporation's normal automobile allowance payment practices.
(f) RELOCATION EXPENSES. The Corporation will reimburse the
Employee for a minimum of $20,000 of out-of-pocket expenses incurred in
connection with any relocation requirements.
(g) STOCK OPTION. The Corporation agrees to grant to the
Employee, pursuant to a separate written agreement to be executed, an
unvested option (the "Option") to purchase, up to 1,000,000 shares (the
"Option Shares") of the common stock, $O.001 par value per share, of the
Corporation (the "Common Stock") at $0.45 per share. Such agreement shall
determine at what times and in what amounts the Option will vest in the
Employee, the manner of exercising the Option, and all other matters
determined by the Board. Additional stock options will be offered
annually, if at all, in accordance with stock option plans offered to
other senior management in the discretion of the Corporation.
5. BUSINESS EXPENSES AND REIMBURSEMENTS. It is contemplated that, in
connection with his employment hereunder, the Employee may be required to incur
reasonable business, entertainment, and travel expenses. The Corporation agrees
to reimburse the Employee in full for all such reasonable and necessary
business, entertainment and travel expenses incurred or expended by him in
connection with the performance of his duties hereunder; proving the Employee
submits to the Corporation vouchers or expense statements satisfactorily
evidencing such expenses as may be reasonably required by the Corporation and
such expenses are in accordance with any corporate policy with respect thereto.
During the Employment Period, the Employee is entitled to reimbursement by the
Corporation for the following out-of-pocket expenses incurred by the Employee
after receiving written approval from the Board:
(i) Membership fees for professional organizations and
affiliations beneficial to the Employee or the Corporation in the
performance of the Employee's duties under this Agreement, and
(ii) Expenses for seminars, courses and conferences attended
for the Corporation's business purposes.
6. EMPLOYEE'S REPRESENTATIONS AND INDEMNIFICATION. The Employee
represents and warrants to the Corporation that:
3
<PAGE>
(a) He is not restricted or prohibited contractually from entering into
and performing this Agreement; and
(b) His execution and performance under this Agreement is not in
violation or breach of any other agreement between the Employee and any other
person or entity.
The Employee indemnifies, defends, and holds harmless the Corporation
against all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries, and deficiencies including interest, penalties, and
attorneys' fees and disbursements including Enforcement Costs as stated in
Section 23, that the Corporation or its officers or shareholders shall incur or
suffer, which arise, result from, or relate to any breach of, any of his or her
representations and warranties in this Section.
7. CONFIDENTIAL INFORMATION. The Employee acknowledges that the list of
the Corporation's customers, method of doing business and the Corporation's
sources of information as the Corporation may revise are valuable, special and
unique assets of the Corporation's business. The Employee will not, during and
after the Employment Term, disclose any part of the Corporation's customer list,
method of doing business, sources of information, trade secrets or other
confidential or proprietary information, to any person, firm, corporation,
association, or other entity for any reason or purpose. Upon the Employee's
breach or threatened breach of this Section, irreparable injury is presumed, and
the Corporation is entitled to preliminary restraining order and an injunction
restraining and enjoining the Employee from disclosing any part of the list has
been, or is threatened to be disclosed. In addition to or in lieu of the above,
the Corporation may pursue all other remedies available to the Corporation for
the breach or threatened breach, including the recovery of damages from the
Employee.
8. COVENANT NOT TO COMPETE. During he Employment Term and for 1 year
after the termination of this Agreement, the Employee will not, within Dade,
Broward or Palm Beach Counties, State of Florida, directly or Indirectly, own,
manage, operate, control, be employed by, participate in, or be connected in any
manner with the ownership, management, operation, or control of any business
similar to the type of business conducted by the Corporation at the time this
Agreement terminates or solicit customers of the Corporation. Upon the
Employee's actual or threatened breach of this Section including use or
disclosure of the Corporation's trade secrets or customer lists or direct
solicitation of existing customers, irreparable injury is presumed, and the
Corporation is entitled to a preliminary restraining order and injunction
restraining the Employee from violating its provisions. Nothing in this
Agreement may be construed to prohibit the Corporation from pursuing any other
available remedies for the breach or threatened breach, including the recovery
of damages from the Employee. If the stockholders agree to dissolve the
Corporation, and the principals do not continue to operate a residential wiring
company, this covenant terminates. The Employee acknowledges that the length of
the term and all restrictions contained in this Section and Sections 8 and 9 are
fair and reasonable and not the result of overreaching, duress or coercion of
any kind. The Employee further acknowledges that his or her full, uninhibited
and faithful observance of each of the covenant contained in such Sections will
4
<PAGE>
not cause him her any undue hardships, financial or otherwise, and that
enforcement of each of the covenant contained in this Agreement will not impair
his or her ability to obtain employment commensurate with his or her abilities
and on terms fully acceptable to him or her or otherwise to obtain income
required for the comfortable support of himself or herself and his or her family
and the satisfaction of the needs of his or her creditors.
9. TERMINATION BY THE EMPLOYEE OR BY THE CORPORATION.
(a) The Corporation may terminate this Agreement for cause after
written notice to the Employee and subject to the expiration of any applicable
cure period set forth below. "Termination for cause" shall mean discharge by the
Corporation on the following grounds:
(i) The Employee's conviction in a court of law of any crime or
offense, which conviction makes him unfit for continuing employment, prevents
him from effective management of the Corporation or materially adversely affects
the reputation or business activities of the Corporation.
(ii) Dishonesty or willful misconduct which materially, adversely
affects the reputation or business activities of the Corporation and which
continues after written notice thereof to the Employee, substance abuse for
which the Employee fails to undertake and maintain treatment after 15 days after
requested by the Corporation, or misappropriation of funds.
(iii) The Employee's continuing material failure or refusal to
perform his duties in accordance with the terms of this Agreement or to carry
out in all material respects the lawful directives of the Board of Directors,
provided that discharge pursuant to this Subsection 1l(a)(iii) constitutes
discharge for cause only if the Employee has first received written notice from
the Board stating with specificity the nature of such failure or refusal and, if
requested by the Employee within 10 days thereafter, the Employee is afforded a
reasonable opportunity to be heard before the Board.
Upon such termination for cause, the Employee shall lose all right,
title and interest in and to all payments required to be made in accordance with
the provisions of this Agreement, and the Corporation shall have no further
obligation to the Employee hereunder, except for compensation pursuant to
Section 4 to which the Employee is entitled through the date of termination,
bonus compensation to which the Employee is entitled for and in respect of the
preceding fiscal year if not theretofore paid, and any benefits referred to in
Section 4 to which the Employee has a vested right under the terms and
conditions of the plan or program pursuant to which such benefits were granted.
(b) The Corporation may terminate the Employee without cause at any
time. In the event of termination of the Employee without cause, the Corporation
will pay or provide to the Employee (in addition to salary, bonus and other
compensation to which the Employee is entitled
5
<PAGE>
or has earned pursuant to Section 4 through the date of termination and any
benefits referred to in Section 4 in which the Employee has vested right under
the terms and conditions of the plan or program pursuant to which the benefits
were granted), a lump sum cash payment equal to the total amount of base salary
due to the end of the term of this Agreement discounted using a present value
discount of 7%. The Corporation also agrees to redeem for cash all of the
Employee's shares in the Corporation at fair market value as computed by the
independent certified public accountants for the Corporation.
(c) The Employee may terminate this Agreement by resignation and giving
the Corporation 3 months' written notice. The Corporation can waive this notice
and agree with the Employee to an earlier termination date. Upon termination by
the Employee, all obligations of the Corporation and the Employee under this
Agreement will cease as of the date of final termination, except the Employee's
obligations under Sections 8, 9 and 10 will survive.
10. RETURN OF MATERIALS. The Employee will immediately turn over to the
Corporation all materials including brochures, agreements, customer lists, and
all other materials relating to the operation of the Corporation in the
Employee's possession or control, and all copies and any other forms of
reproductions of such materials (all of which are acknowledged to be the sole
and exclusive property of the Corporation), and will retain no copy or record of
any of the foregoing.
11. DISABILITY OR DEATH.
(a) The term of employment of the Employee will terminate immediately
upon the death of the Employee, or, at the option of the Corporation, upon
physical or mental incapacity or disability, which renders him unable, with
reasonable accommodation, to perform the services required of him under this
Agreement ("Disability") for a period of 90 consecutive days or for 180 days or
more during any period of 12 consecutive months. Disability is subject to
verification by an independent qualified physician if requested by the Employee.
During any period of Disability before termination, the Employee will continue
to be compensated as provided in this Agreement (less any payments due the
Employee under disability benefit programs paid for by the Corporation including
Social Security disability, worker's compensation and disability or retirement
benefits).
(b) Upon the death of the Employee during the period of employment or
upon termination of this Agreement by the Corporation because of the Disability
of the Employee, the Employee is entitled to receive the cooperation the
Employee through the date of death or termination (provided the payment of any
bonus for the fiscal year in which termination occurred will be in the sole
discretion of the Board). The Corporation thereafter will have no further
obligations under this Agreement except for its obligations to pay any vested
employee benefits referred to in Section 4.
12. OWNERSHIP OF INVENTIONS AND IDEAS. The Employee acknowledges that
the Corporation is the sole owner of all the results and proceeds of the
Employee's service under this
6
<PAGE>
Agreement, including all patents, patent applications, patent rights, formulas,
copyrights, inventions, developments, discoveries, other improvements,
data documentation, drawings, charts, and other written, audio and/or visual
materials relating to equipment, methods, products, processes, or programs in
connection with or useful to the Corporation's business (collectively, the
"Developments") which the Employee, by himself or in conjunction with any other
person, may conceive, make, acquire, acquire knowledge of, develop or create
during the term of the Employee's employment, free and clear of any claims by
the Employee (or any successor or assignee of him) of any kind or character
whatsoever other than the Employee's right to compensation under this Agreement.
The Employee acknowledges that all copyrightable Developments are considered
"works made for hire" under the Federal Copyright Act. The Employee assigns and
transfers his right, title and interest in and to all Developments, and agrees
that he will, at the request of the Corporation, sign or cooperate with the
Corporation in any patent applications, sign any assignments, certificates or
other instruments, and do any and all other acts, as the Board from time to time
reasonably deems necessary or desirable to evidence, establish, maintain,
perfect, protect, enforce or defend the Corporation's rights, title and interest
in or to any Developments.
13. ENTIRE AGREEMENT. This Agreement represents the entire
understanding and agreement between the parties with respect to the subject
matter of this Agreement, and supersedes all other negotiations, understandings
and representations, if any, made between the parties.
14. AMENDMENTS. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
15. ASSIGNMENTS. The Employee cannot assign or delegate his or her
obligations under this Agreanent. This Agreement is freely assignable by the
Corporation but must be assumed by the purchaser of all of substantially all of
the assets of the Corporation or by the surviving corporation in the case of a
merger.
16. BINDING EFFECT. All of the terms of this Agreement, regardless of
whether so expressed, are binding upon, inure to the benefit of, and be
enforceable by the parties and their respective personal representatives, legal
representatives, heirs, successors and permitted assigns.
17. SEVERABILITY. If any provision of this Agreement or any other
agreement entered into pursuant to this Agreement is contrary to, prohibited by
or deemed invalid under applicable law or regulation, that provision will be
inapplicable and deemed omitted to the extent so contrary, prohibited or deemed
invalid under applicable law or regulation, that provision will be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder of the provision will not be invalidated and will be given full force
and effect so far as possible. If any provision of this Agreement may be
construed in two or more ways, one of which would render the provision invalid
or otherwise voidable or unenforceable and another of which would render
7
<PAGE>
the provision valid and enforceable, the provision shall have the meaning that
renders it valid and enforceable.
18. SPECIFIC PERFORMANCE. The Employee acknowledges that the services
to be rendered by the Employee under this Agreement are extraordinary and unique
and are vital to the success of the Corporation, and that damages at law would
be an inadequate remedy for any breach or threatened breach of this Agreement by
the Employee. Therefore, upon a breach or threatened breach by the Employee of
any provision of this Agreement, then the Corporation shall be entitled, in
addition to all other rights and remedies, to injunctions restraining the
breach, without being required to show any actual damage or to post any bond or
other security
19. WAIVERS. The failure or delay of the Corporation at any time to
require performance by the Employee of any provision of this Agreement, even if
known, will not affect the right of the Corporation to require performance of
that provision or to exercise any right, power or remedy under this Agreement,
and any waiver by the Corporation of any breach of any provision of this
Agreement should not be construed as a waiver of any continuing or succeeding
breach of the provision, a waiver of the provision itself, or a waiver of any
right, power or remedy under this Agreement. No notice to or demand on the
Employee in any case will, of itself, entitle that party to any other or further
notice or demand in similar or other circumstances.
20. NOTICES. All notices, requests, consents and other communications
requited or permitted under this Agreement will be in writing (including telex
and telegraphic communication) and will be (as elected by the person giving the
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
If to the Corporation: If to the Employee:
Automotive Technologies, Inc. David Rich
7301-A Palmetto Park Road, Suite 105-C 7628 Monarch Court
Boca Raton, FL 33433 Delray Beach, FL 33446
21. JURISDICTION AND VENUE. The parties acknowledge that a substantial
portion of negotiations, anticipated performance and execution of this Agreement
occurred or will occur in Palm Beach County, Florida, and that, therefore,
without limiting the jurisdiction or venue of any other federal or state court,
each of the parties irrevocably and unconditionally (a) agrees that any suit,
action or legal proceeding arising out of or relating to this Agreement may be
brought in the courts of record of the State of Florida in Palm Beach County or
the Federal District Court of the United States, Southern District of Florida;
(b) consents to the jurisdiction of each court in any suit, action or
proceeding; (c) waives any objection that it may have to the laying of venue of
any suit, action or proceeding in any of these courts; and (d) agrees that
service of any court paper
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may be effected on that party by mail, as provided in this Agreement, or in any
other manner as may be provided under applicable laws or court rules in State of
Florida.
22. ENFORCEMENT COSTS. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provision of this
Agreement, the successful or prevailing party or parties is entitled to recover
reasonable attorneys' fees, sales and use taxes, court costs and all expenses
even if not taxable as court costs (including all fees, taxes, costs and
expenses incident to arbitration, appellate, bankruptcy and post-judgment
proceedings), incurred in that action or proceeding, in addition to any other
relief to which the party or parties may be entitled. Attorneys' fees include
paralegal fees, investigative fees, administrative costs, sales and use taxes
and all other charges billed by the attorney to the prevailing party.
23. REMEDIES CUMULATIVE. No remedy conferred in this Agreement upon any
party, is intended to be exclusive of any other remedy, and every remedy is
cumulative and is in addition to every other remedy given under this Agreement
or now or later existing at law or in equity or by statute or otherwise. No
single or partial exercise by any party of any right, power or remedy under
this Agreement precludes any other or further exercise of that right, power or
remedy.
24. GOVERNED LAW. This Agreement and all transactions contemplated by
this Agreement are governed by, and construed and enforced in accordance with
the internal laws of the State of Florida without regard to principles of
conflicts of laws.
25. FURTHER ASSURANCES. The parties agree to sign and deliver all
further and other transfers, assignments and documents and do all acts that may
be convenient or necessary to more effectively and completely carry out the
intentions of this Agreement.
26. DEFINITIONS.
(a) As used in this Agreement, the following terms have the following
meanings:
"AGREEMENT" means this Employment Agreement, as it may be amended,
supplemented or otherwise modified by an agreement in writing signed by the
Corporation and the Employee pursuant to Section 15.
"BOARD" means the Board of Directors of the Corporation.
"EMPLOYMENT PERIOD" means the period in which the Employee is employed
by the Corporation including the initial term and any successive terms.
(b) Other definitional provisions used in this Agreement include:
(i) The term "person" includes any corporation, partnership,
estate, trust, association, branch, bureau, subdivision, venture,
associates group, individual,
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government, institution, instrumentality and other entity, enterprise,
association or endeavor of every nature and kind;
(ii) Reference to the "business" of any person also is deemed to
include the operations, financial condition, properties and prospects
of that person; and
(iii) The term "affiliate" means, with reference to any specified
person: (A) any person that directly or indirectly through one or more
intermediaries controls or is controlled by, or is under common control
with the specified person, (B) any person that directly or indirectly
is the beneficial owner of 5% or more of any class of equity securities
of, or otherwise has a substantial beneficial interest in, the
specified person, or of which the specified person is directly or
indirectly the owner of 5% To or more of any class of equity securities
or in which the specified person has a substantial beneficial interest;
(C) any person who is an officer, director, general partner or trustee
of, or serves in a similar capacity with respect to, the specified
person or entity; (D) any relative or spouse of the specified person;
or (E) any trust created by the specified person for the benefit of
that person's spouse or children.
IN WITNESS WHEREOF, the parties have signed this Agreement.
AUTOMOTIVE TECHNOLOGLES, INC.
By: /s/ Richard D. Wedel, Chairman
- -------------------------------------- -------------------------------------
- --------------------------------------
/s/ David Rich
------------------------------------
David Rich
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EXHIBIT "A"
Milestone Achievements.
(reference attached schedule of performance for years 1999 through 2001).
EXECUTIVES' BONUSES.
Will be paid quarterly, pro-rata up to 35% of annual salary on achievement of
100% of milestone for each of the three months of the quarter. Achievement of
80% of the mile-stone warrants a bonus payment of 20%, achievements below 80%
warrant no bonus.
STOCK OPTIONS.
Options will vest and accumulate at the rate of 1O% of the 1,000,000 option
shares for each month when the milestones have been met or have exceeded 90% of
the milestone.
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
Between
AUTOMOTIVE TECHNOLOGIES, INC.,
a Colorado corporation
("Corporation")
and
PHILIP W. SERGEANT
("Employee")
Dated: March 31, 1999
<PAGE>
TABLE OF CONTENTS
SECTI0N
BACKGROUND:...............................................................1
1. Employment............................................................ 1
2. Term.................................................................. 1
3. Duties................................................................ 1
4. Compensation ......................................................... 2
5. Business Expenses and Reimbursements.................................. 3
6. Employee's Representations and Indemnification........................ 3
7. Confidential Information.............................................. 4
8. Covenant Not to Compete............................................... 4
9. Termination by the Employee or By the Corporation..................... 5
10. Return of Materials .................................................. 6
11. Disability or Death................................................... 6
12. Ownership of Inventions and Ideas..................................... 7
13. Entire Agreement...................................................... 7
14. Amendments............................................................ 7
15. Assignments........................................................... 7
16. Binding Effect........................................................ 7
17. Severability.......................................................... 7
18. Specific Performance..................................................
19. Waivers............................................................... 8
20. Notices............................................................... 8
21. Jurisdiction and Venue................................................ 9
22. Enforcement Costs..................................................... 9
23. Remedies Cumulative................................................... 9
24. Governing Law......................................................... 9
25. Further Assurances.................................................... 9
26. Definitions...........................................................1Q
EXHIBIT A- MILESTONES....................................................11
i
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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is signed on March 31,
1999 between AUTOMOTIVE TECHNOLOGIES, INC., a Colorado corporation having its
principal place of business at 7301-A Palmetto Park Road, Suite 105-C, Boca
Raton, Florida 33433 (the "Corporation") and PHILIP W. SERGEANT (the
"Employee").
BACKGROUND:
A. The Corporation is engaged in the business of establishing residential
networks within communities, installing low voltage wiring systems and equipment
in homes and selling electronic upgrades and options to home buyers; and
B. The Corporation desires to employ the Employee as President and Director of
Marketing of the Corporation in connection with the conduct of the business of
the Corporation, and the Employee desires to accept such employment on the terms
set forth in this Agreement.
The parties agree as follows:
1. EMPLOYMENT. The Corporation employs the Employee as President and
Director of Marketing to perform the duties set forth in Section 3 and the
Employee accepts the employment, all upon the terms in this Agreement.
2. TERM. Unless sooner terminated pursuant to the terms of this
Agreement, the initial term of employment begins on the date of this Agreement
and continues for 5 years. The Employment Period shall be extended automatically
for additional one-year terms unless either the Corporation or the Employee
gives at least 30 days' written notice to the other pursuant to Section 21.
3. DUTIES.
(a) The Employee will serve as President and Director of Marketing
of the Corporation. Subject to any restrictions set forth in the Shareholders'
Agreement or in the Bylaws of the Corporation, the Employee will perform all
duties as are customary for a President and Director of Marketing of a leading
edge technology company in the US, and such other duties as may from time to
time be assigned to him by the Board.
(b) The Employee will use his best efforts to carry out his duties
and responsibilities and devote his entire working time to the business and
affairs of the Corporation and will not, in any advisory or other capacity,
work for any other individual, firm or corporation without first having obtained
the written consent of the Board.
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<PAGE>
(c) The principal place of employment of the Employee will be the
Corporation's, headquarters in Boca Raton, Florida or such other locations as
may be selected for the Corporation's facilities by the Board, although it is
understood that in connection with his duties under this Agreement, the Employee
will be required to travel to and perform services at other locations.
4. COMPENSATION. As compensation for the services to be rendered by
the Employee, the Corporation agrees to pay or provide to the Employee:
(d) SALARY. The Corporation will pay to the Employee a base annual
salary of $102,500 per year payable in accordance with the normal payroll
policies of the Corporation less withholding of all applicable FICA taxes,
federal unemployment taxes (FUTA), income tax withholding and other payments the
Corporation is obligated to withhold. The annual salary is subject to annual
review and upward adjustment in the Board's sole discretion. An adjustment to
the amount of salary, if any, is not deemed a modification, amendment or waiver
of this Agreement and all other terms of his Agreement will remain in full force
and effect.
(e) BONUSES. The Employee shall be entitled to a bonus paid annually
during the Employment Period up to a maximum of 35% of the base annual salary,
payable at such times and upon the achievement of such milestones as are set
forth on Exhibit A or as shall be mutually agreed upon by the Employee and the
Board.
(f) VACATION/SICK DAYS. The Employee is entitled to an annual paid
vacation of 3 calendar weeks per fiscal year (taken consecutively or in
segments) adjusted pro rata for any partia1 fiscal year. For purposes of
vacation eligibility, the Employee's start date is June 1, 1998. The Employee is
also entitled to annual paid sick days of at least 5 days per year during the
Employment Period. Vacation may be taken at such times as is reasonably
consistent with proper performance by the Employee of his duties and
responsibilities. Vacation days and sick days are forfeited and not accumulated
from year to year.
(g) INSURANCE. The Corporation agrees to provide to the Employee,
throughout the Employment Period, insurance and all benefits including workers'
compensation insurance, life insurance, health insurance and profit sharing
benefits, that are, or may in the future be, provided generally by the
Corporation to its other employees including:
(i) The Corporation may, so long as this Agreement remains in
effect, maintain in force, a life insurance policy on the life of the
Employee in an amount determined by the Corporation. The proceeds of the
insurance policy is payable directly to the Corporation, which is the
direct beneficiary. The Corporation will pay all premiums for all policies
as the same become due; and
(ii) The Corporation will provide health insurance providing full
hospital, medical and dental coverage pursuant to the Corporation plans in
effect from time to time
2
<PAGE>
for the Employee and each of the Employee's dependents at no expense to
the Employee or his or her dependents other than deductible amounts under
these plans not to exceed S200 per person per year.
(h) AUTOMOBILE. During the Employment Period, the Employee is
entitled to a $650 per month car allowance in accordance with the
Corporation's normal automobile allowance payment practices.
(i) RELOCATION EXPENSES. The Corporation will reimburse the
Employee for a minimum of $20,000 of out-of-pocket expenses incurred in
connection with any relocation requirements.
(j) STOCK OPTION. The Corporation agrees to grant to the
Employee, pursuant to a separate written agreement to be executed, an
unvested option (the "Option") to purchase, up to 1,000,000 shares (the
"Option Shares") of the common stock, $O.001 par value per share, of the
Corporation (the "Common Stock") at $0.45 per share. Such agreement shall
determine at what times and in what amounts the Option will vest in the
Employee, the manner of exercising the Option, and all other matters
determined by the Board. Additional stock options will be offered
annually, if at all, in accordance with stock option plans offered to
other senior management In the discretion of the Corporation.
5. BUSINESS EXPENSES AND REIMBURSEMENTS. It is contemplated that, in
connection with his employment hereunder, the Employee may be required to incur
reasonable business, entertainment, and travel expenses. The Corporation agrees
to reimburse the Employee in full for all such reasonable and necessary
business, entertainment and travel expenses incurred or expended by him in
connection with the performance of his duties hereunder; proving the Employee
submits to the Corporation vouchers or expense statements satisfactorily
evidencing such expenses as may be reasonably required by the Corporation and
such expenses are in accordance with any corporate policy with respect thereto.
During the Employment Period, the Employee is entitled to reimnbursement by the
Corporation for the following out-of-pocket expenses incurred by the Employee
after receiving written approval from the Board:
(i) Membership fees for professional organizations and
affiliations beneficial to the Employee or the Corporation in the
performance of the Employee's duties under this Agreement; and
(ii) Expenses for seminars, courses and conferences attended
for the Corporation's business purposes.
6. EMPLOYEE'S REPRESENTATIONS AND INDEMNIFICATION. The Employee
represents and warrants to the Corporation that:
3
<PAGE>
(k) He is not restricted or prohibited contractually from entering into
and performing this Agreement; and
(l) His execution and performance under this Agreement is not in
violation or breach of any other agreement between the Employee and any other
person or entity.
The Employee indemnifies, defends, and holds harmless the Corporation
against all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries, and deficiencies including interest, penalties, and
attorneys' fees and disbursements including Enforcement Costs as stated in
Section 23, that the Corporation or its officers or shareholders shall incur or
suffer, which arise, result from, or relate to any breach of, any of his or her
representations and warranties in this Section.
7. CONFIDENTIAL INFORMATION. The Employee acknowledges that the list of
the Corporation's customers, method of doing business and the Corporation's
sources of information as the Corporation may revise are valuable, special and
unique assets of the Corporation's business. The Employee will not, during and
after the Employment Term, disclose any part of the Corporation's customer list,
method of doing business, sources of information, trade secrets or other
confidential or proprietary information, to any person, firm, corporation,
association, or other entity for any reason or purpose. Upon the Employee's
breach or threatened breach of this Section, irreparable injury is presumed, and
the Corporation is entitled to preliminary restraining order and an injunction
restraining and enjoining the Employee from disclosing any part of the list has
been, or is threatened to be disclosed. In addition to or in lieu of the above,
the Corporation may pursue all other remedies available to the Corporation for
the breach or threatened breach, including the recovery of damages from the
Employee.
8. COVENANT NOT TO COMPETE. During he Employment Term and for 1 year
after the termination of this Agreement, the Employee will not, within Dade,
Broward or Palm Beach Counties, State of Florida, directly or Indirectly, own,
manage, operate, control, be employed by, participate in, or be connected in any
manner with the ownership, management, operation, or control of any business
similar to the type of business conducted by the Corporation at the time this
Agreement terminates or solicit customers of the Corporation. Upon the
Employee's actual or threatened breach of this Section including use or
disclosure of the Corporation's trade secrets or customer lists or direct
solicitation of existing customers, irreparable injury is presumed, and the
Corporation is entitled to a preliminary restraining order and injunction
restraining the Employee from violating its provisions. Nothing in this
Agreement may be construed to prohibit the Corporation from pursuing any other
available remedies for the breach or threatened breach, including the recovery
of damages from the Employee. If the stockholders agree to dissolve the
Corporation, and the principals do not continue to operate a residential wiring
company, this covenant terminates. The Employee acknowledges that the length of
the term and all restrictions contained in this Section and Section 7 are
fair and reasonable and not the result of overreaching, duress or coercion of
any kind. The Employee further acknowledges that his or her full, uninhibited
and faithful observance of each of the covenant contained in such Sections will
not
4
<PAGE>
cause him or her any undue hardship, financial or otherwise, and that
enforcement of each of the covenants contained in this Agreement will not impair
his or her ability to obtain employment commensurate with his or her abilities
and on terms fully acceptable to him or her or otherwise to obtain income
required for the comfortable support of himself or herself and his or her family
and the satisfaction of the needs of his or her creditors.
9. TERMINATION BY THE EMPLOYEE OR BY THE CORPORATION.
(m) The Corporation may terminate this Agreement for cause after
written notice to the Employee and subject to the expiration of any applicable
cure period set forth below. "Termination for cause" shall mean discharge by the
Corporation on the following grounds:
(i) The Employee's conviction in a court of law of any crime or
offense, which conviction makes him unfit for continuing employment, prevents
him from effective management of the Corporation or materially adversely affects
the reputation or business activities of the Corporation.
(ii) Dishonesty or willful misconduct which materially, adversely
affects the reputation or business activities of the Corporation and which
continues after written notice thereof to the Employee, substance abuse for
which the Employee fails to undertake and maintain treatment after 15 days after
requested by the Corporation, or misappropriation of funds.
(iii) The Employee's continuing material failure or refusal to
perform his duties in accordance with the terms of this Agreement or to carry
out in all material respects the lawful directives of the Board of Directors,
provided that discharge pursuant to this Subsection 1l(a)(iii) constitutes
discharge for cause only if the Employee has first received written notice from
the Board stating with specificity the nature of such failure or refusal and, if
requested by the Employee within 10 days thereafter, the Employee is afforded a
reasonable opportunity to be heard before the Board.
Upon such termination for cause, the Employee shall lose all right,
title and interest in and to all payments required to be made in accordance with
the provisions of this Agreement, and the Corporation shall have no further
obligation to the Employee hereunder, except for compensation pursuant to
Section 4 to which the Employee is entitled through the date of termination,
bonus compensation to which the Employee is entitled for and in respect of the
preceding fiscal year if not theretofore paid, and any benefits referred to in
Section 4 to which the Employee has a vested right under the terms and
conditions of the plan or program pursuant to which such benefit were granted.
(n) The Corporation may terminate the Employee without cause at any
time. In the event of termination of the Employee without cause, the Corporation
will pay or provide to the Employee (in addition to salary, bonus and other
compensation to which the Employee is entitled
5
<PAGE>
or has earned pursuant to Section 4 through the date of termination and any
benefits referred to in Section 4 in which the Employee has vested right under
the terms and conditions of the plan or program pursuant to which the benefits
were granted), a lump sum cash payment equal to the total amount of base salary
due to the end of the term of this Agreement discounted using a present value
discount of 7%. The Corporation also agrees to redeem for cash all of the
Employee's shares in the Corporation at fair market value as computed by the
independent certified public accountants for the Corporation.
(o) The Employee may terminate this Agreement by resignation and giving
the Corporation 3 months' written notice. The Corporation can waive this notice
and agree with the Employee to an earlier termination date. Upon termination by
the Employee, all obligations of the Corporation and the Employee under this
Agreement will cease as of the date of final termination, except the Employee's
obligations under Sections 8, 9 and 10 will survive.
10. RETURN OF MATERIALS. The Employee will immediately turn over to the
Corporation all materials including brochures, agreements, customer lists, and
all over materials relating to the operation of the Corporation in the
Employee's possession or control, and all copies and any other forms of
reproductions of such materials (all of which are acknowledge to be the sole and
exclusive property of the Corporation), and will retain no copy or record of any
of the foregoing.
11. DISABILITY OR DEATH.
(p) The term of employment of the Employee will terminate immediately
upon the death of the Employee, or, at the option of the Corporation, upon
physical or mental incapacity or disability, which renders him unable, with
reasonable accommodation, to perform the services required of him under this
Agreement ("Disability") for a period of 90 consecutive days or for 180 days or
more during any period of 12 consecutive months. Disability is subject to
verification by an independent qualified physician if requested by the Employee.
During any period of Disability before termination, the Employee will continue
to be compensated as provided in this Agreement (less any payments due the
Employee under disability benefit programs paid for by the Corporation including
Social Security disability, worker's con~pensation and disability or retirement
benefits).
(q) Upon the death of the Employee during the period of employment or
upon termination of this Agreement by the Corporation because of the Disability
of the Employee, the Employee is entitled to receive the cooperation the
Employee through the date of death or termination (provided the payment of any
bonus for the fiscal year in which termination occurred will be in the sole
discretion of the Board). The Corporation thereafter will have no further
obligations under this Agreement except for its obligations to pay any vested
employee benefits referred to in Section 4.
12. OWNERSHIP OF INVENTIONS AND IDEAS. The Employee acknowledges that
the Corporation is the sole owner of all the results and proceeds of the
Employee's service under this Agreement, including all patents, patent
applications, patent rights, formulas, copyrights,
6
<PAGE>
inventions, developments, discoveries, other improvements, data documentation,
drawings, charts, and other written, audio and/or visual materials relating to
equipment, methods, products, processes, or programs in connection with or
useful to the Corporation's business (collectively, the "Developments") which
the Employee, by himself or in conjunction with any other person, may conceive,
make, acquire, acquire knowledge of, develop or create during the term of the
Employee's employment, free and clear of any claims by the Employee (or any
successor or assignee of him) of any kind or character whatsoever other than the
Employee's right to compensation under this Agreement. The Employee acknowledges
that all copyrightable Developments are considered "works made for hire" under
the Federal Copyright Act. The Employee assigns and transfers his right, title
and interest in and to all Developments, and agrees that he will, at the request
of the Corporation, sign or cooperate with the Corporation in any patent
applications, sign any assignments, certificates or other instruments, and do
any and all other acts, as the Board from time to time reasonably deems
necessary or desirable to evidence, establish, maintain, perfect, protect,
enforce or defend the Corporation's rights, title and interest in or to any
Developments.
13. ENTIRE AGREEMENT. This Agreement represents the entire
understanding and agreement between the parties with respect to the subject
matter of this Agreement, and supersedes all other negotiations, understandings
and representations, if any, made between the parties.
14. AMENDMENTS. The provisions of this Agreement may not be amended,
supplemented, waived or changed orally, but only by a writing signed by the
party as to whom enforcement of any amendment, supplement, waiver or
modification is sought and making specific reference to this Agreement.
15. ASSIGNMENTS. The Employee cannot assign or delegate his or her
obligations under this Agreanent. This Agreement is freely assignable by the
Corporation but must be assumed by the purchaser of all of substantially all of
the assets of the Corporation or by the surviving corporation in the case of a
merger.
16. BINDING EFFECT. All of the terms of this Agreement, regardless of
whether so expressed, are binding upon, inure to the benefit of, and be
enforceable by the parties and their respective personal representatives, legal
representatives, heirs, successors and permitted assigns.
17. SEVERABILITY. If any provision of this Agreement or any other
agreement entered into pursuant to this Agreement is contrary to, prohibited by
or deemed invalid under applicable law or regulation, that provision will be
inapplicable and deemed omitted to the extent so contrary, prohibited or deemed
invalid under applicable law or regulation, that provision will be inapplicable
and deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder of the provision will not be invalidated and will be given full force
and effect so far as possible. If any provision of this Agreement may be
construed in two or more ways, one of which would render the provision invalid
or otherwise voidable or unenforceable and another of which would render
7
<PAGE>
the provision valid and enforceable, the provision shall have the meaning that
renders it valid and enforceable.
18. SPECIFIC PERFORMANCE. The Employee acknowledges that the services
to be rendered by the Employee under this Agreement are extraordinary and unique
and are vital to the success of the Corporation, and that damages at law would
be an inadequate remedy for any breach or threatened breach of this Agreement by
the Employee. Therefore, upon a breach or threatened breach by the Employee of
any provision of this Agreement, then the Corporation shall be entitled, in
addition to all other rights and remedies, to injunctions restraining the
breach, without being required to show any actual damage or to post any bond or
other security
19. WAIVERS. The failure or delay of the Corporation at any time to
require performance by the Employee of any provision of this Agreement, even if
known, will not affect the right of the Corporation to require performance of
that provision or to exercise any right, power or remedy under this Agreement,
and any waiver by the Corporation of any breach of any provision of this
Agreement should nor be construed as a waiver of any continuing or succeeding
breach of the provision, a waiver of the provision itself, or a waiver of any
right, power or remedy under this Agreement. No notice to or demand on the
Employee in any case will, of itself, entitle that party to any other or further
notice or demand in similar or other circumstances.
20. NOTICES. All notices, requests, consents and other communications
required or permitted under this Agreement will be in writing (including telex
and telegraphic communication) and will be (as elected by the person giving the
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
If to the Corporation: If to the Employee:
Automotive Technologies, Inc. Philip W. Sergeant
7301-A Palmetto Park Road, Suite 105-C 22080 Altona Drive
Boca Raton, FL 33433 Boca Raton, FL 33428
21. JURISDICTION AND VENUE. The parties acknowledge that a substantial
portion of negotiations, anticipated performance and execution of this Agreement
occurred or will occur in Palm Beach County, Florida, and that, therefore,
without limiting the jurisdiction or venue of any other federal or state court,
each of the parties irrevocably and unconditionally (a) agrees that any suit,
action or legal proceeding arising out of or relating to this Agreement may be
brought In the courts of record of the State of Florida in Palm Beach County or
the Federal District Court of the United States, Southern District of Florida;
(b) consents to the jurisdiction of each court in any suit, action or
proceeding; (c) waives any objection that it may have to the laying of venue of
any suit, action or proceeding in any of these courts; and (d) agrees that
service of any court paper may
8
<PAGE>
be effected on that party by mail, as provided in this Agreement, or in any
other manner as may be provided under applicable laws or court rules in State of
Florida.
22. ENFORCEMENT COSTS. If any legal action or other proceeding is
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any provision of this
Agreement, the successful or prevailing party or parties is entitled to recover
reasonable attorneys' fees, sales and use taxes, court costs and all expenses
even if not taxable as court costs (including all fees, taxes, costs and
expenses incident to arbitration, appellate, bankruptcy and post-judgment
proceedings, incurred in that action or proceeding, in addition to any other
relief to which the party or parties may be entitled. Attorneys' fees include
paralegal fees, investigative fees, administrative costs, sales and use taxes
and all other charges billed by the attorney to the prevailing party.
23. REMEDIES CUMULATIVE. No remedy conferred in this Agreement upon any
part, is intended to be exclusive of any other remedy, and every remedy is
cumulative and is in addition to every other remedy given under this Agreement
or now or later existing at law or in equity or by statute or otherwise. No
single or partial exercise by any party of any right, power or remedy under
this Agreement precludes any other or further exercise of that right, power or
remedy.
24. GOVERNED LAW. This Agreement and all transactions contemplated by
this Agreement are governed by, and construed and enforced in accordance faith,
the internal laws of the State of Florida without regard to principles of
conflicts of laws.
25. FURTHER ASSURANCES. The parties agree to sign and deliver all
furthier and othor transfers, assignments and documents and do all acts that may
be convenient or necessary to more effectively and completely carry out the
intentions of this Agreement.
26. DEFINITIONS.
(a) As used in this Agreement, the following terms have the following
meanings:
"AGREEMENT" means this Employment Agreement, as it may be amended,
supplemented or otherwise modified by an agreement in writing signed by the
Corporation and the Employee pursuant to Section 15.
"BOARD" means the Board of Directors of the Corporation.
"EMPLOYMENT PERIOD" means the period in which the Employee is employed
by the Corporation including the initial term and any successive terms.
(b) Other definitional provisions used in this Agreement include:
9
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(i) The term "persons includes any corporation, partnership,
estate, trust, association, branch, bureau, subdivision, venture,
associates group, individual, government, institution, instrumentality
and other entity, enterprise, association or endeavor of every nature
and kind;
(ii) Reference to the "business" of any person also is deemed to
include the operations, financial condition, properties and prospects
of that person; and
(iii) The term "affiliate" means, with reference to any specified
person: (A) any person that directly or indirectly through one or more
intermediaries controls or is controlled by, or is under common control
with the specified person, (B) any person that directly or indirectly
is the beneficial owner of 5% or more of any class of equity securities
of, or otherwise has a substantial beneficial interest in, thec
specified person, or of which the specified person is directly or
indirectly the owner of 5% To or more of any class of equity securities
or in which the specified person has a substantial beneficial interest;
(C) any person who is an officer, director, general partner or trustee
of, or serves in a similar capacity with respect to, the specified
person or entity; (D) any relative or spouse of the specified person;
or (E) any trust created by the specified person for the benefit of
that person's spouse or children.
IN WITNESS WHEREOF, the parties have signed this Agreement.
AUTOMOTIVE TECHNOLOGLES, INC.
By: /s/ Richard D. Wedel, Chairman
- -------------------------------------- -------------------------------------
- --------------------------------------
/s/ PHILIP W. SERGEANT
------------------------------------
Philip W. Sergeant
10
EXHIBIT 21
(1) Integrated Homes of Florida, Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 11,986
<SECURITIES> 0
<RECEIVABLES> 17,538
<ALLOWANCES> 0
<INVENTORY> 47,953
<CURRENT-ASSETS> 77,477
<PP&E> 67,644
<DEPRECIATION> (3,700)
<TOTAL-ASSETS> 141,421
<CURRENT-LIABILITIES> 615,695
<BONDS> 0
0
0
<COMMON> 1,500
<OTHER-SE> (475,774)
<TOTAL-LIABILITY-AND-EQUITY> 141,421
<SALES> 106,020
<TOTAL-REVENUES> 106,020
<CGS> 74,800
<TOTAL-COSTS> 74,800
<OTHER-EXPENSES> 540,165
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (508,945)
<INCOME-TAX> 0
<INCOME-CONTINUING> (508,945)
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<EXTRAORDINARY> 0
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<NET-INCOME> (508,945)
<EPS-BASIC> (0.34)
<EPS-DILUTED> (0.34)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 131,419
<SECURITIES> 0
<RECEIVABLES> 47,216
<ALLOWANCES> 0
<INVENTORY> 47,953
<CURRENT-ASSETS> 228,603
<PP&E> 72,962
<DEPRECIATION> (7,200)
<TOTAL-ASSETS> 294,365
<CURRENT-LIABILITIES> 868,970
<BONDS> 0
0
0
<COMMON> 7,942
<OTHER-SE> (582,547)
<TOTAL-LIABILITY-AND-EQUITY> 294,365
<SALES> 152,565
<TOTAL-REVENUES> 152,565
<CGS> 74,737
<TOTAL-COSTS> 74,737
<OTHER-EXPENSES> 3,178,159
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,100,531)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,100,531)
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> (3,100,531)
<EPS-BASIC> (1.75)
<EPS-DILUTED> (1.75)
</TABLE>
